"Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy.”
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.
July 31, 2009
Rollover Days: Essential Information for Any Trader
Rollover is when we switch from trading the contract that expires in the current month, to a contract that expires in a future month. Rollover for futures trading can occur each month, and/or quarterly.
With all of the different exchanges available to trade off these days (CME,NYMEX,EUREX), it is easy to get confused when trying to determine when contract rollover will actually occur. In this article I will share with you the rollover dates for some of the most popular futures products that I trade ranging from all asset classes, as well as some of the common signs to look for that you might be trading in the wrong contract month.
For starters, some of my favorite index futures to trade are the e-mini’s, which trade on the Chicago Mercantile Exchange (www.cmegroup.com). The e-mini‘s that I trade are the S&P, Dow, Russell, and Nasdaq. All four of these indexes also expire at the same times throughout the year, which is quarterly.
The contract expiration months occur in March, June, September, and December.
The important part to remember for all of you e-mini traders out there is that the rollover day itself occurs 8 days before expiration on the second Thursday of each contract month. You can trade up until the 3rd Friday of the contract month, but traders are usually in the process of trading the next contract month 8 days prior to that.
I also enjoy trading currency futures, like the Euro, Pound and Yen, which also trade on the CME. These currency futures have contract rollover months of March, June, September and December. The last trading during each expiring contract month is at 9:16 a.m. Central Time (CT) on the second business day immediately preceding the third Wednesday of the contract month (usually Monday).
Some of my favorite commodity futures, which trade on the New York Mercantile Exchange
(www.nymex.com), include Gold and Light Sweet Crude Oil.
The contract expiration occurs month to month.
When trading the Gold Futures, it is important to remember that rollover occurs each month, instead of every quarter like the e-mini contracts. So, if you trade Gold or are interested in trading Gold in the future, it is important to set yourself a reminder to check the next month’s contracts. This reminder can be set on anything from your cell phone to a desk calendar, as long as it is convenient for you. When marking your calendar, you will want to remember that trading will terminate on the current contract month on the third to last business day of that current contract month.
The Crude Oil market is slightly different; they also rollover on a month to month basis, but on a different day during the month than Gold. The last trading day available for the current contract month is going to be the third business day before the 25th of that month. If for some reason the 25th is not a business day, count back three days from the next business day preceding the 25th. For example if the 25th fell on a Sunday, you would count back three days from Monday, which means trading would cease on Wednesday for the current month’s contract. .
Other commodity futures such as Wheat, Corn and Soybeans (which also trade on the CME) also have different rollover days. If you are trading any of these commodities, you will want to rollover to the next contract month on the business day prior to the 15th of the current contract month.
These commodity futures have expiration months of: March, May, July, September and December.
Lastly, one of my favorite exchanges to trade off of is the Eurex (www.eurexchange.com), especially because they offer one of my favorite markets to trade, the Dax Futures. Not only do I enjoy trading the Dax, because of its large tick value, but I also find the DJ Eurostoxx 50 very interesting as well. The last trading day or settlement day for these Eurex products is going to be the third Friday of each maturity month, if this is an exchange day, otherwise immediately proceeding that day. Trading will end on that last trading day once the start of the Xetra intraday auction begins at 13:00 CET (Central European Time). For the DJ Eurostoxx 50, the last trading day is still on the third Friday of the contract maturity month, but the close of trading on the last trading day occurs at 12:00 CET.
The contract expiration months occur in March, June, September and December.
One last point I would like to make is, what is the easiest way to spot when a contract has switched to the next maturity month? Well what I find works best is to use some sort of market analyzer and compare the trading volume on the current contract month V.S the trading volume on the next maturing contract. A great example was during the month of July, we saw that Crude Oil was getting close to its contract rollover date for its August contracts. So, that week we kept a keen eye on the volume of the September contracts V.S the August contracts to make sure we would know when traders had started trading the September contracts. Sure enough, on July 20, 2009 we noticed that volume was actually higher on the September contract then it was in August! So just as a friendly reminder, always be paying attention to the volume traded during the contract month, especially during
contract rollover week!!
Also, here are the links to all of the exchanges we talked about today, for more detailed information, please go to the following:
www.CMEGroup.com
www.Nymex.com
www.Eurexchange.com
8:30am Advance Q2 Annualized GDP q/q (last -5.5%), Q2 GDP Price Index (last 2.8%), Q2 Personal Consumption (last 1.4%)
9:45am July Chicago Purchasing Manager Index (last 39.9)
10:00am July NAPM-Milwaukee (last 50)
Todays Headlines
9:30:24 AM
(EU) IMF: Euro is overvalued by 15% versus fundamentals, urges ECB to maintain low interest rates, insists ECB has scope for more interest rate cuts
- Euro Zone governments should not exit fiscal stimulus prematurely, must keep stimulus programs in place into 2010.
- Euro Zone is facing strong dis-inflationary pressures.
- Believes that the health of Euro Zone banks is key to economic recovery.
11:01:51 AM
NY Fed: Purchased $6.5B in $300B outright coupons purchase; Dealers submitted $20.31B for consideration (bid to cover 3.13)
- Heaviest purchase was $2.2B in the 07/15/12 maturity
- Note: Avg bid to cover for prior four auctions is 3.8
1:01:45 PM
*TREASURY'S $28B 7-YEAR NOTE AUCTION BID-TO-COVER RATIO: 2.63 V 2.82 PRIOR AND 2.40 OVER THE LAST FIVE
- indirect bidders take 62.5% of competitive bids
- notes draw 3.369% with 91.7% alotted at the high
- median 3.287%, low 3.210%
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.
- Equity indices are surging this morning after spending several sessions in the doldrums, with the DJIA up triple digits, Nasdaq above 2000 for first time since last October, and the S&P actually eying 1000. The continuing claims data was 100K below the consensus figure, offering optimists encouragement over employment, following on this week's hopeful housing numbers. Front-month NYMEX crude has recovered nearly all of yesterday's losses to trade above $66 after Goldman Sachs reaffirmed its $85 year-end WTI crude target, calling recent weakness temporary. Goldman forecasted US stabilization and Chinese growth would drive oil higher. Commodities are bid up across the board with gold up 1%, copper higher by 3.5%, grains higher led by a 5% increase in soybean futures. Treasury prices remain lower as sentiment remains fragile ahead of today's 7-year and in the wake of the disappointing 2 and 5-year results. The US benchmark 10-year yield is holding right around 3.7%.
- Behemoth integrated energy firms Exxon and Royal Dutch Shell each reported sharply contrasting results this morning. Like ConocoPhillips, Exxon's revenue beat expectations but was down significantly from 2008 (-66%), while its earnings were well off the consensus view thanks to big quarterly declines in upstream and downstream profits. RDA blew out top- and bottom-line estimates, but said it too is facing a difficult environment in both upstream and downstream segments. RDS also warned that energy demand remains weak, cautioned about excess capacity in the market and complained that industry costs remain high. XOM is down a percent or two in early trading. Earnings from second-tier energy names Tesoro and Apache were better than expected, although Tesoro missed top-line revenue targets, while Apache outperformed on the top line. Both names are up 5% or so in the early going.
- Results from chemical industry leaders Dow and BASF indicate zero recovery for chemicals. BASF's net in Q2 was well below estimates and the firm warned it expects a significant decline in sales and earnings in 2009. Dow's bottom-line earnings were much better than expected while revenues were a big miss. Dow said its 2009 operating plan does not count on material improvements in market conditions for the remainder of the year. Note also that CitiGroup Raised DOW to Buy from Hold.
- Credit card rivals MasterCard and Visa both crushed the Street's earnings expectations, although revenue at both firms was merely in line. Both firms offer more qualitative guidance: Visa reaffirmed that it would achieve its targeted revenue growth in the high single digits in 2009, while MasterCard does not expect to meet its 2009 revenue growth target of 12%. MA's CEO said he does not expect global crisis will improve until some time next year, while a Visa executive said the company is not observing any indications of a sustained turnaround in the US economy.
- Newly-minted DJIA component Travelers was largely in line with expectations, and competitor Hartford Financial Services destroyed consensus estimates but cut its full-year outlook in half. Note that CIT took another step away from bankruptcy this morning, after Barclays extended another $1B in (very expensive) credit to the troubled firm
- Consumer staples names Kellogg and Colgate-Palmolive beat earnings targets and missed on revenue by a hair. On the conference call, a Kellogg executive said cost pressures this year are way down from 2008 levels, aiding results. Motorola managed to turn a (tiny) profit after two quarters in the red, but its guidance for next quarter makes it questionable whether it can earn a profit next quarter. Motorola's CEO sees Q3 mobile device sales flat q/q with unit shipments lower and said the firm has not changed its strategy of splitting off its mobile device business. Wynn Resorts surprised investors with a solid quarterly profit, but warned that its y/y results were not comparable as the quarter included Encore at Wynn Las Vegas, which was not open for Q2 2008.
- In currencies, corporate earnings are sustaining in the New York session the risk appetite that blossomed on Asian and European bourses. Also aiding sentiment was a reiterated pledge from China's central bank to "unswervingly continue applying appropriate, loose monetary policy," complemented by a drop in US continuing claims that only reinforced the sense that recessionary forces are moderating.
- EUR/USD began the NY session in the upper third portion of its session trading range but continued to struggle to pierce the 1.41 level. Mid-morning the IMF commented that the euro was overvalued by 15% versus fundamentals and urged the ECB to maintain low interest rates, insisting that the central bank had scope for more interest rate cuts. The tone of the IMF statements seemed to differ with IMF Chief Strauss-Kahn's recent comments that the USD was not weak and that the market was valuing it correctly. The USD's move into positive territory of 1.4015 was short-lived as equities and oil maintained their firm tone.
- USD/JPY tested the 95.70 area as the market gunned for stops that were lurking above the 95.30 area. Sterling sustained most of its earlier momentum after better UK house price data, which rose for its third straight month. GBP/USD continued to hover around the 1.65 area after opening in Asia at 1.6355. Commodity-related currency pairs were firmer by 100 pips from their opening levels in Asia thanks to Goldman's big call on crude.
More Headlines
9:30:24 AM
(EU) IMF: Euro is overvalued by 15% versus fundamentals, urges ECB to maintain low interest rates, insists ECB has scope for more interest rate cuts
- Euro Zone governments should not exit fiscal stimulus prematurely, must keep stimulus programs in place into 2010.
- Euro Zone is facing strong dis-inflationary pressures.
- Believes that the health of Euro Zone banks is key to economic recovery.
11:01:51 AM
NY Fed: Purchased $6.5B in $300B outright coupons purchase; Dealers submitted $20.31B for consideration (bid to cover 3.13)
- Heaviest purchase was $2.2B in the 07/15/12 maturity
- Note: Avg bid to cover for prior four auctions is 3.8
1:01:45 PM
*TREASURY'S $28B 7-YEAR NOTE AUCTION BID-TO-COVER RATIO: 2.63 V 2.82 PRIOR AND 2.40 OVER THE LAST FIVE
- indirect bidders take 62.5% of competitive bids
- notes draw 3.369% with 91.7% alotted at the high
- median 3.287%, low 3.210%
*JUNE DURABLE GOODS ORDERS: -2.5% V -0.6%E; DURABLES EX-TRANSPORTATION: 1.1% V 0.0%E
- Prior Durables revised from +1.8% to +1.3%
- Prior Durables Ex Transportation revised from +1.1% to +0.8%
8:43:44 AM
(US) PIMCO's El-Erian: July equities rally is a "sugar high"; Not seeing long-term, sustainable demand return yet; reiterates it is too soon to say the recession is over - CNBC
- notes there is a limit to how high we can "float up" on public debt.
- mostly reiterates his comments from yesterday.
9:05:02 AM
*(GE) GERMAN JULY CONSUMER PRICE INDEX: M/M: -0.1% V 0.2%E; Y/Y: -0.6% V -0.3%E; first negative annual reading since reunification in 1990
*Reminder: European Central Bank officials expect to be a brief period of negative inflation in Germany and across the Euro-zone in general.
11:01:45 AM
NY Fed: Purchased $3B in $300B outright coupons purchase; Dealers submitted $11.7B for consideration (bid to cover 3.90 )
- Heaviest purchase was $1.25B in the 02/15/23 maturity
- Note: Avg bid to cover for prior four auctions is 3.3
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.
- US equity indices are soft again through the first part of today's session, looking much like the previous four days, with a few weak earnings reports putting pressure on trade. PIMCO's El-Erian reiterated his view before the open that the stock market has gotten ahead of reality on underlying growth and earnings. The Commerce Department's June Durable Goods data was mixed, with the index turning negative again after last month's growth and the ex-transport figure sustaining May's slightly positive trend.
- Commodity markets are all under pressure from a resurgent Greenback. Weekly DOE crude inventories swelled an unexpected 5M barrels confirming similar data from API yesterday. August NYMEX crude futures have slid more than 5% headed toward the $63 figure, while spot gold and other metals are also dropping noticeably too. Grain futures are lower across the board as well led by wheat which trades at its lowest level in months.
- Treasury markets are anxiously awaiting this afternoon's $39B 5-year note auction. Though yesterday's 2-year results were strong on a historical basis, traders did pick up on an appreciable decline from the metrics seen in June. Prices are rebounding in today's session helped by the consternation in other asset classes. The long bond yield remains pegged near 4.5% while the benchmark is holding 3.6%. The benchmark spread has narrowed back towards 250 basis points.
- Sprint continues to hemorrhage monthly wireless subscribers, partially driving an unexpectedly large quarterly loss in Q2. The company lost a total of 1M of these post-paid customers over last quarter, a figure the company said was only partially offset by its pre-paid business. The Palm Pre smartphone is also helping; executives said the Pre helped blunt the assault from Apple's iPhone juggernaut. The other big (but not unexpected) tech news was the official confirmation of a Yahoo/Microsoft search deal, with a ten-year term. The announcement has been expected for a week now, and the only really surprising part of the deal was the lack of any cash component, with the arrangement essentially a search-for-advertising swap. Note that electrical components names Arrow and Tyco Electronics both beat earnings expectations and offered strong guidance for next quarter. Tyco's CEO said demand for consumer products is showing signs of improvement and inventory reductions appear to be substantially over.
- Earnings at integrated oil major ConocoPhillips were in line, although its profit was down a shocking 76% on a y/y basis dud to declining revenue margins and revenue was a big miss. Net income from E&P was $725M, about 82% lower than a year ago. Second-tier energy name Hess saw its profit fall even further, down 89% y/y, although it did much better than the Street had expected. Like COP, revenue was well short of expectations.
- Time Warner and Time Warner Cable both had strong quarterly results, with earnings comfortably ahead of the consensus view in the quarter. Both companies also reaffirmed their full-year earnings forecasts. A Time Warner Cable executive warned that the firm has not seen much change in the dismal advertising environment, although a Time Warner, Inc. exec did note that some stability has returned to advertising markets. Online media name IAC Interactive missed bottom-line expectations by a wide margin, but managed to return to profitability after last quarter's loss. Revenue at IACI was better than expected.
- Multiple healthcare names reported results yesterday and today. Benefits manager Medco was in line with expectations across the board; managed care names WellPoint and WellCare beat earnings expectations, and WellCare guided earning well ahead of target for the year; specialty pharmaceutical name Hospira beat top- and bottom-line estimates and guided slightly higher for 2009. Auto rental names Hertz and Penske both crushed earnings estimates. Hertz also raised its full-year forecast. Penske cited cost reduction estimates for its solid quarterly performance.
- In currencies, the dollar and yen have broken from their usual relationship with equity price movements. Overall the late drop in the Chinese equity markets before the New York session made many players wonder whether the July equity rally is sustainable, particularly as the traditional August vacation period commences. The USD was stronger against the major currency pairs as both energy and metals maintained a soft tone in the session. Month-end profit taking appearing to be the overriding sentiment. Germany's July CPI registered its first negative annual reading since reunification back in 1990; ECB officials have expected to experience a brief period of negative inflation in Germany and across the Euro Zone in general. EUR/USD is hovering near session lows of 1.4085 with dealers noting of some Euro sell stops lurking below the 1.4050 area. The 30-day mvg avg currently at 1.4047 level. USD/CAD consolidated under Tuesday's 1.0905 highs, but dealers are noting of some significant USD buy stops building above the 1.0930 area. AUD/USD also consolidated around the 0.8200 area.
More Headlines
8:30:03 AM
*JUNE DURABLE GOODS ORDERS: -2.5% V -0.6%E; DURABLES EX-TRANSPORTATION: 1.1% V 0.0%E
- Prior Durables revised from +1.8% to +1.3%
- Prior Durables Ex Transportation revised from +1.1% to +0.8%
8:43:44 AM
(US) PIMCO's El-Erian: July equities rally is a "sugar high"; Not seeing long-term, sustainable demand return yet; reiterates it is too soon to say the recession is over - CNBC
- notes there is a limit to how high we can "float up" on public debt.
- mostly reiterates his comments from yesterday.
9:05:02 AM
*(GE) GERMAN JULY CONSUMER PRICE INDEX: M/M: -0.1% V 0.2%E; Y/Y: -0.6% V -0.3%E; first negative annual reading since reunification in 1990
*Reminder: European Central Bank officials expect to be a brief period of negative inflation in Germany and across the Euro-zone in general.
