08:30 US Oct Trade Balance, Oct Import/Export Prices
07:30 US NFIB Index
08:30 US Nov PPI, Nov Core PPI, Nov Retail Sales, Canada Nov Leading Indicators
10:00 US Oct Business Inventories
11:30 US Treasury's 1- and 12-month bill auction
14:15 FOMC rate decision
16:30 API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
5:00:35 AM
(GE) German RWI think tank: Germany's economic expansion is likely to accelerate but risks remain
- Remains to be seen, how the debt crisis in the euro zone and the US real estate crisis will develop further
- Lower US consumption could restrain global expansion more than expected
5:25:29 AM
(CH) PBoC issues statement on Central Economic Work Meeting: Confirms previously announced increase to RRR; confirms to have implemented a prudent monetary policy approach
- Reiterates to improve yuan exchange rate mechanism and to keep the yuan at a reasonably balanced level.
- To balance managing inflation expectations, restructuring of economy and ensuring growth.
6:30:40 AM
(UK) BoE's Bean: MPC to watch CPI risks very closely as expectations risks may have increased
- Moderate pace of growth and the fading effects of GBP's past depreciation should mute inflation pressures
- Outlook continues to remain highly uncertain.
- Income expectations will determine consumer spending next year.
11:02:32 AM
NY Fed: Purchased $7.79B in outright coupon purchase; dealers submitted $18.26B for consideration (bid to cover 2.35)
- Avg bid to cover over prior four QE2 auctions is: 3.6
- Heaviest purchase $900M in the 11/30/16 maturity
11:55:42 AM
(CA) BoC's Carney: Reiterates that further stimulus spending reductions must be carefully considered; low cost money is not a sustainable long-term strategy
- Notes that more QE spending may be needed for Canada.
- International monetary system is moving towards a "massive dollar block," status of the dollar reduces prospects for reducing global imbalances.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
"It is only possible to live happily ever after on a day-to-day basis."
Market Week Wrap-up
- The trading week began with unabated European debt trouble driving a sell-off of risk assets. Panicky trading continued through Monday and Tuesday worldwide even after Ireland and its EU and IMF partners nailed down the details of an €85B bailout package, with tension manifested in ever-widening spreads between the debt of European nations and German Bunds. Talk of contagion heated up and rumors of fresh ECB buying of Irish government debt failed to inspire any significant rebound in either the euro or European debt. Wednesday saw a violent reversal of sentiment as markets rallied behind a better-than-expected Chinese manufacturing PMI reading and a strong hint from the ECB's Trichet that the central bank would be open to expanding its bond purchasing program at its Thursday press conference. In addition, sequential improvements in the US November Challenger and ADP employment numbers added confidence and raised hopes for the key US payrolls report due later in the week. The DJIA was up 250 points on Wednesday, and another 100 points or so on Thursday as Trichet delayed the expiration of the ECB's bond buying campaign, and US October pending home sales blew away expectations. Solid November same-store sales data from the retail sector also helped improve sentiment at the outset of the holiday shopping season. US November payrolls data on Friday came in surprisingly low; gains in both nonfarm and private payrolls registered less than one-third the amount projected by consensus estimates. Even more disappointing was the unemployment rate which rose to 9.8% from 9.6%. Chairman Bernanke surely sees the data as a vindication of sorts for QE2, and the US equity market turned the jobs data lemon into lemonade, eking out a gain on Friday as it awaits Helicopter Ben's interview on '60 Minutes' this Sunday. For the week, the DJIA rose 2.6%, the S&P500 added 3%, and the Nasdaq gained 2.2%.
