07:30 US Aug Challenger Job Cuts
08:15 US Aug ADP Employment Change
10:00 US Aug ISM Manufacturing, July Construction Spending
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
6:14:54 AM
Far East Equity Summary
- Nikkei 225 Index: -3.6% at 8,824
- Hang Seng Index: -1.0% at 20,536
- Australia ASX 200: -1.1% at 4,404
- Shanghai Composite Index: -0.5% at 2,638
- India Sensex -0.3% at 17,971
9:00:03 AM
(US) June S&P/Case-Shiller Composite 20 Y/Y: 4.23% v 3.5%e; Home Price Index: 147.97 v 146.47 Prior
- Prior Composite-20 revised from 4.61% to 4.64%
- Prior Home Price Index revised from 146.43
- Q2 Home Price Index: 138.0 v 132.2 prior; HPI Y/Y: 3.6% v 2.3% prior
9:45:02 AM
*(US) AUG CHICAGO PURCHASING MANAGERS: 56.7 V 57.0E
- Prices Paid: 57.2 v 58.1 last
- New Orders: 55.0 v 64.6 last
- Employment: 55.5 v 56.6 last
- Inventories: 46.5 v 50.8 last
- Supplier Deliveries: 61.2 v 59.4 last
10:00:18 AM
(US) FDIC Q2 Troubled Bank list: 829 v 775 q/q (+7%)
- Total assets of problem institutions $408B v $431B q/q
- Deposit insurance fund now -$15.2B v -$20.7B q/q
- FDIC insured institutions net income $21.6B v $18.2B q/q
- Q2 net charge offs $49B (first y/y decline in charge offs since Q4 2006) v $52.4B q/q
10:45:38 AM
(EU) ECB sources: Concern exists on some banks' dependence on funds from the ECB; will delay exit from measures due to US and EMU perhiphery states concerns
- ECB expected to add at a min 1 more full allotment of 3 month operations; and maintain full allotment of MROs through the end of 2010
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
09:00 US June S&P/CS Home Price Index, S&P/CS Composite-20
09:45 US Aug Chicago Purchasing Manager Index
10:00 US Aug Consumer Confidence, Aug NAPM Milwaukee
14:00 FOMC Minutes
16:30 API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
5:16:34 AM
*( IT) ITALY DEBT AGENCY (TESORO) AUCTION RESULTS: SELLS TOTAL €10.4B IN THREE TRANCHES
- Sells €2.86B in 2.0% Jun 2013 BTPs; avg yield 2.07% v 2.01% prior; Bid-to-cover: 1.45x 1.4x prior
- Sells €5.0B in 4.0% Aug 2021 BTPs; avg yield 3.81% v 4.03% prior; Bid-to-cover: 1.3x v 1.7x prior
- Sells €2.5B in Dec 2015 Floating Rate Notes (CCT); avg yield 1.74% v 1.7% prior; bid-to-cover 1.27x v 1.44x prior
6:37:46 AM
(RU) Russia Deputy Economy Minister Klepach: Raises 2011 inflation and GDP growth targets
- Raises 2011 GDP est to 4.2% from 3.4% prior;
- Raises 2012 GDP forecast to 3.9% from 3.5% prior
- Raises 2010 inflation forecast to 7-8% from 6-7% prior
- Raises 2011 inflation forecast to 6-7% from 5.5-6.5% prior
8:58:00 AM
(FR) France Debt Agency (ATF) Bill Auction Results: Sells approx €9.0B in 7, 12, 25 and 51-week Bills versus €9.0B indicated
- Sells €7.0B in 7-week Bills
- Sells €4.0B in 3-month (12-week) Bill; avg yield0.382% v 0.381% prior
- Sells €2.0B in 6-month (25-week) Bills; avg yield 0.436% v 0.440% prior
- Sells €2.0B in 1-year (51-week) Bills; avg yield 0.543% v 0.561% prior
10:27:28 AM
*(US) DALLAS FED MANUFACTURIG ACTIVITY: -13.5% V -10%E
- Production -0.1 v 4.9 prior
- New orders -9.3 v -9.6 prior
- Raw materials prices paid 24.3 v 12.3 prior
- Wages and benefits +7.1 v 8.0 prior
11:02:05 AM
NY Fed: Purchased $360M in outright TIPS purchase; dealers submitted $14.75B for consideration (bid to cover 40.97)
- Heaviest purchase $221M in the 07/15/19 maturity
- Avg bid to cover over prior four auctions is: 8.24
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.
“You have to have confidence in your ability, and then be tough enough to follow through.”
Market Week Wrap-up
- Markets entered the summer doldrums this week, with little major economic data scheduled and volumes well below average. Apart from the modestly positive return to growth seen in the July US industrial production data, there was little good news for traders to fix on. Poor showings in the Empire State and Philly Fed regional production surveys, plus another leg up in weekly claims helped revive risk aversion flows into gold, safe-haven currencies and government debt (where yields dropped to record lows in some cases). Initial jobless claims reached their highest level since last November and crossed back above the psychologically important 500K handle. Fed Governor Bullard reiterated his position more asset purchases might be needed to avoid deflation, while across the pond ECB hawk Webber said the ECB should put off discussion of exiting easy policy until next year. For the week both the Dow and S&P gave back a little under one percent, but the NASDAQ eked our small gains on the back of several notable M&A announcements.
- More weak US data fueled the ongoing rotation into safe haven assets this week. Equity indices worldwide tumbled through the US open on Friday as investors piled into USTs, bunds and gilts, while key currencies, especially the Japanese Yen, soared. With gold futures not far off all-time highs, investors sought out fresh commodity plays to hide from risk, sending silver up by double digit percentages. The US July new and existing home sales numbers were much worse than expected; July new home sales fell to their lowest level ever, while the backlog of existing homes pushed out to a record 12.5 months of supply. But housing has been terrible for months, and it was the unexpectedly large decline in the July durables ex-transport series that really threw investors. The DJIA sunk below 10,000 after the durables data on Wednesday and closed below that level on Thursday for the first time since early July. Slightly better weekly jobless claims and the smaller than expected downward revision to Q2 GDP on Friday morning helped staunch the bleeding (many analysts cautioned that the Q3 GDP reading will be much more relevant given the recent deterioration in trends that has taken place in Q3). On Friday, Fed Chairman Bernanke's policy speech from Jackson Hole also helped to calm the markets, leading to an equity rebound and a sharp reversal in the Treasury market, highlighted by a three point drop in the 30-year. The words "double dip recession" have been heard more often this week, most notably from Fed Governor Evans, who said the risk of a double-dip recession is higher now than a few months ago, and "Dr. Doom" Nouriel Roubini who estimated that the chances of a double dip were around 40%. For the week the S&P500 lost 0.7%, the DJIA declined 0.6% and the Nasdaq Composite dropped 1.2%.
- Fed Chairman Bernanke kicked off the annual Jackson Hole conference on Friday morning. Generally Fed chairmen have taken a low profile at Jackson Hole, but ahead of this year's event market participants inflated a bubble of anticipation around Bernanke's speech, as analysts crowed that the chairman needed to reassert control over what has become a fractured monetary policy dialog. Fed watchers expected Bernanke to counter the idea that the Fed is either paralyzed by indecision or out of ammunition. But in the event, Bernanke did not offer any major new initiatives in his speech, merely signaling that the Fed was ready to provide more support if necessary. Fed dove Bullard scooped the chairman before his speech, telling CNBC that the FOMC might do "a little more" in its quantitative easing program. Contrast these remarks with ECB heavyweight Axel Weber, also attending the Jackson Hole symposium, who confidently stated later on Friday that Europe is "bordering on a self sustaining recovery."
- Merger drama continues to dominate the news flow. This week's headline contest pits Dell against Hewlett-Packard for network storage firm 3Par. Commentators say that both Dell and HP believe they must acquire 3Par in order to reinforce their cloud computing offerings, and that both see 3Par as central to their strategy in this emerging IT category. On August 16th Dell offered $18/share for 3Par, and HP responded this week with a $24/share. Several more back-and-forth offers left HP with the higher bid on Friday, at $30/share, with Dell expected to consider its next move over the weekend. Press reports published throughout the week indicated that Potash Corp has been encouraging other firms to launch counterbids to BHP's $130/share offer, with reports stating several foreign firms might be considering bids. The WSJ wrote that Chinese private equity firm Hopu Investment Management was mulling a bid for Potash, while Chinese media reported that Sinochem was evaluating a rival bid. Vale stated that it is not interested in bidding for Potash.
- In other equity news, Intel cut its guidance for Q3 on Friday, citing weaker than expected demand for PCs in mature markets and reinforcing doubts about the strength of a technology sector recovery. Boeing delayed its first 787 delivery date until mid-Q1 of 2011, suffering a further setback after a Rolls Royce engine to be used on the aircraft blew up during testing earlier this month. Homebuilder Toll Brothers reported its first quarterly profit in nearly three years, although the gain was due mostly to tax benefits and lower write downs on land holdings.
- In fixed income trading, US rates moved out to levels not seen at the long end since Q1 of 2009, pushing the benchmark 10-year briefly below 2.5%. Despite new all time lows in the 2-year yield, the benchmark spread narrowed below 200 basis points for the first time in more than a year. Another $102B in US Treasury coupon supply had little if any effect on trade. Friday saw rates snap back after Bernanke signaled no aggressive shift in policy to deal with the current US economic soft patch.
