Keystone presents the following underlying market currents, sometimes subtle, sometimes turbulent, that move global markets in real time. The key dates and times below typically correspond to market pivot points.
Key Dates and Times for the Week Ahead:
· Keystone’s Comments on the Upcoming Week: Yearnings season is underway. The U.S. Presidential election is now only 22 days away, three short weeks, and the fiscal cliff is 78 days away, 11 weeks. The second Presidential Debate, in a town hall format, is Tuesday evening. Retail Sales on Monday and Housing Starts on Wednesday are the two most important economic data points for the week. The European news flow directly dictates global market direction. The main market mover is wishy-washy Spain deciding on whether or not it will seek a bailout. The ECB’s bond-buying program cannot be unleashed unless Spain requests the bailout but Spain does not want to give up sovereignty by accepting conditionality. If Spain requests aid, the euro and markets will bounce higher but that pop will likely not have much oomph. Markets will likely further weaken as Spain delays the bailout request which is likely to not occur until late October or later. Euro leaders probably want to provide one large bailout package for Spain-Greece-Cyprus and handle all three at one time. Watch for a potential downgrade of Spanish debt by Moody’s which would cause equity markets to sell off. The next ECB meeting is Thursday, 11/8/12, two days after the U.S. presidential elections. Europe must cut rates to weaken the euro and help the continent grow out of its mess. A flight of deposits out of Greece, Spain and Italy is ongoing which may lead to bank runs. The European riots and violence is escalating daily with events occurring in Greece, Portugal, Spain and France. The ECB/Euro Summit on Thursday and Friday is uber important with Greece on the table, Spain, and especially discussions on the proposed banking union. China economic data is important this week. Watch for further China easing measures such as lowering rates or triple R’s which will bounce copper, commodities and equity markets. China, however, appears hesitant to act since they worry about the commodities inflation and asset bubbles that will be created. Oil price should remain buoyant as the violence remains or escalates in the Middle East but overall, the weak global economy is driving the oil price lower. California is getting hit with high gasoline cost due to refinery issues, pipeline problems and other issues. A possible SPR (Strategic Petroleum Reserve) release appears unlikely with WTIC at 90-ish. Lower oil price will help President Obama’s reelection campaign but it is difficult to justify. Most importantly, the SPR will likely not be released because if the Iran sanctions continue to bite hard, Iran may do something stupid like block the Strait of Hormuz, which would violently spike the oil price skyward, and then the SPR would be needed. The SPX moves in the same direction as oil. U.S. trading volumes are increasing now that summer is over. Earnings season is in full force this week with many blue chip bellwether stocks reporting especially, banks, tech and railroads. Many companies warned of lower Q3 earnings, the largest warnings in a few years, so the bar is sufficiently low that even Gradma Edna can walk across that bar with her orthopedic shoes. The weak utilities, transportation stocks, shipping sector and tech and semiconductor industries indicate a weak global economy; see if this theme continues this week, or not. The weak behavior in the tech (COMPQ) and small cap (RUT) market leaders is signaling trouble ahead for the broad markets. Watch AAPL closely moving forward since it has a huge impact on tech and the markets. Watch to see if the VIX starts to climb which will lead to large wild daily swings in the equity markets. Congress is back on vacation until after the presidential election; markets are typically bullish when Congress is not in session but considering the seriousness of the impending fiscal cliff, Congress is creating market negativity on a continual basis moving forward. On the esoteric side, the new moon is Monday which typically creates market weakness. The new moon is the darkest time of the month so look for potential global military actions to occur now thru the coming days, which will obviously impact markets, perhaps the oil market. Last month, the Afghan extremists attacked under the cover of the new moon so watch for potential trouble in Afghanistan over the next couple days. Keystone’s Eclipse Indicator is now opening a window from here thru early November as a period where an extremely large market selloff may occur.
· Sunday, 10/14/12: Chairman Bernanke speaks in Tokyo.
