Photo shows the president of Destatis, the German federal statistics office, Roderich Egeler, presenting the Indicator Report on Sustainable Development to the Head of the Federal Chancellery and Federal Minister for Special Tasks, Ronald Pofalla. The report describes the current state of development, using 35 indicators for which concrete targets have been set at the political level as part of the national strategy for sustainable development. The evaluation makes use of eye-catching weather symbols to give a first orientation on the progress achieved by the German sustainable development strategy. The symbols show to what extent the targets will presumably be achieved if the current trends are extrapolated mathematically. The Indicator Report 2010 reveals that more than half of the indicators show favourable trends in terms of achieving the targets: 14 out of 35 indicators received the “sunny” symbol and five others were marked as “slightly cloudy”. However, ten indicators carry the “cloudy” symbol.

The labour market continues to show a positive employment trend according to provisional results of Destatis, the federal statistics office. The number of persons in employment living in Germany amounted to 40.3 million in June 2010. Compared with June 2009, that was an increase of 131,000 persons or 0.3%. With a rise by 0.2%, in May 2010 the number of persons in employment was higher for the first time in twelve months than in the corresponding period of the previous year.
 
Compared with May 2010, the number of persons in employment rose by 41,000 in June 2010 (+ 0.1%). After seasonal adjustment, that is, after the elimination of typical seasonal variations, there was an increase of 32,000 persons (+0.1%) against May 2010.

Fed's Beige Book confirms US slowdown: Davy chief economist,  Rossa White, commented  - -"US economic growth is slowing, albeit not dramatically. That was the impression conveyed in the Fed's latest Beige Book, or regional survey of activity. Manufacturing activity softened, housing has definitely dipped since the homebuyer tax credit expired on April 30th and the outlook for consumer spending is somewhat weaker. Nonetheless, the economy is still expanding, if not as quickly as it was to the end of May. The ISM manufacturing reading is even more likely to disappoint next Monday.

This survey covers the period to July 19th, so it is close to real-time. Following the recent disappointing regional manufacturing indices from New York, Philadelphia, Chicago and Dallas, it is worth noting what the 12 Fed districts had to say overall. This is significant ahead of next Monday's ISM index for July. Manufacturing moved up in aggregate, but half of the districts reported that it slowed or levelled off. With regard to consumer spending, the outlook is perhaps of most relevance. Three districts were less optimistic than they had been about future spending. But the trend in recent retail sales has generally been solid, if unexciting.

We noted that yesterday's US mortgage applications index for last week dipped again. On a four-week average basis, the index is back to its lowest level since 1996. And it has slumped noticeably since the ending of the incentive to buy three months ago. The Beige Book confirmed that housing is weak: 'nearly all districts reported sluggish housing markets in the months since the homebuyer credit expired'. Meanwhile, commercial property markets 'continued to struggle in all twelve districts'. Excess supply issues aside, the US property market will find it difficult to recover until credit conditions normalise. Even though the last couple of (separate) Fed senior loan officer surveys have shown improvement, this survey stated that 'most districts reporting on credit standards continued to note that lending standards remain restrictive'."

In 1843, Ireland was emerging from the gloom of a 25-year famine. George Cannock and Andrew White established a small business at number 14, Henry Street in Dublin 1. In 1845, bankers Andrew and Patrick Reid loaned them £6,000 to extend the business. Today Art Holdings Ltd. is the holding company which owns the Arnotts Department Store Group. Art Holdings is 55% owned by the Nesbitt family and 45% owned by Boundary Capital, the AIM and IEX listed investment company. State-owned Anglo Irish Bank and Ulster Bank have seized control of the department store company. In 2006, the craziest year of the Irish property bubble, the Nesbitt family fell for the allure of plans to "transform" the area of Dublin City Centre bounded by Henry Street, O’Connell Street, Abbey Street and Liffey Street. The area, branded as the Northern Quarter, was to be redeveloped into a lively new shopping and entertainment area complete with 47 new shops, 17 new cafes, restaurants and bars, 189 apartments and a 152 bed four star hotel. The Northern Quarter Development Proposal was said to represent a €700 million investment in the heart of the city. As part of the development plan, Arnotts said that it intended to bring on board a strategic partner with the appropriate expertise to develop the Northern Quarter. It said a competitive process would commence immediately to select a strategic partner.  Today, both Arnotts and its partner, investment company Boundary Capital, are struggling to survive.

Economic View 1: Credit Conditions tighten in Europe; Goodbody economist, Juliet Tennent, commented - - "According to the ECB’s lending survey, credit conditions tightened in the Eurozone in Q2 and are expected to continue to do so over the next three months. In Ireland, credit conditions for business and consumers remained unchanged in Q2 while those for house purchases weakened. An increase in loan margins was reported across all loans and sectors over the period. The Irish survey also showed that in Q2 there was less demand on the business side for credit for fixed investment, mergers and acquisitions activity, inventories and working capital. While on the consumer side housing market prospects, less spending on durables and confidence all weighed.