- The greenback began the week on a temperate note as markets maintained a tight focus on the yen and European data again beat expectations. USD/JPY entered the week right around the pivotal 85 handle, putting strong pressure on Japanese officials to act. Japanese PM Kan and BoJ Gov Shirakawa conferred by phone, with the only result being statements that officials continue "watching markets" and are "observing developments." The lack of concrete action by the Ministry of Finance or the BoJ presented ample opportunities for market participants to test Japan's resolve on the yen appreciation trend. Once the key 85.00 level gave way with no sign of intervention, the yen proceeded to hit a series of fresh multi-year highs against dollar and euro pairs. EUR/JPY fell to fresh nine-year lows around 105.40 while USD/JPY approached 83.57 for its lowest reading since April 1995. Late in the week, Japan's largest trade union called for the G7 to do something about the strengthening Japanese currency, prompting PM Kan to promise his government would take "decisive action" in the foreign exchange market when it becomes appropriate. These late moves shepherded a reversal in yen strength, putting USD/JPY back around 85.50 while 10-year and 20-year JGB yields spiked to two-week highs.
- The strong yen reflects the recent spate of safe-haven buying that has propelled yields on key European treasury instruments, chiefly Bunds and Gilts, to record lows. The yield on the German 30-year Bund hit all-time lows below 2.63% late in the week, while the spread between the German 2-year and 30-year bonds narrowed below 200 basis points. The European peripheral debt crisis lurked in the background this week, adding to the "risk off" theme. S&P downgraded Ireland's sovereign rating by one notch to AA-, reigniting fears of more ratings dominos among Europe's PIIGS. By the end of the week the spread between Irish/German 10-year bonds had widened to record levels above 365 basis points and other peripheral spreads in the region were elevated. The spread between Greek and German 10-year government bonds moved back above the over 930 basis point level.
- The dollar seemed to struggle a bit against the European pairs after the German IFO business climate data beat expectations once again, rising to its best level since June 2007, before the financial crisis. In addition, there were some sovereign rating concerns after an S&P sovereign analyst warned the US would need to address its ballooning budget deficit to protect its "AAA" rating. Fresh risk aversion kept dealers watching for CHF strength to impact Eastern Europe. The EUR/CHF cross descended to fresh all-time lows below the 1.30 handle on chatter that the Swiss National Bank was off-loading more of the euros it accumulated during its year-long intervention binge. Traders keenly pointed out that this scenario could inflict pain on carry-related trades against the HUF and PLN. The yield on the 3-month Hungarian Bill auction crept higher by 10bps for the first rise in five auctions.
- Australia's national elections on Saturday ended in a stalemate, with no clear winner emerging in a close race between Labor's Gillard and opposition leader Tony Abbott. The Electoral Commission's count of mail-in ballots is expected to extend into next week, but initial projections are for a 73-72 edge for the opposition coalition. With the threshold to form a new government at 76 seats, the winning party will be the one most capable of securing an agreement with the 4 independents and 1 Green party member. Pundits indicate the Independents appear inclined to form a bloc and most likely will throw in with Gillard. Mining companies saw some early strength this week after the election on speculation the hung parliament would at the very least result in a watered-down mining resource rent tax (MRRT) reform.
Week of Monday, August 30, 2010 thru Friday, September 3, 2010
Monday, August 30, 2010
Economic
08:30 US July Personal Income, Personal Spending, PCE Core, PCE Deflator
10:30 US Aug Dallas Fed Manufacturing Index
11:00 US Treasury's 10-year TIPS announcement
Tuesday, August 31, 2010
Economic
09:00 US June S&P/CS Home Price Index, S&P/CS Composite-20
09:45 US Aug Chicago Purchasing Manager Index
10:00 US Aug Consumer Confidence, Aug NAPM Milwaukee
14:00 FOMC Minutes
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, September 01, 2010
Economic
08:15 US Aug ADP Employment Change
10:00 US Aug ISM Manufacturing, July Construction Spending
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Thursday, September 02, 2010
Economic
07:30 US Aug Challenger Job Cuts
07:45 ECB Rate Decision
08:30 US Final Q2 Nonfarm Productivity, Q2 Final Unit Labor costs, Initial Jobless Claims, Continuing Claims
10:00 US July Factory Orders, July Pending Home Sales
10:30 Natural Gas Inventories
11:00 US Treasury announcement
13:00 US Treasury's 10-year TIPS auction
Friday, September 03, 2010
Economic
08:30 US Aug Unemployment Rate, Nonfarm Payrolls, Manufacturing Payrolls, Private Payrolls, Average Hourly
10:00 US Aug ISM Non-Manufacturing
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Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US Prelim Q2 GDP, Q2 GDP Price Index, Q2 Personal Consumption, Q2 Core PCE
09:55 US Aug Final University of Michigan Confidence
Todays Headlines
5:31:32 AM
*(HU) HUNGARY DEBT AGENCY BOND AUCTION RESULTS: SELLS TOTAL HUF50B (THREE TRANCHES)
- Sells HUF20B in Feb 2014 Bonds; avg yield 6.88% v 6.82% prior; bid-to-cover: 1.4x v 2.0x prior
- Sells HUF15B in Feb 2016 Bonds; avg yield 7.00% v 6.87% prior; bid-to-cover: 2.1x v 2.7x prior
- Sells HUF15B in Nov 2020 Bonds; avg yield 7.05% v 7.09% prior; bid-to-cover: 1.9x v 2.6x prior
5:33:57 AM
*(IR) IRELAND DEBT AGENCY (NTMA) BILL AUCTION RESULTS: SOLD TOTAL €600M IN BILLS V €400-600M RANGE
- Sells €200M in 6-month (182-day) Bills; avg yield 1.978% v 2.458% prior; Bid-to-cover: 10.1 x v 3.6x prior
- Sells €400M in 8-month (245-day) Bills; avg yield 2.348% v 2.81% prior; Bid-to-cover: 4.1x v 3.1x prior
8:30:03 AM
*(US) INITIAL JOBLESS CLAIMS: 473K V 490KE; CONTINUING CLAIMS: 4.456M V 4.495ME
- Prior initial claims revised higher from 500K to 504K
- Prior continuing claims higher from 4.478M to 4.518M
10:00:06 AM
*(US) Q2 MORTGAGE DELINQUENCIES: 9.85% V 10.06% PRIOR (Q1)
- MBA Mortgages in foreclosure at 4.57% v 4.63% q/q
- Total Prime mortgage seriously delinquent rate (1-4 units) 6.78% v 7.08% q/q
- Total Percentage of loans on which foreclosure actions were started at 1.11% v 1.23% q/q
11:02:40 AM
NY Fed: Purchased $1.415B in outright coupon purchase; dealers submitted $8.455B for consideration (bid to cover 5.9)
- Heaviest purchase $1.13B in the 11/15/21 maturity
- Avg bid to cover over prior four auctions is: 8.24
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 Initial Jobless Claims, Continuing Claims
10:30 Natural Gas Inventories
Todays Headlines
7:00:03 AM
*(US) MBA MORTGAGE APPLICATIONS W/E AUG 20TH: 4.9% V 13.0% PRIOR
- Refi's: +5.7% v 17.1% prior
- Purchase Index: (Seasoanlly adj) +0.6%
- Avg Rate on 30y mortgage: 4.55% v 4.60% prior
7:16:32 AM
(US) Tight scrap steel market in the US could push up prices - Steel Business Briefing
- One Mid-Atlantic dealer believes the market is headed for more than a slight increase. "The scrap supply is extremely short, export demand is heavy and we are told that domestic mills expect a robust quarter coming up," he said. "Unless I am reading the tea leaves incorrectly, it looks like we could have an exciting month."
- A West Coast source estimated shredded scrap prices would be up at least $10/long ton - also due to tight supply. "Most buying is via containers, reflecting (that) companies dont want to take a long position, so they are buying lower volumes in containers."
8:30:02 AM
*(US) JULY DURABLE GOODS ORDERS: 0.3% V 3.0%E; DURABLES EX TRANSPORTATION: -3.8% V +0.5%E
- Capital Goods Orders Non-defense Ex-aircraft: -8.0% v +3.6% prior (revised higher from 0.2% prior)
- Capital Goods Shipments Non-defense Ex-aircraft -1.5% v +1.0% prior (revised higher from 0.5% prior)
10:06:45 AM
(SZ) SNB Hildebrand: Balance sheet has risks; Economic uncertainties remain elevated - newspaper interview
- Inflation risks remain in longer term picture
- Switzerland does NOT have either inflation or deflation; will respond to any renewed deflation risks yet inflation remains a threat over the longer term
- SNB does not have an exchange rate target
- Swiss economic growth could be weaker in 2H10
11:03:14 AM
(FR) French President Sarkozy: Global economy not yet on the way to solid growth; G20 needs to pursure more reforms and broaden its mandate
- Tools are needed to limit "excessive" FX rate volatility, does not envision a return to fixed rates.
- Current forum for discussing FX issues is the G7, but the world cannot discuss FX issues without China (not a G7 member).
- Need to discuss commodity price volatility.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US July Durable Goods Orders
10:00 US July New Home Sales, Q2 House Price Index, Mexico Q2 GDP, July Unemployment
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
7:30:49 AM
(IN) India Central Bank (RBI): Uncertain global enviroment warrants caution while formulating policies
- Market conditions in FY11 (current fiscal year) is more challenging for debt management.
- High bond holding of banks might limit demand for Gov't debt.
- Policy transmission may be faster in a cycle of rising interest rate cycle.
8:45:31 AM
(US) Fed Evans: Sees encouraging signs of economic recovery in the US, even though housing is not out of the woods yet
- Seeing "some evidence" of housing price stability.
- Number of successful loan modifications is small so far relative to the size of the problem.
- More mortgage defaults are due to unemployment than imprudent lending.
8:24:44 AM
(US) Goldman Sachs Chief US Economist Hatzius: Sees real US GDP +1.5% in the second half of 2010 and early 2011
- Over the last few months, the US economic indicators have shown a broad-based slowdown.
