On 8/24/12, Friday, futures are negative with copper down a half percent or more. The day begins with a gloomy tone. Markets drop at the opening bell, the SPX falls thru the psychological 1400 level and tests 1399 support. Copper is tumbling lower and utilities remain weak. All systems are go for the market bears, however, at 11 AM EST, the WSJ releases an article by Jon Hilsenrath, a perceived Fed mouthpiece, and the markets catapult higher. The article says nothing new concerning central bank action but the very suggestion that more crack cocaine (stimulus) is on the way is enough to get the crack addict (markets) jumping higher. Copper leaps upwards. Keystone’s SPX 30-Minute Chart with 8 MA and 34 MA Cross Indicator shows the 8 MA piercing up thru the 34 MA at 1:30 PM EST signaling that the bulls are in control for the hours and days ahead. The utilities sector recovers. The SPX closes at 1411 slightly down for the week. The Dow Industrials are up 101 points to close at 13158, down one percent on the week. The Nasdaq closes at 3070, flat on the week. The small cap RUT closes at 809 and drops 1.3% on the week. Money continues to chase blue chip stocks and pump the Dividend Stock Bubble higher while avoiding the riskier small caps. The SPX and Dow break their string of six up weeks in a row and Nasdaq breaks its trend of five up weeks in a row.
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On 8/26/12, Sunday, house prices are dropping in Australia as home sellers come to grips with a real estate bubble popping. European bank DB warns of recession in Australia in 2013 as the need for commodities falls in light of slowing global demand. Aussie mining companies continue to go belly-up and iron ore prices continue to plummet. China steel mills have created a glut in the steel industry. There is talk in China and Australia that the Commodities Supercycle may be coming to an end. Courts rule that Samsung violated AAPL patents. Merkel says that European leaders should “weigh words carefully.” Merkel is trying to rein in the negative talk concerning Greece. Merkel does not agree with Weidman’s (Bundesbank President—Germany’s top central banker) comments but supports his right to speak. Weidman does not want to see ECB bond-buying whereas Merkel is warming up to the idea, which has rallied equity markets. Weidman said that such bond-buying actions are “addictive like a drug.” Of course the U.S. has realized this point with equity markets completely addicted and moving in direct correlation to the Fed crack cocaine (quantitative easing), the current rally is proof positive, markets jumping higher on promises of QE. The Troika Report for Greece, which is required for Euro leaders to make a decision, is now delayed until October, another can-kicking announcement. Perhaps this hints that Merkel does not plan to make a decision on Greece until the October Euro Summit, and, considering that the U.S. Presidential election is 11/6/12, perhaps she is trying to push the Greece decision beyond the U.S. election. Is that why Geithner made a special trip to Europe a couple weeks ago? If Greece falls apart just before the election, that will damage President Obama’s hopes for reelection.
On 8/27/12, Monday, Samsung plunges over 7% on the AAPL lawsuit ruling losing 11 billion in market cap. German IFO Business Confidence drops for four months in a row with expectations dropping into negative territory moving forward. Germany is in a period of low growth and potential recession for the quarters ahead. Markets spike higher at the opening bell but then steadily lose steam as the day plays out, closing at the lows with the SPX at 1410. Gold is 1675. Despite Hurricane Isaac now in the Gulf, WTIC oil actually drops, now at 96.
On 8/28/12, Tuesday, Spain’s recession deepens; GDP continues to fall. Draghi cancels his trip to Jackson Hole so his Saturday speech will obviously not take place. Republican Presidential Convention begins one day late due to Hurricane Isaac which is about to hit New Orleans, seven years after Hurricane Katrina. Keystone’s SPX 30-minute chart shows the 8 MA down thru the 34 MA again signaling market bearishness ahead.
On 8/29/12, Wednesday, Draghi writes in a German newspaper that ‘sometimes the ECB must go beyond its mandate’ which is a back hand slapping of Merkel and Germany, the ECB letting them know that the mid-September vote better go well. Merkel and Monti argue publicly over the proposed banking license. U.S. GDP is 1.7% as the consensus expected. The markets are moving sideways all week long ahead of Bernanke on Friday. Hurricane Isaac hits New Orleans as a CAT 1 hurricane and much of the Gulf oil rigs and refineries are off line, but oil markets are flat and not rising. Oil is in ample supply.
