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Market Week Wrap-up
- Markets whipsawed lower then higher this week in an atmosphere of uncertainty as conflicting headlines out of Europe on Greece and mixed US data kept trading unsettled. The week began on a strong note, with China back in the mix after its week-long Lunar New Year holiday and Europe seemingly ready to disclose firm details about how much it would spend to save Greece. But the Greek situation quickly devolved back into rounds of accusations and vapid rhetoric, the US February Consumer Confidence index hit its lowest level in almost a year and the FDIC released a dire quarterly troubled bank list, all contributing to fresh risk aversion Tuesday morning. The FDIC increased the number of institutions being monitored by 27% q/q and noted its deposit insurance fund is now deeply in deficit, at -$20.9B compared to -$8.2B q/q. Markets steadied briefly on Wednesday as Fed Chairman Bernanke and Treasury Secretary Geithner testified on Capitol Hill. In his annual monetary policy report, Bernanke reiterated that the key rate was likely to stay low for an "extended period." Commenting on fiscal policy, Bernanke warned that the government's current budget path is not sustainable given CBO projections and said bond markets could get worried and drive up rates. Thursday saw steep declines in equity markets thanks to the softer than expected weekly claims data, weak ex-transport durables and another round of Greece jitters - then investors drove equities higher Thursday afternoon, recouping much of their earlier losses ahead of the second reading of US Q4 GDP on Friday morning. The US GDP data was a bit higher than the advance reading, hitting 5.9%. Meanwhile the UK managed to eke out a Q4 GDP rating that was a bit firmer than expected as well. But despite theses unexpectedly robust GDP numbers, uncertainty over the recovery remains. Fed Governor Pianalto said the recovery "does not feel like one" while BoE Governor Barker warned the UK could see another quarter of negative production (but would not describe this outcome as a "double dip"). For the week, the DJIA dropped 0.7%, the Nasdaq declined 0.3%, and the S&P500 fell 0.4%.
- On Monday President Obama launched a fresh effort to bring healthcare reform back from the dead. The administration is prodding Congress to put together a package from the various bills that passed the House and Senate last year, which then may be pushed through using "budget reconciliation" (this parliamentary dodge would mean the legislation would only need a simple 50-vote majority to pass the Senate, rather than the 60 votes usually required). Obama's proposals include notable changes and additions to existing bills. His plans would limit increases on health premiums and do not include a public option, instead utilizing the health insurance exchanges to stoke competition. His proposals would also increase fees on drug makers, raises the threshold for taxing more expensive "Cadillac" plans (a concession to unions), and provides various tax cuts and tax credits. Large health insurance names have gained all week long on the news, while certain pharma and medical device names have lost ground.
- A spurt of notable M&A deals was seen this week. Schlumberger confirmed widespread media speculation and announced it would buy Smith International in an all-stock deal valued at more than $11B. The deal is expected further consolidate Schlumberger's position as the leader in the oil-services industry, giving Schlumberger revenue double that of its nearest rival, Halliburton. Coca-Cola is acquiring the North American operations of its largest bottler, Coca-Cola Enterprises in a complicated cash, stock and debt deal (recall that late last year Pepsi acquired two of its biggest bottling partners). CKE Restaurants, which owns fast-food chains Hardee's and Carl's Jr., has agreed to sell itself to private equity firm Thomas Lee Partners for $928M in cash and debt, marking the continued recovery in leveraged buyout deals.
- US housing data this week was not pretty, deepening fears that a weak real estate market could undermine the recovery. On Thursday, the December house price data missed expectations and declined again, then on Friday the January Existing Home Sales index fell to its lowest level since June 2009. Housing-related earnings reports added color to the outlook for housing. Homebuilder Toll Brothers reported a smaller-than-expected loss and raised its 2010 guidance for home deliveries to 2.1K-2.7K units from 2.0-2.75K units prior. Toll's CEO said that "while the housing market is still in choppy waters, the seas are getting calmer." Home improvement names Home Depot and Lowes came in modestly ahead of consensus estimates. Executives from both firms were very cautious on 2010: Lowes executives said that while the demand outlook may be improving, the company continues to plan conservatively. Home Depot was cautious about 2010, warning that no robust growth was seen as the US housing industry remains at distressed levels.
- A raft of consumer-oriented companies wrapped up the December quarter earnings season this week. Mid-market department store names Target, Macy's and Sears Holdings were all more or less in line with expectations in earnings reports this week. Results from upscale department store name Nordstrom's were somewhat soft, although the firm's impressive y/y recoveries in comps and margins are worth noting. Barnes and Noble met analysts' targets, but warned that it would report as much as twice the expected quarterly loss next quarter and full-year results would be well under par. The Gap reported in line with expectations, hiked its 2010 dividend substantially and promised robust 2010 earnings and revenue growth. Wynn Resorts came in firmly ahead of expectations. Steve Wynn said his company was conservative regarding the Las Vegas outlook, and that Macau has had a "very good start" to 2010.
- In Europe, the sovereign debt story shows no signs of going away, and although the spot light remains on Greece, contagion fears are lingering. Up to €5B in 10-year Greek bonds were expected to be priced this week in a key test of investor appetite for peripheral paper. But with the EU/German/IMF bailout seemingly stuck in stalemate, the 10-year Greek spread versus Bunds deteriorated back towards the 350bps area, forcing Greece to postpone the sale. Most analysts believe they will give it another try next week. Hope remains that some form of resolution is in sight as the Greek PM himself confirmed that the country's borrowing needs are only covered until March and German lawmakers have outlined how they could tap certain government owned banks to fund any potential emergency bailout.
- Ultimately any new Greek issuance is likely to coincide with a second, deeper austerity package, but just how this would be sold to a public that has already taken to the streets in response to the first round of cuts remains a major question mark. Meanwhile both S&P and Moody's issued cautious statements regarding the country's credit rating. If Moody's were to recalibrate its credit rating to be comparable to the other two agencies, there is the possibility that Greek sovereign debt would become ineligible collateral for ECB repo operations at the end of the year. Such a move would certainly make it harder to find buyers for Greek sovereign debt, sending yields higher and only inflaming an already troublesome predicament. Finally, S&P even commented that Spain's outlook for weak economic growth could undermine fiscal programs, and forecasted the deficit to GDP ratio to stay above 5% for at least three more years.
- In the US, the Treasury continues to raise money at an historic clip. Yields moved markedly lower despite $118 in coupon supply this past week. Demand at these auctions overall remains robust despite some consternation over the continuing trend that the percentage of awards going to indirect bidders remains elevated. Bond prices were also buoyed by a swath of generally softer than expected economic data that included housing, durables, and consumer confidence as well as a steady chorus of Fed speak that emphasized rates are going to stay low for an "extended period". The US benchmark 10-year yield has given back nearly 20 basis points since Monday and the 2-10 year spread has narrowed some 15 basis points from historically high levels above 290 bps.
- The week in currency trading opened with markets poised for fresh risk appetite. With China back from vacation, the PBoC reiterated its pledge to maintain moderately loose monetary policy and proactive fiscal policy to support growth in an attempt to shape expectations following the reserve ratio increase just before the Chinese holiday. In Europe, weekend press articles speculated that Euro Zone states had a €25B aid package for Greece in the pipeline. Press reports also circulated about a Dubai World package from the Dubai Government. Euphoria and risk appetite waned quickly, as European officials shot down the aid speculation and investors had even more time to ponder the implications of the European peripheral debt situation. By mid-week risk aversion from various developments on both sides of the pond was benefitting the usual suspects, the USD and JPY related pairs. Slumping US consumer confidence, the Fitch downgrade of Greece's four largest banks, the FDIC's troubled bank list and more comments from the BoE were all factors. Adding a touch of the bizarre to an already tenuous situation, Greek officials complained that criticism of its finances was unwarranted as Germany had failed to compensate Greece for its occupation during World War II. According to the deputy finance minister, the Nazis "took away Greek gold that was in the Bank of Greece and never gave it back." Germany dismissed the comments as unhelpful.
- EUR/USD managed to hold above the 1.36 handle after testing 1.3450 last week. Dealers had plenty of time to analyze the situation in Europe as news flow was light and data releases were sparse. The waves of risk aversion-provoking headlines failed to give the greenback enough momentum to push beyond established ranges. Options-related flows picked up, with chatter circulating about deep out-of-the-money option strikes getting good interest. Late in the week, European desks were noting option barrier exposure being opened up around the 1.25 area while New York desks commented on a 1.10 strike being shopped around a three-month play by a North American prop desk.
- The dollar bid was not a one-way street, and the reserve diversification issue was circulating in the background. Unsubstantiated press rumors that China would buy 191 tons of gold being offered by the IMF made the rounds (despite the existing offers from another central bank). Nothing came of the reports, although a Chinese think tank loosely affiliated with the PBoC said China should keep buying gold over the long haul and advised that any price declines would present excellent buying opportunities. A spokesperson for China's Foreign Ministry stated that China would invest in reserves carefully and seek liquidity. He called on reserve currency nations to increase market confidence in their currencies (in reference to recent US TIC data that showed China's holding of US Treasuries have declined by over $34B).
- In the UK, the BoE discussed the merits of increasing the scale of its asset purchases program and kept talking down the pound ahead of a policy meeting next week. Sterling slumped of off highs around 1.575 as dealers absorbed the dovish comments from BoE testimony in parliament on Tuesday. Each of the BoE members seemed to mention the benefits of weak sterling over and over again and dealers took the point. GBP was also impacted by pending gilt maturities and the related potential redemption flows. Between £2B and £3B will be repatriated over the next few sessions out of the total interest in excess of £8B of Gilt maturities and a quarter of the maturities are said to be held overseas. The UK GDP data was revised higher, moving the UK out of recession, although analysts said the improvement seemed led by higher government spending. Finally, towards the end of the week there was chatter circulating that a general election would be announced for May. An announcement must be made by June 6th at the latest.
- Japan reported consistently strong economic data this week, starting with a January adjusted merchandise trade balance of ¥728B, the highest level since January 2008. The January retail trade numbers also grew at a surprising rate, up 2.9% m/m, for the biggest increase in the series since the summer of 2007. January Industrial production hit an eight-month high, +2.5% m/m, above the expected +1%. The government reported the pace of price declines continued to slow, with January CPI at an eight-month high, at -1.3%. The yen benefitted from risk aversion and the unwinding of historical carry trades, as well as chatter that the pending Dai-ichi Life IPO (set to be largest in Japan since 1997/98) was receiving overseas interest. JPY hit 11-month highs against the euro and pound pairs.
- There was more chatter that the Chinese Yuan may be revalued. Dealers said there was plenty of talk that the Chinese government was conducting a series of stress tests of currency appreciation on labor intensive industries. There was also talk that China might be preparing to raise capital adequacy ratios to 11.5% from the current average of 11.0%. China Commerce Minister Yao said he cannot rule out a trade deficit within several months. Note the trade surplus has declined for three consecutive months, most recently falling to $14.2B in December, marked by faster import growth. The official data for China trade figures and new loans for Feb expected in 2nd week of March.