- If our GDP view is correct, substantial further downward revisions are coming.
- Believes odds of US economy returning to technical recession are low, sees 25-30% risk of this outcome.
- We find forecasts that do not look for GDP growth well below trend quite implausible.
10:07:55 AM
(PD) Poland Central Bank: PLN tracks EUR/USD, downplays the weaker zloty; believes CPI could top bank's target of +2.5% - press Conf
- Rate panel does not share "alarmist" views on CPI.
- Core inflation remains low and is important for rates
- MPC is cautious, does not want to hamper growth
11:02:58 AM
NY Fed: Purchased $1.35B in outright coupon purchase; dealers submitted $17.29B for consideration (bid to cover 12.8)
- Heaviest purchase $516M in the 08/15/13 maturity
- Avg bid to cover over prior four auctions is: 9.02 (third auction today)
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 Canada June Retail sales
10:00 US July Existing Home Sales, Aug Richmond Fed Index, Mexico July Trade Balance
16:30 API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
4:35:54 AM
Former IMF Chief Economist Rajan: Federal Reserve should consider raising rates
- Interest rates near zero risk fanning asset bubbles or propping up inefficient companies
- Believe FED should start increasing the benchmark rate by as much as 200bps so it is no longer negative in real terms
4:46:55 AM
(JP) Japan Finance Min Noda: Discussed recent economic and market trends with PM Kan but did not talk about specific stimulus measures
- Informed PM of his analysis of economy and currencies
- Instructed by PM Kan to continue to watch markets
- Kan and BoJ Gov Shirakawa to consider a meeting if needed.
- Would want to continue close cooperation with BOJ
5:01:43 AM
(EU) Moody's Semi Annual European Sovereign Outlook: European economic growth seen lower compared to other region of the world and poses downside risks for its sovereign ratings
- Financial crisis and divergences to challenge EU 'cornerstone'
- Fiscal consolidation could be positive for growth
- Stronger focus on government spending is 'encouraging'
- Greece debt stabilization could occur before 2013
5:07:10 AM
(UK) BOE/CEPR Roundtable: Signs that the global economy might be losing momentum with risks to growth largely to the downside
- British Pound currency decline is key to the resilience of inflation
- Broad consensus that QE would be effective if used again
8:53:35 AM
(FR) France Debt Agency Sells total €8.022B in 13, 26 and 52-week Bills versus €8.5B indicated
- Sells €4.52B in 13-week Bils; avg yield 0.381%; bid-to-cover: 2.2x
- Sells €1.5B in 26-week Bills; avg yield 0.440%; bid-to-cover: 3.3x
- Sells €2.0B in 52-week Bills; avg yield 0.561%; bid-to-cover: 3.5x
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.
“Life is tough, and if you have the ability to laugh at it you have the ability to enjoy it.”
Market Week Wrap-up
- Markets entered the summer doldrums this week, with little major economic data scheduled and volumes well below average. Apart from the modestly positive return to growth seen in the July US industrial production data, there was little good news for traders to fix on. Poor showings in the Empire State and Philly Fed regional production surveys, plus another leg up in weekly claims helped revive risk aversion flows into gold, safe-haven currencies and government debt (where yields dropped to record lows in some cases). Initial jobless claims reached their highest level since last November and crossed back above the psychologically important 500K handle. Fed Governor Bullard reiterated his position more asset purchases might be needed to avoid deflation, while across the pond ECB hawk Webber said the ECB should put off discussion of exiting easy policy until next year. For the week both the Dow and S&P gave back a little under one percent, but the NASDAQ eked our small gains on the back of several notable M&A announcements.
- Record amounts of cash are burning holes in corporate balance sheets, so the recent surge in mergers and acquisitions comes as little surprise. According to the Wall Street Journal, $85B in deals were announced this week, the highest amount since late 2009, with BHP Billiton's massive $40B offer for Canada's Potash Corp. accounting for nearly half this figure. Potash rejected BHP's initial buyout offer, and BHP has responded by taking its $130/shr offer to shareholders. BHP's gambit is part of its quest to diversify its mining portfolio. Similar thinking drove UK-listed miner Vedanta Resources to offer to acquire 51-60% of Cairn's India oil production unit for $8.5-9.6B in cash. Tech has seen several high-profile announcements which led to a rash of rumors and speculation within the group. Intel signed a deal to acquire computer security firm McAfee for $7.68B, adding security to its toolbox for providing components for Internet-connected devices such as tablet computers and mobile phones. On Monday Dell announced it would acquire 3PAR for $18/shr in cash, valuing 3PAR at $1.15B, in a bid to build a virtualization business. There were reports that Research in Motion is holding talks with online advertising firm Millenial Media, for a deal worth up to $500M. Note that RIMM is struggling to catch up with advertising initiatives by Apple and Google. In the financial sector small cap banks NewAlliance and First Niagara are merging in an all-stock deal valued at $1.5B. MasterCard bought the UK's DataCash Group, an online payment security firm, in a deal worth $520M. And in the natural gas space, multiple privately-held natural gas firms put themselves up for sale: Talon Oil and Gas is on the block and could fetch $1.5B, Anschutz could be worth around $1B and Chief could fetch $3B.
- Deere & Co. was the final major industrial name to report June quarter results. Top- and bottom-line results did not disappoint, but executives had little good to say about the firm's outlook. Tech giants Dell and HP offered lukewarm quarterly results. Dell missed earnings targets by a hair and reaffirmed its full year guidance. HP's results were thoroughly in line with expectations. Executives were upbeat on the conference call and dodged questions about former CEO Mark Hurd, insisting that HP is "looking forward, not back." Tech Data and Applied Materials both outperformed consensus estimates. Earnings out of Tech Data were relatively strong in its Q2 report, but revenue only a bit ahead. AMAT's Q3 was strong, thanks to very firm growth in the company's solar and silicon businesses. Brocade's Q3 report met earnings expectations but missed top-line estimates.
- A substantial portion of the US retail sector reported June quarter results this week. All in all there was little to cheer in the reports, with the best performers merely meeting or only barely exceeding analysts' reduced expectations, while executives were universally cautious in their outlook for the second half of 2010. There was a marked absence of enthusiasm about the back-to-school season. Retail giants Wal-Mart, Home Depot, Staples and TJX Companies met expectations, while Wal-Mart's CEO said the slow economic recovery would continue make the company's customers very cautious. Revenue at Target and BJ's missed expectations, while BJ's slashed its 2010 guidance. Reports from apparel names such as The Gap, Abercrombie & Fitch, The Limited and Ann Taylor. One bright spot was Saks, which continues to reliably outperform the Street.
- Much of the focus in fixed income trading this week centered on the seemingly insatiable demand for the safety of government debt. Disappointing data in the United States and Japan as well as re-emerging concerns about European sovereign debt severely hindered investors' appetite for risk. By Friday yields on both sides of the Atlantic moved toward or made fresh all-time lows. The 10-year Gilt is below 3% for the first time in 17 months, the 10-year German Bund made new all-time lows near 2.25% while the US benchmark sunk toward 2.5% for the first time since coming out of the depths of the credit crisis. Demand for US paper was particularly robust at the long end of the curve briefly pushing the 30-year yield below 3.6%. Peripheral European sovereign debt and CDS spreads widened at the end of the week after reports resurfaced that the Greek economy is really struggling under the weight of onerous austerity measures.
- Despite the 18-month high in China's trade surplus reported last week, the most recent US TIC data indicated that the Chinese continue to diversify their reserves away from US assets. US Treasury holdings fell for the second consecutive month to a fresh multi-month low of $844B, down from last month's $867B. This theme will remain front and center heading into a week with three scheduled coupon sales totaling $102B.
- The sovereign debt issue and China's reserve diversification process reappeared as major drivers of sentiment in FX trading this week. Initial dollar softness followed comments out of an influential former PBoC advisor who said that China had been buying European bonds. Chatter circulating during the early part of the week that China was selling the greenback and purchasing emerging market currencies, despite constant assurances that the greenback would remain the core of China's investment strategy. Bouts of dollar softness also correlated with interest rate differentials, given that the 10-year US swap spreads have gone negative.
- Moody's commented on "AAA" rated sovereign debt of France, Germany, UK and US, all of which are facing fiscal challenges but retain Stable outlooks. Moody's warned that the "distance to downgrade" has been further reduced and warned that the countries must address long-term fiscal challenges. Afterwards French President Sarkozy called key government officials back to Paris from summer vacations to discuss the economic situation after Moody warned that France was moving closer to losing its "AAA" sovereign credit rating.
- As the week drew to a close the risk aversion theme won out over interest rate differentials, aiding the USD, CHF and JPY pairs, as the unending parade of weaker US data weighed down global equities. The CHF outperformed the other major pairs and EUR/CHF was back within striking distance of hitting fresh lifetime lows below 1.3070. EUR/USD dipped below the 1.2750 level after numerous failures to sustain gains above 1.29 earlier on in the week. EUR/JPY was trading under the 109 handle by Friday for the first time since July 1st.
- Current and former Japanese officials continued their verbal intervention in the yen, although they were mostly unable to move the USD/JPY away from the pivotal 85 handle. Former MoF official Sakakibara (aka Mr. Yen) said that JPY might hit all-time highs against USD by the end of September (which would be below the 79.75 level in USD/JPY pair). That level was in play after the BoJ reiterated its view that recent yen strength did not pose an immediate threat to the Japanese real economy. Dealers surmised that any BoJ emergency meeting to reckon with currency strength was unlikely at this time.
