08:30 Canada May Leading Indicators
10:00 Mexico rate decision
Today’s Headlines
4:58:09 AM
(EU) ECB's Weber: Stance on bank stress tests has not changed, believes stress tests should be published
- Europe needs a backstop system for its banking sector.
- Germany's Landesbanken cannot be excluded from stress tests.
- More stress tests, including new scenarios replicating greater market weakness, may be needed.
5:04:18 AM
(HU) Hungary Central Bank: Biggest monetary risk is inflation followed by Euro entry challenge
- Risk in monetary policy is expectations in the CPI; sees policy risk is rising imported CPI.
- Setting euro path is the main med-term challenge.
5:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 472K V 450KE; CONTINUING CLAIMS: 4.571M V 4.500ME
- Prior initial claims revised higher from 456K to 460K
- Prior continuing claims revised higher from 4.462M to 4.483M
5:32:13 AM
(GR) IMF and EU officials reiterate that Greek fiscal reforms are on track; Greek budget gap is lower than was projected in budget plan
- Comments that liquidity at Greek banks "remains adequate."
- Officials from IMF, EU, and ECB will return to Athens at the end of July to complete review.
- IMF: Satisfactory completion of review to allow Greece to draw second tranche under aid program.
6:10:03 AM
(IN) India PM Econ advisor Rangaraan: India can achieve 9-10% growth in coming years
- Low pace of farm growth presents challenge to GDP growth of 9%.
- Farm growth of 4% from current 2.5% level needed to sustain a medium term targets.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US May CPI, CPI Ex Food & Energy, CPI Core Index SA, Q1 Current Account Balance, Initial Jobless Claims, Continuing Claims
10:00 US June Philadelphia Fed, May Leading Indicators
10:30 Natural Gas Inventories
Today’s Headlines
4:28:14 AM
(US) Stainless buyers are reporting "disturbing" spot price cutting at the distributor level - Steel Business Briefing
- SBB notes the move is to stimulate anemic June demand in the face of a sharp surcharge dip in July.
5:18:17 AM
(SP) Spain approves labor reform as expected
- Spain Deputy PM: Government approves labor-law overhaul.
- Reforms to increase productivity and competitiveness.
- Government to continue working for maximum support for reforms.
6:00:06 AM
(US) Draft copy of new Dept of Education rules proposes prevents for-profit colleges from linking pay for recruiters to the number of students they enroll (update)
- The new rules are also meant to prevent recruiters from using pressure sales tactics to convince potential students to apply for unaffordable government loans that they may later default on.
- The proposal would bar for profit schools from getting US aid if their graduates pay out over 8% of their starting salaries on loan payments. This part of the regulations are called "gainful employment" rules, aimed at lowering the debt levels of students.
7:34:47 AM
IMF: Financial markets can create 'major risk' to global economic growth - report to G-20 dated 6/5
- If risk aversion persists, advanced economies' growth will suffer
- Calls for G20 countries to create medium term plans for fiscal adjustments; there is no need for advanced economies to tighten interest rates before 2011, and to do so may hurt recovery
8:35:54 AM
(CA) BoC's Carney: There is a chance for fresh weakness in Europe, more FX flexibility needed in emerging markets
- Notes that the growth in Canada will most likely be the highest among G7 memebers over the coming 2 years
- Comments that better controls in banking sector will make it mroe resilient
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.
08:00 Brazil April Retail Sales
08:30 US May PPI, Core PPI, May Housing Starts, May Building Permits
09:15 US May Industrial Production, May Capacity Utilization
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
17:00 Colombia April Trade Balance
Today’s Headlines
4:34:06 AM
(SL) Slovak Central Bank raises 2010 GDP outlook to +3.7% v 3.2% prior
- Sees 2011 GDP +4.3%, 2012 GDP +4.4%
- Sees 2010 inflation 0.8%, 2011 inflation 4.3%, 2012 inflation 4.4%
5:30:03 AM
*(US) MAY IMPORT PRICE INDEX M/M: -0.6% V -1.2%E; Y/Y: 8.6% V 7.9%E
- Prior MoM revised higher from 0.9% to 1.1%
- Prior YoY revised higher from 11.1% to 11.2%
7:02:01 AM
(EU) EU Commission assess deficits in 15 member States: Spain and Portugal's budgets are 'appropriately ambitious'; Must specify steps for targets
- Sees need for more forceful structural reforms in EU
- Calls Spain and Portugal have acted in line with recommendations and are expected to specify measures in their 2011 budgets amounting to 1.75 % and 1.5 % of GDP, respectively, in order to attain the new targets.
8:36:29 AM
(US) NY Fed releases results of first term deposit test auction; sold $1.15B in term deposits at auction
- Notes bid to cover 6.14 (Competitive Amount Offered: $ 1,000,000,000 Competitive Amount Tendered: $ 6,138,150,000 )
- Reminder: On 5/28 the Fed scheduled its test for term deposits sees auction on June 14, June 28, and July 12
8:35:24 AM
(FR) France Pres Sarkozy reportedly does not have fears over the Euro currency; a weaker currency is better for exports
- PM Fillon confirms Govt will propose increase to retirement age.
- Note on 6/13, PM Fillon said the govt would propose raising the retirement age from 60 to 63.
9:00:05 AM
Market Internals update at 12:00ET
- NYSE volume 375M shares, about 28% below its three-month average; advancers lead decliners by 5.5:1.
- NASDAQ volume 860M shares, about 21% below its three-month average; advancers lead decliners by 2.2:1.
- VIX index -7% to just above 26.00
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US June Empire Manufacturing, May Import Price Index, Canada April Manufacturing Sales, Chile May Copper Exports
09:00 US April Long-Term TIC Flows
10:00 NAHB Housing Index
16:30 API Crude Oil/Gasoline/Distillate Inventories
18:00 Chile rate decision
Today’s Headlines
1:11:28 AM
(EU) ECB's Nowotny: Stability of the euro is not in danger; important that the debt crisis does not turn towards the banking sector
- Reiterates that the EUR/USD rate within normal historical range.
- Has no issue with euro currency appreciation affecting exports. FX tendency of late is not a problem but notes he is against "abrupt moves."
- The global economy has recovered this year and the Central Eastern Europe has recovered faster than expected.
- Market spreads show that ECB's Greece bonds package is effective.
2:15:33 AM
(US) Fed's Bullard: US economic recovery is on track; may be complete in Q3
- China is back on rapid growth path but is not facing bubble and is likely to continue for a 'considerable' period of time.
