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 for the hours and days ahead. 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. The less-wide screen is clearly disappointing some of the Apple faithful but the long and short of it is that all these Smartphones are the same. 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 Draghi bazooka can be fired. 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.
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On 9/23, Sunday, in China, over 2,000 people are involved in a fight and riot at Foxconn factory dormitories, 40 are injured. 5,000 police were required to restore order. Foxconn manufacturers AAPL’s popular iPad’s and iPhone’s, as well as components for DELL and HPQ, and has seen recent trouble with employees sadly committing suicide, jumping from windows, due to the long stressful hours. Hollande (France) and Merkel (Germany) disagree on banking union details. France wants the union formed asap but Gemany says it is better to take it slow. The futures markets sell off on the news. Copper falls over 1%.
On 9/24/12, Monday, German business confidence drops for five months in a row. The euro moves lower to test 1.2900. Gold, silver, copper, aluminum, etc… are all weak and the lower futures carry into the U.S. opening bell. Luxury car sellers are seeing slower sales moving forward. Foxconn closes a factory unit due to yesterday’s rioting which may impact AAPL, DELL and/or HPQ. Keystone’s SPX 30-minute chart shows the 8 MA piercing down thru the 34 MA at 10:00 AM EST indicating bearish markets for the hours and days ahead.
On 9/25/12, Tuesday, Germany says the slowdown is getting worse. Draghi and Merkel say that Spain is dragging its feet in asking for a bailout. European auto manufacturers are weak. CAT, a bellwether of the global economy since it is the World’s largest construction and mining equipment manufacturer, lowers its outlook moving forward expecting anemic growth thru 2015 and citing a weak global economy. Italy’s central banker Saccomanni says that stable spreads are important and Spain’s bailout is a large gamble since accepting conditionality will be difficult. The futures are flat, gold flat, and the euro continues to tease 1.29 at 6 AM EST. In the afternoon, the Fed’s Plosser says that QE3 will not spur growth. At the same time, television screens show footage from the Spain riots. The violence rattles markets as rubber bullets are shot into the rioting crowds. Piling on late day, the homebuilders are downgraded. Markets rapidly sell off during the afternoon into the closing bell. The SPX is down 15 points, -1.1%, to 1442. The Dow Industrials lose 101 points, -0.8%, to 13458. The Nasdaq loses 43 points, -1.4%, to 3118.
On 9/26/12, Wednesday, Yom Kippur holiday. The global automobile industry is weak. Copper and platinum drop. The euro falls under 1.29. A strike occurs in Greece with 50,000 people taking to the streets. Tear gas is fired; a tree is set ablaze next to the parliament building. There is simply no money available for Greece to pay their bills and at the same time more austerity is needed. In Spain, Rajoy is in no rush to commit to the bailout so markets are in a negative mood. The Catalonia region of Spain actually wants to succeed. Rajoy says time is available since borrowing costs have come down but the yields calmed due to the ECB’s jawboning and bond-buying program which was based on Spain asking for the bailout right away. The politico’s have created a circular argument. Spain is balking on the conditionality but talks are occurring behind the scenes between the ECB and Spain to work things out. The Spain 10-year yield moves over 6%. Markets gave up waiting for Spain’s bailout, the broad indexes drop at the open, and remain weak all day long, losing about one-half percent across the board. WTIC oil moves under 90. Gold sells off strongly dropping to 1736 but recovers ending at 1756.
On 9/27/12, Thursday, China economic data is weak but the slowdown may force Beijing to act with stimulus so the whacky markets actually move higher on bad news with commodities, copper and equities markets jumping higher. German unemployment increases for six months in a row. VW say some automakers will go bankrupt if they do not receive government help. Protests continue in Madrid. The U.S. economic data is weak with GDP at a paltry 1.3% (in a regular recovery the GDP should be from two to five times higher). FDX and UPS say there is a drop in revenue per package delivered this year. The Dow Transportation Average is weak for many weeks failing to confirm the market rally as per Dow Theory. Fidelity’s fixed-income assets overtake equities for the first time ever. The central bankers can create all the money they want but their actions are pushing on a string. Since folks and businesses do not want loans, and the banksters are employing strict lending standards anyway, there is no velocity of money, which stifles the concept of quantitative easing and is why QE is not working. The euro is at 1.2854. The 10-year Treasury note is 1.62%. The markets open and jump higher on the China stimulus rumors that now what seems to be every few days. The SPX moves across the 1440 level.