11:01:45 AM
NY Fed: Purchased $3B in $300B outright coupons purchase; Dealers submitted $11.7B for consideration (bid to cover 3.90 )
- Heaviest purchase was $1.25B in the 02/15/23 maturity
- Note: Avg bid to cover for prior four auctions is 3.3
8:30am June Durable Goods Orders (last 1.8%, ex-transport 1.1%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
1:00pm Treasury's 5-year auction
2:00pm Fed's Beige Book
Todays Headlines
9:00:04 AM
*MAY CASE SHILLER HOME PRICE INDEX: 139.84 V 139.18 PRIOR; COMPOSITE-20 Y/Y: -17.06% V -17.90% PRIOR
- Prior Home Price Index revised from 139.18 to 139.21
- Prior Composite-20 revised from -18.12% to -18.10%
9:33:40 AM
(CH) Chinese Vice Premier Wang: Worst of financial crisis is now over; uncertainties will continue
- Will continue to focus on boosting domestic demand
- Sees US domestic markets stabilizing, sees demand there improving; should balance and manage the USD supply's impact on domestic and world economies
- Financial reforms will continue to be persued
10:00:03 AM
*JULY CONSUMER CONFIDENCE: 46.6 V 49.0E
- Conference Board:
- July expectations index 62.0 v 65.5 in June
- Percentage of consumers who saw more jobs ahead in coming months fell to 15% from 17.5% m/m
- Percentage of consumers who saw fewer jobs ahead in coming months fell to 26.3% from 27.6% m/m
12:35:17 PM
Fed's Yellen:Concerned with commercial real estate loans; reiterates unemployment may rise before going down
- Notes that there is considerable slack on the economy; keeping inflation low
- Comments taht the rise in the Fed Balance sheet will not spur high inflation; large fiscal deficits are appropriate for now
- Seeing several solid signs that growth is poised to resume
1:01:35 PM
*TREASURY'S $42B 2-YEAR NOTE AUCTION BID-TO-COVER RATIO: 2.75 V 3.19 PRIOR AND 2.58 AVE OVER LAST 10 AUCTIONS
-indirect bidders take 33% of competitive bids
- notes draw 1.080% with 21.59% alotted at the high
- median bid 1.039%, low bid 0.950%
1:28:28 PM
(US) Fed's Yellen: Fed will not repeat mistakes from the 60s and 70s, when the Fed lost control of inflation; now is not the right time for rate hikes - Q&A
- Oil prices are a concern due to the unpredictable nature in the last few years
- Notes the Fed should be ahead of the curve with regards to tightening
- Calls the current account deficit one of the unsustainable trends that is occurring; as the US saves more; it will be more healthy
1:36:01 PM
(US) CFTC's Gensler: Recent reports of revisions to report on swap dealers was "premature," study found speculators had no major impact on run up in oil prices
- Note that overnight, the WSJ published an article stating that the CFTC plans to suggest speculators have played a role in the big swings in oil prices recently. This would have been a reversal of an earlier CFTC position.
2:07:39 PM
Fed's Yellen: No double dip recession forecasted; Fed's continuance of Treasury purchases an 'open question' - comments to reporters
- Feels as though consumer spending should start to improve; encouraged by the path of the economy
- Notes is not surprised that the banks are not increasing lending in light of the Fed's actions; expecting to see continuing demand for Treasury debt
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.
- US equities are under a little pressure from dismal earnings out of US Steel, Deutsche Bank and Valero, as well as declining consumer confidence, with all three leading indices in negative territory. Another shot of positive housing data is raising hopes for stabilization in home prices, coming as it does on the heels of yesterday's increase in June new home sales yesterday. The May Case Shiller home price index logged a very small sequential increase, prompting commentators to trumpet that this is the index's first move upward since July 2006. Adding to the froth was a stronger than expected July Richmond Fed Manufacturing number, although the Commerce Department's July Consumer Confidence reading declined m/m and was weaker than expected. Front-month NYMEX crude is plummeting, wiping out three sessions worth of gains in early trading this morning. Gold prices are giving back 1.5% to trade below $940 for the first time in more than a week.
- Treasury prices are rebounding as a renewed bout of risk aversion works it why through US and European markets. The US 10-year note is up half a point in the cash market yielding 3.65%. The 2-year yield is unchanged holding above 1% in terms of yield ahead of this afternoon's $42B auction results.
- US Steel reported its second consecutive quarterly loss this morning, although the shortfall was smaller than analysts had projected. The company missed revenue targets. US Steel's CEO said there are signs destocking has ended in North American and Central European markets, although the firm's outlook remains opaque. Recall that mid-cap US steel names Nucor and Reliance both reported quarterly losses last week. Goldman Sachs is more optimistic about the sector, apparently, and raised the US Steel Industry to a buy from neutral overnight. It also offered a buy call on US Steel itself. US Steel opened down 4% and made a run for breakeven before heading back to the downside. Industry ETF SLX is down 2% in early trading.
- Office Depot's quarterly loss was almost twice the expected amount and the company's quarterly same-store sales were down 18%. Revenue was in line with expectations, however. On the conference call, ODP's CEO said he was "cautiously optimistic" that the economic decline has hit bottom. Retail names Supervalu and Group 1 Automotive both fared better in the quarter than ODP. Supermarket chain SVU reported in line and cut its full-year outlook, warning that it sees no near-term change in consumer spending patterns. Car and auto parts retailer GPI blew out earnings estimates and exceeded expectations in its full-year guidance, saying it believes that the automotive retail market has stabilized. Shares of ODP are down 15%, GPI is down 5% and SVU is up nearly 10%.
- Quarterly reports from Viacom and Interpublic Group shed some light on the media/advertising industry. Media conglomerate Viacom's earnings were in line, while revenue was well short of the consensus view. Domestic ad revenue was -6% and international advertising was -8%; in films, theatrical revenue was -27% and home entertainment was -29%. Advertising giant IPG missed top- and bottom-line targets, but executives struck a positive note on the conference call, saying the worst is behind the industry, which seems to be coming off a bottom.
- Other major earings included integrated oil name Valero, with a slightly smaller than expected loss and better-than-expected revenue. Health insurance firm Coventry Health was much better than Aetna's results yesterday, beating earnings and revenue targets and raising its 2009 forecast. Generic pharma name Teva offered solid results and reaffirmed its full-year guidance, noting that Barr integration is ahead of schedule. Shares of VLO are down 3%, TEVA is up 4% and CVH is up 10%.
- In currencies, the New York session saw the greenback hit the brakes and reverse earlier losses after hitting fresh eight-week lows above 1.4300. Overall dealers were noting that the urge to take profits was creeping into market sentiment after major option barriers were tested during the European morning, including 1.43 in EUR/USD and 1.0770 in USD/CAD. The failure of the USD/JPY cross to hold above its 21-day moving average was cited as a potential range breaker.
- More drama is emerging from the Baltic region, with chatter circulating among dealing desks that Latvia might have devalued its currency despite the recent agreement between it and the IMF for emergency funding. Dealers noted that despite the fact devaluation was not one of the IMF's conditions for the aid, Latvia might decide to devalue the Lat anyhow. The rumor hinged on sharp price movements in the EUR/SEK cross, which rallied 13 big figures from the European open, propelled by a market trying to find the news behind the move. But the overall market was caught massively short on EUR/SEK and USD/SEK as corporate buyers came in. Separately, the IMF noted that needs of emerging markets (ex China) could be in range of $1.3T to $2.0T over the next decade.
More Headlines
9:00:04 AM
*MAY CASE SHILLER HOME PRICE INDEX: 139.84 V 139.18 PRIOR; COMPOSITE-20 Y/Y: -17.06% V -17.90% PRIOR
- Prior Home Price Index revised from 139.18 to 139.21
- Prior Composite-20 revised from -18.12% to -18.10%
9:33:40 AM
(CH) Chinese Vice Premier Wang: Worst of financial crisis is now over; uncertainties will continue
- Will continue to focus on boosting domestic demand
- Sees US domestic markets stabilizing, sees demand there improving; should balance and manage the USD supply's impact on domestic and world economies
- Financial reforms will continue to be persued
10:00:03 AM
*JULY CONSUMER CONFIDENCE: 46.6 V 49.0E
- Conference Board:
- July expectations index 62.0 v 65.5 in June
- Percentage of consumers who saw more jobs ahead in coming months fell to 15% from 17.5% m/m
- Percentage of consumers who saw fewer jobs ahead in coming months fell to 26.3% from 27.6% m/m
12:35:17 PM
Fed's Yellen:Concerned with commercial real estate loans; reiterates unemployment may rise before going down
- Notes that there is considerable slack on the economy; keeping inflation low
- Comments taht the rise in the Fed Balance sheet will not spur high inflation; large fiscal deficits are appropriate for now
- Seeing several solid signs that growth is poised to resume
1:01:35 PM
*TREASURY'S $42B 2-YEAR NOTE AUCTION BID-TO-COVER RATIO: 2.75 V 3.19 PRIOR AND 2.58 AVE OVER LAST 10 AUCTIONS
-indirect bidders take 33% of competitive bids
- notes draw 1.080% with 21.59% alotted at the high
- median bid 1.039%, low bid 0.950%
9:00am May S&P/CS Home Price Index (last 139.18), May S&P/CS Composite-20 y/y (last -18.12%)
10:00am July Consumer Confidence (last 49.3)
1:00pm Treasury's 2-year auction
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
7:43:24 AM
(LV) Latvian parliamentary coalition member has decided to withhold its vote in favor of agreement with IMF; seeks additional information
- Looking to hold a meeting on 7/29 to "clarify" the issue.
- Follow up at 8:03am EST: coalition member says it could support IMF agreement if it recieves satisfactory answers from PM and Finance Minister
8:00:25 AM
*(HU) HUNGARY CENTRAL BANK CUTS BASE RATES BY 100BPS TO 8.50%; MORE THAN EXPECTED
- Was expected to cut by 50bps to 9.00%
- follow up 9:05amET: Central Bank's Simor says the rate cut today had "ripened for months;" 100 bps cut was "narrowly" decided, also considered 50 and 75 bps cuts. Says inflation and the recession supported the cut.
8:02 AM
(UK) BOE received £20M in non-competitive Gilts offers
- To auction £1.98B in competitive auction
10:00:02 AM
*JUNE NEW HOME SALES: 384K V 352KE (+11% M/M); highest reading since Nov 2008
- prior revised from 342K to 346K
- Median price $206,200 v $219K m/m (-6%); v $234,300 y/y (-12%)
- Months supply 8.8 months (lowest since Oct 2007) v 10.2 in May
10:31:35 AM
(IS) Israeli Central Bank leaves Base Rate unchanged at 0.50%; As expected
- Will halt its gov't bond purchase program
- Reduction in GDP has continued to moderate, may have already ended
- Expect inflation to rise over the course of the next 2 months on the back of gov tax increases
1:01:45 PM
*TREASURY $6B 20-YEAR TIPS AUCTION BID-TO-COVER RATIO: 2.27 V 1.58 AT LAST REOPENING
- indirect bidders take 47.8%
- notes draw 2.387%
- 97.3% allotted at the high
2:50:31 PM
Fed's Plosser: Will need raise interest rates in the "not too distant future," likely before unemployment reaches highest levels; there is risk of inflation in late 2010
- Exit strategy will require many tough choices.
- Unsatisfied with the Obama's systemic regulator plan as the Fed may be assuming too many roles.
- Sees growth turning positive in 2H09.
- note: this is one of the most specific comments about timing of rate hikes we have seen from a member of the Fed in recent months. In March, Plosser did make a comment with a similiar tone, stating the Fed must remove additional liquidity before markets have fully recovered.
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.
- Cuts to full-year guidance at Aetna and Honeywell are apparently trumping the latest improvements in housing data, with all three major equity indices trading in negative territory this morning. The June new home sales logged a strong 11% sequential improvement over May's numbers, although the data also showed median prices continue to decline on both a y/y and m/m basis. Note that the July Dallas Fed manufacturing index was very bearish, at -25% v -11%e. A two-day US-China trade summit opened in Washington, DC, with very general commentary out of President Obama, Treasury Secretary Geithner and senior Chinese officials. Front-month NYMEX crude is more or less unchanged, around $68. Treasury prices continue to head South pushing the US 10-year yield back towards 3.75% ahead of a week stuffed with new supply.
- Dow component Verizon reported quarterly results that were just a hair ahead of the consensus and largely flat business metrics. The company typically does not offer forward-looking guidance, but it did say it is planning 8,000 job cuts in the second half of the year. Shares of VZ are down 2%. Aetna reported its Q2 earnings ahead of its prior schedule this morning. The health insurance giant reported more or less in line with analysts' estimates and also announced steep cuts to its full-year forecast. Aetna said higher-than-projected medical costs have not been fully captured in 2009 pricing and warned that earnings will continue to be adversely affected by a higher commercial medical benefit ratio. Shares of Aetna are down 5% or so in early trading, while shares of the other health insurance majors are making modest gains.
- Like Aetna, Honeywell's Q2 results were in line with expectations while the company shaved the top end off its full-year earnings guidance and cut its revenue forecast significantly. Honeywell's CEO said that economic conditions remain challenging and the company is not planning for any recovery in 2009. Specialty manufacturer Corning beat top- and bottom-line expectations, and managed to raise its gross margin by nearly a third over last quarter. Corning raised its forecast for 2009 by 15% over last year thanks to strong LCD TV sales in the first half of the year. Investors are not impressed, however, and shares of GLW are down nearly 4%. HON opened down 2% and are now around even.
- In currencies, emerging market rumblings helped the USD come off its worst levels in early New York trading. EUR/USD failed to break above the 1.43 handle as chatter of some large USD buy stops building above 1.4300 but "protected" by option barriers that are in play at 1.4300 levels. Also contributing to the profit-taking sentiment was the lack of market response to the increase risk appetite following the US new home sales, the biggest gain in eight years. EUR/USD wrapped up the New York morning just above the 1.4210 level. In Eastern Europe, a Latvian parliamentary coalition member has decided to withhold its vote in favor of an emergency funding agreement with the IMF. Lavian press outlook Leta had noted that the IMF might sign LOI with the country as soon as today to keep bailout funds flowing. The Hungarian central bank slashed its key interest rates by 100bps to 8.50%, more than the 50bps expected. Commodity currencies retreated from session highs as profit-taking ensued. USD/CAD failed to elect the slew of USD sell stop orders said to be lurking below the 1.0770 area.
More Headlines
7:43:24 AM
(LV) Latvian parliamentary coalition member has decided to withhold its vote in favor of agreement with IMF; seeks additional information
- Looking to hold a meeting on 7/29 to "clarify" the issue.
- Follow up at 8:03am EST: coalition member says it could support IMF agreement if it recieves satisfactory answers from PM and Finance Minister
8:00:25 AM
*(HU) HUNGARY CENTRAL BANK CUTS BASE RATES BY 100BPS TO 8.50%; MORE THAN EXPECTED
- Was expected to cut by 50bps to 9.00%
- follow up 9:05amET: Central Bank's Simor says the rate cut today had "ripened for months;" 100 bps cut was "narrowly" decided, also considered 50 and 75 bps cuts. Says inflation and the recession supported the cut.
8:02 AM
(UK) BOE received £20M in non-competitive Gilts offers
- To auction £1.98B in competitive auction
10:00:02 AM
*JUNE NEW HOME SALES: 384K V 352KE (+11% M/M); highest reading since Nov 2008
- prior revised from 342K to 346K
- Median price $206,200 v $219K m/m (-6%); v $234,300 y/y (-12%)
- Months supply 8.8 months (lowest since Oct 2007) v 10.2 in May
10:31:35 AM
(IS) Israeli Central Bank leaves Base Rate unchanged at 0.50%; As expected
- Will halt its gov't bond purchase program
- Reduction in GDP has continued to moderate, may have already ended
- Expect inflation to rise over the course of the next 2 months on the back of gov tax increases
"You must get involved to have an impact. No one is impressed with the won-lost record of the referee."
Market Week Wrap-up
-The broad-based earnings season rally continued this week as quarterly reports led markets higher in the absence of outright bad news.
Earnings reports were generally positive, though skeptics again harped on the fact that much of the improvement was due to cost cutting measures rather than growth.
Goldman Sachs touted the equity market, boosting its forecast for the S&P 500 Index, saying that improving earnings will spur the steepest second-half rally since 1982.
Caterpillar's big earnings win kept the ball rolling on Tuesday as Fed Chairman Bernanke began his semi-annual monetary policy report to Congress.
Morgan Stanley's lackluster results provided some weight mid week, but impressive reports from Dow components and tech names helped push the DJIA over 9,000 on Thursday for the first time since early January.
On the data front, the June existing home sales number was in line with expectations, but the m/m growth trend in overall sales and median prices, coupled with a faint decline in inventory were all good news for housing.
The National Association of Realtors (NAR) also emphasized that the share of distressed properties in sales is "declining measurably," further indicating a trend toward normalization.