- Risk of sudden Chinese slowdown is limited
- European situation is serious and unclear but does not expect that the debt woes will derail global recovery
- Fed should start shrinking its balance sheet to pre-crisis levels in order to avoid inflation.
- Expects employers in the US to start hiring for the remainder of 2010 in order to keep up with the demand
3:56:08 AM
(IT) Italy Fin Min Tremonti: 2010 will be the last year that EU countries decide their own budgets independently - Italian press
- In the future, economic policy in Europe will be made at the same time of year, in the same way all together.
4:18:18 AM
(SP) Spain Dep Fin Min Ocana: Country has no plans to use EU/IMF rescue fund
- Currently not considering tax increases, focusing on spending.
- No issues regarding ability to pay debt; country has low debt burden.
4:55:25 AM
(SP) Spain plans to sell up to €9.5B in debt this week
- To sell €3.5B in Apr 2020 and Jul 2041 Bonos On Thursday Jun 17th
- To sell up to €6B in Bills on Tuesday Jun 15th
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.
“What you don't see with your eyes, don't invent with your mouth.”
rules
Market Week Wrap-up
- Much like the wisdom of Mr. Miyagi in The Karate Kid, this has been a week of rapid risk off, risk on. The general slide that got underway after the weak US payrolls data last Friday continued through Tuesday morning. With little positive news to counteract the heightened risk aversion, investors fretted over press reports that Germany's high court might block or delay the nation's participation in the €750B Euro Zone debt backstop and rumors of bad news coming out of European bank stress testing. Investors bailing out of risky assets drove spot gold to test all-time highs around $1,250 in Tuesday's session. Some calming words from Fed Chairman Bernanke on Tuesday, and data out of China quickly reversed the bearish sentiment mid week. China reported May trade figures showing a nearly 50% y/y increase in Chinese exports, accompanied by a seven-month high in its trade surplus. The Chinese surprise pushed the DJIA back above the key 10,000 level and helped EUR/USD regain the 1.20 level late in the week. In addition, the weekly continuing claims data fell incrementally (the initial claims numbers ticked up) and RealtyTrac reported that the US foreclosure rate continued to decline in May. For the week, the DJIA rose 2.7%, the Nasdaq gained 2.8% and the S&P500 was up 2.5%.
- The impressive Chinese trade data drew immediate political fire from US. Senator Schumer (D-NY) who commented that the Treasury's failure to cite China as a currency manipulator was disappointing and that the Senate would vote to censure China for its currency policies within weeks. Senator Stabenow (D-MI) stated that were sufficient votes in Senate to approve a bill on the China currency issue. Treasury Secretary Geithner testified on the topic, reiterating once again that a stronger yuan would benefit China by increasing its purchasing power and permit more balanced and sustainable growth. Geithner also promised that the administration would apply "forceful remedies" under US law and WTO to address China's unfair trade practices.
- Leading US banks stocks have been under pressure this week as House and Senate negotiators iron out key differences between versions of the financial regulatory overhaul bills passed by either chamber. Among the biggest bones of contention is Senator Lincoln's amendment, which would require banks to spin off their derivatives units. Lincoln won a primary race in Arkansas on Tuesday, dashing hopes that her amendment would vanish along with her candidacy. Goldman Sachs fell to new 52-week lows in the wake of a report in the FT that the SEC has launched a preliminary investigation of another Goldman CDO deal, this time the $2B Hudson Mezzanine package, created in 2006. On Thursday, Goldman's President, Gary Cohn, said that there is "no indication" that Goldman is close to a settlement of the SEC's charges related to the Abacus CDO deal.
- Apple officially released the fourth generation iPhone on Monday with most of the new features that had been expected. The biggest surprise in the announcement was the absence of a Verizon compatible model, which many analysts had predicted would break AT&T's iPhone monopoly. Apple also officially rolled out its iAd mobile advertising platform, disclosing that it already had around $60M in sales. In its mid quarter update, Texas Instruments tightened up its Q2 guidance and said that orders look strong and are still rising in the quarter. Applied Materials' CEO seconded Texas Instrument's strong outlook, stating that the semiconductor market is recovering thanks to demand for tablet computers and warning there may not be enough capacity in the industry to meet this wave of demand. Shares of CVS have suffered after Walgreens cut off its participation in CVS's pharmacy benefit manager plans. In a letter to CVS, Walgreens said that it was troubled by uncertainties surrounding transfers of customers among CVS's pharmacy networks and the unpredictability of its reimbursement rates.
- BP's Gulf of Mexico gusher got worse this week, officially, as US government analysts upped their estimates for the spill. According to their report, the well was likely leaking 25-30K/bpd before June 3 (prior to the riser pipe being cut), though by other methodologies the estimate could be as high as 50K bpd. Pressure on BP has been unrelenting, and by Friday there were reports that BP would make a formal decision on Monday to defer its next quarterly dividend by placing it in escrow, with an official announcement to come on Wednesday.
- Global mining stocks saw a relief rally this week as some press reports emerged that speculated the Australian government might be inclined to show some flexibility on its mining tax proposal. Australian Finance Minister Tanner defended the proposed super-profit mining tax, and said the administration will not be deterred by a decline in political approval, but also stated there is room for negotiations with industry leaders.
- Government bond trading closely tracked the dramatic ebb and flow of overall investor risk appetite seen through the course of the week. Prices rallied early in the week as concerns in Europe and their banks in particular dominated headlines. The US 10-year yield traded back under 3.2% while German bond yields continued to trade below levels last seen in the US market led crisis of 2008. Toward mid-week, focus shifted back to strong global economic data and several well received European peripheral bond auctions, most notably in Portugal and Italy. Stocks rallied as safe haven flows reversed, sending yields higher. The US 10-year yield quickly popped back up above 3.3% before retreating on Friday as buyers returned following the weaker than expected retail sales figures.
- The single currency continues to be the focus in FX trading. EUR/USD plumbed fresh four-year lows under the 1.1900 level in risk averse trading on Monday. European officials were out in full force in the first half of the week providing plenty of verbal intervention to support the euro. The general talking points are that the absolute level of the euro is not a big worry and that a weak euro can only help increase the competitiveness of European exports, while the rapid decline of the single currency has been troubling. With spreads between European peripheral sovereign debt and bunds still elevated, officials have also offered strong verbal support for budget austerity measures in Greece, Spain and other peripheral Euro Zone nations. In addition, officials insisted that Hungary is no Greece.