- With little consequential economic data on the calendar and the European debt crisis temporarily pacified, market sentiment has been driven by some novel developments this week. In Washington, the Obama Administration and Congressional partisans of the GOP and the Democrats played a three-handed game of poker over the infamous Bush tax cuts. Extension of the cuts, which has been a point of contention for months, came to a head as the GOP forced the White House to agree to support lower taxes for high earners along with the middle class (in exchange for extended unemployment benefits), to howls of protest from the left. The prospect of "stimulus by other means," coming on the heels of Fed Chairman Bernanke hinting that more Fed bond purchases beyond QE2's initial $600B allotment may be on tap, has put a bid under stocks and driven a growing rotation out of fixed income instruments. Rising US rates were a major focus heading into the week, and a pronounced move higher for US Treasury yields became the overriding theme for traders. After testing 3% for the first time since July, the benchmark 10-year yield surged through its 200-day moving average following news President Obama had reached a deal with the Congressional Republicans. Of course the tax and unemployment benefit package (stuffed as it is with other goodies) involves massive deficit spending, driving fresh fears of US debt levels and associated inflation. Spot gold once again hit fresh al-time highs above $1,430. Meanwhile front-month NYMEX crude tested above the $90/barrel mark briefly for the first time since October 2008, although the contract was down on the week for the first time in nearly a month ahead of an OPEC gathering this weekend. Late in the week, October data showed that the US trade deficit fell to its lowest level in nine months and US exports rose to their highest point in more than two years. The preliminary December University of Michigan Confidence survey rose to its highest level since January 2008. For the week, the DJIA rose 0.2%, the S&P500 added 1.3%, and the Nasdaq gained 1.8%.
- Debate is growing over whether the moves in the US fixed income market represent the long-anticipated break toward higher rates or a more temporary phenomenon; its still not clear just what is fueling the 10-year's 100 basis point yield surge from the low set in early October. Several economists saw fit to come out and raise next year's growth expectations citing the expected stimulus effects of the US tax deal along with the recent improvement in economic data. Also European debt jitters receded somewhat with the impending passage of an Irish budget, and in some cases were replaced with concerns about Uncle Sam's ability to finance and eventually wean itself off of this latest round of fiscal stimulus. Finally, supply remained a key factor with the US Treasury selling another $66B in coupons. Regardless of the underlying factors, US yields finished the week consolidating around 6 month highs and, interestingly, the worst performance was seen in the belly of the curve (where the Fed's QE2 is concentrated). The 10-year finished the week above 3.25% widening the spread between the 2 and the 10-year yield out above 265 basis points while the 10-30 year spread has actually narrowed.
- The fallout from rising rates was not only felt in Treasury circles. Metals prices corrected forcefully led by gold which had reached a new all time high early in the week. Metals desks quickly seized on the correlation between higher yields and lower prices. The higher yields directly supported the dollar while rising interest rates raised the allure of bank deposits over gold and at the same time boosted storage costs for metals. By Friday the February gold contract briefly tested an uptrend line going back to July while March Silver was more than $2 off of 30-year highs. Equity markets experienced inflows with US bank stocks in particular surging as investors bet a steepening yield curve would serve as a catalyst for bank fundamentals. Home building stocks underperformed with the XHB hitting its highest levels on Tuesday. MBA mortgage applications fell for the second week in a row while mortgage rates moved out to their highest levels in six months climbing 15 basis points this week alone to 4.61%. Thus, Fed watchers have a lot to discuss heading into this coming week's FOMC meeting. Consensus remains that the Fed will leave both the statement language and the controversial asset purchase program unchanged, but speculation is growing the Fed might be forced to alter their current path sooner rather than later as the environment changes.
- With the fourth quarter drawing to a close, firms have begun offering profit warnings or improved guidance ahead of earnings season, which will begin in mid January. Met Life offered a very strong earnings outlook for Q4, while firm's FY11 earnings guidance range was right in line with consensus expectations. Kellogg reaffirmed its FY10 and FY11 guidance and named a new CEO. 3M's initial FY11 forecast featured an earnings range in line with the consensus estimate and revenue a bit above par. Home Depot expects FY11 revenue +2.0-2.5%. DuPont sees FY11 earnings in line and revenue a bit ahead of expectations. Both FY11 earnings and revenue projections from United Technology were a bit softer than expected. In the tech sector, leading semi names Texas Instruments and Novellus Systems both offered mid-quarter updates. Both names narrowed their earnings ranges, and TXN also tightened up its revenue outlook. Dutch semi name ASML raised its Q4 bookings guidance to €2B from €1.3B prior on stronger demand for lithography equipment from most market segments.
- The launch of Chinese IPOs on US exchanges continued apace this week, including two highly anticipated internet firms. DangDang, touted as the "Amazon of China" opened at a 50% premium to its IPO pricing and ended the week even higher. Yoku, called the "YouTube of China" was up four fold from its IPO price before turning lower on Friday as the euphoria wore off in the face of questions about profitability.