Financial markets also took heart from California lawmakers reaching a deal to close the state's $26B budget deficit and from CIT striking a deal with bondholders to refinance and restructure outside of bankruptcy, averting Chapter 11 fears for the moment.
Commodity markets followed in the wake of the equity rally, with front-month NYMEX crude up about 5.4% on the week, closing around $68 and gold up about 1.6%.
Congressional healthcare negotiations apparently melted down toward the end of the week, with reports that centrist Democrats had run negotiations off the rails.
On Friday, the Nasdaq finally broke a 13-day winning streak, closing down on the weight of disappointing earnings from Microsoft and Amazon.
Stocks were still up for the week, with the DJIA gaining 4%, the S&P500 jumping 4.2% and the Nasdaq climbing 4.2%.
Week of 7/27/2009 thru 7/31/2009
Monday, July 27, 2009
10:00am June New Home Sales (last 342K, m/m -0.6%)
10:30am July Dallas Fed Manufacturing Activity (last -20.4%)
1:00pm Treasury's 20-year TIPS auction
Tuesday, July 28, 2009
9:00am May S&P/CS Home Price Index (last 139.18),
May S&P/CS Composite-20 y/y (last -18.12%)
10:00am July Consumer Confidence (last 49.3)
1:00pm Treasury's 2-year auction
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Wednesday, July 29, 2009
8:30am June Durable Goods Orders (last 1.8%, ex-transport 1.1%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
9:55am July Final U. of Michigan Confidence (64.6)
Todays Headlines
8:30:02 AM
*INITIAL JOBLESS CLAIMS: 554K V 557KE; CONTINUING CLAIMS: 6.225M V 6.390ME
- Prior jobless claims revised from 522K to 524K
- Prior Continuing Claims revised from 6.273M to 6.313M
- Labor Dept reiterates claims data reflect a shift in the timing of auto sector shutdowns.
10:00:02 AM
*JUNE EXISTING HOME SALES: 4.89M V 4.84ME (+3.6% M/M)
- Prior revised from 4.77M to 4.72M
- Median existing home price $181.6K v $173K in May, +5% m/m, -15.4% y/y
- Total Months Supply: 9.4 v 9.8 m/m
10:30:07 AM
(CA) Bank of Canada Monetary Policy report: See recession ending in current quarter; Still see economy contracting by 2.3% in 2009
- Economy to grow by 3% in 2010 , 3.5% in 2011
- Have seen signs that US economic recession has reached its bottom
- Actions by the G20 have helped in recovery/stabilization of global markets
- Commodities and weaker USD are seen as boosting CAD
- Monetary policy rates to state at 0.25% through June
- Have seen prices drop at annualized rate of -0.7% into Q3
10:34:12 AM
(UK) BoE's Sentance: BoE might pause APF bond purchase program if justified by forecasts
- Quantitative easing (QE) not necessarily finished, there is nothing to prevent the APF expansion beyond the £150B announce.
- August will be an important month for decisions on APF.
- Surprised the markets were expecting expanded APF announcement in July.
- Does not expect MPC to move to rapidly into tightening.
- Should see signs of positive growth in H2; but BOE staff expecting small Q2 GDP decline.
11:02:34 AM
NY Fed: Purchased $3B in $300B outright coupons purchase; Dealers submitted $7.37B for consideration (bid to cover 2.46 )
- Heaviest purchase was $765M in the 05/15/39 maturity (longest dated)
- Note: Avg bid to cover for prior four auctions is 4.1
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.
- Unbridled enthusiasm is sending the major US equity indices through the roof this morning, with the DJIA breaking above 9,000 within the first hour of trade. Solid quarterly results from Dow components and a positive housing report from the National Association of Realtors is fueling this morning's rally. The June existing home sales number was in line with expectations, but the m/m growth trend in overall sales and median prices, coupled with a faint decline in inventory are all good news for housing. The NAR also emphasized that the share of distressed properties in sales is "declining measurably," further indicating a trend toward normalization. Front-month NYMEX crude fell below $65 before the opening bell, but has shot up above $66 along with the equity rally. Treasury prices are declining as investors' risk appetite rebounds with every tick higher in stocks. The 10-year yield is back above 3.6% while the long bond is testing 4.5%.
- Dow components McDonalds, 3M and AT&T reported solid second-quarter results this morning. 3M was the standout, soundly beating top- and bottom-line expectations and boosting its forecast for FY09. 3M's CEO said he expects the US economy has bottomed out, although he also warned the company is not seeing any improvement in demand yet. McDonalds and AT&T both modestly exceeded analysts' estimates and reported healthy gains in major business metrics. Economic bellwether UPS reported in line with the Street, but missed a bit on its guidance for next quarter. On the conference call, UPS executives said that while they are seeing economic stabilization, there have been no signs that growth is returning, noting that the Q3 business environment would remain similar to that in Q2.
- Tech names Qualcomm, eBay and EMC all modestly exceeded expectations. Chipmaker Qualcomm's Q4 results were positive, much better than AMD's disastrous quarter but hardly the blowout quarter seen out of Intel. Qualcomm also raised its FY09 revenue outlook. Online retailer eBay also met consensus estimates and guided slightly above par for next quarter. EMC said the Data Domain merger would boost profits in 2010. Sandisk roared back to profitability, crushing estimates for a $0.16 loss and nearly doubling its margins.
- Ford's Q2 results showed that the automaker is firmly on the highway to stability, with executives insisting the firm would "achieve or exceed" its 2009 financial targets. Even Ford Motor Credit managed to turn a proft. After taking account of its debt reductions, the company was in the black to the tune of $2.3B, although its manufacturing operations are not profitable yet.
- Mid-cap steel makers Nucor and Reliance Steel did not have a good second quarter. Reliance racked up an unexpected quarterly loss and fell $200M short on the top line, making for the company's first net loss since becoming a public company in 1994. Nucor's loss was slightly smaller than expected. Nucor executives are concerned that the marginal uptick in orders is not representative of an increase in "real" demand but more a result of both inventory adjustments and concern over rising prices. Reliance's CEO said he believes the worst is over but still does not anticipate any meaningful improvement in demand for the balance of the year.
- In other earnings, tobacco names Phillip Morris and Reynolds American both beat earnings expectations and raised their FY09 forecasts modestly. Fertilizer company Mosaic was solidly in line with the Street, while competitor Potash Corp. slipped a bit. Mosaic said customer confidence is returning, pipeline inventories have been drawn down and soil nutrients need to be replenished, pointing to recovering crop nutrient markets in 2010. Potash cut its 2009 forecast and limited its qualitative comments to the standard line that buyers have been extremely cautious thanks to the crisis.
- In currency trading, the dollar maintained a soft footing early in the New York session as price action followed in the wake of US earnings. In addition, the euro's inability to take out the recent high of 1.4277 was seen as a good reason to lighten up positions and take profits. EUR/USD briefly tested below the 1.4200 level but headed higher as the Dow Jones tested 9,000. The JPY was broadly weaker against the major pairs ahead of tomorrow's Japanese investment trust launch. USD/JPY probed toward the 95 neighborhood, up over 130 pips, while the EUR/JPY and GBP/JPY pairs were well over two big figures firmer in the session. JPY weakness was initially attributed to rumors that the Japanese MoF might have told some large Japanese accounts that it is safe to buy USD/JPY around the 93 area. AUD/USD struggled to stay above the 0.82 area as chatter circulated that the Australian Central bank (RBA) might conduct more reserve management activity.
More Headlines
8:30:02 AM
*INITIAL JOBLESS CLAIMS: 554K V 557KE; CONTINUING CLAIMS: 6.225M V 6.390ME
- Prior jobless claims revised from 522K to 524K
- Prior Continuing Claims revised from 6.273M to 6.313M
- Labor Dept reiterates claims data reflect a shift in the timing of auto sector shutdowns.
10:00:02 AM
*JUNE EXISTING HOME SALES: 4.89M V 4.84ME (+3.6% M/M)
- Prior revised from 4.77M to 4.72M
- Median existing home price $181.6K v $173K in May, +5% m/m, -15.4% y/y
- Total Months Supply: 9.4 v 9.8 m/m
10:30:07 AM
(CA) Bank of Canada Monetary Policy report: See recession ending in current quarter; Still see economy contracting by 2.3% in 2009
- Economy to grow by 3% in 2010 , 3.5% in 2011
- Have seen signs that US economic recession has reached its bottom
- Actions by the G20 have helped in recovery/stabilization of global markets
- Commodities and weaker USD are seen as boosting CAD
- Monetary policy rates to state at 0.25% through June
- Have seen prices drop at annualized rate of -0.7% into Q3
10:34:12 AM
(UK) BoE's Sentance: BoE might pause APF bond purchase program if justified by forecasts
- Quantitative easing (QE) not necessarily finished, there is nothing to prevent the APF expansion beyond the £150B announce.
- August will be an important month for decisions on APF.
- Surprised the markets were expecting expanded APF announcement in July.
- Does not expect MPC to move to rapidly into tightening.
- Should see signs of positive growth in H2; but BOE staff expecting small Q2 GDP decline.
11:02:34 AM
NY Fed: Purchased $3B in $300B outright coupons purchase; Dealers submitted $7.37B for consideration (bid to cover 2.46 )
- Heaviest purchase was $765M in the 05/15/39 maturity (longest dated)
- Note: Avg bid to cover for prior four auctions is 4.1
8:30am Initial Jobless Claims (last 522K), Continuing Claims (last 6.273M)
10:00am June Existing Home Sales (last 4.77M, m/m 2.4%)
10:30am Natural Gas Inventories
11:00am Treasury note announcement
Todays Headlines
8:30 AM
*(CA) CANADA MAY RETAIL SALES M/M: 1.2% V 0.5%E
-EX AUTO M/M: 0.7% V 0.5%E
-Prior Retail Sales MoM revised from -0.8% to -0.6%
9:59:30 AM
*MAY HOUSE PRICE INDEX (M/M): 0.9% V -0.2%E
- FHFA now sees US home price -10.7% from peak levels of 2007
- New England monthly price change -2.0%
- Pacific monthly price change +2.7%
- South Atlantic monthly price change +1.4%
- Mid Atlantic monthly price change -0.1%
10:30 AM
*DOE CRUDE: -1.8M V -2ME
-GASOLINE: +813K V +750ME
-DISTILLATE: +1.2M V +1.5ME
-CAPACITY UTILIZATION: 85.8% V 87.5%E
- Distillate demand +16K bpd to 3.45M bpd
- Gasoline demand +92K bpd to 9.25M bpd
2:01:06 PM
(CH) IMF China Review: economy is turning around; there is room for additional fiscal stimulus
- Note: This is the first review since 2006
- Advises unwinding of monetary easing when recovery is in place
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.
- Uncertainty seems to be interrupting the earnings season rally that has been under way for the last seven or eight sessions, with a big miss from Morgan Stanley unsettling investors this morning and US equity indices zigzagging in and out of negative territory.
Bond prices are lower after yesterday's rally as Fed Chairman Bernanke's second day of testimony on the hill appears to have much less of an effect. Oil is recovering some early declines after weekly inventory data from the Department of Energy.
- Morgan Stanley has proved to be the laggard among the top five bank holding companies.
The firm reported a quarterly loss that was bigger than expected, and more than twice the expected figure once charges for repaying TARP were factored in. Results were also significantly hampered by an accounting rule related to the value of its debt. Strength in the firm's wealth management and investment banking revenues was not enough to offset declines in trading revenue and real estate losses. Shares of MS opened down 4% but have recovered somewhat in mid morning trading.
- Four leading regional banks reported better-than-expected results, including Wells Fargo, US Bancorp, SunTrust and Bank of New York.
KeyCorp's loss was greater than analysts' estimates. Note that results from Wells Fargo and Bank of New York were well below expectations after additional charges for TARP, various write downs and merger expenses were taken into account. Shares of WFC are down 5%, while BK is down 8%. STI's loss was less than expected, although its non-performing loans keep increasing. USB remains firmly profitable, stating that deposit growth is strong while its commercial real estate portfolio is under pressure. Shares of STI and USB are making modest gains this morning. KEY's loss was somewhat offset by revenue that beat expectations and big improvements in ROE and ROA.
- Yesterday evening boldface tech names Apple and Yahoo both blew out analyst estimates, although Apple's guidance for next quarter was notably lower than expected on top- and bottom lines.
On the conference call, Apple's CFO said the company has been unable to meet demand for the new iPhone 3G-S, and warned iPod sales are continuing to decline over time. Yahoo's CEO said she is seeing "less fear in the marketplace" and advertisers spending more actively. AMD's results contrasted dramatically with Intel's results, with AMD reporting yet another quarterly loss. AAPL is up 4%, YHOO in the red but off its worst levels and AMD is down 14%.
- In other earnings, Boeing managed to exceed consensus estimates in Q2 and its FY09 guidance despite the recession and ongoing trouble with the 787 Dreamliner.
Executives said the firm is still assessing the schedule for 787 test flights and first deliveries more than a month after announcing yet another delay due to problems with a body component. PepsiCo offered results that were more or less in line with expectations and reaffirmed its full-year forecast, noting that it has begun to see the return of consumer spending, even in developed markets. Pfizer also reported in line, and increased its 2009 forecast by a hair. Mid-cap industrials WHR and ITW offered solid results and better-than expected guidance.
- The consolidation in EUR/USD seen throughout the European morning continued into the New York session as option expiration chatter tamed the price action.
The 1.4200 strike remained a magnet for choppy price moves ahead of the NY cut. The USD looked like it would initially gain some upward momentum as risk aversion appeared in the wake of Morgan Stanley's poor quarterly results. Dealers noted that the EUR/USD almost broke an eight-day string of higher lows with the 1.4150 level cited as pivotal support. Thus far, market has paused above just above the 1.4150 area. CAD eventually reacted to better retail sales data for May with the 1.10 handle again tested during the morning in USD/CAD. Dealers are noting that prospects for softer equity markets and lower oil prices could cap further gains in the CAD-related pairs. Looking ahead, the Brazilian Central bank is expected to cut its SELIC target by 50bps to 8.75%. The decision usually comes after the value date change (5:00pm ET).
More Headlines
8:30 AM
*(CA) CANADA MAY RETAIL SALES M/M: 1.2% V 0.5%E
-EX AUTO M/M: 0.7% V 0.5%E
-Prior Retail Sales MoM revised from -0.8% to -0.6%
9:59:30 AM
*MAY HOUSE PRICE INDEX (M/M): 0.9% V -0.2%E
- FHFA now sees US home price -10.7% from peak levels of 2007
- New England monthly price change -2.0%
- Pacific monthly price change +2.7%
- South Atlantic monthly price change +1.4%
- Mid Atlantic monthly price change -0.1%
10:30 AM
*DOE CRUDE: -1.8M V -2ME
-GASOLINE: +813K V +750ME
-DISTILLATE: +1.2M V +1.5ME
-CAPACITY UTILIZATION: 85.8% V 87.5%E
- Distillate demand +16K bpd to 3.45M bpd
- Gasoline demand +92K bpd to 9.25M bpd
10:00am May House Price Index m/m (last -0.1%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
9:00:01 AM
*(CA) BANK OF CANADA LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
- Reaffirms pledge to keep rates low through mid 2010, makes no metion of unconvetional measures
- Forecasts 2009 GDP at -2.3% v -3.0% prior view; 2010 GDP at +3.0% v +2.5% prior view; 2011 growth view lowered to +3.5% from +4.7% prior
- Total CPI to trough in 3Q,Core Rate to diminish in 2H
- Risks To CPI tilted slightly to downside,overall risks roughly balanced
- Forecasts total,Core CPI At 2% target in Q2 2011; previously saw the target getting hit in 3Q 2011
- Higher CAD currency is significantly moderating growth; Statement drops mention of "Unprecedentedly rapid rise" from prior statement
10:00:17 AM
(US) Fed's Bernake: Demand has shown signs of stabilization; rates to be kept low for extended period of time; Declines in housing appear to have moderated
- Prompt attention must be given to deficit levels
- Declines in confidence regarding fiscal stability levels will hurt recovery efforts
- Loss of independence of the Fed could lead to increase of inflation fears, not positive on Congressional review of Fed operations
- Pace of decline in the economy has slowed significantly
- Most of the FOMC members see inflation levels remaining subdued over the course of the next 2 years
- Will tighten fiscal policy when the timing is appropriate, when the job market shows recovery
10:47:02 AM
Fed's Bernanke: Commercial real estate market seeing more pressure, which could threaten financing for the sector
- Says Fed is taking steps under current programs to address the issue in commercial real estate.
- Says Fed is not buying a significant amount of securities, but asset program has helped improve borrowing conditions in the private credit markets.
- Sees foreclosures peaking in the 2H09; with foreclosures to decline in 2010
11:02:32 AM
NY Fed: Purchased $7B in $300B outright coupons purchase; Dealers submitted $18.5B for consideration (bid to cover 2.64)
- Heaviest purchase was $3.78B in the 06/30/16 maturity
- Note: Avg bid to cover for prior four auctions is 4.1
11:20:49 AM
Fed's Bernanke: Too early to make judgment on a second stimulus as less than one quarter of first has been spent
- Discloses that the Fed has lost some money on the AIG and Bear Stearns interventions but has turned a profit in other lending.