- Confidence returned to markets midweek thanks to the Chinese trade data, helping peripheral EMU members pull off decent treasury auctions. Spreads tightened back up again and the fresh risk appetite helped EUR/USD build upon its recent base in the 1.1980 to 1.2000 area. The euro benefited from some short-covering momentum, which was driven by stops elected in the wake of Spain auctioning debt in the upper end of its projected range. EUR/USD also benefitted from Middle Eastern names buying the pair. EUR/USD tested above the 1.21 handle on Thursday after ECB Chief Trichet called the euro a "credible currency" with an "exceptional track record" at the ECB monthly press conference.
- Fitch dropped a bomb on the budget plans of the new UK government this week, calling the efforts "un-ambitious." Fitch called the UK's fiscal challenge "formidable" and wrote that the situation warranted faster deficit cuts than were included in the government budget plan. All-time lows were seen in the EUR/CHF cross, with FX dealers saying more vague chatter of a European bank in trouble drove the cross down to around 1.3750. Additional weight was provided by the Swiss May foreign currency reserves, which came in at CHF232B, versus April's CHF154B. In Japan, freshly installed Finance Minister Noda warned that he has no intention of guiding the yen exchange rate in any particular direction and insisted that the ministry's position was to simply observe FX market movements.
- The Reserve Bank of New Zealand (RBNZ) became the next commodity-economy oriented central bank to begin withdrawal of monetary stimulus with a 25 basis point rate hike to 2.75%. Despite the hike being widely telegraphed at the last meeting, the Kiwi dollar traded higher on the RBNZ statement that pointed to broad based growth with "particularly strong" environment in Asia. RBNZ Governor Bollard reaffirmed continued removal of policy.
Week of 6/14/2010 thru 6/18/2010
Monday, June 14, 2010
Economic
None seen
Tuesday, June 15, 2010
Economic
08:30 US June Empire Manufacturing, May Import Price Index, Canada April Manufacturing Sales, Chile May Copper Exports
09:00 US April Long-Term TIC Flows
10:00 NAHB Housing Index
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, June 16, 2010
Economic
08:00 Brazil April Retail Sales
08:30 US May PPI, Core PPI, May Housing Starts, May Building Permits
09:15 US May Industrial Production, May Capacity Utilization
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
17:00 Colombia April Trade Balance
Thursday, June 17, 2010
Economic
08:30 US May CPI, CPI Ex Food & Energy, CPI Core Index SA, Q1 Current Account Balance, Initial Jobless Claims, Continuing Claims
10:00 US June Philadelphia Fed, May Leading Indicators
10:30 Natural Gas Inventories
Friday, June 18, 2010
Economic
08:30 Canada May Leading Indicators
10:00 Mexico rate decision
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US May Advance Retail Sales
09:55 US June Prelim Univ of Michigan Confidence
10:00 US April Business Inventories
15:00 Argentina May CPI
Today’s Headlines
5:08:05 AM
(SP) Spain PM Zapatero: Spain's overhaul of its labor system will be substantial, confident reform will pass the legislature
- Plans to be presented to social parties tomorrow.
- Sees parliament labor reform approval this month.
- Followup: The Comisiones Obreras (CCOO) union said the measure, which cuts wages by 5% in 2010 and freezes them next year as part of an austerity package, threated union rights recognized under the Constitution.
-Note that earlier in the session labor reform talks with union and business leaders ended without agreement. Back on June 9th Spain Labour Min said the govt could pass pension reform unilaterally if no political deal is reached
5:15:51 AM
(CA) Bank of Canada's Carney: G20 global financial system reform agenda is radical and comprehensive
- Aims to implement Basel III capital rules by end of 2012
- Notes moral hazard in financial system which would inflate public costs if unchecked
- Apprehension that Basel III rules can be damaging to the economy recovery is misplaced.
5:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 456K V 450KE; CONTINUING CLAIMS: 4.462M V 4.640ME
- Prior initial claims revised higher from 453K to 459K
- Prior continuing claims revised higher from 4.666M to 4.717M
- 4-week average for claims at 463K v 459K prior
5:31:48 AM
(EU) ECB's Trichet: Reiterates that rates remain appropriate - prepared remarks
- Latest info confirms that economic recovery continued in the first half of 2010. Expects moderate Euro Zone growth in second half of 2010.
- Euro Zone economic growth to be uneven.
- Risks to economic growth outlook are broadly balanced and in line with other international forecasts.
5:48:54 AM
(EU) ECB's Trichet: Reiterates that ECB bond purchases ensure markets continue to function properly - Q&A session
- Bond buying program does not constitute a change in monetary policy. ECB promised to withdraw extra liquidity, and this process has been working "week after week."
- Reiterates ECB is "inflexibly attached" to mandate for price stability.
- High overnight deposits illustrate that money market is not functioning properly, demonstrate tension in markets.
- Notes there is "one ECB, one governing council, one policy position."
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 US April Trade Balance, Initial Jobless Claims, Continuing Claims
10:30 Natural Gas Inventories
13:00 US Treasury's $13B 30-year bond auction
14:00 US May Budget Statement
Today’s Headlines
4:32:56 AM
(EU) Russian President Putin: "Trusts and believes" in the euro, believes EU leaders are handling the crisis correctly
- Will not change attitude to the euro's role as a reserve currency.
Reminder: On May 27th, Russia Central Banker Ignatiev stated that there was no discussion about changing Russia's reserve makeup (In recent sessions there had been market rumors that the CBR would cut its euro share of currency reserves.
Back on On May 24th theStreet.com reported that Russia's Central Bank increased its USD reserve
6:04:07 AM
(HU) Fitch: Hungary's budget plans are a "moderately encouraging," 2010 budget deficit ratio remains unchanged at 4.2%
- Calls for Hungarian Govt to avoid attacking its Central Bank
- Medium term debt is 'central' to the determination of sovereign ratings
- Tight fiscal policy is needed to stabilize Hungary's ratings
***Reminder: On Apr 26th Fitch commented that Hungary faces challenge to consolidate finances with little room for slippage and stated that its 2010 budget deficit to GDP ratio might be above 4.2%. It did note that the country had a post-election opportunities for reform
7:00:33 AM
(US) Fed's Bernanke: US fiscal position has deteriorated strongly, see significant restraints on the pace of the US recovery
- Impact on US economy from European crisis is likely to be modest, if markets stabilize.
- Economy will likely grow this year and in 2011.
- US job market is improving, still has a long way to go.
- Expects gains in private demand to sustain the economic recovery, consumer spending to rise moderately.
- Housing market has firmed up only slightly since the middle of last year.
