"Reality is merely an illusion, albeit a very persistent one.”
Market Week Wrap-Up
- It was another volatile week in markets as US equities rallied on quarter-end rebalancing and hopes for a European resolution, and then gave up most of their gains as the month of September drew to a close on Friday. European indices sustained some gains thanks to brighter prospects for passage of the EFSF, including big gains after reports early in the week, including a now notorious call by CNBC's Liesman, that euro zone officials were working on a detailed plan to leverage up the EFSF. In a sign of the volatility, the VIX index ended the week above 41, just above where it began on Monday. September witnessed a collapse in metal prices, with copper down 25%, silver down 28% (the metal's worst month since 1980) and gold off 11% (its worst month in three years). Numerous commentators asserted that both the US and Europe were already essentially in recession. In China, the weak HSBC Manufacturing PMI for September raised concerns that the last bright spot in the global economy could be headed toward a hard landing. Germany's Sept IFO business conditions survey had its lowest reading since June 2010, and European CPI data showed inflation pressure is on the rise again. But in the US there were a few bright spots, including the slight upward revision in the final Q2 GDP data, to +1.3% versus the preliminary reading of +1.0%, the lowest weekly initial jobless claims number in five months, and a relatively strong September Chicago PMI report. For the week the DJIA gained1.3%, the S&P500 lost 0.4% and the Nasdaq slumped 2.7%.
- Continuing fallout from the 2008 financial crisis was back in headlines this week. Reports circulated on Wednesday that Bank of America shareholders, including pension systems in the Ohio and Netherlands, would sue the bank for up to $50B over its troubled Merrill Lynch acquisition. The lawsuit claims that BoA failed to disclose what would be a $15B loss at Merrill in the days before and after the acquisition to ensure that shareholders would not vote against the transaction. McGraw-Hill disclosed that the SEC may charge its Standard & Poor's unit with violating securities laws in rating a mortgage bond in 2007. The SEC investigation comes as the company is getting ready to split into two publicly-traded companies, one holding Standard & Poor's and the other holding its textbook publishing company.
- Amazon's release of the Kindle Fire tablet computer obsessed the tech industry this week. Commentators called it the best Android challenge to Apple's iPad dominance of the tablet market, thanks to its tight content integration with Amazon.com and is low $200 price point, although the techies were not overly impressed with the hardware itself.
- AMD gave investors a dim preliminary look at its Q3 results. The company warned that its revenue growth would be considerably less than expected, with gross margins also lower. Micron Technology saw a substantial loss in Q4 thanks to a collapse in gross margins from the steep decline in DRAM prices. Late on Friday, shares of Kodak collapsed after reports said they had hired restructuring lawyers, raising the specter of a bankruptcy.
- Walgreens had a very good Q4 to round up the year, narrowly beating estimates on very strong y/y profit growth and solid comps. On the subject of the dispute with Express Scripts management had no new developments to share, expect to reiterate that terms offered by Express Scripts are still unacceptable. Casual dining name Darden only just met expectations and maintained its profit forecast, as profits declined on a y/y basis as Olive Garden continues to struggle. Manufacturer Ingersoll-Rand cut its Q3 and FY11 profit outlook due to weakness in its North American residential and commercial security markets. Mosaic reported quarterly results that were right in line with recent guidance. The firm was very bullish on fertilizer markets worldwide and dismissed concerns that economic weakness would diminish agricultural commodity demand.
- Treasury and Bund yields entered the week at or near historic lows which induced some profit taking early on. Heading towards the close of Q3 hopes were growing that a plan was in the works for levering up the European rescue fund which could ultimately insulate the European banking industry from the unfolding sovereign debt crisis. Three strong US Treasury auctions complimented the reversal seen in safe have flows and at one point had the benchmark 10-year yield up 25 basis points on the week above 2%. By Friday though, concerns surrounding Europe returned while disturbing warning signals about global growth continued to flash. Bond buyers stepped in once again pushing the Bund yield back below 1.9% and the US long bund under 3%.
- In FX markets, the EUR/USD entered the week at fresh eight-month lows of 1.3364 after weekend meetings of the IMF and World Bank failed to deliver any new proposals to help salvage Europe. It now appears that the G20 is preparing itself for some form of Greek default and focusing on recapitalizing banks in preparation. There was a certain amount of speculation about the potential for ECB rate cut in October at Trichet's final meeting as ECB chief, with central bank officials giving mixed signals about it throughout the week. Elevated CPI readings in the Euro Zone (+3%) and Germany (+2.8%), however, largely quashed those hopes.
- The status of the amended EFSF agreement was the central focus for most of the week. Last weekend, Treasury Secretary Geithner was said to have given his European colleagues something of a lecture, strongly suggesting that they beef up the EFSF directly or leverage it higher. By Tuesday, the EU Commission was strenuously denying that any leverage was being considered, although it became clear by late in the week that the denials were likely just a smokescreen as reports came out that a detailed leverage plan is being drafted.
- Several more national parliaments approved the amendments to the EFSF this week, most notably Germany, and the last few member nations are expected to hold votes by mid-October. EUR/USD moved off its best levels of the week of 1.3680 following Germany's passage of the expansion. Chancellor Merkel managed to garner a victory without needing any minority support (a total of 13 members of the ruling coalition defected, well within the 19 vote margin). Testy parliaments in Finland and Austria also passed the measures, while Slovakia has emerged as a potential problem for the deal. Coalition partners in the conservative government of Prime Minister Radicova are demanding concessions to support passage, though the PM continues to lobby his coalition. The EU/IMF/ECB Troika mission returned to Greece on Thursday to complete discussions before signing off on the sixth tranche of the country's bailout package. Few really believed the troika's return was ever in doubt and nobody doubts it will have anything but a favorable spin to its findings.
- Asian currencies saw their worst monthly performance since the 1997 Asian flu while Asian equities registered their biggest quarterly drop in three years. In China, HSBC Manufacturing PMI for September came in at 49.9 - unchanged from August but above the 49.4 print that spooked the markets during the prior week. Official manufacturing PMI, which includes larger state-run firms, will be released on Friday night, however its impact will not be felt locally for a week as China heads into its holiday season. Separately, US-traded ADRs of key Chinese companies traded sharply lower on Thursday after the DoJ launched an investigation into the accounting practices of US listed Chinese firms, joining an SEC probe that has been ongoing for a year. CNY weakened against the USD in September, making for its first monthly decline since January 2011, which will add to the ire of members of Congress as the Senate takes up a China currency manipulation bill next week.
