10:00am Aug ISM Manufacturing (last 48.9), Aug ISM Prices Paid (last 55), July Construction Spending m/m (last 0.3%), July Pending Home Sales (last m/m 3.6%, y/y 9.2%)
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
6:56:35 AM
(GE) Germany seeks G20 discussions on exit strategies and regulation at Sept 24th-25th summitt in Pittsburgh - Fin Min spokesperson
- France and Germany to increase NAB (new arrangment to borrow) share at IMF to €18B and €25B respectively
- Bundesbank to fund German NAB expansion via existing foreign reserves
- Does not expect currency debate to dominate G-20 debate
- G20 must remain committed to reducing public deficits
- Policy steps have stabilized financial markets
7:20:08 AM
(US) NY Fed's Dudley: Confident that current Fed Chief Bernanke willing to pursue exit strategy at the correct time -CNBC
- Is possible that inflation could see further decline
- Confident on turnaround
- Household spending/consumption rates will be major factor to watch looking forward
- Housing and auto sectors finally beginning to perform better
- Banking sector still set to face large credit losses
- Likely that decent growth will be seen in H2 2009
8:00 AM
-(BR) BRAZIL JULY INDUSTRIAL PRODUCTION
-M/M: 2.2% V 1.5%E
- Y/Y: -9.9% V -10.5%E
- Prior M/M revised fro, 0.2% to 0.4%
8:30 AM
-(CA) CANADA JUN GROSS DOMESTIC PRODUCT
M/M: 0.1% V 0.2%E; Q2 GDP ANNUALIZED: -3.4% V -3.0%E (first positive MoM GDP reading since July 2008)
- Prior GDP Annualized revised from -5.4% to -6.1%
9:45:01 AM
*AUG CHICAGO PURCHASING MANAGERS INDEX: 50.0 V 48E (highest reading since Sept 2008)
**sub-indices:
- Prices Paid: 50.0 v 35.0 last
- New Orders: 52.5 v 48.0 last
- Employment: 38.7 v 35.3 last
- Inventories: 27.5 v 25.4 last
- Supplier Deliveries: 54.6 v 49.6 last
- Production: 52.9 v 43.3 last
- Order Backlogs: 45.8 v 32.1 last
10:01 AM
(TU) Turkey July Trade Balance:
-$3.4B v -$3.9Be
- Exports at $9.0B, down 28% y/y
- Imports at $12.4B, down 40% y/y
10:30 AM
*AUG DALLAS FED MANUFACTURING ACTIVITY:
-9.1% V -14%E
- Prior revised from -25.5% to -23.4%
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 and European equity markets began the week under some pressure in the wake of fresh declines in Asia. The Shanghai Composite hit a new 3-month low while Nikkei whipsawed to a lower close after their election results. After the NY open the August Chicago PMI index reached 50 for the first time since September while the new orders and production indices signaled growth. The data did little in the way of providing upside momentum for stocks. The head of the NY Fed garnered some attention in a TV interview when he assured that he remained confident in the ongoing turnaround and the Fed's ability to keep future inflation in check, but that the banking sector still faces large credit losses. He also raised some eyebrows when expressing his view that new regulation of bank stocks in particular is critical to avoid a similar financial crisis in the future. Overall trading volumes remain light with UK markets closed for a holiday, but the tone is decidedly negative with decliners leading advancers by a wide margin on the NYSE.
- October crude is dipped back below $70, down 3.8% on the session amidst general commodity weakness. Natural Gas is back below $3 while gold is off nearly 8% hovering right at $950. Treasury prices are holding fairly steady with the 10-year note up fractionally yielding 3.44%. The long end is a little lower with T-bond futures down a quarter of a point in thin trade.
- There was some interesting M&A announced before the open with Disney making a play for Marvel in a $4B cash and stock deal. MVL has surged more than 25% to $49 while Disney stock has declined modestly. Over in the oil patch Baker Hughes offered $5.5B in cash and stock for BJ Services. BJS has rallied a fairly modest 7.5% to $16.60 while BHI is lower by nearly 7%. Though the deal has touched off the predicable chatter about "who is next" the OIH is lower by 3%.
- The NY currency action continued to consolidate from Asian market price action with the election of a new Japanese government and another strong sell-off in the Chinese equity markets. The USD initially held onto a portion of its gains against the European components. EUR/USD hovered just above the 1.43 level after the Chicago PMI data but has since popped towards 1.4350.
- The CAD was broadly weaker ahead of its GDP data for the month of June and its Q2. The MoM reading was positive for the first time since July 2008 but the number failed to beat consensus expectations. The USD/CAD pair approached the 1.11 handle and dealers were aware of the pairs downtrend line in effect since Mar with pivotal resistance currently seen at 1.1140 level.
- Some dealer chatter is focusing on the central bank front and noting that the CHF/JPY cross might best suit recent policy views by the respective central bankers. Touched off by the speculation surrounding the new Japanese government's possible stance on reserves, as well as the SNB desire to curb CHF appreciation. The 84 level is in sight as a potential momentum point for an additional move lower in this cross.
More Headlines
6:56:35 AM
(GE) Germany seeks G20 discussions on exit strategies and regulation at Sept 24th-25th summitt in Pittsburgh - Fin Min spokesperson
- France and Germany to increase NAB (new arrangment to borrow) share at IMF to €18B and €25B respectively
- Bundesbank to fund German NAB expansion via existing foreign reserves
- Does not expect currency debate to dominate G-20 debate
- G20 must remain committed to reducing public deficits
- Policy steps have stabilized financial markets
7:20:08 AM
(US) NY Fed's Dudley: Confident that current Fed Chief Bernanke willing to pursue exit strategy at the correct time -CNBC
- Is possible that inflation could see further decline
- Confident on turnaround
- Household spending/consumption rates will be major factor to watch looking forward
- Housing and auto sectors finally beginning to perform better
- Banking sector still set to face large credit losses
- Likely that decent growth will be seen in H2 2009
8:00 AM
-(BR) BRAZIL JULY INDUSTRIAL PRODUCTION
-M/M: 2.2% V 1.5%E
- Y/Y: -9.9% V -10.5%E
- Prior M/M revised fro, 0.2% to 0.4%
8:30 AM
-(CA) CANADA JUN GROSS DOMESTIC PRODUCT
M/M: 0.1% V 0.2%E; Q2 GDP ANNUALIZED: -3.4% V -3.0%E (first positive MoM GDP reading since July 2008)
- Prior GDP Annualized revised from -5.4% to -6.1%
9:45:01 AM
*AUG CHICAGO PURCHASING MANAGERS INDEX: 50.0 V 48E (highest reading since Sept 2008)
**sub-indices:
- Prices Paid: 50.0 v 35.0 last
- New Orders: 52.5 v 48.0 last
- Employment: 38.7 v 35.3 last
- Inventories: 27.5 v 25.4 last
- Supplier Deliveries: 54.6 v 49.6 last
- Production: 52.9 v 43.3 last
- Order Backlogs: 45.8 v 32.1 last
“The more I want to get something done, the less I call it work.”
Market Week Wrap-up
-Equity trading was directionless this week, and US indices ended the week more or less where they began.
The Administration confirmed that President Obama would nominate Fed Chairman Ben Bernanke for a second four-year term, a move that was praised from most quarters.
Meanwhile, the White House's mid-year budget review trimmed estimates for the FY10 deficit to $1.58 trillion (mostly since money earmarked for bailing out banks is no longer required) but increased the deficit the ten-year deficit projection by $2T.
The month-long "cash-for-clunkers" program ended, with 690K vehicles traded in at a cost of $2.9B in Federal funding. Housing data showed further improvement and the Conference Board's Consumer Confidence index rose to 54.1, blowing away estimates.
For the week, the DJIA, S&P500, and Nasdaq were each up less than 0.5%.
Week of 8/31/2009 thru 9/4/2009
Monday, August 31, 2009
9:45am Aug Chicago Purchasing Manager Index (last 43.4)
10:00am Aug NAPM-Milwaukee (last 45)
10:30am Aug Dallas Fed Manufacturing (last -25.5%)
Tuesday, September 01, 2009
10:00am Aug ISM Manufacturing (last 48.9),
Aug ISM Prices Paid (last 55),
July Construction Spending m/m (last 0.3%),
July Pending Home Sales (last m/m 3.6%, y/y 9.2%)
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Wednesday, September 02, 2009
7:30am Aug Challenger Job Cuts y/y (last -5.7%)
8:15am Aug ADP Employment Change (last -371K)
8:30am Final Q2 Nonfarm Productivity (last 6.4%), Q2 Unit Labor Costs (last -5.8%)
10:00am July Factory Orders (last 0.4%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
8:30am Aug Nonfarm Payrolls (last -247K),
Aug Unemployment Rate (last 9.4%),
Aug Manufacturing Payrolls (last -52K),
Aug Average Hourly Earnings (last m/m 0.2%, y/y 2.5%)
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
8:30am July Personal Income (last -1.3%),
July Personal Spending (last 0.4%),
July PCE Deflator y/y (last -0.4%),
June PCE Core (last m/m 0.2%, y/y 1.5%)
9:55am Aug Final U. of Michigan Confidence (last 63.2)
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.
8:30am Preliminary Q2 Annualized GDP q/q (last -1.0%), Q2 GDP Price Index (last 0.2%), Q2 Personal Consumption (last -1.2%), Q2 Core PCE q/q (last 2.0%), Initial Jobless Claims (last 576K), Continuing Claims (last 6.241M)
10:30am Natural Gas Inventories
1:00pm Treasury's 7-yr auction
Todays Headlines
8:30:09 AM
*JULY DURABLE GOODS ORDERS: 4.9% V 3.0%E; DURABLES EX-TRANSPORTATION: 0.8% V 0.9%E
- Prior Durables revised from -2.2% to -1.3% (second revision)
- Prior Durables Ex Transportation revised from +1.6% to +2.5% (second revision)
8:44:53 AM
(US) PIMCO's El-Erian: Taking advantage of rally to position investments more carefully in higher-quality assets
- Fed needs to take a back seat to fiscal authorities in cleaning up the crisis.
- Difficult to predict when markets will come off their :sugar high"
- International coordination for dealing with the crisis is eroding, would like to see G-20 jumpstart global coordination
9:00 AM
*(GE) GERMAN AUG CPI - NORTH RHINE-WEST.
-M/M: 0.3% V -0.2% PRIOR
- Y/Y: 0.0% V -0.7% PRIOR
10:00:02 AM
*JULY NEW HOME SALES: 433K V 390KE (+9.6% M/M)
- prior revised from 384K to 395K
- Median price $210.1K v $210.4K m/m (unch); v $237K y/y (-11%)
- Months supply 7.5 months (lowest since April 2007) v 8.5 in June
- New home sales highest since Sept 2008; m/m increase largest since +9.6% m/m in Feb 2005
10:14:54 AM
(FR) French Pres Sarkozy: Seeking to discuss energy prices at G-20 meeting in Sept; Euro should not suffer by itself for FX adjustments
- Will also seek to discuss global economic imbalances at meeting.
- Must continue to avoid the destabilizing effects of broad currency fluctuations.
- on the dollar Sarkozy comments "a multipolar world cannot count on one currency."
11:02:34 AM
NY Fed: Purchased $2.3B in $300B outright coupons purchase; Dealers submitted $7.44B for consideration (bid to cover 3.25)
- Heaviest purchase was $539M in the 08/15/39 maturity (longest dated)
- Note: Avg bid to cover for prior four auctions is 4.08
12:42:33 PM
(US) American Hospital Assn: US hospitals to gain more than $15B over the next decade from healthcare reform due to expanded coverage
-Hospital association notes could receive billions in reimbursements over the next 10 years; offsetting and exceeding the cost cuts the hospitals promised to the White house previously
- Hospitals receive a benefit from the elimination of bad debt for caring for uninsured
1:01:41 PM
*TREASURY'S $39B 5-YEAR NOTE AUCTION BID-TO-COVER RATIO: 2.51 V 1.92 PRIOR AND 2.20 AVG OVER THE LAST 10 AUCITONS
- indirect bidders take 56.4% of competitive bids
- notes draw 2.494% with 16.5% alloted at the high
- median 2.419%, low 2.31%
1:25:41 PM
Fed's Lockhart: too soon to contemplate raising rates; exit strategy for exit from asset purchase programs must be carefully communicated to prevent distortions - Q&A with reporters
- sees Fed's balance sheet starting to shrink in 2010.
- says he does not rule out raising MBS purchases but not leaning in that direction.
- notes recent housing data has been encouraging, has 'every hope' that the housing market has bottomed.
- expects more bank failures.
4:11:15 PM
FDIC Board votes 4-1 to approve revised private equity proposals, relaxing rules for investments in in failed banks
- OTS Bowman dissents
- FDIC votes 5-0 to approve proposal on extension of transaction account guarantee program for banks
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 trading has been unsettled this morning as the leading US indices bounce in and out of negative territory. The July New Homes Sales figure rose nearly 10% on a sequential basis, for their biggest m/m gain since early 2005.
Some analysts cited a surge of first-time homebuyers cutting deals as the Federal tax credits for such first-time buyers are scheduled to expire in November. In another sign of housing normalization, the supply of new homes fell to 7.5 months from 8.5 months in June. The homebuilder ETF XHB is up 3% on the news. Front-month crude is testing the $71 handle after both API and DoE data showed fresh builds in inventories, against expectations for another round of declines.
- In earnings, Dollar Tree Stores reported Q2 results that were well ahead of estimates and hiked its guidance for the full year.
Executives said back-to-school sales are doing well so far, while discretionary spending continues to grow. Williams Sonoma reported a modest profit (expectations were for a loss) and significantly improved its guidance for the coming two quarters and the full year. Footwear retailer DSW managed to outperform earnings estimates. Shares of DLTR are up 7%, DSW is up 9% and WSM has risen nearly 15%.
- The dollar maintained a firmer tone during the New York session, taking its cue from comments out of the Chinese Cabinet that it would curb excessive investment in industrial sectors experiencing overcapacity, helping to erode momentum in most commodities.
The comments compounded earlier rhetoric from IFO members and the ECB's Gonzalez-Paramo on economic sustainability. EUR/USD headed below the 1.4250 level, where chatter indicated an Asian sovereign account had been bidding for euros for month-end commercial purposes. French President Sarkozy commented that he would discuss energy prices at G-20 meeting in September and warned the euro alone should not suffer in FX adjustments. The USD retraced its session gains as equities strengthened following the US new homes data.
