On 6/8/12, Friday, Spanish banks are down about 3%. An Italian bank is suspended from trading since it falls too far too fast. The China rate cut did not help the Shanghai Index since it closed down today. China is to release economic data on the weekend and rumors say the data is bad and China needed to act quickly. Analysts say this is why China announced the rate cut mid-week rather than waiting for the weekend which is typically the time that these moves occur. ECB’s Nowotny says banks have the ability to cut rates if the European debt crisis worsens. U.S. futures are lower in front of the open but improve slightly as news that a Spain bailout may occur as early as this weekend. A Twitter hashtag #StopMerkel experiences strong popularity as sides square off over the Spain drama. Before the opening bell, MCD warns on earnings resulting in a drop of 3%--the divvy bubble is popping. Markets drop at the open bouncing off of SPX 1307 support and travel higher all day long closing at the highs at 1326 resistance. President Obama performs a midday speech to explain the economy and mistakenly says the “private sector was fine.” The broad markets finish the day up almost one percent and finish with the best week of the year. For the week, the SPX finishes up 4% gaining almost 50 points. Ditto for the Dow Industrials, up 4% gaining 440 points. The Nasdaq also gaining 4% with 110 points. The small cap RUT jumped over 4% this week. After the close, the S&P rating agency said the outlook for the U.S. remains negative because of political and fiscal risks.
On 6/9/12, Saturday, traders await China economic data and Spain bailout developments this weekend.
On 6/10/12, Sunday, China economic data is much better than expected with exports doubling projections. Domestic growth is not impressive, however. The Spain bailout occurs with 100 billion euro’s (126 billion dollars) requested. The futures markets catapult higher.
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On 6/11/12, Monday, the futures remain elevated all night long on the Spain bailout news. Details of the Spain bailout are not yet worked out. European leaders are referring to the action as a ‘line of credit’ but this fools no one. Traders realize the Spain bailout is only a small band-aid solution but they need major surgery. Spain’s Rajoy, who said a week ago a bailout was not needed, now jumps in to assume control of the situation as if he was the main planner of the action the last few weeks. 80% of Spain does not have confidence in Rajoy, no wonder. The Spain bailout marks the fifth bailout for the Eurozone in this over 2-year old drama. First was Greece, then Ireland, then Portugal, then Greece’s second bailout, now Spain. The markets explode higher at the opening bell but in a heartbeat reverse course and begin cascading lower. The Apple Worldwide Developers’ Conference occurs, with all the techies spinning the news positive, but the AAPL announcements do not inspire traders. The markets are sick all day long and end at the lows, the Spain bailout rally was mainly a futures market play and only the traders selling at the open today benefited. The SPX loses 17 points, 1.3%, to 1309. The Dow Industrials lost 143 points, 1.1%, to 12411. The Nasdaq loses 49 points, 1.7%, to 2810. Gold is 1589. Oil is under 82 as traders prepare for a possible breach of the 80 level.
On 6/12/12, Tuesday, Fitch rating agency downgrades Spanish banks BBVA and Banco Santander and warns that Spain will miss deficit targets. Cyprus is the next European nation to ask for a bailout and will receive about 4 billion euro’s once formally requested. European banks are selling off strongly today. The Spain bailout is confusing investors since no one knows where the money is even coming from, the ESM or EFSF, or how much from each. The ESM has a preferred creditor mechanism that requires the ESM to be repaid first, before any private investors, if a default occurs. Germany prefers using the ESM. The Spain 10-year yield is now at 6.61% exploding above 6.5% and contagion is spreading in Europe with the Italy 10-year yield now at 6.15%. To paraphrase NASA, “Houston, we have a problem.” Today is a major Bradley turn date. The mood turns more negative as the Spain 10-year yield blows out above 6.8%, a euro era high. Italy blows out above 6.5%. The bulls reverse the negativity, however, and run the markets up into the close retracing Monday’s down move. The SPX closes up 15 points, 1.2%, and the Dow Industrials finish up 163 points, or 1.3%.