- Chatter heated up again on the peripheral front. The ECB drained €60.5B in its one-week term deposit facility and noted that they settled only €10M in Euro Zone Govt bonds last week, but the info seemed to disappoint the market after chatter circulated that the central bank had been buying Irish bonds. The governor of the Irish Central Bank signaled that building society Irish Nationwide would need additional capital. As a result German Bund futures tested record highs (German 10-year yield is at record low). Peripheral spreads widened out, with the spread between 10-year Irish and German government bonds pushed out to six-week highs beyond 310bps. Noted ECB hawk Weber took on a dovish tone in statements on Friday. Weber said that the ECB should maintain its unlimited lending allotment until after the end of 2010 to take into account of year-end funding tensions. The comments accelerated risk aversion flows and sent 10-year Gilt yield below the 3.0% level.
- Sterling probed its 200-day moving average, just below 1.5500, at various times over the course of the week. Chatter that a potential BHP/Potash Corp deal would be finance in USD weakened the pound initially, although the impact of these rumors were short lived. Then there were that the minutes from the BoE's Aug 5th policy meeting would show a three-way split in the MPC voting (very bad for the pound). In fact the BoE voted 8-1 to leaves rates unchanged, proving that earlier rumors false. Positive July UK retail sales and borrowing data also provided some defense for 1.5500 area, but by the end of the week the level had been breached. Note that CAD was aided by talk of China reserve diversification and the BHP/Potash Corp flows.
- Japan's preliminary Q2 GDP reading was a disappointment, contributing to risk aversion early in the week (q/q the reading was 0.1% v 0.6%e while the annualized figure was 0.4% v 2.3%e, both at the lowest level since Q3 of 2009). Fresh signs of a setback to Japan's economic recovery spurred speculation of new monetary stimulus from the BoJ and fiscal measures from the Finance Ministry. On Thursday, an early press report from Sankei Shimbun said BoJ may expand the amount of its corporate loan buying program to ¥30T from ¥20T prior while also increasing the duration of eligible debt to six months from three months. And even though subsequent reports refuted rumors of an emergency BoJ confab, rumors continued to percolate that further easing could take place at the BoJ's next scheduled meeting, scheduled for early September.
Week of Monday, August 23, 2010 thru Friday, August 27, 2010
Monday, August 23, 2010
Economic
10:00 Mexico June Retail Sales
Tuesday, August 24, 2010
Economic
08:30 Canada June Retail sales
10:00 US July Existing Home Sales, Aug Richmond Fed Index, Mexico July Trade Balance
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, August 25, 2010
Economic
08:30 US July Durable Goods Orders
10:00 US July New Home Sales, Q2 House Price Index, Mexico Q2 GDP, July Unemployment
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Thursday, August 26, 2010
Economic
08:30 Initial Jobless Claims, Continuing Claims
10:30 Natural Gas Inventories
Friday, August 27, 2010
Economic
08:30 US Prelim Q2 GDP, Q2 GDP Price Index, Q2 Personal Consumption, Q2 Core PCE
09:55 US Aug Final University of Michigan Confidence
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Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
(US) Preview: Weekly Initial Jobless Claims due at 08:30 ET (12:30 GMT)
**Consensus expectations:
- Initial claims expected at 478Ke v prior week's 484K (estimates range from 460K to 495K)
- Continuing claims seen at 4.50Me v prior week at 4.45M (range seen from 4.41M to 4.54M)
8:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 500K V 478KE (highest reading since Nov 2009); CONTINUING CLAIMS: 4.478M V 4.50ME
- Prior initial claims revised higher from 484K to 488K
- Prior continuing claims higher from 4.452M to 4.491M
9:40:29 AM
(US) Preview July Leading Indicators due out at 10:00ET
**Consensus expectation: +0.1%e v -0.2% prior
- Estimates range from -0.4% to +0.5%
10:46:46 AM
Preview: (US) Treasury to announce coupon auctions and TIPS reopening at 11AM ET
- Analysts generally see another $1B reduction in both the 2 and 5-year auctions while the 7-year is less certain with many calling for the government to hold sales steady. The resulting $37B 2-year, $36B 5-year and $29B 7-year package would include $70B in new money.
- The 30-year TIPS reopening will likely be boosted by $1B y/y to $7B.
11:06:17 AM
NY Fed: Purchased $3.609B in outright coupon purchase; dealers submitted $21.89B for consideration (bid to cover 6.06)
- Heaviest purchase $1.62 in the 02/28/17 maturity
- Avg bid to cover over prior four auctions is: 7.1 (second auction today)
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US Initial Jobless Claims, Continuing Claims
10:00 US July Leading Indicators, Aug Philadelphia Fed
10:30 US Natural Gas Inventories
11:00 US Treasury note announcement
Todays Headlines
5:47:18 AM
*(PO) PORTUGAL DEBT AGENCY (IGCP) SELLS TOTAL €1.525B v €1.5B EXPECTED IN 3-MONTH AND 12-MONTH BILLS
- Sells €775B in 3-month Bills; Avg yield 0.994% v 1.861% prior; Bid-to-cover: 2.5x v 3.5x prior
- Sells €750B in 12-month Bills; Avg yield 2.727% v 2.394% prior; Bid-to-cover:1.8x v 2.2x prior
6:53:43 AM
(SP) Spain Econ Min Salgado: The public works ministry has an additional €500M for next year
- Extra public works funding from cheaper debt placements.
- Committed to 6% deficit next year.
- Current tax levels enough to meet deficit taxes; No plans to alter the corporate tax rates.
8:00:24 AM
*(PD) POLAND JULY SOLD INDUSTRIAL OUTPUT M/M: -6.1% V -3.8%E; Y/Y: 10.3% V 12.6%E
- Prior MoM revised lower from 7.0% to 6.8%
- Prior YoY revised lower from 14.5% to 14.3%
8:10:16 AM
(CL) Preview: Chile Q2 Current Account and GDP data expected at 8:30am ET (12:30 GMT)
**Consensus expectations:
- Current Account: $75Me v $1.5B prior
- GDP Y/Y: 6.2%e v 1.0% prior
9:00:06 AM
*(RU) RUSSIA JULY UNEMPLOYMENT RATE: 7.0% V 6.8%E
- Disposable Income: 5.2% v 1.5%e
- Investment in Productive Capacity: 0.8% v 7.3%e
- Real wages Y/Y: 6.8% v 6.4%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.
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
9:05:50 AM
(US) Treasury Sec Geithner: There is no clear consensus on how best to design a new housing finance structure
- Any wind down of GSE portfolios must be done very carefully, must keep overall mortgage rates "reasonably priced."
- Markets must be weaned from government programs to private capital.
9:19:25 AM
Moodys comments on "AAA" rated sovereign debt: France, Germany, UK and US face fiscal challenges but retain stable outlook
- Believes that large Aaa governments are faced with a slightly different set of challenges from those they faced only a few months ago. Must address long-term fiscal challenges
- The Aaa ratings of France, Germany, the UK and the US continue to be well positioned based on a forward-looking assessment of their debts dynamics and debt affordability
10:00:06 AM
European Market Internals Update at 10:00 EST
- FTSE100 volume at 404.4M, which is approx 56% below its 10-day moving average
- DAX volume at 51.4M, which is approx 47% below its 10-day moving average
- CAC40 volume at 54.4M, which is approx 53% below its 10-day moving average
10:00:44 AM
(US) NY Fed: Q2 Report on Household Debt and Credit: Total consumer debt at $11.7T, down 1.5% q/q and 6.5% from peak seen in Q3 2008
- Total Household Mortgage debt down 6.4% from peak seen in Q3 2008
- Share of total household debt in some stage of delinquency declined, from 11.9% to 11.2%.
- households steadily reduced aggregate consumer indebtedness over the past seven quarters
10:02:54 AM
(UK) Chancellor Osborne: Can be cautiously optimistic in regards to the UK economy, rebalancing is underway
- Inflation is proving more persistent than expected.
- Will not budge from current budget, deficit plans.
- Agrees with BoE's King that UK recovery to be bumpy.
- Manufacturing and exports are recovering.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US July PPI, June Core PPI, July Housing Starts, July Building Permits
09:15 US July Industrial Production, July Capacity Utilization
16:30 API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
6:02:44 AM
(NV) Netherland Debt Agency (DSTA) sells total €4.9B in Bills
- Sells €2.2B in Oct'10 3-month Bills; avg yeild 0.38% v 0.425% prior; bid-to-cover: 1.7x
- Sells €1.4B in Nov '104-month Bills; avg yeild 0.39% v 0.505% prior; bid-to-cover: 3.2x
- Sells €1.3B in Jun'11 10-month Bills; avg yeild 0.565% v 0.520 prior; bid-to-cover: 3.2x
8:54:37 AM
(FR) France Debt Agency (ATF) sells total €8.5B in 12, 27 and 49-week Bills versus €8.5B indicated
- Sells €4.5B in 12-week Bill; avg yield 0.381%
- Sells €2.01B in 27-week Bills; avg yield 0.481%
- Sells €2.01B in 49-week Bills; avg yield 0.571%
9:00:05 AM
*(US) JUN NET LONG-TERM TIC FLOWS: $44.4B V $45.7BE; TOTAL NET TIC FLOWS: -$6.7B V $40.0BE
- Prior Net Long Term TIC Flows revised lower from $35.4B to $35.3B
- Prior Total TIC Flows revised lower from $17.5B to $17.1B
10:00:02 AM
*(US) AUG NAHB HOUSING MARKET INDEX: 13 V 15E; Lowest since March 2009
- No revisions
- Comments: Builders also are fighting tough competition from distressed properties.
10:08:42 AM
(EU) EU Commission: Has not decided whether or not to appeal WTO ruling on tariffs on imported electronic products
- Note that in late July the WTO ruled that EU tariffs on imports of widely used electronic products violate internatonal trade agreement.