More Headlines
8:30:09 AM
*JULY DURABLE GOODS ORDERS: 4.9% V 3.0%E; DURABLES EX-TRANSPORTATION: 0.8% V 0.9%E
- Prior Durables revised from -2.2% to -1.3% (second revision)
- Prior Durables Ex Transportation revised from +1.6% to +2.5% (second revision)
8:44:53 AM
(US) PIMCO's El-Erian: Taking advantage of rally to position investments more carefully in higher-quality assets
- Fed needs to take a back seat to fiscal authorities in cleaning up the crisis.
- Difficult to predict when markets will come off their :sugar high"
- International coordination for dealing with the crisis is eroding, would like to see G-20 jumpstart global coordination
9:00 AM
*(GE) GERMAN AUG CPI - NORTH RHINE-WEST.
-M/M: 0.3% V -0.2% PRIOR
- Y/Y: 0.0% V -0.7% PRIOR
10:00:02 AM
*JULY NEW HOME SALES: 433K V 390KE (+9.6% M/M)
- prior revised from 384K to 395K
- Median price $210.1K v $210.4K m/m (unch); v $237K y/y (-11%)
- Months supply 7.5 months (lowest since April 2007) v 8.5 in June
- New home sales highest since Sept 2008; m/m increase largest since +9.6% m/m in Feb 2005
10:14:54 AM
(FR) French Pres Sarkozy: Seeking to discuss energy prices at G-20 meeting in Sept; Euro should not suffer by itself for FX adjustments
- Will also seek to discuss global economic imbalances at meeting.
- Must continue to avoid the destabilizing effects of broad currency fluctuations.
- on the dollar Sarkozy comments "a multipolar world cannot count on one currency."
11:02:34 AM
NY Fed: Purchased $2.3B in $300B outright coupons purchase; Dealers submitted $7.44B for consideration (bid to cover 3.25)
- Heaviest purchase was $539M in the 08/15/39 maturity (longest dated)
- Note: Avg bid to cover for prior four auctions is 4.08
8:30am July Durable Goods Orders (last -2.5%, ex-transport 1.1%)
10:00am July New Home Sales (last 384K, m/m 11%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
1:00pm Treasury's 5-yr auction
Todays Headlines
9:00:02 AM
*JUN S&P/CASESHILLER-20 Y/Y: -15.44% V -16.4%E; HOME PRICE INDEX: 141.86 V 139.84 PRIOR
- Q2 US HPI: 132.64 v 128.81 prior; HPI Y/Y: -14.92% v -19.75%e
- Prior Home Price Index Revised from 139.84 to 139.91
- Prior Composite-20 revised from -17.06% to -17.02%
- Prior US HPI revised from 128.81 to 128.94
- Prior US HPI YOY% revised from -19.07% to -19.11%
9:00:03 AM
*(BE) BELGIUM AUG BUSINESS CONFIDENCE LEVEL: -18.2 V -20.0E
- No revisions
***Reminder: Belgium seen as an indicator for the German IFO Business Climate expected out in tomorrow's European session (Aug 26th)
9:12:39 AM
(BR) Brazil Central Banker Meirelles: Credit now back at pre-crisis levels
- Anti-crisis measures have stabilized market
- Brazil is emerging from crisis sooner than others due to forceful and decisive measures
- Q4 GDP of 4% is not too optimistic
10:00:04 AM
*AUG CONSUMER CONFIDENCE: 54.1 V 47.9E
- Prior revised from 46.6 to 47.4
**Conference Board:
- Aug Expectations Index: 73.5 v 63.4 in July (highest level since Dec 2007)
- Percentage of consumers who saw more jobs ahead in coming months increased to 18.4% from 15.5% m/m
- Percentage of consumers who saw fewer jobs ahead in coming months fell to 23.3% from 26.1% m/m
10:08:13 AM
*JUN HOUSE PRICE INDEX M/M: 0.5% V 0.4%E
- Q2 House price index Q/Q: -0.7% v -0.4%e
- Prior MoM revised to 0.6% v 0.09% prior
- Home prices -5% in 12 months ended in June; Q2 -6.1% y/y
1:01:40 PM
TREASURY'S $42B 2-YEAR NOTE AUCTION BID-TO-COVER RATIO: 2.68 V 2.75 PRIOR AND 2.63 AVE OVER LAST 10 AUCTIONS
- indirect bidders take 49.4% of competitive bids
- notes draw 1.119% with 92.3% alotted at the high
- median bid 1.06%, low bid 0.95%
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 nomination of Ben Bernanke for another term as chairman of the Fed, improved housing numbers and strong consumer confidence data sent US stock markets higher once again.
The Conference Board's Consumer Confidence index rose to 54.1 this month from an upwardly revised 47.4 in July and far above the 47.5 reading analysts expected. But continuing skittishness over the sustainability of the recovery has pulled equities off their highs, with both the White House and Congressional Budget Office out with fresh FY09 Federal budget deficit estimates reminding everyone of the precarious situation the US government faces heading into the next decade. Front-month NYMEX crude spiked above $74.50 with the morning's peak in equities, then rapidly traded off to below $74. Treasury prices have stayed right around unchanged to slightly lower in the wake rising stock prices. The 2-year kicks off a week full of Treasury auctions this afternoon when the results of the $42B auction are announced. The when issued 2-year yield of 1.09% is roughly 6 basis points above the cash market.
- The June S&P/CaseShiller and June House Price Index indicated improvements in housing, although there has been lively debate over how the data should be interpreted.
The S&P/CS home price index rose on a q/q basis for the first time in three years, prompting some to say housing has bottomed. The S&P/CS composite showed home prices declined less than expected and improved a bit over May levels (a second consecutive gain) in the 20 leading metropolitan areas in the US, but are still 16% lower than last year. The economists that developed the index, Karl Case and Robert Shiller gave contrasting interpretations of the data; Case said "the boat has turned" for US housing while Schiller warned that less positive data should reverse this trend soon. The Commerce Department's Homebuilders spike up in the mid single digits on the news, but have traded off with markets.
- Multiple consumer franchise names reported earnings before the bell. Staples came in line with expectations and once again refrained from offering any forward-looking guidance.
Staples CFO told CNBC that while customers returning in larger numbers and back-to-school sales are looking up, average tickets remain flat. Shares of SPLS popped into the black just after the bell but have returned to negative territory mid morning - rivals ODP and OMX are both up 4% or so on their competitor's weakness. Burger King Holdings crushed EPS estimates and offered strong guidance for its FY10, although comps are still in negative territory. Shares of BKC are around +8% in early trading, leaving other fast-food names in the dust. Quarterly losses at bookseller Borders Group were higher than expected, although the CEO said the worst is behind the company, which should be able to drive better sales in the second half of the year. Shares of BGP rose 5% before the open, then dropped right into negative territory from the open. In other earnings, Medtronic met expectations and reiterated its 2010 outlook. Shares of MDT are down 1% on the day.
- The USD and JPY saw their pre-European gains all evaporate as the NY morning wore on aided by better US home price and as rumored consumer confidence data above the 50 level.
Congressional Budget Office (CBO) painted a fresh picture on the US deficit front as it raised its FY09 budget deficit at $1.59 trillion compared to $1.8 trillion prior estimate and trimmed its 2010 deficit at $1.38T versus $1.4T prior estimate.
More Headlines
9:00:02 AM
*JUN S&P/CASESHILLER-20 Y/Y: -15.44% V -16.4%E; HOME PRICE INDEX: 141.86 V 139.84 PRIOR
- Q2 US HPI: 132.64 v 128.81 prior; HPI Y/Y: -14.92% v -19.75%e
- Prior Home Price Index Revised from 139.84 to 139.91
- Prior Composite-20 revised from -17.06% to -17.02%
- Prior US HPI revised from 128.81 to 128.94
- Prior US HPI YOY% revised from -19.07% to -19.11%
9:00:03 AM
*(BE) BELGIUM AUG BUSINESS CONFIDENCE LEVEL: -18.2 V -20.0E
- No revisions
***Reminder: Belgium seen as an indicator for the German IFO Business Climate expected out in tomorrow's European session (Aug 26th)
9:12:39 AM
(BR) Brazil Central Banker Meirelles: Credit now back at pre-crisis levels
- Anti-crisis measures have stabilized market
- Brazil is emerging from crisis sooner than others due to forceful and decisive measures
- Q4 GDP of 4% is not too optimistic
10:00:04 AM
*AUG CONSUMER CONFIDENCE: 54.1 V 47.9E
- Prior revised from 46.6 to 47.4
**Conference Board:
- Aug Expectations Index: 73.5 v 63.4 in July (highest level since Dec 2007)
- Percentage of consumers who saw more jobs ahead in coming months increased to 18.4% from 15.5% m/m
- Percentage of consumers who saw fewer jobs ahead in coming months fell to 23.3% from 26.1% m/m
9:00am June S&P/CS Home Price Index (last 139.84), June S&P/CS Composite-20 y/y (last -17.06%)
10:00am Aug Consumer Confidence (last 46.6), June House Price Index m/m (last 0.9%), Aug Richmond Fed Manufacturing Index (last 14), TAF results
1:00pm Treasury's 2-yr auction
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
6:50:55 AM
USD 3 Month Libor fixes at 0.39% v 0.39% prior
- Overnight USD: 0.23% v 0.23% prior
- Overnight GBP: 0.52% v 0.52% prior
- 3M GBP: 0.71% v 0.72% prior
- 3M EUR: 0.82% v 0.82% prior
8:30 AM
*(CA) CANADA JUN RETAIL SALES
M/M: 1.0% V 0.2%E
EX AUTOS M/M: 1.0% V 0.4%E
- Prior Retail Sales MoM revised from 1.2% to 1.1%
- Prior Ex Autos MoM revised from 0.7% to 0.6%
10:30:06 AM
*(IS) ISRAELI CENTRAL BANK RAISES BASE RATE BY 25BPS TO 0.75%; NOT EXPECTED
- Was expected to hold its base rate at 0.50%
- Central bank notes that the rate increase was to help bring inflation back to the range of 1-3%; as inflation is towards the upper end of its target without the inclusion of Govt tax increases
10:30:06 AM
*(IS) ISRAELI CENTRAL BANK RAISES BASE RATE BY 25BPS TO 0.75%; NOT EXPECTED
- Was expected to hold its base rate at 0.50%
- Central bank notes that the rate increase was to help bring inflation back to the range of 1-3%; as inflation is towards the upper end of its target without the inclusion of Govt tax increases
11:02:41 AM
NY Fed: Purchased $6.1B in $300B outright coupons purchase; Dealers submitted $29.37B for consideration (bid to cover 4.82 )
- Heaviest purchase was $2.4B in the 02/15/12 maturity
- Note: Avg bid to cover for prior four auctions is 3.7
11:42:16 AM
(EU) ECB's Mersch: Current recovery is "not sustainable," although economic downturn has been halted; No need to reduce ECB stimulus as of yet - newspaper interview
- Does not see a sustainable recovery in Germany or France.
- Current recovery is coming from government stimulus spending and monetary policy.
- Sees a new economic downturn as still a risk.
- Says its better to avoid too much optimism.
- Outlook for financial markets remains "very volatile."
12:25:55 PM
(US) White House: Current H1N1 flu strain poses a serious threat to the US
- Follow up 1:00pm : White House science advisors are advising US to accelerate stockpiling of H1N1 vaccine. Advisors ask the FDA to speed up decision on intravenous flu drug formulas.
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.
- Momentum from the latter end of last week's steady upward moves in equities is continuing this morning in the absence of major corporate news or economic data.
Positive rhetoric from global economists at the annual Jackson Hole retreat over the weekend is also supporting equities. Perma-bear Noriel Roubini warned of the strong possibility of a double-dip recession in an FT op-ed piece, maintaining his prior position that the global economy will bottom out in the second half of 2009; while the Fed's Bullard in comments over the weekend cast doubt on the potential for a double dip recession. PIMCO's McCulley added to his recent comments about the "new normal" in the US, noting that in the longer term unemployment may settle around the 6% level due to positions that may not be transferable after the recovery settles in. Front-month NYMEX crude is trading in a narrow band around the $74 handle.
- In equity news, financials continue to move higher in early trading, led by Citigroup, which popped above the $5 mark for the first time since January mid morning.
The WSJ's "Heard on the Street" column is overall positive on the firm, citing its stronger tangible common equity level coming out of the recent preferred-for-common stock exchange. Shares of Citi are up nearly 5% on the day, while other leading financials are up in the low single digits. Note that Freddie and Fannie are up 45% and 20% respectively, extending the big gains in the name seen from last week. In other news, Warner Chilcott confirmed that it would acquire PG's pharmaceutical unit for $3.1B. PG sees the sale adding $1.4B (or around $0.44/shr) to earnings after tax, followed by EPS dilution in the range of $0.10 to $0.12 per share in fiscal year 2010. Shares of WCRX are up 30% on the news, while PG is more or less flat on the day.
- In currencies, the greenback has seen strength from the European morning slip away as commodities maintain their steady tone despite cautious comments from the Chinese government earlier today.
Overall, currencies continue to take their lead from equity markets. EUR/USD is little changed from its opening levels seen in Tokyo around the 1.4330 area. USD/CHF is holding above Friday's lows of 1.0550. Sterling is bucking the trend as fiscal concerns continue to dog the pound. GBP/USD trades at the 1.6420 area and off by 70+ pips from its Asian opening levels. The commodity-related currencies are firmer with CAD getting an added boost from better-than-expected retail sales data for the month of June.
More Headlines
6:50:55 AM
USD 3 Month Libor fixes at 0.39% v 0.39% prior
- Overnight USD: 0.23% v 0.23% prior
- Overnight GBP: 0.52% v 0.52% prior
- 3M GBP: 0.71% v 0.72% prior
- 3M EUR: 0.82% v 0.82% prior
8:30 AM
*(CA) CANADA JUN RETAIL SALES
M/M: 1.0% V 0.2%E
EX AUTOS M/M: 1.0% V 0.4%E
- Prior Retail Sales MoM revised from 1.2% to 1.1%
- Prior Ex Autos MoM revised from 0.7% to 0.6%
10:30:06 AM
*(IS) ISRAELI CENTRAL BANK RAISES BASE RATE BY 25BPS TO 0.75%; NOT EXPECTED
- Was expected to hold its base rate at 0.50%
- Central bank notes that the rate increase was to help bring inflation back to the range of 1-3%; as inflation is towards the upper end of its target without the inclusion of Govt tax increases
10:30:06 AM
*(IS) ISRAELI CENTRAL BANK RAISES BASE RATE BY 25BPS TO 0.75%; NOT EXPECTED
- Was expected to hold its base rate at 0.50%
- Central bank notes that the rate increase was to help bring inflation back to the range of 1-3%; as inflation is towards the upper end of its target without the inclusion of Govt tax increases
11:02:41 AM
NY Fed: Purchased $6.1B in $300B outright coupons purchase; Dealers submitted $29.37B for consideration (bid to cover 4.82 )
- Heaviest purchase was $2.4B in the 02/15/12 maturity
- Note: Avg bid to cover for prior four auctions is 3.7
"Stay committed to your decisions, but stay flexible in your approach."