7:30:29 AM
(EU) ECB's Weber: Fiscal rule book needs to be improved; Germany is the role model for EU consolidation
- Most aid measures wrere unavoidable and warranted
- Insolvency mechanism for States should be examined and would discipline the markets
- Does NOT believe in open-ended support program for EU countries; such measures would weaken fiscal responsibility
- Higher debt levels tend to require higher interest rates in order to keep inflation expectations anchored
8:09:16 AM
(US) US Dept of Interior's Salazar: 6 month moratorium on deepwater drilling could be ended sooner if appropriate
- Will request BP pay salaries of laid off workers related to oil services.
- Says the deepwater moratorium is the 'pause' button, not the 'stop' button.
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.
“I cannot believe that the inscrutable universe turns on an axis of suffering; surely the strange beauty of the world must somewhere rest on pure joy!”
08:00 Brazil Q1 GDP, Chile May CPI
10:00 US April Wholesale Inventories, Mexico May Consumer Prices, Mexico April Trade Balance
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's $21B 10-year note auction
14:00 Fed's Beige Book
Today’s Headlines
5:20:44 AM
(US) Fed's Duke: US consumers may be slow to return to spending, will re-engage as househould balance sheets strengthen
- Expects both banks and consumers to be "more prudent" moving forward.
- Roughly 20% of mortgage borrowers are underwater.
- Volumes of credit currently being offered are a fraction of pre-crisis levels.
- Senior loan officers still seeing little demand for consumer and mortgage loans.
- Charge offs and tight lending standards are contributing to lower volumes of consumer credit.
6:05:57 AM
(US) Fed's Evans: Optimistic that US recovery to continue, reiterates that unemployment levels will remain high
- Deeper Euro Zone debt problems could further impact the US economy.
- Europe's crisis will reduce US net exports and impact US GDP outlook.
- May US employment data were disappointing, but the May release was "just one number."
- Sees 2010 US GDP around +3.5%.
- Sees US inflation at +1.75% by 2012 as resource slack abates.
- Anecdotal news on US economy has been positive.
6:29:29 AM
(US) Fed's Evans: Expects Fed to maintain accomodative policy for 'quite some time' - Q&A
- Highlights that the low rates may remain for another 3-4 FOMC meetings; there is no hurry to increase interest rates
- Must study high frequency trades over a period of years.
- Still see US 2010 GDP of 3.5%.
- Bank lending leading to inflation wouldnt be bad; banks are currently slow to lend despite liquidity
- Reiterates that now is not the right time to raise interest rates
6:35:12 AM
(UK) UK Chancellor Osborne: Level of debt is a threat to the recovery; large part of deficit is 'structural'
- Later today will publish framework for review of spending.
- Budget situation is 'extremely' critical
7:35:11 AM
(US) US Senate Democrats release bill to renew unemployment benefits, correct medicare doctor payments; biodiesel tax credit extension
- Bill to place a tax on fund managers profits at 33% (65% of income profits to be taxed at ordinary income vs 75% in House bill); extends state medicaid funding for 6 months; will tax investments held for 7 years or more at 31%; provides oil producer tax at $0.41/bbl ($0.34 in the House version)
- Reminder: On 5/28 House of Representatives approves legislation to extend unemployment benefits and adjust the 'carried interest' fund manager tax code; Extends jobless benefits through Nov 30- Includes delay in 21% Medicare payment cuts to doctors (costing $23B over 10 years)
- Includes $1/gallon biodiesel tax credit extension- Bill designed to eventually subject approx 75% of the Carried interest income from fund managers at ordinary income rates
- Oil barrel tax raised to $0.34/bbl from $0.08/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.
08:00 Brazil Q1 GDP, Chile May CPI
10:00 US June IBD/TIPP Economic Optimism
13:00 US Treasury's $36B 3-year note auction
16:30 API Crude Oil/Gasoline/Distillate Inventories
Today’s Headlines
2:13:49 AM
(UK) UK PM Cameron: Massive deficit and growing debt were most urgent issues; framework for upcoming budget to be released on Jun 8th
- Decision will affect everyone and felt for decades.
- Scale of budget issues worse than previously thought.
- Plan for deficit reduction deficit backed by Treasury and Bank of England.
- Cuts in UK deficit to avoid higher interest rates
3:00:03 AM
*(GE) GERMANY APR FACTORY ORDERS M/M: 2.8% V -0.4%E; Y/Y: 29.6% V 25.4%E
- Prior MoM revised higher from 5.0% to 5.1%
- Prior YoY revised higher from 26.1% to 26.2%
3:16:21 AM
*(BE) BELGIUM DEBT AGENCY AUCTION RESULTS: SELLS TOTAL €3.2B (upper end of range)
- Sells €1.36B in 3.75% 2020 OLO; avg yield 3.523%; Bid-to-cover: 1.4x v 1.8x prior
- Sells €950M in 2.75% 2016 OLO; avg yield 2.835%; Bid-to-cover: 1.4x
- Sells €857M in 2.0% 2012 OLO; avg yield 0.928%; Bid-to-cover: 3.1x v 2.8x prior
3:46:09 AM
(IN) India's Central Bank Gokarn (RBI): Pledges to maintain moderate monetary tightening pace; current stance appropriate
- Global economy remains vulnerable and recovery should not be taken for granted.
- Fast growing economies need to continue with exit strategies.
- Need to cut budget deficit by reducing subsidies.
- Reasonable to expect monsoon rains would help slow inflation.
4:54:07 AM
(EU) EU's Rehn: To discuss structure of the European Union's €750B debt bailout plan at today's EuroFin meeting
- Reiterates that the pace of the euro's decline is more concerning than the absolute level of the currency.
- Many countries need increased pace of fiscal consolidation.
- Both Portugal and Spain taken important tough fiscal steps.
6:27:45 AM
(FH) Finland Fin Min Katainen: Sovereign debt restructuring must be part of task force discussions
- Talks on debt restructuring must take place at current Fin Min meeting or by the next one
- Deficits, debt levels and coordination agreements could strengthen stability
- No obstacles remain to agreement of €440M SPV, but confident of "AAA" sovereign rating
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.
“Having a dream is what keeps you alive. Overcoming the challenges make life worth living.”