- The major M&A news for the week was characterized by negotiations and maneuvering - plus one notable take under deal. Bill Ackman's Pershing Square said Monday that it was prepared to finance an offer for Borders Group to buy Barnes & Noble for $16/share (Pershing owns a 37.3% stake in Borders). There were later press reports that as many as 10 buyout firms were interested in acquiring Barnes & Noble. Air Products made its "best and final" offer in the long-running pursuit of Airgas, raising its offer to $70 from $65.50. CNBC injected some drama into the story on Friday, reporting that three of Airgas's directors are hiring lawyers to assert that the board has misrepresented its position as being 'unanimous' in rejecting APD's offer, reporting that "open warfare could break out" on the ARG Board. Dell said on Thursday that it was in advanced talks to buy network storage provider Compellent Technologies for $876M in cash, at $27.50 a share, a sizable discount to Compellent's closing price on Wednesday. Compellent plays in the same space as 3Par, which Dell lost to HP in a protracted bidding war this fall.
- The flames of contagion in the eurozone seem to have been subdued for the time being, and consolidation was the name of the game in FX trading. Uncertainties surrounding the passage of the Irish budget provided some discomfort for the euro and had a predictable effect on peripheral debt spreads, even after the Irish budget passage looked likely. The IMF postponed its formal board vote on the Irish bailout package as it awaited Irish budget measures to be finalized, although markets mostly took the delay as a mere formality. A good deal of rhetoric emerged from Eurogroup and EcoFin meetings, where European officials discussed increasing the size of the €750B bailout fund, despite continued German opposition. There was a grab bag of other events affecting Europe - Moody's downgraded the sovereign ratings of Hungary, Fitch removed Ireland from the "A" rating club, Greece's final Q3 GDP was revised downwards - but these moves did not really move sentiment away from subdued consolidation after weeks of excitement. EUR/USD continued to encounter resistance above the 1.34 handle, which corresponds to the Dec 3rd post-US November payrolls high, although it managed to recoup all of its losses from after last week's payrolls data.
- The answer to global anxiety over China's attempts to cool its rapidly growing economy could arrive as early as Friday evening with the release of key November economic data. Monthly CPI is expected to rise 4.7%, even though speculation of an even hotter inflation number above 5% has kept risk appetite contained for much of the week. On Monday, an official at China's State Council Development Research Center suggested last week's shift to "prudent policy" stance by the PBoC is indicative of further tightening, while other local press sources further spooked investors with warnings that policymakers could hike rates as early as this weekend. China November trade data, released early on Friday, did little to dispel perceptions of an overheated growth engine. Exports rose at a 4-month high and the overall trade surplus came in well above expectations.
- New Zealand, Australia and South Korea all kept their benchmark interest rates unchanged in decisions this week, as expected, accompanied with varying degrees of dovishness. The Kiwi central bank sounded off in the most downbeat tone, cutting its 2011 GDP forecast down to 1.7% from 2.8% while warning that rates will remain low "until the recovery becomes more robust and underlying inflationary pressures show more obvious signs of increasing". The RBA remarked that lending rates in the economy are a little above average, cautioning that the strong employment growth could moderate in the months ahead. The Bank of Korea was the most hawkish of the three central banks, warning upward pressure on inflation will continue while forecasting further policy normalization. After the decision, the BOK released its 2011 economic outlook, affirming 4.5% GDP and raising headline inflation estimate to 3.5% from 3.4%. In terms of 2010, BOK also boosted its GDP forecast to 6.1% from 5.9% - above the 5% targeted by South Korea's Finance Ministry.