Week Wrap-up
-The rally mentality returned to markets this week as positive economic data and gyrations in Chinese equity trading combined to push the major US indices out to fresh year to date highs. Substantial declines on the Shanghai Composite pulled down European and US equities early in the week (on Wednesday the Shanghai index hit a 20% retracement off its August 4th high), but Shanghai made its second biggest one-day gain of the year on Thursday and managed to rebound again on Friday as well, bringing Western markets higher in turn.
Strength was also seen in regional US economic data, including the Philadelphia Fed and Empire Manufacturing surveys, with the latter turning positive for the first time since April 2008.
More worrisome data came in the form of second quarter mortgage delinquencies, which unsurprisingly hit another record high at 9.24%, while Q2 mortgages in foreclosure surged to 4.30% from 3.85% in Q1.
Plenty of positive rhetoric supported confidence but hardly drowned out the naysayers.
Opening the Fed's annual symposium at Jackson Hole, Wyoming, Fed Chairman Bernanke said the US is on the verge of recovery and the global economy is starting to emerge from recession. Elsewhere, Goldman Sachs' Abby Cohen said she expects US GDP growth of up to 3% in coming quarters.
Less optimistic comments were heard from Warren Buffett, who wrote in a NY Times op-ed piece that "...unchecked greenback emissions will certainly cause the purchasing power of currency to melt."
And in the background were rumbles of a still devastated financial sector, as Guaranty Financial Group came to the brink of bankruptcy before the FDIC arranged a sale of the company to Spanish bank BBVA. Had it gone under, GFG would have been among the ten largest bank failures in US history.
For the week, the DJIA rose 2%, the S&P500 gained 2.2%, while the Nasdaq edged up 1.7%.
Week of 8/24/2009 thru 8/28/2009
Monday, August 24, 2009
10:00am TAF auction
Tuesday, August 25, 2009
9:00am June S&P/CS Home Price Index (last 139.84),
June S&P/CS Composite-20 y/y (last -17.06%)
10:00am Aug Consumer Confidence (last 46.6),
June House Price Index m/m (last 0.9%),
Aug Richmond Fed Manufacturing Index (last 14), TAF results
1:00pm Treasury's 2-yr auction
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Wednesday, August 26, 2009
8:30am July Durable Goods Orders (last -2.5%, ex-transport 1.1%)
10:00am July New Home Sales (last 384K, m/m 11%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
1:00pm Treasury's 5-yr auction
Thursday, August 27, 2009
8:30am Preliminary Q2 Annualized GDP q/q (last -1.0%),
Q2 GDP Price Index (last 0.2%),
Q2 Personal Consumption (last -1.2%),
Q2 Core PCE q/q (last 2.0%),
Initial Jobless Claims (last 576K),
Continuing Claims (last 6.241M)
10:30am Natural Gas Inventories
1:00pm Treasury's 7-yr auction
Friday, August 28, 2009
4:30am Preliminary UK Q2 GDP.
8:30am July Personal Income (last -1.3%),
July Personal Spending (last 0.4%),
July PCE Deflator y/y (last -0.4%),
June PCE Core (last m/m 0.2%, y/y 1.5%)
9:55am Aug Final U. of Michigan Confidence (last 63.2)
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 July Existing Home Sales (prior 4.89M, m/m 3.6%)
Todays Headlines
8:10:16 AM
(PD) Polish Central Bank minutes: Most members saw inflation below target; Held interest rates steady on inflation outlook
- Economy showing signs of recovery
- Sees Q2 GDP was higher than expected (current expectation is +0.5% set for official release on Aug 28th)
- Sees 2009 GDP growth as ' more probable'
8:30:03 AM
*INITIAL JOBLESS CLAIMS: 576K V 550KE; CONTINUING CLAIMS: 6.241M V 6.215ME
- Prior jobless claims revised from 558K to 561K
- Prior Continuing Claims revised from 6.202M to 6.239M
- Four-week mvg avg 570K v 566K prior
8:30 AM
*(CA) CANADA JUN WHOLESALE SALES
-M/M: 0.6% V 0.2%E
- Prior MoM revised from -0.3% to -0.2%
9:59:59 AM
*AUG PHILADELPHIA FED INDEX: 4.2 V -2.0E
**sub-Indices:
- Prices Paid: 10.0 v -3.5 prior
- New Orders: 4.2 v -2.2 prior
- Employment: -12.9 v -25.3 prior
- Inventories: 0.3 v -15.4 prior
- 6-month business conditions outlook: 56.8 v 51.9 prior
10:00:02 AM
*JULY LEADING INDICATORS: 0.6% V 0.7%E
- prior revised from 0.7% to 0.8%
- Conference Board: Data suggests that recession is bottoming out; Economy may begin to recover soon (previously stated that growth could come in Fall 2009)
1:11:10 PM
(US) President Obama: Affirms position on public health insurance option is 'unchanged,' calls option "a good idea, but not the only aspect of reform" - radio interview
- Reminder: Back on 8/17 White House Press Sec Gibbs said Obama prefers government health-insurance option. Over the weekend that the Obama administration signaled that it was ready to abandon the idea of giving Americans the option of government-run insurance as part of a new health care system.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
- Ahead of the NY open Chinese markets were leading Europe and US equity markets higher after the Shanghai Composite registered its second biggest one-day gain of the year, right on the heels of yesterday's big losses. The S&P500 crossed back above 1,000 just after the open, although some hesitation can be expected below early August highs around 1,010. Thus far markets are shaking off both initial and continuing jobless claims that rose more than analysts' forecasts. Initial claims are averaging 568k in August compared to a 558k average in July but a bit below averages of 612k in June. Second quarter mortgage delinquencies unsurprisingly hit another record high at 6.24%, although the rise in the prime mortgage delinquency rate to 6.41% is providing cause for real concern. Brighter data was seen in the August Philadelphia Fed survey, which posted much better-than-expected numbers and a big improvement in its employment sub-index. Front-month NYMEX crude is making fresh weekly highs above $72, while natural gas is looking to test the $3 mark despite reports overnight that an unnamed hedge fund placed a big bet that prices would be at $10 by January. Treasury prices are marginally lower even after the US Treasury said they were going to be auctioning off $109B in notes next week, which was a little below what many analysts were expecting. The 10-year yield remains just below 3.5% while the 2-year is pinned at 1%.
- On the fifth anniversary of its IPO yesterday, Goldman Sachs added Google to its Conviction Buy list and set a price target for the stock of $560, noting that Google merits a bigger premium than downstream customers like Ebay and media companies, which are slower growing and less global. Shares of Google are up more than 4%. In other tech news, Tech Data crushed earnings and revenue estimates, noting that the IT market in the Americas is showing signs of stability. TECD is up nearly 10% in the session. Goldman published a bullish report on Chinese solar names and warned that major European manufacturers face intense competition from China due to industry oversupply and China's cost advantages. Shares of Renesola are up around 20% after Goldman singled it out for praise in the report. In other solar news, Chinese solar name STP did fairly well in Q2, beating profit targets, and said Q3 shipments would rise 50% sequentially, although for the year the company said its shipments would fall to 600MW, below its prior estimates. Shares of STP have slipped into negative territory in mid morning trading.
- Another crowd of retail earnings came out yesterday and today. Sears Holding dramatically missed earnings estimates, reporting -$0.17 (ex items) v $0.35e. The firm noted that costs for store closings and hedging losses were a big impediment in the quarter. Limited Brands beat expectations and raised its 2009 guidance. Ross Stores met expectations and increased its full-year outlook somewhat. Sears is down more than 10%, ROST is struggling to sustain modest gains while LTD has given up 2% gains and moved into negative territory. Consumer staples names Heinz and Hormel both beat earnings expectations and offered strong guidance for the full year, sending shares of both companies up 2% in early trading.
- Currency trading in the USD has continued following in the wake of the equity action in the New York. Some risk aversion surfaced following the higher initial and continuing US jobless claims data, as the numbers reflected cautious comments about the global economic recovery. S&P noted earlier today that a sluggish US economy would hinder a rebound in the Asian region. The Q2 mortgage delinquencies data also supported risk aversion with another month of rising prime mortgage delinquencies and mortgages in foreclosure. EUR/USD is around 1.4225 in mid-NY morning trading while the USD/JPY is moving back above the 94 handle.
More Headlines
8:10:16 AM
(PD) Polish Central Bank minutes: Most members saw inflation below target; Held interest rates steady on inflation outlook
- Economy showing signs of recovery
- Sees Q2 GDP was higher than expected (current expectation is +0.5% set for official release on Aug 28th)
- Sees 2009 GDP growth as ' more probable'
8:30:03 AM
*INITIAL JOBLESS CLAIMS: 576K V 550KE; CONTINUING CLAIMS: 6.241M V 6.215ME
- Prior jobless claims revised from 558K to 561K
- Prior Continuing Claims revised from 6.202M to 6.239M
- Four-week mvg avg 570K v 566K prior
8:30 AM
*(CA) CANADA JUN WHOLESALE SALES
-M/M: 0.6% V 0.2%E
- Prior MoM revised from -0.3% to -0.2%
9:59:59 AM
*AUG PHILADELPHIA FED INDEX: 4.2 V -2.0E
**sub-Indices:
- Prices Paid: 10.0 v -3.5 prior
- New Orders: 4.2 v -2.2 prior
- Employment: -12.9 v -25.3 prior
- Inventories: 0.3 v -15.4 prior
- 6-month business conditions outlook: 56.8 v 51.9 prior
8:30am Initial Jobless Claims (last 558K), Continuing Claims (last 6.202M)
10:00am JulyLeading Indicators (last 0.7%), Aug Philadelphia Fed (last -7.5)
10:30am Natural Gas Inventories
11:00am Treasury note announcement
Todays Headlines
7:00 AM
*(CA) CANADIAN JUL CONSUMER PRICE INDEX
-M/M: -0.3% V -0.2%E
-Y/Y: -0.9% V -0.8%E
- No revisions
8:00 AM
*(PD) POLISH JUL PRODUCER PRICES
- M/M: -1.3% V -0.2%E
- Y/Y: 3.0% V 3.8%E
- No revisions
8:30 AM
*(CA) CANADIAN JULY LEADING INDICATORS
-M/M: 0.4% V 0.2%E
- Prior revised from -0.1% to 0.0%
8:52:43 AM
(CH) July China Oil demand 34.9M tons v 33.35M tons m/m
- Domestic crude oil production 16.1M v 16.2M tons m/m
- Domestic crude imports 19.64 v 16.31M tons m/m
9:41:49 AM
(GE) IFO's Nerb: Most German companies can handle Euro exchange rate at 1.40, but rates over 1.50 could be a "big problem"
- IFO business sentiment trend is clearly up.
- New manufacturing orders are key to confidence, cannot rule out that business confidence will fall over next six months or more; other sectors are little changed.
- ECB should maintain low interest rates for relatively long period.
11:02:22 AM
NY Fed: Purchased $2.6B in $300B outright coupons purchase; Dealers submitted $13.09B for consideration (bid to cover 5.04)
- Heaviest purchase was $1.4B in the 11/15/21 maturity
- Note: Avg bid to cover for prior four auctions is 3.06
11:25:46 AM
OECD's Elmeskov: Economic bottom and a return to growth may arrive a few months earlier than expected, recovery will still be weak
- Non-OECD countries continue to lead the recovery.
- Unemployment in OECD countries will likely keep growing.
- Improvements in Europe and Japan are surprising.
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.
- More steep losses on the Shanghai Composite sparked softness in European trading and hit US equities before the bell this morning (note that the Shangahai Composite is now almost 20% off its early August highs). The leading US indices opened a bit below yesterday's opening levels, although they have retested yesterday's highs within the first hour of trading. Some commentators singled out Warren Buffet's op-ed piece in the New York Times for adding to the overall risk aversion in global markets, as the Sage of Omaha wrote that "...unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar's destiny lies with Congress." Yale Economist Robert Shiller was also out with his own predictions, telling CNBC that house prices would likely increase a sluggish 4% over next 5 years, but he is unable to rule out the possibility of another housing bubble. Crude, gas, copper and aluminum were down significantly heading into the New York session, although the front-month NYMEX contract is rebounding with strength following the unexpectedly large draw downs in stocks seen in weekly DoE inventory data. Bond prices opened up on a flight to safety bid but as stock prices have recovered Treasuries have given back some gains.
- Chinese metals traded limit down overnight, driving follow-on weakness in US mining and metal names. Steel, aluminum and copper names are all under pressure in early trading. Goldman Sachs cut AA to Neutral from Buy, insisting that increased supply will slow gains in aluminum market prices. AA is down 4% on the news.
- In earnings, HP was largely in line with the Street in its Q3 results and forward-looking guidance. HP's CEO said that business is stabilizing and expressed his confidence that the company will be an early beneficiary of an economic turnaround. Nevertheless, he also said HP is not ready to say business conditions have turned the corner. John Deere outperformed on top- and bottom-lines in Q3, although the company also offered plenty of cautious guidance on its business for the final quarter of its FY, noting that Q4 equipment sales would still be -34% y/y, thanks to significant production cutbacks that are being made to match retail demand. BJ's was a bit ahead of the Street and raised its full-year outlook by a hair. Executives said they saw positive membership trends in Q2, with renewals still tracking slightly ahead of plans. Shares of HPQ are down 2% and DE are down 4%. Shares of BJ spiked up nearly 4% after the open, before settling down to a modest +1%.
- Currency trading in the New York session initially looked ready to extend the risk aversion led by the yen as its advanced against the USD and European and commodity pairs. Early on USD/JPY moved below the 94 handle to make one-month lows while EUR/JPY approached the 132.10. However, a degree of calm returned with the US equity open, along with some retracement of the late Asian and European price action, with earnings from Deere driving away the initial sting. EUR/USD managed to cover from its earlier losses and hit fresh session highs of 1.4180 prior to the DOE crude inventory report. Note that the IFO's Nerb commented that most German companies could handle a euro exchange rate at 1.40, but any level above 1.50 could be a "big problem."
- The Swiss Franc was also on the radar of dealing desks. The U.S. government reached an final settlement of its tax tussle with UBS this morning and there was vague chatter of a central bank selling the EUR/CHF, along with speculation the Swiss government might start selling off its CHF 6B stake in UBS as the lockup period of its investment expired a while back. Dealers said the 1.5130 area in the EUR/CHF cross could be a critical sentiment level as it reflected both 30-week and 200-day moving averages.