- New Zealand was unexpectedly the focus of credit rating agencies this week, as Fitch and S&P cut its sovereign rating by one notch to AA. Both attributed the revision to a high level of net external debt and prospects for further fiscal deterioration while the economy continues to rebuild from the Christchurch earthquake. Finance Minister English reiterated that Kiwi government remains on track to return to budget surplus in FY14/15, but warned that New Zealand is not immune to the recent global doldrums. NZD/USD tested 6-month lows below $0.7640 following the downgrades, while AUD/NZD rose to a 3-week high.
Week of 10/3/2011 thru 10/7/2011
Monday, October 03, 2011
Economic
10:00 US Sept ISM Manufacturing, Aug Construction Spending
11:30 US Treasury's 3- and 6-month bill auction
Tuesday, October 04, 2011
Economic
10:00 US Aug Factory Orders
11:30 US Treasury's 4-week bill auction
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, October 05, 2011
Economic
07:30 US Sept Challenger Job Cuts
08:30 US Sept ADP Employment
10:00 US ISM Non-Manufacturing
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
Thursday, October 06, 2011
Economic
08:30 Initial Jobless Claims, Continuing Claims
10:00 Canada Sept Ivey PMI
10:30 DoE Natural Gas Inventories
11:00 US Treasury announcement
Friday, October 07, 2011
Economic
07:00 Canada Sept Unemployment
08:30 US Sept Non-Farm Payrolls, Manufacturing Payrolls, Private Payrolls, Unemployment Rate
10:00 US Aug Wholesale Inventories
15:00 US Aug Consumer Credit
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
“Man is the only animal that laughs and weeps, for he is the only animal that is struck with the difference between what things are and what they ought to be.”
08:30 US Aug Personal Spending, Personal Income, PCE Deflator, PCE Core
09:45 US Sept Chicago Purchasing Manager
09:55 US Sept Final University of Michigan Confidence
10:00 US Sept NAPM-Milwaukee
Todays Headlines
8:06:01 AM
(US) Texas Govt Perry (R-TX): Would not re-nominate Fed Chairman Bernanke; feels 'printing money' is not the answer for the economy - CNBC
- Would repeal the Obama healthcare reform act; peel back Dodd Frank legislation and cut the EPA's powers.
- Supports a "private option" for social security.
8:30:03 AM
*(CA) CANADA AUG INDUSTRIAL PRODUCT PRICE M/M: +0.5% V -0.5%E; RAW MATERIALS PRICE INDEX M/M: -3.2% V -2.5%E
- Prior Industrial Product Price MoM revised lower from -0.3% to -0.4%
- Prior Raw Materials Price Index MoM revised higher from -1.2% to -1.1%
8:30:07 AM
*(US) INITIAL JOBLESS CLAIMS: 391K V 420KE; CONTINUING CLAIMS: 3.73M V 3.73ME
- Prior Initial Claims revised higher from 423K to 428K
- Prior Continuing Claims revised higher from 3.727M to 3.75M
8:45:35 AM
(US) Fed's Plosser: Slow pace of economic recovery is painful protracted; sees 2011 GDP at +2%, 2012 GDP at +3%
- Expects to see unemployment decline to 8.0-8.5% in 2012
- Reiterates that he does not expect to see a double-dip recession, does not think the Fed should act simply because it can.
- Believes that recent rounds of Fed stimulus undermines the Fed's credibility (reminder: Plosser was among the dissenters against additional stimulus). Present Fed actions will make future moves more difficult.
9:33:52 AM
(US) Fed's Plosser: It is untrue that the Fed solely focuses on core inflation; non core inflation such as energy and commodities prices have impact the volatility of inflation - Q&A
- Dodd-Frank is just a full employment scheme for regulators.
- Fed can still be creative policy
- Feels envious of the ECB's sole mandate on inflation
10:39:34 AM
(US) Dept of Justice launches investigation into accounting practices of Chinese firms listed in the US - financial press
- No comment on which Chinese firms are subject to investigation. Article notes that the SEC has been investigating multiple firms for the last year but often has found it difficult to get access to documents because of strict Chinese laws related to business documents.
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 Q2 Final GDP, Initial Jobless Claims, Continuing Claims, Canada Aug Industrial Product Prices
10:00 US Aug Pending Home Sales, Sept Kansas City Fed Manufacturing
10:30 DoE Natural Gas Inventories
13:00 US Treasury's 7-year bond auction
Todays Headlines
6:06:38 AM
(EU) EU Commission publishes financial tax proposal (Tobin Tax)
- Could raise €57B annually and would come in effect in Jan 2014
- Tax would be 0.1% on all transactions between institutions when at least one party is based in the EU.
6:18:06 AM
(GR) EU Commission confirms that Troika mission to return Greece on Thursday, Sept 29th
- Eurogroup to hold an additional meeting in Oct to talk about Greece, consideration of disbursement of next aid.
- EU/IMF/ECB Troika to issue statement later today.
8:30:03 AM
*(US) AUG DURABLE GOODS ORDERS: -0.1% V -0.2%E; DURABLES EX TRANSPORTATION: -0.1% V -0.2%E
- Durable Goods Orders, Ex-Defense: -0.1% v +4.8% prior
- Capital Goods Orders Non-defense Ex-aircraft: +1.1% v +0.4%e
- Capital Goods Shipments Non-defense Ex-aircraft: 2.8% v 0.2% prior
8:46:32 AM
OPEC Ministers said to be willing to tolerate lower oil prices; sees $90 brent crude as still high - financial press
- OPEC officials say the cartel may not cut production unless Brent drops below $90 ($105 currently) for a sustained period of time.
11:48:00 AM
(EU) Basel committee agree to finalize plans for global bank surcharges, adjust calculation method for surcharges on SIFIs - financial press
- SIFI surcharge range of 1-2.5% remains unchanged.
- To publish SIFI surcharge plan by November.
- To review liquidy coverage ratios (LCR) ahead of a mid-2013 deadline.
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 July S&P/CS Home Price Index, June S&P/CS Composite-20
08:30 US Aug Durable Goods
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's 5-year note auction
Todays Headlines
6:10:47 AM
*(SP) SPAIN AUG YTD BUDGET BALANCE: -€30.9B V €-22.75B PRIOR
- Aug YTD Central Budget Balance at -2.8% to GDP
6:22:41 AM
(GR) EU Commission: There is no formal debate on leveraging EFSF, although the concept is being discussed
- EFSF can be leveraged without altering any treaties.