Week of 12/13/2010 thru 12/17/2010
Monday, December 13, 2010
Economic
08:30 Canada Q3 Capacity Utilization
11:30 US Treasury's 3- and 6-month bill auction
Tuesday, December 14, 2010
Economic
07:30 US NFIB Index
08:30 US Nov PPI, Nov Core PPI, Nov Retail Sales, Canada Nov Leading Indicators
10:00 US Oct Business Inventories
11:30 US Treasury's 1- and 12-month bill auction
14:15 FOMC rate decision
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, December 15, 2010
Economic
08:30 US Nov CPI, Nov Core CPI, Dec Empire Manufacturing
09:00 US Oct Net Long-Term TIC Flows
09:15 US Nov Industrial Production, Nov Capacity Utilization
10:00 US Dec NAHB Housing Market Index
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Thursday, December 16, 2010
Economic
08:30 US Nov Housing Starts, Nov Building Permits, Q3 Current Account, Initial Jobless
Claims, Continuing Claims
10:00 US Dec Philadelphia Fed
10:30 DoE Natural Gas Inventories
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US Oct Trade Balance, Oct Import/Export Prices
09:55 US Dec University of Michigan Confidence
14:00 US Nov Monthly Budget Statement
Todays Headlines
8:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 421K V 425KE; CONTINUING CLAIMS: 4.086M V 4.24ME
- Prior Initial Jobless Claims revised higher from 436K to 438K
- Prior Continuing Claims revised higher from 4.27M to 4.277M
- 4 week Avg claims: 428K v 431K prior (fresh two-year lows
10:32:11 AM
(CA) BoC': Risks to financial sector have increase in recent months since June; speculators appear to be having a role in commodity prices
- Risks to the domestic economy include the financial situation of households; chances for shocks to the property system have increased
10:50:00 AM
(BR) Brazil Fin Min Mantega: Expects 2011 CPI near mid point of target; Real estate is not in a bubble in Brazil
- If CPI is under control, may consider the reduction in interest rates.
- Expects inflation to be +5.2-5.3% at the end of 2010.
11:02:57 AM
NY Fed: Purchased $8.31B in outright coupon purchase; dealers submitted $33.1B for consideration (bid to cover 4)
- Avg bid to cover over prior four QE2 auctions is: 3.47
- Heaviest purchase $3.175B in the 04/30/17 maturity
- Purchased maturities dated 06/30/2016 - 11/30/2017
12:00:10 PM
(US) Fed reports Q3 Flow of Funds: Household wealth +$1.2T to $54.89T; +2.2% q/q
- Home mortgage debt annualized rate -2.5% v -2.25% q/q
- Consumer credit annualized rate -1.5% v -2.5% q/q
- Household debt annualized rate -1.75% v -2.25% q/q
- Domestic non financial debt annualized rate +4.25% v +4.75% q/q
- Non financial business debt annualized rate +1.75% v unchanged q/q
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
10:00 US Dec IBD/TIPP Economic Optimism
08:30 US Initial Jobless Claims, Continuing Claims
10:00 US Oct Wholesale Inventories
10:30 DoE Natural Gas Inventories
13:00 US Treasury's 30-year bond auction
Todays Headlines
9:00:01 AM
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 1.00%; AS EXPECTED
- Economy still has considerable slack, exports weaker than expected.
- GDP growth in H2 slightly weaker vs. BoC Oct monetary policy report.
- Core Inflation pressures are largely unchanged.
- Still considerable stimulus in the economy.
5:30:58 AM
(EU) EU Commission weighs stronger minimum penalties for financial companies
- Seeks to ensure that national regulators have the power to limit commodity traders' bets
- Will examine "dark pools," the markets operated away from regulated exchanges
- Seeks risk controls, circuit-breakers for high-frequency trading
6:00:03 AM
*(GE) GERMANY OCT INDUSTRIAL PRODUCTION M/M: 2.9% V 1.0%E; Y/Y: 11.7% V 10.0%E
- Prior MoM revised lower from -0.8% to -1.0%
- Prior YoY revised lower from 7.9% to 7.7%
6:31:08 AM
Goldman raises US Engineering and Construction Sector to Attractive from Neutral
- FWLT, KBR raised to Buy from Neutral; adds both to Americas Buy List
- CBI price target raised to $41 from $34
- JEC price target raised to $43 from $36
8:01:33 AM
(HU) Hungarian Central Bank's Minutes: six members voted for 25bps rate hike due to CPI concerns
- MPC: Banfi sought to keep rates steady.
- CPI expectations seen between 4% to 5%.