On Thursday, in the 10 AM EST hour, Spain releases details on their budget plan but most of the information was already leaked and expected. The markets continue sideways with notable signs of weakness occurring. The euro drops to 128.30, an important bull-bear S/R level that projects strong market selling ahead if it fails. The XLF (financials) and RTH (retail sector) drop under their 20-day MA’s. The Spain yields are moving higher. Clearly, the broad indexes are starting to roll over, perhaps dramatically so. But, in the 11 AM EST hour, volatility starts to plummet (bullish). The euro comes down to test the critical 128.30 and immediately catapults higher, back up thru 128.50 and up thru the 129. The higher euro slaps the dollar so commodities, gold, copper and equities all catapult higher. Gold is up 25 bucks. The broad indexes experience a wild upside orgy, the SPX moves from 1440 to 1447 in a heartbeat, then up to 1450. Trader’s ask, ‘what happened?’. The Spain budget news was of no real import and in fact Spain continues to play games with the bailout request. The conspiracy theorists will have a field day with today’s market bounce since a benevolent hand appears to reach down and lift the markets just as the indexes were rolling over. Perhaps the PPT (Plunge Protection Team) was on the job today? Keystone’s SPX 30-minute chart shows the 8 MA piercing up thru the 34 MA at 2:00 PM EST indicating bullish markets for the hours and days ahead. The SPX closes up 13 points to 1447 but remains down on the week overall. Gold is at 1780. WTIC oil prints above 92 after being under 90 yesterday. Brent is 113. Natty gas prints a high for 2012 at 3.32, the highest number in about one year’s time.
On 9/28/12, Friday, Japan economic data is weak showing a continued funk in this demographically-challenged country. Today ends September and Q3; EOM, EOQ3. Futures drift lower into the U.S. open. The Spain 10-year yield moves above 6% again. The Chicago PMI drops under 50 for the first time in three years. Markets sell off at the opening bell. Keystone’s SPX 30-minute chart shows the 8 MA stabbing down thru the 34 MA at 12:30 PM EST indicating bearish markets for the hours and days ahead. The Spain stress tests are in line with estimates, seven banks have needs and seven do not. The euro pops and markets float upwards after the news but fade into the close. Keystone’s SPX 30-minute chart shows the 8 MA piercing up thru the 34 MA at 1:30 PM EST indicating bullish markets for the hours and days ahead. For the week, the SPX loses -1.3%. The Nasdaq loses -2%. The Dow Industrials -1.1%. The small cap RUT is down -2.1%. The SPX is exploring the same levels that were in place when the Fed announced QE3 twelve days ago.
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On 9/30/12, Sunday, China’s Golden Week holiday celebration begins.
On 10/1/12, Monday, markets will be listening for a potential Moody’s downgrade of Spanish debt. Troika Report on Greece is due this month (this is needed for leaders to make a decision on Greece) and has been continual delayed since the original due date in early September. ISM Manufacturing Index-watch the energy markets.
On 10/2/12, Tuesday, Motor vehicle sales.
On 10/3/12, Wednesday, ADP Employment Report. ISM Non-Mfg Index. First of three Presidential Debates Obama v. Romney.
On 10/4/12, Thursday, ECB Rate Decision and Press Conference—euro will drop if rates are lowered. Jobless Claims. Factory Orders. FOMC Minutes.
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 moving forward into and thru 2013. This report today is the most important economic data release for the whole entire year since the Novermber report is only three days in front of the presidential election, released in the middle of what will likely be a lot of commotion and last minute political antics, so that jobs report may be easier to sweep under the rug. Consumer Credit.
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On 10/8/12, Monday, Columbus Day. Eurozone Finance Ministers meet to discuss Greece aid. ESM Inaugural Meeting.
On 10/11/12, Thursday, first and only Vice Presidential Debate Biden v. Ryan.
On 10/12/12, Friday, Consumer Sentiment.
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On 10/16/12, Tuesday, second of three Presidential Debates Obama v. Romney.
On 10/17/12, Wednesday, Housing Starts.
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 acceptable?)
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On 10/22/12, Monday, third and final Presidential Debate Obama v. Romney.
On 10/24/12, Wednesday, FOMC Rate Decision.
On 10/26/12, Friday, Consumer Sentiment.
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On 10/30/12, Tuesday, Consumer Confidence.
On 10/31/12, Wednesday, Halloween. EOM.
On 11/2/12, Friday, Monthly Jobs Report—last report before the election.
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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 11/8/12, Thursday, the new China Premier Xi Jinping is officially selected and named the Head of Party, but, where is he? The transition of China leadership begins with China holding the 18th Party Congress.
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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.
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In February or March, new China Premier Xi Jinping is named Head of Government and takes over complete control.
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