- There are no new developments to report in regards to the Troika or Greece
8:20:12 AM
(EU) Germany Fin Min Schaeuble: Strengthening the euro may require treaty changes; solidarity among euro zone member states cannot replace govt reforms
- More fiscal consolidation and structural reforms are needed in Italy, Greece, Portugal and Spain.
- The entire euro zone will defend the euro.
9:00:02 AM
*(US) JULY S&P/CASESHILLER 20 CITY M/M: +0.05% V 0.1%E ; Y/Y: -4.11% V -4.40%E; HOME PRICE INDEX: 142.77 V 141.3 PRIOR
- Prior MoM revsied from -0.06% to +0.04%
- Prior YoY revised from -4.52% to -4.40%
- Prior HPI revised from 141.30 to 141.48
11:00:36 AM
(RU) IMF revises Russia growth and and inflation forecasts; notes that Russian fiscal policy is not strong enough to respond to risks
- 2012 GDP seen at 4.1%, 2011 GDP at 4.3%
- 2011 inflation revised lower to 7.5%
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
09:00 US July S&P/CS Home Price Index, June S&P/CS Composite-20
10:00 US Sept Consumer Confidence, Sept Richmond Fed
11:30 US Treasury's 4-week bill auction
13:00 US Treasury's 2-year note auction
16:30 API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
8:56:10 AM
(US) Moody's comments on President Obama's budget proposal; feels it would be positive for ratings but sees only a small chance for implementation
- US Deficit reduction is made more difficult with the threat of lower economic growth; expects economic growth below potential through 2012
9:37:42 AM
(EU) ECB's Bini Smaghi: Discussions about what comes after the EFSF have already begun, policymakers are trying to avoid another Lehman
- Monetary policy alone cannot solve every problem, can only provide extra time for further adjustments.
12:44:25 PM
(GE) Germany Fin Min Schaeuble: There are no plans to increase the size of the EFSF rescue fund; the planned €440B EFSF will be used in an 'efficient way'
- It would be wise to make the ESM fund active earlier than had been expected
2:00:07 PM
(EU) ECB's Nowotny: Extending the EFSF makes sense; euro is working properly as a currency; refuses to speculate on potential haircuts for Italian and Spanish debt
- Aid for struggling euro zone nations cannot be a dead-end effort, cannot simply throw money at the crisis.
- Euro zone cannot simply keep handing out aid funding without compliance.
2:04:49 PM
Equity markets tick higher as CNBC's Liesman reports euro zone officials are working on a "detailed proposal" for leveraging the EFSF; next steps could include special purpose vehicle that could issue bonds and sovereign debt
- Issuance of bonds that may ultimately be used as collateral at the ECB(in line with various EMU ministers' comments earlier).
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.
"Some men are born mediocre, some men achieve mediocrity, and some men have mediocrity thrust upon them.”
Market Week Wrap-Up
- Global markets entered liquidation mode this week as the European debt crisis seemed to morph into a European banking crisis and the Fed launched 'Operation Twist,' to terrible reviews. Equities, metals (precious and base), energy and key currencies racked up steep losses heading into week's end as fears of the global economic slowdown plus the Europe situation drove risk into the woodshed. The IMF issued its World Economic Outlook, warning that Europe and the US could slip back into recession in 2012 unless they dealt with problems that were threatening to infect the rest of the world. A round of weak September European PMI data added to baseline risk aversion, including China reporting another sub-50 reading in flash PMI. In its policy decision on Wednesday, the FOMC altered its statement language to read "there are significant downside risks to the economic outlook." The committee also said it would extend the average maturity of securities held on the Fed balance sheet by buying $400B in longer-dated securities and selling shorter-dated notes. While the amount is greater than some observers had expected, the response among analysts was still generally negative, with some decrying the move as ineffectual, some saying it would destroy bank profitability and other calling the move a poorly thought-out QE3. Adding to the growing sense of uncertainty, a looming impasse over a six week stop gap funding measure in the US Congress is again threatening a government shutdown. Global equities saw a massive sell-off in Thursday's session as investors coped with the Fed move, heard the growing consensus that Greece will default while remaining inside the euro zone and threats and worried about the state of the European banking system. For the week the DJIA lost 6.4%, the S&P500 dropped 6.6%, and the Nasdaq fell 5.3%.
- Ongoing policy skirmishes in Washington were hard to ignore this week. On Monday, President Obama handed Congress a $3.5T deficit reduction bill, including $1.5T in funds from his so-called "Buffett Rule" to boost tax rates for those who earn more than $1M. The move provoked howls of protest from the right, which branded the effort "class warfare." The plan will be submitted to the Congressional debt reform super committee, which is mandated to come up with at least $1.2T in budget cuts by November 23rd. In Congress, a routine short-term government funding bill blew up into a battle that could result in a government shutdown in October. With FEMA's war chest running low after the disasters of recent months, the House GOP leadership tried and then failed to pass the government bill that included much less than the requested amount for FEMA and sought to pay for the funds by cutting billions from a program to help car factories retool for building more fuel-efficient vehicles. A total of 48 conservative Republicans defied the leadership on the bill, saying it did not include enough spending cuts. A slightly reconfigured bill passed the House thanks to some arm twisting, although the Democratic-controlled Senate voted down the measure, setting Congress up for more conflict next week.
- In equity news, US bank and insurance stocks were slammed in the wake of the new Fed policy, as investors forecasted that financial sector profits would be hurt by the flattening yield curve. In addition, Moody's downgraded ratings on Bank of America, Citigroup and Wells Fargo due to the decreased probability that the US government would support the banks in the event of a crisis. FedEx only just topped expectations in its Q1 report and trimmed its FY12 outlook slightly. FedEx's CEO said that recession is not part of the forecast at the moment, although he does expect sluggish growth. Homebuilders Lennar and KB Homes both reported Q3 results that were much better than expected, and additionally both demonstrated healthy y/y growth in their new order rates. Following Patriot Coal's move last week, two more major coal producers cut production guidance. Alpha Natural Resources and Walter Energy reduced their forecasts based on lower-than-expected output due to negative events at their mines. Hewlett-Packard's board abruptly dumped CEO Apotheker and named former eBay CEO Meg Whitman as the new chief.