Week of 3/1/2010 thru 3/5/2010
Monday, February 22, 2010
Economic
10:00 Jan Chicago Fed Activity (last -0.61)
10:30 Feb Dallas Fed Manufacturing (last 8.3%)
13:00 Treasury's $8B 30-yr TIPS auction
Monday, March 01, 2010
Economic
08:00 Brazil Feb PMI Manufacturing
08:30 Jan Personal Income (last 0.4%), Jan Personal Spending (last 0.2%), Jan PCE Deflator y/y (last 2.1%), Jan PCE Core (last m/m 0.1%, y/y 1.5%), Canada Q4 GDP
10:00 Feb ISM Manufacturing (last 58.4), Feb ISM Prices Paid (last 70), Jan Construction Spending m/m (last -1.2%)
Tuesday, March 02, 2010
Economic
09:00 BoC rate decision
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, March 03, 2010
Economic
08:00 Brazil Jan Capacity Utilization
07:30 Feb Challenger Job Cuts y/y (last -70.4%)
08:15 Feb ADP Employment Change (last -22K)
10:00 Feb ISM Non-Manufacturing (last 50.5)
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 Mexico Feb Manufacturing Index, Non-Manufacturing Index
14:00 Fed Beige Book
Thursday, March 04, 2010
Economic
07:00 BoE rate decision, Brazil Jan Industrial Production
07:45 ECB rate decision
08:30 Final Q4 Nonfarm Productivity (last 6.2%), Q4 Unit Labor Costs (last -4.4%), Initial Jobless Claims (last 496K), Continuing Claims (last 4.617M)
10:00 Jan Pending Home Sales (last m/m 1.0%, y/y 10.5%), Jan Factory Orders (last 1.0%), Canada Feb Ivey PMI, Mexico Feb Consumer Confidence
10:30 Natural Gas Inventories
11:00 Treasury note announcement
16:00 Colombia Feb PPI
Friday, March 05, 2010
Economic
08:30 Feb Nonfarm Payrolls (last -20K), Feb Unemployment Rate (last 9.7%), Feb Manufacturing Payrolls (last 11K), Feb Average Hourly Earnings (last m/m 0.2%, y/y 2.0%)
15:00 Jan Consumer Credit (last -$1.7B)
19:00 Chile Feb CPI
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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.
07:00 Chile Jan Industrial Production, Jan Unemployment, Jan Copper Production
08:30 Preliminary Q4 GDP q/q (last 5.7%), Q4 GDP Price Index (last 0.6%), Q4 Personal Consumption (last 2.0%), Q4 Core PCE q/q (last 1.4%)
09:45 Feb Chicago Purchasing Manager Index (last 61.5)
09:55 Feb Final University of Michigan Confidence (last 73.7)
10:00 Jan Existing Home Sales (last 5.45M, m/m -16.7%), Feb NAPM-Milwaukee (last 56)
11:00 Colombia Jan Unemployment
Today’s Headlines
4:45:16 AM
*(UK) FEB CBI DISTRIBUTIVE TRADES: +23 V -8 PRIOR; highest reading since May 2007
- Order Volume Balance: +12 v +13 prior
- Volume of Underlying Sales: +9 v -8 prior
- Expected Sales Balance: +16 v -1 prior
5:30:02 AM
*(US) JAN DURABLE GOODS ORDERS: 3.0% V 1.5%E; DURABLES EX-TRANSPORTATION: -0.6% V 1.0%E
- Prior Durables revised higher from 1.0% to 1.9% (2nd revision)
- Prior Durables Ex Transportation revised higher from 1.4% to 2.0% (2nd revision)
- January Defense capital spending was up 4.7%, the headline surge in orders likely reflected the 59 aircraft bookings received by Boeing in December
7:01:11 AM
*(US) DEC HOUSE PRICE INDEX (M/M): -1.6% V 0.4% PRIOR; Q4 (Q/Q): -0.1% V 0.2% PRIOR
- prior m/m revised lower from 0.7% to 0.4%
- prior q/q revised lower from 0.2% to 0.1%
8:12:29 AM
Spot gold firms on chatter that China has stated interest in buying next scheduled round of IMF gold sales
- Source for the rumor is an English language Russian news website citing Russia's Interfax. States China could seek to buy the entire 191 tons of gold that the IMF said it is planning to sell in the near term.
10:00:37 AM
(UK) BoE's Miles: QE policy is still very much alive, may yet expand QE bond purchases
- Economic output will not likely return to the trajectory seen before the crisis.
- Sees a substantial amount of economic slack set to remain in UK economy.
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.
07:00 Jan Brazil Unemployment
08:30 Jan Durable Goods Orders (last 1.0%, ex-transport 1.4%), Initial Jobless Claims (last 473K), Continuing Claims (last 4.563M)
10:00 Dec House Price Index (last 0.7%)
10:30 Natural Gas Inventories
13:00 Treasury's $32B 7-yr note auction
17:00 Colombia Dec Industrial Production, Dec Retail Sales
Today’s Headlines
7:00:14 AM
(US) Fed Chairman Bernanke: Fed will need to begin tightening at some point, reiterates key rate to remain where it is for "extended period"
Congressional testimony
- US is in a nascent economic recovery.
- Inflation concerns remain subdued.
- Would like to see money market funds, GSEs engage in reverse repos.
7:00:17 AM
(US) Treasury Sec Geithner: Govt needs power to break apart failing firms; Big firms can not be allowed to take on economy wide risk
- Congressional testimony
- Current budget deficit levels are not sustainable.
*note: Testimony is nearly identical to Feb 4 testimony on the 2011 budget.
7:44:23 AM
(US) Fed's Bernanke: Not expecting any sovereign downgrade of US debt; have no plans to monetize debt - House panel Q&A
- Current budget path is not sustainable given CBO projections; bond markets could get worried and drive up rates; need a credible plan for a "fiscal exit."
Reiterates that a deficit of 2.5% or 3% of GDP at the most is sustainable.
- Reiterates that monetary policy is "extreme accommodative."
7:30:04 AM
DOE CRUDE: +3.03M V +2ME; GASOLINE: -895K V +500KE; DISTILLATE: -590K V -1.7ME; UTILIZATION: 81.17% V 80%E
- Distillate demand -125K bpd to 3.66M bpd
- Gasoline demand +540K bpd at 9.06M bpd
- Strategic Petroleum Reserve unchanged at 726.6M bbl
8:01:57 AM
(US) Treasury's Geithner: need financial reform as quickly as possible to end uncertainty - House panel Q&A
- Says the TARP has outlived its basic usefulness
- Notes that higher capital requirements for systemically important firms may need to be a graduated system
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 Brazil Jan Total Outstanding Loans, Jan Private Bank Lending
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
10:00 Jan New Home Sales (last 342K, m/m -7.6%), Mexico Q4 GDP
13:00 Treasury's $45B 5-yr note auction
Today’s Headlines
5:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 473K V 438KE; CONTINUING CLAIMS: 4.563M V 4.500ME
- Prior Initial Claims revised higher from 440K to 442K
- Prior Continuing Claims revised from 4.538M to 4.563M
5:55:11 AM
(US) Redbook Retail Sales for the week ending Feb 20th: 1.9% y/y; MTD 1.6% v Jan
- Presidents Day offered the opportunity for retailers to clear remaining winter inventories, but it appears the holiday didn't contribute significantly to sales momentum.
- Winter storms may have kept shoppers inside, but diversified retailers saw "firm business" in consumer basics, such as food and household supplies.
7:00:15 AM
(US) FDIC Q4 Troubled Bank List: 702 v 552 q/q (+27%)
- Total assets of problem institutions $402.8B v $346B q/q
- Deposit insurance fund now $-20.9B v -$8.2B q/q
- FDIC insured institutions net income $914M v $2.8B q/q
- Q4 net charge offs $53B (+37% y/y) v $50.8B q/q (12th consecutive quarter y/y increase)
7:03:21 AM
(US) FDIC's Bair: More banks are reporting improved earnings, 1 in 5 banks showed a narrower loss in Q4 2009
- Around 26% of banks reported losses in 2009, the highest since 1983.
- Non-current loans may peak this year.
- expects bank failures will continue to rise in 2010 (note: there were 140 US bank failures in 2009); expects FDIC deposit insurance fund will hit its low in 2010, then rebound late this year.
- urges large banks to lend more; says small banks are constrained.
10:01:41 AM
(US) TREASURY'S $44B 2-YEAR NOTE AUCTION DRAWS 0.895%; BID-TO-COVER RATIO: 3.33 V 3.13 PRIOR AND 3.03 AVE OVER LAST 10 AUCTIONS
- indirect bidders take 53.6% of competitive bids with 14.79% alotted at the high
- direct bidders take 8.2%; primary dealers take 38.24%.
- median bid 0.865%, low bid 0.80%
11:00:18 AM
Fed Discount Rate Minutes of January 25 meeting: Regional directors saw inflation stable; 2 directors wanted 25bps increase
- directors noted positive developments that included gain in real activity as well as further improvements in financial markets. Nonetheless, overall economic activity remained weak, with substantial slack in resource utilization.
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.
09:00 Dec S&P/CS Home Price Index (last 146.3), Dec S&P/CS Composite-20 (last -5.3%)
10:00 Feb Consumer Confidence (last 55.9), Feb Richmond Fed Manufacturing (last -2)
13:00 Treasury's $44B 2-yr note auction
04:30 API Crude Oil/Gasoline/Distillate Inventories
Today’s Headlines
5:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 473K V 438KE; CONTINUING CLAIMS: 4.563M V 4.500ME
- Prior Initial Claims revised higher from 440K to 442K
- Prior Continuing Claims revised from 4.538M to 4.563M
12:30:48 AM
(CH) China reiterates pledge to maintain moderately loose monetary policy and maintain activist fiscal policy in 2010 - Xinhua
- Growth will be balanced against inflation expectations
- Reiterates pledge to manage inflationary expectations
5:09:46 AM
Update: UBS downgrades Materials Sector to Market Weight from Overweight
- Downgrade is largely based on the widening growth differential between the U.S. and Europe, as well as recent dollar strength.
- Firm now has Market Weight ratings on Energy, Materials, and Tech (the three cyclical sectors with the highest Foreign Sales exposure).
-Firm maintains their Overweight ratings on Consumer Cyclicals and Industrials (the two cyclical sectors that are more domestically oriented).
7:31:08 AM
*(US) FEB DALLAS FED MANUFACTURING ACTIVITY: -0.1% V 10.0%E (first decline in 12 months)
- no revisions
- Employment -5.2 v -4.5 prior
- Raw materials prices paid 40.9 v 32.6 prior
- Growth rate new orders -3.3 v 11.4 prior
- Reminder Texas is one of the top 2 or 3 fastest growing states
8:00:28 AM
(US) Fed's Yellen: Tide has appeared to have turned for economy; interest on reserves to play key role in policy; now not the time to remove stimulus
- credit remains tight; assets sales may be gradual down the road and follow rate tightening
- US may be close to turnaround in labor market but will remain 'painfully high' for years; consumer mindset remains fragile
- commercial real estate still bleak; there is a risk that the housing market could become weaker again
- Sees GDP in 2010 at 3.5%
8:57:37 AM
(US) Fed's Yellen: Expecting more regional bank failures in coming years due to commercial real estate - Q&A
- Uncertain how spreads will react when Fed ends MBS buys. Does not expect a big market reaction.
- Reiterates inflation is not an issue at the moment.
- Seeing unhealthy pattern of global imbalances with hugh capital inflows into the US.
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.
"Keep your heart open to dreams. For as long as there's a dream, there is hope, and as long as there is hope, there is joy in living."
Market Week Wrap-up
- Equity indices gapped lower this week in the face of growing risk aversion, with traders disregarding robust corporate earnings and a strong first reading of US GDP. The Shanghai Composite dropped below 3,000 for the first time since late 2008, while the DJIA closed within 44 points of 10,000 and commodities traded off hard. On Friday, advance GDP showed the US economy grew faster than expected in Q4, at an annualized rate of 5.4%. If the GDP reading holds up upon revision, GDP in the final quarter of 2009 would be higher than at any time since September 2003. Housing data was mixed: the November S&P/CS index gained for the sixth consecutive month, although the move up was modest. Meanwhile, December new home sales fell nearly 8% m/m (following an 11% m/m decline in November), prompting Yale Economist Robert Shiller to reiterate that he believes home prices could be faltering yet again. President Obama gave his first State of the Union speech on Wednesday, offering a trenchant defense of his first year in office while also admitting certain mistakes had been made. The President promised to double US exports over the next five years and make job creation a primary focus, and also said $30B in repaid TARP funding would be redirect to loans for small businesses. Ahead of the speech, the Congressional Budget Office released predictions for a $1.35T deficit for this year as the economy continues to slowly recover from the recession. After a flurry of Washington drama last week (full of implicit threats to Fed policy independence), the Senate handed Ben Bernanke a second term as Fed chairman in a 70 to 30 vote. For the week, the DJIA lost 1.1%, the Nasdaq dropped 2.6% and the S&P 500 fell 1.7%.
