Sunday, July 7, 2013

Keystone's Key Events and Market Movers for Trading the Week of 7/8/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week:  As always, double A, Alcoa, kicks off earnings season after the bell on Monday.  The FOMC Minutes are 2 PM Wednesday afternoon and note how Chairman Bernanke talks after the markets close, sensitive that his words are the major factor in equity market direction these days. The central bankers control the markets and Fed heads are speaking in the back half of the week no doubt pumping equity markets higher. Egypt and the Middle East remain in turmoil. Ramadan, a month-long holy period of fasting for Muslims, begins Monday evening and ends on 8/7/13. WFC kicks off the bank earnings on Friday. Consumer Sentiment is important on Friday.  The BOJ meeting is a focus mid-week but major policy decisions are not expected. The Sequestration budget cuts create concern over a second half slowdown this year. The Debt Ceiling limit and CR (Continuing Resolution to fund the government) deadlines occur in September. Politicians must solve the U.S. fiscal mess within the next 10 weeks, reminiscent of summer 2011, which did not end so well. The Whitehouse scandals are distracting politicians from addressing the fiscal mess. Traders are not concerned since the politicians will always kick the can down the road but any stumble would impact markets very negatively. Congress returns from the July 4th recess which is a negative for markets. The European debt crisis escalated last week but the BOE and ECB central bankers saved the day with plenty of easy money QE talk. The BOJ easy money is buying Euro stocks and bonds creating a faux calm over the last three months. Cyprus is bankrupt, Greece will need additional funding this month, Spain and Italy remain challenged and France’s debt-to-GDP ratio is particularly worrisome. The ECB’s OMT bond-buying program, not fully accessed as yet, also creates faux stability. Merkel (Germany) does not want any nation to exit the euro before her re-election in September but will not care afterwards. The next ECB Rate Decision and Press Conference is Thursday, 8/1/13.  Draghi leaves rates unchanged 7/4/13 and 6/6/13 after a one-quarter point cut to 0.5% on 5/2/13. The euro dropped like a stone due to Draghi’s dovish talk last week causing the dollar to jump higher.  A lower euro is needed to help the European manufacturing, export and automobile and pull the continent out of the quagmire of recession and depression.  Europe must also compete with the race to debase (currency wars) ongoing around the world.  The China hard versus soft landing saga continues. China is propping up the banking system on the verge of a Lehman-type event which will create havoc in global equity markets. Copper and commodities have tumbled lower since February. Dr. Copper is a valuable market indicator but the Fed and BOJ central banker policies are distorting markets and masking price discovery. The ‘protectionism’ wars begin as Europe and China impose tariffs on one another. The equity markets continue to ignore the geopolitical landscape. Egypt ousted Mursi last week and is now on the verge of civil war. Syria is out of control with 100,000 dead from their bloody civil war. There are 4 million Syrian refugees and 10% of the Syrian people are now in Jordan. One in every 200 Syrians have now died due to the ongoing civil war. Countries bordering Syria cannot support this influx of people causing destabilization across the Middle East. Russia is supporting Asaad with the U.S. now supporting the rebels, many of which are terrorists. The Turkey unrest continues.  Egypt, Turkey and Syria unrest causes a big jump in oil prices so gasoline price will be on the rise this summer. In addition, the Brazil social unrest continues continuing with the new global theme that common citizens are fed up with the bailouts and preferential treatment for the wealthy while everyone else suffers.  Geopolitical risk is getting priced into the oil markets but is not properly priced into the equity markets.  Q2 earnings season kicks off with AA on Monday evening. YUM earnings are a key bellwether for China and WFC will kick off the bank earnings on Friday.  Companies have lowered estimates during confessional season so the bar is lowered again. Watch to see if the theme of companies meeting EPS but missing on top line revenue continues since this cannot go on forever. Either the economy picks up providing increased sales, or, companies will start a new round of layoffs across the board to reflect ever-slowing sales. The Fed and BOJ easy money created asset bubbles in dividend stocks, healthcare, staples, utilities, telecoms, REIT’s, MLP’s, high-yield instruments, home builders and blue chips in general. The interest rate sensitive sectors such as utilities, REIT’s, homebuilders and telecom are sold off as Treasury yields sneak higher. Volatility is higher and creates the large intraday and day-to-day point swings in the broad indexes but the VIX has dropped from 22 to under 15 in only a few days time providing the bull fuel for equities. Broad market topping and roll over action is anticipated as the weeks play out.  Keybot the Quant trading algorithm is bullish and tracking UTIL 480.72, VIX 14.25 and GTX 4736. The bulls need to pull UTIL and/or VIX into their camp to send markets higher while the bears need to pull GTX into their camp to push markets lower. On the seasonality and esoteric side, the start of a new month is typically bullish and the behavior the last few days is textbook. The holiday positivity helps the bulls as well.  Typically the Monday after a holiday weekend is bullish, however, the new moon is only hours away and markets are typically weak through the new moon. The Bradley turn on 6/22/13 identifies a market bottom at SPX 1560 reversing the downtrend from the May SPX 1687 top. The next Bradley turn is another major turn date on 10/8/13. Solar flare activity is increasing and may affect electronics, communications and markets as the year moves along. The epic and historic market action continues.


