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, news wires state that Berlesconi will step down but he responds via his Facebook page that ‘rumors of his dismissal are greatly exaggerated’. Markets like the idea of Berlesconi resigning and bounce at the open. At lunch time, Jurgen Stark, ECB governing council member, says the ‘Eurozone crisis can be brought under control within two years’. The markets ran to the upside on the news and the Dow regains the 12000 level.
On 11/8/11, Tuesday, Italian Prime Minister Silvio Berlusconi promised to resign once a new budget was passed. The markets bounced on the news and the major indexes finished up about one percent.
On 11/8/11, Keybot the Quant algorithm flips back to the long side at 9:30 AM at SPX 1261. The trade from 11/1/11 taking a minor loss.
On 11/9/11, Wednesday, the Berlusconi rally is history. The day has a peculiar feel especially considering that an asteroid and Comet Elenin are both passing by Earth, several planets are in alignment, the Exercise Pacific Wave tsunami drill is scheduled and the test of the Emergency Alert System (EAS) will occur at 2 PM. Futures are dropping precipitously as Italy bond yields creep upwards. At 4 AM EST, Italy’s 10-year bond yield broke thru 7% and did not look back, ticking off basis points every time you blinked driving higher towards 7.5%. In addition, Italy’s yield curve inverts across the 2’s, 5’s and 10’s; the 2-year briefly moving above 8%. Global markets are pummeled as Europe appears to be spinning out of control. Volatility spikes higher.
On 11/9/11, Keybot the Quant algorithm flips back to the short side at 9:30 AM at SPX 1260. The trade from 11/8/11 was flat. The whipsaw for the algo is testimony to the current jumpiness and highly volatile markets in play.
On 11/9/11, at 2 PM, coincidentally with the EAS test, the markets roll over for another leg down. The financial sector broke support and took the broad markets lower. Keystone’s SPX:VIX Ratio Indicator dropped under 35 verifying today’s selling event and locking in the day’s fate. The blood bath today finished with the SPX down 47 points, or 3.7%, turning negative on the year again. The Dow Industrials finished down 389 points, or 3.2%, but remains positive on the year. The Nasdaq dropped 106 points, or 3.9%.
On 11/9/11, Jefferson County, Alabama, home of Birmingham, filed the largest U.S. municipal bankruptcy in history from sewer bond troubles. A major creditor is JPM. This creates new worries for the $3.7 trillion dollar muni bond market.
On 11/10/11, Thursday, China’s trade surplus widened as the nation’s export destinations continue to show lower demand. The slowdown is appearing from other countries around the globe in addition to Europe, such as Canada. Italy’s 10-year bond yield drops back below 7% returning calm to equities markets. After four days of drama, banker Lucas Papademos is named the Greek Prime Minister, taking Papandreou’s place. The more positive news from Europe buoys markets. Keystone’s SPX:VIX Ratio Indicator moves above 35 indicating that a large up day is on tap and a rally is in progress.
On 11/11/11, Friday, markets continue to react positively to more encouraging news from Greece and a growing optimism that Italy will avoid fiscal calamity. The futures are up large overnight and the markets gap up at the open. The week ends with the major indexes moving up 3% over the last two days. Gold remains buoyant. Oil is at highest price since July. Despite the strong markets today, volume was very light and AAPL finished down.
On 11/11/11, Keybot the Quant algorithm flips back to the long side at 9:30 AM at SPX 1251. The trade from 11/9/11 gains 9 handles. The whipsaws for the algo are unprecedented and highlight the intense, highly volatile bull-bear battle now occurring.
………………………the saga continues…………..
Looking ahead to next week,
Eurozone problems continue. Italy and Spain remain the big worries. Global recovery is stalling. China bubble popping. Copper and commodities languish despite the rallies. Semiconductors, retail, utilities and financials are the main pillars of bullish support for the markets currently.
Earnings continue with the retail sector remaining in focus, as gasoline prices increase and the department stores displ;ay holiday decorations. Retail sales data hits on Tuesday morning.
Lots of Fed talk on Tuesday and Wednesday.
PPI and CPI on Tuesday and Wednesday, respectively.
Housing Starts on Thursday morning are extremely important.
On 11/17/11, European leaders meet, although all these schedules are constantly changing.
On 11/18/11, EcoFin meeting.
On 11/23/11, the U.S. 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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