- Markets temporarily put the of hubbub over Greece behind them this week, with equities and commodities steadily gaining strength thanks to a round of positive earnings reports and more less-bad economic data. Both US and Chinese markets were closed on Monday for holidays, when European leaders essentially put off Greece's day of reckoning until mid March. On Tuesday, the unexpectedly strong February Empire Manufacturing survey and very strong earnings from UK bank Barclays drove markets higher. Better January housing starts and industrial production data helped on Wednesday, and the better than expected Philly Fed survey did its bit on Thursday. Then on Friday, markets vacillated after the Fed raised the Discount Rate by 25 basis point increase to 0.75%, following through sooner than some had expected on Fed Chairman Bernanke's promise from just last week. While many called this a signal that the tightening cycle is beginning, markets digested it with little difficulty as the Fed chorus gave assurances that policy is not about to change. For the week, the DJIA rose 2.9%, the Nasdaq gained 2.7%, and the S&P500 added 3.1%.
- The somewhat surprising timing of the discount rate move, at 4:30pm on a Thursday, was the most hotly discussed topic of the week. Fed members Duke, Bullard, and Lockhart all spoke after the Discount Rate decision in an attempt to shape expectations, reminding everyone that the rate hike is not a sign Fed will tighten soon but should rather be seen as a move toward "normalization." Bullard confirmed that moving the Fed funds rate remains "as far away as it ever was." PIMCO's Bill Gross commented that the discount rate increase is a signal likely designed to appease the hawks on FOMC. Note that the 25 basis point increase in the discount rate widened the spread over the benchmark Fed Funds Target Rate to a total of 50 basis points. This is still less than the pre-crisis spread of 100 basis points and also lower than the 75 basis spread in the equivalent ECB rates. Stocks and bonds initially slumped on the news, leading to an ugly Asian session and European open on Friday. But by the time New York markets were opening on Friday buyers had lifted stocks well off their lows. It didn't take long for markets to recognize that the effect of the Fed's action on the real economy should be minimal as many pointed out that the discount window accounted for less than $15B worth of lending as of last week.
- In earnings news, shares of Wal-Mart fell in the wake of the retail behemoth's mixed quarterly earnings report. EPS was ahead of the consensus view, while revenue was lower than expected and the firm's Q1 guidance was soft. Apparel giant JC Penny met expectations and offered firm guidance for next quarter and the full year. Kraft's results were a slightly ahead of the consensus view, while General Mills offered slightly soft guidance for the full year. Casino names took a hit after MGM reported double the quarterly loss expected. Shares of Deere rocketed higher following the company's stunning results. The firm also offered very strong revenue guidance for the coming quarter and the full year.
- Dell beat revenue expectations, although the stock was hit as investors expressed their displeasure that margins missed projections. Dell said demand in the important commercial business continues to return and is cautiously optimistic the trend will continue into its FY11. HP beat expectations and raised its 2010 prognosis. On the conference call, HP execs said they expect a long awaited corporate IT refresh in second half of 2010. First Solar beat the consensus handily and reaffirmed full year guidance. Applied Materials was firmly in line with the Street; the CEO said he expects global solar PV installations to increase 50% this year.
- Pharma giant Merck met earnings expectations in its Q4 reports, although revenue was a bit soft. Looking forward, Merck warned that drugs accounting for $3B in annual revenues would lose patent protection in 2010 to the likes of generic maker Teva, which also met earnings expectations this week. Biotech giant Genzyme's results were in line, although its full-year forecast missed expectations. UK pharma name Shire's earnings results blew out the consensus estimates.
- The discount rate increase after the US close on Thursday was the main focus for fixed income. Treasury yields were elevated and testing key levels Thursday afternoon even before the rate hike. Bid-up equity markets, improving economic data and a focus on the $118B in new supply on tap for next week emboldened sellers. The 30-year yield offered rates not seen since last summer while the benchmark 10-year climbed back above 3.8% for the first time in more than a month. The 2-yr/10-yr spread made a new high above 290 basis points before the 2-year yield surged on the discount rate move.
- As markets came to grips on Friday morning with the Fed's move, the focus shifted to the US CPI data. Expectations for a hot reading built ahead of the release, given the tightening the day before. As it turned out the data was weaker than expected, including the first negative core reading since 1982. Analysis immediately turned to the Fed's balance sheet (also released late on Thursday), which indicated the fourth straight decline in M2 and a fresh record high in excess reserves ($1.19T). As the week drew to a close the CPI reading seemed to cap the rise in Treasury yields. Thirty-year bond prices actually traded higher in the week's final session while the curve saw minor flatting in what were some of the all-time widest spreads on record. The December fed fund futures have given back about half the gains seen in the wake of the discount announcement, although the metric still prices in just under a 50% chance the Fed hikes the funds rate 50 basis in the fourth quarter.
- The $118B auctions in 2-, 5- and 7-year paper is sure to draw major attention next week after last week's chilly reception to the Treasury's 10- and 30-year auctions, which served as a catalyst for the recent rise in rates. Indirect awards are sure to be scrutinized after the Dec TIC flows showed Chinese holdings in US Treasuries fell to their lowest levels in almost a year. Jitters on the sovereign front have receded, with the focus now on Greece's upcoming 10-year note auction. Reports suggest Greece could be looking to sell as much as €5B in bonds to test the markets. If this issue runs into trouble, European leaders could be forced into some form of direct bailout, while success could soften fears over several of the other member nations' bond markets. Concern about demand for any new Greek paper are high, especially after investors in January's €8 5-year bonds saw prices drop more than 3% within 48 hours of the auction.
- FX markets saw thin trading conditions at the beginning of the week with Chinese markets closed all week for the Lunar New Year holiday and the US off for President's Day. Dealers speculated the absence of liquidity helped the euro retest Friday's lows of 1.3530, just ahead of a EcoFin meeting in Brussels on the Greek fiscal situation. Constructive comments from the IMF and EUR in regards to several Eastern European countries seemed to stem risk aversion flows. At EcoFin European finance ministers offered more of the same tepid rhetoric on the Greek situation that was heard last week. Traders have decided that the EU's assessment of Greece's progress in cutting its deficit-to-GDP ratio by 4%, which comes in mid-March, is the new line in the sand. The greenback continued to benefit against the major pairs throughout much of the week, and the sunnier FOMC minutes from the January meeting combined with the increase in the discount rate gave the dollar the fuel it needed to close out the week around nine-month highs against the euro and the Swiss Franc.
- Many traders took note of larger than usual amounts of borrowing from the ECB overnight loan facility in the early part of the week. Borrowing levels in the facility came back in line on Thursday and Friday. Dealers pointed out that the facility typically doles out around €300M a day; this amount climbed above €3B for a few sessions, with speculation centering on Greece-related fears.
- Reserve diversification issues flared up again following the US December TIC flow data, highlighted by the $34B decline in the Chinese US Treasury holdings buried in the numbers. Dealers seemed to conclude that the proceeds from China's Treasury sales likely stayed within US borders for the time being, as China apparently bought real goods like land, farms and equities.
- Sterling softened after UK jobless claims rose to 1.64M, the highest since April 1997 and January public finance data disappointed. January is said to be an important month for tax receipts, and the UK was forced to borrow funds for the first time on record. In other news, Dubai's five-year credit default swaps rose to its highest level since last March, above 650bps. The Russia Central Bank lowered its refi rate and widened the lower band of its currency basket.
- In Asia, the Lunar New Year celebration shifted the spotlight away from China's surprise reserve ratio tightening last week to Japan, where the central bank maintained its steadfast commitment to easy policy and reiterated its focus on deflation. In a unanimous decision, the BoJ also kept is monthly JGB purchases at ¥1.8T, acknowledging that while economic risks are receding and economic activity is picking up, the pace of recovery may slow until mid-year. Earlier in the week, Japan's Q4 GDP data marked a nice surprise for the embattled economy, rising 1.1% q/q and 4.6% on annualized basis - both marks hitting the highest level since Q1 of 2008. Of greatest note for trade-dependent Japan, the exports component was very strong with a 5% increase, while capital investment rose for the first time in seven quarters. Speaking after the GDP figures, Japan's finance minister Kan said the risk of a double-dip recession is receding.
- The minutes from the Australian central bank's surprising February rate decision detailed the thought processes that led to the RBA to hold interest rates unchanged at 3.75% instead of implementing the widely expected 4th consecutive tightening. Policymakers noted the decision was "finely balanced," but pointed to the earlier rate hikes allowing for some flexibility in assessing events overseas, namely the fiscal challenges in Greece and the stimulus withdrawal in China. Going forward, the RBA said future rate hikes are likely if economic conditions continue to improve. Ahead of the next Australia rate decision on March 1st, fixed income markets' implied probability of renewed tightening stood just above 40%.
Week of 2/22/2010 thru 2/26/2010
Monday, February 22, 2010
Economic
10:00 Jan Chicago Fed Activity (last -0.61)
10:30 Feb Dallas Fed Manufacturing (last 8.3%)
13:00 Treasury's $8B 30-yr TIPS auction
Tuesday, February 23, 2010
Economic
09:00 Dec S&P/CS Home Price Index (last 146.3), Dec S&P/CS Composite-20 (last -5.3%)
10:00 Feb Consumer Confidence (last 55.9), Feb Richmond Fed Manufacturing (last -2)
13:00 Treasury's $44B 2-yr note auction
04:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, February 24, 2010
Economic
08:30 Brazil Jan Total Outstanding Loans, Jan Private Bank Lending
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
10:00 Jan New Home Sales (last 342K, m/m -7.6%), Mexico Q4 GDP
13:00 Treasury's $45B 5-yr note auction
Thursday, February 25, 2010
Economic
07:00 Jan Brazil Unemployment
08:30 Jan Durable Goods Orders (last 1.0%, ex-transport 1.4%), Initial Jobless Claims (last 473K), Continuing Claims (last 4.563M)
10:00 Dec House Price Index (last 0.7%)
10:30 Natural Gas Inventories
13:00 Treasury's $32B 7-yr note auction
17:00 Colombia Dec Industrial Production, Dec Retail Sales
Friday, February 26, 2010
Economic
07:00 Chile Jan Industrial Production, Jan Unemployment, Jan Copper Production
08:30 Preliminary Q4 GDP q/q (last 5.7%), Q4 GDP Price Index (last 0.6%), Q4 Personal Consumption (last 2.0%), Q4 Core PCE q/q (last 1.4%)
09:45 Feb Chicago Purchasing Manager Index (last 61.5)
09:55 Feb Final University of Michigan Confidence (last 73.7)
10:00 Jan Existing Home Sales (last 5.45M, m/m -16.7%), Feb NAPM-Milwaukee (last 56)
11:00 Colombia Jan Unemployment
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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 Jan CPI (last m/m 0.1%, y/y 2.7%; ex food & energy last m/m 0.1%, y/y 1.8%), Jan CPI Core Index SA (last 220.774), Canada Dec Retail Sales
10:00 Mexico rate decision
Today’s Headlines
5:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 473K V 438KE; CONTINUING CLAIMS: 4.563M V 4.500ME
- Prior Initial Claims revised higher from 440K to 442K
- Prior Continuing Claims revised from 4.538M to 4.563M
7:00:03 AM
*(US) FEB PHILADELPHIA FED INDEX: 17.6 V 17.0E
**Sub-Indices:
- Prices Paid: 32.4 v 33.2 prior
- New Orders: 22.7 v 3.2 prior (22.7 is highest since Sept 2004)
- Employment: 7.4 v 6.1 prior (revised) (7.4 is highest since Oct 2007)
- Inventories: 3.2 v -1.6 prior (revised)
- Avg employee workweek: 1.9 v 4.2 prior (revised)
7:30:43 AM
IMF Spokesperson: Stands ready to provide technical assistance to Greece; Did provide preliminary technical assistance back in Jan; Studied tax admiistration and policy; budget and pension reform
- Greece has not request aid fro IMF
- Portugal and Spain have strong positions
- Says Ukraine has needed reserves to meet all external payment needs, including gas costs
7:37:20 AM
(RU) USDA Exec: US and Russia are nearing an agreement with regards to the Pork Trade row
- Note: Russia had refused pork shipments from 5 US plans in late 2009
8:00:05 AM
*DOE CRUDE: +3.1M V +1.7ME; GASOLINE:+1.6M V +1.5ME; DISTILLATE: -2.9M V -1.6ME; UTILIZATION: 79.8% V 79.4%E
- Distillate demand +91K bpd to 3.78M bpd
- Gasoline demand -245K bpd at 8.52M bpd
- Strategic Petroleum Reserve unchanged at 726.6M bbl
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.
