On 10/28/11, Friday, China is open to providing 100 billion euro’s to support the expansion of the EFSF. China talks a lot but has yet to place any substantial dough on the table. Italy 10-year bonds moving up towards 6% so the party from yesterday is over. Fitch rating agency says the 50% Greek bond haircut would be a default event. The markets move in a tighter range, now that volatility has dropped significantly over the last day, and close flat. The markets close up for another week, the major indexes are above their starting year numbers and positive for the year now. Bullish euphoria is ruling the day, copper is up over 20% in the last six days, an epic run, and the markets are set to break records for the upside move for the month of October. All this euphoria is built on the euro debt crisis resolution, but, stepping back, there are no details for the plan as yet, and the final-final deadline is next week with the G20 Summit “Kick the Cannes” meeting Thursday, 11/3/11.
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On 10/31/11, Monday, Halloween, EOM, futures are weak as traders await an announcement of a potential bankruptcy of John Corzine’s MF Global. Markets sell off after the opening bell and languish as weak manufacturing data is released. At about 2 PM EST, Prime Minister Papandreou said a referendum will occur concerning the Greek bailout and also a vote of confidence is requested for next week. The markets sold off immediately, tumbling into the close, since the political risk of the European debt problem has now escalated greatly. The SPX lost 32 points, or 2.5%. The Dow Industrials lost 276 points, or 2.3%. MF Global is halted from trading all day long and at the closing bell MF Global declares bankruptcy.
On 11/1/11, Tuesday, China PMI is lowest in nearly three years. South Korea also warns of lower growth. Credit Suisse plans on cutting 1500 additional jobs continuing to scale-back the investment banking business. Futures are down 25 S&P points and almost 200 Dow points. The dollar index $USD moves up to 78. Italy bond yields are climbing showing that there is no faith in the Europe debt plan. The Greece referendum news is causing broad market weakness. Around 1 PM EST, European leaders announce that the Greece referendum may be off the table. Markets jump higher but remain down for the day, then, late in the session, news hits that the Greece referendum is back on the table. Traders are reacting to every news bite and it is obvious that Europe is in disarray. The SPX finishes down 28 points, or 2.2%. The Dow Industrials finish down 236 points, or 2.0%. After the close, BAC scraps its plan for the new $5 monthly debit card fee since outraged customers are exiting the bank. Banks were sold hard today; MS and C down 8%.
On 11/1/11, Keybot the Quant algorithm flips back to the short side at 9:30 AM at SPX 1233. The trade from 10/24/11 is flat.
On 11/2/11, Wednesday, futures are buoyant over a rumor that China will inject billions into the EFSF, and also on the anticipation that Chairman Bernanke will discuss new quantitative easing measures today. Bernanke cuts the GDP outlook from over 3% to under 3% moving forward but talks up the positive side as well.
On 11/2/11, in the evening, a few hundred Occupy Wall Street protestors braved the rain to assemble outside a hotel, blocking the entrance, where Jamie Dimon, CEO of JPM, was speaking. Interestingly, Mr. Dimon expressed sympathy and support for the protestors.
On 11/3/11, Thursday, thousands of Occupy Wall Street protestors in Oakland, California, start a large bonfire in the middle of a downtown street. This action forces the closure of one of the U.S’s busiest ports. The ECB cuts rates by 25 basis points during Draghi’s first meeting taking over the head spot from Trichet. European growth projections are worsening with a recession on the table necessitating the start of rate cuts. The G-20 meeting begins but takes a back seat to the Greece turmoil. News hits that the Greece referendum will be cancelled so the equities markets run to the upside into the close. The SPX closes up 23 points, or 1.8%. The Dow Industrials close up 208 points, or 1.8%.
On 11/4/11, Friday, the Jobs Report is weak as expected although the previous month revisions are much better. Manufacturing and construction jobs are weak. Markets sell off at the open. Italy 10-year yields spike north of 6.35% indicating trouble for Europe and igniting fears of contagion. Markets recover from early losses in the session but the major averages finish off about one-half percent. Traders are waiting on the Greek vote this evening. A no confidence vote would place the bailout in jeopardy and hurt equities markets next week. Italy and Spain are the major contagion worries.
On 11/4/11, the Greek vote is scheduled for midnight Greece time (6 PM EST). Greece will run out of money sometime in December, or sooner, so Greece needs to move quickly. The Fed’s Tarullo says measures are needed to reduce the risks of runs on financial institutions such as 2007 and 2008.
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On 11/7/11, Monday, …………………..
………………………the saga continues…………..
Looking ahead to next week,
Eurozone problems continue led by the Greece circus. Italy and Spain are the big worries. Global recovery is stalling. China bubble popping. Copper and commodities languish despite the October rallies. Semiconductors, retail, utilities and financials are the main pillars of bullish support for the markets currently. Copper price remains subdued and volatility remains elevated which encourages market bears.
Earnings continue, retail will be in focus.
Fed talk in full force next week every day Monday thru Friday with Chairman Bernanke on Wednesday, 11/9/11.
On 11/7/11, Consumer Credit sheds light on retail spending.
On 11/9/11, 10-Year Note Auction. Chairman Bernanke speaks.
On 11/10/11, International Trade. Jobless Claims. 30-Year Bond Auction
On 11/11/11, Veterans Day, bond market closed but stocks will trade.
On 11/13/11, Troika decision, although these schedules change like the weather.
On 11/23/11, the Deficit Commission deadline.
On 12/8/11, ECB rate decision and conference.
On 12/13/11, FOMC rate decision meeting.
On 12/23/11, Congress will conduct the debt vote. Merry Christmas.
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