“Manufacturing Data Edges Markets Down”

Will Smith – maybe the only trader on Wall Street today?

Dow: 13,165 (-0.06%)        S&P 500: 1,406 (+0.11%)

Things are quiet – too quiet.  Trading volumes remain low this week as investors get their tans on far away from Wall Street, leaving stocks drifting aimlessly for the 2^nd day in a row.  Regional manufacturing data for New York State surprisingly disappointed, dampening any investor enthusiasm out there.  On top of that, the earnings report from industrial heavy-weight Deere (DE) and the firm’s bearish outlook for the rest of ’12 pulled down other utility and energy stocks.  The elephant in the room though was the record fine smacked on disgraced bank Standard Chartered as more news on their relationship with Iran is released.  Stocks remained flat as the S&P 500 finished up, adding 2 points, while the Dow edged down 7 points on another quiet day.

New York State Manufacturing Activity dips for 1^st time in 10 months

Aside from being home to the legendary MarketSnacks Headquarters, New York is arguably the most dominant state in the Union (think of the Yankees, pizza and its patient city folk) – for analysts, New York’s economy is a rich and diverse microcosm of many of the nation’s industries.  So when the Federal Reserve offers a bunch of regional manufacturing surveys every month, the “Empire State Index” is always the highly anticipated 1^st one up.  Surprisingly, NY business activity showed a contraction in manufacturing orders in August for the 1^st time since October.  Although the factory sector in this region has improved over the last year, today’s significant dip reignites some questions for investors about the state of the area’s economy.

Standard Chartered Bank settles with NY State regulators for illegal transactions with Iran 

The U.S. government shitlist includes the likes of North Korea, Cuba, and Iran.  Like a father telling his child to stay out of certain neighborhoods, the federal government has forbid Americans to engage in financial business with these countries (i.e. economic sanctions). Sanctions are a way to compel foreign nations to behave – without having to use guns and bombs.  Standard Chartered Bank (STAN) got caught last week by a New York State regulator for years of illegal transactions with the Iranian government.  The regulator said that the London-based bank secretly engaged in thousands of financial transactions involving billions of dollars.  The practice, known as money-laundering (handling the money of “dirty” counterparties, like criminals or druglords or other no-good people), has given the Iranian government access to the American financial system through Standard Chartered, so the bank paid New York State regulators $340 million today to settle the case and end the investigation. 

It’s a good thing they settled ‘cause the evidence was dirty.  Upon reading a message from the head of the New York branch that their reputations were at risk with the illegal transactions, the British CEO allegedly replied in 2006 “You f—ing Americans.  Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.” Oh. No. You. Didn’t. The U.S. can’t tell the world what to do, but it can to an American branch of a London bank.  Standard Chartered’s stock was up 4% today due to the end of uncertainty on the size of the fine, but way down since the announcement last week – and the troubles don’t end there. Other federal and city regulators are expected to prosecute the bank and get similar fines that could add up to $1 billion. 

Tomorrow:

• Weekly jobless claims
• A mansion’s worth of housing data: July Building Permits, July Housing Starts
• The 2nd quarter earnings season continues: Walmart, Gap, Sears
  

© 2012 MarketSnacks

Tags: Empire State Manufacturing, Government Sanctions, Iranian Sanctions, Money Laundering Explained, Standard Chartered, Wall Street