- Believes a 'sustainable deficit' is 2-3% of GDP.
- Asked about extending asset purchase program, Bernanke says additional asset purchases will be a continuing topic of discussion for the FOMC.
- says inflation concerns are "misguided."
12:30 PM
(US) US Treasury details ratings agency reforms, planning to create a department at the SEC to oversee ratings companies, hopes to reduce reliance on rating agencies- Ratings companies would be prohibited from advising companies they rate.
3:00 PM
(US) House Panel has rejected plan for SLM to continue selling student aid alternatives
-Follow up 15:10ET: panel passes the Obama student loan plan in 30 to 17 votes
4:30 PM
*API PETROLEUM INVENTORIES:
CRUDE: +3.1M V -2ME
GASOLINE: +1.33M V +750KE
DISTILLATE: +147K V +1.5ME
CAPACITY UTILIZATION: 84% V 87.5%E
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.
- Investors have multiple tier one earnings reports to reckon with this morning, in addition to Fed Chairman Bernanke's Congressional testimony and more jitters over CIT.
The DJIA has sustained modest gains thanks to strong results from Caterpillar and Merck, while the Nasdaq is in negative territory. S&P500 is around even. Treasury prices opened notably lower as the major indices tested the June highs, but as stocks gave back some initial gains bond prices recovered. Yields accelerated to the downside upon the release of Chairman Bernanke's testimony to Congress. Though much of it was covered in his WSJ editorial this morning, Bernanke did stress to Congress that unemployment was likely to remain high into 2011 potentially undermining what is already expected to be a gradual recovery, and for that reason the Fed will only consider tightening fiscal policy once the job market shows signs of recovery. The US 10-year has rallied nearly a full point from session lows pushing the yield back towards 3.5%. The 2-year yield has slid more than 10 basis points from session highs of more than 1% sparking a rallying in fed fund futures contracts.
- Note that three of the four Dow components (CAT, KO, DD and MRK) that reported this morning beat EPS targets but missed revenue expectations; Merck managed to exceed expectations on both the top and bottom lines.
Shares of Caterpillar, a widely watched economic bellwether, are up a whopping 10% after the company stomped earnings estimates and offered a very bullish outlook for the full year, with a broad range that is twice the consensus view at its high end. Coca-Cola reported top-line earnings that were a bit ahead of the consensus, although its revenue missed expectations by $500M. Shares of KO are down a few percent in early trading. Note that the company was significantly hurt by FX in the quarter. DuPont's earnings results were much better than expected and the company reaffirmed its 2009 EPS forecast. The company warned, however, that its revenue would remain below par next quarter, noting that it sees Q4 results broadly better than Q3 results. Shares of Merck are up 5% after a solid second-quarter report. Merck executives reiterated that the Schering Plough merger would close in Q4 and said they see continued improvement in top line results.
- Shares of asset managers State Street and Blackrock are both in negative territory this morning.
State Street reported a giant after-tax "extra ordinary loss," although operating earnings were mildly better than expected. BlackRock beat top- and bottom-line targets solidly. Assets under management at both firms climbed showed sequential improvements, although STT reported q/q revenue declines in key product segments. Note that a BLK executive said clients are beginning to ask if they have "too much cash" and look to move into other asset classes with more risk. Competitor Legg Mason is bucking this trend, up 3% after returning to profitability for the first time since early 2008. Weak results from Zions Bancorp and Regions Financial are pulling down the other regional banks, with ZION down 10% and RF down 14%. Both reported disastrous ROE and ROA figures, boding ill for other regionals.
- While quarterly results from Texas Instruments were not as dramatically good as those out of Intel last week, they were still very strong, with operating earnings about one third ahead of the consensus view, gross margins headed back toward normal levels and order up 27% sequentially.
TXN's outlook for next quarter is better than the Street's, although it warned demand trends remain uncertain. Nevertheless investors are selling shares of TXN, with the name down nearly 5% in early trading. Small enterprise software firm JDA Software is up 30% after a very strong quarterly report.
- Two more major US airlines reported huge quarterly losses this morning, on the heels of American last Wednesday.
Continental's loss was in line with expectations, while United's loss was slightly smaller than projected. Southwest Air also reported quarterly results, which were more or less in line with analysts' estimates. Shares of UAUA are up 7%, while CAL and LUV are down 6%. Continental's president said that business travel has stabilized at low levels and warned there is no visibility as of yet on autumn travel demand. All three airlines continue to slash capacity, with promises of more reductions in coming quarters.
- In currencies, New York trading saw USD profit taking from the European session abate as better corporate earnings from Caterpillar and other major US corporations sharpened risk appetite.
Sovereign accounts are continuing to show buying interest around 1.4190, indicating more reserve diversification. EUR/USD managed to break above the 1.4250 level for fresh six-week highs. BoE's Bean commented that Q2 GDP would likely be negative and said he was uncertain about the durability of any UK housing market recovery. CAD was also in the spotlight as the Bank of Canada left its key interest rate unchanged at 0.25% (as expected) and removed a key line from its statement regarding concern about the "unprecedented, rapid appreciation" of CAD, helping the currency firm above the 1.10 level. Dealers noted that the BoC's statement showed hardly any protest over the strong CAD. Energy and metals hit fresh session highs as a result.
More Headlines
9:00:01 AM
*(CA) BANK OF CANADA LEAVES INTEREST RATES UNCHANGED AT 0.25%; AS EXPECTED
- Reaffirms pledge to keep rates low through mid 2010, makes no metion of unconvetional measures
- Forecasts 2009 GDP at -2.3% v -3.0% prior view; 2010 GDP at +3.0% v +2.5% prior view; 2011 growth view lowered to +3.5% from +4.7% prior
- Total CPI to trough in 3Q,Core Rate to diminish in 2H
- Risks To CPI tilted slightly to downside,overall risks roughly balanced
- Forecasts total,Core CPI At 2% target in Q2 2011; previously saw the target getting hit in 3Q 2011
- Higher CAD currency is significantly moderating growth; Statement drops mention of "Unprecedentedly rapid rise" from prior statement
10:00:17 AM
(US) Fed's Bernake: Demand has shown signs of stabilization; rates to be kept low for extended period of time; Declines in housing appear to have moderated
- Prompt attention must be given to deficit levels
- Declines in confidence regarding fiscal stability levels will hurt recovery efforts
- Loss of independence of the Fed could lead to increase of inflation fears, not positive on Congressional review of Fed operations
- Pace of decline in the economy has slowed significantly
- Most of the FOMC members see inflation levels remaining subdued over the course of the next 2 years
- Will tighten fiscal policy when the timing is appropriate, when the job market shows recovery
10:47:02 AM
Fed's Bernanke: Commercial real estate market seeing more pressure, which could threaten financing for the sector
- Says Fed is taking steps under current programs to address the issue in commercial real estate.
- Says Fed is not buying a significant amount of securities, but asset program has helped improve borrowing conditions in the private credit markets.
- Sees foreclosures peaking in the 2H09; with foreclosures to decline in 2010
11:02:32 AM
NY Fed: Purchased $7B in $300B outright coupons purchase; Dealers submitted $18.5B for consideration (bid to cover 2.64)
- Heaviest purchase was $3.78B in the 06/30/16 maturity
- Note: Avg bid to cover for prior four auctions is 4.1
11:20:49 AM
Fed's Bernanke: Too early to make judgment on a second stimulus as less than one quarter of first has been spent
- Discloses that the Fed has lost some money on the AIG and Bear Stearns interventions but has turned a profit in other lending.
- Believes a 'sustainable deficit' is 2-3% of GDP.
- Asked about extending asset purchase program, Bernanke says additional asset purchases will be a continuing topic of discussion for the FOMC.
- says inflation concerns are "misguided."
9:00am BoC rate decision
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
7:14:22 AM
(RU) Russian Jun Unemployment Rate: 8.3% v 9.8%e - update
- Real Wages: -5.2% v -3.6%e
- Disposable Income: -1.0% v -2.1%
***Note: Unemployment figure was in line with an estimate revealed by the Ministry of Industry last week
9:29:32 AM
IMF approves $250B Special Drawing Rights (SDR) allocation to increase global liquidity
- Proposal to be submitted to Full Board of Governors for final approval
- Low income countries will receive over $18B
10:00:01 AM
*JUN LEADING INDICATORS: 0.7% V 0.5%E
- Prior revised from 1.2% to 1.3%
- Conference Board: If trend continues, will see growth by fall 2009
- Sees slow recovery in confidence and volatility falls in financial markets
12:01:46 PM
(UK) BoE's Bean: Unknown where interest rates are going; BoE wants to keep the period of "unusually low" rates as short as possible - BBC interview
- CPI is slightly below 2% presently (the BoE has repeatedly stated it is trying to keep CPI below 2%).
- Expects recession to exert downward pressure on inflation in the medium term.
- There is an emerging picture that suggests the economy has hit bottom.
1:30:14 PM
Fed's Lockhart: Do not need 'extraordinary measures' to shrink balance sheet; Concerned about commercial real estate; economy must undergo structural adjustments
- Risks to deflation and inflation are roughly balances
- Some time will pass before unwind of policy is needed
- housing still under stress; employment still weak; business investments are 'lackluster'
- Says that the size of the Fed's balance sheet is not as scary anymore
- Not expecting a strong recovery over the medium term
4:15:17 PM
US Economist Roubini: Sees unemployment peaking next year; October will be weak - CNBC interview
- Comments that we have seen the worst in the sense that the economy is no longer in a freefall; expecting a sluggish, U-shaped recovery.
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.
- With an apparently hopeful outcome in the offing for CIT Group and European markets making gains, US equity indices opened modestly higher in New York with volumes even closer to normal and the DJIA back in positive territory for the year to date for the first time since early June.
In the premarket, Goldman Sachs boosted its forecast for the S&P 500 Index, saying that improving earnings will spur the steepest second-half rally since 1982. But the enthusiasm has leaked away in mid morning trading and the leading indices are back around even. Note that business group NABE stated earlier this morning that the recession is abating although there are few signs of a robust economic recovery, and warned that conditions are continuing to weaken. Front-month Sep NYMEX crude, which tested $65 earlier today, is back around even near $63.50. Treasury prices opened lower on the back of equities' gains but have worked back towards unchanged on the day. The 10-year yield is hovering at 3.65% while the 2-year is just below 1%. Gold prices moved back above $950 for much of the morning but are relinquishing some of their gains.
- CIT seems to have come to an agreement with its bondholders over the weekend.
According to widespread press reports, the bondholders will extend $3B in new credit to the company backed by its unsecured assets, allowing it to restructure outside of bankruptcy. No confirmation of the deal has come out of CIT as of yet, but is expected sometime today. Shares of CIT nearly doubled in value in the premarket, and remain up more than 80% in early trading. Financial sector names are up in the low single digits this morning, with the exception of Citi and BoA; there have been unconfirmed reports that Citi is considering a 30-year note, and Citi is down 5% on the news.
- Mid-cap manufacturing firms Johnson Controls and Eaton are both up 7% in early trading.
JCI beat earnings estimates while missing revenue targets; investors are enthusiastic as the auto parts manufacturer returns to profitability after two consecutive losing quarters. The CEO said the company would increase its profitability next quarter and into 2010. Eaton's top line results were in line and revenue was below par, while its guidance for next quarter was better than expected.
- Oil services names Haliburton and Weatherford are headed in different directions in the wake of earnings reports this morning.
Haliburton was more or less in line with the Street, although it said there would be little recovery in North America this year. Shares of HAL are up 5%. Weatherford is down 8% after missing top and bottom-line estimates. In other earnings, Hasbro is up 4% after earning more than expected and reducing the expected dilution from its JV with Discovery Communications.
- In currencies, risk appetite firmly underpinned sentiment in New York trading this morning, with USD and JPY currencies were under pressure against most other currencies, particularly the commodity-related and emerging market units.
The Russian Ruble surged over 3% at one point against the USD to test the 30.80 level. This was the largest one-day gain for the ruble in over a decade. The NY morning was marked by consolidation of the price moves seen during the Asian and European session. EUR/USD is holding above the 1.42 level with some minor stops below the 1.4190 area. The pair was unable to break above the 1.4250 level where some quasi-government offers were rumored to be lurking. Note also that the IMF approved a $250B Special Drawing Rights (SDR) allocation to increase global liquidity. The proposal still needs to be submitted to Full Board of Governors for final approval.
More Headlines
7:14:22 AM
(RU) Russian Jun Unemployment Rate: 8.3% v 9.8%e - update
- Real Wages: -5.2% v -3.6%e
- Disposable Income: -1.0% v -2.1%
***Note: Unemployment figure was in line with an estimate revealed by the Ministry of Industry last week
9:29:32 AM
IMF approves $250B Special Drawing Rights (SDR) allocation to increase global liquidity
- Proposal to be submitted to Full Board of Governors for final approval
- Low income countries will receive over $18B
10:00:01 AM
*JUN LEADING INDICATORS: 0.7% V 0.5%E
- Prior revised from 1.2% to 1.3%
- Conference Board: If trend continues, will see growth by fall 2009
- Sees slow recovery in confidence and volatility falls in financial markets
"Mistakes are part of the dues one pays for a full life."
Market Week Wrap-up
- Quarterly results from corporate America provided firm upward momentum as earning season hit its stride this week.
US equity indices made solid gains after two consecutive down weeks, with a strong updraft on Monday in anticipation of blowout results from Goldman Sachs and then another big leg up on Wednesday on hopes for more good news out of JP Morgan, with an assist from Intel's strong quarter and positive industrial performance data. That morning the July Empire Manufacturing survey came in dramatically better than expected (-0.55 v -5.00e) while the Fed's June Industrial Production data crept even closer to positive. Indices leveled off on Friday as Bank of America and Citi offered tepid results. Drama at CIT and Congressional negotiations over healthcare, including proposals for 5% wealth tax, didn't manage to put a damper on the overall market, but will doubtlessly remain hot stories in the future. Brighter economic outlooks from Singapore, China's PBoC and the Japanese cabinet helped drive commodity gains; copper rose 9.5% on the week, finishing at its best level in a month. Spot gold rose 2.8% to finish the week around $937, after hitting a two-month low just last week. Crude oil reversed its recent bearish trend gaining almost 6% on the week, ending above $63. For the week, on the strength of earnings reports, the DJIA rose 7.3%, the S&P500 jumped 6.9% and the Nasdaq climbed 7.5%.
- Goldman Sachs and JP Morgan reported blow-out second quarter results that crushed analysts' estimates.
JP Morgan reported a better than expected profit despite big charges for retuning TARP funds and paying the FDIC's special assessment fee. Investment banking activities at the two firms drove the big gains: Goldman said trading and investment revenues were up a whopping 93% y/y and 51% q/q, while JP Morgan CEO Dimon said that investment bank fee revenue of $2.2B was a record for his firm (or for anybody in the business in one quarter). Analysts and commentators spent the rest of the week discussing the firms' renewed willingness to take on risk to drive big profits. Goldman's CFO offered a veiled commentary on his firm's future direction, stating that the company is talking with regulators about altering its financial holding status to "allow additional activities," prompting some to wonder just how dead the investment banking model really is.
- Earnings from Bank of America and Citigroup on Friday were a stark contrast to results from Goldman and JP Morgan.
Citi's earnings were something of a mirage: on the one hand, the bank racked up a $4.2B profit in the quarter thanks to the sale of Smith Barney to Morgan Stanley. But after backing out these gains, quarterly losses were only slightly smaller than expected. Bank of America's results were a bit above expectations. Loss provisions, write downs and charge offs continue to rise at both companies, with BoA's non-performing assets rising significantly on a sequential basis (the firm put special emphasis on trouble in commercial real estate) and Citi's total write downs rising to $6.57B.
- The deteriorating situation at CIT provided a background of tension for the big quarterly reports this week, as the company struggled to arrange financing for major debt payments ($1B to 3B, according to various reports) due in mid-August.
On Tuesday the government decided CIT was not worthy of a bailout, leaving any rescue to the private sector. The Treasury is evidently making an example of CIT, stating that a "high threshold" exists for exceptional government aid. At least one analyst believes this is a good thing: PIMCO's Crescenzi said markets are taking the situation in stride and their reaction shows stability returning to the system. There were reports on Friday that CIT is negotiating with JP Morgan and Goldman Sachs for a lifeline, although there has been no confirmation of these reports. CNBC reported that CIT debt holders may be leaning toward a 'debtor in possession' scenario, and a bankruptcy announcement could come over the weekend.
- Dow components General Electric and Johnson & Johnson both reported Q2 earnings that were a bit above estimates.
On the conference call, JNJ's CFO said the results were among their most challenging ever for annualized comparisons due to the loss of patent coverage for several major drugs. JNJ reiterated its full-year earnings outlook, while GE, which has discontinued giving guidance, talked a lot about its outlook on the conference call, noting that its FY09 forecast for non-finance related profits is "little changed" and warned that equipment revenue would be down 10-15% y/y in 2010. CEO Immelt insisted that GE Capital is profitable, and also said he is seeing big improvements in capital markets. GE stock traded down 6% on Friday following the report.