07:00 Canada Jan CPI
08:30 Jan PPI (last m/m 0.2%, y/y 4.4%, ex food & energy last m/m 0.0%, y/y 0.9%), Initial Jobless Claims (last 440K), Continuing Claims (last 4.538M)
10:00 Jan Leading Indicators (last 1.1%), Feb Philadelphia Fed (last 15.2)
10:30 Natural Gas Inventories
11:00 DoE Crude Oil/Gasoline/Distillate Inventories, US Treasury note announcements
Today’s Headlines
5:20:14 AM
(GR) EU Stat Agency: Greece has denied using currency derivatives to hide debt
- Agency issued guidance to government on use of derivatives in March 2008
- Sees need for a harmonization of accounting practices in Europe.
- Note: Greece must submit information on swaps by February 19th
5:43:43 AM
(US) Former Fed Gov Meyer: Fed could raise discount rate "at any time" - CNBC interview
- Says discount rate hike would not imply change in outlook.
- Believes higher inflation target "would be better."
6:15:03 AM
*(US) JAN INDUSTRIAL PRODUCTION: 0.9% V 0.7%E; CAPACITY UTILIZATION: 72.6% V 72.6%E
- Prior Industrial Production revised higher from 0.6% to 0.7%
- Prior Capacity Utilization revised lower from 72.0% to 71.9%
8:15:25 AM
Fed's Bernanke to testify before a House committee on Feb 24 dealing with exit strategies
- Note: This testimony was delayed from 2/10; when Bernank's written text was released: Highlights: - TAF and TALF will be phased out before long (scheduled to close June 30 for all loans); any change in discount rate would be modest.- Should not expect sale of securities in the short term (Note: Bullard recently noted that the Fed would sell assets in the 2H10); would sell securities once the recovery is considered "sufficiently advanced."- Will use use interest on banking reserves as the focal policy target.
9:25:09 AM
(CA) BoC's Longworth: Financial conditions have improved significantly
- Liquidity operations used duing the crisis should remain part of BoC's tool kit; more studies needed to examine tools for future liquidity issues.
- Intervention in the crisis does not mean BoC would intervene in more normal times.
- Need to mitigate moral hazard from intervention.
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.
04:30 BoE Minutes
08:30 Jan Import Price Index (last m/m 0.0%, y/y 8.6%), Jan Housing Starts (last 557K), Jan Building Permits (last 653K), Canada Dec Wholesale Sales
09:15 Jan Industrial Production (last 0.6%), Jan Capacity Utilization (last 72%)
14:00 FOMC minutes; Jan Monthly Budget Statement (last -$63.5B)
16:30 API Crude Oil/Gasoline/Distillate Inventories
Today’s Headlines
6:00:04 AM
*(US) DEC NET LONG-TERM TIC FLOWS: $63.3B V $35.4BE; TOTAL NET TIC FLOWS: $60.9B V $50.0BE
- Prior Long Term TIC Flows revised from $126.8B to $126.4B
- Prior Total TIC Flows revised from $26.6B to $30.7B
9:00:23 AM
(US) Fed's Hoenig: Need to cut spending and raise taxes now; rising debt threatens Fed independence, inflation, and debt goals
- Hyperinflation is possible when the economy is under a great deal of stress.
- There is a risk the Fed may be asked to monetize US debt; feels if the fiscal situation is not addressed the currency will weaken
- US fiscal policy needs to concentrate on cutting debt.
- Argentina presents an example of how political pressure can bring on inflation; expecting inflation in Argentina to increase
9:55:40 AM
(US) Fed's Hoenig: Fed asset purchases have brought the Fed into the political sphere; may encounter adverse affects on the economy if the Fed does not shrink the balance sheet to normal - Q&A
- Need to remove assets from the balance sheet as quickly and as systematically as possible.
- If Fed's goal is price stability, political pressure will likely mount to extend quantitative easing.
10:23:47 AM
(US) Fed's Kocherlakota: Inflation may increase if the Govt fails to adopt good policies - Q&A
- Seeing growth in consumer spending; spending will spur most of upcoming growth.
- Says that Glass-Steagall Act represents a world that no longer exists, returning to Glass-Steagall would not be the best way to help the financial system.
- Subsidizing job growth would be one way to help the labor market.
1:26:22 PM
Berkshire Hathaway discloses quarterly holdings
- RSG stake goes to 8.3M shares from 3.6M
- cuts stake in UNH to 1.2M shares from 3.4M
- cuts stake in WLP from 3.39M to 1.3M
- cuts stake in KMX to 8M from 9M
- increases stake in WFC to 320M from 313M
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.
“Do not follow where the path may lead. Go instead where there is no path and leave a trail.”
Market Week Wrap-up
- Equity indices gapped lower this week in the face of growing risk aversion, with traders disregarding robust corporate earnings and a strong first reading of US GDP. The Shanghai Composite dropped below 3,000 for the first time since late 2008, while the DJIA closed within 44 points of 10,000 and commodities traded off hard. On Friday, advance GDP showed the US economy grew faster than expected in Q4, at an annualized rate of 5.4%. If the GDP reading holds up upon revision, GDP in the final quarter of 2009 would be higher than at any time since September 2003. Housing data was mixed: the November S&P/CS index gained for the sixth consecutive month, although the move up was modest. Meanwhile, December new home sales fell nearly 8% m/m (following an 11% m/m decline in November), prompting Yale Economist Robert Shiller to reiterate that he believes home prices could be faltering yet again. President Obama gave his first State of the Union speech on Wednesday, offering a trenchant defense of his first year in office while also admitting certain mistakes had been made. The President promised to double US exports over the next five years and make job creation a primary focus, and also said $30B in repaid TARP funding would be redirect to loans for small businesses. Ahead of the speech, the Congressional Budget Office released predictions for a $1.35T deficit for this year as the economy continues to slowly recover from the recession. After a flurry of Washington drama last week (full of implicit threats to Fed policy independence), the Senate handed Ben Bernanke a second term as Fed chairman in a 70 to 30 vote. For the week, the DJIA lost 1.1%, the Nasdaq dropped 2.6% and the S&P 500 fell 1.7%.
- Headline roulette kept trading choppy this week as Euro Zone nations struggled to work out a plan to deal with Greek debt issues. Conflicting statements from a full range of European politicians and central bankers left markets grasping for details on what form the Greek support package would take. EU Commissioner Almunia stated there were clear risks of spillover from the Greece crisis among other EU members, and traders watched developments in Spain and Portugal closely. With Greece providing a grim example of budgets gone bad, many commentators took the opportunity to question US spending priorities and debt levels. PIMCO's El-Erian stated that while the situation of the US is not comparable with Greece, there are elements of the US position that are similar. The US calendar was light of market moving economic data, while a massive blizzard put Washington DC and most of Federal government out of commission, leading to the postponement of several data reports. Fed Chairman Bernanke's appearance before the House Financial Services Committee was cancelled, although the Fed released his prepared testimony, which confirmed that tightening would begin with the discount rate and that TAF and TALF special loan programs would expire in June as planned. However, he also reiterated that low rates are still warranted for an "extended period." FOMC voting member Bullard later suggested the Fed could begin to sell some assets as early as the second half of this year, and that any spike in inflation expectations would cause the Fed to tighten policy even if the unemployment rate is still high. Meanwhile, policy tightening continues in China, where the PBoC increased its reserve requirement ratio by 50bps for a second time this year. Equities markets were choppy all week, but were eventually led higher by strength in the tech sector. For the week, the DJIA rose 0.8%, the Nasdaq gained 2%, and the S&P500 added 0.9%.
- The Greek tragedy reached a key turning point this week. After ECB Chief Trichet abruptly left a conference in Sydney on Tuesday, a day earlier than originally expected, speculation erupted that emergency meetings were being convened in Europe to work out a rescue package for the besieged Hellenic Republic. German officials seemed to take the lead, with direct measures (such as outright bond purchases or loans) and indirect measures (such as loan guarantees) both apparently on the table. Focus quickly shifted to Thursday when a previously routine meeting of the EU council in Brussels was scheduled. With questions lingering over the legality of an EU bailout, a bilateral approach driven by Germany and France was shaping up as the most likely outcome, although chatter over some form of IMF involvement remained. Heading into the meeting anticipation was building for some closure but traders were ultimately left scratching their heads as, save for the usual expressions of solidarity and support, few concrete details emerged. According to the European press, German Chancellor Merkel, perhaps realizing that asking Germans to foot the bill for Greek largesse may be political suicide, wasn't even willing to discuss a bailout, and was instead focused on ensuring Greece was compliant with the pledges laid out in its recently announced Stability Plan. With around €7B in the Treasury's coffers, Greece faces two large bond redemptions of about €20B in April and May. If EU finance ministers can't thrash out a concrete deal at a meeting of finance ministers on Tuesday next week it seems contagion fears may persists.
- Equity news was relatively thin this week, featuring quarterly reports from a variety of consumer-oriented companies. CVS and Disney topped expectations, while Pepsi and Coca-Cola met analysts' expectations. Marriot's results were slightly ahead of expectations, however the firm refrained from offering revenue guidance for next quarter and warned that full-year REVPAR would be flat or down. Media names New York Times and IAC Interactive both modestly exceeded targets, although Times executives warned that that visibility remains limited for advertising and internet ad revenue would be flat next quarter. Sprint reported a bigger than expected quarterly loss and revenue below consensus. On the bright side, wireless customer losses were at their lowest level in a year, and Sprint executives assured investors that the company's revenue declines are bottoming out. Insurance name Allstate beat slightly, while rival Prudential missed on the bottom line. Manufacturer Ingersoll-Rand missed earnings estimates and offered an extremely weak Q1 forecast. Biogen Idec crushed its earnings expectations and offered strong 2010 guidance.
- US Treasury markets experienced mostly isolated flows this week, avoiding Europe's headline roulette and all the resulting shifts in risk appetite. Yields pushed higher for the better part of the week as traders refocused on supply/demand factors in the $81B in auctions on the Treasury's calendar. By Thursday yields at the long end of the curve were approaching 1-month highs and the 2-yr/10-yr spread had widened back out toward the steepest levels on record. Following a disappointing reception of the 10-year auction on Wednesday, 30-year paper required nearly a three basis point tail and nearly a quarter of the offering went to direct bidders. Declining indirect awards and unusually high directs continue to spark concerns as to who is buying and how that demand will be sustained going forward. Regardless, prices bottomed out Thursday afternoon as traders who sold ahead of the supply attempted to buy the news. Friday's session saw rates retreat even further, buoyed by some early weakness in equities. By week's end, the 30-year yield traded some 8 or 9 basis points below what Thursday's auction drew.
- The greenback maintained a very firm tone in currency trading this week, hitting multi-month highs against numerous pairs, particularly the euro and Swiss Franc, as the euro suffered from the tepid remarks that streamed out of various European officials and central bankers all week long in regards to Greece. The lack of clarity on the issue gave traders plenty of reasons to sell the European currency, and the softness will likely continue until concrete details of a fiscal resolution plan for Greece are firmly communicated. Note that the CFTC Commitment of Traders report for the week ending Feb 2nd showed the number of euro short contracts hit multi-year highs. In the back half of the week, chatter intensified regarding an alleged option barriers around the 1.3500 level.
- A raft of disappointing European preliminary Q4 GDP figures out on Friday accentuated the headwinds facing most European nations in their quest to satisfy Maastrict stability criteria. The potential for continued sluggish economic growth will weigh upon government tax revenues and increase pressure to further cut spending to fulfill membership criteria. Both the G7 and the IMF took the opportunity to reiterate that nations must maintain stimulus spending in order to support economic recovery.