- In deal news, Tyco International - which was the focus of various takeover rumors late last week - is moving to separate its businesses into three independent publicly traded companies. The company plans to spin off three units to shareholders, including the ADT North America residential security business, the flow control products and the services and the fire and security business. United Technologies said it would acquire Goodrich for $18.4B in cash, at $127.50/shr. The deal helps UTX gain heft in new aircraft technology and plane services. The company will issue about $4.6B in new shares to fund the deal and cut its spending on share buybacks as it digests its biggest acquisition in a decade.
- Government bond markets continued to make historic moves in Europe and the United States. Tensions surrounding Greece and contagion effects ratcheted up borrowing costs in Europe once again, leading to several reports that in some cases lenders were choosing to pull out of the market all together. Layered on top of deteriorating economic data and the Fed's decidedly disconcerting statement on US growth prospects, safe haven flows sent both yields to new historic lows. Operation Twist had the desired effect, flattening the curve substantially by forcing buyers to the longer end. The US 30-year yield decline by roughly 50 basis points on the week to finish at 2.85% while the 10-year touched a new all time low at 1.7%. In terms of spreads, the US 10-2 year narrowed towards 150 basis points while the 30-10 year declined to 106 from 126 basis points on the week.
- Fears about a Greek default were stoked by conference calls between Greece and IMF/ECB/EU troika officials on Monday and Tuesday. Both sides discussed more measures Greece would need to take to secure the next aid tranche. But the main focus in Europe this week moved on to the delicate state of the continent's financial sector, where fluctuating bank shares reflected investor worries that whatever happens in Athens, a European bank crisis may be inevitable. Tension built on reports that more entities were cutting exposure to European banks, especially after German industrial giant Siemens pulled funds from a French bank and Chinese state banks appeared to sever swap lines with several European counterparts (the Chinese claimed the lines were "full"). On Thursday, reports that the EU was speeding up recapitalization of the 16 mid-tier banks that came close to failing last summer's EU stress tests made the rounds, and on Friday there were reports that France was mulling a unilateral TARP-like program to aid its banks. Even US banks were not immune: one speculative research report making the rounds asserted that Morgan Stanley could have significant exposure to French banking contagion, though it was quickly denied.
- EUR/USD continued the slide seen last week as an endless stream of negative European news and contradictory official rhetoric hammered the single currency. By Friday the technical picture played a role in curbing euro declines as EUR/USD found Fibonacci support around 1.3410, which corresponded to a 50% retracement of the 1.1875 June 2010 low to 1.4939 May 2011 high. In addition, dealers said that there were hopes late in the week that the annual gatherings of the IMF and the World Bank could provide an opportunity to coordinate a fresh round of measures to stem the spread of the crisis. The ECB continued to buy peripheral bonds for the sixth straight week, although Spanish and Italian 10-year yields are higher than ever.
- Sterling slumped after the most recent policy minutes indicated the BoE was ready to provide more stimulus. The vote for QE was 8-1, and the contents of the minutes painted a more dovish view among MPC members. The yen continued to maintain a firm tone. USD/JPY lingered about 25 pips above fresh all-time lows, EUR/JPY hit fresh 10-year highs and GBP/JPY reached all-time highs. With the end of the Japanese fiscal half-year fast approaching, repatriation seems to be generating JPY demand. There were rumors circulating mid-week that the Swiss National Bank might raise the EUR/CHF floor from 1.20 to 1.25, sending EUR/CHF from 1.2060 to test above 1.22 before retreating. Swiss officials would not comment on the market rumors, although dealers said it would be in the SNB's interest to keep investors guessing about where they intend to maintain the floor.
- In Asia, the China flash manufacturing indicator from HSBC echoed the largely disappointing PMI data in Europe, falling to 49.4 from 49.9 prior. Recall that last month marked the first increase in four months, raising some speculation that the downturn in Chinese production has run its course. Instead, this most recent print makes it a third consecutive month that China HSBC PMI data is in sub-50 contraction territory.
- In New Zealand Q2 GDP was also a disappointment, with 0.1% q/q increase coming well shy of 0.5% consensus. The New Zealand dollar sold off sharply to a five-month low of $0.7750 against dollar and also hit a one-week low against its slumping relative AUD. The Reserve Bank of Australia September meeting minutes suggested the markets are overestimating the bank's willingness to cut rates in the face of global turmoil, hinting that it is too early to assess the extent of this crisis. Later in the week, S&P revised the outlook for South Australia region to negative from stable, but affirmed the AAA rating of the sovereign, pointing to strong mining exports and private investment in the resources sector.
Week of 9/26/2011 thru 9/30/2011
Monday, September 26, 2011
Economic
08:30 US Aug Chicago Fed NAI
10:00 US Aug New Home Sales
10:30 US Sept Dallas Fed Manufacturing Survey
11:30 US Treasury's 3- and 6-month bill auction
Tuesday, September 27, 2011
Economic
09:00 US July S&P/CS Home Price Index, June S&P/CS Composite-20
10:00 US Sept Consumer Confidence, Sept Richmond Fed
11:30 US Treasury's 4-week bill auction
13:00 US Treasury's 2-year note auction
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, September 28, 2011
Economic
08:30 US Aug Durable Goods
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's 5-year note auction
Thursday, September 29, 2011
Economic
08:30 US Q2 Final GDP, Initial Jobless Claims, Continuing Claims, Canada Aug Industrial Product Prices
10:00 US Aug Pending Home Sales, Sept Kansas City Fed Manufacturing
10:30 DoE Natural Gas Inventories
13:00 US Treasury's 7-year bond auction
Friday, September 30, 2011
Economic
08:30 US Aug Personal Spending, Personal Income, PCE Deflator, PCE Core
09:45 US Sept Chicago Purchasing Manager
09:55 US Sept Final University of Michigan Confidence
10:00 US Sept NAPM-Milwaukee
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.
*(CA) CANADA JULY RETAIL SALES M/M: -0.6% V -0.3%E; RETAIL SALES LESS AUTOS M/M: 0.0% V 0.2%E
- Prior Retail Sales revised higher from 0.7% to 0.8%
- Prior Retail Sales Less Autos revised higher from -0.1% to 0.0%
9:17:54 AM
*(SA) SOUTH AFRICA CENTRAL BANK (SARB) LEAVES INTEREST RATES UNCHANGED AT 5.50%, AS EXPECTED
- Inflation risks are balanced.
- SARB will act when action is deemed appropriate.
- Review currency reserve policy regularly
- Today's rate decision was unanimous.
- Possibility of a rate cut was discussed.