- Intel reported earnings that were more than double Wall Street's expectations, while revenue significantly outperformed the consensus view.
The firm said its results reflect improving conditions in the PC market, confirming the many reports suggesting improvement for the sector over the last six to eight weeks. IBM and Google both managed to beat Wall Street's earnings expectations, although revenue results at both firms were lukewarm. Big Blue remains positive looking forward, raising its 2009 earnings forecast and offering a sanguine FY10 outlook. Google managed to grow margins, meet revenue expectations and keep top-line growth in positive territory; on the conference call executives said that business has "stabilized" and large advertisers have "come back to the table."
- Mobile phone giants Nokia and Sony Ericsson reported weak second-quarter results (Nokia missed expectations, Sony Ericsson's loss was a bit smaller than expected) and their outlook on the rest of the year was dim.
Nokia said its market share would remain flat and overall industry volumes would fall 10% in 2009 y/y. Sony Ericsson saw challenging market conditions everywhere in the quarter and expects things to remain difficult all year. Elsewhere in the mobile device market, Apple rapped Palm, announcing the latest version of iTunes fixed a "bug" that will prevent Palm's workaround from mimicking an iPod for easy connectivity to iTunes.
- Treasury markets have been overshadowed by equities and corporate earnings this week, but with several high-profile reports beating expectations, risk appetite ratcheted up noticeably.
The result was a steady decline in government bond prices, pushing yields higher. Thursday was the exception as Treasuries managed to rally modestly in tandem with equities; some market participants began to speculate whether bond traders were unconvinced early Q2 earnings reports were indicative of better things to come for the broader economy or even whether the second quarter sell-off in government paper (when yields rose by roughly 50bps in the US 10-year) was undergoing a rethink. But Friday's better-than-expected housing starts and building permits data helped bond prices resume their move lower. Yields have moved out to their highest levels in nearly three weeks as stocks consolidate gains in their best week in months. The long bond yield has retested 4.5% while the two-year briefly ticked above 1%. With the 10-year yield regaining 3.6% the benchmark spread widened out to more than 260 basis points for the first time since early June.
Week of 7/20/2009 thru 7/24/2009
Monday, July 20, 2009
10:00am June Leading Indicators (last 1.2%)
Tuesday, July 21, 2009
9:00am BoC rate decision
10:00am Fed Chairman Bernanke testifies on monetary policy before Congress
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Wednesday, July 22, 2009
10:00am May House Price Index m/m (last -0.1%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
8:00am FDA Hematology and Pathology Devices Panel Meeting.
8:30am June Housing Starts (last 532K), June Building Permits (last 518K)
Todays Headlines
8:30:02 AM
*INITIAL JOBLESS CLAIMS: 522K V 553KE; CONTINUING CLAIMS: 6.273M V 6.850ME
- Prior jobless claims revised from 565K to 569K
- Prior Continuing Claims revised from 6.883M to 6.915M
- Four-week moving average of initial claims, 584.5K v 607K prior
.
**Labor Dept: jobless claims were affected by seasonal factors, manufacturing and auto sector layoffs were less than typical; expected auto layoffs have already taken place.
9:00:07 AM
*MAY NET LONG TERM TIC FLOWS: -$19.8B V +$16.5BE; TOTAL NET TIC FLOWS; -$66.6B V -$11.2BE
- Prior Net Long Term TIC Flows revised from +$11.2B to +11.5B
- Prior Total Net TIC Flows revised from -$53.2B to -$38.0B
9:00:28 AM
(UK) IMF: Outlook on the UK is "highly uncertain," chances are will be a "slow recovery," the UK may need to futher bolster its financial system
- IMF maintains UK GDP forecast of -4.2% in 2009, +0.2% in 2010.
- UK needs credible plan for its public finances
- UK debt on track to reach around 100% of GDP
- UK banking uncertainty impedes lending
10:30 AM
*EIA NATURAL GAS INVENTORIES:
+90 BCF VS. +85 TO +90 BCF ESTIMATE RANGE
11:02:24 AM
NY Fed: Purchased $1.5B in $300B outright coupons purchase; Dealers submitted $9.18B for consideration (bid to cover 6.13)
- Heaviest purchase was $829M in the 04/15/10 maturity
- Note: Avg bid to cover for prior four auctions is 3.35
1:00:01 PM
*JULY NAHB HOUSING MARKET INDEX: 17 V 16E
- NAHB:A true recovery in the housing market and overall economy cannot take place until the continuing foreclosure crisis is abated and a decent flow of credit is restored to housing production,"Meanwhile, the stalled jobs market is a major concern to builders and potential home buyers alike.
"Builders recognize the recovery is going to be a slow one and that we are facing a number of substantial negative forces,"
1:29:04 PM
(US) Economist Nouriel Roubini: Sees recession ending by year's end; likely to have 'subpar' growth for next few years
- Sees deflation as the biggest short term risk, inflation will become an issue in the medium term if policy is not adjusted.
- Says US will need a second stimulus package at the end of 2009, should be $200B-$250B in size.
- Reminder: Last week Roubini commented that he expected the US recession to last six more months.
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.
- US equity indices opened in the red this morning as the government's refusal to throw CIT a lifeline overshadowed better JP Morgan earnings and sent the overall financal sector lower in the pre-market. The better-than-expected weekly jobless claims were overlooked as well, despite the fact the continuing figure was tantalizingly close to dropping below six million (the Labor Department did note that seasonal factors continue to play a role in the lower figures). The three leading indices popped into positive territory in the first 30 minutes of trade, only to get knocked down again by the July Philly Fed data, which offered a sharp contrast to yesterday's hopeful industrial tea leaves, with the figure nearly twice a bad as expected. Another piece of data is hovering in the background: RealtyTrac reported that the foreclosure activity surged to record levels again in the second quarter, up 11% sequentially and up 20% over the same period last year. June was the fourth consecutive month to see foreclosures above 300K.
- After dropping toward $60 earlier, front-month NYMEX crude is around unchanged at $61.70. Treasury prices have rallied getting back a good portion of yesterday's declines. The 10-year benchmark yield does remain above 3.5%. JP Morgan announced the sale $1.25B in credit card bonds not backed by TALF following their earnings announcement. This is ahead of a TALF announcement scheduled for later today that will be the first to include eligibility of CMBS.
- JP Morgan opened in negative territory along with the rest of the US financial sector despite the firm's Goldman-like quarterly performance. Adding to the weight in financials, FDIC Chairman Bair said tougher curbs and additional fees were needed for the largest US financial firms. JP Morgan's earnings and revenue totals were miles above consensus estimates, despite big charges for repaying TARP and the FDIC's special assessment fee. CEO Dimon had plenty to say before and after the conference call, noting that it is unlikely the credit card business will make money in 2010, and that the dividend could be increased next year if there are improvements in charge offs and overall conditions. Also note that Charles Schwab reported solid Q2 reports, in line with all expectations.
- Mobile phone giants Nokia and Sony Ericsson reported contrasting second-quarter results, although their outlook . Nokia came in below expectations on both the top and bottom lines, predicting its market share would remain flat in mobile devices next quarter and overall industry volumes would be down 10% in 2009 over last year. The Sony Ericsson JV's net loss was significantly smaller than expected, while revenue was a bit below expectations. The JV saw challenging market conditions everywhere in the quarter and said it expects the market to remain difficult all year, echoing Nokia in saying the global mobile phone market would be down 10% in 2009. Nokia's ADRs are down nearly 14% in early trading, while the ADRs of Sony and Ericsson are both down about 2%. Note also that shares of MOT are down 6% and headed lower.
- In other earnings, blood product and dialysis name Baxter offered in-line quarterly results and slightly upped its forecast for the full year. Biotech name Biogen Idec reported strong results in the quarter, although it cut back on its earnings outlook for 2009. Both names are up in the low single digits in early trading. Paint and coatings manufacturer PPG Industries shellacked earnings targets but slipped on the top line, noting that it only sees mild market improvement next quarter. Packaging manufacturer Sonoco also beat bottom-line targets and missed top-line revenue expectations, and trimmed its full-year earnings forecast. Both PPG and SON are both strong, up 6-7% in the early going. After a decent Q1, motorcycle legend Harley Davidson fell out of the saddle in Q2, thanks mainly to declining shipments and credit charges. After dropping a bit before the open, HOG is up 6% in early trading. Hotelier Marriott had a decent Q2, but cut its 2009 guidance due to economic conditions, sending shares of MAR down 8%.
- In currencies, dollar sentiment appeared soften up initially during the New York session as earnings and economic data, including JP Morgan's earnings and the US claims data, helped stoke risk appetite. Note that the dollar is at or near numerous key chart points heading into the weekly close. EUR/USD was above 1.4140 and close to breaking out of its one-year downtrend line after hitting the all-time high of 1.6030 last August. However, the Philly Fed number helped reign in the risk appetite and EUR/USD was heading into mid-morning New York trade just above 1.41. The yen has maintained a firmer tone as well, with USD/JPY in the mid-93 level after testing 94.45 earlier today.
More Headlines
8:30:02 AM
*INITIAL JOBLESS CLAIMS: 522K V 553KE; CONTINUING CLAIMS: 6.273M V 6.850ME
- Prior jobless claims revised from 565K to 569K
- Prior Continuing Claims revised from 6.883M to 6.915M
- Four-week moving average of initial claims, 584.5K v 607K prior
.
**Labor Dept: jobless claims were affected by seasonal factors, manufacturing and auto sector layoffs were less than typical; expected auto layoffs have already taken place.
9:00:07 AM
*MAY NET LONG TERM TIC FLOWS: -$19.8B V +$16.5BE; TOTAL NET TIC FLOWS; -$66.6B V -$11.2BE
- Prior Net Long Term TIC Flows revised from +$11.2B to +11.5B
- Prior Total Net TIC Flows revised from -$53.2B to -$38.0B
9:00:28 AM
(UK) IMF: Outlook on the UK is "highly uncertain," chances are will be a "slow recovery," the UK may need to futher bolster its financial system
- IMF maintains UK GDP forecast of -4.2% in 2009, +0.2% in 2010.
- UK needs credible plan for its public finances
- UK debt on track to reach around 100% of GDP
- UK banking uncertainty impedes lending
10:30 AM
*EIA NATURAL GAS INVENTORIES:
+90 BCF VS. +85 TO +90 BCF ESTIMATE RANGE
11:02:24 AM
NY Fed: Purchased $1.5B in $300B outright coupons purchase; Dealers submitted $9.18B for consideration (bid to cover 6.13)
- Heaviest purchase was $829M in the 04/15/10 maturity
- Note: Avg bid to cover for prior four auctions is 3.35
8:30am Initial Jobless Claims (last 565K), Continuing Claims (last 6.883M)
9:00am May Net Long-Term TIC Flows (last $11.2B), May Total Net TIC Flows (last -$53.2B)
10:00am July Philadelphia Fed (last -2.2)
10:30am Natural Gas Inventories
1:00pm July NAHB Housing Market Index (last 15)
Todays Headlines
8:30:03 AM
*JUN CONSUMER PRICE INDEX M/M: 0.7% V 0.6%E;
-CPI EX FOOD&ENERGY M/M: 0.2% V 0.1%E; CPI NSA: 215.693 V 215.500E
- CPI Y/Y: -1.4% v -1.5%e (Largest annual decline since Nov 1949)
- Core CPI Y/Y: 1.7% v 1.7%e
8:30:04 AM
*JULY EMPIRE MANUFACTURING: -0.55 V -5.00E
-Components
- Prices Paid: 10.42 v -5.75 prior
- New Orders: 5.89 v -8.15 prior
- Employment: -20.83 v -21.84 prior
9:15:02 AM
*JUNE INDUSTRIAL PRODUCTION: -0.4% V-0.6%E; CAPACITY UTILIZATION: 68.0% V 67.9%E
- Prior Industrial Production revised from -1.1% to -1.2%
- Prior Capacity Utilization revised from 68.3% to 68.2%
10:15:21 AM
(US) Treasury Sec Geithner: USD will remain principal currency; committed to strong USD; US is committed to lowering budget deficit
- Comments looking for ways to reduce volatility in oil and commodity markets
***Reminder: UAE Central Bank Gov Al-Suwadi stated that the UAE remained committed to USD peg after meeting Geithner earlier today
11:51:31 AM
(US) Update: California lawmakers reach budget deal - LA Times
- The legislative leaders refused to discuss details of the negotiations, although staffers involved in the confidential talks said the leaders had largely resolved the most contentious issue in negotiations -- education cuts.
2:00:17 PM
*MINUTES OF JUNE 24 FOMC MEETING: UNEMPLOYMENT COULD EXCEED 10% THIS YEAR; MOST SEE ECONOMY AS WEAK AND VULNERABLE
- Sees risk that rising mortgage rates may hurt housing further
- Sees a danger of further decline in spending; there is no need to adjust asset purchases at the moment
- Officials are split as far as inflation risks; inflation will stay low, but see less of a downside risk
- Particularly concerned about job market; banks could encounter substantial losses in loan portfolios
- 2009-2010 GDP outlook improved from April
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.
- Strong industrial surveys coupled with volume levels trending toward normal, Intel's quarterly earnings and fresh strength in financials ahead of big reports from the sector on Friday are buoying the leading US equity indices.
The July Empire Manufacturing survey came in dramatically better than expected (-0.55 v -5.00e), with both the prices paid and new orders sub indices flipping positive, while the Fed's June Industrial Production data crept even closer to positive. Master trust data from the leading credit card issuers showed some glimmers of improvement in charge-offs and delinquencies, adding some upside to the financials. Front-month NYMEX crude is holding the psychologically important $60 level, up nearly $1.50 in early trading, with the contract just shy of $62. Spot Gold is around $930/oz. A weaker US Dollar on overall increased risk appetite is helping commodity prices in general, and bringing some sellers into the Treasury market. Sep copper has made a 1-month high moving back to $2.40 while wheat and soybean futures are up 2% in Chicago. The US 10-year yield is firmly back above 3.5% while the benchmark spread is widening back towards 260 basis points.
- Results from DJIA component Intel, S&P500 major YUM and the largest US airline AMR are moving their respective sectors in early trading this morning.
Intel's blowout results after the close yesterday prompted lots of price target increases in the name overnight and has buoyed the shares of numerous other semi stocks, with AMD, NVDA and the SMH fund all up in the high single digits. Shares of INTC are up 7%. Fast food giant YUM had a mixed report yesterday, exceeding bottom-line targets by a fair margin but missing on the top line. On the conference call this morning, YUM's CEO warned that the higher EPS but sluggish sales theme would continue in 2009, adding weight to his shares and those of other major fast-food names. YUM is down around 5%, while MCD, BKC and WEN are also a few percent into the red. A slightly smaller than expected loss from AMR is helping keep the airline stocks in positive territory this morning, despite a consecutive quarter of double-digit y/y comps for most of the company's major metrics.
- In other earnings news, Abbott Labs reported its Q2 and guided Q3 results more or less in line with expectations, and also reaffirmed its 2009 forecast for the fourth time in a row.
Investors are evidently not impressed, as shares of ABT are down 5% in the early going. Media conglomerate Gannett is on fire, up 20% after destroying earnings estimates (but missing revenue targets). Note that GCI's publishing segment revenues are down more than 25% on a y/y basis, and even digital revenues are down more than 18%. Specialty chemicals name Lubrizol also killed their Q2 targets in a preliminary report this morning, providing no additional commentary on their very strong results. LZ is up 5% in mid-morning trading, but off its best levels, while other specialty chemical names such as ALB and WDFC are up 3-5%.
- In currencies, there has been little change in the overall dollar sentiment in the New York session as the greenback maintains its softer tone on the back of rising risk appetite and firmer commodity prices.
The dollar was also weakened by news South Korean sovereign fund KIC would purchase inflation-hedging assets, including property and commodities. Dealers are noting that China had a hand in the price movements. PBoC economist Wang Yon stated that China should moderately increase its holdings of US Treasuries, saying that China and other nations with large dollar reserves should hold talks with the U.S. government on such funds can be injected into the world's largest economy, and those talks should include the possibility of shifting bond holdings into other assets such as stocks and gold.
Some dealers have concluded that China has hit the reset button on the reserve currency issue. Treasury Secretary Geithner reiterated that the USD would remain principal currency and remained committed to strong USD. He also stressed that the US was committed to lowering its budget deficit. UAE Central Bank Gov Al-Suwadi stated that the UAE remained committed to its USD peg after meeting Geithner earlier today. EUR/USD tested the 1.4100 level where it encountered some additional selling orders. CAD and AUD pairs were firmer on the rising risk appetite, with AUD/USD moving above the 0.80 area and USD/CAD testing below 1.12.