· Monday, 10/15/12: China Consumer and Price data. Empire State Manufacturing Survey and Retail Sales 8:30 AM. Fed’s Dudley speaks 8:45 AM. Business Inventories 10 AM-potential market pivot point. Fed’s Lacker speaks 12:45 PM. Fed’s Bullard speaks 1:10 PM. Monday’s are typically down days in recent weeks. A new moon occurs tonight; markets are typically weak about two-thirds of the time in front of the new moon. Global military events, which could affect the price of oil, may occur thru the next couple days. As a counterbalance, Monday’s during OpEx week tend to be up. A Bradley turn window remains open today and tomorrow but the market trend changes appear to have already occurred with a bounce up under the affects of the 9/30 Bradley turn date, and a move down under the affects of the 10/9/12 Bradley turn date. Keystone’s Eclipse Indicator signals that now thru early November is a potential target area for a large market selloff. Earnings: C-will set the market mood, GCI, PKG-great indicator of shipping and economic health, SCHW, WDFC.
· Tuesday, 10/16/12: Spain and Greece bill auctions. CPI 8:30 AM. TIC data 9 AM will provide a gauge on foreign investment. Industrial Production 9:15 AM. Housing Market Index 10 AM-potential market pivot point. Fed’s Wiliams speaks 8:30 PM. Second of Three Presidential Debates; Obama v. Romney 9 PM EST (town hall-type debate which is a different format than the podium debate). Futures may receive a boost higher if Romney wins or perhaps a move lower if the President wins. Markets are typically buoyant from a Tuesday low into a Wednesday high during OpEx week. Earnings: APOL, CREE, CSX-railroads are an important gauge for the global economy, DPZ, KO, FRX, GS, IBKR, IBM, INTC, ISRG, JNJ, MAT-how are holiday toy sales?, STLY, UNH, URI.
· Wednesday, 10/17/12: Mortgage Purchase Applications 7 AM. Housing Starts 8:30 AM. Oil Inventories 10:30 AM. Earnings: ABT, AXP, BAC, BK, BLK, CHKP, CLB, DOV, EBAY, HAL, KMP, KCG, KNL, LRCX, MTB, NE, PEP, STJ, SWK-a gauge for housing, STLD, SYK, TXT, USB, XLNX.
· Thursday, 10/18/12: China GDP. Spain bond auctions. ECB/Euro Summit-the banking union discussions are very important. Europe needs to decide about further aid to Greece. Also about whether or not Greece will stay in the euro. Greece will likely remain in the euro into Merkel’s reelection bid next year. The Spain bailout drama continues but with the elections occurring on Sunday a bailout request is not expected this week. Equity markets will bounce when the bailout is requested. A downgrade of Spain’s debt by Moody’s, however, would send a shock wave thru global markets. Jobless Claims 8:30 AM. Philly Fed and Leading Indicators 10 AM. Natty Gas Inventories 10:30 AM. 30-Year TIPS Auction 1 PM. Fed Balance Sheet and Money Supply 4:30 PM. Earnings: AMD, ATHN, BAX, BBT, BX, BSX, COF, CPHD, CMG, CY, DHR, DO, ETFC, FCS, FITB, GMT, GOOG, KEY, MS-lots of exposure to Europe, MSFT, NCR, NOK, NUE, PENN, PM, PPG-chemicals indicate global health, RVBD, SNDK, LUV, TRV, UNP-railroads are an important gauge for the global economy, VZ.
· Friday, 10/19//12: 25th Anniversary of the 1987 Black Monday Crash. OpEx. Existing Home Sales 10 AM. AAPL versus Samsung lawsuit and trade news. Keystone’s Eclipse Indicator targets the time period of 10/19/12 thru 12/20/12 as potential for a large market selloff especially October into early November, 10/19/12 thru 11/9/12, then the period between Thanksgiving and Christmas, 11/26 thru 12/28. Earnings: APD, BHI, EW, GE, HON, IDXX, IR-important gauge for economic activity, KSU-railroad, MAN-jobs, MCD, PH, SLB.
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· Sunday, 10/21/12: Spain regional elections.
· Monday, 10/22/12: Third and Final Presidential Debate; Obama v. Romney 9 PM EST.