9:34:46 AM
(EU) EU's Rehn: If the monetary union is strengthened, the Euro bond concept would be more realistic
- Uncontrolled default or exit of Greece from the EMU could cause enormous economic damage; not expecting a double dip recession for Europe
- Reiterates the EMU will not allow an uncontrolled default or an exit of Greece from the EMU; the idea that the EU can conduct an orderly default of Greece is an illusion
- Confident that Ireland is moving towards a sustained recovery
9:35:56 AM
(EU) There is a growing consensus among EU diplomats and officials that Greece will default while remaining inside the euro zone - UK Telegraph
- Intense talks are taking place in Berlin, Paris, Frankfurt and Brussels about how to manage a Greek default in the short to medium term.
- In the absence of other structures, a consensus is emerging that the European Central Bank will have to monetise debt by buying large quantities of Greek bonds to keep banks, especially in France, afloat. A huge expansion of bond buybacks would be used as a firewall to protect Italy and Spain.
12:13:38 PM
(CH) Senator Brown (R-MA): China currency bill would treat currency manipulation as an unfair subsidy
- Asserts that China currency manipulation is undermining US job creation.
12:28:13 PM
(CH) China PBoC Deputy Min: Purchases of euros will continue, may help at the margin
- Notes that the China property market is not in a bubble.
- Calls on IMF and G20 to design a credible package of measures to address the crisis.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
08:30 Canada July Retail Sales, US Initial Jobless Claims, Continuing Claims
10:00 US Aug Leading Indicators, July House Price Index
10:30 DoE Natural Gas Inventories
11:00 US Treasury's announcement
13:00 US Treasury's 10-year TIPS auction
Todays Headlines
7:35:20 AM
(UK) BoE's Dale: The demand outlook has weakened materially; any policy easing needs to be weighted against high inflation
- Acknowledges that it is tempting to conclude that monetary policy needs to be eased further.
- Warns of 'pronounced downward spiral'
- More stimulus might be needed if economy continues to weaken and needs to take into account high inflation
8:00:12 AM
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES THE DEPOSIT RATES UNCHANGED AT 2.25%, AS EXPECTED
- Global economic prospects have weakened considerably
- Unusually high level of uncertainty surrounding the key rate policy ahead
9:33:23 AM
IMF' Vinals: Markets appear to be overshooting with regards to sovereign risks, yet risks do exist
- Sees China as being able to help the issue through rebalancing.
- It is unclear how much European banks have recognized increased exposure to debt crisis.
11:15:27 AM
(GR) New Greece austerity measures said to be include pension cuts, measures estimated to be €24B through 2014, one year ahead of prior schedule - financial press
- Will seek to cut public spending
- Pensions valued over €1,200/month could be reduced by up to 20%, will put 30K civil servants into a labor reserve
- Aims to lower pensions by more for those retiring before 55
- Real estate tax will be extended to at least 2014.
11:57:12 AM
(EU) EU Commission document suggests that the EU could impose a tax on trading bonds and equities (Tobin Tax) by 2014 - financial press
- Primary markets for currencies and securities would be excluded from the tax.
- Reminder: German Chancellor Merkel and France Pres Sarkozy have in the past both affirmed support for a financial transaction tax
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 Aug Housing Starts, Aug Building Permits, Canada Aug Leading Indicators
11:30 US Treasury's 4-week bill auction
16:30 API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
5:50:39 AM
(NV) Netherlands Debt Agency (DSTA) sells approx €2.63B vs. €2.0-4.0B indicated range in 3-month and 6-month Bills
- Sells €1.4B in Dec 2011 Bill; Avg yield 0.27% v 1.14% prior
- Sells €1.23B in Mar 2012 Bill; Avg yield 0.375% v 1.29% prior
6:00:02 AM
(GE) German Bundesbank monthly report: Sees strong German Q3 as expecting private consumption to pick up markedly and a strong performance from the industrial and construction sectors.
- Says Q3 fast pace may not be sustained.
7:30:11 AM
UBS Upgrading Global Semis View to Positive
- DRAM raised to Positive from Neutral
8:30:28 AM
*(RU) RUSSIA AUG UNEMPLOYMENT RATE: 6.1% V 6.4%E
- Disposable Income 1.4% v 1.6%e (prior revised from 0.6% to 0.4%
- Investment in Productivity: 6.5% v 7.0%e (prior revised from 3.8% to 2.4%
10:57:28 AM
(US) President Obama: Urges Congress to pass jobs bill quickly and is fully paid for; reiterates need to cut debt but not in a way that hurts recovery
- Program reduces deficit by $4T over 10 years; cuts $2 in spending for every $1 in revenue.
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 Sept Empire Manufacturing, Aug CPI, Q2 Current Account, Initial Jobless Claims, Continuing Claims
09:15 US Aug Industrial Production, Aug Capacity Utilization
10:00 US Sept Philadelphia Fed
10:30 DoE Natural Gas Inventories
11:00 US Treasury's TIPS announcement
Todays Headlines
8:30:04 AM
*(US) AUG ADVANCE RETAIL SALES: 0.0% V 0.2%E; RETAIL SALES LESS AUTOS: 0.1% V 0.2%E; RETAIL SALES EX AUTO & GAS: 0.1% V 0.3%E
- Prior Advanced Retail sales revised lower from 0.5% to 0.3%
- Prior Ex Auto revised lower from 0.5% to 0.3%
8:37:56 AM
(US) US Treasury Sec Geithner: Economy weaker than expected due to policitical dysfunction and unexpected evens such as the Japan earthquake - CNBC
- Early stage of the reaction to the financial crisis was a success, as at that time we had a clear unified commitment and used "overwhelming force"; are still dealing with scars from the financial crisis in 2008. I'm a fiscal hawk, but to put out a financial fire you have to be willing to do things you normally would not, do some things that you "hate."
8:54:24 AM
(SP) Fitch lowers 5 Spain regions ratings; outlook Negative
- The downgrades reflect the sharp fiscal deterioration seen in recent years which has led to sharp increases in debt levels. Although Fitch acknowledges that the regions will take all possible measures to rein in expenditure, the still weak economic recovery will limit fiscal revenue growth
10:26:47 AM
(GR) Greece said to be preparing workforce cuts in the public sector; will ask Germany and France to reduce criticism and leaks during aid process - financial press
- Greece PM planing to affirm its plans for lowering the budget and implementing new taxes, property tax details due out tommorow, estimated to affect 5.1M homes and businesses
11:31:11 AM
World Bank's Zoellick: Global economy is entering the danger zone; euro zone needs to accept responsibility for the euro
- Calls on advanced economies to adopt more policies to address economic weakness.