More Headlines
8:30:03 AM
*JUN CONSUMER PRICE INDEX M/M: 0.7% V 0.6%E;
-CPI EX FOOD&ENERGY M/M: 0.2% V 0.1%E; CPI NSA: 215.693 V 215.500E
- CPI Y/Y: -1.4% v -1.5%e (Largest annual decline since Nov 1949)
- Core CPI Y/Y: 1.7% v 1.7%e
8:30:04 AM
*JULY EMPIRE MANUFACTURING: -0.55 V -5.00E
-Components
- Prices Paid: 10.42 v -5.75 prior
- New Orders: 5.89 v -8.15 prior
- Employment: -20.83 v -21.84 prior
9:15:02 AM
*JUNE INDUSTRIAL PRODUCTION: -0.4% V-0.6%E; CAPACITY UTILIZATION: 68.0% V 67.9%E
- Prior Industrial Production revised from -1.1% to -1.2%
- Prior Capacity Utilization revised from 68.3% to 68.2%
10:15:21 AM
(US) Treasury Sec Geithner: USD will remain principal currency; committed to strong USD; US is committed to lowering budget deficit
- Comments looking for ways to reduce volatility in oil and commodity markets
***Reminder: UAE Central Bank Gov Al-Suwadi stated that the UAE remained committed to USD peg after meeting Geithner earlier today
11:51:31 AM
(US) Update: California lawmakers reach budget deal - LA Times
- The legislative leaders refused to discuss details of the negotiations, although staffers involved in the confidential talks said the leaders had largely resolved the most contentious issue in negotiations -- education cuts.
8:30am June CPI (last m/m 0.1%, y/y -1.3%; ex food & energy last m/m 0.1%, y/y 1.8%), June CPI Core Index SA (last 218.910), July Empire Manufacturing (last -9.41)
9:15am June Industrial Production (last -1.1%), June Capacity Utilization (last 68.3%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
2:00pm FOMC minutes
10:00pm Q2 China GDP
Todays Headlines
8:00:34 AM
*(PD) POLISH MAY CURRENT ACCOUNT: €207M V €6ME; TRADE BALANCE: -€58M V - €100ME
- Exports: €7.6B v €7.87Be
- Imports: €7.6B v €8Be
- Prior Current Account revised from €171M to €147M
- Prior Trade Balance revised from €28M to -€4M
8:30 AM
*JUN PRODUCER PRICE INDEX M/M: 1.8% V 0.9%E;
-PPI EX FOOD&ENERGY M/M: 0.5% V 0.1%E
- PPI YoY: -4.6 % v -5.2%e
- PPI Ex Food & Energy YoY: 3.3% v 2.9%e
8:30:02 AM
*JUN ADVANCE RETAIL SALES: 0.6% V 0.4%E; EX AUTOS: 0.3% V 0.5%E
- Prior Less Autos revised from 0.5% to 0.4%
- Note: with June Advanced Retail Sales positive, that is the first time it has been positive for two months in a row since April 2008.
11:02:44 AM
NY Fed: Purchased $7.5B in $300B outright coupons purchase; Dealers submitted $14.73B for consideration (bid to cover 1.96)
- Heaviest purchase was $2.2B in the 05/31/11 maturity (shortest dated)
- Note: Avg bid to cover for prior four auctions is 3.7
3:30:18 PM
Fed's Hoenig: US economy near bottom of downturn; expect 2010 growth below trend, and a return to trend by 2011
- Forecasts for positive growth in Q2 most likely 'optimistic'; must avoid an inflation problem in 4-5 years.
- Sees recent proposal on Resolution Authority as 'entrenching' the 'too big to fail' idea; need to refine proposals.
- Affirms Fed stance that it would be a mistake to withdraw stimulus measures too quickly or too slowly; says must withdraw accommodation slowly and carefully.
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.
- US equities are choppy this morning as investors weigh the widely expected record results from Goldman Sachs and solid numbers from Johnson & Johnson against a bit of a surprise in June wholesale prices. The June PPI data showed wholesale prices rose far more than expected in the month, for their biggest gain since November 2007, due to higher energy prices. The data has bought some sellers into the Treasury market sending the 10-year yield up to 3.4% while weighing on stocks. Front-month NYMEX crude spiked above $61 earlier this morning, but the contract has retreated towards opening levels below $60.
- The first major financial company to report this earnings season, Goldman Sachs fulfilled widespread expectations from the last week for a blow-out second quarter. Topping its impressive performance in Q1, the bank holding company destroyed earnings and revenue expectations and delivered an impressive 23% return on equity (versus 14.3% last quarter).Trading and investment revenues were up a whopping 93% y/y and 51% q/q. And just after the open Goldman's CFO said the company is still talking with regulators about altering its financial holding status to "allow additional activities," prompting commentators to wonder just how dead the investment banking model really is. Goldman is up a modest 1% this morning after its shares traded up more than 5% over recent days; competitors BAC, JPM and MS are all down about 1% a piece. Note also that CIT is up 25% or so this morning after last night's report in the WSJ that the government is in advanced talks with the company over some sort of bailout.
- Dow component Johnson & Johnson reported Q2 results that were a bit above estimates and reaffirmed its full-year earnings forecast, while trimming its revenue outlook for the year slightly. On the conference call, JNJ's CFO said the results were among the most challenging ever for annualized comparisons due to the loss of patent coverage for Risperdal and Topamax. The company is seeing tighter consumer spending in certain parts of medical device business and continues to experience significant impacts from FX translation (-$0.06 EPS, -6% revenue impact). Railroad CSX beat earnings expectations in its Q1, although revenue lagged the Street by a bit. The company said it expects revenue to continue falling in Q3 in 8 out of 10 markets, with a return to strength in 2010. Shares of CSX are up 6%, while other leading railroad names are up 2-3%. In other earnings news, Sun Microsystems said it expects a much larger loss than analysts have been projecting in its Q4, with revenue weaker than expected as well. Oracle noted that it still expects Sun to be accretive to earnings in the first year. Take-Two also said it would loose more than expected in the quarter, and said it now projects a significant loss for FY09 as well. Shares of TTWO are down 9%.
- PC industry leaders Dell and Microsoft are both making headlines. At an investor meeting, Dell executives said they are seeing demand stabilize but also warned that the competition has improved as the dynamics of the industry evolved. While the enterprise business is still weak, the consumer unit is seeing strong results in the current quarter. After providing a glimpse at its online application strategy the other day, Microsoft unveiled its strategy and pricing for its Azure cloud computing platform. Shares of DELL are down 7% this morning, while MSFT is around even. Note that Intel reports after the close today.
- In currencies, the USD and JPY sustained a soft tone into the New York session as risk appetite gained a bit. Note that while the Asia session provided some optimism about green shoots, news out of Europe indicated that some cracks remain in the recovery. The German ZEW survey in particular highlighted the fact that any recovery would be bumpy. EUR/USD pushed above the 1.40 level but encountered some resistance after ECB's Hurley noted that monetary policy must support real economy and any interest rate hike should only come when the recovery was shown to be totally solid. Sterling drifted off its best levels after the June UK Commercial Property Values survey fell by 0.9%, for its 24th consecutive decline. GBP/USD is around 1.6300 during the New York morning. USD/CAD is probing below its 30-day moving average at 1.1400 and AUD/USD has been hovering around the 0.79 level for most of the morning.
More Headlines
8:00:34 AM
*(PD) POLISH MAY CURRENT ACCOUNT: €207M V €6ME; TRADE BALANCE: -€58M V - €100ME
- Exports: €7.6B v €7.87Be
- Imports: €7.6B v €8Be
- Prior Current Account revised from €171M to €147M
- Prior Trade Balance revised from €28M to -€4M
8:30 AM
*JUN PRODUCER PRICE INDEX M/M: 1.8% V 0.9%E;
-PPI EX FOOD&ENERGY M/M: 0.5% V 0.1%E
- PPI YoY: -4.6 % v -5.2%e
- PPI Ex Food & Energy YoY: 3.3% v 2.9%e
8:30:02 AM
*JUN ADVANCE RETAIL SALES: 0.6% V 0.4%E; EX AUTOS: 0.3% V 0.5%E
- Prior Less Autos revised from 0.5% to 0.4%
- Note: with June Advanced Retail Sales positive, that is the first time it has been positive for two months in a row since April 2008.
11:02:44 AM
NY Fed: Purchased $7.5B in $300B outright coupons purchase; Dealers submitted $14.73B for consideration (bid to cover 1.96)
- Heaviest purchase was $2.2B in the 05/31/11 maturity (shortest dated)
- Note: Avg bid to cover for prior four auctions is 3.7
8:30am June PPI (last m/m 0.2%, y/y -5.0%, ex food & energy last m/m -0.1%, y/y 3.0%), June Advance retail sales (last 0.5%, ex autos last 5.0%)
10:00am May Business Inventories (last -1.1%), TAF results
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
3:06:57 AM
(UK) IMF has warned that the UK cannot afford another fiscal rescue - Telegraph
- Article noted that IMF paper presented to world's leaders has laid bare how the UK's indebtedness has left it unable to provide the vital stimulus the economy could need over the next 18 months
- IMF paper noted that every other G20 country apart from the UK and Argentina has been able to budget for temporary spending increases or tax cuts next year to help drag their economies out of recession
5:27:27 AM
(CH) China MOF: June fiscal rev +19.6% y/y; first-half revenue -2.4% y/y
- Sees difficulty for Government finance over remainder of 2009
- Foundation for fiscal revenue growth is not solid
5:55:42 AM
(JP) Japan Econ Min Hayashi: Japanese exports are picking up but remain at low levels
- Expectations for US and European recovery are fading
- Attributes Yen strength to flight to quality (safe haven flows)
- Stock market declines and yen currency gains are both bad for the economy
6:05:46 AM
(EU) ECB's Bonello: Seeing signs Euro-zone recession has reached a bottom, risk of deflation is limited
- Must give time for ECB measures to feed through to economy
- Unsure if the worst of crisis has past; not out of the woods at this time
8:00:32 AM
(EU) ECB's Bonello: No discussions on further lowering interest rates but additional non-standard measures cannot be ruled out
- ECB satisfied with policy outcome to date.
- Not sure the worst is over for the Euro Zone.
- Seeing some signs of commodities bottoming out.
- Seeing limited risks of deflation in the Euro Zone.
8:43:38 AM
(US) Treasury Sec Geithner: Have seen a significant easing of the financial crisis, expects different global regions to emerge from crisis at different times
- Sees a good chance US and overall global economy will return to growth over the second half of 2009.
- Warns that the global recovery still faces plenty of significant risks and challenges.
- Monitoring CIT situation closely, US has the authority it requres to resolve CIT if needed.
- There is strong consensus among global economic players on measures needed to stoke recovery.
- The maximum impact of US stimulus spending is only just beginning to be felt
4:00:17 PM
Auto Task Force's Rattner to return to private sector; Ron Bloom to assume leadership of Task Force
- Treasury's Geithner noted that these actions are occurring due to the Govt transition away from day to day restructuring of industry towards monitoring
- Ron Bloom is a former steelworker's official
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.
- US equity indices opened higher this morning and are making further gains after slipping a bit.
However, volumes are still one-third below average and the overall sentiment remains substantially unchanged. In an interview with the FT published yesterday evening, Larry Summers said he "does not think the worst is over" for the US recession, warning that it "would not surprising" if GDP falls further. In the UK for talks, Treasury Secretary Geithner commented that there has been a significant easing of the financial crisis, although the recovery still faces plenty of significant risks and challenges. Front-month NYMEX crude is down a dollar or so, trading just above $59. Treasury markets are successfully digesting the recent gains with yields still hovering around the lowest levels in two months. The long bond is below 4.2% and the benchmark is holding at 3.3%.
- The banks were back in headlines as two big stories - Goldman Sachs and CIT - kept analysts and commentators chattering over the weekend.
Goldman Sachs, which reports its second-quarter results on Tuesday, was the subject of wildly positive press reports. The New York Times wrote that the company is likely to post "huge profits," given analyst forecasts. The bank holding company's shares climbed in the NY pre-market as Meredith Whitney talked to CNBC about the company. Note that Whitney's firm raised Goldman to a buy with a $186 price target this morning.
Shares of Goldman are up 4%, while other major financials were up 3-4% as well.
- Last Friday CIT apparently hired bankruptcy advisors after failing to win government borrowing guarantees after extended negotiations.
CIT has a $1B payment due in mid-August and it remains unclear whether the company will be able to make the payment or not. Executives spent the weekend trying to compile a plan that would convince customers and investors that it can deal with its liquidity crunch, lobbying members of congress, government officials and regulators. Geithner said he is monitoring CIT's situation closely, insisting the US has the authority it requires to resolve CIT if needed. Shares of CIT are down about 25%, compounding the big losses seen on Friday. Many other second-tier financial names and regional banks were making 3-5% gains in the early going.
- In currencies, the risk aversion that characterized the Asian session was put on ice as the European morning wore thanks to constructive comments from China's PBoC and the Japanese cabinet on their respective economic outlooks.
A PBoC assistant governor said there were some positive signs in the economy, while the Japanese Cabinet's monthly report raised its view on exports, imports, business spending and private consumption sectors. However, both far east nations noted that uncertainties remained. EUR/USD recovered the majority of its European session losses to trade around the 1.3960 ahead of the US equity open. GBP/USD is also off its worst levels but remains softer across the board against the major pairs. AUD and CAD price action mirrored oil movements, with AUD/USD moving back toward 0.78 after testing 0.77 during Europe. USD/CAD is testing 1.1600 after probing toward the 1.17 neighborhood.
More Headlines
3:06:57 AM
(UK) IMF has warned that the UK cannot afford another fiscal rescue - Telegraph
- Article noted that IMF paper presented to world's leaders has laid bare how the UK's indebtedness has left it unable to provide the vital stimulus the economy could need over the next 18 months
- IMF paper noted that every other G20 country apart from the UK and Argentina has been able to budget for temporary spending increases or tax cuts next year to help drag their economies out of recession
5:27:27 AM
(CH) China MOF: June fiscal rev +19.6% y/y; first-half revenue -2.4% y/y
- Sees difficulty for Government finance over remainder of 2009
- Foundation for fiscal revenue growth is not solid
5:55:42 AM
(JP) Japan Econ Min Hayashi: Japanese exports are picking up but remain at low levels
- Expectations for US and European recovery are fading
- Attributes Yen strength to flight to quality (safe haven flows)
- Stock market declines and yen currency gains are both bad for the economy
6:05:46 AM
(EU) ECB's Bonello: Seeing signs Euro-zone recession has reached a bottom, risk of deflation is limited
- Must give time for ECB measures to feed through to economy
- Unsure if the worst of crisis has past; not out of the woods at this time
8:00:32 AM
(EU) ECB's Bonello: No discussions on further lowering interest rates but additional non-standard measures cannot be ruled out
- ECB satisfied with policy outcome to date.
- Not sure the worst is over for the Euro Zone.
- Seeing some signs of commodities bottoming out.
- Seeing limited risks of deflation in the Euro Zone.
8:43:38 AM
(US) Treasury Sec Geithner: Have seen a significant easing of the financial crisis, expects different global regions to emerge from crisis at different times
- Sees a good chance US and overall global economy will return to growth over the second half of 2009.
- Warns that the global recovery still faces plenty of significant risks and challenges.
- Monitoring CIT situation closely, US has the authority it requres to resolve CIT if needed.
- There is strong consensus among global economic players on measures needed to stoke recovery.
- The maximum impact of US stimulus spending is only just beginning to be felt
"The question isn't who is going to let me; it's who is going to stop me."
Market Week Wrap-up
-US equity indices slipped downward for a second consecutive week as doubts about the reality of an economic recovery seemed to gather strength. >
On Tuesday the S&P500 broke through a key technical level, moving back below its 200-day simple moving average; it had remained above this level since the beginning of June without a serious breach to the downside. >
Technicians discussed the possibility of a head-and-shoulders formation appearing in the S&P 500, indicating the potential for more downside to come. >
Along with the fresh bout of skepticism came a wave of commentary on whether a second stimulus package would be needed (along with plenty of criticism of the failings of the initial stimulus plan). President Obama himself said that recovery has not arrived and that stimulus at least should not be wound down yet. >
In a joint appearance on Bloomberg radio late in the week, perma-bear Nouriel Roubini said the US economy is not yet recovering and the recession will last six more months, while noted Yale economist Robert Shiller and Warren Buffett both said the US needs a second fiscal stimulus package. >
The "new GM" emerged from its bankruptcy restructuring on Friday, promising that it would repay its government loans in advance of its 2015 deadline. >
Nymex crude continued its plunge dropping 10.2% for its biggest weekly decline since January, and ending the week below $60 for the first time since mid-May. >
For the week the DJIA fell 1.6%, the Nasdaq dropped 2.3%, and the S&P500 slid 1.9%.
Week of 7/13/2009 thru 7/17/2009
Monday, July 13, 2009
10:00am TAF auction
2:00pm June Budget Statement (last $33.5B)
Tuesday, July 14, 2009
8:30am June PPI (last m/m 0.2%, y/y -5.0%,
ex food & energy last m/m -0.1%, y/y 3.0%),
June Advance retail sales (last 0.5%, ex autos last 5.0%)
10:00am May Business Inventories (last -1.1%), TAF results
4:30pm API Crude Oil/Gasoline/Distillate Inventories
BoJ Rate Decision. OPEC monthly report
Wednesday, July 15, 2009
8:30am June CPI (last m/m 0.1%, y/y -1.3%;
ex food & energy last m/m 0.1%, y/y 1.8%),
June CPI Core Index SA (last 218.910),
July Empire Manufacturing (last -9.41)
9:15am June Industrial Production (last -1.1%), June Capacity Utilization (last 68.3%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
- US equities indices opened lower this morning and are printing fresh lows in mid morning trade in the wake of the worse-than-expected University of Michigan confidence reading.