- Noted outlook for CPI worsened from August and could worsen on secondary food price shock
- More interest rate hikes might be needed in coming months
1:01:53 PM
(US) TREASURY'S $21B 10-YEAR NOTE REOPENING DRAWS 3.34%; BID-TO-COVER RATIO: 2.92 V 2.99 PRIOR AND 3.28 OVER THE LAST 6
- Indirect bidders take 44.4% of competitive bids, with 8.71% allotted at high
- 11.4% go to Direct bidders; 44.2% go to Dealers
- Median 3.259%, Low 3.17%
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
“He that would make his own liberty secure, must guard even his enemy from oppression; for if he violates this duty, he establishes a precedent that will reach to himself.”
10:00 US Dec IBD/TIPP Economic Optimism
08:30 US Oct CPI, Oct CPI Core Index SA, Oct Housing Starts, Oct Building Permits
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's 10-yr note auction
Todays Headlines
9:00:01 AM
*(CA) BANK OF CANADA (BOC) LEAVES INTEREST RATES UNCHANGED AT 1.00%; AS EXPECTED
- Economy still has considerable slack, exports weaker than expected.
- GDP growth in H2 slightly weaker vs. BoC Oct monetary policy report.
- Core Inflation pressures are largely unchanged.
- Still considerable stimulus in the economy.
10:02:56 AM
(US) ISM Semi Annual Report: Guides 2011 growth in the manufacturing and non manufacturing areas
- The manufacturing sector continues to outpace the non-manufacturing sector and has greater expectations for growth in terms of revenue
- The overall forecast projects optimism about the U.S. economy for 2011.
10:48:18 AM
(IR) Ireland Fin Min Lenihan outlines 2011 budget plan; sees small GDP rise this year; economic activity has been stabilized
- Labor market also stabilized
- Sees GDP at 2.75% through to 2014
- Expecting the the economic growth in light of large budget cuts
- Plans to publish debt burden sharing legislation in the next week
11:04:51 AM
NY Fed: Purchased $6.81B in outright coupon purchase; dealers submitted $16.4B for consideration (bid to cover 2.4)
- Avg bid to cover over prior four QE2 auctions is: 3.8
- Heaviest purchase $1.35B in the 07/31/15 maturity
- Purchased maturities dated 12/31/2014 - 05/31/2016
11:40:55 AM
(US) US House Dem leader Hoyer (D); Democrats did not reach a deal with Obama on tax compromise; Senate will vote on Republican tax cut first
- House Speaker Pelosi (D-CA): Planning to discuss the tax deal with Obama soon. Not happy about estate tax changes, plan would add $25B to the deficit.
-Reminder: Obama had struck a compromise with the GOP yesterday
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
10:00 US Dec IBD/TIPP Economic Optimism
11:30 US Treasury's 4-week bill auction
13:00 US Treasury's 3-yr note auction
15:00 US Oct Consumer Credit1
16:30 API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
5:47:06 AM
*(NV) NETHERLANDS DEBT AGENCY (DSTA) SELLS APPROX €6.1B IN FEB, APR AND MAY 2011BILLS VS €7.5BE
- Sells €2.33B in Feb 2011 Bills vs. €2.5B indicated; avg yield 0.510% v 0.670% prior
- Sell €1.99B in Apr 2011 Bills vs. €2.5B Indicated ; avg yield 0.600% v 0.785% prior
- Sells €1.75B in May 2011 Bills vs €2.5B Indicated ; avg yield 0.625%
7:00:57 AM
(EU) ECB's Quaden: Would like to see EU rescue fund expanded
- Not opposed to a euro bond, but the political conditions for setting up a euro bond process are not good at the moment (ahead of today's EcoFin meeting).
11:03:51 AM
NY Fed: Purchased $2.04B in outright coupon purchase; dealers submitted $10.25B for consideration (bid to cover 5)
- Avg bid to cover over prior four QE2 auctions is: 3.4
- Heaviest purchase $504M in the 05/15/30 maturity
- Purchased maturities dated 08/15/2028 - 11/15/2040
12:00:36 PM
(IT) Bank of Italy Bank Sector Report: Sees good short-term liquidity available for Italian banks
- Slow growth is the biggest threat to Italian banks, sees reform of national finances as essential.
- Some banks need to act quickly to shore up capital levels.
