Fears Of A New Cold War With Russia Erupt

The recent conflict with Georgia has caused many to wonder if we are facing the
a new version of the old Soviet Union?

No. While tensions have certainly risen. We are seeing the new Russia reasserting itself. Former Soviet Republics are nervous about recent events and fear that they will be next. Ukraine especially feels this way. Having heard the same rhetoric from Russia about the treatment of ethnic Russians. Its hard push to join NATO. And that Russia views it as an important part of its territory.

Bottom Line: The situation is complicated and NATO is split about what should be done. Poland and the Baltic Republics want a hard line stance. While, Germany, France, and Italy want to avoid a confrontation because they are dependent on Russian oil. For the time being there is little the alliance can do.

US Trade Will Continue To Soar

US exports will grow by an even bigger amount next year. The trade deficit will drop to $448 billion as exports grow by 7%. The strong demand is coming from Asia, Canada, Mexico, and Brazil. Also free trade agreements with Chile, Peru, and Central America will help out tremendously. Many small and medium sized businesses will benefit from the free trade agreements because of the demand for: infrastructure equipment, medical supplies, and cosmetics.

The increase in trade will help balance out the economy and will cause the dollar to stabilize as we move into next year.

Upcoming Events and Economic Numbers

Tuesday August 19

Housing Starts: consensus: 963K prior: 1.066M

Producer Price Index: consensus: .6% prior: 1.8%

Wednesday August 20

Oil Inventories: prior: -316K

Thursday August 21

Jobless Claims: prior: 450K

Leading Indicators: consensus: -.2% prior: -.1%

Philadelphia Fed: consensus: -14.1 prior: -16.3

Upcoming Earnings

Monday August 18

Lowes (LOW): Before the open: estimate: .56

Tuesday August 19

Home Depot (HD): Before the open: estimate: .61

Target (TGT): Before the open: estimate: .76

Hewlett Packard (HPQ): After the close: estimate: .76