On 1/21/12, Saturday, news sources are reporting that a key negotiator in the Greece debt talks has left Athens without a deal in place. Greece needs a second tranche of funding to stay afloat but has to come to a deal with private debt holders first.
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On 1/23/12, Monday, the Greece talks continue without resolution. The markets do not seem to care as the major indexes move sideways.
On 1/24/12, Tuesday, after the close, AAPL announces blow-out earnings hitting a solid homerun. Ericcson, however, misses earnings and tumbles 14%. Alcatel-Lucent loses over 10%. VZ is weak. People want the new Smartphone technology but at the same time the telecom companies and parts suppliers appear to be weakening. Portugal’s yields continue to blow out.
On 1/25/12, Wednesday, LaGarde says combining the ESM and EFSF would boost confidence. The World Economic Forum’s annual meeting in Davos, Switzerland, begins. The FOMC rate decision and press conference announces that the Fed’s low interest rate policy will continue well into late 2014 (another 18 months). Chairman Bernanke also comments that further quantitative easing is on the table. Traders ponder that perhaps the Fed is seeing a much weaker economy than everyone else sees but with the fresh quantitative easing, traders dubbing the Fed move as QE2.5, the markets sky rocket higher, the SPX moves over 1330. The dollar weakens on the Fed move thus, the commodities, copper, gold, oil, and equities, as well as the euro, all move higher.
On 1/26/12, Thursday, Italy bond auctions go well as all the European auctions have in recent days after the LTRO program appears to be increasing confidence on the continent. All eyes are on the Dow as the day begins since a close above 12811 from 4/29/11 will have the Dow at levels not seen for 3 ½ years, but, those hopes disappear quickly as the markets steadily trail lower during the session. Technology is strong supporting the bullishness in the markets. The XLK technology sector chart shows price highs not seen since eleven years ago, back during the dotcom bubble days. CAT, an excellent global economic proxy, announces stellar earnings, but the bulk of the improvements is in the States rather than the high-growth emerging markets.
On 1/27/12, Friday, the GDP number is 2.8% far short of the 3% and higher whisper numbers, but actually an improvement over recent months. Markets meander directionless into the weekend. Portugal yields continue to blow out indicating the need for a second bailout is coming fast. Fitch rating agency downgrades Belgium, Cypress, Italy, Slovenia and Spain.
On 1/29/12, Sunday, the Greece talks with bondholders continues with no word yet on resolution.
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Looking Ahead,
On 1/30/12, Monday, Italy and Belgium bond auctions. Greece resolution needed. E.U. Summit. Personal Income and Outlays. Dallas Fed Mfg Survey.
On 1/31/12, Tuesday, EOM, S&P Case-Shiller, Chicago PMI, Consumer Confidence.
On 2/1/12, Wednesday, Final China PMI, ADP Employment, ISM Mfg Index-watch energy markets, Construction Spending.
On 2/2/12, Thursday, Jobless Claims. Productivity and Costs. Fed Chairman Bernanke testifies befoe the House Budget Committee.
On 2/3/12, Friday, Monthly Jobs Report, Factory orders, ISM Non-Mfg Index.
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Continue watching the European 10-year bond market yields, especially Portugal yields that continue to blow out. Greece’s talks with bondholders requires resolution as the E.U. Summit begins on Monday. The bond auctions over the last two weeks went well for Europe and helped calm markets. Greece, Portugal and Hungary require close watching.
Global recovery is stalling. China real estate bubble is popping.
Another big earnings week is on tap.
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