On 9/14/12, Friday, global markets respond to the QE3 euphoria. Oil is over 100. Brent Oil is over 117. The euro overtakes 131 filling a gap on the weekly chart from late April. Growth assets around the world run higher. Emerging markets are up. Copper is up. Gold to 1776. Shares in Europe are at or near 14-month highs. Banks are strong. JPM has now recovered the losses from the London whale trading incident. Republican’s cry foul as President Obama’s favorable poll ratings escalate on the QE3 news, provided by the man he hired, Chairman Bernanke. The Fed has laid all their cards on the table, essentially a QE Infinity. This is a Bernanke experiment where he does not even know the eventual outcome. Always thinking of outlier events, a war conflict in the near future will render all these QE machinations meaningless. Perhaps the president informed the chairman of the coming global turmoil, green-lighting the kitchen sink approach with QE, since it will be inconsequential in a few months time anyway? Euro zone Finance Ministers are meeting today and tomorrow mainly discussing Greece and Spain. U.S. futures are higher wanting to push the market rally further.
On 9/14/12, at the opening bell, the SPX punches up thru yesterday’s high and then accelerates to test 1468, the starting year number for 2008, pierces that and places a HOD at 1474.51. The euro prints a HOD at 131.68, an over 1% move for a currency, a 5% move in only six days, these are unprecedented times, epic economic history in the making with the Draghi and Bernanke bazooka’s. The ECB and Fed are both easing but the Fed is easing more so the euro moves higher. The dollar plummets since the Fed’s QE3 devalues the dollar. The SPX, and the VIX, move up together today which only happens 10% of the time or less, one of them is wrong. The low VIX (at multi-year lows) and CPC continue to signal that a Significant Market Top is now in place. What curious markets since the QE3 bazooka tells all traders to go long and strong without thinking, and they have. The utilities sector continues its weakness which is a very ominous signal for markets. The telecom sector is weak on T and VZ downgrades. NKE sells off. The broad indexes are up about one-half percent today. In the final minutes, the SPX falls about five handles on news that Egan-Jones rating agency lowers the U.S. debt rating but quickly recovers. Gold is up slightly but silver is actually negative. For the week, after all the fanfare and excitement, with central bankers firing bazooka’s, the SPX is up 1.9% to 1466. The Dow Industrials are up 2.2% to 13593. The Nasdaq is up 1.5% to 3184. The RUT is up 2.7% to 865. The broad indexes are at or near multi-year highs. Note the underperformance of tech.
----------------------------------------------------------------------------
On 9/16/12, Sunday, the Middle East and Northern Africa riots and demonstrations against the U.S. continue. The violence has spread to over 20 different locations. Israel voices increased concern over Iran’s ongoing plan to develop nuclear weapons. Portugal erupts in demonstration and violence against austerity measures. The Japan and China dispute over an island escalates with China rioters attacking Japanese businesses on the mainland. Syria violence is out of control. The violence at the South African mines continues keeping platinum prices elevated. It is truly a world gone mad with conflicts ongoing around the globe.
On 9/17/12, Monday, Brazil and India cut reserve ratio requirements to help boost their economies. The Shanghai Index drops over 2% as worries over inflation grow, stoked by the Fed now creating another commodities bubble with QE3. The Euro Finance Ministers argue over the future banking union. Supervision and oversight is a sticky issue with countries that will receive money not wanting to be held accountable while at the same time the countries, such as Germany, that will have to bank roll the union, wants to see strong supervision. Schauble does not want to see Germany held responsible for all the debt and wants to see health checks performed, ahead of time, before entering into any banking union. Two-thirds of German citizens regret swapping the deutschmark for the euro. Sweden does not want its banks overseen by any means. France, Spain and Italy all want the banking union to be pushed thru quickly but today’s events expose the difficulties moving forward. At 5 AM, the euro drops under 131. The U.S. politicians prepare for vacation until after the presidential elections; folks suffer trying to find jobs and the country teeters on the fiscal cliff but the politicians do not care as they head for the beach.