-The US, Japan and Taiwan brought the complaint in 2008, arguing that the EU's duties on flat-panel computer screens, multifunction printers and certain cable boxes violate the Information Technology Agreement, a 1996 pact now signed by 70 nations that largely eliminated import tariffs on a broad range of electronics.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
“It seems the misfortune of one can plow a deeper furrow in the heart than the misfortune of millions.”
Market Week Wrap-up
- With earnings season in the rearview mirror, market participants were tightly focused on Tuesday's FOMC decision this week. In the statement the FOMC reiterated the now familiar "extended period" language and formally downgraded its assessment of the US economy, noting that the recovery will be "more modest in the near term," echoing the words of Chairman Bernanke at his Senate testimony on July 21st. However, the key was the Fed's decision to resume buying Treasuries, funded by principal payments on its MBS holdings. Neither development was entirely unexpected; however the Fed's return to easing (so called 'QE lite') moved global markets and provoked a fresh wave of risk aversion. For some market participants, the Fed's move came dangerously close to monetizing the debt while others claimed the new developments were merely "implied easing" . Fed dissenter Hoenig took the opportunity to highlight his objections to Fed policy in a speech on Friday. Hoenig said that the zero rate policy reinforces doubts about the economic recovery in the US and insisted that keeping rates too low is a "dangerous gamble." Other economic data reinforced global growth concerns: Chinese data indicated a slowing recovery in Asia and the US June trade deficit widened to approach the $50B level, for the biggest gap since Oct 2008. Initial US weekly jobless claims hit their highest levels since February. Positive preliminary University of Michigan confidence data for August and better July retail sales were seen on Friday. For the week, the S&P500 lost 3.8%, the DJIA declined 3.3% and the Nasdaq Composite dropped 5%.
- Positive comments from several major consumer names were complimented by Friday's gain in July retail sales (the first gain in three months). McDonalds served up very strong comps for the month of July, marking a firm reversal from what analysts saw as a weak June SSS performance. Quarterly earnings from Disney, DISH Networks and Macys beat both top- and bottom-line expectations and grew over year-ago levels. Disney saw strong y/y revenue growth in the its media and studio entertainment divisions and said that bookings at its theme parks have recovered strongly. Macy's bumped up its view for full-year earnings and comp sales. Note however that Dish warned that it lost 20K subscribers in the quarter and saw a big bounce in churn.
- Late in the week there were mixed reports from a number of leading retailers. JC Penny may have met expectations in its Q2 report, but it missed its own Q2 comp store sales guidance and offered a very weak outlook for Q3. Both Kohl's and Nordstrom's quarterly results were in line, although Nordstrom's simply reiterated guidance without improving its forecast at all, worrying analysts. Kohl's guidance was very weak, and the company said August comps are below the quarterly average so far. Both Wendy's and Brinker International missed expectations in their quarterly reports. Wendy's cut its profit guidance slightly due to the "challenging economic environment." Brinker warned that comps in the firm's FY11 would be challenging.
- The tech sector was a major source of equity declines this week. Intel set a decidedly negative tone in tech early on after the stock was hit by multiple analyst downgrades accompanied by reports of soft channel checks in Asia. Shares of Cisco dropped nearly 10% in the wake of the firm's Q4 earnings and conference call. Cisco's results were not bad, with earnings and revenue more or less in line with expectations, although the firm typically beats by a wider margin. On the conference call, Cisco offered a revenue outlook for its Q1 that was below consensus and CEO Chambers warned that the company was seeing mixed signals from customers, with business softening in June and July. RIM continued to fight off threats by various Middle Eastern and Asian nations to cut off BlackBerry service assuming the company did not provide national security services with privileged access to the firm's private network. Oracle filed a lawsuit against Google over the use of Java IP in its Android mobile operating system.
- Solar names were an exception to the tech softness. Wafer manufacturer LDK Solar crushed expectations in its Q2, while solar panel maker SunPower beat earnings targets (revenue was a bit below consensus). LDK's guidance for Q3 was very strong, and the firm sees continued growth in the current quarter. JA Solar outperformed on the top line in its Q2 report, but earnings missed expectations thanks to several large one-time items.
- Troubled mono-line bond insurers Ambac and MBIA reported improved Q2 reports. Earnings out of MBIA were up notably over last year's Q2, while revenue more than doubled. The losses continue over at Ambac, but the company's net income this year was much stronger than the comparable period last year. Ambac said that it is working on a prepackaged bankruptcy filing. And on the topic of moribund financial firms, AIG reached a deal to sell 80% of its American General Finance unit to Fortress Investment Group. The purchase price was not disclosed, although sources noted Fortress paid a "small fraction" of the unit's equity value.
- General Motors reported its second consecutive post-crisis quarterly profit. GM earned $1.3B in its Q2, up from $865M in Q1, for its best quarterly profit since 2004. Note that on the conference call, executives warned profits might not be as strong in the second half of the year as in the first half. There was speculation all week that GM's IPO filing could come as early as Friday.
- In the aftermath of the FOMC decision to reinvest balance sheet funds in Treasuries, the US 10-year benchmark yield hit a fresh 14-month low below 2.7% and the 2-year yield briefly broke below 0.5%, leading the 10-yr/2-yr spread to narrow below 220 basis points for first time in months. Despite dwindling yields, auctions of $74B in 3-, 10-, and 30-year treasuries were fairly well received this week, with solid demand. The corporate bond markets also remained active. J&J was among numerous firms joining the growing ranks of those taking advantage of historically low yields. In the first offering by a non-financial AAA rated company in 15 months, J&J issued $1.1B in 10- and 30-year debt. Anadarko Petroleum offered up $2B in 6.375% 2017 senior notes to be used in part for refinancing other near term debt.
- The greenback entered the trading week on the defensive in the aftermath of last Friday's US July payrolls report. With the Fed poised to downgrade its outlook on the US economy things were looking grim for the dollar, but the currency stood its ground against the European pairs thanks to renewed risk aversion. Weak economic data out of China, including the July trade and new yuan loan numbers, helped drive investors into safe havens, including USD, CHF and JPY. Cable once again failed to break the 1.60 level while EUR/USD not only failed to move above the 1.3333 area but in fact dropped below 1.30 for the first time in more than a month. In Japan, the BoJ came to the very edge of currency intervention following a protracted period of yen strength, with the USD/JPY testing 15-year lows.
- The European peripheral situation crept back into view this week after the ECB commented that the month of July saw a rise in borrowing by banks in Spain, Greece and Portugal. There was continued dealer speculation about possible ECB purchases of sovereign debt. Suspicion fell on Irish two-year paper after the Bank of Ireland increased its loan loss provisions; this move corresponded with the ECB allotting dollars via its liquidity swap line for the first time in 10 weeks for two unnamed European banks. On the data front the Greek May unemployment and Q2 GDP data missed analyst expectations. Spot gold reflected the potential pothole, testing above $1,215/oz. Peripheral spreads widened out with these developments; the spread between Spanish and German 10-year bonds moved above 160 bps, hitting the widest level in three weeks while the Greek/German spread moved back above 800bps to its widest level in three months.
- Moves surrounding the yen reached a critical juncture this week. There was some dealer chatter that a large amount of 85.00 strike JPY calls/USD puts were dealt amid speculation of barriers expiring at this level during the week. The pivotal level came into play after the BoJ stated that G7 central banks do not target specific currency levels, and Vice Banking Minister Otsuka added fuel to the fire when he commented that FX rates were at a critical juncture and reiterated a long-held market belief that solo attempts at currency intervention by the BoJ have little impact. A further verbal boost came from an influential official at the China Academy of Social Sciences who observed that Japanese government debt was more stable than US Treasuries. After all this talk USD/JPY tested 85 for the first time since last November, with the pair hitting a 15-year low at 84.71. Intervention jitters hit markets after the BoJ confirmed it had 'checked rates' as a possible precursor to currency intervention. The policy step helped to propel the USD/JPY to test above 86.00, aided by news of a unscheduled MoF press conference. Intervention finally did not happen this week, and USD/JPY finished up within striking distance of those 15-year lows.
- Monthly July metrics out of China provided further evidence that the nation's V-shaped economic recovery may become flatter in the second half of the year. July industrial production rose at 13.4% y/y - in line with estimates but at its slowest pace since August of 2009. New yuan loans came in at four-month lows, at CNY533B, missing expectations. Consumer inflation was at its highest pace since October 2008 (3.3% v 2.9% m/m), with the acceleration attributed to a bump in food prices caused by grain shortfalls from flooding and the Russian drought. Data indicating China had its highest trade surplus in July since early 2009 showed that domestic consumption has retrenched; analysts blamed policies taken to deflate the real estate bubble. On the currency front, instead of making further progress in yuan revaluation on export strength, monetary policy officials took a big step back by weakening the currency this week, as USD/CNY was set above CNY6.80 for the first time since FX reform was announced in June.
- The Bank of Korea left rates unchanged at 2.25% as expected by a narrow majority of analysts, though a minority called for a second consecutive 25 basis point tightening. The BoK statement struck a mixed tone, largely attributing the decision to stand pat to global turmoil. Specifically, policymakers said future decisions will depend on conditions overseas and also strive to keep domestic inflation stable. Governor Kim noted the balance of focus is with price stability, suggesting the improving economic data may lead the central bank to resume tightening. USD/KRW - rising in early part of the week after higher than expected South Korea July unemployment rate - subsequently backed away from its 3-week-high at the 1,200 mark.