12:01:15 PM
(US) Chicago Fed Survey of economists: US real GDP expected at 3% in 2011, unemployment at 9.2% by end of 2011
- 2011 real personal consumption expected +2.5%
- 2011 CPI seen averaging +1.6% in 2011
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
- The trading week began with unabated European debt trouble driving a sell-off of risk assets. Panicky trading continued through Monday and Tuesday worldwide even after Ireland and its EU and IMF partners nailed down the details of an €85B bailout package, with tension manifested in ever-widening spreads between the debt of European nations and German Bunds. Talk of contagion heated up and rumors of fresh ECB buying of Irish government debt failed to inspire any significant rebound in either the euro or European debt. Wednesday saw a violent reversal of sentiment as markets rallied behind a better-than-expected Chinese manufacturing PMI reading and a strong hint from the ECB's Trichet that the central bank would be open to expanding its bond purchasing program at its Thursday press conference. In addition, sequential improvements in the US November Challenger and ADP employment numbers added confidence and raised hopes for the key US payrolls report due later in the week. The DJIA was up 250 points on Wednesday, and another 100 points or so on Thursday as Trichet delayed the expiration of the ECB's bond buying campaign, and US October pending home sales blew away expectations. Solid November same-store sales data from the retail sector also helped improve sentiment at the outset of the holiday shopping season. US November payrolls data on Friday came in surprisingly low; gains in both nonfarm and private payrolls registered less than one-third the amount projected by consensus estimates. Even more disappointing was the unemployment rate which rose to 9.8% from 9.6%. Chairman Bernanke surely sees the data as a vindication of sorts for QE2, and the US equity market turned the jobs data lemon into lemonade, eking out a gain on Friday as it awaits Helicopter Ben's interview on '60 Minutes' this Sunday. For the week, the DJIA rose 2.6%, the S&P500 added 3%, and the Nasdaq gained 2.2%.
- In tech, Comcast picked a fight with Level 3 over content transmission fees, announcing that, for the first time, it will demand recurring charges from Level 3 to transmit Internet online movies and other content to Comcast's customers. The conflict reopens discussion about 'Net Neutrality' regulation, and Level 3 said that it believes Comcast's current position violates the spirit and letter of the FCCs proposed internet policy principles. The Semiconductor Industry Association reported that global October semi sales rose nearly 20% over 2009 levels, while Taiwan Semi's chairman said the firm would not be able to meet demand for chips in late 2010 and that capacity would grow 30% y/y in 2011.
- Homebuilder Toll Brothers managed to defy expectations, reporting a profit in its fourth quarter. Revenue also topped expectations. However, the number of net signed contracts fell 27% as demand for new homes remained soft. Canadian banks Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce reported mixed Q4 results on, citing a sharp drop in trading offset by stronger retail banking results. Kroger fell sharply after the supermarket chain narrowed its 2010 outlook for earnings and comps. Continuing a trend seen over the last several weeks, a rash of companies have either hiked quarterly dividends or declared special dividends ahead of the year end. Regal Entertainment, RLI Corp, Interactive Brokers, and Options Express all saw sharp gains after declaring large special dividends.
- Broad-based strength was seen in the November same-store sales data. With a couple of notable exceptions, the retail and department store segments reported strong positive y/y comp store sales growth and beat consensus expectations, with a pronounced assist from the very strong opening to the US holiday shopping season. Standouts included Limited Brands, with +10% y/y, and Abercrombie & Fitch with +22% y/y. Aeropostale and American Eagle were the only major apparel names to surprise to the downside, while Saks slipped after several months of impressive performance. Costco was another standout, racking up +9% comps.
- Deal flows have backed off the furious pace seen earlier in the year, although there were a few headline-making deals this week. Pepsi said it would buy 66% of Russian juice and dairy company Wimm-Bill-Dann for $3.8B, marking the firm's biggest-ever international acquisition. Due to the size of the deal and Pepsi's projected market share in the Russian beverage market, analysts believe Russian antitrust regulators could impose certain restrictions and preconditions. BP sold 60% stake in Pan American Energy to Bridas for $7.1B in order to further fund its oil spill cleanup efforts. Mellanox Technologies said it would acquire network hardware manufacturer Voltair, in a deal valued at $218M. Voltaire made its name selling InfiniBand switches, but it entered the 10-we Gbit/s ethernet market last year in an attempt to take share from Cisco. Hard drive manufacturer Seagate Technology terminated preliminary buyout talks with private equity firms. To placate restless investors the company launched a big stock buyback equal to 30% of the firm's float.