On 9/17/12, the markets are sideways with a downward bias. At 2 PM, oil drops three bucks in one minute’s time. The fat finger explanation, as well as a rumor about an SPR release are bandied about, as well as a rogue robot, but none of the three can be verified to have occurred. At 2:11 PM, Keystone’s proprietary algorithm, Keybot the Quant, flips to the bearish side at SPX 1460. Keystone’s SPX 30-minute chart shows the 8 MA stabbing down thru the 34 MA at 3:30 PM EST indicating bearish markets moving forward. Apple iPhone5 sales top 2 million in the first 24 hours. After the close, AAPL crosses the 700 level in afterhours trading.
On 9/18/12, Tuesday, Australia lowers iron ore projections which indicates a weak steel sector moving forward. The euro falls under 131. European automobile sales are weak. Spain delays asking for a bailout which creates weakness in Europe. Spain is very reluctant to give up any sovereignty. Draghi’s easy money program is of no use if Spain does not request the bailout. Portugal riots continue. Japan-China tension grows. FDX earnings beat the lowered expectations but lowers yearly guidance again citing a weakening global environment. Markets languish sideways with a downward bias all day on low volume.
On 9/19/12, Wednesday, the global coordinated intervention continues with the BOJ, in a surprise move, expanding its monetary easing program increasing asset purchases to spur the weak economy. The euro/yen moves higher and the dollar/yen moves above 79 as the yen weakens. The global currency wars are in full bloom with all countries now in a race to the bottom debasing their respective currencies. The markets stumble along sideways all day long in a malaise as if they are waiting for something. Volume is only about two-thirds of an expected day’s average volume. Keystone’s SPX 30-minute chart shows the 8 MA crossing up thru the 34 MA at 11:30 AM EST indicating bullish markets moving forward. The CPC put/call prints an uber low 0.68 and the VIX prints under 14 indicating complete complacency in the markets. Trader’s are completely convinced that markets will not go down due to QE3 money pumping. After the bell, NSC disappoints on earnings showing a weak rail industry which reinforces the weak shipping news from FDX this week.
On 9/20/12, Thursday, Japan exports continue falling. China’s Flash PMI disappoints showing shrinking manufacturing for eleven months in a row, the largest contraction since data collection began. Weaker Chinese domestic demand is worrisome since the transition from rural to urban life is obviously occurring far slower than hoped. Japan-China tensions continue over the island dispute. Eurozone PMI’s remain weak now showing an eight month contraction ongoing in Europe. Spanish bailout doubts are weighing negatively on markets. The ECB wants to help Spain but Spain continues to delay asking for the bailout since it does not want to give up sovereignty. Instead, Spain says there is some ‘leftover’ bailout money available and will limp along using that. The euro falls under 1.30. Mining and commodities are hit very hard on the weak China and Eurozone PMI’s. Overnight futures markets are weak with the S&P’s down about five points and copper moving strongly lower. Daimler lowers guidance, the Mercedes-Benz unit is weak, perhaps another indication that even the high-end shoppers are decreasing spending. The euro falls under 1.2950. The SPX drops to 1450 intraday but recovers into the close to end flat. Keystone’s SPX 30-minute chart shows the 8 MA stabbing down thru the 34 MA at 10:30 AM EST indicating bearish markets moving forward.