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Market Week Wrap-up
- The first week of June trading brought no improvement to the market outlook: the euro hit fresh lows below 1.20, the DJIA is back below 10,000, job growth remains anemic and oil continues to flow from BP's well at the bottom of the Gulf of Mexico. Markets were relatively calm on Monday with US and UK traders out for the holidays, although equity declines got back underway on Tuesday, prompted by the weak Chinese May PMI reading (the data hit three month lows) and media chatter about the possibility of more European bank write downs. Things improved mid week as investors positioned themselves ahead of what most participants assumed would be a strong May US payrolls report on Friday, particularly as President Obama suggested the number would be strong. Goldman Sachs optimistically raised its estimates for the May gain in non-farm payrolls to 600K from 500K prior as risk appetite sharpened, and equities hit their highs for the week on Thursday's close. Needless to say, the data disappointed: the Labor department reported that the US economy added 430K jobs in May, well less than the 536K expected, and the bulk of those jobs were part time census-related positions. The data showed private payrolls gained only 41K, far below the 180K expected. Commentators are increasingly using raising the specter of a potential "double dip," as the weakening economic picture sent commodities lower and lower manufacturing data was seen worldwide. Copper moved out to eight-month lows, and funds were said to be rotating out of industrial metals and into natural gas (+10.5% this week), which has been a perennial laggard in the commodity sector. Front-month crude dropped from weekly highs around $75 ahead of the payrolls data to around $71 by the close on Friday. For the week, the DJIA fell 2%, the Nasdaq declined 1.7% and the S&P500 dropped 2.3%.
- Investors have not been kind to BP this week as yet another attempt to plug the leaking oil well at the bottom of the Gulf of Mexico failed spectacularly. BP executives had trumpeted the "top kill" effort last week and into the weekend, although it was clear by Monday that the technique was not working - and BP's shares were down up to 12% in trading on Tuesday morning. The "top kill" failure touched off sharp declines in many other oil and oil services-related names, with especially steep declines seen in shares of BP partners Anadarko and Transocean. BP immediately began work on Plan C, which involved cutting away the remaining pipe still attached to the well head and then attaching a "top hat" to the well head to collect leaking hydrocarbons. As of Friday morning the "top hat" unit was attached to the well head, just in time for CEO Hayward to ambiguously inform investors that the board would be making any decisions about BP's dividends, while also warning that long-term costs of the disaster would be severe and spread out over years. As of Friday, oil tar balls were beginning to wash up on beaches along the Florida panhandle.
- Much like April comps, May same-store sales indicate slowing in US consumer spending. Cool weather and a late Memorial Day weekend impacted business in May, although longer-term trends of high unemployment and fears about the state of the economic recovery surely played a role as well. Notable apparel names racked up positive comps that beat expectations, including The Gap, Limited Brands, Ross Stores and TJX. Teen oriented mall chains were hit badly, and American Eagle, Abercrombie, Hot Topic and Wet Seal all reported another month of comp declines. Warehouse retailer BJs saw improvement over April levels, beating expectations, whereas Costco slipped a bit over the prior month. Department store names saw mixed results: higher end names Saks and Macy's grew sales and exceeded expectations, as did mid-range name Kohl's. JC Penny and Nordstrom were laggards.
- Both developed and emerging economies continue to grapple with the ongoing European debt crisis. Brazil failed to sell BRL150M in 11-year notes on Tuesday with Treasury officials citing unacceptable yield premiums stemming from recent market volatility as the reason for rejecting all bids. Evidence is growing that the turmoil in European government debt markets is really starting to serve as a headwind to the effective functioning of financial markets. Investors are clearly shying away from lending to banks that have exposure to southern European sovereign debt in particular. The volume of loans to foreign banks in the commercial paper market declined for the fifth straight week, while European banks continue to park record amounts of money at the ECB's ultra safe overnight lending facility. Anxiety surrounding loan losses and default concerns in the banking system has banks avoiding the higher rates they could otherwise get in interbank money markets. Not surprisingly, corporate issuance has all but dried up, with no relevant European corporate offerings seen in the last two weeks.
- US Treasury yields spent most of the week backing up ahead of the jobs data. The US 10-year yield briefly surpassed 3.4% after Thursday's announcement that another $70B in coupon supply will come onto the market next week. But the weaker than expected US employment report proved to be the straw that broke the camel's back flooding the markets with flight to safety bids. The 10-year German Bund yield fell to fresh all time lows below 2.60% while the US benchmark quickly retreated below 3.25%.
- Rhetoric from key officials drove trading in the much battered euro this week, which in turn drove the overall FX market. On Monday the euro remained under the cloud of Fitch's downgrade of Spain's sovereign rating from AAA status (leaving only Moody's with a AAA rating on Spanish debt). In a TV interview over the weekend, the French Budget Minister commented that it would be a "stretch" for France to keep its AAA sovereign rating without tough budget decisions. Central bankers in Brazil, India, Russia, Japan and South Korea firmly announced early on in the week that they would not stop investing in euros despite the declines in the single currency, noting that there were few to no alternatives to the euro or the dollar. On the other hand, there was also talk that Iran was in the initial process of removing euros from its €45B in foreign exchange reserves in favor of dollars (the irony of this move was lost on no one). As traders in the US and UK returned to their desks after the three-day Memorial Day holiday weekend, the euro tested fresh four-year lows at 1.2100 on commentary that European banks may need write down up to €195B in bad loans, along with vague FX chatter of possible Western European sovereign downgrades, before bouncing right back. The spread between the debt of select European sovereign debt and German Bunds widened through the week, with Spain and Italy again hitting post euro-launch highs. With rumors swirling over French banking giant SocGen's derivative exposure on Friday's sesion, French CDS spreads moved sharply wider surpassing the UK's.
- Hungary's new government injected itself into the European bubbling sovereign debt stew on late in the week, further damaging euro sentiment. Hungary's Fidesz party recently won parliamentary elections, and on forming a government the new finance ministry officials discovered that the former administration had lied about the state of the country's finances. Party officials warned that Hungary had a "slim chance" to avoid a Greek situation and asserted that it was no exaggeration to say that a sovereign default could be imminent. Chatter circulated that Hungary's 2010 budget deficit could be as high as 7%, nearly double the prior estimate. Many commentators (including Goldman Sachs and government officials from the former administration) insisted that Fidesz was exaggerating the situation for political advantage, but the damage was done. Later on Friday the euro dipped below the 1.20 level for the first time in nearly four and a half years. EUR/CHF plummeted to fresh lifetime lows as the 1.40 handle gave away with no signs of any SNB currency intervention.
- European officials and ECB members were out in force reiterating the necessity of fiscal discipline and blithely asserting that the level of the euro was not a concern. The ECB's Noyer said the euro was not unusually low, while other ECB officials commented that short-term euro weakness was welcome as it aided exports and reflected fundamentals. French PM Fillon bluntly stated that the euro's move toward parity with the dollar is "good news" and that he was "unconcerned" about the level of the EUR/USD.
