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: The fiscal cliff is 50 days away, 7 weeks. The European news flow directly dictates global market direction. The Troika report and decision on Greece was to occur this week but it will likely be delayed. However, Greece is in need of immediate funding. Spain will likely delay the bailout until December and perhaps a package deal for Spain, Greece and Cyprus will emerge. 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. The SPX is now below the 1403 level where the ECB’s OMT bond-buying program was announced. A flight of deposits out of Greece, Spain and Italy is ongoing which may lead to bank runs. Spain’s bad loan percentage is now over 10.5% and growing. European riots and violence are worrisome with events occurring in Greece, Portugal, Spain and France. The banking union is very important but European leaders do not appear to be making progress. Merkel likely wants Greece to stay in the euro until her election in the Fall 2013. The next ECB Rate Decision and Press Conference is 12/6/12. Europe must cut rates to weaken the euro and help the continent grow out of the debt mess. If the ECB cuts, the euro will drop and so should equities. If the ECB stands pat, the euro and equities markets will be flat to up. Watch for further China easing measures perhaps in December such as lowering rates or triple R’s which will bounce copper, commodities and equity markets, but, do not hold your breath. China appears hesitant to act since they correctly worry about the commodities inflation and asset bubbles that will be created (Chairman Bernanke incorrectly defends QE saying it does not create asset bubbles). President Xi Jinping and Premier Li Keqiang are named as the new China leaders. A weak global economy is driving the oil price lower but Middle East violence holds any downward movement in check. Oil price is weak as rules are relaxed on bringing oil and oil products in faster to help the Hurricane Sandy victims. The SPX moves in the same direction as oil. The retail sector earnings will take the main stage this week as well as the Retail Sales data. Many companies are highlighted below. HD on Tuesday and TGT and WMT on Thursday are very important. The housing sector is in focus to begin the week with the HD earnings as well as BZH and DHI. The ocean shipping industry is also important and provides a gauge on the strength of the global economy. The earnings are about as would be expected this season but the bottom lines are barely beating while the top line revenue numbers are missing. Major companies are canning workers which will help those stock prices short term but the ramifications to the economy over the intermediate and longer term are worrisome. Further, many stock buyback announcements are occurring and this actually forecasts lower stock prices two or three months out. The weak copper, utilities, transportation stocks, shipping sector and tech and semiconductor industries indicate a weak global economy. The weak behavior in the tech (COMPQ) and small cap (RUT) market leaders is signaling extended trouble. Watch AAPL closely moving forward since it has a huge impact on tech and the markets. As AAPL goes, so goes the markets. The VIX continues to climb which will lead to large and wild intraday and daily swings in the equity markets. Congress is on quasi vacation and will meet this month to pick leaders and perform other administrative functions but will likely not get down to business until after Thanksgiving. A token meeting occurs this week to kick off the fiscal cliff talks. Congress and the President are creating market negativity on a continual basis moving forward due to the fiscal cliff drama and worries of potential downgrades of U.S. debt. Keystone’s Eclipse Indicator targets this period from now thru the end of the year as having potential for a large market selloff, especially over the next week and then the period between Thanksgiving and Christmas. A Bradley turn is 11/14/12 so a window is open from now thru Thursday, 11/21/12, for a potential market trend change to occur, especially between Monday and Friday. A new moon and solar eclipse occurs on Tuesday so markets may be weak thru Tuesday. Seasonality-wise, the markets should tend to be buoyant and bullish next week ahead of the holiday. There are only 8 trading days remaining until Thanksgiving.
· Monday, 11/12/12: Ecofin Finance Ministers meet. Troika report and decision on Greece (delayed from August to now) is needed but it will likely be delayed again. Veteran’s Day Observed—thank you to all the veteran’s for your service, especially the ones that gave their lives. U.S. stock market is open but the bond market and banks are closed. Monday’s are typically down days in recent weeks. GS Industrials Conference will comment on China and may affect copper and commodties. Earnings: BZH, CDZI, DHI, GRZ, HAYN, HHC, HRT, JEC, KITD, MRX, NGL, OPXA, OPK, OSG, PEIX, SABA, SJT, SINO, MOBI, SFUN, TNK-shipping, VTUS, WFT.