On 9/21/12, Friday, news that a Spain bailout is near agreement launches the euro above 1.30 and the futures markets move higher. Rajoy (Spain) and Monti (Italy) meet today. Negative news concerning Greece is ignored by markets. An Italian official says that Spain and Italy will not request bailouts unless the bond yields blowout again but markets ignore this negative news as well. Today is Quadruple Witching OpEx. Markets jump higher after the opening bell and then slowly leak lower the entire day into the close. Keystone’s SPX 30-minute chart shows the 8 MA piercing up thru the 34 MA at 9:30 AM EST indicating bullish markets moving forward. Apple’s iPhone5 is available for sale helping keep the tech sector buoyant today. Early complaints with the iPhone5 are that the aluminum scratches easily, the mapping capabilities are poor since Google maps was discontinued and the screen size which remains not as large as the Droid screens. Appleonians say the Apple screen is elegant and slips into a pocket easier while Droid lovers say bigger is better and the less-wide screen is clearly disappointing some of the Apple faithful. The rivalry is interesting when you consider that all the Smartphone’s are the same these days. At about 10:30 AM, the Troika says the Spain bailout may be delayed. Gold immediately takes a strong drop lower but remains up on the day. Lots of continual mixed signals and confusion are occurring out of Europe. Germany’s Schauble says that Spain does not need a bailout, they are doing the right things with austerity and will be successful. EU officials say that Spain will likely not request a bailout until the election in Spain’s Galicia region on 10/21/12 occurs. This neuters the ECB bond-buying plan since the country must ask for help first (and be subject to conditionality) before the bazooka can be put to strong use. The markets are moving on Spain news, up on news that a Spain bailout is coming anytime, and down on news that the Spain bailout is to be delayed. The broad indexes were flat on the week taking a rest from the central banker pumping this month. Companies are lowering earnings forecasts for Q3 at an alarming rate, the largest amount of confessionals since 2006. Lower earnings means lower stock prices. The violence against America grows across the Northern African continent and across the Middle East but citizens in Libya demonstrate in favor of America and attack the radical fractions within Libya causing the anarchy and destruction. Despite the global tensions, WTIC oil dropped from near 100 down to a 90 handle this week, closing at 93, showing that the global slowdown is carrying more weight than the tensions caused by radical terrorists across the oil-producing regions.
-------------------------------------------------------------------------
On 9/24/12, Monday, Congress goes on recess. Spanish bank audits are due so watch for a potential ratings downgrade, especially by Moody’s. Lots of drama ahead for Spain and Greece. The markets will react negatively if Spain does not request a bailout. Window dressing for Q3 occurs in the equity markets.
On 9/25/12, Tuesday, Consumer Confidence.
On 9/26/12, Wednesday, Yom Kippur holiday. New Home Sales.
On 9/27/12, Thursday, GDP.
On 9/28/12, Friday, EOM, EOQ3. Consumer Sentiment.
-------------------------------------------------------------------------
On 10/4/12, Thursday, ECB Rate Decision and Press Conference—euro will drop if rates are lowered.
On 10/5/12, Friday, Monthly Jobs Report—second to last report before election but considering the Fed’s QE3 to help employment, this number is the most important data point in the markets here on out each month, bar none, moving forward into and thru 2013.
----------------------------------------------------------------------
On 10/8/12, Monday, Eurozone Finance Ministers meet to discuss Greece aid. ESM Inaugural Meeting.
In October, Troika Report on Greece is due (this is needed for leaders to make a decision on Greece) and has been delayed since the original due date in early September. Also, the new China Premier Xi Jinping is officially selected and named the Head of Party, but, where is he?
-----------------------------------------------------------------------
On 10/18/12, Thursday, ECB/Euro Summit (Merkel may avoid a decision on Greece until now? Will Greece exit the euro? Is the banking union outline accepatable?)
-------------------------------------------------------------------------
On 10/24/12, Wednesday, FOMC Rate Decision.
-------------------------------------------------------------------------
On 11/2/12, Friday, Monthly Jobs Report—last report before the election.
On 11/6/12, Tuesday, U.S. Presidential Election Obama v. Romney, the result will be known in the evening from 9 PM thru 12 PM EST.
-------------------------------------------------------------------------
On 1/1/13, Tuesday, ESM is officially up and operating.
On 1/2/13, Wednesday, if Congress does not act, 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, on the positive side, the nation’s debt will decrease. Bernanke states on 9/13/12 that the Fed does not have tools to handle the fiscal cliff, should it occur.
--------------------------------------------------------------------------
In February or March, new China Premier Xi Jinping is named Head of Government and takes over control.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.