- Early in the week Treasury prices were buoyed by safe haven flows as fears of European debt contagion reverberated. By midweek focus shifted away from Europe and found its way to the strong Chinese PMI data and encouraging ADP jobs figures in the US. Treasury yields shot up sending the benchmark 10-year above 3% for the first time since July. The curve steepened and by the end of the week the US 2-/10-year spread had surpassed 250 basis points. A growing number of market participants are beginning to voice the opinion that it might be time for money to flow out of the bond market after retail investors have poured cash into fixed income funds for months on end. The yield on the German Bund has also continued to move higher, closing the week above 2.85% for the first time since early this summer. Even Friday's surprisingly poor US November jobs report was unable to sustain any momentum for the bond bulls.
- The eurozone debt crisis appeared to stabilize somewhat this week, arresting fears of contagion in sovereign bond markets for the moment. Even after Ireland and the EU disclosed final details of their debt backstop agreement, spreads on semi-core (Belgium, Austria) and even core (France, Italy) eurozone nations were opening up. Dealers keenly watched the growing gap between rates on Belgian and German 10-year debt as a barometer of contagion, given that Belgium is seen as shielded from peripheral debt exposure. Euro price action remained at the mercy of the peripheral situation, and the EUR/USD pair's move below its key 200-day moving average sparked talk of parity. There was furious (and somewhat desperate) verbal intervention from all levels downplaying the impact of peripheral issues in core Europe but it fell on deaf ears. Reports of ECB peripheral bond purchases on Wednesday morning managed to turn around the euro after EUR/USD spent much of Tuesday swinging around the 1.30 level. Wednesday's turnaround was also buttressed by improving European PMI data and orderly outcomes in peripheral debt auctions, the 12-month notes in Portugal and Spanish 3-year notes (although both auctions featured big climbs in average yield).
- The focus then shifted firmly to the ECB rate decision on Thursday morning, with markets wondering whether things had gotten dire enough to force Trichet and company to bulk up their bond buying program. At the post-decision press conference, the chairman reiterated ECB boilerplate and extended refi purchases until mid-April from January. The slight change was on the lower end of expectations and EUR/USD seemed to move lower each time Trichet clarified his position. In a masterful move, the ECB apparently entered the market to buy more peripheral debt as the press conference continued. Peripheral spreads immediately began narrowing, and by the end of the press conference the Portuguese/German 10-year spread had narrowed below 345 basis points, hitting its tightest level since late October. Rumor had it that the ECB bought more bonds during the press conference than the total amount purchased during the whole week prior.
- On Friday, the Chinese Politburo signaled a shift toward a more "prudent" monetary policy from the current "moderately loose" stance. PBoC member Li Daokui also called on China to adopt a tighter monetary policy stance in 2011 in order to slow money supply growth. These comments echo sentiment from another PBOC official Sheng Songcheng earlier in the week; Songcheng warned that November CPI would likely continue to rise beyond the 25-month high of +4.4% seen in the month of October. Strength in China's economy was also evident in the November Manufacturing PMI, which printed a 7-month high of 55.2 and helped ignite the mid-week rally.
- In Australia, a steady stream of deteriorating fundamentals took some shine off of the upbeat sentiment in the region, which should result in a more subdued tone from the RBA interest rate decision early next week. Q3 corporate profits fell 1.5% q/q - the worst drop since Q2 of 2009 - while Q3 GDP at 0.2% was the smallest q/q increase since the series first emerged from contraction mode in the first quarter of 2009. October data saw retail sales fall 1.1%, the first drop in eight months. Terms of trade were above consensus at a four-month high surplus of A$2.6B, however Australia's top two exports - copper and iron ore - fell from September levels, only to be rescued by the rising value of gold shipments and a 3% drop in imports.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US Nov Nonfarm Payrolls, Unemployment Rate, Manufacturing Payrolls, Private Payrolls, Average Hourly Earnings
10:00 US Nov ISM Non-Manufacturing, Oct Factory Orders
Todays Headlines
8:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 436K V 424KE; CONTINUING CLAIMS: 4.27M V 4.20ME
- Prior Initial Jobless Claims revised higher from 407K to 410K
- Prior Continuing Claims revised higher from 4.182M to 4.22M
8:32:57 AM
(EU) ECB's Trichet: Uncertainty remains elevated, but underlying growth momentum is positive; continuing full allotment in main refi operations and one-month refi - prepared remarks
- Full allotment to remain in place until April 12th at least.