- Poland's Finance Ministry issued a new EMU convergence plan that sees a budget deficit under 3% by 2012 and government debt not exceeding 55% of GDP in the 2010-12 period, according to Polish accounting standards. The debt-to-GDP level would hit 56.3% 2011 under EU rules. The plan decided against setting a new target date for adopting the euro. The government originally wanted to replace the Polish Zloty with the single currency in 2012.
- In the UK, the BoE inflation report sent GBP/USD lower after testing the pivotal 1.5750 against the dollar. Sterling had benefited from the euro's woes but remains range bound against the dollar.
- The Chinese currency issue may be simmering once again as both US and Chinese officials traded rhetoric on where the yuan FX rate should be. President Obama reportedly set a year-end goal for China to allow the yuan to appreciate, while the PBoC stressed that a stable yuan is best for China and the world. Also note that China's PBoC increased its reserve requirement ratio by another 50bps.
- In Australia, the case for continued RBA rate tightening was bolstered by surprisingly strong January jobs data. Unemployment unexpectedly fell to 5.3% from 5.5%, while net new jobs figure registered its biggest monthly gain since December of 2006 at +52.7K. Just ahead of the data, Australia's Treasury warned that it was unsure whether unemployment rate has peaked at the 5.8% seen three months ago. Nonetheless, the Aussie outperformed broadly against other majors, rising above 0.89 vs USD for the first time in a week. Monetary policy meeting minutes as well as some key speakers from the central bank take the stage next week, likely offering the markets a clearer outlook for the March 2nd RBA decision.
- China's January trade data denoted a further shift in favor of an economy driven more by domestic consumption than external demand. The trade surplus fell for the third consecutive month to a 4-month low of $14.2B, but imports grew at a multi-year high rate of 85.5% y/y. Slightly less impressive, exports grew at a 16-month high of 21%. Sequentially, trade activity did see a seasonal decline in January ahead of the Lunar New Year celebration, as imports fell 0.9% and exports fell 5.5% on m/m seasonally adjusted basis. In other notable Chinese data for the week, consumer price index fell for the first time in 6 months to 1.5% y/y, below the expected 2.1%. Economists downplayed the drop by pointing to the seasonality of the Chinese New Year falling on January in the prior year, and warning that February data runs the risk of exceeding expectations.
- In Korea, the central bank left interest rates unchanged at 2.00% as expected, citing considerable uncertainties over economic growth and further turbulence in financial markets because of European sovereign risks. The central bank noted policy would remain accommodative to sustain economic recovery. Subsequently, Bank of Korea Governor Lee said the central bank is mindful of the low rates' side effects, warning rates would rise when economic conditions return to normal. However, South Korea's January unemployment rate rose to a 10-yr high of 4.8% from 3.5%, dampening expectations that the Bank of Korea could become the next G20 body to tighten rates.
Week of 2/15/2010 thru 2/19/2010
Monday, February 15, 2010
Economic
06:30 Chile Jan Copper Exports
Tuesday, February 16, 2010
Economic
08:30 Feb Empire Manufacturing (last 15.92)
09:00 Dec Net Long-Term TIC Flows (last $126.8B), Dec Total Net TIC Flows (last $26.6B)
13:00 Feb NAHB Housing Index (last 15)
14:00 Jan Monthly Budget Statement (last -$63.5B)
Wednesday, February 17, 2010
Economic
04:30 BoE Minutes
08:30 Jan Import Price Index (last m/m 0.0%, y/y 8.6%), Jan Housing Starts (last 557K), Jan Building Permits (last 653K), Canada Dec Wholesale Sales
09:15 Jan Industrial Production (last 0.6%), Jan Capacity Utilization (last 72%)
14:00 FOMC minutes
16:30 API Crude Oil/Gasoline/Distillate Inventories
Thursday, February 18, 2010
Economic
07:00 Canada Jan CPI
08:30 Jan PPI (last m/m 0.2%, y/y 4.4%, ex food & energy last m/m 0.0%, y/y 0.9%), Initial Jobless Claims (last 440K), Continuing Claims (last 4.538M)
10:00 Jan Leading Indicators (last 1.1%), Feb Philadelphia Fed (last 15.2)
10:30 Natural Gas Inventories
11:00 DoE Crude Oil/Gasoline/Distillate Inventories, US Treasury note announcements
Friday, February 19, 2010
Economic
08:30 Jan CPI (last m/m 0.1%, y/y 2.7%; ex food & energy last m/m 0.1%, y/y 1.8%), Jan CPI Core Index SA (last 220.774), Canada Dec Retail Sales
10:00 Mexico rate decision
< BR>
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.
“Do not follow where the path may lead. Go instead where there is no path and leave a trail.”
Market Week Wrap-up
- Equity indices gapped lower this week in the face of growing risk aversion, with traders disregarding robust corporate earnings and a strong first reading of US GDP. The Shanghai Composite dropped below 3,000 for the first time since late 2008, while the DJIA closed within 44 points of 10,000 and commodities traded off hard. On Friday, advance GDP showed the US economy grew faster than expected in Q4, at an annualized rate of 5.4%. If the GDP reading holds up upon revision, GDP in the final quarter of 2009 would be higher than at any time since September 2003. Housing data was mixed: the November S&P/CS index gained for the sixth consecutive month, although the move up was modest. Meanwhile, December new home sales fell nearly 8% m/m (following an 11% m/m decline in November), prompting Yale Economist Robert Shiller to reiterate that he believes home prices could be faltering yet again. President Obama gave his first State of the Union speech on Wednesday, offering a trenchant defense of his first year in office while also admitting certain mistakes had been made. The President promised to double US exports over the next five years and make job creation a primary focus, and also said $30B in repaid TARP funding would be redirect to loans for small businesses. Ahead of the speech, the Congressional Budget Office released predictions for a $1.35T deficit for this year as the economy continues to slowly recover from the recession. After a flurry of Washington drama last week (full of implicit threats to Fed policy independence), the Senate handed Ben Bernanke a second term as Fed chairman in a 70 to 30 vote. For the week, the DJIA lost 1.1%, the Nasdaq dropped 2.6% and the S&P 500 fell 1.7%.
- Headline roulette kept trading choppy this week as Euro Zone nations struggled to work out a plan to deal with Greek debt issues. Conflicting statements from a full range of European politicians and central bankers left markets grasping for details on what form the Greek support package would take. EU Commissioner Almunia stated there were clear risks of spillover from the Greece crisis among other EU members, and traders watched developments in Spain and Portugal closely. With Greece providing a grim example of budgets gone bad, many commentators took the opportunity to question US spending priorities and debt levels. PIMCO's El-Erian stated that while the situation of the US is not comparable with Greece, there are elements of the US position that are similar. The US calendar was light of market moving economic data, while a massive blizzard put Washington DC and most of Federal government out of commission, leading to the postponement of several data reports. Fed Chairman Bernanke's appearance before the House Financial Services Committee was cancelled, although the Fed released his prepared testimony, which confirmed that tightening would begin with the discount rate and that TAF and TALF special loan programs would expire in June as planned. However, he also reiterated that low rates are still warranted for an "extended period." FOMC voting member Bullard later suggested the Fed could begin to sell some assets as early as the second half of this year, and that any spike in inflation expectations would cause the Fed to tighten policy even if the unemployment rate is still high. Meanwhile, policy tightening continues in China, where the PBoC increased its reserve requirement ratio by 50bps for a second time this year. Equities markets were choppy all week, but were eventually led higher by strength in the tech sector. For the week, the DJIA rose 0.8%, the Nasdaq gained 2%, and the S&P500 added 0.9%.
- The Greek tragedy reached a key turning point this week. After ECB Chief Trichet abruptly left a conference in Sydney on Tuesday, a day earlier than originally expected, speculation erupted that emergency meetings were being convened in Europe to work out a rescue package for the besieged Hellenic Republic. German officials seemed to take the lead, with direct measures (such as outright bond purchases or loans) and indirect measures (such as loan guarantees) both apparently on the table. Focus quickly shifted to Thursday when a previously routine meeting of the EU council in Brussels was scheduled. With questions lingering over the legality of an EU bailout, a bilateral approach driven by Germany and France was shaping up as the most likely outcome, although chatter over some form of IMF involvement remained. Heading into the meeting anticipation was building for some closure but traders were ultimately left scratching their heads as, save for the usual expressions of solidarity and support, few concrete details emerged. According to the European press, German Chancellor Merkel, perhaps realizing that asking Germans to foot the bill for Greek largesse may be political suicide, wasn't even willing to discuss a bailout, and was instead focused on ensuring Greece was compliant with the pledges laid out in its recently announced Stability Plan. With around €7B in the Treasury's coffers, Greece faces two large bond redemptions of about €20B in April and May. If EU finance ministers can't thrash out a concrete deal at a meeting of finance ministers on Tuesday next week it seems contagion fears may persists.
- Equity news was relatively thin this week, featuring quarterly reports from a variety of consumer-oriented companies. CVS and Disney topped expectations, while Pepsi and Coca-Cola met analysts' expectations. Marriot's results were slightly ahead of expectations, however the firm refrained from offering revenue guidance for next quarter and warned that full-year REVPAR would be flat or down. Media names New York Times and IAC Interactive both modestly exceeded targets, although Times executives warned that that visibility remains limited for advertising and internet ad revenue would be flat next quarter. Sprint reported a bigger than expected quarterly loss and revenue below consensus. On the bright side, wireless customer losses were at their lowest level in a year, and Sprint executives assured investors that the company's revenue declines are bottoming out. Insurance name Allstate beat slightly, while rival Prudential missed on the bottom line. Manufacturer Ingersoll-Rand missed earnings estimates and offered an extremely weak Q1 forecast. Biogen Idec crushed its earnings expectations and offered strong 2010 guidance.
- US Treasury markets experienced mostly isolated flows this week, avoiding Europe's headline roulette and all the resulting shifts in risk appetite. Yields pushed higher for the better part of the week as traders refocused on supply/demand factors in the $81B in auctions on the Treasury's calendar. By Thursday yields at the long end of the curve were approaching 1-month highs and the 2-yr/10-yr spread had widened back out toward the steepest levels on record. Following a disappointing reception of the 10-year auction on Wednesday, 30-year paper required nearly a three basis point tail and nearly a quarter of the offering went to direct bidders. Declining indirect awards and unusually high directs continue to spark concerns as to who is buying and how that demand will be sustained going forward. Regardless, prices bottomed out Thursday afternoon as traders who sold ahead of the supply attempted to buy the news. Friday's session saw rates retreat even further, buoyed by some early weakness in equities. By week's end, the 30-year yield traded some 8 or 9 basis points below what Thursday's auction drew.
- The greenback maintained a very firm tone in currency trading this week, hitting multi-month highs against numerous pairs, particularly the euro and Swiss Franc, as the euro suffered from the tepid remarks that streamed out of various European officials and central bankers all week long in regards to Greece. The lack of clarity on the issue gave traders plenty of reasons to sell the European currency, and the softness will likely continue until concrete details of a fiscal resolution plan for Greece are firmly communicated. Note that the CFTC Commitment of Traders report for the week ending Feb 2nd showed the number of euro short contracts hit multi-year highs. In the back half of the week, chatter intensified regarding an alleged option barriers around the 1.3500 level.
- A raft of disappointing European preliminary Q4 GDP figures out on Friday accentuated the headwinds facing most European nations in their quest to satisfy Maastrict stability criteria. The potential for continued sluggish economic growth will weigh upon government tax revenues and increase pressure to further cut spending to fulfill membership criteria. Both the G7 and the IMF took the opportunity to reiterate that nations must maintain stimulus spending in order to support economic recovery.
- Poland's Finance Ministry issued a new EMU convergence plan that sees a budget deficit under 3% by 2012 and government debt not exceeding 55% of GDP in the 2010-12 period, according to Polish accounting standards. The debt-to-GDP level would hit 56.3% 2011 under EU rules. The plan decided against setting a new target date for adopting the euro. The government originally wanted to replace the Polish Zloty with the single currency in 2012.
- In the UK, the BoE inflation report sent GBP/USD lower after testing the pivotal 1.5750 against the dollar. Sterling had benefited from the euro's woes but remains range bound against the dollar.