Week of Monday, August 16, 2010 thru Friday, August 20, 2010
Monday, August 16, 2010
Economic
08:30 US Aug Empire Manufacturing
09:00 US June Long-Term TIC Flows
10:00 US Aug NAHB Housing Index
Tuesday, August 17, 2010
Economic
08:30 US July PPI, June Core PPI, July Housing Starts, July Building Permits
09:15 US July Industrial Production, July Capacity Utilization
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, August 18, 2010
Economic
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Thursday, August 19, 2010
Economic
08:30 US Initial Jobless Claims, Continuing Claims
10:00 US July Leading Indicators, Aug Philadelphia Fed
10:30 US Natural Gas Inventories
11:00 US Treasury note announcement
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US June CPI, CPI Ex Food & Energy, CPI Core Index SA, July Advance Retail Sales
09:55 US August Prelim University of Michigan Confidence
Today’s Headlines
5:59:09 AM
*(IR) IRELAND JULY CPI M/M: 0.0% V -0.1% PRIOR; Y/Y: -0.1% V -0.9% PRIOR
- (IR) Ireland July CPI EU Harmonized M/M: -0.1% v -0.1% prior; Y/Y: -1.2% v -2.0% prior
- No revisions
6:31:21 AM
USD 3-month Libor at 0.376% v 0.384% prior
- Overnight USD: 0.231% v 0.233% prior
- Overnight GBP: 0.549% v 0.550% prior
- Overnight EUR: % v 0.376% prior
- 3M GBP: 0.737% v 0.742% prior
8:03:18 AM
(GE) German Fin Min confirms it Will Include bad banks in public debt forecast
***Note that there were press reports overnight that Eurostat would force Germany to bring the rest of its bailed banks' debt into its balance sheet.
-Note that according to press articles, if Hypo Real Estate were added to Germany's balance sheet, it could take the country's debt to GDP ratio to 90% which is well above the 60% Maastricht Treaty requirement
8:30:37 AM
(US) USDA monthly crop report: US 2010 winter wheat 1.52B bushels v 1.51B on July 1; wheat surplus est cut by 6.6% from July
- 2010 all wheat 2.27B v 2.22B in July
- 2010-11 Russia wheat 45M tons v 53M in July
- 2010-11 Ukraine wheat 17M tons v 20M in July
8:30:03 AM
*(US) INITIAL JOBLESS CLAIMS: 484K V 465KE (highest level since mid February); CONTINUING CLAIMS: 4.452M V 4.535ME
- Prior initial claims revised higher from 479K to 482K
- Prior continuing claims higher from 4.537M to 4.570M
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.
“Whatever you think, be sure it is what you think; whatever you want, be sure that is what you want; whatever you feel, be sure that is what you feel.”
08:30 Initial Jobless Claims, Continuing Claims, July Import Price Index
10:30 Natural Gas Inventories
13:00 US Treasury's $16B 30-yr bond auction
Today’s Headlines
6:46:10 AM
(CH) China iron ore import prices continue rising - Steel Business Briefing
- Transacted prices of spot Indian iron ore exports to China have kept rising in the past week on recovering demand due to the rebound of steel prices in China.
- Prevailing transaction prices are now at $152-153/tonne cfr for 63.5%/63% Fe content iron ore, up from $145-148/t last week. Transaction tonnages range around 30,000-50,000 tonnes, according to a Beijing-based trader.
7:00:15 AM
*(SA) SOUTH AFRICA JUN MANUFACTURING PRODUCTION M/M: 0.7% V -0.6%; Y/Y: 8.8% V 6.7%E
- Prior MoM revised higher from 0.3% to 0.5%
- Prior YoY revised higher from 7.9% to 8.1%
8:05:03 AM
(HU) Hungary Central Bank's Minutes from July 19th meeting: Voted 7 to 0- to maintain rates at 5.25%
- Country's financing room might narrow without the IMF/EU credit agreement
- Sustained decline in Forint currency (HUF) would increase inflation
8:00:02 AM
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATE UNCHANGED AT 2.00%; AS EXPECTED
- Global growth stronger than expected; but the level of activity is still low in advanced economies
- Recent developments in the Norwegian economy have been broadly in line with expectations
- Turbulence related to public finances in several European countries has receded, but the outlook for the US economy is somewhat more uncertain
10:01:40 AM
NAR: 100 of 155 metro areas in Q2 showed higher median existing home prices y/y
- In metro areas: 14 metro areas had double-digit increases; two were unchanged and 53 metros showed price declines. In the first quarter of this year 91 areas had higher prices, while only 26 MSAs experienced annual price gains in second quarter of 2009.
- Median price $176.9K; +1.5% y/y; Distressed home sales were 32% of total v 36% y/y
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US June Trade Balance, Canada June Trade Balance
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's $24B 10-yr note auction
14:00 US July Budget Statement
Today’s Headlines
6:00:19 AM
*(IR) IRELAND JUN INDUSTRIAL PRODUCTION M/M: 1.3% V 8.8% PRIOR; Y/Y: 5.8% V 9.6% PRIOR
- Prior MoM revised higher from 7.5% to 8.8%
- Prior YoY revised higher from 8.2% to 9.6%
6:39:18 AM
(CH) Rally in Chinese steel prices loses momentum - Steel Business Briefing
- The rapid rebound in the Chinese steel market appeared to slow last week. HRC spot prices in Shanghai were fluctuating between RMB 4,200/tonne and RMB 4,250/t ($620-628/t), including 17% VAT, while rebar prices were in the range RMB 3,850-3,900/t.
- High inventory for HRC - now approaching 1.8m tonnes in Shanghai - and stagnant end-user demand prevented spot prices increasing any further last week.
6:59:50 AM
*(EU) ECB DRAINS €60.5B IN 7-DAY TERM DEPOSIT VERSUS €60.5BE
- Rec'd 94 bank bids totalling €123.5B in one-week deposits at weighted avg rate 0.43% (Bids ranged from 0.3% to 1.0%); Highest rate paid was 0.47%
***Insight: ECB Operation seen as sterilizing the government bond purchases.
- On Aug 9th the ECB noted that it purchased €9M in gov't bonds in latest week v €81M prior
8:30:03 AM
*(US) Q2 PRELIMINARY NONFARM PRODUCTIVITY: -0.9% V +0.1%E; UNIT LABOR COSTS: 0.2% V 1.5%E
- Prior Nonfarm Productivity revised higher from 2.8% to 3.9%
- Prior Unit Labor Costs revised lower from -1.3% to -3.7%
- Note: Q2 productivity - first negative reading since Q4 2008
12:04:00 PM
EIA Short Term Energy Outlook: Raises 2011 world oil demand forecast +40K, to 1.51M bpd y/y; 2010 world oil demand +10K to 1.57M bpd y/y
- Lowers forecast for US Natural gas production +1.9% in 2010 (prior forecast +2.1%); 2011 production -1.3% (prior forecast -0.6%)
- Lowers forecast for US Natural gas consumption +3.8% in 2010 (prior forecast +3.5%); 2011 production flat (prior forecast +0.1%)
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:15 Canada July Housing Starts
08:30 US prelim Q2 Non-Farm Productivity, Unit Labor Costs, Canada June New Housing Price Index
10:00 US August IBD/TIPP Economic Optimism, June Wholesale Inventories
13:00 US Treasury's $34B 3-yr note auction
14:15 FOMC rate decision
16:30 API Crude Oil/Gasoline/Distillate Inventories
Today’s Headlines
5:45:36 AM
(EU) ECB'S Orphanides: Seeing less dependency on ECB funds; there is no sign of rising longer-term inflation expectations
- Inflation pickup due to energy-related price swings; Sees no urgency to change policy stake given subdued inflation
- Liquidity provision aims for appropriate accomodative policy stance
- Would not be surprised if staff projections for 2010 growth are revised upwards within the June range
- Does not see a sign in ECB's forecasters' survey of rising expectations in longer-term inflation
6:42:32 AM
USD 3-month Libor at 0.404% v 0.411% prior
- Overnight USD: 0.237% v 0.238% prior
- Overnight GBP: 0.551% v 0.551% prior
- Overnight EUR: 0.343% v 0.343% prior
7:07:57 AM
Chrylser Group reports Q2 Net loss $172M, Op profit $183M, Net R$10.5B v $9.7B q/q; reiterates FY10 guidance
- Q2 global vehicle sales 407K units, +22% q/q; U.S. market share improved to 9.4 percent in Q2 2010 from 9.1 percent in Q1 2010.
- Q2 global vehicle shipments 433K, +14% q/q; US shipments 305K, +16% q/q
- Cash at the end of June 2010 was $7,841M compared to $7,367M at the end of Q1. An additional $2.3B remains available to be drawn under Chrysler Group's U.S.
7:45:57 AM
(US) Benchmark scrap prices for September jump $32/ton in the US - Steel Business Briefing
- A key scrap price that determines surcharges for September deliveries of many steel products in the US market jumped by $32 - from $310 to $342 per long ton.
- It is not clear if domestic mills will now raise their transaction prices accordingly. Only last month, scrap prices fell by $40, and the prices of many products dropped.
- The benchmark shredded scrap price is used to set surcharges on Nucors spot sales of plate, rebar, merchant bar, light sections and wide flange beams.
8:08:05 AM
(RO) Fitch affirms Romania sovereign rating at "BB+"; Outlook Stable
- Romania faces significant challenges in cutting its large budget deficit in the midst of a recession, however, the government has demonstrated its commitment to fiscal consolidation and the agency's central expectation is that Romania will be able to steer a path towards an export-led recovery and stabilise its public finances
- External position has improved considerably over the past 18 months due to official balance-of-payments support and a sharp adjustment in the current account.
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.
“Laughing is the sensation of feeling good all over and showing it principally in one spot.”