More Headlines
7:00 AM
*(CA) CANADIAN JUL CONSUMER PRICE INDEX
-M/M: -0.3% V -0.2%E
-Y/Y: -0.9% V -0.8%E
- No revisions
8:00 AM
*(PD) POLISH JUL PRODUCER PRICES
- M/M: -1.3% V -0.2%E
- Y/Y: 3.0% V 3.8%E
- No revisions
8:30 AM
*(CA) CANADIAN JULY LEADING INDICATORS
-M/M: 0.4% V 0.2%E
- Prior revised from -0.1% to 0.0%
8:52:43 AM
(CH) July China Oil demand 34.9M tons v 33.35M tons m/m
- Domestic crude oil production 16.1M v 16.2M tons m/m
- Domestic crude imports 19.64 v 16.31M tons m/m
9:41:49 AM
(GE) IFO's Nerb: Most German companies can handle Euro exchange rate at 1.40, but rates over 1.50 could be a "big problem"
- IFO business sentiment trend is clearly up.
- New manufacturing orders are key to confidence, cannot rule out that business confidence will fall over next six months or more; other sectors are little changed.
- ECB should maintain low interest rates for relatively long period.
“Any fool can make things bigger, more complex, and more violent. It takes a touch of genius -- and a lot of courage -- to move in the opposite direction."
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
7:01:07 AM
(SW) Sweden Riksbank's Oberg: Recession has hit bottom, recent data has been positve but recovery will be weak
- Interest rates need to remain low for some period of time.
- Underlying inflation is in line with the central bank's target level .
- Labor market continues to be weak.
7:40:14 AM
(UK) BOE's Posen: Not concerned over chance of CPI letter, was surprised by readings in French and German Q2 GDP
- Hopes that both the BOE and ECB do not tighten credit anytime soon
- If growth rates are maintained, ECB may be the first to raise interest rates
8:30 AM
*(CA) CANADA INTL SECURITIES TRANSACTIONS: C$10.5B V C$2.0BE
- Prior revised from C$18.9B to C$18.8B
10:17:44 AM
(SZ) SNB's Jordan: Market has understood the SNB's currency intervention policies; content with recent 1.50 to 1.53 range; will not accept appreciation against the Euro
- Will continue with purchases of Franc bonds and would consider corp bond purchases; is too early to begin a normalization of SNB policy
- Would intervene with 'substantial' amounts if necessary
- Declines comment on a specific desired level of CHF; but a Franc appreciation could be considered 'dangerous', and unjustified
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 indices are in positive territory this morning on a few decent earnings from the retail sector and a sense of relief that yesterday's weakness seems to have abated. The data picture is mixed: the July housing starts registered its fifth consecutive month of growth, although the total figure fell short of expectations, while July PPI inflation data remains in negative territory. PIMCO's El-Erian reiterated once again that the equity rally had "hit a wall" and insisted that valuations were ahead of fundamentals. Front-month NYMEX crude has gained somewhat in mid morning trade but remains below $68. Bond prices remain right near the unchanged mark with the benchmark yield remaining below 3.55. Trading across all markets is in generally lackluster with more typical summertime volumes.
- CIT reported a $1.68B loss in its Q2, missing analysts expectations by wide margins, and again warned it might have to file for bankruptcy protection if it fails to restructure its business. Just last month, CIT was bailed out with a $3B loan from some of its largest bondholders as it faced a cash crunch. CIT does not expect to return to profitability during 2009. Nevertheless, shares of CIT were up as much as 9% right after the bell, and are still up % in mid morning trading. BBT's CEO appeared on CNBC this morning to discuss his bank's takeover of Colonial Bank, noting that the deal with the FDIC should limit potential losses to a maximum of $500M.
- Home Depot has trounced rival Lowe's in quarterly earnings out this morning. Home Depot beat earnings expectations (ex items) and came in even with revenue targets, and improved its full-year forecast. Executives said concerns remain over housing, but that the company had its best gain in market share in the last five years in the quarter and saw improving comps in troubled markets in California and Florida. Shares of HD are up 3%, while LOW is sustaining losses suffered yesterday post-earnings. Department store Target also beat bottom-line expectations and met top-line targets, while apparel name TJX was a bit ahead of earnings estimates and in line on revenue. Saks reported a quarterly loss that was half the expected amount and insisted that its business is on the rebound. Shares of TGT and SKS are up about 5% or so on the day, while TJX is down 4%.
- Currency trading during the New York session has been quiet in terms of volatility so far, with price moves in the dollar continuing to reflect equity moves. Note that cautionary comments from German ZEW officials seem to have capped the rally in European equity markets. IMF Chief Economist Blanchard also reiterated caution towards all the optimism, saying that the economic recovery has begun but the potential for economic output is lower than it was before the crisis began. EUR/USD was drifting backs towards its key hourly pivot level of 1.4050 (near Monday's lows, on chatter of Asian sovereign bids). Some chatter was also circulating regarding option-related flows picking up, with 1.38 and 1.35 strikes going through with October expirations in the pair.
- Swiss National Bank Chief Jordan commented that the economic recovery in Switzerland would arrive later given its recession has lagged the ones in other countries. He also said that markets have understood the SNB's currency intervention policies, and also confirmed that the bank is content with the recent 1.50-1.53 range in the franc and would not accept appreciation against the euro.
More Headlines
7:01:07 AM
(SW) Sweden Riksbank's Oberg: Recession has hit bottom, recent data has been positve but recovery will be weak
- Interest rates need to remain low for some period of time.
- Underlying inflation is in line with the central bank's target level .
- Labor market continues to be weak.
7:40:14 AM
(UK) BOE's Posen: Not concerned over chance of CPI letter, was surprised by readings in French and German Q2 GDP
- Hopes that both the BOE and ECB do not tighten credit anytime soon
- If growth rates are maintained, ECB may be the first to raise interest rates
8:30 AM
*(CA) CANADA INTL SECURITIES TRANSACTIONS: C$10.5B V C$2.0BE
- Prior revised from C$18.9B to C$18.8B
10:17:44 AM
(SZ) SNB's Jordan: Market has understood the SNB's currency intervention policies; content with recent 1.50 to 1.53 range; will not accept appreciation against the Euro
- Will continue with purchases of Franc bonds and would consider corp bond purchases; is too early to begin a normalization of SNB policy
- Would intervene with 'substantial' amounts if necessary
- Declines comment on a specific desired level of CHF; but a Franc appreciation could be considered 'dangerous', and unjustified
8:30am July PPI (last m/m 1.8%, y/y -4.6%, ex food & energy last m/m 0.5%, y/y 3.3%), July Housing Starts (last 582K), July Building Permits (last 570K)
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
5:00:02 AM
*(EU) JUN EURO-ZONE TRADE BALANCE: €4.6B V €2.1B PRIOR, JUN EURO-ZONE TRADE BALANCE SA : €1.0B V €1.3BE
- Prior Trade Balance revised from €1.9 to €2.1B
- Prior Trade Balance SA revised from €0.8B to €1.1B
- Largest Euro-Zone trade surplus since Jun 2007
8:30:03 AM
Aug Empire Manufacturing: 12.08 v 3.00 expected
- No revisions
-Components
- Prices Paid: 13.83 v 10.42 prior
- New Orders: 13.43 v 5.89 prior
- Employment: -7.4 v -20.83 prior
9:00:34 AM
(US) Fed & Treasury extend TALF program expiration dates
- Extending TALF to March 31, 2010 for newly issued ABS and legacy CMBS.
- Extending TALF lending against newly issued CMBS through June 30, 2010.
- For the time being, no new eligible collateral would be added to the facility.
- Continuing to monitor situation to determine whether futher extensions are needed.
11:02:08 AM
NY Fed: Purchased $7.01B in $300B outright coupons purchase; Dealers submitted $15.94B for consideration (bid to cover 2.27)
- Heaviest purchase was $4.56B in the 06/30/14 maturity
- Note: Avg bid to cover for prior four auctions is 3.28
1:00 PM
*AUG NAHB HOUSING MARKET INDEX: 18 V 18E- no revisions - 18 reading is higest since June 2008
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 markets are extending a correction begun in Friday's session, with the leading US indices down 2% or so in the early going, USD and JPY strong, and front-month crude below $66 for the first time this month, while natural gas is testing seven-year lows.
Note that after closing just above 1,000 on Friday, the S&P500 opened below 990 and remains below the key level of 1,000.. Government bonds on both sides of the Atlantic are seeing risk aversion bids after Chinese stock markets slid nearly 6% overnight. The US 10-year yield is back below 3.5%. nvestors are disregarding the August Empire Manufacturing survey, which showed a striking uptick in factory orders in the Northeast and turned positive for the first time since April 2008. There was some verbal support for the ongoing equity rally, with the CEO of NYSE Euronext saying he is more confident in US stock market rally than he was in April. Goldman Sachs' Abby Cohen reiterated her cheerleading, saying that she expects US GDP growth of up to 3% in coming quarters.
- Hedge funds disclosed quarterly holdings on Friday after the close, prompting a few notable moves this morning.
Lone Pine Capital cashed out of its 31M stake in Las Vegas Sands, with the name off 9% from the news. Pershing Square flushed stakes in Wendy's, Yum and Visa - shares of WEN initially reacted very negatively to the news, dropping nearly 5% just after the open, although they have recovered somewhat. Becton, Dickinson is up a few percent after Berkshire Hathaway disclosed a new 1.2M share position in the medical technology company. Berkshire cut takes in health insurance names Wellpoint and UnitedHealth. Bill Miller's Legg Mason Capital Management raised its stake in Bank of America but reduced stakes in other financials.
- In other equity news, managed care names are up four or five percent on news out over the weekend that the Obama administration is backing away from a public option as part of the US healthcare reform.
Lowe's quarterly report was full of doom and gloom. The home improvement name missed top- and bottom-line estimates, and also guided below par for the coming quarter as well as the full year. Executives warned that consumers remain reluctant to take on discretionary projects until signs of economic improvement are more evident. Shares of LOW are down 10%, and rival Home Depot is down 5% in sympathy (HD reports tomorrow morning). Major credit card issuers disclosed July master trust data, with net charge offs seen declining slightly or holding more or less steady across the board.
- In currencies, the greenback consolidated its overnight gains as the New York morning progressed.
Less was heard of the risk aversion song following Empire manufacturing data, although the retracement has been limited as both the USD and JPY have maintained their strength against the major European and commodity-related currencies. The continued weakness in Chinese equities and the fifth largest US bank failure have been cited for the fresh spat of risk aversion. The Fed extended its TALF program but said they did not expect to add any further types of collateral eligible for the facility. The June TIC flow data showed that China dumped just over $25.1B in Treasuries, while other foreign buyers picked up $90.7B in net US long term assets.
More Headlines
5:00:02 AM
*(EU) JUN EURO-ZONE TRADE BALANCE: €4.6B V €2.1B PRIOR, JUN EURO-ZONE TRADE BALANCE SA : €1.0B V €1.3BE
- Prior Trade Balance revised from €1.9 to €2.1B
- Prior Trade Balance SA revised from €0.8B to €1.1B
- Largest Euro-Zone trade surplus since Jun 2007
8:30:03 AM
Aug Empire Manufacturing: 12.08 v 3.00 expected
- No revisions
-Components
- Prices Paid: 13.83 v 10.42 prior
- New Orders: 13.43 v 5.89 prior
- Employment: -7.4 v -20.83 prior
9:00:34 AM
(US) Fed & Treasury extend TALF program expiration dates
- Extending TALF to March 31, 2010 for newly issued ABS and legacy CMBS.
- Extending TALF lending against newly issued CMBS through June 30, 2010.
- For the time being, no new eligible collateral would be added to the facility.
- Continuing to monitor situation to determine whether futher extensions are needed.
11:02:08 AM
NY Fed: Purchased $7.01B in $300B outright coupons purchase; Dealers submitted $15.94B for consideration (bid to cover 2.27)
- Heaviest purchase was $4.56B in the 06/30/14 maturity
- Note: Avg bid to cover for prior four auctions is 3.28
"Being an optimist after you've got everything you want doesn't count."
Market Week Wrap-up
- The healthy glow bestowed on markets by last Friday's employment data vanished early in the week, chased away by a wave of doubt that China alone can't be the main driver steering the world away from recession.
Repositioning ahead of Wednesday's FOMC decision returned US equity indices to levels seen at the end of last week - in the event the Fed held steady on rates and said it wasn't walking away from its liquidity programs as of yet. But in the back half of the week markets buckled under the weight of economic releases that reminded everyone about the threat to consumer spending and the overall recovery from the toxic combo of rising unemployment, declining home prices and tight credit. The preliminary August University of Michigan confidence index was much worse than expected (63.2 v 69e), July advanced retail sales numbers turned negative again (-0.1% v 0.8%e) and RealtyTrac's July foreclosures were up 7% m/m (and 32% y/y) for a new record high. Nevertheless, the sentiment that has emerged over the last two weeks is that the worst is over, a double-dip recession can be avoided and US economic growth will return by the end of this year or perhaps next. For the week all three of the major US indices were off roughly 0.5% or more.
- Less than a week after the improved US employment reports sparked talk of an accelerated economic recovery in the US, France and Germany surprised markets by pulling themselves out of recession.
Preliminary GDP figures from Europe's two largest economies showed growth of +0.3% during the second quarter. However, fiscal stimulus and domestic consumption had a bigger impact than economists anticipated, making many wonder whether growth can be sustained as the countries are inevitably weaned off government support. Despite accounting for almost half of the regions output, France and Germany were unable to pull the overall Euro Zone GDP out of negative territory, with the "Club Med" nations of Italy, Spain, Portgual and Greece all still firmly in contraction.
- Financial sector names sagged early in the week as markets traded off and analysts threw cold water on the banks.
On Tuesday Rochdale's Dick Bove recommended taking short term profits in financials, noting that bank stocks are "running on fumes." Citigroup fell more than 8% that morning. Adding to weight in the sector was a monthly report out of the Congressional TARP Oversight Panel calling on regulators to consider more bank stress tests and fresh CIT bankruptcy fears. But the good news from the FOMC and a vote of confidence from hedge fund manager John Paulson helped the sector recover in the latter half of the week. Paulson bought 168M shares (for a 1.9% stake) of Bank of America, making him the fourth-largest holder in the company. Paulson also added 2M shares in Goldman Sachs, as well as new positions in numerous regional banks.
- News from global giants Walmart, McDonalds and many other retailers only reinforced fears about the state of consumer demand.