Various bold-face commentators are offering pessimistic assessments, adding to the heavy tone. Permabear Nouriel Roubini said the US economy is not yet recovering and the recession will last six more months, while noted Yale Economist Robert Shiller said the US needs a second fiscal stimulus package. GE CEO Immelt wrote in an FT editorial that the US economy requires a "fundamental transformation," and went on to discuss the failures of an economy based on services and consumption. NYMEX crude shows no signs of letting up on its downward slide, with the front-month contract testing below $59 after Italian PM Berlusconi said the G8 has expressed disapproval of speculation in oil markets and its discussed intervening to block speculators.
- With the Dow falling towards 8100 and crude firmly below $60 risk aversion has put another underlying bid into US Treasuries.
The bench mark spread has narrowed back to 240 basis points with 10-year yield nearing 3.25% for the first time in nearly two months. The yield is approaching its 200-day EMA as well.
- GM passed a critical point in its restructuring process this morning, with the formal acquisition of the best assets of "old GM" by "new GM" following yesterday's court approval of the sale.
CEO Henderson insisted that "many" of GM's problems are in the rearview mirror and reiterated that he would take the company public again "as soon as is practical." More job cuts and massive cost reductions are still in the future for the automaker, as Henderson said he would reduce salaried staff by 20% by end of 2009. GM is required to pay off its loans from the government by 2015, but Henderson said the goal is to repay them "much sooner."
- Energy giant Chevron offered a mid-quarter update after the close yesterday, warning that its Q2 downstream results are projected to be significantly lower than the first quarter.
The company said its Q2 upstream earnings would benefit from increases crude prices, but this would be largely offset by substantial unfavorable foreign currency effects. Shaw Group fell short of the Street's earning expectations and cut its full-year outlook by around 10% in its Q3 report. Shaw's CEO said that underperforming projects impacted its Fossil & Nuclear segment. Shares of CVX were down 3%, while SGP were down 9% in the early going.
- Insurance firm Progressive Corp was more or less in line with earnings estimates, while net premiums were right in line on a y/y basis.
Regional banking name Susquehanna Bancshares said its second-quarter results would be below expectations due to a rise in loan loss provisions (from $35M in Q1 to $50M in Q2), while its non-performing loans rose to $230.2M from $156M q/q. Shares of SUSQ fell in the premarket and after the open, bottoming out around -10% before recovering somewhat. In other equity news, Goldman Sachs raised the US software and the US computer hardware sectors to a buy, moving selected names. Hard drive manufacturer STX is up 5% on the move, while IBM and CA are down slightly after being cut to neutral at Goldman.
- In currencies, the USD and JPY maintained most of their European gains thanks to continuing concerns over the sustainability of the global recovery.
The Chinese trade data registered its eighth consecutive monthly decline in both imports and exports components, while the US trade balanced improved during the month of May, with exports registering their biggest sequential gain since last July. There was vague chatter that the Russian Central bank (CBR) was a euro seller ahead of the NY morning, but no confirmation of such action.
The CBR did cut its refi rate earlier today and the Ruble was broadly softer which could be complementing such speculation. The EUR/USD ending the NY morning around the 1.3940 area and USD/JPY at 92.40. The commodities softness hit the AUD and CAD pairs, preventing CAD from benefiting from an improved employment report (the Canadian June employment report much better than expected at -7.4K, while the part-time component was +40.1K)
More Headlines
6:00:18 AM
OECD May Leading Indicator: 94.0 v 93.2 prior
- Signals potential recovery emerging in France and Italy
- Possible Trough emerging in US, Canada, UK, China and India economies
6:39:03 AM
*USD 3 MONTH LIBOR FIXES AT 0.51% V 0.51% PRIOR (fresh lows in 3 month USD, EUR and GBP fixings)
- Overnight USD-Libor: 0.24% v 0.25% prior
- Overnight GBP-Libor: 0.55% v 0.55%prior
- 3M GBP-Libor: 1.05% v 1.06% prior
- 3M EUR-Libor: 0.98% v 0.99% prior
7:50:14 AM
(IT) Italian PM Berlusconi: G8 has expressed disapproval regarding the return of speculation in oil markets
- G8 discussed with international organizations about intervening in oil markets to block oil speculation
- Must fight hedge fund speculation in commodity markets
8:30:02 AM
*(US) MAY TRADE BALANCE: -$26B V -$30.0BE
- Prior revised from -$29.2B to -$28.8B
- No revisions
8:54:13 AM
(RU) Russian President Medvedev: It would be simpler for Russia to join the WTO "on its own"; hopes the US will alter its missile shield plans, reiterates threat to station missiles in Kaliningrad
- Note that on 7/7, Medvedev said Russia still plans to join WTO.
-In early June, Russia threw its 16-year bid to join the World Trade Organization (WTO) into jeopardy when PM Vladimir Putin said Moscow would only join the trade body in partnership with two former Soviet republics.
10:00:33 AM
(US) Treasury Sec Geithner: Oversight of derivatives is the foundation for a more stable financial system, fresh regulations will prevent regulatory arbitrage - Congressional testimony
- Proposes to require all standardized derivative contracts be cleared through well-regulated central counterparties and executed either on regulated exchanges or regulated electronic trade execution systems.
- Proposes to encourage substantially greater use of standardized OTC derivatives and thereby to facilitate substantial migration of OTC derivatives onto central clearinghouses and exchanges.
- Propose to require all OTC derivative dealers, and all other major OTC derivative market participants, to be subject to substantial supervision and regulation, including conservative capital requirements; conservative margin requirements; and strong business conduct standards.
12:52:40 PM
(US) Treasury Sec Geitherner: Reiterates that a strong USD is in the interest of the US, not concerned by calls for "a new world currency" - CNN interview
- Now is not the time to settle the future of the GSEs.
- Believes Fed Chairman Bernanke has done and "excellent job" and deserves "a lot of confidence."
8:30am May Trade balance (last -$29.2B), June Import Price index (last m/m 1.3%, y/y -17.6%)
9:55am July prelim Univ of Michigan Confidence (last 70.8)
Todays Headlines
7:00 AM
*(UK) BOE MAINTAINS QUANTITATIVE EASING MEASURE AT £125B
-TO REVIEW PROGRAM AT AUGUST MEETING
- Asset purchases to completed in one month
8:30:02 AM
*INITIAL JOBLESS CLAIMS: 565K V 603KE; CONTINUING CLAIMS: 6.883M V 6.710ME (initial claims reading below 600K for the first time since week of January 23)
- Prior jobless claims revised from 614K to 617K
- Prior Continuing Claims revised from 6.702M to 6.724M
8:47:37 AM
IEA's Tanaka: Expects "very strong" rebound in oil demand next year
- Sees significantly tight markets by 2014, like 2008, unless there is more upstream investment
- More information on hedge funds, more transparency in futures markets are key to G8's attempts to curb energy market volatility.
9:00:17 AM
(US) Fed's Duke: Economy is slowly stabilizing, or deteriorating more slowly; banks should consider keeping TARP funds until economy heals
- Banks should not let "bailout stigma" govern their decisions on whether or not to retain TARP funds.
- Notes that the Fed is among those who "underestimated the complexity of the TARP program."
- Urges banks to make as many loans as possible in order to fuel recovery.
- Economic activity remains at low levles, confidence has not returned to pre-crisis levels.
10:30 AM
*EIA NATURAL GAS INVENTORIES:
+75 BCF VS. +80 TO +90 BCF ESTIMATE RANGE
11:02:35 AM
NY Fed: Purchased $2.99B in $300B outright coupons purchase; Dealers submitted $17.09B for consideration (bid to cover 5.7)
- Heaviest purchase was $2.25 in the 04/30/11 maturity
- Note: Avg bid to cover for prior four auctions is 3.01
1:01:38 PM
*TREASURY'S $11B 30-YEAR BOND REOPENING BID-TO-COVER RATIO: 2.36 V 2.68 PRIOR AND 2.56 AVE OVER THE LAST 5 REOPENINGS
- Indirect bidders take 50.2% of competitive bids
- Bonds draw 4.303% with 67.9% alloted at the high
- Note median 4.230%, low 4.150%
2:30:33 PM
(US) Fed's Stern: Prices of assets should be the focus of rate policy; Must do more to curb asset bubbles; improvement in economy is close
- Does not see inflation as 'inevitable' due to the expanded balance sheet
- Confident in consumer spending and manufacturing segments of economy
- Sees an expansion in credit availability recently compared with a few months prior
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.
- US equities opened in the black this morning, as the weekly initial jobless claims fell below 600K for the first time in 24 weeks (continuing claims remain at all-time highs around 6.8M).
Better-than-expected results from earnings season opener Alcoa, as well as initial positive investor reaction to June SSS figures supported sentiment. But like yesterday the gains were short lived and evaporated quickly in trade that continues be characterized as thin and choppy. Front-month NYMEX crude futures strengthened to above $61 before dropping below $60 level this morning for the first time since May 26. Treasury prices opened lower but yields are remaining below the levels seen ahead of yesterday's 10-year note auction results.
- Mid-cap financial group CIT is up 10% in today after the FT reported executives at the company are pushing regulators to stop stalling its requests to issue government-backed bonds.
CIT is the only major financial group that received TARP but has not been given the go-ahead to FDIC-backed debt. In other financial sector news, Citi shook up its senior management yet again, bumping CFO Ned Kelly to vice chairman and naming John Gerspach CFO in his stead. Former CFO Gary Crittenden is leaving the company. In March Gerspach was moved to be chairman of Citi Holdings, the entity created to manage bad assets the company is looking to sell.
- Alcoa kicked off earnings season yesterday after the close by surprising investors with a smaller-than-expected loss and impressive revenues.
On the conference call, executives said the company's liquidity situation is much better and said they were "very close" to being free cash flow positive. Shares of AA gained 5% before the open this morning, but have dropped into negative territory in mid morning trading. A couple of small cap names are also moving on earnings news, with both Scansource and Helen of Troy up 8% or so after much better than expected earnings performances last quarter. Note also that SCSC is down 14% after guiding revenue for next quarter much higher.
- The June same-store numbers were a mixed bag this month, with most companies still well below last year's levels but more than a few outperforming expectations.
TJX and ROST blew out estimates, coming in at +4% versus -2.6%e and +1% versus -2.3%e, respectively. ARO continues to stand out from the pack, with sales up 12%, although its worth noting this growth is less than the stronger growth seen in April and May. Department stores reported declines across the board, although they nearly all did better than expected, with high-end names SKS (-4.7% v -10.7%e) and JWN (-10% v -11%e) doing surprisingly better than expected. Higher-end mall retailers continue to suffer. LTD was much worse than expected (-12% v -8.3%e), while AEO and ANF racked up yet another month of big double-digit declines, with both worse than expected. Big box discounters BJ and COST were both a little better than expected, but still showing uncomfortable y/y sales declines, while TGT did worse than expected, at more than -6%.
- In currencies, the dollar once again tried to regain its composure during the New York morning as the G5 made vague comments on the reserve currency issue.
A Chinese official reiterated that management of reserve currency system must be improved, with a "more diversified" system a chief goal. World Bank President Zoellick insisted the dollar would remain the primary reserve currency but warned its role cannot be taken for granted by the United States. EUR/USD briefly probed above the 1.40 handle in early NY where it meet some selling pressure (rumored to be the Bank of International Settlements). Risk aversion crept back in after the mixed picture presented by the US claims data. Dealers noted that the initial claims number was likely impacted by seasonal factors as auto layoffs were far less than expected. Note that the German finance minister reiterated calls for the Bundesbank to consider making corporate bond purchases, citing need to improve lending given the looming threat of a credit crunch persists in the second half of 2009. The Bundesbank declined to comment on the remarks. The BoE left both its interest rates and quantitative easing measures unchanged. GBP/USD tested 1.6270 in the aftermath of the decision on relief that the £125B QE was left alone for the time being.
More Headlines
7:00 AM
*(UK) BOE MAINTAINS QUANTITATIVE EASING MEASURE AT £125B
-TO REVIEW PROGRAM AT AUGUST MEETING
- Asset purchases to completed in one month
8:30:02 AM
*INITIAL JOBLESS CLAIMS: 565K V 603KE; CONTINUING CLAIMS: 6.883M V 6.710ME (initial claims reading below 600K for the first time since week of January 23)
- Prior jobless claims revised from 614K to 617K
- Prior Continuing Claims revised from 6.702M to 6.724M
8:47:37 AM
IEA's Tanaka: Expects "very strong" rebound in oil demand next year
- Sees significantly tight markets by 2014, like 2008, unless there is more upstream investment
- More information on hedge funds, more transparency in futures markets are key to G8's attempts to curb energy market volatility.
9:00:17 AM
(US) Fed's Duke: Economy is slowly stabilizing, or deteriorating more slowly; banks should consider keeping TARP funds until economy heals
- Banks should not let "bailout stigma" govern their decisions on whether or not to retain TARP funds.
- Notes that the Fed is among those who "underestimated the complexity of the TARP program."
- Urges banks to make as many loans as possible in order to fuel recovery.
- Economic activity remains at low levles, confidence has not returned to pre-crisis levels.
10:30 AM
*EIA NATURAL GAS INVENTORIES:
+75 BCF VS. +80 TO +90 BCF ESTIMATE RANGE
11:02:35 AM
NY Fed: Purchased $2.99B in $300B outright coupons purchase; Dealers submitted $17.09B for consideration (bid to cover 5.7)
- Heaviest purchase was $2.25 in the 04/30/11 maturity
- Note: Avg bid to cover for prior four auctions is 3.01
"The only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it."
7:00am BoE Interest rate decision
8:30am Initial Jobless Claims (last 614K), Continuing Claims (last 6.702M)
10:00am May Wholesale Inventories (last -1.4%)
10:30am Natural Gas Inventories
1:00pm 30 year bond auction
Todays Headlines
7:34:46 AM
(UK) UK Fin Min Darling: FSA will strengthen bank capital rules and stop banks lending too much
- Plans to establish new council for financial stability (including BoE, Treasury & FSA) - financial reform white paper
- FSA to ensure banks have enough liquidity to operate at all times.
- FSA to report on yearly basis on remuneration code.
- FSA to have new powers to take into account risks from big hedge funds if needed.
- More "counter-cyclical" steps are needed; central banks will play a big role in this effort.
9:00:17 AM
*IMF JULY WORLD ECONOMIC OUTLOOK UPDATE:
-RAISES 2010 GLOBAL OUTLOOK TO 2.5% V 1.9% PRIOR APRIL VIEW
-First upgrade of its published forecasts in two years
- Global economy beginning to pull out of recession but recovery would likely be sluggish
9:14:50 AM
IMF Chief Economist Blanchard: Forces that are pulling the global economy up remain weak; Sustained recovery demands private spending
- Forces pulling economies down are now less than before.
- Banks are still not in great shape.
- Must see coordination of exit strategies on global basis.
- Too early to implement exit strategies but not too early to plan such exits
- Might need more stimulus in 2010/11 period if recovery stumbles
- Only 10% to 15% of US stimulus has been spent so far
10:30 AM
*DOE CRUDE: -2.9M V -2.5ME
GASOLINE: +1.9M V +800KE
DISTILLATE: +3.7M V +1.7ME
CAPACITY UTILIZATION: 86.8% V 86.8%E.
Distillate demand -218K bpd to 3.04M bpd
Gasoline demand +175K bpd to 9.23M bpd
1:01 PM
*TREASURY'S $19B 10-YEAR NOTE REOPENING BID-TO-COVER RATIO:
3.28 V 2.62 PRIOR AND 2.41 OVER THE LAST 5 REOPENINGS
- Indirect bidders take 43.9% of competitive bids - notes draw 3.365% with 86.7% alloted at high
1:16:12 PM
(US) Fed's Evans: Fiscal stimulus is having a positive impact but not as much as we would like; jobless rate to peak over 10% but below 10.6% - Q&A
- Notes unemployment has risen faster than he expected.
- Notes Non-TALF backed ABS issuance is a good sign.
- Reiterates the Federal deficit must be dealt with.
- Comments that it is not the Fed's responsbility to propose fiscal stimulus, but more would be helpful.
3:00:03 PM
*MAY CONSUMER CREDIT: -$3.2B V -$8.5BE
- Prior revised from -$15.7B to -$16.5B
- 4th straight decline (longest straight decline since 1991)
- Annual growth rate -1.5% v -7.8% m/m
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
- The IMF helped US equities open higher this morning for the first time since last Wednesday, but all three major indices made their way back to the red around 11amET.
Overall markets were hit with a fresh bout of risk aversion late in the NY morning as bids came into the Japanese Yen. Nervous investors seem to be waiting for more robust positive signals to emerge from upcoming earnings reports. The IMF published an update to its World Economic Outlook report, raising its 2010 global growth forecast to +2.5% from +1.9% back in April (and slightly lowering its outlook for 2009 growth to -1.4%).