- US is acting unresponsibly in not facing entitlement spending, stalled trade pacts and tax issues.
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
07:30 US Aug NFIB Survey
08:30 US Aug PPI, Aug Advance Retail Sales, Canada Q2 Capacity Utilization
10:00 US July Business Inventories
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's 30-year bond auction
Todays Headlines
7:31:11 AM
(CL) Chile Central Bank Economist Survey
- Central Bank seen holding interest rates steady at 5.25% through Dec
- CPI seen at +0.4% in Sept and at +3.3% in 12-months to Dec
- Q3 GDP seen +4.7% with 2011 GDP growth at +6,5%
7:08:40 AM
(GR) French President Sarkozy and German Chancellor Merkel to make announcement concerning Greece later today - financial press
- Sarkozy and Merkel were said to have spoken by phone on Monday, said to have affirmed that they would "do what is necessary to resolve the crisis."
7:23:49 AM
(PO) Portugal govt official: GDP to further contract in H2; Stand ready to enact more measures to achieve targets
- Reiterates that country remains fully committed to its fiscal objectives.
- Banking sector liquidity remains under pressure.
8:09:27 AM
(EU) German Chancellor Merkel: Confirms there will be no Franco-German joint statement on Greece today; A Greek default would not solve the debt crisis
- Pledges to work closely with Finland in the future. To find a sloution to fulfill all of Finlands demands for Greek collateral.
- The stability of the euro can be secured.
9:21:52 AM
(GR) Netherlands Fin Min de Jager: Preparing for any possible Greece scenarios; concerned with the state of the economy
- An orderly default of a nation would be difficult inside of a monetary union.
10:30:49 AM
(US) Congressional Budget Office (CBO) revises unemployment rate higher, economic growth weaker, 2011 forecast at 1.5%, 2012 growth forecasted at 2.5% 0
- Sees unemployment rate near 9% through 2012
- Notes that immediate Govt spending cuts and tax increases would be a drag on the economy at the moment
12:01:23 PM
(EU) ECB's Weidmann: Concerned that measures taken in the debt crisis will push crisis into path that is not sustainable
- Calls for reforms and consolidation in member countries; does not see a need for euro bonds
- Current framework measures do not solve the issues, EFSF is an appropriate tool
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.
"Once the game is over, the King and the pawn go back in the same box.”
Market Week Wrap-Up
- Global markets shifted from risk aversion to optimism and back again this week as investors responded to developments in the European debt crisis. Markets have historically been at their most volatile in the month of September and this year is proving to be no exception. European markets dropped precipitously on Monday (US markets were closed for the Labor Day holiday) on fears about Italy's shaky fiscal situation. On Tuesday equity markets fell further and Germany's DAX hit fresh 25-month lows below 5,170. Optimism returned after the German Constitutional Court authorized German participation in the Greek bailout and Italy's Senate passed a key package of austerity measures. On top of that, the BoE and ECB kept rates on hold. But fear returned as rumors of an imminent Greek default made the rounds late in the week, compounded by the sudden resignation of German economist Jrgen Stark from the ECB, reportedly over disagreements about the central bank's bond buying program. The G7 finance ministers are meeting in France this weekend and ahead of the conference IMF Director Lagarde called on nations to act boldly to sustain the recovery while suggesting austerity can wait. Some are wondering whether a coordinated monetary policy response might be announced at the conference, although Treasury Secretary Geithner noted that he does not expect any dramatic developments at the meeting. President Obama delivered his much anticipated jobs proposal to a joint session of Congress, but the response from Republican legislators has been lukewarm at best. Economic data this week had little market impact. The US trade balance data indicated that US exports rebounded sharply in July, rising 3.6% to a new all-time high of $178 billion. Imports were softer than projected due to an unexpectedly large decline in petroleum products. China's CPI data declined on a y/y basis for the first time in four months, to a mere +6.2%. For the week the DJIA lost 2.2%, the S&P500 dropped 1.7% and the Nasdaq fell 0.5%.
- Share prices of the leading US banks names sew-sawed through the week. Banks opened deep in the red on Tuesday after the big slides in global equities on Monday, with shares of both Bank of America and Citi down 6% or so right at the open, following reports that the banks had been offered a deal on questionable mortgage foreclosure practices from the states. Midweek there were reports that regulators were asking banks how they would raise capital if market conditions worsen and reviewing results of mandated tests for various banks. Recall that just last week, the Fed requested that Bank of America disclose its contingency plans for dealing with the worsening environment. Over at Goldman Sachs, New York prosecutors expanded their probe related to firm's sales of CDOs. Press reports indicated that Morgan Stanley and other investors in certain Goldman transactions received subpoenas in relation to the Goldman probe.
- Three leading semi names trimmed their Q3 guidance this week, after Novellus cut its outlook last week . Altera, Fairchild, and Texas Instruments cut their outlook due to weaker demand. Altera cited flagging demand in vertical markets including Telecom and Wireless, particularly outside Asia. Texas Instruments is seeing broadly lower demand across a wide range of products and markets. Nvidia offered a relatively robust initial FY13 forecast, saying that the company is projecting growth across its entire GPU and mobile-processor business. Shares of Yahoo are up sharply this week following the ouster of CEO Bartz and the resumption of chatter that the company might try to sell itself.
- It was more of the same for trading in fixed income markets. Contagion concerns in Europe continued to hammer financial stocks and fears are growing that financing markets are gumming up. The Euribor-OIS spread reached its highest level since the spring of 2009 and even the 3-month USD Libor touched multi-year highs after rising for 34 straight days. Usage of the ECB's deposit facility topped €170B for the first time in more than a year as well. The resulting safe haven flows sent rates in Germany and the United States to historic lows. The US 10-year yield by Friday tested 1.9% for the first time in 60 years while the Bund hit fresh lifetime lows below 1.75%.