McDonald's reported July global comps at +4.3%, its weakest monthly showing since its +1.4% February comp. The company noted that its Asia sales were impacted by declines in China. Walmart came in slightly ahead of earnings estimates and a bit below revenue targets, but same-store sales notably turned negative for the quarter (for the first time in many years), declining significantly on a sequential basis. Mid-market department store names Kohl's and JC Penny guided well below estimates for next quarter.
- Preliminary Q3 revenue figures from Toll Brothers beat the Street by nearly $100M and complimented recently bullish housing sector data and offset the RealtyTrac numbers.
Toll's CEO pointed to the increase in the number of net contracts signed this quarter as a reason for optimism. "This marked the first time in 16 quarters - dating back to Q4 of FY05 - that our net contracts exceeded the prior year's same quarter," he said. In other news, GM bragged about the Volt's fuel efficiency, claiming it would get 230 mpg in city driving. A closer look at the figures showed that this would be for the first 50 miles (40 on the battery alone, 10 on the gas generator), while longer driving on the gas generator would make for efficiency of 50-100 mpg.
- Heading into the week bond investors were noticeably anxious ahead the $75B in Treasury coupon supply on the docket and an FOMC statement that needed to walk a very fine line to keep expectations in check.
Ultimately the supply was absorbed relatively smoothly and the Fed deftly managed expectations in its statement. The latter noted that economic improvement continues to gain traction, making it possible to commence the exit strategy as soon as this fall, while also reassuring that rates would remain unchanged for quite some time. Wednesday's 10-year note offering tailed significantly, but all was quickly forgotten when Thursday's sale of $15B in long bonds met with resounding success (despite the significant duration extension). With supply on hiatus next week, yields are looking to end the week significantly lower while a multi-decade low in annual US CPI and the second successive month of negative inflation in Europe have made real yields look increasingly attractive, fueling bullish sentiment in government bonds. The US 10-year yield has declined around 30 basis points from where it entered the week, nearing 3.5% once again. The two-year gilt yield made a new all time low late in Friday's session below 0.9%. Fed fund futures recouped their post non-farm payroll losses and then some, highlighted by a March 2010 contract that continues price out the likelihood of even a 25bp hike in first quarter.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
"All over the place, from the popular culture to the propaganda system, there is constant pressure to make people feel that they are helpless, that the only role they can have is to ratify decisions and to consume"
8:30am July CPI (last m/m 0.7%, y/y -1.4%; ex food & energy last m/m 0.2%, y/y 1.7%), July CPI Core Index SA (last 219.344)
9:15am July Industrial Production (last -0.4%), July Capacity Utilization (last 68%)
9:55am Aug prelim Univ of Michigan confidence (last 66)
Todays Headlines
6:39:38 AM
USD 3 Month Libor fixes at 0.44% v 0.45% prior
- Overnight USD: 0.23% v 0.24% prior
- Overnight GBP: 0.53% v 0.54% prior
- 3M GBP: 0.78% v 0.80% prior
- 3M EUR: 0.84% v 0.84% prior
7:14 AM
(GE) German Q2 Retail Sales Q/Q: -0.1% v -0.8% prior
- Bundesbank- June Retail Sales revised from -1.8% to -1.3%
8:30:01 AM
*INITIAL JOBLESS CLAIMS: 558K V 545KE; CONTINUING CLAIMS: 6.202M V 6.300ME
- Prior jobless claims revised from 550K to 554K
- Prior Continuing Claims revised from 6.310M to 6.343M
- Four-week mvg avg 565K
8:30:04 AM
*JULY ADVANCE RETAIL SALES: -0.1% V 0.8%E; EX AUTOS: -0.6 % V 0.1%E
- Retail sales ex Auto & Gas: -0.4% v -0.1% (revised) prior
- Prior Advance Retail Sales revised from 0.6% to 0.8%
- Prior Ex Auto revised from 0.3% to 0.5%
9:15:07 AM
*(SA) SOUTH AFRICA CENTRAL BANK (SARB) CUTS INTEREST RATES BY 50BPS TO 7.00%; NOT EXPECTED
- Was expected to keep interest rates at 7.50%
- Decision was "closely debated," came after long debate
1:01:40 PM
*TREASURY'S $15B 30-YEAR BOND AUCTION BID-TO-COVER RATIO: 2.54 V 2.14 PRIOR AND 2.10 AVG OVER THE LAST 5 AUCTIONS
- indirect bidders take 48.1% of competitive bids
- bonds draw 4.541%, 16.7% alloted at high
- median 4.480%, low 4.392%
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 have been pretty whippy since yesterday's FOMC decision, as traders try to decide what to make of the Fed holding steady on rates and asset purchases. Overall stocks are holding onto and in many cases adding to gains, while Treasury yields remain below where there were heading into the announcement suggesting the Fed is doing a decent job corralling market expectations. The flood of debt and equity offerings continues apace, leaving investors and prognosticators alike to wonder whether the rush to raise capital indicates a temporary top or a healthy indicator this rally has legs. Initial jobless claims came in slightly higher than estimates and above last week's figure, reminding everyone once again that the jobs picture is far from clear. Last night RealtyTrac reported that US foreclosures in July were up 7% m/m (and 32% y/y), for a new record high in the company's monthly foreclosures data. To top off a dreadful data morning, the July advanced retail sales numbers declined unexpectedly, underling the continuing threats to consumer spending and the overall recovery from the toxic combo of rising unemployment, declining home prices and tight credit. The front-month NYMEX contract shot up above $72 on European GDP strength, but has traded off somewhat on equity declines in the US.
- Bond prices are higher this morning as investors become more comfortable that Fed will remain on hold in terms of raising rates for the foreseeable future regardless of volatility in the economic data. The long bond yield is just below 4.5% ahead of this afternoon's auctions results while the benchmark rate at 4.66% is some 7 basis points below where yesterday's auction went off.
- Hedge fund manager John Paulson (who won big betting against subprime last year) bought 168M shares (for a 1.9% stake) of Bank of America, making him the fourth-largest holder in the bank. Paulson also added 2M shares in Goldman Sachs, as well as new positions in Capital One, Regions Financial, State Street, M&I and Suntrust Bank. BoA jumped 5% in the premarket on the news, while other tier-one financials rose modestly on the news as well. Regions Financial was up 7% in the premarket on the news, Suntrust is up 5% in early trading and other regionals have gained one or two percent. Elsewhere in the financials, CIT is up nearly 15% after adopting a rights plan to protect its substantial tax assets.
- In earnings, Walmart came in slightly ahead of earnings estimates and a bit below revenue targets, but same-store sales notably turned negative for the quarter, declining significantly from last quarter and turning negative for the first time in years. Mid-market department store chain Kohl's reported in line and guided a bit below expectations for the coming two quarters and the full year. On the conference call, Kohl's CEO said the company had gained significant market share in 2009. Dr Pepper Snapple blew out profit estimates and raised its full-year forecast. Revenue for the quarter was in line.
- In currencies, the better risk appetite stemming from gains in European markets hit turbulence early in the US session. The price action in most commodities and equities described a parabolic arc, soaring upward in the European morning and plunging back again as US trading got underway, coupled with a modest retracement in the greenback's soft tone. The yen benefited most from the risk aversion, with USD/JPY probing the lower end of its 95 handle. Dealers were talking about big USD sell stops building below the 95.10 area. EUR/JPY and GBP/JPY crosses retreated almost 200 pips from session highs to move back into negative territory. Dealers did note that the JPY was lagging behind the risk appetite theme earlier today, with rumors making the rounds that Japan's DPJ might be willing to tolerate a strong yen if the party took power after the Japanese national elections on August 30. The South African Central Bank unexpectedly cut its interest rate by 50bps to 7.00%. The ZAR weakened against the major pairs in the aftermath of the rate decision. The Danish Central Bank also unexpectedly lowered its key interest rate by 10bps to 1.45%.
More Headlines
6:39:38 AM
USD 3 Month Libor fixes at 0.44% v 0.45% prior
- Overnight USD: 0.23% v 0.24% prior
- Overnight GBP: 0.53% v 0.54% prior
- 3M GBP: 0.78% v 0.80% prior
- 3M EUR: 0.84% v 0.84% prior
7:14 AM
(GE) German Q2 Retail Sales Q/Q: -0.1% v -0.8% prior
- Bundesbank- June Retail Sales revised from -1.8% to -1.3%
8:30:01 AM
*INITIAL JOBLESS CLAIMS: 558K V 545KE; CONTINUING CLAIMS: 6.202M V 6.300ME
- Prior jobless claims revised from 550K to 554K
- Prior Continuing Claims revised from 6.310M to 6.343M
- Four-week mvg avg 565K
8:30:04 AM
*JULY ADVANCE RETAIL SALES: -0.1% V 0.8%E; EX AUTOS: -0.6 % V 0.1%E
- Retail sales ex Auto & Gas: -0.4% v -0.1% (revised) prior
- Prior Advance Retail Sales revised from 0.6% to 0.8%
- Prior Ex Auto revised from 0.3% to 0.5%
9:15:07 AM
*(SA) SOUTH AFRICA CENTRAL BANK (SARB) CUTS INTEREST RATES BY 50BPS TO 7.00%; NOT EXPECTED
- Was expected to keep interest rates at 7.50%
- Decision was "closely debated," came after long debate
8:30am July Import Price Index (last m/m 3.2%, y/y -17.4%), July Advance retail sales (last 0.6%, ex autos last 0.3%), Initial Jobless Claims (last 550K), Continuing Claims (last 6.31M)
10:00am June Business Inventories (last -1.0%)
10:30am Natural Gas Inventories
1:00pm Treasury's 30-yr bond auction
Todays Headlines
8:04:26 AM
*(PD) POLISH JUN TRADE BALANCE: -€26M V -€90ME; CURRENT ACCOUNT: €459M V €164M
- Exports : €8.3B v €8.0Be
- Im ports €8.3B v €8.0Be
- Prior Trade balance revised from - €58M to +€5M
- Prior Current Account revised from €207M to €284M
8:30:01 AM
*(US) JUNE TRADE BALANCE: -$27B V -$28.7BE
- Prior revised from -$26.0B to -$25.97B
8:30:13 AM
*(CA) CANADA JUN INTL MERCHANDISE TRADE BALANCE: -C$100M V -C$700ME; Third straight monthly deficit
- Prior revised from -C$1.4B to -C$1.1B
- First quarterly trade deficit since 1976
10:30 AM
*DOE CRUDE: +2.5M V +1ME; GASOLINE: -927K V -1.2ME; DISTILLATE: +786K V +100KE; CAPACITY UTILIZATION: 83.5% v 84.4%E
- Distillate demand -230K bpd to 3.2M bpd - Gasoline demand -250K bpd to 8.95M
1:01:37 PM
*TREASURY'S $23B 10-YEAR NOTE AUCTION BID-TO-COVER RATIO: 2.49 V 2.47 IN FEB AND 2.29 OVER THE LAST 5 AUCTIONS
- indirect bidders take 45.7% of competitive bids
- notes draw 3.734% with 20.93% alloted at the high
- median 3.636%, low 3.550%
2:16:17 PM
*FOMC LEAVES RATE UNCHANGED AT 0.25%; leaves MBS, agency debt, and Treasury securities purchases unchanged; will gradually slow purchases with full amount to be purchased by end of October
- Vote was unanimous
- Conditions in financial markets have improved further in recent weeks
- Reiterates inflation will remain low for some time
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 are jumping right back into the pool this morning, sending US equity indices up nearly 2% in early trading ahead of the FOMC decision later this afternoon.
The hesitation that drove two days of losses on the major indices has evaporated, thanks to follow-on strength from Europe, a strong quarterly report from Macy's and bullish preliminary earnings from Toll Brothers. Markets aren't blinking at another big batch of secondary equity offerings either, with nearly all of the names selling shares up on the day. Front-month NYMEX crude was up almost $1.50 per contract higher following the monthly EIA report earlier today and has managed to maintain its strength despite yet another big build in crude stocks seen in the weekly DoE inventory report.
- Treasury prices began the day moving higher but have reversed as stock momentum builds.
The 10-year note future was up more than to ticks at one point with its yield moving below 3.65%, but prices are now in the red and the yield is back above 3.7%. This afternoon is expected to be extremely eventful with the $23B 10-year auction results due out a little more than an hour before a highly anticipated FOMC statement. It is also worth pointing out that Fed Fund Futures prices looking out into 2010 have pretty much recouped losses seen following Friday's jobs numbers. The March contract was at one time putting a better than 50% chance the Fed hikes the funds rate up to 0.75% by the end of the first Quarter, but that same contract is now not fully pricing in a 25 basis point hike.
- Macy's strong earnings beat estimates and missed on slightly on revenue, with quarterly profits up on robust cost cutting.
The retailer nearly doubled its profit forecast for 2009. High-end apparel retailer Liz Claiborne reported its third consecutive quarterly loss, missing top- and bottom-line estimates. The company said it is looking for an additional $100M in cost cuts (on top of the $70M already announced), but said it believes the big declines in same-store sales would moderate in the coming quarters with quarterly results improving as well.
- Homebuilder Toll Brothers reported preliminary Q3 revenue figures this morning, beating the Street by nearly $100M.
Toll's CEO pointed to the increase in the number of net contracts signed this quarter as a reason for optimism. "This marked the first time in 16 quarters - dating back to Q4 of FY05 - that our net contracts exceeded the prior year's same quarter. It also marked the first quarterly sequential unit increase in our backlog in more than three years," he said.
- Food name Sarah Lee beat estimates (before impairment charges), while revenue fell short of expectations due to big declines overseas.
Heinz boosted its forecast for 2010, offering guidance that was much better than the consensus view, but warned of "unprecedented currency volatility" in the coming FY. Note that Nestle, the world's biggest food company, pared its FY09 outlook after missing forecasts this morning.
- In tech, Applied Materials seems to have staunched the bleeding, with Q3 results at break-even, well ahead of analysts' expectations for an $0.08 loss.
Revenue was much better than expected. Solar names JA Solar and Rensola both reported quarterly losses. JA Solar's loss was three times the expected amount. Rensola met consensus EPS estimates, but missed on the top line. JA Solar's CEO said the company is seeing significant signs of market improvement in both end-market demand and financing.
- In currencies, follow-on risk aversion from the Shanghai stock sell-off and the European open seems to evaporated as equity indices in both Europe and the US rack up gains (with fresh lows in USD and JPY).
