By James Langton


(September 14 – 09:00 EST) – Markets look set to head down on the open. Far better-than-expected retail sales numbers came out in the U.S. Asia was down overnight. Europe was mildly up, and S&P futures are pointing to a mild down open.


August retail sales came in far above the estimates. American economists were calling for a 0.7% increase on the headline number, and they came in up 1.2%, almost double expectations. The core number, not including autos, came in at 0.7%. The June and July numbers were also revised upward.


The question for traders is whether this indicates an overheated economy, nascent inflation, and continued interest rate hikes, or just a heady low-inflation economy. Futures traders are betting on the former, immediately trading down on the news. Tomorrow’s Consumer Price Index will add another piece to the puzzle.


Although the European markets stayed somewhat range-bound and nervous ahead of the U.S. data, they received their own numbers this morning. Retail prices in the U.K. rose less than expected in August and the annual inflation rate fell to an almost five-year low. This comes a week after the Bank of England unexpectedly hiked rates 25 basis points. But it cools concern that it will move again before the end of the year. European markets are up on the news. London’s FTSE 100 is up about 22 points. Over in Germany the DAX is up 37 points, and Paris’ CAC 40 is up around 15 points.


European markets were chock full of business news too this morning. Holland-based banking giant ING Groep NV will make Ewald Kist its next chief executive. The firm, which operates ING Direct here in Canada, also added executives from the U.S. and the U.K. to its board.


Over in Switzerland the world’s biggest money manager, UBS AG, made a small acquisition – buying Bermuda-based Global Asset Management Ltd. for as much as $675 million.


While the U.K.’s biggest brewer, Scottish & Newcastle PLC is spending US$1.8 billion for assets from Greenalls PLC, mostly bars and restaurants.


Overnight in Asia markets were down. The strong Yen is the story there. The Bank of Japan intervened to subdue the Yen again last night, but Japanese exporters sold off anyway, dropping the Nikkei by 132 points. Hong Kong’s Hang Seng index took a 57 point haircut as traders continue to consolidate last week’s gains.