- The Chinese currency issue may be simmering once again as both US and Chinese officials traded rhetoric on where the yuan FX rate should be. President Obama reportedly set a year-end goal for China to allow the yuan to appreciate, while the PBoC stressed that a stable yuan is best for China and the world. Also note that China's PBoC increased its reserve requirement ratio by another 50bps.
- In Australia, the case for continued RBA rate tightening was bolstered by surprisingly strong January jobs data. Unemployment unexpectedly fell to 5.3% from 5.5%, while net new jobs figure registered its biggest monthly gain since December of 2006 at +52.7K. Just ahead of the data, Australia's Treasury warned that it was unsure whether unemployment rate has peaked at the 5.8% seen three months ago. Nonetheless, the Aussie outperformed broadly against other majors, rising above 0.89 vs USD for the first time in a week. Monetary policy meeting minutes as well as some key speakers from the central bank take the stage next week, likely offering the markets a clearer outlook for the March 2nd RBA decision.
- China's January trade data denoted a further shift in favor of an economy driven more by domestic consumption than external demand. The trade surplus fell for the third consecutive month to a 4-month low of $14.2B, but imports grew at a multi-year high rate of 85.5% y/y. Slightly less impressive, exports grew at a 16-month high of 21%. Sequentially, trade activity did see a seasonal decline in January ahead of the Lunar New Year celebration, as imports fell 0.9% and exports fell 5.5% on m/m seasonally adjusted basis. In other notable Chinese data for the week, consumer price index fell for the first time in 6 months to 1.5% y/y, below the expected 2.1%. Economists downplayed the drop by pointing to the seasonality of the Chinese New Year falling on January in the prior year, and warning that February data runs the risk of exceeding expectations.
- In Korea, the central bank left interest rates unchanged at 2.00% as expected, citing considerable uncertainties over economic growth and further turbulence in financial markets because of European sovereign risks. The central bank noted policy would remain accommodative to sustain economic recovery. Subsequently, Bank of Korea Governor Lee said the central bank is mindful of the low rates' side effects, warning rates would rise when economic conditions return to normal. However, South Korea's January unemployment rate rose to a 10-yr high of 4.8% from 3.5%, dampening expectations that the Bank of Korea could become the next G20 body to tighten rates.
Week of 2/15/2010 thru 2/19/2010
Monday, February 15, 2010
Economic
06:30 Chile Jan Copper Exports
Tuesday, February 16, 2010
Economic
08:30 Feb Empire Manufacturing (last 15.92)
09:00 Dec Net Long-Term TIC Flows (last $126.8B), Dec Total Net TIC Flows (last $26.6B)
13:00 Feb NAHB Housing Index (last 15)
14:00 Jan Monthly Budget Statement (last -$63.5B)
Wednesday, February 17, 2010
Economic
04:30 BoE Minutes
08:30 Jan Import Price Index (last m/m 0.0%, y/y 8.6%), Jan Housing Starts (last 557K), Jan Building Permits (last 653K), Canada Dec Wholesale Sales
09:15 Jan Industrial Production (last 0.6%), Jan Capacity Utilization (last 72%)
14:00 FOMC minutes
16:30 API Crude Oil/Gasoline/Distillate Inventories
Thursday, February 18, 2010
Economic
07:00 Canada Jan CPI
08:30 Jan PPI (last m/m 0.2%, y/y 4.4%, ex food & energy last m/m 0.0%, y/y 0.9%), Initial Jobless Claims (last 440K), Continuing Claims (last 4.538M)
10:00 Jan Leading Indicators (last 1.1%), Feb Philadelphia Fed (last 15.2)
10:30 Natural Gas Inventories
11:00 DoE Crude Oil/Gasoline/Distillate Inventories, US Treasury note announcements
Friday, February 19, 2010
Economic
08:30 Jan CPI (last m/m 0.1%, y/y 2.7%; ex food & energy last m/m 0.1%, y/y 1.8%), Jan CPI Core Index SA (last 220.774), Canada Dec Retail Sales
10:00 Mexico rate decision
< BR>
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.
09:55 Feb prelim Univ of Michigan confidence (last 74.4)
14:00 Argentina Jan CPI, Wholesale Price Index
Today’s Headlines
5:30:04 AM
*(US) INITIAL JOBLESS CLAIMS: 440K V 465KE; CONTINUING CLAIM: 4.538M V 4.600ME
- Prior Initial Claims revised higher from 480K to 483K
- Prior Continuing Claims revised from 4.602M to 4.617M
- 4 week average for claims at 469K v 469K prior
7:05:57 AM
(EU) ECB's Weber: Reiterates first potential steps of liquidity phase outs; Liquidity operations are not meant to be a sign of policy direction
- First steps will most likely be the gradual return of normal tender operations
- Will first reduce the maturity of outstanding liquidity operations, then seeking to bring down liquidity
- Can not rule out a flat or slightly negative Q1 GDP read in Germany due to weather
- Full allotment of MROs likely needed for some time
- Aware of need to cope with 1-year LTRO repayment in July
- Does not rule out flat Q1 GDP; Says German Q2 GDP will be stronger than Q1
7:13:24 AM
S&P revises Estonia outlook to stable from negative; Reaffirms A- long term sovereign credit ratings
- States: Stable outlook reflects our view of Estonia's improving economic flexibility and the prospect of near-term Eurozone accession against the challenges inherent in adapting the economy to lessen its reliance on external funds
8:03:59 AM
(US) Senators Dodd (D) and Corker (R) have agreed to shelve Consumer Protection Agengy legislation - CNBC
- Reports earlier this week noted the two Senators were working together on a bipartisan financial reform bill. CNBC now reports that part of that agreement was to shelve the CPA portion of the bill and address it after the rest of the bipartisan bill is crafted.
- CNBC reporters speculate that this strategy is meant to attract moderate Republicans to vote for the reform bill.
8:12:26 AM
(EU) EU's Barroso: Leaders at summit talked exclusively about Greece, did not discuss other countries
- EU's Van Rompuy also stated no other countries were discussed at the meeting.
- Spain PM Zapatero: Discussions at EU meeting also involved pension systems
10:01:40 AM
TREASURY'S $16B 30-YEAR BOND auction draws 4.72%; BID-TO-COVER RATIO 2.36 V 2.26 PRIOR AND 2.31 AVG OVER THE LAST 3
- With 61.57% allotted at the high.
- Indirect bidders take 28.5% of competitive bids; 24.1% direct bidders; 47.4% to primary dealers.
- Median 4.64%, low 4.536%.
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 Jan Advance Retail Sales (last -0.3%, ex auto -0.2%), Initial Jobless Claims (last 480K), Continuing Claims (last 4.602M), Canada Dec Housing Price Index
10:00 Dec Business Inventories (last 0.4%), Mexico Dec Industrial Production
10:30 Natural Gas Inventories
13:00 US Treasury's $16B 30-yr bond auction
16:00 Chile rate decision
Today’s Headlines
5:04:51 AM
(GR) German official: Unlikely to see concrete steps for Greece at summit, debating aid will not solve the issue
- No doubt about Greece's ability to pay.
- No finance minister to attend EU Summit on Thursday.
- No one has instructed a restructuring of Greek debt.
- EU comission and ECB seeking greater consolidation from Greece
- Germany and France agree on all EU topics
5:30:05 AM
*(CA) CANADA DEC INTL MERCHANDISE TRADE: -C$200M V -C$100ME
- Prior revised from -C$300M to -C$200M
Components
- Exports C$32.2B v C$31.6B prior; fourth straight gain
- Imports: C$32.4B v C$31.9B prior
- Trade Balance with US: C$3.7B v C$3.2B prior
- Trade Balance non-US: -C$3.9B v -C$3.6B prior
5:31:04 AM
*(US) DEC TRADE BALANCE: -$40.2B V -$35.8BE
- No revisions
Components:
- Imports M/M $182.9B v $174.6B prior (+4.7%)
- Exports M/M: $142.7B v $138.2B prior (+3.3%)
6:57:09 AM
(EU) EU's Barroso: Part of EU's growth potential has been adversely impacted by the crisis; EU must address imbalances in the Euro Zone
- EU member states cannot effectively address challenges by themselves.
7:00:15 AM
US Fed Chair Bernanke: Fed may opt to raise discount rate before long; change would not mean outlook on policy is shifting
- Reiterates low rates warranted for extended period; outlook has not changed from Jan meeting.
- TAF and TALF will be phased out before long (scheduled to close June 30 for all loans); any change in discount rate would be modest.
- May look to auction large blocks of term deposits.
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 Dec Trade Balance (last -$36.4B)
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's $25B 10-yr note auction
14:00 Jan Monthly Budget Statement (last -$63.5B)
Today’s Headlines
3:59:33 AM
(US) Economist Joseph Stiglitz: US needs a second round of stimulus measures
- US housing scars will last for decades
- First US stimulus measures prevented a bigger economic downturn
- Giving into banks has not led to US economic revival
- China's strength partly based on education investment
5:30:16 AM
(US) USDA FEB WASDE/Crop Report: FL OJ crop seen at 129M boxes v 135M seen Jan 1; Global supplies of Wheat, Coarse Grain, Rice, Oilseed and Soybean projected up m/m
- Global wheat supplies for 2009/10 are projected 1.4M tons higher reflecting production increases for Argentina and Ukraine
- The projected marketing-year average farm price is narrowed 5 cents on both ends of the range to $4.75 to $4.95 per bushel.
- Global coarse grain production for 2009/10 is projected 1.6M tons higher this month with higher Argentina corn production only partly offset by lower EU-27 corn production and lower Ukraine barley and oats production.
7:20:25 AM
(EU) Fitch: EU bailout a possibility but not a certainty; the probability of a bailout is not high enough to warrant a change in ratings
- Analyst believes that an IMF bailout would not break EU rules and would be a sensible route
- Analyst Believes that a contagion risk is exaggerated; Greek effort is enough to reduce deficit in 2010 but further steps might be needed
- Next major step for Greece in seen in Apr-May finances
- No mechanism for country to leave EMU
9:41:33 AM
*(GR) GERMANY GOVT SPOKESMAN: REPORTS ABOUT AID TO GREECE ARE UNFOUNDED
***Reminder: At 11:44amET EU Commissioner for Enlargement Rehn stated that the EU can support Greece "in the broad sense of the word," Greece needs to take "necessary measures" to get aid.
-Note also that German CDU party officials have said that the German Fin Min would address party members on Greece debt issues tomorrow.
10:01:45 AM
*(US) TREASURY'S $40B 3-YEAR NOTES DRAW 1.377%; BID-TO-COVER RATIO: 2.83 V 2.98 PRIOR AND 2.85 AVG OVER THE LAST 10 AUCTIONS
- indirect bidders take 51.2% of competitive bids
- direct biddres take 10.1% of competitive bids
- 26.75% allotted at high
- Median 1.307%; Low 1.20%
10:29:51 AM
(GR) Germany Fin Min Schaeuble: EU will discuss Greek recapitalization steps
- Says that all other reports on Greece's aid are speculations
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 Dec Wholesale Inventories (last 1.5%), Mexico Jan Consumer Prices
13:00 US Treasury's $40B 3-yr note auction
16:30 API Crude Oil/Gasoline/Distillate Inventories
Today’s Headlines
3:59:33 AM
(US) Economist Joseph Stiglitz: US needs a second round of stimulus measures
- US housing scars will last for decades
- First US stimulus measures prevented a bigger economic downturn
- Giving into banks has not led to US economic revival
- China's strength partly based on education investment
4:16:19 AM
(GR) Risk aversion being attributed to chatter that some tier 1 European banks are no longer lending to Greek banks via repo markets - dealers
- Greek news services reporting UniCredit and DB no longer trading with Greek banks due to collateral concerns
-Insight: one dealer noted that Greek banks may not trade directly with major repo liquidity providers in the interdealer market but still trade with them outside that market at a higher cost
6:33:10 AM
(EU) ECB comments on various refi operations
- Calls for bids in main 7-day refi operation at fixed 1.0% rate
- Calls for bids on 28-day refi operation at fixed 1.0%
- Special term operation settling on Feb 10th will be at fixed rate of 1.0%
7:47:18 AM
Fed's Bullard: Could start to sell some assets in 2H10; timing still in question; a double dip recession in the US not likely
- Does not want to consider any further MBS purchases beyond March; does not expects mortgage rates to rise significantly as the MBS purchase program ends.