- In Q1 three-month refis will be indexed to the main refi.
- ECB will adjust liquidity measures as needed.
8:36:57 AM
(EU) ECB's Trichet: To delay exit measures; Ireland package has addressed market's concerns decisively
- Ireland package includes all the elements needed to stabilize the Irish economy.
- Economic risks remain tilted to the downside, but business confidence remains high.
- Sees additional downside risks from oil, commodity prices, protectionism and global trade imbalances.
- Risks to inflation outlook are broadly balanced, risks include energy and commodity prices, taxes.
8:46:52 AM
Goldman Sachs turn positive on US financial services sector due to macro upgrades
- Upgrades SF to Buy from Neutral on its improved outlook
- Highlights JPM, C and BAC on loan growth and NIMs
- Notes a steeper yield curve and improved equity investment environment are positives for PFG, AMTD, EVR, SF, IVZ, BX, STT, SPG and DHI
12:20:26 PM
(US) Fed's Plosser: Expecting unemployment levels to move to 8-8.5% by the end of 2011
- Skeptical that QE2 will impact the US economy very much, unclear whether it will improve the unemployment levels
- Sees 2011 and 2012 GDP at 3-3.5%; 2010 expected at 2.5%
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US Initial Jobless Claims, Continuing Claims
10:00 US Oct Pending Home Sales
10:30 DoE Natural Gas Inventories
Todays Headlines
9:33:20 AM
(US) FDIC's Bair: Foreclosure paperwork issues could force banks to buy back mortgages
- Ongoing review of foreclosure practices at banks is finding varying levels of quality control.
- New rules on securitization and risk retention will likely get mortgage providers to improve their servicing operations.
11:03:28 AM
NY Fed: Purchased $8.17B in outright coupon purchase; dealers submitted $30.1B for consideration (bid to cover 3.69)
- Avg bid to cover over prior four QE2 auctions is: 4.5
- Heaviest purchase $1.41B in the 11/30/17 maturity (longest dated)
- Purchased maturities dated 06/30/2016 - 11/30/2017
12:15:22 PM
(US) Fed's Bullard: Not opposed to ending dual policy mandate (jobs and price stability) - Fox Business News
- US economy is "very close" to seeing a strong recover in 2011.
- It is "absolutely possible" US job growth rates could return to pre-recession levels in 2011.
- Opposes raising any taxes, calls on Obama Administration to extend tax cuts.
12:07:55 PM
Goldman forecasts global GDP at +4.6% in 2011, +4.8% in 2012; raises US 2011 GDP forecast to 2.7% from 2.0% prior forecast
- Forecasts US 2012 GDP +3.6%
- Sees peak for gold at $1,750/oz in 2012; Sees oil at $110 in 2012
- Sees soybeans at $14/bushel in three months
- Sees corn at $5.85/bushel in three months
12:09:40 PM
(JP) Japanese govt bond sales will exceed ¥170T in FY11 (a record high) v ¥162.4T in FY10 - Nikkei News
- Under its fiscal reform plan approved in June, the government will cap new bond issues at 44 trillion yen next fiscal year.
-But offerings of rollover bonds are set to increase by around 10 trillion yen to more than 110 trillion yen as some bonds that financed economic stimulus measures after the global financial crisis reach maturity.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
SchoolOfTrade.com and United Business Servicing, Inc. are not registered investment or trading advisers. The services and content provided by SchoolOfTrade.com and United Business Servicing, Inc. are for educational purposes only, and should not be considered investment advice in any way. U.S. Government Required Disclaimer - Commodity Futures Trading Commission. Futures and Options trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. cftc rule 4.41. These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or-over-compensated for the impact, if any, of certain market factors, such as liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown. Testimonials may not be representative of the experience of other clients. Testimonials are not a guarantee of future performance or success. No compensation is ever paid in exchange for any testimonials. Testimonials have not been independently verified.