· Tuesday, 10/23/12: Spain bill auction. FOMC meeting begins. 2-Year Note Auction. AAPL iPad Mini announcement. FB earnings and conference call.
· Wednesday, 10/24/12: New Home Sales. 5-Year Note Auction. FOMC Rate Decision 2:15 PM.
· Thursday, 10/25/12: Durable Goods Orders and Jobless Claims 8:30 AM. 7-Year Note Auction. AAPL earnings and conference call 5 PM EST.
· Friday, 10/26/12: Italy bond auction. GDP 8:30 AM. Consumer Sentiment.
· Sunday, 10/28/12: Finnish municipal elections.
· Monday, 10/29/12: Italy bill auctions.
· Tuesday, 10/30/12: Italy bond auctions. Troika review of Cyprus should occur before month-end. Consumer Confidence.
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· Thursday, 11/1/12: Bradley turn date so a turn window opens for a market trend change to occur between 10/25/12 and 11/8/12. This period matches up with Keystone’s Eclipse Indicator.
· Friday, 11/2/12: Monthly Jobs Report 8:30 AM-last report before the election, A 0.1 tick higher in the rate to 7.9% (7.8% is the current number which sparked controversy) will quiet the negative BLS conspiracy talk while remaining under 8% will provide a positive key reelection talking point for President Obama.
· Sunday, 11/4/12: G20 Finance Ministers meet in Mexico.
· Tuesday, 11/6/12: U.S. Presidential election decides on Obama or Romney. Type ‘Presidential’ into the search box above to bring up the Presidential Election Stock Market Effects missive that highlights the effects that either outcome will have on stocks.
· Wednesday, 11/7/12: European Commission provides economic forecasts.
· Thursday, 11/8/12: Spain bond auctions. ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM- if the rate is lowered the euro will weaken and weaken markets, if the ECB stays on hold, the euro will elevate and elevate commodities and equities. New China Premier Xi Jinping is officially selected and named Head of Party, but, where is he? The transition of China leadership begins with China holding the 18th Party Congress.
· Monday, 11/12/12: Ecofin Finance Ministers meet.
· Tuesday, 11/13/12: Italy and Greece bill auctions.
· Wednesday, 11/14/12: Italy bond auctions. Bradley turn date so a turn window opens for a market trend change to occur between 11/7/12 and 11/21/12. This period matches up with Keystone’s Eclipse Indicator.
· Thursday, 11/15/12: European GDP reports.
· Tuesday, 11/20/12: Spain bill auction.
· Wednesday, 11/21/12: Spain bond auction.
· Thursday, 11/22/12: EU Leaders Summit. Thanksgiving Day.
· Friday, 11/23/12: Markets close early at 1 PM.
· Sunday, 11/25/12: Catalonia regional elections.
· Tuesday, 11/27/12: Spain bill auction and Italy bond auction.
· Wednesday, 11/28/12: Italy bill auction.
· Thursday, 11/29/12: Italy bond auction.
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· Tuesday, 12/11/12: FOMC meeting begins.
· Wednesday, 12/12/12: FOMC Rate Decision, Forecasts and Press Conference at 12:30 PM, 2 PM and 2:15 PM, respectively. Expect market pivot points especially at 12:30 PM and after 2 PM.
· Saturday, 12/22/12: Major Bradley turn date so a turn window opens for a significant market trend change to occur between 12/14/12 and 12/28/12. This period matches up with Keystone’s Eclipse Indicator.
· Monday, 12/24/12: Christmas Eve. Markets close early at 1 PM.
· Tuesday, 12/25/12: Christmas Day. Markets are closed.
· Monday, 12/31/12: Last day of trading for 2012.
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· Tuesday, 1/1/13: New Years Day. Markets are closed. ESM is officially up and operating.
· Wednesday, 1/2/13: If Congress does not act, the U.S. drives off 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. Chairman Bernanke stated that the Fed does not have the tools to help should the fiscal cliff occur.
· In February or March: New China Premier Xi Jinping is named Head of Government and takes control.
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