- In other FX action, Canada became the first G7 economy to see monetary tightening post-crisis: on Tuesday the Bank of Canada raised interest rates by 0.25% to 0.50%, as expected. The BoC noted in its statement that further rate moves would be weighed carefully against domestic and global developments. It also stated that tightening still leaves considerable monetary stimulus in place, given the 2% inflation target and the significant excess supply in Canada. Sterling was broadly firmer mid-week with dealers attributing strength to AIG's crumbling $35B deal to sell its AIA unit to the UK's Prudential PLC. Dealers noted that Prudential had sold GBP to pay for the potential acquisition and thus would now be forced to unwind the move. GBP/USD tested above 1.4750 before consolidating.
- With labor supplies growing tight and worker unrest rising, Chinese companies and authorities raised wages this week in a move that can only add to growing inflation pressures. Employees at electronics manufacturer Foxconn, China's largest private employer, received a pay boost of than 30% to assuage concerns of corporate clients about labor conditions at its plants after a rash of worker suicides. Honda said striking workers at four plants in China would go back to work after agreeing to a 24% wage increase. Finally, the city of Beijing said it would increase its minimum wage by 20%, effective July 1. Cities and regions all over China have raised minimum wages this year as companies have reported growing labor shortages with migrant workers from the interior choosing to seek jobs in small cities closer to their homes.
- Japan saw the tenure of embattled Prime Minister Hatoyama come to an abrupt close. On Monday the SDP party pulled out of the minority government coalition following the embarrassing failure by the administration to deliver on its campaign promise to reduce the US military presence in Okinawa, which prompted a round of closed-door talks between Hatoyama and senior DPJ party officials. After initial resistance, Hatoyama reluctantly agreed to take the fall, also securing the departure of influential DPJ secretary-general /"shadow shogun" Ozawa, whose staff was implicated in a controversial political fund-raising scandal earlier this year. Finance Minister Naoto Kan immediately emerged as the front-runner for PM as investors punished the yen while boosting JGBs and the Nikkei225 index on Kan's reputation of support for a weaker currency and more activist deflation-fighting central bank policies. The DPJ approved Kan as the new party leader on Friday, paving the way for him to take the reins as PM when the new cabinet is formed next week. Vice Fin Min Noda and Strategy Minister Sengoku were rumored to take over the respective vacant Finance Minister and Secretary General posts.
- As widely expected, the Reserve Bank of Australia paused its tightening campaign for the first time since early February, leaving the cash rate unchanged at 4.50%. The RBA dedicated much of its statement to the ongoing fiscal saga in Europe, noting the progress of EU actions to stabilize markets would be closely monitored going forward. Commentary outside sovereign debt turmoil was perceived as rather upbeat, boosting AUD across the board following the decision. More specifically the RBA said inflation would remain in the upper half of its target range over the next year, with growth in Asia remaining strong and recovery in North America becoming more established. In Australia, policymakers forecasted high levels of trade would support incomes and demand. That assessment held up in the release of Australian April terms of trade later in the week, coming in at a surplus of +A$134M versus expectations for a sizable deficit (first surplus in a year) primarily as a result of strong exports, which rose 11% from March levels. Australia's shipments of coal and iron ore - its biggest two export commodities - also saw their best levels of the year.
Week of 6/7/2010 thru 6/11/2010
Monday, June 07, 2010
Economic
08:30 Chile April Economic Activity, May Trade Balance
15:00 April Consumer Credit
Tuesday, June 08, 2010
Economic
08:00 Brazil Q1 GDP, Chile May CPI
10:00 US June IBD/TIPP Economic Optimism
13:00 US Treasury's $36B 3-year note auction
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, June 09, 2010
Economic
10:00 US April Wholesale Inventories, Mexico May Consumer Prices, Mexico April Trade Balance
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's $21B 10-year note auction
14:00 Fed's Beige Book
Thursday, June 10, 2010
Economic
08:30 US April Trade Balance, Initial Jobless Claims, Continuing Claims
10:30 Natural Gas Inventories
13:00 US Treasury's $13B 30-year bond auction
14:00 US May Budget Statement
Friday, June 11, 2010
Economic
08:30 US May Advance Retail Sales
09:55 US June Prelim Univ of Michigan Confidence
10:00 US April Business Inventories
15:00 Argentina May 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.
08:30 US May Unemployment Rate, Nonfarm Payrolls, Manufacturing Payrolls, Private Payrolls, Average Hourly Earnings
17:00 Colombia May PPI
Today’s Headlines
4:30:51 AM
(US) US Fed's Lockhart: Reiterates the Fed might tighten rates even with high unemployment; problems of Europe added uncertainty to outlook
- Reiterates that it is not yet time to increase rates, but notes the time is approaching when tighter policy is required.
- Inflation picture not a big concern.
- Recent US data indicated solid performance.
5:15:09 AM
*(US) MAY ADP EMPLOYMENT CHANGE: 55K V 70KE
- Apr revised higher from 32K to 65K
-- Small businesses* +13,000 v +1K m/m
-- Medium businesses** +39,000 v +17K m/m
-- Large businesses*** +3,000 v +14K m/m
-- Goods-producing sector: -23,000 v -18K m/m
-- Service-providing sector: +78,000 v +50K m/m
5:30:04 AM
*(US) INITIAL JOBLESS CLAIMS: 453K V 455KE; CONTINUING CLAIMS: 4.67M V 4.61ME
- Prior initial claims revised higher from 460K to 463K
- Prior continuing claims revised higher from 4.607M to 4.635M
- 4-week average for claims at 459K v 457K prior
6:25:26 AM
(HU) Hungary ruling party Fidesz to announce a two-year economic crisis plan next week - Hungarian media
- The new Fidesz government took office over the weekend and has discovered that Hungary's finances are in a much worse condition than previously believed.
- Fidesz deputy chairman Kosa stated that Hungary has a "slim chance to avoid a Greek situation."
8:15:40 AM
(US) US Fed's Bernanke: Economy is growing, most banks have stopped the tightening of credit rules
- Calls for worthy borrowers to have access to credit; bank lending to small business has been declining (Bernanke referring to the Q1 Fed loan officer survey on credit standards issued on 5/3/10)
- Notes it was unclear in Q1 whether lending was declining due to less demand or the availability of credit
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.