·         Monday, 7/8/13: Consumer Credit 3 PM. New Moon occurs early morning; markets are typically bearish through the new moon, however, markets are typically bullish on the Monday following a holiday weekend, so pick your poison. Earnings: AA kicks off the Q2 earnings season, FLOW, IGTE, SCLN, WDFC.
·         Tuesday, 7/9/13: First of Ramadan. NFIB Small Business Optimism Index 7:30 AM. JOLTS Report 10 AM. 3-Year Note Auction 1 PM. Earnings: MHR.
·         Wednesday, 7/10/13: BOJ Policy-Board meeting. Mortgage Applications 7 AM (down 7 of the last 8 weeks). Wholesale Trade 10 AM. Oil Inventories 10:30 AM. 10-Year Auction 1 PM. FOMC Minutes 2 PM. Chairman Bernanke speaks 4:10 PM. Earnings: ADTN, FDO, FAST, FIZZ, NG, YUM-China bellwether.
·         Thursday, 7/11/13: BOJ Policy-Board meeting. Chain Store Sales data. Jobless Claims and Import and Export Prices 8:30 AM. Natty Gas Inventories 10:30 AM. Fed’s Tarullo speaks 11 AM. 30-Year Bond Auction 1 PM. Treasury Budget 2 PM.  Earnings: PPHM.
·         Friday, 7/12/13:  PPI (Producer Price Index) 8:30 AM.  Consumer Sentiment 9:55 AM. Fed’s Bullard speaks 2:45 PM. Fed’s Williams speaks 5:15 PM. Earnings: WFC and JPM kick off bank earnings.


·         Monday, 7/15/13: Empire State Mfg Survey and Retail Sales 8:30 AM. Business Inventories 10 AM—market pivot point. Earnings: AEP, AMTD, BTU-coal, CPHD, CTAS-uniforms, C-bank, ETFC, GDI, HTLD, JBHT-trucking, MTB, MAN-jobs, OSTK, STLY, TER, TZOO, WERN-trucking, WYNN, XLNX.
·         Tuesday, 7/16/13: Consumer Price Index (CPI) 8:30 AM. TIC data 9 AM.  Industrial Production 9:15 AM. Housing Market Index 10 AM. Fed’s George speaks 2:15 PM. Markets are typically bullish from a Tuesday low to a Wednesday high during OpEx week. Markets are typically bullish from the day before Chairman Bernanke’s Congressional Testimony through the day after (today through Friday). Earnings: CSX-rails, GS-bank, JNJ, MOS, KO.
·         Wednesday, 7/17/13: Mortgage Applications 7 AM. Housing Starts 8:30 AM. Chairman Bernanke speaks 10 AM (House testimony). Oil Inventories 10:30 AM. Beige Book 2 PM. Earnings: ABT, ALB, BAC-bank, BK-bank, CLB, EBAY, EPB, GHL, INTC, IBM, KMR, MAT, NE, PNC-bank, SLM, STJ, SVU, TXT, USB-bank, GWW.
·         Thursday, 7/18/13: Jobless Claims 8:30 AM. Chairman Bernanke speaks 10 AM (Senate testimony). Philly Fed Survey and Leading Indicators 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. 10-Year TIPS Auction 1 PM. Earnings: AMD, APH, ATHN, AN, BAX, BBT, BLK, BX, COF, CE, DHR, DOV, FCS, GMT-rails, GOOG, ISRG, JCI, KEY, MSFT, NUE-steel, PM, DGX, SWY, SHW-paint, SWKS, SYK, UNP-rails, UNH-healthcare, VZ-telecom.
·         Friday, 7/19/13: OpEx.  Markets are typically bullish through the full moon. Earnings: BMI, BHI, COL, FHN, GE, HON, IR, IPG, LH, NCR, ORB, SLB, STT, STI, VFC.