EUR/USD was testing above the 1.42 handle after electing some minor sell-stops below the 1.41 level just a few hours ago. USD/JPY was back above the 96 level after probing 95.10. In Scandinavia, the Norwegian Central Bank surprised the market with hawkish rhetoric. The bank left its deposit rate unchanged at 1.25% (as expected) but acknowledged that it might be appropriate to start raising interest rate earlier than previously indicated. NOK rallied against the euro and dollar pairs as market participants seemed to be short on NOK. EUR/NOK was testing the 8.6770 level, down from the 8.81 level ahead of the comments.
More Headlines
8:04:26 AM
*(PD) POLISH JUN TRADE BALANCE: -€26M V -€90ME; CURRENT ACCOUNT: €459M V €164M
- Exports : €8.3B v €8.0Be
- Im ports €8.3B v €8.0Be
- Prior Trade balance revised from - €58M to +€5M
- Prior Current Account revised from €207M to €284M
8:30:01 AM
*(US) JUNE TRADE BALANCE: -$27B V -$28.7BE
- Prior revised from -$26.0B to -$25.97B
8:30:13 AM
*(CA) CANADA JUN INTL MERCHANDISE TRADE BALANCE: -C$100M V -C$700ME; Third straight monthly deficit
- Prior revised from -C$1.4B to -C$1.1B
- First quarterly trade deficit since 1976
10:30 AM
*DOE CRUDE: +2.5M V +1ME; GASOLINE: -927K V -1.2ME; DISTILLATE: +786K V +100KE; CAPACITY UTILIZATION: 83.5% v 84.4%E
- Distillate demand -230K bpd to 3.2M bpd - Gasoline demand -250K bpd to 8.95M bpd
8:30am June Trade Balance (last -$26B)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
2:00pm July Monthly Budget Statement (last -$94.3B)
2:15pm FOMC Rate Decision
1:00pm Treasury's 10-yr note auction
Todays Headlines
7:45:14 AM
ICSC/GS weekly chain store sales w/w Aug 8th: 0.0% w/w; +0.4% y/y
- sales helped by back-to-school and tax holidays
- Guides August Comparable sales down 3.5% to 4.0%
8:30:01 AM
*Q2 PRELIMINARY NONFARM PRODUCTIVITY: 6.4% V 5.5%E; UNIT LABOR COSTS: -5.8% V -2.5%E
- Prior Nonfarm Productivity revised from 1.6% to 0.3%
- PriorUnit Labor Costs revised from 3.0% to -2.7%
- Note: unit labor costs represent largest decline in unit labor costs since Q2 2000; Productivity registered it largest gain since Q3 2003
10:00 AM
*JUNE WHOLESALE INVENTORIES: -1.7% V -0.9%E
- Prior revised from -0.8% to -1.2%
11:22:26 AM
NY Fed: Purchased $2.7B in $300B outright coupons purchase; Dealers submitted $11.3B for consideration (bid to cover 4.19)
- Heaviest purchase was $730M in the 11/15/26 maturity
- Note: Avg bid to cover for prior four auctions is 3.21
2:45:00 PM
(US) Bureau of Labor Statistics (BLS): Q2 US productivity report contains compensation & unit labor costs errors, publishing correct report as soon as possible
- Errors will not affect reported Q2 productivity number, but Q2 unit labor costs will be revised.
4:29 PM
*API PETROLEUM INVENTORIES: CRUDE: -1.42M V +1ME
GASOLINE: -2.26M V -1.2ME
DISTILLATE: +1.6M V +100ME
CAPACITY UTILIZATION: 82.3% 84.4%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.
- US equity indices are making fresh lows in late NY morning trade as investors position themselves ahead of Wednesday's FOMC decision. The non-farm productivity and unit labor costs readings are only adding weight to equities, as they paint an unsettled picture for those looking for a solid rebound in employment: unit labor costs saw their biggest sequential decline since early 2000 while productivity made its largest gain since 2003. Energy and metals are seeing gains from the European session erode, with front-month NYMEX crude off over $1.50 and ready to dip below $69, while copper is down over 8 cents from its electronic session highs of around 2.81 to test 274. Treasury prices remain bid up on the back of lower stock prices globally despite some trepidation around today's Fed coupon pass and tomorrow's FOMC statement. The 10-year yield is back below 3.7% while the 2-year is sub 1.2% ahead of this afternoon's 3-year auction results.
- A broad selection of financial names are in the red this morning. Before the open Rochdale's Dick Bove recommended taking short term profits in bank holding companies, noting that bank stocks are "running on fumes." Adding to weight in the sector were fresh CIT bankruptcy fears stemming from the company's delay of its 10-Q. CIT warned that "going concern" issues remain and reiterated it still expects to report a net loss of more than $1.5B. Citigroup published its Q2 TARP report, crowing that it approved $6B in new TARP-supported initiatives in the second quarter. A Citigroup analyst commented on Bank of America, noting that BoA has a "clear intention" to "partially repay" TARP "before the end of 2009." The analyst also said that credit quality trends at BAC seen in 2Q are carrying through into 3Q, clearing the way for TARP repayment.
- In earnings, engineering firm Fluor modestly exceeded consensus EPS estimates and missed revenue targets by 10% or so. Shares of FLR are down in the mid single digits. Watchmaker Fossil beat bottom-line estimates while falling short on revenue. The firm guided lower for next quarter, although it said revenue and earnings should really pick up in Q4. Shares of FOSL are down 12% and heading lower. Force Protection is really blowing up in early trading, with shares down 18% after barely eking out a profit in the quarter. The company was hurt by manufacturing costs related to lower vehicle shipments. In other news, GM was bragging about the Volt's fuel efficiency this morning, claiming it would get 250 mpg in city driving. A closer look at the figures shows that this would be for the first 50 miles (40 on the battery alone, 10 on the gas generator), while longer driving on the gas generator would make for efficiency of 50-100 mpg.
- Numerous firms have filed to launch secondary offerings over the last 24 hours and most of them are deep in the red this morning. Bunge is down 6% after filing to offer 10M shares to repay debt. Boardwalk Partners is selling 7M shares to fund its expansion plans; shares of BWP are down 4%. Small cap names SPH and PSB are down around 8% after launching offerings. Pharma name Chelsea Therapeutics was initially up 4% after filing a mixed shelf that was equal to 40% of its market cap, while its shares have fallen to -6% in early trading. PETD is down 20% after filing to sell shares equal to around 25% of its float.
- In currencies, risk aversion slowly gathered momentum as the New York session wore on, with the yen leading the charge. Dealers say the yen's firm tone gathered momentum after word went around that CIT would delay its Q2 report amid rumors of bankruptcy. Note that there are numerous USD/JPY sell stops lurking below the 95.80 level. EUR/USD slowly gave away its European highs to probe 1.4110, where alleged sovereign bids from Asian and Middle Eastern names were lurking. There was also plenty of dealer chatter of massive euro sell-stop orders building below 1.4100, which corresponds with a late April uptrend line for the pair and could set the tone for a test toward 1.39. CAD and AUD maintained a softer tone on weaker energy and metal prices, with USD/CAD over the 1.10 handle and AUD/USD moving below 0.84. July Canadian housing starts came in below expectations to add to bearish Cad momentum.
More Headlines
7:45:14 AM
ICSC/GS weekly chain store sales w/w Aug 8th: 0.0% w/w; +0.4% y/y
- sales helped by back-to-school and tax holidays
- Guides August Comparable sales down 3.5% to 4.0%
8:30:01 AM
*Q2 PRELIMINARY NONFARM PRODUCTIVITY: 6.4% V 5.5%E; UNIT LABOR COSTS: -5.8% V -2.5%E
- Prior Nonfarm Productivity revised from 1.6% to 0.3%
- PriorUnit Labor Costs revised from 3.0% to -2.7%
- Note: unit labor costs represent largest decline in unit labor costs since Q2 2000; Productivity registered it largest gain since Q3 2003
10:00 AM
*JUNE WHOLESALE INVENTORIES: -1.7% V -0.9%E
- Prior revised from -0.8% to -1.2%
11:22:26 AM
NY Fed: Purchased $2.7B in $300B outright coupons purchase; Dealers submitted $11.3B for consideration (bid to cover 4.19)
- Heaviest purchase was $730M in the 11/15/26 maturity
- Note: Avg bid to cover for prior four auctions is 3.21
(US) Treasury projects that the current debt limit could be reached as early mid-October - letter to U.S. lawmakers
- Sec Geithner sent a request by letter to Congress last friday to increase the $12.1T debt limit over the next two months.
- The letter did not request a specific increase.
10:07:23 AM
(TU) Turkey Jun Current Account: -$1.9B v -$1.6Be
- Prior revised from -$1.5B to -$1.6B
- July Budget deficit (TRY) at 9.5B v deficit 2.4B y/y; ex interest on debt: deficit 4.4B v surplus 3.9B y/y
11:02:46 AM
NY Fed: Purchased $3.59B in $300B outright coupons purchase; Dealers submitted $22B for consideration (bid to cover 3.34)
- Heaviest purchase was $4.05B in the 07/15/12 maturity
- Note: Avg bid to cover for prior four auctions is 2.9
4:10:06 PM
USGS reports 7.7 magnitude earthquake near India
- 262 km (163 miles) N (4°) from Port Blair, Andaman Islands, India
- 364 km (226 miles) SSW (212°) from Pathein (Bassein), Myanmar
- 465 km (289 miles) SW (229°) from YANGON (Rangoon), Myanmar
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 markets are digesting Friday's payrolls induced gains quite well, as stocks are slowly working up from opening losses to post marginal declines. With no data on the docket lingering Q2 earnings results are the main focus. Treasury prices are getting back a small portion of last week's declines but yields are consolidating at higher levels. The 10-year remains above 3.8% while the long bond has dipped back below 4.6%. Fed fund futures are recovering as well with the March contract now pricing in less than a 30% chance of a 0.75% fed funds rate in Q1 2010. Those odds had spiked to above 50% post the payroll data on Friday. Energy prices are posting modest gains and remain near early session highs while Gold has moved back below $950 as the Dollar continues to find some traction.
- Foodservice giant Sysco came in broadly in line with the Street in earnings this morning, with the company apparently dealing well with the broad downturn in consumer spending at restaurants. McDonalds reported July global comps at +4.3%, its weakest monthly showing since its +1.4% February comp. The company noted that its Asia sales were impacted by declines in China without elaborating on the point any further. Unemployment may have been down a hair on Friday but Spam is still a great way to beat the recession: Hormel Foods raised its full-year forecast thanks to stronger than expected results in the third quarter. HRL is up 7% on the guidance call, MCD is up 2% and Sysco is unchanged.
- In tech news, Microsoft officially announced the sale of its Razorfish online advertising unit to French ad giant Publicis for $530M. The move has been widely discussed over the last week, and seems to be a natural outcome of Redmond's shiny new pact with Yahoo. Dish Network faced a rough Q2, missing profit forecasts in a big way, although revenue met analysts' expectations and the company pulled of a stunning turnaround in subscriber additions. Investors seem to like the latter two points, sending shares of DISH up 10% in early trading. Priceline.com beat its Q2 top- and bottom-line estimates and guided higher than expected for next quarter. On the conference call executives said leisure travel demand was stronger than expected in the quarter, driven by lower prices.
- As noted during the European session, the overall theme in currency trading comes down to markets trying to determine whether the dollar is really decoupling from rising risk appetite. Markets continue to pick apart Friday's US employment reports as they await the results from the FOMC's policy meeting due Wednesday afternoon. The greenback for much of the morning grinded higher against its European pairs, with EUR/USD holding above the 1.4150 level - speculation there are plenty of euro sell stop lurking below this point. For the moment dealers are saying Middle Eastern names are buyers of euro ahead of this level. Just after 11AM ET Euro broke below that level electing some the purported sell stops down trading down to 1.4128. The dollar is also shrugging off news that would have typically damaged sentiment, as the US Treasury projected that the current debt limit could be reached as early mid-October, citing a letter Secretary Geithner recently sent to lawmakers. Geithner wants Congress to increase the current $12.1T debt limit over the next two months, although the letter did not request a specific increase.
More Headlines
7:38:45 AM
(US) Treasury projects that the current debt limit could be reached as early mid-October - letter to U.S. lawmakers
- Sec Geithner sent a request by letter to Congress last friday to increase the $12.1T debt limit over the next two months.
- The letter did not request a specific increase.
10:07:23 AM
(TU) Turkey Jun Current Account: -$1.9B v -$1.6Be
- Prior revised from -$1.5B to -$1.6B
- July Budget deficit (TRY) at 9.5B v deficit 2.4B y/y; ex interest on debt: deficit 4.4B v surplus 3.9B y/y
11:02:46 AM
NY Fed: Purchased $3.59B in $300B outright coupons purchase; Dealers submitted $22B for consideration (bid to cover 3.34)
- Heaviest purchase was $4.05B in the 07/15/12 maturity
- Note: Avg bid to cover for prior four auctions is 2.9
"One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man."
Market Week Wrap-up
-Investor optimism shifted into high gear this week as several helpings of very positive economic data captivated markets and plenty of commentators rushed to declare a bottom.
Goldman Sachs Strategist Abbey Joseph Cohen said "the new bull market has begun," predicting the S&P500 would be at 1050-1100 by the end of 2009 (echoing Goldman's predictions from back in late July).
Corporate chieftains were waxing positive: Cisco's Chambers said there was a "good chance this Q4 was the tipping point" headed to the upside, while AmEx's CEO said the firm's credit metrics are showing signs of improvement for the first time in 18 months (reversing a more pessimistic position taken back in July).
Looking backwards, it all seemed like prelude for the July unemployment data, which registered its first month over month improvement in the series since April 2008, dropping to 9.4% from 9.5% in June.
Nonfarm payrolls fell a less than expected 247K. Dissenting voices were heard from the usual suspects. Nouriel Roubini predicted the equity rally would be over in the next two months, saying prices have outpaced any recovery in earnings and revenue. PIMCO's El Erian once again insisted it is too early for a vigorous economic recovery.
Even President Obama hedged his rhetoric, noting that the jobs data shows the country is headed in the right direction but still warned that the recession is not over yet and stuck by the forecast that unemployment will still rise to 10%.
Thanks largely to Friday's rally on the payrolls data, stocks were up for the week: the DJIA rose 2.1%, the S&P500 gained 2.3%, while the Nasdaq edged up 1.1%.