08:15 US May ADP Employment Change
08:30 US Q1 Final Nonfarm Productivity, Q1 Final Unit Labor costs, Initial Jobless Claims, Continuing Claims
10:00 US May ISM Non-Manufacturing, April Factory Orders, Mexico May Consumer Confidence
10:30 US Natural Gas Inventories
11:00 US DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury note announcement
Today’s Headlines
1:30:07 AM
*(UK) APR NET CONSUMER CREDIT: -£0.1B V £0.3BE; NET LENDING: £0.5B V £0.6BE
- Prior Net Consumer Credit revised lower from £0.3B to £0.1B
- Prior Net Lending revised lower from £0.3B to £0.2B
1:02:53 AM
(HU) Hungary Central Bank: Set to miss 2010 budget deficit goal of 3.8% without measures and could hit 4.5% this year
- The defcit could narrow to 3.9% in 2011 and to 2.9% in 2012 period
- The official 2010 budget deficit target is forecast to be more than 0.5% point higher because of higher spending and lower revenue than planned
***Reminder: In 2008 Hungary agreed to deficit targets when it obtained a €20B bailout from the IMF, the European Union and the World Bank
2:59:09 AM
*(IR) IRELAND MAY LIVE REGISTER CHANGE M/M: 6.6K V -0.5K PRIOR; UNEMPLOYMENT RATE: 13.7% V 13.4% PRIOR
- Prior Live register Change MoM revised from -0.5K to K
- Prior Unemployment Rate revised from 13.4% to %
- No revisions
4:30:06 AM
*(US) MAY CHALLENGER JOB CUTS Y/Y: 38.8K V 38.3K PRIOR; -65.1% V -71.1% PRIOR
- Hiring intentions: 14.9K v 15.6K prior; Led by financials
- Job cuts might slow further as summer is historically the slowest downsizing period
- Job cuts returned to pre-recession levels
- Budget crisis for State Gov't are getting worse
5:38:18 AM
(UK) BoE's King: Inflation is low historically, may need additional policy tools
- Asset purchases are an important tool.
- On track to meet medium term CPI expectations despite recent volatility.
- Cannot allow 'too big to fail' to continue.
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.
“When you encounter difficulties and contradictions, do not try to break them, but bend them with gentleness and time.”
rules
Market Week Wrap-up
- Friday's closing bell ends one of the worst months for markets since the precipitous declines of early 2009. Faced with a spiraling debt situation in Europe, the euro plumbing five-year lows, North and South Korea tensions escalating, questions about the sustainability of the US recovery, the biggest one-month decline in crude since 2008 and to top it off an ecological disaster that is shaping up to the biggest oil spill in history, there is little doubt that most investors are glad to see May go away. The extreme volatility that characterized last week's trading continued through Wednesday, with inflammatory headlines playing havoc with all asset classes. In Europe, Spanish flu took the place of Greek tragedy: the week opened with news that Spain had seized one troubled bank and forced several more to merge, while Spanish unions firmed up plans for general strikes in June to protest government austerity measures. Markets swooned on Tuesday morning on more Spain jitters, Germany's decision to further clamp down on "speculators" (proposing a ban on naked short sales on all German stocks after banning naked shorts on selected names and Euro Zone debt last week), and moves by South Korea to ramp up pressure on the North over the sinking of a patrol vessel back in late March. Equity markets regained their footing on Wednesday, only to be knocked down again by a report in the Financial Times that China was evaluating its Euro Zone bond holdings. Chinese officials took pains to deny the report, and trading in the back half of the week was relatively calm. The second reading of US GDP was lower than expected, at 3.0%, down slightly from the 3.2% advance figure, while weekly claims disappointed for a second consecutive week. However, appetite for risk has overcome the down data, buoyed by China's supportive commentary and a very strong University of Michigan May confidence reading. In a volatile week that ultimately saw the VIX volatility index drop 20%, the DJIA fell 0.7%, the Nasdaq gained 1.2% and the S&P500 rose 0.1%.
- In Washington the financial regulation overhaul bill is heading into a conference committee, to be chaired by Rep Frank. The New York Times wrote that when the bill goes into effect it could pressure ratings of the US banks, which would leave banks with billions of dollars in additional financing costs. However S&P commented that it would not immediately downgrade major US banks following the passage of the financial overhaul bill, as "several months" would be needed to determine the impact of the complex new legislation. Nevertheless, S&P believes that the bill will affect most of the larger banks it rates. Separately, according to widespread press reports, AIG and the UK's Prudential are negotiating revised pricing for Prudential's purchase of AIG's AIA unit. The original transaction agreed to back in March was $35.5B; the FT reported that the new price could be as low as $30B.
- Economic data and corporate reports offered conflicting reads on the health of the American consumer. Several mid-range retail names offered a cautious look at the second quarter of 2010. On Friday, the April personal spending data showed no growth, disappointing analysts who had expected another slight uptick in line with the growth seen in the March data. American Eagle, Guess and J. Crew met or exceeded estimates in the March quarter, but all three offered guidance for the June quarter that missed expectations, suggesting more declines to come in consumer spending. Tiffany showed that high end retailers may be faring better, beating expectations handily and raised its 2010 outlook as well. May consumer confidence data crushed expectations and moved out to levels last seen back in early 2008.
- April housing data out this week was very strong, thanks to a final surge in buying ahead of the expiration of the first-time homebuyer tax credit on April 30th, as well as better levels of consumer confidence. April existing home sales beat expectations comfortably. Nevertheless, the NAR warned of a temporary pullback in home sales in the months ahead due to the expiration of the tax credit. April new home sales data were very strong, with the month's data up nearly 15% over March levels and sales stronger than any time since May 2008. Leading homebuilder Toll Brothers offered dismal quarterly results, including a miss on top-line revenue. In regards to higher sales, Toll executives stated that the tax credit wasn't the determining factor for improved sales, insisting that the past few months' activity has been driven by an increase in confidence among buyers. Toll and most of the other leading US homebuyers made modest gains this week on the positive data.
- The disaster that has resulted from the explosion and sinking of the Deepwater Horizon in the Gulf of Mexico crept closer to becoming the largest oil spill in history this week. On Wednesday the Administration officially revised its estimate of the flow rate from the leaking well to 12-25K bpd. In an extended press conference late in the week, President Obama reiterated that he is holding BP Plc responsible for the oil spill and confirmed the six-month moratorium on issuing new deepwater drilling permits. In addition, 37 or so ongoing deepwater operations will have to shut down for thorough inspections. After the failure of several previous efforts to staunch the leak, BP began a "top kill" procedure that will attempt to cap the well. It remains unclear whether the effort has any chance of success.