·         Monday, 7/22/13: Chicago Fed Activity Index 8:30 AM. Existing Home Sales 10 AM—market pivot point. Full moon. Earnings:
·         Tuesday, 7/23/13: FHFA House Price Index 9 AM. Richmond Fed Mfg Index 10 AM. 2-Year Note Auction 1 PM. Earnings:
·         Wednesday, 7/24/13: Flash PMI’s. Mortgage Applications 7 AM. New Home Sales 10 AM—market pivot point. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings:
·         Thursday, 7/25/13: Jobless Claims and Durable Goods Orders 8:30 AM. Natty Gas Inventories 10:30 AM. Kansas City Fed 11 AM. 7-Year Note Auction 1 PM. Earnings:
·         Friday, 7/26/13:  Consumer Sentiment 9:55 AM. Earnings:

·         Monday, 7/29/13: Pending Home Sales 10 AM. Dallas Fed Mfg Survey 10:30 AM. Earnings:
·         Tuesday, 7/30/13: FOMC meeting begins. S&P Case-Shiller Home Price Index 9 AM. Consumer Confidence 10 AM. Earnings:
·         Wednesday, 7/31/13: EOM. Mortgage Applications 7 AM. ADP Jobs Report 8:15 AM. Employment Cost Index and GDP 8:30 AM.  Treasury Refunding Announcement 9 AM. Chicago PMI 9:45 AM. Oil Inventories 10:30 AM. FOMC Meeting Announcement 2 PM. Farm Prices 3 PM. Earnings:
·         Thursday, 8/1/13: BOE rate decision.  ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM. Motor Vehicle Sales. Challenger Job-Cut Report 7:30 AM. Jobless Claims 8:30 AM. PMI Indexes. Construction Spending and ISM Mfg Index 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Earnings:
·         Friday, 8/2/13: Personal Income and Outlays and Monthly Jobs Report 8:30 AM.  Factory Orders 10 AM—market pivot point. Earnings:


·         Monday, 8/5/13: ISM Non-Mfg Index 10 AM. Earnings:
·         Tuesday, 8/6/13: International Trade 8:30 AM. JOLTS 10 AM. 3-Year Auction 1 PM. Earnings:
·         Wednesday, 8/7/13: Mortgage Applications 7 AM. Oil Inventories 10:30 AM. 10-Year Note Auction 1 PM. Consumer Credit 3 PM. Earnings:
·         Thursday, 8/8/13: Chain Store Sales. Jobless Claims 8:30 AM. Natty Gas Inventories 10:30 AM. 30-Year Bond Auction 1 PM. Earnings:
·         Friday, 8/9/13:  Wholesale Trade 10 AM. Earnings:


·         In September:  The Debt Ceiling Limit and CR Continuing Resolution to fund the U.S. government deadlines occur.  Politicians must develop solutions during July and August reminiscent of 2011 which did not end well. The Whitehouse scandals are distracting politicians from addressing the fiscal problems.
·         In September:  Merkel (Germany) seeks re-election and will not want Greece or other nations to exit the euro before the election, but will not care afterwards.  Perhaps Greece or other nations, and/or Germany will exit the euro in the future.
·         In Q4 2013:  European bank stress tests will occur.

----------------------------  2014  ----------------------------------

·         On Friday, 1/31/14: Chairman Bernanke’s term ends at the Fed, unless there is news during Q4 2013 that he will stay on. Will Yellen, even more dovish and likely wanting to see QE on steroids, take the reins? Equity bulls will be happy if Yellen receives the nod but bears will be happy if Yellen is not selected.
·         Friday, 2/7/14:  Winter Olympics begin in Sochi, Russia, through 2/232/14. Watch $RTSI and RSX.
·         In March 2014: ESM is officially ‘fully operational’. The banking union schedule has been delayed from January 2013 to January 2014 and now to March 2014.

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