10:00am June Wholesale Inventories (last -0.8%), TAF results
4:30pm API Crude Oil/Gasoline/Distillate Inventories
1:00pm Treasury's 3-yr note auction
Wednesday, August 12, 2009
8:30am June Trade Balance (last -$26B)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
2:00pm July Monthly Budget Statement (last -$94.3B)
2:15pm FOMC Rate Decision
1:00pm Treasury's 10-yr note auction
Thursday, August 13, 2009
8:30am July Import Price Index (last m/m 3.2%, y/y -17.4%),
July Advance retail sales (last 0.6%, ex autos last 0.3%),
Initial Jobless Claims (last 550K),
Continuing Claims (last 6.31M)
10:00am June Business Inventories (last -1.0%)
10:30am Natural Gas Inventories
1:00pm Treasury's 30-yr bond auction
Friday, August 14, 2009
8:30am July CPI (last m/m 0.7%, y/y -1.4%; ex food & energy last m/m 0.2%, y/y 1.7%),
July CPI Core Index SA (last 219.344)
9:15am July Industrial Production (last -0.4%),
July Capacity Utilization (last 68%)
9:55am Aug prelim Univ of Michigan confidence (last 66)
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.
8:30am July Nonfarm Payrolls (last -467K), July Unemployment Rate (last 9.5%), July Manufacturing Payrolls (last -136K), July Average Hourly Earnings (last m/m 0.0%, y/y 2.7%)
3:00pm June Consumer Credit (last -$3.2B)
Todays Headlines
8:30:01 AM
*INITIAL JOBLESS CLAIMS: 550K V 580KE; CONTINUING CLAIMS: 6.310M V 6.250ME
- Prior jobless claims revised from 584K to 588K
- Prior Continuing Claims revised from 6.197M to 6.241M
- Four-week mvg avg from 559K prior week
8:35:06 AM
(EU) ECB's Trichet: Reiterates rates remain at an appropriate level; economic activity to remain weak but contraction is slowing, sees increasing signs global recession is bottoming out
- Reiterates gradual recovery expected in 2010.
- Inflation expectations remain anchored over the medium and longer term; Expects extremely low inflation to be short lived.
- Data broadly confirmed ECB's expectations, uncertainty remains high.; risks to outlook include commodity prices.
- Must be prepared for volatile data, risks to outlook remain balanced.
- Confidence may improve more quickly than expected (in line with July comment).
8:46:15 AM
(EU) ECB's Trichet: To quickly counter any threat to price stability; watching all levels closely
- reiterates governments must prepare "ambitious exit strategies" and further fiscal stimulus is not warranted.
8:52:34 AM
(EU) ECB's Trichet: ECB did not discuss if interest rates were at their lowest level at today's meeting - Q&A session
- Liquidity situation remains ample, overall mood is better then before.
- A number of surveys show improvement in mood but uncertainty remains high.
- Despite improvement, does not exclude contradictory signs in the future.
- Demand for new credit is becoming less and less dynamic.
9:31:09 AM
ECB's Trichet: Reiterates that ECB does not precommit on rates; today's decision to hold rates steady was unanimous
- ECB has all appropriate tools for exit
- Careful not to use tools it could not exit easily
- Noted that the ECB did not hesitate to raise interest rates when necessary in the past
10:03:29 AM
FTC issues new rules to curb oil market manipulation effective Nov 4; can levy fines of up to $1M a day against violators
- violations include false reports of data, "wash sales" that disguise market liquidity, or misleading notices of planned pricing or output decisions.
- Congress gave FTC the power to issue new rules to curb manipulation in 2007
12:50:02 PM
(US) White House Press Sec Gibbs: GSE reform will be part of the financial market regulation overhaul, but no meeting specific to reforming Fannie and Freddie is planned
- says any decision on reform for the GSE's is "light years away."
- reminder: The Washington Post reported this morning that the Obama Administration is considering reorganization of Freddie Mac and Fannie Mae.
- On Korea, Gibbs insists no change in US policy toward North Korean nuclear program following President Clinton's mission.
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 mimicking yesterday's session, dropping sharply from the open in the first hour and then slowly marching back towards the unchanged mark. With yet another dismal month of same-store sales, mixed quarterly reports and a mildly better-than-expected weekly claims report, no clear theme is driving trading, although volumes much higher than usual. The FTC published new rules for oil trading today, threatening fines of up to $1M a day against violators who offer misleading reports in an attempt to manipulate markets. Front-month NYMEX crude is down more than a buck to trade just below $71 and natural gas prices moving back below $4 after a larger than expected build in stockpiles. Bond prices are marginally higher after opening lower with extra attention being paid to Europe after the BOE extending and expanded their quantitative easing program. The 10-year yield is just below 3.75% nearly matching that of the 10-year GILT.
- AIG has absolutely astonished markets over the last 24 hours, doubling in value on little news besides the recent choice of a new CEO and earnings scheduled for Friday morning. Yesterday the stock jumped to $22 from $14; the name shot up again before the open today, to top $28. AIG's rise has pulled the major US financial names along with it, with tier-one banks making robust gains yesterday and this morning. In other financial sector news, Prudential repeated the very strong earnings performance from Q1 in Q2, beating estimates and raising its 2009 forecast. Allstate, which has been hit harder than many insurers by losses on mortgage-related securities, missed earnings estimates by half but beat revenue targets. Both ALL and PRU are underperforming.
- Cisco offered solid results that were more or less in line with the Street. The company's CEO has been verbose, on both the company's conference call and in the media, noting that Cisco's Q4 was a tipping point and the firm's business is looking to improve moving forward. Consumer-oriented names Sirius XM, DIRECTV and Metro PCS offered lackluster quarterly results, with SIRI's loss in line with expectations and PCS's earnings half the expected amount. Customer churn was up at all three companies, while SIRI and PCS managed to significantly boost their net customer additions. DTV is around even, SIRI is down 6% and PCS has fallen 25% in early trading.
- Restaurant names Wendy's and Brinker both missed earnings and revenue expectations. Investors are dumping EAT, which is down 12%, while WEN still appears appetizing to some. Casual dining name DRI is down 4% on the Brinker news. Media firms Thompson Reuters and News Corp offered decent quarterly results. Warner Music Group's loss was much bigger than expected, with FX having a significant impact on earnings. Murphy Oil stomped top- and bottom-line estimates, although MUR is down 4% on the day.
- No real signs of economic improvement are coming from the July same-store sales data, although some moderation is seen in the y/y declines at certain companies. Comps at broadlines BJ's, Costco and Target all declined more than expected. After improving somewhat in June, high end department stores Macy's and Saks swung back to bigger than expected declines; Kohl's was the only department store name to show y/y growth (beating estimates). Apparel companies were as dismal as ever, although comps from The Limited and Zumiez were notably better than expected (but still down sharply y/y). Apparel segment darling Aeropostale missed SSS estimates, although it is among the few clothing retailers to show growth. TJX was a rare bright spot, with sales growth beating expectations.
- In currencies, the greenback gained mid morning in the New York session after the FTC announced new rules for oil trading. Also note that softer equity price action has also been a contributing factor. The ECB left its key interest rate unchanged at 1.00% this morning, as expected. During the press conference, ECB Chief Trichet addressed the economic, inflation and aspects of the decision. JPY-related currency pairs reacted the most to his talk, as dealers noted that Trichet's overall tone on the economy sounded quite optimistic. However, EUR/USD's inability to sustain any move above the 1.44 area contributed to a mild bout of profit-taking ahead of the US payroll report on Friday. The soft tone in August crude gave the hunt for euro sell stops momentum, trailing the recent trend. The BoE surprised the market by increasing its quantitative easing program, and GBP/USD made fresh post-lows of 1.6790, down from over the 1.7000 area just ahead of the increase of QE bond purchases program. Commodity currencies were softer on lower energy prices, with USD/CAD up 50 pips at 1.0750 area and AUD/USD drifting back below the 0.84 level.
More Headlines
8:30:01 AM
*INITIAL JOBLESS CLAIMS: 550K V 580KE; CONTINUING CLAIMS: 6.310M V 6.250ME
- Prior jobless claims revised from 584K to 588K
- Prior Continuing Claims revised from 6.197M to 6.241M
- Four-week mvg avg from 559K prior week
8:35:06 AM
(EU) ECB's Trichet: Reiterates rates remain at an appropriate level; economic activity to remain weak but contraction is slowing, sees increasing signs global recession is bottoming out
- Reiterates gradual recovery expected in 2010.
- Inflation expectations remain anchored over the medium and longer term; Expects extremely low inflation to be short lived.
- Data broadly confirmed ECB's expectations, uncertainty remains high.; risks to outlook include commodity prices.
- Must be prepared for volatile data, risks to outlook remain balanced.
- Confidence may improve more quickly than expected (in line with July comment).
8:46:15 AM
(EU) ECB's Trichet: To quickly counter any threat to price stability; watching all levels closely
- reiterates governments must prepare "ambitious exit strategies" and further fiscal stimulus is not warranted.
8:52:34 AM
(EU) ECB's Trichet: ECB did not discuss if interest rates were at their lowest level at today's meeting - Q&A session
- Liquidity situation remains ample, overall mood is better then before.
- A number of surveys show improvement in mood but uncertainty remains high.
- Despite improvement, does not exclude contradictory signs in the future.
- Demand for new credit is becoming less and less dynamic.
9:31:09 AM
ECB's Trichet: Reiterates that ECB does not precommit on rates; today's decision to hold rates steady was unanimous
- ECB has all appropriate tools for exit
- Careful not to use tools it could not exit easily
- Noted that the ECB did not hesitate to raise interest rates when necessary in the past
10:03:29 AM
FTC issues new rules to curb oil market manipulation effective Nov 4; can levy fines of up to $1M a day against violators
- violations include false reports of data, "wash sales" that disguise market liquidity, or misleading notices of planned pricing or output decisions.
- Congress gave FTC the power to issue new rules to curb manipulation in 2007
"All successful people, men and women, are big dreamers. They imagine what their future could be, ideal in every respect, and then they work every day toward their distant vision, that goal or purpose."
*ADP JUN EMPLOYMENT CHANGE: -371K V -350KE; smallest decline since Oct 2008
- Prior revised from -473K to -463K
- Total small business employment -138K v -177k m/m and the third sequential monthly improvement
- Medium Busniess -159K v -205K m/m
- Large Business -74K v -91K m/m
- Goods producing sector -58K
- Service providing sector -80K v -223K m/m
- Manufacturing -99K v -146K m/m
9:00:14 AM
US Treasury to sell $37B 3-year notes, $23B 10-year notes, and $15B 30-year bonds
- Treasury considering introduction of 30 year TIPs and cancelling the 20 year TIPs.
- Sees TIPS gradually increasing in 2010; TIPS auction sizes may gradually increase
10:00 AM
*(UK) JULY NIESR GDP ESTIMATE:
-0.4% V -0.4%E
- Prior of -0.4% revised to -0.8%
10:00:03 AM
*JULY ISM NON-MANUFACTURING COMPOSITE: 46.4 V 48.0E
**Sub-indices:
- Non-Mfg Prices Paid Index: 41.3 v 53.7 prior
- Employment: 41.5 v 43.4 prior
- New Orders Index: 48.1 v 48.6 prior
10:30 AM
*DOE CRUDE: +1.7M V +800KE
-GASOLINE: -220K V -1ME
-DISTILLATE: +1.1M V +1.2ME
- CAPACITY UTILIZATION: 84.5% V 84.4%E.
- Distillate demand +161K bpd to 3.43M bpd
- Gasoline demand +28K bpd to 9.2M bpd
11:02:32 AM
NY Fed: Purchased $7.25B in $300B outright coupons purchase; Dealers submitted $17.91B for consideration (bid to cover 2.47)
- Heaviest purchase was $4.1B in the 05/31/14 maturity
- Note: Avg bid to cover for prior four auctions is 3.03
11:17:22 AM
Goldman Sachs note from today states that on 7/31 the firm raised its US GDP forecast
- "As indicated in Friday's US Economics Analyst, we are boosting our near-term US economic outlook. Specifically, we are raising our forecast for real GDP growth in the second half of 2009 to 3% from 1% (at an annual rate), although we expect a return to below-trend growth in 2010.
- There are no significant changes to our forecasts for unemployment, inflation, and Fed policy. Our new growth forecasts are summarized in the table below. "
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 markets are down somewhat this morning after the ISM reading came in lower than expected and selected corporate names missed estimates. The July ISM non-manufacturing data was just shy of expectations and the June ADP job losses were smaller than the consensus view, but this, coupled with nervousness ahead of Friday's payroll readings, has been enough to upset investors. The White House acknowledged that the looming jobs report on Friday would likely show "hundreds of thousands" of jobs lost (the July Nonfarm Payrolls consensus is -328Ke). Note that the June factory orders data showed a third consecutive month of growth, although a smaller move up than was seen in the May data. There were patches of sunshine, with financial names making solid gains thanks to much better than expected results out of leading European banks. Front month crude is down a hair, trading just below $71.
- US Treasury prices were losing ground once again ahead of the equity open in NY. Prices reversed course after the ADP jobs data as equity markets headed South. The 10-year note future has rallied more than half a point from lows and the yield is back below 3.65%. The 2-year yield has declined by 10 basis points from its highs to trade back at 1.15%.
- Consumer staples names are not helping markets this morning. Dow component Proctor & Gamble missed revenue estimates by a significant amount, spooking investors, although bottom line profit met expectations. Proctor's CFO expects more contraction in consumer discretionary markets and warned that FX would continue to be a problem this year. Kraft also missed on the top line, while earnings were slightly better than expected. The company said it would concentrate even more on cutting costs and increase promotion spending. Dean Foods missed on revenue too, and offered tepid guidance for next quarter and the full year. Shares of PG are down 3%, KFT is down 2% and DF is down a whopping 8%.
- Cult tech stocks Garmin and Coinstar both crushed earnings expectations, sending both names much higher in early trading. Note that Garmin's gross margin was significantly higher sequentially in the quarter. GRMN is up more than 20%, while CSTR is off its best levels around +5%. Video game giant Electronic Arts cut its losses more than expected but still didn't manage to break even. On the conference call, ERTS's CEO noted the game industry is "weaker than originally expected," and that the company remains cautious on the macro environment.
- In other earnings, bond insurer Radian Group astonished with a very large quarterly gain (versus expectations of a sizable loss), sending its shares up 50% and competitors ABK, PMI and MTG up 10-20% a piece in sympathy. Agrium destroyed earnings and revenue targets. The CEO said Agrium is seeing signs of improving demand fundamentals as fall approaches and continues to anticipate a recovery in potash demand later in the second half of 2009. Shares of AGU rose to as much as +4% in early trading, lifting POT and MOS along with it, before it lost altitude with sinking equity indices.