On 8/30/12, Thursday, the Shanghai Index, SSEC, is at 3 ½ year lows. Iron ore prices continue to fall. German unemployment rises for five months in a row. Merkel and Holland meet in Madrid. Slovakia’s Prime Minister Fico says ‘the fate of the Euro zone hangs in the balance, with a 50% chance the currency will collapse’. Markets are weak pre-market and thru the opening bell as traders are realize Bernanke’s talk tomorrow may disappoint. Spain’s Rajoy says he wants to know the terms of the bailout articulated before he requests the bailout. This is significant news that drops the euro immediately and the equity markets follow along taking another leg lower. The SPX falls under the psychological 1400 level.
On 8/31/12, Friday, Japan and Korea industrial output numbers are weak. Japan remains mired in deflation. Spanish retail sales drop 7% for July, now negative for two years. ECB council member Nowotny warns that Europe will decrease growth rates moving forward. Weidman considers resigning from the Bundesbank but decides to stay on to continue fighting against ECB bond-buying. News from Europe hints that the ECB bond-buying program is much further along than anyone thought so the futures markets catapult higher into the opening bell upstaging Chairman Bernanke’s talk occurring in a few hours time. Pre-market S&P futures are up over 12 points. Fed’s Bullard says the Fed should wait a few months before launching additional stimulus. Markets jump higher at the opening bell. Consumer Sentiment is better than expected. Bernanke’s speech script is released from Jackson Hole and traders scour thru the pages to look for hints of quantitative easing. The quant’s drop the markets at 10 AM as the news hits but as the day moves along more traders view Bernanke’s words as guaranteeing QE in the near future, perhaps as soon as the 9/12/12 meeting. The dollar weakens to a three-month low so copper, commodities and PM’s strengthen. Gold catapults to a five-month high in the 1690’s. Keystone’s SPX 30-minute chart shows the 8 MA piercing back up thru the 34 MA to signal that the bulls are back in the driver’s seat for the hours and days ahead. Markets float upwards into the three-day holiday weekend recovering yesterday’s losses and the broad indexes finish relatively flat on the week overall. The EOM occurs and the SPX is now up for three months in a row closing at 1407. The SPX is moving sideways for the last eight trading days thru the 1399-1413 range.
On 9/1/12, Saturday, U.S. jobs data shows that the jobs now created are lower paying than the jobs lost during this Great Recession.
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On 9/3/12, Monday, U.S. Markets are Closed in Observance of Labor Day.
On 9/4/12, Tuesday, U.S. Markets Reopen for Trading. ISM Mfg Index. Troika Report on Greece is due early September (this is needed for leaders to make a decision on Greece) but it may now be delayed.
On 9/5/12, Wednesday, …..
On 9/6/12, Thursday, ECB Rate Decision and Press Conference that should provide details on potential buying of Spanish and Italian debt. Jobless Claims. President Obama’s nomination from the Democratic convention.
On 9/7/12, Friday, Monthly Jobs Report.
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On 9/10/12, Monday, Congress is back in session, a market negative, the childish behavior begins again.
On 9/11/12, Tuesday, Anniversary of the U.S. Terrorism Attacks. Euro Banking Union proposals.
On 9/12/12, Wednesday, German vote on the constitutionality of the ESM (European Stability Mechanism). FOMC Meeting begins. AAPL releases new iPhone5.
On 9/13/12, Thursday, FOMC Rate Decision, Forecasts and Press Conference.
On 9/13/12, Thursday, FOMC Rate Decision, Forecasts and Press Conference.
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On 10/18/12, Thursday, ECB Summit (Merkel may avoid a decision on Greece until now? Will Greece exit the euro?)
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On 1/1/13, Tuesday, the U.S. hits the ‘massive fiscal cliff’ (a phrase coined by Chairman Bernanke in early 2012) that will cut the GDP, increase unemployment and immediately launch the country into recession, but, the nation’s debt will decrease.
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