- Government bond markets on both sides of the Atlantic opened the week with yields at or near their lowest levels of the year, at all-time lows in Germany's case. Fear emanated out of European financial markets, driven by steady increases in LIBOR and associated concerns that banks were becoming less willing to lend fueled safe haven flows. These flows enabled both Germany and the United States to sell new debt in multiple auctions, though the lower rates were certainly seen affecting demand. By Thursday investors were embracing risk globally after China and officials from various other governments expressed confidence in European investments. Treasury prices came under pressure and yields quickly shot up to their highest levels in more than a week. The 10-year benchmark Treasury yield after trading below 3.1% earlier this week climbed back above 3.3%. The 2-10 year spread narrowed below 240 basis points before heading back towards 250 on Friday.
- Risk aversion was never far from currency traders' minds as headline after headline kept up the volatility this week, to the benefit of USD and JPY. The euro opened the week relatively strong, with EUR/USD just below 1.2600, although the pair was down to 1.2200 by Tuesday afternoon, while EUR/JPY hit fresh nine-year lows below 109 level. EUR/USD hit its lowest levels of the week below 1.2200 in the wake of an inflammatory Financial Times article published late on Wednesday. The article suggested China was reviewing its holdings of Euro Zone debt; Chinese officials vigorously denied the story, helping improve risk appetite on Thursday. With Greece in the rear view mirror, the peripheral debt story is now focused on Spain, where worries about the stability of the banking system and credit risk contagion drove trading. EUR/CHF reflected continued chatter that the SNB might have sold EUR/USD to diversify into dollars and offload some of its steady accumulation of euros over the last few months. There is chatter that other central banks might pursue a similar course, with even Russia mentioned as a dollar buyer.
- Europe's' Age of Austerity' is well under way. Governments across the Euro Zone rushed to cut, cut, cut this week, and details of various austerity programs made headlines all week. The FT reported that Germany would slash its government budget by €10B annually until 2016 in order to set an example for the EU and to comply with budget deficit rules in the constitution. The newly minted UK coalition government unveiled over £6B in spending cuts. The Italian and Spanish Parliaments approved spending cut measures during the week, and France made headway in rolling out a plan to raise its retirement age. Labor unions across the continent responded in kind, planning general strikes across Europe in the month of June.
- News that the Bank of Spain took receivership of Spanish savings bank CajaSur over the weekend and four other banks with combined assets of more than €135B were forcibly merged made Spain the new poster child for European peripheral troubles. In addition, chatter circulated about hedge funds in trouble and Spanish banks using the discount window. The IMF expressed concerned about Spain's economy, particularly its labor market and banking sectors, forcing the spread between 10-year Spanish and German debt back above 150, to levels last seen before the announcement of the Euro Zone debt rescue package. On Friday, the Spanish Finance Ministry updated its economic forecasts, maintaining its 2010 GDP view of -0.3% but lowering 2012 and 2013 GDP growth estimates. Later on Friday, the Spanish story culminated in Fitch downgrading Spain's sovereign ratings to AAA from AA+. This leaves Moody's as the only major ratings agency to maintain a AAA rating on Spanish government debt.
- After weeks of euro softness, there was widespread market chatter this week about central banks moving reserves back into the dollar, with the SNB and Russian central banks cited as the main culprits. Risk appetite received a reprieve aided by China's commitment to European investment. This sentiment was echo by some Japanese life insurance firms who implied that they were not considering changing their investment outlooks despite the euro's recent declines. Central banks in Russia and Korea also commented that there were no plans to cut holdings of euro-denominated FX reserves.
- USD/JPY moved higher following the continued uptrend in the 3-month USD Libor fixings and tested above 91 late in the week. However, sentiment remained fixated on the European peripheral situation ahead and the sustainability of the global economic recovery. The BoJ monthly report noted that the economic activity was picking up steadily, but kept its assessment unchanged in its May report. The BoJ reiterated that it remains cautious primarily due to the risk from overseas economies.
- On the data front, Japan saw a setback from recent successes in clawing its way out of a deflationary spiral. April headline CPI fell to -1.2% from -1.1% and core CPI declined to -1.5% from -1.2%, making for the first increase in monthly inflation metrics since mid 2009. In addition, April unemployment rate unexpectedly rose to a 4-month high of 5.1%, while household spending contracted at its highest pace in nine months. Disappointing data prompted Finance Minister Kan to call for greater cooperation between the government and the central bank to deal with lingering deflationary pressures, just as Bank of Japan continued to resist a move to a specific inflation target.
- Brewing conflict between the North and South Korea was in the background all week. The faceoff between the two nations has been escalating since the South uncovered evidence of the North's involvement in the sinking of one of its naval ships in late March. On Monday, South Korean President Lee suspended trade relations with the North, prohibited its ships from entering South Korean waters, demanded a formal apology and promised to take the case to the UN security council. In response, North Korea made threatening remarks against the South throughout the week. The rising tensions caused the Korea market to slip significantly, prompting the finance ministry to intervene verbally for the remainder of the week.
- Mining companies Down Under dug in for a protracted campaign against the "super-profits" tax proposed by Australian Treasury. With the largest exposure to the country's mining operations, Rio Tinto clearly emerged as the most vocal opponent, as CEO Tom Albanese called the tax Australia's "biggest sovereign risk". Moreover, Rio Tinto chief said the tax clouded further capital expenditures on company's projects - a view expressed by BHP CEO last week when he said the government proposal reduces the value of the coveted Pilbara JV. A report from The Australian on Thursday, suggesting that the government may adjust the super-profit threshold from the proposed 6% to as high as 11-12%, helped mining shares recover some of their lost ground. However, Australia's Treasury Secretary Henry rejected those rumors, stating he was not aware of any changes to be made to the tax.
Week of 5/31/2010 thru 6/04/2010
Monday, May 31, 2010
Economic
None Seen
Tuesday, June 01, 2010
Economic
08:00 Brazil April Industrial Production, May Manufacturing PMI
09:00 BoC rate decision
10:00 US May ISM Manufacturing, ISM Prices Paid, April Construction Spending
10:30 US May Dallas Fed Manufacturing Index
Wednesday, June 02, 2010
Economic
07:30 US May Challenger Job Cuts
10:00 US April Pending Home Sales
16:30 US API Crude Oil/Gasoline/Distillate Inventories
Thursday, June 03, 2010
Economic
08:15 US May ADP Employment Change
08:30 US Q1 Final Nonfarm Productivity, Q1 Final Unit Labor costs, Initial Jobless Claims, Continuing Claims
10:00 US May ISM Non-Manufacturing, April Factory Orders, Mexico May Consumer Confidence
10:30 US Natural Gas Inventories
11:00 US DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury note announcement
Friday, June 04, 2010
Economic
08:30 US May Unemployment Rate, Nonfarm Payrolls, Manufacturing Payrolls, Private Payrolls, Average Hourly
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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.