Market Week Wrap-up
Corporate earnings were more mixed this week, with hit or miss corporate results replacing the strong positive tone that sent US equity markets higher last week. Earnings from the major oil firms were very strong and a mid-quarter guidance boost from FedEx helped early in the week, whereas earnings from US Steel and Boeing disappointed investors. There were a handful of key economic reports, but the focus was clearly on Friday's US advance second quarter GDP reading. Wednesday's June Durable Goods data shook confidence after the reading surprised to the downside, setting up risk aversion sentiment. The Q2 GDP data lagged expectations somewhat, while the big upwards revision of the final Q1 reading (to 3.7% from 2.7%) made the Q2 data look even more disappointing. The semi-annual benchmark revisions painted a bleaker picture of the Great Recession, showing that the US economy shrank 4.1% in the period from Q4 of 2007 to Q2 of 2009 (the prior figure was -3.7%). The revisions also showed household spending fell 1.2% in 2009, twice as much as previously projected, for the largest annual decline since 1942. Fed Governor Bullard added to the overall risk aversion theme. Bullard warned that the Fed's 'extended period' language carried "Japan-like risks" and that deflation was a real threat to the US economy. He prescribed more quantitative easing (QE) as the best way to avoid a deflation trap. For the week, the S&P500 lost 0.1%, the Nasdaq Composite dropped 0.6%, and the DJIA rose 0.4%.
- Investors have apparently become immune (or deadened) to sour economic news, and this week they seemed to shrug off more grim data without an excessive sell-off in equities. This newfound mental toughness was on display starting on Monday, when China's July manufacturing PMI came in even worse than the June data, hitting 17-month lows. On Tuesday, US June factory orders declined more than twice the expected amount and there was no growth seen in the June income and spending data. With the easy comps out of the way, July same-store sales from US retailers were awful. The weekly jobless claims spiked up to their highest levels since early April, and the July payrolls reports were not pretty. The headline non-farm payrolls decline was more than twice the expected amount, although the government job cuts including the end of temporary census jobs accounted for a good part of the losses. Private hiring gains were well below expectations, and less than one-third of the estimated 200K new jobs a month needed to actually reduce the unemployment rate. Not all the news was terrible: Wednesday's July ADP employment reading was noticeably better than expected, and the ISM non-manufacturing index also (narrowly) exceeded the consensus view, with strength seen in the employment sub index. The dollar has been the biggest casualty of the data, with EUR/USD rising from 1.3050 to around 1.3300. The flight to safety trade in treasuries is alive and well, and yields on US and German government debt are hitting record lows. Thanks to a strong rally on Monday and a solid rebound off of the lows of the week on Friday, equity markets were higher this week: the S&P500 gained 1.8%, the Nasdaq Composite rose 1.5%, and the DJIA was up 1.8%.
- In the financial sector, European banks reported excellent results from the June quarter. French banking giants BNP Paribas and Societe Generale beat profit targets by wide margins, despite big declines in investment banking. Nationalized UK banks RBS and Lloyds managed to return to profitability after several quarters of losses. Germany's Postbank was an exception, with profit merely in line and provisions for bad loans rising higher. AIG swung back to losses in Q2 after a profitable Q1, losing $2.7B in the June quarter. CEO Benmosche confirmed that the company is holding talks with the Treasury and the NY Fed in order to facilitate the government exit from its 80% stake in the crippled firm. MasterCard's results were largely in line with expectations, but the major credit card firms were impacted by news this week that AT&T and Verizon are planning a pilot program for a mobile phone-based payment system in cooperation with Discover that would compete with credit and debit cards.
- Among insurer, Allstate, Prudential and Hartford reported strong Q2 earnings, although Allstate and Harford both said they had significant catastrophe losses in Q2. Humana crushed earnings expectations and raised its FY10 outlook slightly. Cigna was a bit ahead of consensus, and also raised its 2010 guidance. Health insurers have posted higher-than-expected profits during this reporting season, helped by generally lower use of medical services.
- Number two US homebuilder Pulte Homes reported its first quarterly profit since 2006 this week. Smaller competitor Beazer Homes reported strong revenue on double the closings it saw in the prior quarter (however Beazer also swung back to a net loss from last quarter's profit). As with the rest of the homebuilders in the June quarter, results at both firms were inflated by buyers rushing to take advantage of the Federal tax credit before the measure expired at the end of April.
- Profits at big agriculture names Archer Daniels Midland and Agrium both beat consensus expectations in the June quarter, although revenues from the two firms were disappointing. Agrium said its crop protection and seed markets should see more favorable conditions in the rest of 2010 and into 2011, with seed prices expected to trend higher over the next year. Fertilizer firm CF Industries missed expectations after taking into account merger and integration costs associated with acquiring Terra Industries. Revenue was a bit above par. CF's outlook is favorable for autumn volume in North America due to an expected early harvest and strong projected 2011 plantings. Dow Chemical missed consensus targets in its Q2 results. Revenue growth was mostly flat across regions, expect for some growth in the North America business, while management warned that demand could remain flat next quarter.
- After more than 100 days of crisis, BP began the process of sealing the Macondo well in the Gulf of Mexico this week. The US government said it had nearly finalized estimates for the total amount of crude leaked from the well at around five million barrels. If BP Is found liable for gross negligence in the explosion and sinking of the Deepwater Horizon, it could be liable for up to $20B in total fines under the US Clean Water Act. Macondo partners Anadarko and Transocean both reported relatively strong Q2 results, with profits at both firms way ahead of expectations. Anadarko, which owns a 25% in the Macondo well, reiterated its strong position on the disaster, stating that "the tragedy was preventable and likely the result of the operator's gross negligence and/or willful misconduct." Deepwater Horizon operator Transocean suspended its share buyback program and said it has recognized about $80M in liabilities from the Gulf of Mexico spill.
- Quarterly results from media names were strong as the industry bounces back from a terrible advertising environment in 2009. News Corp and Time Warner led the sector with the best showings, while results from CBS and Viacom were more restrained. Procter & Gamble missed Q4 consensus estimates by a hair and offered soft Q1 earnings guidance. Dow component Pfizer beat top- and bottom-line results. Casino operator MGM's quarterly loss was greater than expected, although the firm's revenue is holding up.
- Risk aversion drove investors into the relative safety of US Treasury debt this week. Speculation that the recent string of weak economic data could force the Fed's hand at next week's FOMC meeting was only exacerbated by the discouraging July jobs report. The US benchmark 10-year yield slipped back the lowest level in more than a year, to 2.82%, while the two-year rate tested 0.5% for the first time ever. Markets all but ignored the Treasury announcement that another $74B in supply will come onto the market next week, including both 10- and a 30-year auctions. Corporations remain aggressive in using the low rates to refinance their balance sheets. The week saw another plethora of offerings from the likes of Altria, Citigroup, MetLife, Continental Airlines, Pride International and Hess Corp, to name a few. Analysts are forecasting August issuance could reach $100B for the first time ever.
- The greenback appears to be suffering from a crisis of confidence. The currency is probing multi-month lows against nearly all the major pairs despite rising risk aversion. With US spending and income stagnating and unemployment near 26-year highs, investors evidently do not feel the dollar deserves the safe haven role it has played in the past. This week GBP/USD inched toward the neighborhood of 1.60 for fresh six-month highs, EUR/USD approached 1.33 for its best level since early May and USD/JPY moved towards the pivotal 85.00 area, its lowest level since December 2009.
- On the other side of the Atlantic a different story is unfolding, where the ECB is exhibiting a tone of new-found confidence. In his post-rate decision press conference, Jean Claude Trichet seemed proud to report that Euro Zone Q2 and Q3 GDP would be better than expected, capping a week of generally positive economic data. Three-month Euribor continued its upward path, topping the 0.90% level for the first time in over a year. The peripheral debt situation continued to ease, aided by a joint report from the IMF, ECB and EU stating that Greek austerity measures have met targets for the first half of 2010.
- Looking ahead, the risk aversion theme may strike deeper roots and widen its impact beyond the US. The OECD warned that its reading of leading indicators points to a possible peak in the global economic expansion. In its commentary, the OECD warned of below-trend growth in China and India as well as France and Italy, and a peak in expansion in Canada and Brazil.
- Ahead of next week's barrage of monthly economic data out of China, the July manufacturing PMI released early this week registered a 17-month low of 51.2 - just below expectations. Markets largely shrugged off the decline because of earlier rumors that the figure might fall below the contraction threshold of 50, fueling a broad based rally on Monday. Furthermore, investors took solace in a Chinese press report suggesting the slowdown represents the "soft landing" sought by policymakers, allowing the PBoC to maintain "moderately loose" monetary policy for the rest of the year. Signs of deceleration in China's V-shaped recovery emerged later in the week, when the country's top economic planning agency, the NDRC, said Q3 GDP may come in at 9.2% - a 1-yr low. Despite the weak data and soft sentiment, speculation for further monetary tightening resurfaced late in the week, as China banking industry officials quoted in state press warned about the possibility of a 3rd reserve requirement ratio hike this year as early as October.
- The Reserve Bank of Australia kept its cash target rate on hold at 4.50%, as widely expected, heeding the soft Q2 inflation data released last week. RBA reiterated core inflation would be at the top half of the target 2-3% zone until Mid 2011, but also noted global growth has become more uncertain than a few months ago. Later in the week, RBA's quarterly statement largely reiterated its policy language, affirming 2010-2012 GDP and inflation targets and concluding cash rate level is appropriate at this time.