Unsurprisingly, Irish banks also reported that access to wholesale funding markets deteriorated across all maturities in Q2, as the European sovereign crisis and fears over the Eurozone banking system put huge strains on the financial system. This is the first quarter in three that banks have reported that funding markets had tightened. The expectation from the survey is that access to funding will remain the same or worsen slightly in Q3 and that credit conditions for both Irish businesses and consumers will remain unchanged. The outlook for access to wholesale markets is particularly key for Irish banks as maturity profiles has been built up ahead of the government guarantee expiry, which has been extended somewhat. All the main quoted banks report in the coming weeks, so investors will be looking for updates on progress on funding and capital."

US second-quarter GDP due on Friday is likely to come in at 2.7 percent or lower, and could further pressure equities and risk trades, says Lee Wai Tuck, currency markets strategist at Forecast. He talks to CNBC's Chloe Cho, Yousef Gamal El-Din and Maithreyi Seetharaman:

Economic View 2: Nationwide House prices fall more than expected; Juliet Tennent additionally commented  - -"The Nationwide House Price Index fell by 0.5% mom in July, more than the expected decrease of 0.3% and the June 0.1% rise was revised down to flat. This sees the yoy increase drop to 6.6% from 8.7% in June (vs. 7% f/c). This is the first mom fall in the Nationwide Index since February this year and only the second fall in 15 months.

According to Nationwide, buyer demand remains weak despite record low interest rates, while supply has increased. It follows reports from Hometrack and Rightmove that both saw asking prices for houses fall mom in July by 0.1% and 0.6%, respectively. Sentiment in the housing market has turned negative in recent months with the RICS report in June also showing that the number of properties coming to market increased in May and June, while the number of new buyer enquiries fell in June. With the Bank of England’s outlook for credit conditions for the second quarter of this year turning negative for the first time since Q408 and the Nationwide Consumer Confidence Index at 12 month lows, it looks like UK house prices may be in for further modest price falls."

J. West Riggs, MD and head of Asia equity capital markets at Piper Jaffray, believes earnings optimism will add to confidence about the global recovery and companies will profit from that. He talks to CNBC's Chloe Cho, Yousef Gamal El-Din and Maithreyi Seetharaman:

US Markets

On Wednesday, the Dow fell 40 points or 0.38% to 10,498.

The S&P 500 slid 0.69% and the Nasdaq slipped 1.04%.

AIB Group (Add, Closing Price €0.94); Bit more colour on BZW Q2 figures: Goodbody's Eamonn Hughes, commented  -- "Yesterday morning, BZW reported Q2 figures. Net income was PLN250m, modestly behind consensus forecasts for the quarter, but the detailed financial statements and subsequent results presentation provided a bit more colour on the figures, which looked a bit better on an underlying basis. In addition, there was further commentary around the M&A process. Net interest income was up from PLN424m in Q1to PLN438m in Q2 (+3.3% sequentially), with net fee and commission income also up to PLN335.7m from PLN331.9m sequentially (1.1%). Net interest income growth was supplemented by the net interest margin expanding from 3.37% in Q1 to 3.46% in Q2 (+9bp). Total income finished up 10.6% in the half year.

While costs were up 2.3% sequentially, the Operating Surplus was up 14% sequentially and 7.6% yoy. The provision line of PLN146.4m included an upwards adjustment to the IBNR, which is probably why the headline figures first thing yesterday morning showed a miss versus consensus. The bank’s Tier 1 ratio now stands at 13%, up 30bps in the quarter. The reported loan to deposit ratio of 83% indicates a deposit-rich institution, which presumably is one of the key attractions for potential purchasers as well as exposure to the substantially under-banked Polish economy.

Clearly, M&A remains the key issue in the short term. BZW remains the key component in our €4.4bn of disposal gains pencilled in for AIB in the months ahead. The BZW share price has averaged PLN195 for the last 2 months, which is the figure we input to generate the €1.95bn of capital gains for AIB (similar methodology for M&T generating €1.15bn and 1x TNAV for the UK bank, implying €1.3bn). As a reference, a c10% higher BZW share price would add c€250m of capital to AIB’s coffers. We note yesterday that the BZW CEO indicated that it has held four meetings with bidders, with Intesa confirming it was conducting due diligence on the bank that was “at a good point and then we will make an evaluation”. We hope this means the sale process is coming to a head soon, which would set up AIB on its way in its capital raising programme. We will be watching for any updates on the capital front next week (August 4), when AIB releases its H1 results."