Monday, July 22, 2013

Keystone's Key Events and Market Movers for Trading the Week of 7/22/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week:  Earnings season continues in force with many top tier companies reporting which will set the market tone each morning. Economic data of interest this week includes Existing Home Sales, PMI’s, Durable Goods and Consumer Sentiment.  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 8 weeks but they will take a recess vacation during August. The Whitehouse scandals and Obamacare problems are distracting politicians from addressing the fiscal mess. Traders are not concerned since the politicians will always kick the can down the road and vote in favor of pumping the stock market higher but any stumble would impact markets very negatively. Listen for any saber-rattling ahead of the August recess which may spook markets. Congress is in session which is a negative for markets. The European debt crisis continues but is held at bay by BOE and ECB easy money QE talk. Cyprus is bankrupt, Greece remains in depression, Portugal yields are on the rise, 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, 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 on 7/4/13.  A lower euro is needed to help the European manufacturing, export and automobile sectors and pull the continent out 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 to avoid collapse.  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 are underway as Europe and China impose tariffs on one another. The equity markets continue to ignore the geopolitical landscape. Egypt is in chaos causing crude oil prices to catapult higher. Syria is out of control with 100,000 dead from its bloody civil war. There are 4 million Syrian refugees. 10% of the Syrian people are now in Jordan. One in every 200 Syrians have died during the conflict over the last couple years. Countries bordering Syria cannot support this influx of people causing destabilization across the Middle East. The Turkey unrest continues.  Egypt, Turkey and Syria unrest causes a big jump in oil prices which sends gasoline prices higher, crimping retail spending and lowering consumer sentiment.  In addition, the Brazil social unrest continues with the new global theme that common citizens are fed up with the bailouts and preferential treatment for the wealthy while everyone else suffers. Protests flare-up in France  Geopolitical risk is getting priced into the oil markets but is not properly priced into the equity markets.  Q2 earnings season is underway with a large cross section of blue chips companies on tap.  Reference the major earnings in red below. UPS is key, as well as AAPL, AMZN, MCD, oil and chemicals, dividend stocks and the housing sector stocks.  Companies have lowered estimates during confessional season so the bar is easy to step over. Top line revenue numbers remain challenged. Either the global economy picks up providing increased sales, or, companies will start a new round of layoffs across the board to reflect ever-slowing sales and the sick economic conditions. 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 will sell off if Treasury yields rise. Keybot the Quant trading algorithm remains bullish. The central bankers create the market rally the last few weeks, pounding volatility lower, especially last Friday.  Volatility is now under 13. The market bulls will cruise higher if VIX stays below 14.19. The market bears will growl if VIX moves above 14.19.  A higher VIX, at these levels and higher, will create large intraday and day-to-day point swings in the broad indexes. The NYMO, CPC, CPCE, SPXA150R, SPX:VIX and other charts are consistent in signaling that markets are forming another top like May. On the esoteric side, the full moon is 2 PM EST today (7/22/13) and markets are typically bullish through the full moon. Everything is going the bull’s way these days. The next Bradley turn is a major turn date on 10/8/13. Solar flare activity is increasing and may affect electronics, communications and markets as the year moves along. Broad market topping and roll over action is anticipated as the weeks play out.  The epic and historic market action continues.


·         Monday, 7/22/13: Chicago Fed Activity Index 8:30 AM. Existing Home Sales 10 AM—market pivot point. Full moon; markets are typically buoyant through the full moon. Listen for any political posturing over the next two weeks ahead of the Congress recess in August. Earnings: BYD, CR, DXM, FLOW, GCI, GDI, GRC, HAL, HAS, KMB, MCD, MED, NFLX, PETS, SANM, SCLN, SYNC, TXN, VLTR, WERN, WYNN, ZION.
·         Tuesday, 7/23/13: FHFA House Price Index 9 AM. Richmond Fed Mfg Index 10 AM. 2-Year Note Auction 1 PM (important for 2-10 spread). Earnings: AAPL, AKS, AMTD, APD, BRCM, CIT, DFS, DPZ, DD, EA, EDU, FCX, IDXX, ITW, ILMN, IRBT, JNPR, LXK, LMT, MO, NBR, NSC, PNRA, PNR, RSH, RF, T, TRV, TRMK, UPS, UTX, VLO, VMW, WAT.
·         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: AKAM, ATI, AMP, BA, BIDU, COG, CAT, CTXS, CROX, CCI, DAL, DPS, ETFC, LLY, EMC, EFX, EQIX, ETH, EVR, FFIV, FB, FLS, F, FBHS, GD, LVS, LL, MSA, MCO, NFX, NOC, OII, OC, OI, PEIX, PEP, PX, RDN, RRC, RLGY, ROL, RYL, SCCO, SKX, SWFT, TCP, TER, TEX, TMO, TRIP, TQNT, TSCO, TUP, VAR, V, WLP, WDC.
·         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: ALK, ARG, AMZN, BAS, BLL, BIIB, BWA, BSX, BMY, BG, CPN, CRR, CELG, CB, CERN, CRUS, CLF, CCE, CL, CNX, COR, DHI, DO, DECK, DLB, DOLE, DOW, DNKN, ELY, EW, EQT, EXPE, FSL, GM, GILD, GPN, HOG, HSY, IP, KBR, KEG, KLAC, LLL, LM, MMM, NEM, NBL, OLN, PTEN, PCP, PHM, RYN, RTN, RS, SIRI, SBUX, HOT, TDY, TPX, UA, UTHR, UHS, USG, WAB, XRX, YNDX, ZMH, ZNGA.
·         Friday, 7/26/13:  Consumer Sentiment 9:55 AM. Earnings: ABBV, DTE, HP, KKR, LEA, LYB, NWL, SWK, TYC, WY.


·         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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