On 6/13/12, Wednesday, the early morning futures show the S&P’s green but they leak lower into and thru the open and the markets fall all day long once again reversing course from yesterday’s gains. The SPX is moving thru a sideways range of 1307-1326. JPM’s Dimon testifies about the firm’s trading debacle in front of Congress but all the good ole boys slap each other’s backs and wink as Dimon was handled with kid gloves. The only two politicians that were mildly teste were two that did not receive prior campaign contributions from Dimon and JPM. JPM has the politicians handily paid off. The markets tumble lower with the retail sector stumbling but also due to Sean-Egan Rating Agency downgrading Spain. Rumors surface that the Greece bank runs are increasing. The markets are shaky but recovered into the close. The SPX finishes down 9 points to 1315 and the Dow Industrials lost 77 points to 12496. After the close, Moody’s downgrades Spain and Cypress.
On 6/14/12, Thursday, the Spain 10-year yield blows out above 7%, record-breaking, and the level where the other countries received a bailout for their sovereign debt. Italy continues to move higher at the 6.2% area. Europe is obviously losing control. The markets move higher all day long but start to roll over at 2 PM. At 3 PM, news hits that a coordinated action is on the table for the central bankers to step in if there are any problems after the Greece elections. The BOE says a stimulus plan is coming. Japan may perform currency intervention. Canada will jump in as well. The news that further quantitative easing is on the way launches the equities markets; in two minutes time, the SPX jumps from 1320 to 1333 and the Dow Industrials leap from 12580 to 12700. Markets respond positively since more crack cocaine stimulus is on the way, fire up the printing presses, a risk-on rally begins. Keystone’s SPX 60-Minute Chart with 200 EMA Cross Indicator turns bullish. The broad indexes remain elevated into the close with the SPX gaining 14 points today, or 1.1%. The Dow gains 156 points or 1.2%. Surprisingly, gold does not catch much of a bid as would be typically expected with talk of QE. The highly volatile week for stocks, bonds and currencies continues. Starting with last Thursday’s down day, the equity markets are see-sawing each day, up Friday, down Monday, up Tuesday, down Wednesday, up Thursday but today the SPX pops above the upper range of the 1307-1326 channel. After the close, Egan-Jones downgrades France.
On 6/15/12, Friday, the U.K. banks are up large on the news that billions of dollars of U.K. stimulus is in planning. U.K.’s Mervyn King says the “case for monetary easing is growing.” ECB’s Draghi says “the ECB will provide liquidity if needed” and “no inflation risks exist in the Euro block.” The ECB has only a single inflation mandate so the mention that inflation is not a threat opens the door to monetary easing at any time (lowering rates). Draghi, however, continues to stress the need for a political solution in Europe. Moody’s cuts ratings on five Dutch banks. Consumer Sentiment is weaker than expected. The markets move up all day continuing the coordinated quantitative easing market rally that began Thursday afternoon. A short-covering rally occurs in the final minutes of trading. The SPX gains 14 points, or 1% to close at 1343. The Dow Industrials gain 115 points, or 0.9%, closing at 12767. Keystone’s NYA 40-Week MA Cross Indicator turns bullish. The Greece elections this weekend will tell the story.
On 6/17/12, Sunday, Greece elections.
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On 6/18/12, Monday,……markets tend to sell off into the new moon. The markets are typically down 90% of the time for the week after OpEx in June. G-20 meetings begin Monday evening. The U.S. Supreme Court rules on Obamacare any day, healthcare stocks will react violently.
On 6/19/12, Tuesday, Housing Starts, FOMC Meeting begins. New moon.
On 6/20/12, Wednesday, FOMC Rate Decision and Press Conference-is there any mention of QE3 if it has not already occurred? If so, a rip-roaring equity rally will begin.
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On 6/26/12, Tuesday, Consumer Confidence.
On 6/28/12, Thursday, Euro Summit. GDP.
On 6/29/12, Friday, EOM. Consumer Sentiment.
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