- A pause in policy tightening may likewise be justified in New Zealand following a much worse than expected jobless rate for Q2 reported this week. Unemployment rose to 6.8% from 6.0%--the second-highest jobless rate since a decade-high 7.1% seen late last year. On a q/q basis, employment change also fell 0.3%, the first decline since Q3 of 2009. Following the data Credit Suisse derived probability for a 25bp RBNZ rate hike in mid-Sept fell from mid-70% to the mid-60's. Economists cited in local press also questioned RBNZ's earlier move, suggesting the tightening may have been premature because New Zealand economy is "exceptionally slow."
Week of 8/9/2010 thru 8/13/2010
Monday, August 09, 2010
Economic
None Seen
Tuesday, August 10, 2010
Economic
08:15 Canada July Housing Starts
08:30 US prelim Q2 Non-Farm Productivity, Unit Labor Costs, Canada June New Housing Price Index
10:00 US August IBD/TIPP Economic Optimism, June Wholesale Inventories
13:00 US Treasury's $34B 3-yr note auction
14:15 FOMC rate decision
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, August 11, 2010
Economic
08:30 US June Trade Balance, Canada June Trade Balance
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's $24B 10-yr note auction
14:00 US July Budget Statement
Thursday, August 12, 2010
Economic
08:30 Initial Jobless Claims, Continuing Claims, July Import Price Index
10:30 Natural Gas Inventories
13:00 US Treasury's $16B 30-yr bond auction
Friday, August 13, 2010
Economic
08:30 US June CPI, CPI Ex Food & Energy, CPI Core Index SA, July Advance Retail Sales
09:55 US August Prelim University of Michigan Confidence
< BR>
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 US July Unemployment Rate, Nonfarm Payrolls, Manufacturing Payrolls, Private Payrolls, Average Hourly Earnings
15:00 US June Consumer Credit
Today’s Headlines
7:45:14 AM
*(EU) ECB LEAVES MAIN REFI RATE UNCHANGED AT 1.00%; AS EXPECTED
- Deposit and Marginal Lending rate left unchanged, as expected at 0.25% and 1.75% respectively
***Reminder: ECB press conference to begin shortly after 8:30am ET (12:30 GMT)
8:30:02 AM
*(US) INITIAL JOBLESS CLAIMS: 479K V 455KE; CONTINUING CLAIMS: 4.537M V 4.515ME (initial claims highest since early April)
- Prior initial claims revised higher from 457K to 460K
- Prior continuing claims higher from 4.565M to 4.571M
8:32:49 AM
(EU) ECB's Trichet: Reiterates interest rates remain appropriate, growth to be uneven, inflationary pressure contained - prepared remarks
- Economy strengthened in the Q2 expects moderate, uneven growth to continue heading forward.
- Available data for Q3 growth has been better than expected
- Adjustments to bank balance sheets could weigh on the economic recovery, still seeing weak lending to private sector.
- Seeing a more and more positive trend in loans to households.
8:49:28 AM
(EU) ECB's Trichet: Rise in EONIA is part of the process of normalization; sees "no signal" in the change in interest rates - Q&A session
- The burden of strutural adjustment is on Euro Zone members with budget deficits.
- Money markets are not quite normal yet but are heading in the right direction.
- Reiterates that the ECB will take appropriate measures for liquidity.
- Fewer bond purchases by the ECB should not come as a surprise
9:31:51 AM
*(BR) BRAZIL JULY VEHICLE PRODUCTION: 315.9K V 306.2K PRIOR; VEHICLE SALES: 303.2K V 262.8K PRIOR
- Vehicle Exports: 64.9K v 63.6K prior
- Prior Vehicle Production revised from 306.4K to 306.2K
- Prior Vehicle Exports revised from 63.7K to 63.6K
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:15 US July ADP Employment Change
07:00 BoE rate decision
07:45 ECB rate decision
08:30 US Initial Jobless Claims, Continuing Claims
10:30 US Natural Gas Inventories
Today’s Headlines
8:15:06 AM
*(US) JULY ADP EMPLOYMENT CHANGE: +42K V +30KE
-- Small businesses: +21K v -1K m/m
-- Medium businesses: +21K v +11K m/m
-- Large businesses: 0K v +3K m/m
-- Goods-producing sector: -21K v -17K m/m
-- Service-providing sector: +63K v +30K m/m
9:00:11 AM
(US) Treasury Quarterly Refunding Announcement: To sell $34B 3-year, $24B 10-year, $16B 30-year bonds
- Expecting to keep cutting auction sizes on gradual basis; considering increasing TIPs offering frequency will assist in liquidity
10:00:05 AM
*(US) JULY ISM NON-MANUFACTURING: 54.3 V 53.0E
** Sub-indices:
- Prices Paid: 52.7 v 53.8 prior
- New Orders: 56.7 v 54.4 prior
- Employment: 50.9 v 49.7 prior (highest since Dec 2007)
- Inventories: 55.5 v 58.5 prior
10:06:34 AM
Treasury Official: could reach the debt ceiling in 1H 2011 - press briefing after quarterly financing announcement
- Notes that higher treasury holdings by banks is a reflection of weaker loan demand, and will not affect Treasury borrowing plans.
- Says tax receipts are meeting projections.
10:33:53 AM
(GR) Greece Central Bank Financial Stabilty Report: End-March Non-performing loans at Greek banks at 8.2% v 7.7% in Dec 2009
- Fiscal adjustments must be convincing and for sustained period to foster financial stability
- Private consumption to be negative from Q2 onwards due to implementation of austerity measures
- Says 2010 consumer inflation to avg 4.5% v 1.3% y/y
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:15 US July ADP Employment Change
09:00 US Treasury's quarterly financing announcement
10:00 US July ISM Non-Manufacturing
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Today’s Headlines
8:10:37 AM
(US) Preview: Jun Personal Income, Spending and PCE data due at 08:30 ET
- Personal Income: 0.2%e v 0.4% prior.(Analyst range of estimates -0.2% to +0.3%)
- Personal Spending: 0.1%e v 0.2% prior (Analyst range of estimates -0.3% to +0.3%)
- PCE Core MoM: 0.1%e v 0.2% prior; YoY: 1.3%e v 1.3% prior
- PCE Deflator YoY: 1.3%e v 1.9% prior
8:30:02 AM
*(US) JUN PCE CORE M/M: 0.0% V 0.1%E; Y/Y: 1.4% V 1.3%E; PCE DEFLATOR Y/Y: 1.4% V 1.3%E
- Prior PCE Core MoM revised lower from 0.2% to 0.1%
- Prior PCE Core YoY revised higher from 1.3% to 1.5%
- Prior PCE Deflator YoY revised higher from 1.9% to 2.1%
8:30:03 AM
*(US) JUN PERSONAL INCOME: 0.0% V 0.2%E; PERSONAL SPENDING: 0.0% V 0.1%E
- Personal Savings 6.4% v 6.3% (revised from 4.0%) m/m
- Prior Personal Income revised lower from 0.4% to 0.3%
- Prior Personal Spending revised lower from 0.2% to 0.1%
9:04:29 AM
(EU) ECB forex reserves w/e Jul 30th: $191.7B v $191.2B prior
- Lending to banks at €632B, up €7.3B
- Gold, gold receivables remained unchanged in week
10:00:02 AM
*(US) JUNE PENDING HOME SALES M/M: -2.6% V 4.0%E; Y/Y: -20.1% V -15.6% PRIOR
- Prior (m/m) revised from -30% to -29.9%
- No revisions to prior (y/y)
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.
“There's the country of America, which you have to defend, but there's also the idea of America. America is more than just a country, it's an idea. An idea that's supposed to be contagious.”
08:30 US June Personal Income/Spending, PCE Core/Deflator
10:00 US August Pending Home Sales, June Factory Orders
16:30 API Crude Oil/Gasoline/Distillate Inventories
Today’s Headlines
6:34:50 AM
USD 3-month Libor at 0.445% v 0.454% prior
- Overnight USD: 0.240% v 0.241% prior
- Overnight GBP: 0.551% v 0.551% prior
- Overnight EUR: 0.350% v 0.356% prior
- 3M GBP: 0.745% v 0.745% prior
7:17:45 AM
Spot iron ore price continues upward track - Steel Business Briefing
- The daily iron ore reference prices released by The Steel Index (TSI) at the end of July show that the price for 62% Fe content iron ore moved up slightly again, continuing the general trend since the recent low-point in mid-July. This price has been rising steadily after earlier falling continually since reaching a peak in late April.
- The reference price for 62% Fe content iron ore fines finished the month at $136.30/dry metric tonne CFR Tianjin port, China. This is a $9.30/dmt, or 7.3%, increase on the previous weeks price, and $1.50/dmt above the level at the start of the month.
7:50:11 AM
(IN) India Jun Trade Balance -$10.5B v -$11.2B prior
- Exports Y/Y: 30.4% v 35.1% prior
- Imports Y/Y: 23.0% v 38.5% prior
10:00:04 AM
*(US) JULY ISM MANUFACTURING: 55.5 V 54.4E; PRICES PAID:57.5 V 55E
- No revisions
**Sub-indices:
- New Orders Index: 53.5 v 58.5 prior, lowest level since June 2009
- Production index: 57.0 v 61.4 prior
- Employment Index: 58.6 v 57.8 prior
- Inventories index: 50.2 v 45.6 prior
10:10:08 AM
(US) Fed Chairman Bernanke: Considerable way to go before there is a full economic recovery
- Municipal bond market is resonably receptive to most borrowers.
- State finances will be "under pressure for some time."
- Not in favor of altering states' balanced budget rules
- Urges state legislators in Southern states to promote growth despite difficult budget conditions.
- Acknowledges that financial conditions have become less supportive of growth in recent months.
- Believes it will be a significant time before the 8.5M jobs lost will be restored to the US economy.
- Stress tests have helped reduce concerns about Europe.
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.
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