- In FX markets, the euro zone debt crisis and associated news remained the focus as worries continued that Greece and Italy might fail to follow through on their fiscal consolidation commitments. As traders returned to the market on Monday, Italy got hit with a round of sovereign downgrade rumors after press reports suggested that the country would miss its 2011 and 2012 growth targets. ECB's Trichet again singled out Italy and urged the country to stick to its planned cuts, and there was concern that the ECB might be tempted to halt Italian bond purchases (although dealers observed the bond purchases continue throughout the week). With the US out on Labor Day holiday, the major European bourses tanked. On Tuesday the Swiss National Bank set a minimum exchange target for the EUR/CHF cross of 1.20 and said that it was ready to buy foreign currency in "unlimited quantity." European indices fell even further on Tuesday, and then recouped some losses through Thursday, after the German Constitutional Court ruled that German participation in the EFSF did not contradict constitutional rules. Thursday also saw the ECB and BoE leave policy unchanged in respective rate decisions. In his penultimate press conference, ECB President Trichet staunchly defended the ECB from criticism and loudly reiterated the bank's commitment to its central mandate, but did acknowledge that the balance of risk has changed to the downside. Reflecting this change, the ECB staff lowered projections of euro zone growth for 2011 and 2012, and the IMF further reduced its global 2011 GDP growth outlook to +4.0% from the +4.2% estimate offered just last week.
- Last week it became clear that Greece's fiscal situation has decayed significantly, putting Athens's ability to follow through on its commitments at risk and prompting EU/IMF/ECB Troika investigators to temporarily suspend their mission. Coming into this week markets were watching news about commitments to the Greek private debt swap, with reports suggesting that Greece would only get a 70-80% participation rate, below the desired 90% target. Chatter that Greece might be preparing to default was making the rounds late in the week, after German Chancellor Merkel warned that a possible Greek exit from the euro zone could trigger a "domino effect." Despite vociferous denials from Greek officials (who called the rumors of default 'organized speculation'), there were press reports suggesting that Europe was battening down the hatches ahead of a possible default event. Germany was said to be preparing a contingency plan to help protect the German banking industry from a Greek default, with some unconfirmed comments that Europe is working on 'plan B' for Greece. Adding fuel to the fire, ECB Chief Economist Jurgen Stark resigned from the ECB on Friday, ostensibly for "personal reasons," although the word is that he is fed up with the ECB's policy of buying the debt of peripheral euro zone nations to keep down their borrowing costs. EUR/USD began the week at three-week lows testing 1.4130 and extended the losses by the end of the week to its lowest level since March below 1.3750. Technical factors also played a role late in the week as the EUR/USD moved below its 1-year uptrend line that was violated once it crossed below the 1.3940 on Thursday
-The EUR/CHF cross was hovering around the 1.10 as the week began. Swiss CPI data registered its third monthly decline, adding to concerns that franc strength was triggering renewed deflation. Then on Tuesday the Swiss National Bank, in another effort to dampen franc strength, took the extraordinary measure of setting a 1.20 floor in the EUR/CHF. The SNB's move effectively reversed safe-haven flows, sending USD/CHF from the 0.7950 area to test above 0.88 while EUR/CHF surged over 9% to test above the 1.22 area. Dealers immediately wondered when markets would test the SNB's resolve, however, some Far East analysts responded that maintaining a peg was not that difficult, provided the central bank possessed enough ammunition to carry out daily maintenance. Recall Bretton Woods dictated a peg that was maintained for three decades. The current belief among dealers is that if the SNB wants to maintain its currency reserves at present ratios, it would sell EUR/USD rather than buy USD/CHF to maintain the floor in EUR/CHF at 1.20. Talk about currency war and protectionism picked up momentum following the SNB move, which received mixed reviews from other central bankers. Trichet said that the move was the SNB's own responsibility, while Norway started to feel the heat as traders sought out new safe havens. The Japanese government warned South Korea that efforts to weaken the won were not desirable.
- A late-week barrage of monthly economic data out of China saw some relief on the inflation front but also offered a stark reminder of a slowdown in global manufacturing. August CPI fell for the first time in four months to 6.2% y/y, below the 6.3% consensus and the 6.5% three-year high in July. In turn, Industrial Production at 13.5% was at a 3-month low and also below consensus. Subsiding inflation coupled with further slowing in industrial production are seen as increasingly likely to keep PBoC from engaging in further tightening through either the RRR or 1-year lending rates.
- Elsewhere in the region, Reserve Bank of Australia, Bank of Japan, and the Bank of Korea all kept policy rates unchanged as widely expected. RBA reiterated inflation would decline further toward the end of the year, prompting Goldman Sachs to update its forecast for a rate cut to as early as October. Bank of Japan offered no additional easing measures despite the politically motivated calls to deal with strong Yen coming from the new cabinet members, even though Japan Q2 final GDP saw a more accelerated slowing at -0.5% q/q than initially reported. Bank of Korea also deferred to powerful macro headwinds in striking a cautious note, despite the minority faction clamoring for a rate hike after hotter than expected CPI data.
Week of 9/12/2011 thru 9/16/2011
Monday, September 12, 2011
Economic
11:30 US Treasury's 3- and 6-month bill auction
13:00 US Treasury's 3-year note auction
Tuesday, September 13, 2011
Economic
07:30 US Aug NFIB Survey
08:30 US Aug Import Trade Index
10:00 US Sept IBD/TIPP Economic Optimism
11:30 US Treasury's 4-week bill auction
13:00 US Treasury's 10-year note auction
14:00 US Aug Budget Statement
16:30 API Crude Oil/Gasoline/Distillate Inventories
Wednesday, September 14, 2011
Economic
08:30 US Aug PPI, Aug Advance Retail Sales, Canada Q2 Capacity Utilization
10:00 US July Business Inventories
10:30 DoE Crude Oil/Gasoline/Distillate Inventories
13:00 US Treasury's 30-year bond auction
Thursday, September 15, 2011
Economic
08:30 US Sept Empire Manufacturing, Aug CPI, Q2 Current Account, Initial Jobless Claims, Continuing Claims
09:15 US Aug Industrial Production, Aug Capacity Utilization
10:00 US Sept Philadelphia Fed
10:30 DoE Natural Gas Inventories
11:00 US Treasury's TIPS announcement
Friday, September 16, 2011
Economic
09:00 US July Long-Term TIC Flows
09:55 US Sept prelim University of Michigan Confidence
12:00 Fed Q2 Flow of Funds
Please read our disclaimer:
Trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. The videos are neither a solicitation nor an offer to Buy/Sell futures or options. The past performance of any trading system or methodology is not necessarily indicative of future results.
Rule 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Learn to trade futures forex stocks.
