Keystone's Key Dates and Market Movers

1.      POMO Pumps:  NY Fed to release new schedule at 2 PM EST Tuesday, 4/12/11. Use 80 B as the gauge which continues current pace.  QE2 market pumps from 10:15 AM to 11 AM each day favoring market bulls. NY Fed is committed to 390 B for up thru 4/11/11.  210 B remaining from 600 B total for 4/12/11 thru 6/30/11. N-D 75, D-J 75, J-F 80, F-M 80, M-A 80, projection A-M 80, M-J 80, J 50.  Thus, POMO pumps should stay at this pace for the next three months.

2.      Japan Quake-Tsunami-Nuclear Disaster; Currency Intervention:  Markets remain at the mercy of the news feed until final resolution is achieved with the nuclear reactors.  Additionally, Japan is performing policy manipulation and currency intervention to handle the markets and will probably intervene to keep dollar/yen in the 85-86 zone.  Possible effect dollar/yen up=dollar index up=equities down=euro down.

3.      Ongoing Wars: Libya, Iraq and Afghanistan keep the war machine gears churning. Libya not a big deal concerning oil, Saudi’s can easily step up production.  A premium is now built into gold, silver and oil markets.  The ME premium in gold is about 10%, oil and silver ME premiums are over 30% now.  Any positive resolution to the Colonel Gaddafi situation, or ME tensions in general, will cause this premium to come back out. Rational price of oil is low to mid80’s but markets are never rational.

4.      Continuing Geopolitical Events other than Ongoing Wars such as Egypt, Syria, Saudi Arabia, Bahrain, N. Korea:  Dollar bullish and equity bearish.  Gold, silver and oil bullish.  Bahrain is the big worry; this will seriously affect oil supply.  Yemen as well since it is a southern border. A premium is now built into gold, silver and oil markets, thus, any positive resolution, especially to Bahrain will cause this premium to come back out.  Conversely, any bad news across the wires concerning Bahrain results in higher gold, silver and oil prices.

5.      State and Muni Crisis; Union Busting:  Muni’s should experience pain first.  Muni’s rely on State funds.  Many State budgets turn over in June and July, only two months away. Colleges relied on State funds. Multiple U.S. cities now experiencing protests concerning union busting.  There simply is no money in Federal, State or Local coffers to handle years of promises.  Meredith Whitney continues to receive a lot of heat from her 60 Minutes projections concerning Muni’s.

6.      Europe Crisis Continues:  Portugal, Ireland, Italy, Greece and Spain, the PIIGS.  Italy’s close ties with Libya are strained which may expose Italy’s bad paper. Portugal needs a bailout immediately and a drop-dead date is Friday, 4/15/11.  Spain heating up now as well.  Weaker euro=stronger dollar index=weaker U.S. equities.

7.      ECB Rate Hike:  Trichet raised rates 25 bips on 4/7/11.  ECB expects additional measured hikes to occur moving forward.  Trichet raised rates July 2008—exactly at the wrong time—when the commodities bubble popped. Is Trichet calling a top again?  The euro has maintained buoyancy in the near term as a direct result of this rate hike.  Euro experienced slight buoyancy after the rate hike move but the hike was already priced in; euro should move down from here in the near term.  Euro down=dollar index up=US equities down.

8.      China Property Bubble and China Contagion:  When it pops, anytime now, it will be extremely negative on global markets causing contagion in Asia and elsewhere.

9.      PBOC, China Rate Hikes:  First hike 10/19/10, 25 bips; second hike Christmas 12/25/10, 25 bips; third hike at end of China New Years on 2/8/11; fourth hike 4/5/11.  China said in 2010 that it will project about five hikes into June 2011 so projection for next hike is June.  Hikes have occurred October, December, February, April so the pattern reinforces the June hike next.  The rate hike will cause commodities, gold, silver, PM’s and copper to sell off.  Lower commodities=lower US equities, but, the April hike that just occurred was a non-event.

10.  India, Brazil, Taiwan and other Emerging Market Rate Hikes:  Same effects as China rate hikes; commodities will sell off, although the China rate hikes carry the most clout.

11.  Congress:  Market bullish when not in session, market bearish when in session. The debt ceiling talks is the next crisis to play out over the next five weeks.

12.  Strategic Oil Reserve:  The talk of using the reserve is moot since about 7 million bbls over next few months will be drained for renovations anyway; say one million bbls per month oil supply will hit the market now into Fall.

13.  Wiki Leaks:  Embarrassing bank information rumored to affect BAC most of all.  This would be a drag on the financial sector which in turn would limit any broad market upside. Financials exhibiting very weak behavior lately, especially C and BAC, perhaps JPM.

14.  4/12/11:  NY Fed releases new POMO schedule 2 PM EST which will move markets.

15.  4/13/11:  Fed talk this week especially Wednesday thru Friday, watch for market moving commentary from the Fed heads.

16.  4/13/11:  Economic data and events are back week weighted starting Wednesday with retail sales, business inventories and 10-year note auction, Thursday with PPI and claims, and ending Friday with CPI, Empire manufacturing, industrial production and University of Michigan Sentiment.

17.  4/15/11: Portugal drop-dead date for a bailout decision, watch the euro. Euro down=dollar up=US equities down.

18.  4/26/11 and 4/27/11: FOMC two-day meeting, QE3 announcement? 4/27/11 is the first press conference style meeting that Chairman Bernanke will conduct.  FOMC meeting days are typically flat to up for equities.

19.  5/1/11 and on:  California financial decisions.  Will these decisions spook the country?  Perhaps this time period sets the wheels in motion for the Muni/State crises a la Meredith Whitney?

20.  5/15/11: Eclipse Sell-off Technique targets this time frame as a potential large market selloff area.

21.  5/16/11 and on:  Congress to Raise Debt Ceiling. This may be another down-to-the-wire fight like the budget crisis was.  Interesting that this timing coincides with the eclipse sell-off projection.

22.  June 2011:  PBOC (China) Rate Hike. Probably 25 bips again but perhaps 50 bips which would shock markets.

23.  June 2011:  EU Bank Stress Test Results.

24.  June 2011:  QE2 Ends.  See the POMO information above.

25.  6/15/11:  Bradley Turn date.

26.  6/22/11:  Bradley Turn date.

27.  7/15/11: Eclipse Sell-off Technique targets this time frame as a potential large market selloff area.

28.  7/29/11 and 7/30/11:  Major Bradley Turn date.

29.  2012:  China chooses a new Premier, smooth transition?