On 4/5/12, Thursday, the last trading day until next week, futures markets are up in the overnight session but begin falling at about 4 AM EST. Concern is growing over Europe as Spain bond yields blow out with the 10-year yield now over 5.75%. Italy jumps towards 5.5%. Portugal blows out over 12% and Hungary is at 9%. The Spain-Germany spread is about 400 basis points matching November 2011 highs. This spells trouble for equities markets moving forward. The markets languish sideways all day long and close the week with the worst trading week thus far in 2012.
On 4/6/12, Friday, U.S. markets are closed in Observance of Good Friday. The Jobs Report is a dramatic miss. Consensus estimates were for a gain of over 200K jobs but the report shows a paltry 120K job gain, that does not even keep up with those entering the job market. Futures markets plummeted lower targeting a big drop for markets come Monday morning when trading resumes.
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On 4/9/12, Monday, China CPI is 3.4% above the estimates so hopes for quantitative easing fades and the Asian markets sell off. European markets remain on Easter vacation until tomorrow. Traders respond to the weaker than expected Jobs Report with the broad indexes tumbling at the open. AAPL sells off after receiving its first major downgrade but recovers as the day proceeds helping the markets recover, but, by late day, the bears press the indexes lower again. Egan-Jones rating agency downgrades the U.S. another notch. The SPX closes down 16 points or 1.1%. The Dow Industrials dropped 131 points or one percent closing under 13K. The Nasdaq falls 33 points or 1.1%. The RUT, small caps, are beat 15 points lower or 1.8%. Chairman Bernanke speaks in the evening at a conference where traders are listening for any comments on the weak Jobs Report but come away disappointed.
On 4/10/12, Tuesday, markets tumble from the opening bell as the selling enters a whole new phase. Volatility spikes higher while the financial and retail sectors tumble into the bear camp joining the negative utilities, copper, commodities and semiconductors. Italy markets are down 5% and Spain down 3%. The European banks are beat badly down from 4% to 6% or more. The SPX loses its 50-day MA. The NYA, INDU and RUT have already lost their 50-day MA’s. Keystone’s SPX:VIX Ratio Indicator drops under 68 verifying the large market drop. The markets experience serious technical damage. The SPX drops 24 points or 1.7%. The Dow Industrials fall 214 points or 1.7%. The Nasdaq drops 56 points or 1.8%. After the close, AA kicks off earnings season with results surpassing estimates. Keystone’s Inflation-Deflation Indicator shows the economy now slipping into disinflation.
On 4/11/12, Wednesday, the markets experience a recovery bounce on talk of ECB intervention. The financials recover leading the broad market higher. Natty gas drops under $2 for the first time in over a decade. A lawsuit is announced against AAPL. Markets recover only about one-third of yesterday’s losses. In the evening, Fed’s Yellen, who is Chairman Bernanke’s #2 right hand man, er woman, says QE remains on the table and the low rate environment will continue; also that when Operation Twist ends this should not be viewed as tightening. This is not surprising considering that both Bernanke and Yellen are very dovish (pro-QE). Soros says the Euro crisis is in a more lethal phase.
On 4/12/12, Thursday, Fed’s Dudley says core inflation has peaked and should decline this year. All the Fed speakers this week talk out of both sides of their mouth, in one hand the economy is strengthening, but in the other hand the Fed stands ready with accommodative policy should the recover fade. As Harry Truman quips decades ago, “Give me a one-armed economist!” The Fed talk hinting at further QE, along with a rumor circulating that China’s GDP number tonight will be a 9-handle catapults stocks skywards. AAPL is a notable exception to the market euphoria, selling off, as Keystone’s forecast of a spank down due to negative divergence on the charts for Apple continues. The markets experience the best two-day rally of the year thus far. The SPX finishes the day up 19 points or 1.4%. The Dow Industrials jumped 181 points or 1.4% but remains a few points shy of 13K. After the close, GOOG beats on earnings and announces a funky 2 for 1 stocks split but the decision-making power remains with the top few.
On 4/13/12, Friday the 13th, China GDP is 8.1% missing the consensus estimates of 8.4% and well under the 9-handle rumors yesterday. The China GDP is the weakest in three years, the fifth straight decline. The Shanghai and Hang Seng indexes finish up, however, since traders are anticipating triple R cuts (QE). China is already addicted to the crack cocaine (QE) just like the U.S., and the rest of the world. Paper markets are simply pumped by easy money printing policies for the last three years. JPM and WFC earnings are released and after a brief bump higher, both roll over. Student and mortgage loans, and litigation expenses, are cutting into the banks’ bottom lines, but this information is hidden in the fine print. India’s Infosys guides lower which whacks the tech sector around the world. Italy, Spain and France banks are beat hard today losing from 2 to 7%. European markets sell off strongly. GOOG tumbles over 26 points, over 4%. Chairman Bernanke speaks after lunch at a conference but avoids the topic of QE so the markets languish sideways after the initial drop today. In the final minutes of trading, the Friday the 13th gremlins appear, and equities markets sell off strongly. Financials tumble into the close while volatility leaps higher. The SPX drops 8 points, over one-half percent, in the final 40 minutes of trading; that’s a one point drop every five minutes. The SPX closes down 17 points or 1.3%. The Dow Industrials fall 137 points or 1.1%. The Nasdaq dropped 44 points or 1.5%. The indexes finish with the worst week of the year (surpassing last week that was the worst week for the year thus far). For the week, the SPX fell 1.6%; the Dow dropped 2%; the Nasdaq fell 2.3%.
On 4/14/12, Saturday, the PBOC (People’s Bank of China) widens the yuan’s trading band which likely means the days of the continual yuan appreciation in relation to the dollar are over. The move will lead to a wider currency trading range each day but have limited affect on markets overall. Traders continue to look forward to the PBOC lowering triple R’s since the quantitative easing would immediately bounce copper, commodities and equities markets.
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On 4/16/12, Monday, Retail Sales. Earnings releases for major companies continue.
On 4/17/12, Tuesday, Housing Starts. Industrial Production.
On 4/18/12, Wednesday, Germany 2-Year Note Auction.
On 4/19/12, Thursday, Spain 2-Year Note and 10-Year Bond Auctions. France 2, 3 and 5-Year Note Auctions.
On 4/24/12, Tuesday, Consumer Confidence.
On 4/25/12, Wednesday, FOMC Rate Decision and Press Conference.
On 4/27/12, Friday, GDP. Consumer Sentiment.
On 4/30/12, Monday, EOM.
On 5/1/12, Tuesday, ISM.
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