07:00 Canada Aug Employment, Aug Unemployment Rate
08:15 Canada Aug Housing Starts
10:00 US July Wholesale Inventories
Todays Headlines
7:45:13 AM
*(EU) ECB LEAVES THE MAIN 7-DAY REFI RATE UNCHANGED AT 1.50%; AS EXPECTED
- Deposit Facility and Margin lending remain unchanged at 0.75% and 2.25% repectively
8:30:03 AM
*(US) INITIAL JOBLESS CLAIMS: 414K V 405KE; CONTINUING CLAIMS: 3.72M V 3.706ME
- Prior Initial Claims revised higher from 409K to 412K
- Prior Continuing Claims revised higher from 3.735M to 3.75M
8:32:14 AM
(EU) ECB Trichet: Inflation remains elevated, downside economic risks have intensified, monetary policy stance remains accomodative, liquidity remains ample - Prepared remarks
- Financial conditions have tightened, warranting a thorough analysis.
- ECB will ensure that liquidity for European banks are not constrained.
8:35:59 AM
(EU) ECB Staff Projections: Lowers growth range for 2011 and 2012; Inflation risks "more balanced"
Growth
- 2011 GDP revised lower between 1.4% to 1.8% vs. June view of 1.5% to 2.3%
- 2012 GDP revised lower between 0.3% to 2.2% vs. June view of 0.6% to 2.8%
8:46:25 AM
(EU) ECB Trichet: Rate decision was unanimous; ECB stands ready to provide liquidity to the banking sector - Q&A
- One month ago, economic risks were balanced; today we see "balance of risk" has changed to the downside
- Seeing no significant changes in balance of risk to inflation outlook.
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, July Trade Balance, Canada July Building Permits, July New House Price Index
10:30 DoE Natural Gas Inventories
11:00 DoE Crude Oil/Gasoline/Distillate Inventories, US Treasury note announcement
15:00 US July Consumer Credit
Todays Headlines
6:00:05 AM
*(GE) GERMANY JULY INDUSTRIAL PRODUCTION M/M: +4.0% V +0.5%E; Y/Y: 10.1% V 6.5%E
- Prior MoM revised higher from -1.0% to -1.0%
- Prior YoY revised lower from 6.7% to 6.6%
7:00:02 AM
*(US) MBA MORTGAGE APPLICATIONS W/E SEPT 2ND: -4.9% V -9.6% PRIOR
- Refi's: -6.3% v -12.2% prior.
- Avg Rate on 30y mortgage: +4.23% v +4.32% prior.
- Purchase Index: (Seasonally adj): +0.2% v +0.9% prior.
7:10:04 AM
*(PD) POLAND CENTRAL BANK LEAVES THE BASE RATE UNCHANGED AT 4.50%; AS EXPECTED
- Leaves Deposit Rate unchanged at 3.00%
- Leaves Rediscount Rate unchanged at 4.75%
- Leaves Lombard Rate at 6.00%
9:17:36 AM
IMF said to have further reduced its global 2011 GDP growth outlook to +4.0% v +4.2% prior, 2012 GDP +4.2% v +4.3% prior- financial press
- Sees euro zone 2011 GDP +1.7% v +1.9% prior, 2012 GDP +1.3% v +1.4% prior
- Sees Italy 2011 GDP +0.8%, 2011 GDP +0.5%
9:44:23 AM
(EU) EU Commissioner Rehn: Economy is slowing in Europe, current employment situation is a concern
- Financial turbulence is threatening the real economy. Situation is very serious, stress and funding pressures have only grown over the summer.
- Must quickly implement EFSF changes.
11:15:14 AM
(US) Fed's Evans: High unemployment argues for more Fed stimulus, must take strong effort now
- More Fed stimulus spending could boost inflation, but does not see that as a huge problem. Inflation over 2% is not terrible.
- The Fed's 2% inflation target is an average, not a cap.
2:00:12 PM
*(US) FED'S BEIGE BOOK: ONLY MODEST GROWTH IN SOME REGIONS; Several districts hurt by stock market volatility; Consumer spending rose only slightly in most areas
- Economic activity continued to expand at a modest pace, though some Districts noted mixed or weakening activity. (**NOTE: Last time, said "economic activity continued to grow; however, the pace has moderated in many Districts."
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 BoC rate decision
10:00 Canada Aug Ivey Purchasing Managers Index
11:30 US Treasury's 4-week bill auction
14:00 Beige Book
16:30 API Crude Oil/Gasoline/Distillate Inventories
Todays Headlines
7:10:30 AM
(JP) Fitch Head of Asia-Pacific Sovereign Ratings Colquhoun: Japan downgrade is more likely than not; more positive news would be needed to bump outlook back to Stable from Negative
- The ongoing deterioration in the global outlook is not helpful for Japan, Fitch is monitoring how politics evolve under Japan's new leadership.
- QE3 in the US would complicate monetary policy options in Asia.
7:51:34 AM
Credit Suisse Coverage of the Brazilian Shopping mall and property with a market-weight stance
- Brazilian shopping mall sector remains a secular growth story and an indirect play on Brazilian consumption, not to mention its often overlooked inflation-hedging aspect. Although growth in the past 5 years were strong, firm still believes the industry is significantly underpenetrated and fragmented leaving interesting room for expansion.
8:45:12 AM
(GR) German Chancellor Merkel said to have warned that Greece leaving the euro zone could trigger a "domino effect," promised Greece will not get payments if Troika report is not positive - financial press
**Reminder: On Sept 5th Merkel reiterated the view that that any exit from Euro Zone could cause a dangerous domino effect. She noted that a strong Europe and that Euro States needed to move closer together and rejected any breakup of the Euro region
9:51:06 AM
(IT) Italy Govt will call for a confidence vote with regards to the austerity package; Govt may add new measures to the adjusted austerity package
- Italy Senate plans vote on austerity package on Wednesday
10:40:59 AM
(NZ) Fonterra Global Dairy Trade auction: Dairy Trade price index -1.4% from prior auction on Aug 16th (-0.9% prior)
- Average winning auction price: $3,580/metric ton v $3,660/metric ton (lowest since Dec 2010) prior
- Whole milk powder: -1.6% v -2.2% prior
- Anhydrous milk fat: 2.0% v -0.3% prior
1:09:55 PM
(US) Fed's Kocherlakota: Unlikely that economic data later in Sept will warrant further policy easing; easing policy announced in August was not in line with Fed inflation mandate
- Any new stimulus plans need to be judged on their own merits. Lower unemployment and higher prices are arguments against more stimulus.
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