- With regards to Volcker rule " When Paul Volcker speaks, everyone should listen'; fixing housing market is key to regulatory reform.
- Any spike in inflation expectations could cause the Fed to tighten policy even if unemployment rate is still high
9:23:24 AM
(CA) BoC's Duguay: Strong Canadian dollar can be a drag on economic growth
- affirms expectations from Jan meeting for inflation and growth
- excess supply current exists in the economy
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.
“All life is an experiment. The more experiments you make the better.”
Market Week Wrap-up
- Equity indices gapped lower this week in the face of growing risk aversion, with traders disregarding robust corporate earnings and a strong first reading of US GDP. The Shanghai Composite dropped below 3,000 for the first time since late 2008, while the DJIA closed within 44 points of 10,000 and commodities traded off hard. On Friday, advance GDP showed the US economy grew faster than expected in Q4, at an annualized rate of 5.4%. If the GDP reading holds up upon revision, GDP in the final quarter of 2009 would be higher than at any time since September 2003. Housing data was mixed: the November S&P/CS index gained for the sixth consecutive month, although the move up was modest. Meanwhile, December new home sales fell nearly 8% m/m (following an 11% m/m decline in November), prompting Yale Economist Robert Shiller to reiterate that he believes home prices could be faltering yet again. President Obama gave his first State of the Union speech on Wednesday, offering a trenchant defense of his first year in office while also admitting certain mistakes had been made. The President promised to double US exports over the next five years and make job creation a primary focus, and also said $30B in repaid TARP funding would be redirect to loans for small businesses. Ahead of the speech, the Congressional Budget Office released predictions for a $1.35T deficit for this year as the economy continues to slowly recover from the recession. After a flurry of Washington drama last week (full of implicit threats to Fed policy independence), the Senate handed Ben Bernanke a second term as Fed chairman in a 70 to 30 vote. For the week, the DJIA lost 1.1%, the Nasdaq dropped 2.6% and the S&P 500 fell 1.7%.
- Relatively strong corporate earnings, the solid ISM manufacturing data (the series grew at its fastest pace in January since August 2004) and the ninth consecutive improvement in the ADP employment data all drove moderate risk appetite in the first half of the week. But a fresh bout of European debt anxiety stemming from debt issues Portugal and Greece led to steep declines on Thursday, with investors fleeing nearly all asset classes for the safety of the dollar and US government debt. Unsubstantiated rumors circulated that the ECB would be given emergency powers to guarantee Greece's debt. The DJIA plunged nearly 300 points on Thursday, to close below 10,000 for the first time since November 4th, 2009, while the VIX volatility index spiked to highs above 28. Worries about Portugal and Greece were severe enough to prompt ECB President Jean-Claude Trichet to take the unusual step of issuing a formal denial of rumors that the ECB would hold an emergency meeting this weekend. Friday's January employment report confused the market, with unexpected losses in the non-farm payrolls somewhat offset by an improvement in the annualized unemployment rate. In other news this week, White House Budget Director Orszag confirmed the administration would propose a FY11 budget with a deficit of $1.27T (around 8% of US GDP), and January retail sales were largely positive, with chain stores reporting a 3% rise in same store sales, bettering the 1% y/y overall expectation. Still rising uncertainty held sway, knocking stocks down for another week: the DJIA lost 0.5%, the Nasdaq dropped 0.3% and the S&P 500 fell-0.7%.
- Friday's headline non-farm payroll data (-20K v 15Ke) missed expectations, although manufacturing payroll reading (+11K v -20Ke) crept into positive territory for its first positive reading since November 2007. Meanwhile, the Labor Department nearly doubled the December non-farm losses by revising it to -150K. Benchmark revisions for the 12 months ended March 2009 were also worse than preliminary estimates, showing 902K more jobs were shed during that one year period than originally reported. The official January annualized unemployment rate dropped below the 10% level, although it's worth noting that the Labor Department is using a new household survey in calculating the number; using the old payroll survey the annualized January unemployment rate would be 10.6%.
- Dow components Cisco and Exxon topped Wall Street's expectations in quarterly reports this week, while Pfizer was firmly in line with estimates. Much like competitor Chevron last week, Exxon saw big growth in its upstream operation, while the downstream business reported a small loss. Cisco CEO Chambers was upbeat, calling Q2 "the second phase" of Cisco's recovery and noting the bounce back was even faster than he expected. Results from leading insurance names Aetna, Aflac, Humana and Met Life ranged from in line to a bit soft, while forward looking guidance was not positive. Echoing comments from other large heath insurance majors, Aetna executives say unemployment, a poor economy and healthcare reform will continue to pressure membership levels in 2010. UPS offered solid Q4 results and a broadly in line forecast for FY10, and also raised its dividend slightly. Visa did slightly better than expected and reaffirmed its 2010 forecast, while MasterCard stock was punished for missing EPS expectations.
- Among the better performers this week, Dow Chemical crushed bottom-line expectations and revenue was very strong. Executives said that US destocking has come to an end and an upturn in demand is being seen across the value chain. Media giant Time Warner Inc beat estimates but was outshined by rival News Corp, which raised guidance and its dividend as it touted strong results from its cable news division and blockbuster "Avatar" production. Mid cap energy names Tesoro and Marathon had weak earnings as refining margins declined, while Marathon's revenue was way ahead of expectations. Steel Dynamics, the last major US steel maker to offer results for the December quarter, missed earnings targets, but executives said demand remains robust and signs of economic recovery are "numerous."
- Toyota's faulty accelerator headache only got bigger this week; shares of TM are down more than 20% since the company vastly expanded its recall effort and idled US production in late January. The firm's much better than expected earnings hardly staunched the bleeding in the company's stock, given the non-stop news coverage, a new investigation by the National Highway Traffic Safety Administration and plans for Senate hearings. Also note that S&P put the firm's AA ratings on negative watch over the recall. The company estimated the FY09/10 impact from recalls at 100K vehicles, lost sales at ¥70-80B, and the cost of repair (not including the Prius break issue) at ¥100B. Other Japanese automakers also posted strong Q3 results this week, while Ford launched a special rebate offer aimed at Toyota owners to take advantage of the situation.
- European sovereign debt remained a center of attention this week and in scenes reminiscent of the first phase of the credit crisis, contagion fears and confusion provided the catalyst for a major risk rethink. The week began on a positive note for Euro Zone peripherals with Greece's stability plan receiving the necessary approvals from Brussels, but the good news was somewhat overshadowed by rumors of a Spanish downgrade at S&P and reports of €40B in previously unaccounted for Greek government debt. Both turned out to be false but the perception remained and credit default swaps were bid up aggressively on concerns that markets were just one headline away from serious damage, and for the bears, the news flow did not disappoint.
- The Portuguese Treasury sold just €300M of the indicated €500M in 12-month bills at a hefty yield of 1.379% on Thursday and the underwhelming auction set off a chain reaction of selling, arguably most felt in the equity space--the S&P500 fell below key chart support at the 1070 area. Despite the US's own fiscal woes, Treasuries retook their perch as the ultimate safe haven vehicle but while yields certainly declined the move was subdued while the market awaited Friday's employment report. Eventually risk aversion flows returned as the market got a handle on the nuanced Jan payrolls figures. Shorter paper performed better, sending the 2-year Treasury yield below 0.75%. The US long bond is back to offering rates below 4.5%. UK Gilts were arguably the chief beneficiary of the week's events as the flight to safety bid more than offset any uncertainty brought about by the end of the BoE's Gilt buying program. The 10-year GILT yield was actually lower on the week at 3.88% despite Jan PPI figures coming in above expectations.
- Corporate bond markets garnered attention from two of the biggest offerings on record. Kraft Foods raised $9.5B in a four-part deal to help finance its purchase of Cadbury PLC. Prices were discounted slightly as investors fled stocks, commodities a various other investment classes, but nevertheless the demand was there. The most expensive tranche of 30-year paper sold for just slightly more than 200 basis points above Treasury's. Also on Thursday, Berkshire Hathaway sold $8B in senior debt in a two-part deal involving both fixed and floating rate notes. Berkshire had to cough up as much as a 90 basis point premium to Treasury's for the 5-year obligations, but more importantly saw S&P cut its credit rating one notch from the coveted AAA rating. Even Valero Energy raised $850M in a 10-year offering. VLO paper priced 260 basis points above Treasuries despite a sizable Q1 loss and admissions that refining profitability will be excruciatingly slow to return in 2010. Regardless investors' strong demand for debt at both ends of the investment grade spectrum signals credit markets are open and functioning effectively.
- FX markets also remained fixated on the peripheral members of the European Union as concerns grew over possible spillover effects from Greek debt problems. Various European officials expressed optimism that member states would be able to tame burgeoning budget deficits over the medium term and reiterated that EU spending rules would be honored, but credibility eluded the European peripherals, keeping risk aversion sentiment high. Risk appetite was not entirely absent during the week, with a certain degree of optimism in evidence ahead of the BoE and ECB rate decisions, although the overall feeling has been that players are re-pricing the prospects for a global economic recovery.
- The EU Commission may have approved Greece's budget proposal, which anticipates returning the country's budget deficit to compliance with Maastrict criteria by 2013, but the Commission's full assessment was four times longer than average, providing an overabundance of red flags to unsettle traders. In the background, there were concerns the Union might need to invoke emergency treaty powers and issue an EU guarantee for Greek debt. All week long a parade of European politicians and central bankers repeatedly insisted that talk of a Euro Zone breakup was absurd. You didn't have to look hard to see the potential for social unrest and political breakdowns as governments try to slash spending: in Greece, the main labor union called for a 24-hour anti-austerity strike later this month, while Portugal's parliament passed a regional spending package despite the opposition of the sitting government.
- Currency dealers were closely watching the euro's price action this week in light of seasonal trends. Since launching in 1999, the euro has picked up significant momentum if it violates the highs or lows set in the month of January. On Thursday the January low in EUR/USD around 1.3850 gave way, sending the cross to test nine-month lows below the 1.3650 level. The 1.3740 area now appears to be the key upside resistance level, as it was last summer's pivot point when reserve diversification was the ongoing theme.
- Looking ahead, the G7 meeting in Canada could provide some surprises. There has been growing speculation that the Chinese Yuan may be a major topic of the conference. Ahead of the meeting the OECD released a report on China that calls for more yuan flexibility and asks the PBoC to rely more on interest rates as its key monetary policy tool. The ECB's Trichet reaffirmed that he "appreciates" the US stance of support for a strong USD ahead of the summit. G7 finance ministers and central bankers have indicated that they will not be issuing a formal communiquat the end of the conclave.
- Sterling was softer as traders worried about the possibility of a hung parliament emerging from the upcoming UK parliamentary elections, which would hamper the UK's fiscal position and increase market uncertainty about the budget deficit. GBP/USD moved below a quarterly pivot point of 1.5750 to probe 1.56. The yen was also a topic as dealers watched the currency maintain its strength despite press speculation the Japanese Banking Ministry supports a plan by the Japanese Postal Service (Kampo) to diversify some of its $1.95T in holdings into US Treasuries and corporate bonds. USD/JPY tested 89.00 as risk aversion prompted safe-haven flows into JPY.
- The biggest surprise out of the Asia-Pacific region this week was the Reserve Bank of Australia unexpectedly leaving rates unchanged. The decision to forego another 25 basis point cut was attributed to information about the early impact of prior rate changes still being limited and concerns the country's biggest trading partner, China, may be looking to reduce stimulus. The RBA's Quarterly Policy Statement offered more mixed messages in the wake of this week's surprising hold. While the central bank raised its FY10 and FY11 CPI targets, it insisted underlying inflation would continue to moderate and remain within target in 2010-12. Policymakers also raised 2011 GDP forecast to 3.5% from 3.25%. Going forward, the RBA said policy would have to be adjusted further if the economy continues to improve, and suggested that rates may no longer be at "exceptionally low level."