However the IMF also warned that while the global economy may be beginning to pull out of recession, recovery would likely remain sluggish. Front-month crude continues to plumb new monthly lows, down $1.50 to trade around $61.25. In its medium-term outlook this morning, OPEC said it sees 2010 demand up a paltry 0.5%, while it said 2013 demand would remain below 2008 levels. The weekly DoE inventory figures are not helping things either with a larger than expected build in gasoline inventories. Gold is under pressure as well moving back towards the $900 mark for the first time in more than a month.
- US Treasury prices have been the beneficiary of the equity selling.
The long bond yield has worked back toward 4.25% while the benchmark is nearing 3.4% once again. These are levels not been seen since late May while the curve has flattened back below 250 basis points in the benchmark spread. Markets are cautiously awaiting today's 10-year reopening as yields have come in more than 50 basis points from the June auction. Investors are anxious to see whether the US Treasury can continue to raise money easily in the face of discounted prices.
- A couple of consumer names have seen big moves in the wake of better-than-expected quarterly results.
Discount retailer Family Dollar beat analysts' estimates by a hair last quarter and boosted its 2009 outlook for the third time, while its guidance for next quarter was well ahead of consensus estimates. Shares of FDO are up 10% in early trading. Casual dining name Ruby Tuesday did much better than expected in its Q4 and beat estimates in its guidance for next year, sending its share up 8% in the pre market; those gains vanished in the first half hour of trade, with RT in negative territory presently. Note that Pepsi Bottling beat earnings estimates but missed revenue targets in a big way thanks to FX impact and steady declines in volume world wide. Shares of Tractor Supply Company are up 9% after the agricultural machinery retailer hiked its earnings guidance for the year and crushed estimates for its Q2. Las Vegas Sands jumped 5% in the pre-market on news it was mulling an IPO for its Macau units, but shares are back to even mid morning.
- Currency trading in the New York session absorbed a flurry of reports from government agencies, cartel members and central banks without too much movement this morning.
The greenback maintained its trading range from the Asian and European morning, but has broken out late in the morning led by the USD/JPY move below 94. The Green is posting strong moves higher against the Euro, Pound, and Franc on risk aversion flows. The IMF report suggested that economies must remain supportive until economic growth resumed and deflationary risks subsided. Rising unemployment and loss of confidence in financial sector could trigger inflation but deflation risks are seen as small.
The ECB published a report on the role of the euro, noting that international use of the currency was relatively stable in 2008 and stating it accounted for 26.5% of global reserves compared to 25.3% at the end of 2007. Dealers noting that ECB report on Euro's international role suggested that the global financial crisis has had no visible effect on the USD and maintained its preeminence in international financial markets. Reports implies that emerging economic including China, Russia and India have had little success in actually reducing the USD's role in global affairs, despite repeatedly stance on such an objective. The OPEC report was followed by comments from El Badri, who said the cartel was still concerned about oil demand and hoping oil demand would bottom in 2009.
More Headlines
7:34:46 AM
(UK) UK Fin Min Darling: FSA will strengthen bank capital rules and stop banks lending too much
- Plans to establish new council for financial stability (including BoE, Treasury & FSA) - financial reform white paper
- FSA to ensure banks have enough liquidity to operate at all times.
- FSA to report on yearly basis on remuneration code.
- FSA to have new powers to take into account risks from big hedge funds if needed.
- More "counter-cyclical" steps are needed; central banks will play a big role in this effort.
9:00:17 AM
*IMF JULY WORLD ECONOMIC OUTLOOK UPDATE:
-RAISES 2010 GLOBAL OUTLOOK TO 2.5% V 1.9% PRIOR APRIL VIEW
-First upgrade of its published forecasts in two years
- Global economy beginning to pull out of recession but recovery would likely be sluggish
9:14:50 AM
IMF Chief Economist Blanchard: Forces that are pulling the global economy up remain weak; Sustained recovery demands private spending
- Forces pulling economies down are now less than before.
- Banks are still not in great shape.
- Must see coordination of exit strategies on global basis.
- Too early to implement exit strategies but not too early to plan such exits
- Might need more stimulus in 2010/11 period if recovery stumbles
- Only 10% to 15% of US stimulus has been spent so far
10:30 AM
*DOE CRUDE: -2.9M V -2.5ME
GASOLINE: +1.9M V +800KE
DISTILLATE: +3.7M V +1.7ME
CAPACITY UTILIZATION: 86.8% V 86.8%E.
Distillate demand -218K bpd to 3.04M bpd
Gasoline demand +175K bpd to 9.23M bpd
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
1:00pm 10 year note auction
3:00pm May Consumer Credit (last -$15.7B)
Todays Headlines
6:35:05 AM
*USD 3 MONTH LIBOR FIXES AT 0.54% V 0.54% PRIOR
- Overnight USD-Libor: 0.26% v 0.26%prior
- Overnight GBP-Libor: 0.54% v 0.54% prior
- 3M GBP-Libor: 1.11% v 1.12% prior
- 3M EUR-Libor: 1.02% v 1.04%prior
6:45:53 AM
(GE) German Fin Min Steinbrueck: German credit access may deteriorate further, may use unprecedented steps to prevent development of credit crunch
- Government and Bundesbank may join forces to combat credit squeeze, offer credit lines to the companies
- Need capital buffers for banks to offset cycle
- New accounting rules must come quickly
8:34:13 AM
American Bankers Assoc (ABA): Q1 consumer loan delinquency rate at 3.23% v 3.22% prior quarter, highest reading on record
- Late payments on home equity borrowings 3.52% v 3.03% prior
- late payment on lines of credit. 1.89% v 1.46% prior
8:58:05 AM
(RU) Russian President Medvedev: Russia still plans to join WTO
- Notes that Russia is "tired" of talks on WTO entry that have lasted 16 years.
10:00:10 AM
*(UK) NIESR GDP ESTIMATE:
- June -0.4% V -0.9%
- Prior revised to -1.3% form -0.9%
- Economy seen now stagnating rather than continuing to contract
- GDP decline lowest level in 1 year period
1:08:03 PM
Alcoa Inc CEO: Global demand for aluminum is recovering; China is 'clearly out of the woods'
- Comments that US and European demand has bottomed.
- reminder: Alcoa is scheduled to report Q2 earnings after the close tomorrow.
2:27:52 PM
(US) Senate Majority Leader Reid (D): There is no need for a second stimulus plan; climate bill will be taken up in Sept or October
- Note that earlier in the session, House Majority Leader Hoyer (D) said need to be open to possibility of additional fiscal stimulus spending.
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.
- US equities opened lower for the third consecutive session this morning as caution ahead of earnings season keeps things subdued and volume remains very thin.
Note that earnings season officially begins with Alcoa's second-quarter report after the close tomorrow. Front-month NYMEX crude has extended its slide, down $1 on the session to around $63. Treasury prices opened marginally lower in Chicago but have rallied back toward unchanged. The US benchmark yield is back at 3.5% while the 3-year offer 1.44% ahead of this afternoon's auction results.
- Healthcare stocks, particularly HMOs and hospitals, have been strong this morning as chatter circulates that Senate Democrats and the White House are moving closer to a deal on healthcare reform.
The WSJ reported that the White House Chief of Staff reiterated the Administration is willing to be flexible on reform as long as the deal gets done. Senator Grassley did question the timing of any healthcare bill, cautioning that a Senate vote may not come before the August recess, but he still expect the legislation to pass this year.
- Discover Financial is down more than 10% this morning after announcing yesterday that it would offer $500M in common stock (9.8% of market cap) and reaffirmed that it would report a 8.5-9% managed net charge off rate for Q3.
KeyCorp is up 4% after Keefe Bruyette raised the name to Outperform and the bank launched an offer to exchange $1.74B of preferred securities held by its various trusts for up to 158.5M shares of common stock (about 31.5% of shares outstanding). Note also that the American Bankers Association said that Q1 consumer loan delinquency rate hit 3.23%, for the highest reading on record. Late payments on home equity borrowings were 3.52% in Q1. The ABA said the effects of soaring US unemployment and an uncertain economic picture is driving delinquencies on credit card debt to all-time highs as a record number of consumers fell behind on their bills.
- Currency trading exhibited a reversal in price action from European moves during the New York session.
The EUR/USD pair probed back above the 1.40 level aided by a comment from German Finance Minister Steinbrueck, who commented that interest rate hikes would be needed to mop up liquidity in Europe. Although he did not mention any timeframe for the moves, EUR/USD tested 1.4050 where it did encounter some decent euro sell orders to quell the upside momentum. The reserve currency issue remains on the front burner ahead of the G8 summit, impacting EUR/USD. Dealers have noted that Middle-Eastern names have been aggressively playing the recent range in the pair. The American Bankers Assoc (ABA) survey data was also a factor.
- As the morning wore on the risk aversion theme resurfaced, helping the USD and JPY off their session lows as the commodity and equities revered thei intial gains.
USD/JPY moved back below the 95.00 level as some chatter circulated that the Bank of International Settlements (BIS) was on the offer in the pair. The EUR/CHF cross also getting attention as it drifted lower towards the 1.5150 level as dealers debated if any additional SNB currency intervention would prove effective as the market seems long the pair already. A move back toward 1.5000 could occur as weak market longs have been flushed out.
More Headlines
6:35:05 AM
*USD 3 MONTH LIBOR FIXES AT 0.54% V 0.54% PRIOR
- Overnight USD-Libor: 0.26% v 0.26%prior
- Overnight GBP-Libor: 0.54% v 0.54% prior
- 3M GBP-Libor: 1.11% v 1.12% prior
- 3M EUR-Libor: 1.02% v 1.04%prior
6:45:53 AM
(GE) German Fin Min Steinbrueck: German credit access may deteriorate further, may use unprecedented steps to prevent development of credit crunch
- Government and Bundesbank may join forces to combat credit squeeze, offer credit lines to the companies
- Need capital buffers for banks to offset cycle
- New accounting rules must come quickly
8:34:13 AM
American Bankers Assoc (ABA): Q1 consumer loan delinquency rate at 3.23% v 3.22% prior quarter, highest reading on record
- Late payments on home equity borrowings 3.52% v 3.03% prior
- late payment on lines of credit. 1.89% v 1.46% prior
8:58:05 AM
(RU) Russian President Medvedev: Russia still plans to join WTO
- Notes that Russia is "tired" of talks on WTO entry that have lasted 16 years.
10:00:10 AM
*(UK) NIESR GDP ESTIMATE:
- June -0.4% V -0.9%
- Prior revised to -1.3% form -0.9%
- Economy seen now stagnating rather than continuing to contract
- GDP decline lowest level in 1 year period
1:00pm 3 year note auction
4:30pmAPI Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
4:30 AM
*(EU) EURO-ZONE JULY SENTIX INVESTOR CONFIDENCE: -31.3 V -25.0E
6:28:09 AM
Euro vs US Dollar EU's Barroso: Unsure when the recovery may begin; growth potential will not be the same post crisis
- Europe is no longer in economic free-fall but remains in negative territory.
- The euro contributes to global stability, is happy with the euro's credibility.
- Stability is needed for major currencies.
- There is no question of being "for" or "against" USD.
- Expansionary policies cannot be carried on forever.
- Nations should begin planning their exit strategies.
6:31:18 AM
*USD 3 MONTH LIBOR FIXES AT 0.54% V 0.56% PRIOR
- Overnight USD-Libor: 0.26% v 0.27%prior
- Overnight GBP-Libor: 0.54% v 0.55% prior
- 3M GBP-Libor: 1.12% v 1.14% prior
- 3M EUR-Libor: 1.04% v 1.04%prior
10:43:06 AM
(GE) German Fin Min Steinbrueck: USD will maintain its 'leading role' in the world; Yuan and Euro will play more significant roles in the future
- Comments that it is important for European and US banks to be on equal ground as far as capital requirements
11:02:05 AM
NY Fed: Purchased $7B in $300B outright coupons purchase; Dealers submitted $18.15B for consideration (bid to cover 2.59)
- Heaviest purchase was $2.32B in the 04/30/14 maturity
- Note: Avg bid to cover for prior four auctions is 3.05
1:01:38 PM
*TREASURY'S $8B 10-YEAR TIPS BID-TO-COVER RATIO: 2.51 V 2.48 PRIOR AND 1.97 AVG OVER THE LAST 5 NEW ISSUES
- 49.7% to indirect bidders
- 23.38% allotted at high (vs. 46.5% at April auction)
- Notes draw 1.92%
2009 3:30:26 PM
(US) Fitch lowers California General Obligations (GOs) two notches to BBB from A-; outlook negative
- Cites recent action to issue IOUs and inability to move foward on agreement on budgetary and cash flow solutions.
- notes BBB rating indicates that expectations of default risk remain low, although the rating is well below that of most other tax supported issuers.
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.
- US equity indices opened to the downside this morning thanks to lingering caution from Thursday's worse-than-expected non-farm payroll data.
Traders bid up equities ahead of the 10amEST June ISM non-manufacturing data, but indices have dropped to session lows despite the ISM beating expectations. Note that the ISM prices paid sub index popped above 50 for the first time since last fall. The front-month NYMEX crude contract continues to make one-month lows, now down $2.50 to trade above $64. There has been little significant equity news to speak of, although it's worth noting that the FTC cleared Net App to acquire Data Domain (for $30/shr in cash and stock), while EMC upped its offer for the firm to $33.50 in cash from its prior offer of $30.
- Treasury prices have seen some selling at the long end of the curve pushing those yields higher.
The long bond is back above 4.35% while the benchmark is holding 3.5%. The curve has steepened with the benchmark spread gaining traction above 255 basis points. The Fed is undertaking another coupon purchase while the Treasury is auctioning off $8B in TIPS later this afternoon.
- In currencies, the risk aversion stemming from the payroll data continued to roil FX trading, to the benefit of overall USD and JPY sentiment.
During the New York session the EU's Barroso said he was unsure when the recovery might begin and warned Europe's growth potential would not be the same post crisis. Rising doubt on the global growth front has brought the fiscal health of countries and whole regions back into question. The Indian finance minister noted that its goal sustainable 9% GDP growth over the medium term would require continuing efforts to provide fiscal stimulus.
- EUR/USD is hovering around the 1.39 handle during the NY while the USD/JPY tested below the 95 handle for one-month lows.
EUR/JPY cross was off 200 pips below the 132 level. Energy and metal commodities remained heavy with the strong dollar against the European pairs. GBP/USD tested below the 1.62 level ahead of the NY morning before retracing back towards 1.62. Sterling's soft tone also buckled as the growing potential for more quantitative easing (QE) from the BoE continues to unsettle traders. The "shadow MPC" called on the BoE to maintain the base rate at 0.5% and called for an extension of its quantitative easing (QE) beyond the £150B it currently has permission to undertake. CAD and AUD were off their worst levels from the European morning. USD/CAD is around 1.1630 while AUD/USD is straddling the 0.79 level.
- With the G8 summit in Italy set to begin later this week, the USD remains vulnerable to comments from various G20 members on its reserve currency status.
The Indian Foreign Secretary commented that he was open to idea of replacing USD as global reserve currency. This comment echoed India Gov't Advisor Tendulkar stated last Friday that he would not be surprised if Rupee basket was revised to reduce role of USD. For the moment the risk aversion theme is outweighing the bulk of the reserve currency rhetoric. French President Sarkozy stated that a joint position on oil prices from the UK & France would be published within the next few days and commented that oil prices must target a reasonable price range.
More Headlines
4:30 AM
*(EU) EURO-ZONE JULY SENTIX INVESTOR CONFIDENCE: -31.3 V -25.0E
6:28:09 AM
Euro vs US Dollar EU's Barroso: Unsure when the recovery may begin; growth potential will not be the same post crisis
- Europe is no longer in economic free-fall but remains in negative territory.
- The euro contributes to global stability, is happy with the euro's credibility.
- Stability is needed for major currencies.
- There is no question of being "for" or "against" USD.
- Expansionary policies cannot be carried on forever.
- Nations should begin planning their exit strategies.
6:31:18 AM
*USD 3 MONTH LIBOR FIXES AT 0.54% V 0.56% PRIOR
- Overnight USD-Libor: 0.26% v 0.27%prior
- Overnight GBP-Libor: 0.54% v 0.55% prior
- 3M GBP-Libor: 1.12% v 1.14% prior
- 3M EUR-Libor: 1.04% v 1.04%prior
10:43:06 AM
(GE) German Fin Min Steinbrueck: USD will maintain its 'leading role' in the world; Yuan and Euro will play more significant roles in the future
- Comments that it is important for European and US banks to be on equal ground as far as capital requirements
11:02:05 AM
NY Fed: Purchased $7B in $300B outright coupons purchase; Dealers submitted $18.15B for consideration (bid to cover 2.59)
- Heaviest purchase was $2.32B in the 04/30/14 maturity
- Note: Avg bid to cover for prior four auctions is 3.05
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.
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.
10:00am June ISM Manufacturing (last 42.8),
June ISM Prices Paid (last 43.5),
May Construction Spending m/m (last 0.8%),
May Pending Home Sales (last m/m 6.7%, y/y 3.3%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
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.