- In currencies, USD and JPY pairs benefited from a combination of profit taking and risk aversion in the New York session on the ISM data and ahead of Friday's big employment data. The greenback did manage to shrug off the Treasury's record $75B quarterly refunding package. The Treasury said it would work with Congress to ensure the national debt limit was raised in a timely fashion and insisted it was not concerned about demand. EUR/USD again retesting its trend high, testing around 1.4440 before retreating well below the 1.44 handle. GBP/USD posted 9½ month highs earlier in the European session at 1.7043, although in New York trading it fell around 80 pips. USD/JPY continues to muddle around the 95 level, although it managed to recover from session lows against its European counterparts. GBP/JPY tested 162.45, although earlier it was probing below the 161.00 level; EUR/JPY drifted over 100 pips from its session highs of 137.60.
More Headlines
8:15:05 AM
*ADP JUN EMPLOYMENT CHANGE: -371K V -350KE; smallest decline since Oct 2008
- Prior revised from -473K to -463K
- Total small business employment -138K v -177k m/m and the third sequential monthly improvement
- Medium Busniess -159K v -205K m/m
- Large Business -74K v -91K m/m
- Goods producing sector -58K
- Service providing sector -80K v -223K m/m
- Manufacturing -99K v -146K m/m
9:00:14 AM
US Treasury to sell $37B 3-year notes, $23B 10-year notes, and $15B 30-year bonds
- Treasury considering introduction of 30 year TIPs and cancelling the 20 year TIPs.
- Sees TIPS gradually increasing in 2010; TIPS auction sizes may gradually increase
10:00 AM
*(UK) JULY NIESR GDP ESTIMATE:
-0.4% V -0.4%E
- Prior of -0.4% revised to -0.8%
10:00:03 AM
*JULY ISM NON-MANUFACTURING COMPOSITE: 46.4 V 48.0E
**Sub-indices:
- Non-Mfg Prices Paid Index: 41.3 v 53.7 prior
- Employment: 41.5 v 43.4 prior
- New Orders Index: 48.1 v 48.6 prior
10:30 AM
*DOE CRUDE: +1.7M V +800KE
-GASOLINE: -220K V -1ME
-DISTILLATE: +1.1M V +1.2ME
- CAPACITY UTILIZATION: 84.5% V 84.4%E.
- Distillate demand +161K bpd to 3.43M bpd
- Gasoline demand +28K bpd to 9.2M bpd
11:02:32 AM
NY Fed: Purchased $7.25B in $300B outright coupons purchase; Dealers submitted $17.91B for consideration (bid to cover 2.47)
- Heaviest purchase was $4.1B in the 05/31/14 maturity
- Note: Avg bid to cover for prior four auctions is 3.03
7:30am July Challenger Job Cuts y/y (last -9.0%)
8:15am July ADP Employment Change (last -473K)
10:00am July ISM Non-Manufacturing (last 47), June Factory Orders (last 1.2%)
10:30am DoE Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
8:30:02 AM
*JUN PERSONAL INCOME: -1.3% V -1.0%E; PERSONAL SPENDING: 0.4% V 0.3%E
- Prior Personal Income revised from 1.4% to 1.3%
- Prior Personal Spending revised from 0.3% to 0.1%
8:30:03 AM
*JUN PCE CORE M/M: 0.2% V 0.2%E, PCE CORE Y/Y: 1.5% V 1.7%E; PCE DEFLATOR: -0.4% V 0.2%E
- Prior PCE Core YoY revised from 1.8% to 1.6%
- Prior PCE Deflator YoY revised from 0.1% to -0.3%
9:00 AM
*(RU) RUSSIA JUL CONSUMER PRICES M/M: 0.6% V 0.6%E, Y/Y: 12.0% V 12.0%E
-CORE CPI M/M: 0.3% V 0.3%E- CPI YTD: 8.1% v 8.0%e
10:00:02 AM
*JUNE PENDING HOME SALES (M/M): 3.6% V 0.7%E (up for 5th straight month)
- Pending Home Sales (y/y): +9.2% (no est.)
- prior m/m revised from 0.1% to 0.8%
- prior y/y revised from 4.6% to 5.4%
- NAR Chief Economist: "Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who''ve been on the sidelines.
12:23:54 PM
(US) SEC's Schapiro: Flash trading & dark pools are concerns, exploring ways to eliminate the inequity from flash trading
- Asserts that the SEC would have to approve any proposal to ban flash trading.
- Reminder: Senator Schumer commented earlier that the SEC would soon "ban" flash trading
1:31 PM
(CA) Canada Fin Min: Concerned about recent CAD appreciation
-There are steps Canada can take to dampen CAD's rise - Seeing encouraging signs from the economy
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
- US equity indices opened slightly below yesterday's closing levels in the wake of the June personal income reading, which indicated the largest decline in the series since August, 2005. But equity markets picked up following the better-than-expected US pending home sales (which has registered positive gains in each of the last five months), sending indices back to around even by mid morning. Front-month NYMEX crude is largely unchanged, trading above $71. Bond prices began the session in positive territory moving inversely once again to the pre-market weakness in stocks, but prices have reversed sending yields higher after the home sales figure. The 10-year yield has pushed back towards 3.7%. Commodity prices trimmed early losses helped by the Dollar paring early gains. Crude is fractionally lower near $71.50.
- At an analyst day event Caterpillar offered a long-term view of its future performance. It reaffirmed its FY09 outlook after tweaking the forecast two weeks ago in its second-quarter earnings report. It insisted that 2010 earnings would be better than 2009, even if the recession continues, and discussed its earnings potential out to 2012 as well. Executives also said the company's strategy in this period would be to maintain the dividend. Other major earnings included CVS, whose second quarter results and full-year outlook were in line with expectations. CVS missed analysts' expectations for next quarter in guidance, however. Ag giant Archer-Daniels-Midland missed earnings targets by a huge margin on collapse in demand for ethanol and sluggish demand in other businesses. On the conference call, executives reiterated their positive long-term view on ethanol.
- PepsiCo has achieved a breakthrough in its quest to take over its independent bottlers, Pepsi Bottling Company and Pepsi Americas. Pepsi launched its offer for the firms back in late May, and the two bottling companies have repeatedly turned down its offers as too small. This morning PBG accepted a deal at $36.50/shr in cash (or a prorated stock/cash combo), up from the original $29.50/shr offer; PAS accepted $28.50/shr (or the prorated stock/cash combo), up from $23.27. The aggregate value of the two deals stands at $7.8B, and will lead to the creation of one of the largest global food and beverage companies.
- Homebuilders DH Horton and Pulte Homes both registered quarterly losses that were larger than expected. However, revenue totals at both firms beat expectations and key metrics including closings, orders and backlogs showed sequential improvement. Note that these positive notes come hand in hand with this morning's m/m pending home sales improvement, as well as positive housing data from last week. Pulte's CEO said the company is seeing signs of stability emerging in Q2.
- In other earnings, manufacturer Emerson Electric offered largely in line results. Anadarko's quarterly loss was smaller than expected. Managed care name Healthspring beat EPS expectations, competitor Health Net missed by a hair, and healthcare product distributor Henry Schein was in line with the Street. GMAC said its Q2 loss would be nearly one third larger than last quarter's results, stating that the quarter was adversely affected by the overall turmoil in the industry and specifically by GM's bankruptcy process. Auto parts manufacturers ArvinMeritor and TRW Automotive both did better than expected, with TRW back in the black ahead of selected items. TRW's guidance for the coming quarter and the full year is well ahead of estimates.
- In currencies, risk appetite was looking hard for fresh energy during the New York morning after a touch of profit taking hit markets during European session. With data showing US personal income declining by 1.3% in June, investors expect consumer spending will take some time to recover, possibly providing an additional catalyst for risk aversion. Dealers noted that the decline partly stemmed from the unwinding of one-time transfer payments from the US stimulus plan. EUR/USD hugged the 1.4400 level through most of the New York session, ahead of the option expiration cut at 10amET. But the better-than-expected US pending home sales helped to calm risk aversion, sending EUR/USD back toward the 1.4430 level and USD/JPY back above 95. Now markets participants are waiting to see whether the US employment data due over the next three sessions will support the stabilization and economic recovery scenario; note that major commodities, equity indices and currencies have touched key psychological levels over the last 24 hours (NYMEX Sept crude is over $70, the S&P 500 is testing the 1,000 handle and GBP/USD is touching the 1.70 mark.
More Headlines
8:30:02 AM
*JUN PERSONAL INCOME: -1.3% V -1.0%E; PERSONAL SPENDING: 0.4% V 0.3%E
- Prior Personal Income revised from 1.4% to 1.3%
- Prior Personal Spending revised from 0.3% to 0.1%
8:30:03 AM
*JUN PCE CORE M/M: 0.2% V 0.2%E, PCE CORE Y/Y: 1.5% V 1.7%E; PCE DEFLATOR: -0.4% V 0.2%E
- Prior PCE Core YoY revised from 1.8% to 1.6%
- Prior PCE Deflator YoY revised from 0.1% to -0.3%
9:00 AM
*(RU) RUSSIA JUL CONSUMER PRICES M/M: 0.6% V 0.6%E, Y/Y: 12.0% V 12.0%E
-CORE CPI M/M: 0.3% V 0.3%E- CPI YTD: 8.1% v 8.0%e
10:00:02 AM
*JUNE PENDING HOME SALES (M/M): 3.6% V 0.7%E (up for 5th straight month)
- Pending Home Sales (y/y): +9.2% (no est.)
- prior m/m revised from 0.1% to 0.8%
- prior y/y revised from 4.6% to 5.4%
- NAR Chief Economist: "Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who''ve been on the sidelines.
"An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity."
8:30am June Personal Income (last 1.4%), June Personal Spending (last 0.3%), June PCE Deflator y/y (last 0.1%), June PCE Core
10:00am June Pending Home Sales m/m (last 0.1%)
4:30pm API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
6:47:55 AM
USD 3 Month Libor fixes at 0.47% v 0.48% prior
- Overnight USD: 0.23% v 0.24% prior
- Overnight GBP: 0.55% v 0.55% prior
- 3M GBP: 0.88% v 0.89% prior
- 3M EUR: 0.85% v 0.86% prior
10:00 AM
*JUNE CONSTRUCTION SPENDING
-(M/M): +0.3% V -0.5%
10:00:03 AM
*JULY ISM MANUFACTURING: 48.9 V 46.5E
**Sub Indices:
- Prices paid: 55 v 50.0 prior
- Employment Index: 45.6 v 40.7 prior
- New Orders Index: 55.3 v 49.2 prior
- Inventories index: 33.5 v 30.8 prior
10:01 AM
-(TU) Turkey Jul PPI -0.7% v -0.2%e,
-Y/Y: -3.8% v -3.2%e
- Jul PPI M/M: 0.3% v 0.3%e
- Y/Y: 5.4% v 5.4%e
10:06 AM
-(BR) Brazil Jul Trade Balance: $2.9B v $3.5Be
- Exports: $14.1B v $14.7Be
- Imports: $11.2B v $11.2Be
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.
August 03, 2009
Rollover Days Article
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
- Follow-through strength from Europe and Asia bid up US futures before the bell while the ISM data helped sustain momentum after the open. At 10:30amET the S&P500 broke above the 1,000 mark at for the first time since November 5th, 2008. The July ISM Manufacturing index was better than expected, while the prices paid and new orders sub indices were both above 55, indicating growth. This is the seventh consecutive gain in the index, although the headline number still remains below the 50 level. The ISM's Ore said that it would be difficult to convince manufacturers the US is on the brink of recovery, "but the data suggests that we will see growth in the third quarter if the trends continue." Yesterday former Fed Chairman Alan Greenspan told ABC's George Stephanopoulos he is "short term optomistic with many caveats," in particular housing and hopes the Fed can hold off on rate hikes for "a couple of years" (but does not believe they have that much time). Front-month NYMEX crude is finding traction above $70 once again while copper has made another high going back to October. Treasury prices are under pressure pushing the 10-year yield back above 3.65% ahead of this afternoon's quarterly refunding announcement.
- In earnings news, MGM's loss in the second quarter was much higher than expected, thanks to impairment charges and big costs for retiring debt. Investors are looking past the results, with shares of MGM spiking up as much as +7% just after the bell and around +3% mid morning. Conglomerate Lowes Corp missed earnings estimates, driven primarily by impairment charges Loews had to take on investments losses at insurance subsidiary CNA Financial. CNA's quarterly earnings exceeded analysts estimates. Shares of CAN are up 10%, while L is up 4% and headed in the right direction. Tyson Foods beat earnings and revenue targets thanks to cost cutting and lower input costs. Shares of TSN were up 4% in the premarket, but have quickly sunk to around -4% early trading. Second-tier energy names Marathon Oil and FirstEnergy are up in the low single digits after offering solid second quarter results and exceeding analysts targets.
- In currencies, the greenback hit fresh 2009 lows against European and commodity-related pairs, with EUR/USD testing the 1.4400 level, USD/CHF probing the 1.0600 and GBP/USD above the 1.69 handle. Continued strength in global equity markets highlighted the ever growing appetite for risk, which is providing a negative backdrop for the USD. Pre-Lehman collapse PMI readings throughout most of Europe have driven stock markets higher this morning. Sterling led the pack as the UK PMI manufacturing moved above the pivotal 50 level for the first time since April 2008. In the US, the ISM survey is only boosting risk appetite.
- Note that the overall tone for the USD is nearing some key chart momentum points, with the 1.06 area being eyed in USD/CHF. The SNB will report its July CPI data in tomorrow's session and intervention chatter could get louder if the pairs is below 1.06 for any prolonged period of time. In addition, the RBA has a rate decision on Tuesday, and could step up its rhetoric over strength of AUD.
More Headlines
6:47:55 AM
USD 3 Month Libor fixes at 0.47% v 0.48% prior
- Overnight USD: 0.23% v 0.24% prior
- Overnight GBP: 0.55% v 0.55% prior
- 3M GBP: 0.88% v 0.89% prior
- 3M EUR: 0.85% v 0.86% prior
10:00 AM
*JUNE CONSTRUCTION SPENDING
-(M/M): +0.3% V -0.5%
10:00:03 AM
*JULY ISM MANUFACTURING: 48.9 V 46.5E
**Sub Indices:
- Prices paid: 55 v 50.0 prior
- Employment Index: 45.6 v 40.7 prior
- New Orders Index: 55.3 v 49.2 prior
- Inventories index: 33.5 v 30.8 prior
10:01 AM
-(TU) Turkey Jul PPI -0.7% v -0.2%e,
-Y/Y: -3.8% v -3.2%e
- Jul PPI M/M: 0.3% v 0.3%e
- Y/Y: 5.4% v 5.4%e
10:06 AM
-(BR) Brazil Jul Trade Balance: $2.9B v $3.5Be
- Exports: $14.1B v $14.7Be
- Imports: $11.2B v $11.2Be
"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.
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.
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