- Some evidence that concerns of a Chinese slowdown may be justified emerged in the January Purchasing Managers Index, which saw the first decline since May of 2009. Index components showed both excess capacity and inflationary pressures, with output, backlog, finished goods, and employment all registering multi-month lows.
Week of 2/8/2010 thru 2/12/2010
Monday, February 08, 2010
Economic
06:00 Chile Jan CPI
06:30 Chile Jan Trade Balance
08:30 Canada Jan Housing Starts
Tuesday, February 09, 2010
Economic
10:00 Dec Wholesale Inventories (last 1.5%), Mexico Jan Consumer Prices
13:00 US Treasury's $40B 3-yr note auction
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, February 10, 2010
Economic
08:30 Dec Trade Balance (last -$36.4B)
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's $25B 10-yr note auction
14:00 Jan Monthly Budget Statement (last -$63.5B)
Thursday, February 11, 2010
Economic
08:30 Jan Advance Retail Sales (last -0.3%, ex auto -0.2%), Initial Jobless Claims (last 480K), Continuing Claims (last 4.602M), Canada Dec Housing Price Index
10:00 Dec Business Inventories (last 0.4%), Mexico Dec Industrial Production
10:30 Natural Gas Inventories
13:00 US Treasury's $16B 30-yr bond auction
16:00 Chile rate decision
Friday, February 12, 2010
Economic
09:55 Feb prelim Univ of Michigan confidence (last 74.4)
14:00 Argentina Jan CPI, Wholesale Price Index
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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.
February 04, 2010
184 Ticks Today! Nightly Newsletter 02-04-10
News Image:
We had a slow week this week in the markets, until today!
With today’s Jobless Claims report @ 830am EST, followed by a report on the Dollar Index jumping, it was easy to see a LOT of trading opportunities today in the live trade room.
We got started early, with patterns showing up as early as 839am EST, and we watched as the Crude Oil, Euro, and Gold Futures produced high percentage patterns all morning long.
What was the biggest challenge today?
Believe it or not, the biggest challenge today was NOT jumping into the patterns that didn’t fit our rules.
This was difficult though, we saw SO many patterns, so many potential entries, so how did we choose which trades to take and which to avoid?
Was momentum curling up for the long trade? If not…skip it!
Did we have big strong buyers at the High of Day? If not…short it!
Did we have the Pace of Tape Indicator increasing in speed? If not…wait for it!
Its important to remember that days like today test our ability to say NO to the market. We aren’t used to that feeling.
Most of the time we are BEGGING the market to give us more trade opportunities…today was not the case.
Our biggest challenge today was being selective!
Do we see these days often?
We see days like today about as often as we see days like yesterday.
The big days average out the smaller days, and on days when we LOSE money, we can easily make that money back on days like today.
06:00 BrazilJan Inflation
06:30 ChileDec Economic Activity
07:00 JanCanada Net Employment Change, Unemployment Rate
08:30 JanNonfarm Payrolls (last -85K), Jan Unemployment Rate (last 10.0%), Jan Manufacturing Payrolls (last -27K), Jan Average Hourly Earnings (last m/m 0.2%, y/y 2.2%)
15:00 DecConsumer Credit (last -$17.5B)
16:00 ColombiaJan PPI
Today’s Headlines
5:00:08 AM
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 1.75%; AS EXPECTED
- Reiterates that it would keep rates between 1.25% to 2.25% until Mar policy meeting
- Reiterates that NOK currency could affect future rate path
- Economic developments broadly in line with expectations
- Recovery taking hold both domestically and internationally
- Underlying Inflation slightly below 2.5%
- Employment has fallen more than expected
5:30:02 AM
*(US) Q4 PRELIMINARY NONFARM PRODUCTIVITY: 6.2% V 6.5%E; UNIT LABOR COSTS: -4.4% V -3.5%E
- Prior Nonfarm Productivity revised lower from 8.1% to 7.2%
- Prior Unit labor Costs revised higher from -2.5% to -1.5%
5:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 480K V 455KE; CONTINUING CLAIMS: 4.602M V 4.581ME
- Prior Initial Claims revised higher from 470K to 472K
- Prior Continuing Claims revised from 4.602M to 4.600M
- 4 week average for claims at 469K v 456K prior
5:35:17 AM
(EU) ECB's Trichet: Reiterates that rates remain appropriate, price developments remain subdued, growth expected to be moderate - Press Conference
- Growth is expected to be "uneven"
- Euro-zone benefitting from inventory cycle, exports, stimulus
- Confidence may improve more than expected
- Risks remain broadly balanced
- Inflation expected at around 1% over mid term
5:46:28 AM
ECB's Trichet: many countries have large and rising fiscal imbalances
- Consolidation of fiscal public finances should start in 2011
- To decide on exit stategies in early March
- Calls for strict implementation of EU Stability pact
7:33:01 AM
(GR) IMF spokesperson: Goals of Greece budget plan is appropriate
- Strong committment to policy reform is Key for Greece
- Welcomes ECB decision to maintain its interest rates at current levels (see our 7:45am ET headline)
- Central bank needs to maintain accomodative policy stance
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.
07:00 BoE Rate Decision
07:45 ECB Rate Decision
08:30 Preliminary Q4 Nonfarm Productivity (last 8.1%), Q4 Unit Labor Costs (last -2.5%), Initial Jobless Claims (last 470K), Continuing Claims (last 4.602M)
10:00 Dec Factory Orders (last 1.1%), Canada Jan Ivey PMI, Mexico Jan Consumer Confidence
10:30 Natural Gas Inventories
16:00 Colombia Jan PPI
Today’s Headlines
5:00:08 AM
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 1.75%; AS EXPECTED
- Reiterates that it would keep rates between 1.25% to 2.25% until Mar policy meeting
- Reiterates that NOK currency could affect future rate path
- Economic developments broadly in line with expectations
- Recovery taking hold both domestically and internationally
- Underlying Inflation slightly below 2.5%
- Employment has fallen more than expected
6:00:13 AM
Treasury to sell total $83B in long term debt next week; Comprising of $40B 3-year, $25B 10-year notes, and $16B 30-year bonds (unchanged from prior)
- Expects auction sizes to "stabilize at current levels."
- Expects to reach debt ceiling as early the end of February (House votes on increase is scheduled for tomorrow, 2/4)
- Considering increasing frequency of TIPS sales, but any changes will not begin until July with decision on 10-year TIPS to be announced in May.
- Will consider cutting coupon auction sizes as fiscal outlook improves.
7:00:02 AM
*JAN ISM NATIONAL NON-MANUFACTURING COMPOSITE: 50.5 V 51E (highest since May 2008)
***sub-indices:
- Prices Paid: 61.2 v 59.6 prior
- Employment: 44.6 v 43.6 prior (highest since Aug 2008)
- New Orders: 54.7 v 52.0 prior (highest since Oct 2007)
- Inventories: 46.5 v 51.5 prior
7:30:08 AM
DOE CRUDE: +2.3M v Oe (FLAT EST.); GASOLINE: -1.3M v +1.2Me; DISTILLATE: -950K v -1Me; CAPACITY UTILIZATION: 77.7% V 78.5%E
- Distillate demand -66K bpd to 3.66M bpd
- Gasoline demand -6K bpd at 8.61M bpd
9:05:21 AM
(GE) Germany Deputy Fin Min Asmussen: expects German economic growth at 2% annually in 2011-2013
- Forecasts 2010 deficit at 5.5% of GDP and only marginally lower in 2011; Forecasts deficit below 3% of GDP by 2013.
***Reminder: On 01/19 Germany Fin Min Schaeuble forecasted 2010 GDP deficit at 6% of GDP.
10:01:44 AM
Fed's Warsh: Mortgage system needs evaluation; resolution authority alone for financial firms not sufficient to handle risks of financial system
- feels that some financial companies have an 'implicit support' from the Govt; which causes weak market discipline
- must look at Fannie and Freddie among other aspects of mortgage system for the originations of the crisis
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.
07:30 Jan Challenger Job Cuts y/y (last -72.9%)
08:15 Jan ADP Employment Change (last -84K)
09:00 Treasury's quarterly funding announcement
10:00 Jan ISM Non-Manufacturing (last 50.1)
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 Mexico Jan Manufacturing Index, Non-Manufacturing Index
Today’s Headlines
7:00:02 AM
*(US) DEC PENDING HOME SALES (M/M): 1.0% V +1.0%E; (Y/Y): 10.5% V +18.9% PRIOR
- prior m/m revised lower from -16% to -16.4%
- prior y/y revised lower to 18.9% from 19.3%
7:00:22 AM
(US) Treasury's Geithner: Unchecked deficits threaten US prosperity, but immediate deep spending cuts threaten growth - comments ahead of Congressional testimony
- Need to address the Federal budget deficit after the recovery is firmly established.
- Not too early to impose deficit reduction policies.
- Reiterates proposal to make Build America bonds permenant.
- Follow up: in Q&A, Geithner reiterates that he believes in a strong USD, notes that people flocked to the dollar when the economic crisis was at its worst.
7:37:29 AM
Fidelity Adjusts pricing on Tiered brokerage; launches new ETF
- will reduce U.S. online equity commissions to $7.95 for all customers beginning February 3, 2010. The new commission rate both eliminates tiered pricing, and reduces some customers commissions by as much as 60 percent
- Customers placing trades through Fidelitys Automated Service Telephone (FAST) will pay an additional $5 per trade ($12.95 total), and those placing trades through a representative will pay an additional $25 ($32.95 total) per trade.
7:41:52 AM
Technical Analysts at UBS see markets moving towards an oversold bounce; Advocate buying Gold
- See most short-term momentum signals pointing to an oversold bounce
- Maintain expectation that upward move is seen in first half of Feb
- See limit to short term pop as 1120
9:20:26 AM
(GE) ECB's Weber: More and more signs of recovery are being seen, recovery in Germany to remain moderate in 2010
- Expects German unemployment to peak at 10% in 2011
- Sees FY10 German budget deficit at 5% of GDP
- Credit squeeze has more to do with demand than supply, tighter credit squeeze cannot be ruled out.
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.
06:00 Brazil Dec Industrial Production
10:00 Dec Pending Home Sales (last m/m -16%, y/y 19.3%)
4:30pmAPI Crude Oil/Gasoline/Distillate Inventories
Today’s Headlines
5:30:03 AM
*(US) DEC DURABLE GOODS ORDERS: 0.3% V 2.0%E; DURABLES EX-TRANSPORTATION: 0.9% V 0.5%E
- Prior Durables revised higher from -0.7% to -0.4%
- Prior Durables Ex Transportation revised higher from 1.5% to 2.1%
5:30:03 AM
*(US) DEC PERSONAL INCOME: 0.4% V 0.3%E; PERSONAL SPENDING: 0.2% V 0.3%E
- Prior Personal Income revised higher from 0.4% to 0.5%
- Prior Personal Spending revised higher from 0.5% to 0.7%
7:00:03 AM
*(US) JAN ISM MANUFACTURING INDEX: 58.4 V 55.5E; PRICES PAID: 70.0 V 62.4E
**headline manufacturing highest reading since Aug 2004
**price paid highest since Aug 2008.
7:29:37 AM
(GE) Fin Min Schaeuble: Euro zone must fulfill its commitments; not required to act on Greece
- Reminder: On 01/18 Schaeuble stated that Greece must comply with EU legislation and is entitled to support as long as it takes necessary steps.
Stated that it would not space necessary measures for Greece.
7:41:50 AM
(EU) Australia, Brazil, and Thailand allege some EU sugar exports are illegal; EU commission claims extra exports were legal
- Countries requesting the removal of 'out of quota' exports of approx 500K tonnes of sugar.
- Note: On 1/27 the EU commission proposed this one time temporary export of 500K tonnes of sugar, and cited extraordinary market conditions
- Reminder: EU zone sugar exports were capped at 1.37M tons due to a trade agreement with Brazil and Australia
9:26:20 AM
(US) Treasury's Barr: expecting more major mortgage services to sign up for second lien program shortly; expanded program should ease the negative home equity problem
- Government will disclose more regarding GSE in the coming weeks.
- GSE's reforms will be related to housing stability.
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.