· Tuesday, 11/13/12: Italy and Greece bill auctions. NFIB Small Biz Optimism Index 7:30 AM. Treasury Budget 2 PM. New moon and solar eclipse. Markets are typically bearish moving into the new moon. During OpEx week, a Tuesday low leads to a Wednesday high so a long play should be considered. Earnings: CSCO-tech, DKS-retail, DVOX, EXM-shipping, HD-retail, KORS-retail, MHR, NKTR, PBT, PLUG, SKS-retail, SDT, SYRG, TJX-retail.
· Wednesday, 11/14/12: Italy bond auctions. EU announces carbon requirements-watch utilities and energy markets. Mortgage Purchase Applications 7 AM. PPI and Retail Sales 8:30 AM. Business Inventories 10 AM. FOMC Minutes 2 PM-expect a market pivot point. Fed’s Williams speaks 8:50 PM. China will officially select the new President Xi Jinping and new Premier Li Keqiang, Xi and Li, as the week-long 18th Party Congress convention wraps up this week, and the ten-year transition of power continues. 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. Earnings: ANF-retail, GSAT, HOTT-retail, INFU, LTD-retail, MANU, NTES, PTN, PETM, SB, SPLS-a gauge for business, TYC-a gauge for engineering activity, VIP, WSM.
· Thursday, 11/15/12: European GDP reports. Empire State Manufacturing Survey, Jobless Claims and CPI 8:30 AM. Fed’s Lacker speaks 9 AM. Philly Fed Survey 10 AM. Natty Gas Inventories 10:30 AM. Oil Inventories 11 AM—delayed one day due to holiday. Fed’s Fisher speaks 2:45 PM. Fed’s Plosser speaks 4:30 PM. Fed Balance Sheet and Money Supply 4:30 PM. Earnings: ARUN, ADSK, BKE, COGO, DELL, DOLE, DLTR-retail, GAME, GME, GPS-retail, HP, INTU, MRVL, NAT-shipping, PLCE-retail, SHLD-retail, SINA, TGT, WMT.
· Friday, 11/16//12: OpEx. TIC data 9 AM—a gauge of foreign investment. Industrial Production 9:15 AM. E-Commerce Retail Sales 10 AM. Fed’s Lockhart speaks 4:20 PM. The Thanksgiving holiday is next Thursday so markets tend to be bullish moving into the holiday. Earnings: FL, HIBB, SJM, NTZ.
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· Monday, 11/19/12: Housing Market Index and Existing Home Sales 10 AM.
· Tuesday, 11/20/12: Spain bill auction. Housing Starts 8:30 AM. Markets tend to be bullish the two days in front of the holiday.
· Wednesday, 11/21/12: Spain bond auction. Jobless Claims 8:30 AM. PMI Manufacturing Index Flash 8:58 AM. Consumer Sentiment 9:55 AM-pivot.
· Thursday, 11/22/12: EU Leaders Summit. Thanksgiving Day. Markets are Closed.
· 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. Durable Goods 8:30 AM. Consumer Confidence 10 AM.
· Wednesday, 11/28/12: Italy bill auction. New Home Sales 10 AM. Beige Book 2 PM.
· Thursday, 11/29/12: Italy bond auction. Jobless Claims and GDP 8:30 AM.
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· Thursday, 12/6/12: BOE Rate Decision 7:00 AM EST. ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM.
· 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.
---------------------------- 2013 ----------------------------------
· Tuesday, 1/1/13: New Years Day. Markets are closed. ESM is officially open for business but ‘will not be fully operational’.
· 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 President Xi Jinping and Premier Li Keqiang take over complete control and the ten-year transition of power is finished. China now sets inflation and budget targets moving forward.
---------------------------- 2014 ----------------------------------
· Wednesday, 1/1/14: ESM is officially ‘fully operational’.
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