On Friday, 2/8/13,
China CPI shows
inflation pulling back and the trade data provides upbeat numbers. Copper and commodities push higher. The
week-long Chinese New Year’s celebration
for the Year of the Snake begins.
The Nikkei
ends a 12-week winning streak, the longest streak in over fifty
years, all due to the weakening yen. Japan’s Aso says the yen weakened more than intended
in the short term but he is likely playing
politics ahead of the G20 meetings. Dollar/yen hovers at 92.50 after
hitting 94. Gold remains flat at 1670. Brent
oil is 117.61 moving higher indicating turmoil in the Middle East. The Syria
situation is out of control and the refugee’s
may collapse neighboring countries, hence, Brent climbs and the WTIC to
Brent spread increases. Thyssenkrupp
steel company announces 2000 job cuts in Europe. Peugot
will likely need a bailout in France showing that automobile sales are
weak. Obviously, growth is weak if steel is not in demand. Draghi
“warns against complacency in the Eurozone crisis.”
A snow
blizzard named Nemo is targeting the
East Coast; airline flights are cancelled ahead of time and preparations
are underway. GNRC jumps in price as folks buy generators. The retailers will lose sales overall as folks
plan to stay indoors for a few days. MCD, a Dow component,
reports weak sales. Trade data is better than expected and hints that the
-0.1% GDP would be revised up to about +0.7%. The futures gain upside into the open as
the bad news is ignored and good news
embraced. The opening bell rings and
the broad indexes leap higher, then move flat the remainder of the day. At 10:00
AM, Keystone’s
SPX 30-minute chart 8 and 34 MA cross indicator shows the 8 piercing up through
the 34 MA to signal bullish markets for the hours and days ahead. Crude oil
drops 2% this week to settle at
95.72 but Brent oil closes at a 9-month
high at 118.90, and pierced through 119 today. The WTIC/Brent spread is a historic wide 23.18, representing a
weakening global economy attempting to bring oil lower, but severe turmoil in
the Middle East that is sending Brent oil higher. Gold closes at 1667 in very lackluster
trading this year. Interestingly, the 10-year
yield is at 1.95% dropping another tick late day showing that money is staying
firmly in notes and bonds, despite the markets buoyancy today. The euro drops
through 1.34 but the equities
markets remain elevated, one of them is wrong. The trading volume is extremely thin as traders sneak out the back door
to beat the snow storm. Bank data shows a surge
in home equity loans, with the dollar amount of loans rising as well, reminiscent of the 2005-2007 housing bubble
top, using the house as a piggy bank, but still well under those very high
levels. Initial indications are that money is going towards home repairs,
although this would be the safe answer to place on the application, but,
perhaps much of the money is actually used on everyday living expenses, to
finance a child through college, or to help support one of the 25 million
underemployed or unemployed people now creating a structural employment problem
in the U.S. The SPX prints a new intraday high for 2013 at 1518.31 and a
new closing high at 1517.93. The Nasdaq prints a new twelve-year high,
going back to late 2000. For the week,
the SPX finishes up 0.3% (up six weeks in a row—a down week has not
occurred yet this year), the Dow
Industrials are down a smidge on the week to 13993, the Nasdaq is up 0.5% to 3194 continuing on a
six-week winning streak, and the RUT
is up 0.3% to 914 also on a six-week winning streak. The blue chips lagged this week. Tech and small caps were leading much
more strongly to the upside, which is a bullish indication, in early January,
but are now moving more coincidentally
with the broader markets. After the close, noted cycle follower Peter
Eliades says today, 2/8/13, marks a significant market top, like October
2007. When asked what he would name the
current market rally, Peter comically replied, “the bitter end.” In the evening, under the cover of darkness, GOOG’s chairman
Schmidt plans to sell over $2.5 billion stock (3.2 million shares), one of the
many insiders throwing their stock overboard during the last two months.
Watch Google on Monday.
On Saturday, 2/9/13, snowstorm
Nemo hits the East Coast. New York and New England declare states of
emergency. About 500,000 folks have lost power as two to three feet of snow fell
in Connecticut, Boston, and the eastern seaboard. The new moon and Lunar New Year occurs.
-----------------------------------------------------------------------
On Monday, 2/11/13,
Asian
markets are closed as the Year of the Snake celebrations continue. The India markets continue to fall, the IFN losing 6% over
the last few days. France production data is weak. Pope Benedict
resigns his position due to health reasons. Italy
elections draw near and tension is building in markets as Berlusconi’s
popularity increases. The euro drops under 1.34. Snow storms are now
hitting the northern Midwest U.S. The northeast U.S. is buried in snow and
begins a long dig out. WTIC oil drops to
95 and Brent oil drops under 118. Gasoline
prices jump 25 cents in two weeks which will hurt retail sales. Gold
weakness continues now at 1650. The broad indexes close flat on the day.
Interestingly, the SPX is down five Monday’s in a row. MAS earnings beat which encourages the housing recovery.
On Tuesday, 2/12/13, India industrial output falls. North Korea
conducts an underground nuke test. The Kospi (S. Korea) sells off. The G7 seeks to defuse the currency war
tensions but the Japanese yen further weakens. U.K.’s bank Barclays
announces 3.7K layoffs coming. The restructuring is greeted with optimism and
the European banks in general float
higher. The euro moves above 1.34.
Oil is rising again. Higher gasoline prices
create worry among consumers. Copper recovers from yesterday’s weakness. Markets
are flat as trading begins. Draghi says the
‘currency war rhetoric is way overdone’.
The euro moves higher
to 1.3456. Markets move higher all day long and continue to print higher
highs. In the evening, President Obama provides the
State of the Union address and Marco
Rubio provides the response. The
administration-friendly press laughs at and ridicules Rubio for taking a sip of
water during his talk and ignores the substance of his intelligent speech.
Markets show a lackluster response to the president’s speech.
On Wednesday,
2/13/13, Ash
Wednesday. BNP Paribas (bank) reports weak earnings but the stock
jumps on promises of a higher dividend. Rio
Tinto (commodities) reports the first full year loss in the company’s history. Levy
of Publicis (an ad agency) says that
Europe itself is now the “sick man of Europe.” SocGen
(France’s #2 bank) reports losses twice as large as estimated. Eurozone industrial production falls. Peugot (auto’s) reports big losses and weak
sales. ING (insurance) is cutting 2.4K jobs due to lower profits. Lloyd Blankfein of GS says the “markets are
beginning a long bull market.” Retail Sales are in
line with estimates. DE
earnings beat but the results are not met with optimism. Three key China bellwethers, YUM, CAT and
DE, all show a less than enthusiastic picture despite all the rosy predictions
in the media. The SPX prints a new
intraday high for 2013 at 1524.69 but markets trail lower as
the day moves along. After the bell, CSCO
earnings beat and CEO Chambers says the economy remains in a slow growth phase
with Europe hurting, specifically southern Europe. CSCO will expand in other
countries as long as the U.S. tax rules remain unfavorable.
On Thursday, 2/14/13,
Valentine’s Day. The G20
Conference and three-days of meetings begin in Russia. The 10-year Treasury yield hits 2.06%. European GDP
numbers are worse than expected. Europe is in far worse shape than anyone
thought. Italy is particularly disturbing since the weak economic numbers occur
as the election approaches. The euro drops through 1.34. The utilities sector weakness creates broad market
weakness today but as the day moves along the markets recover and close
flat on the day. The CPC put/call drops
to 0.83 continuing to show that traders are complacent without any fear or
worry. This is odd behavior considering the sequestration is now only 13 days
away. Traders know the Fed is printing money so there is no reason to study company
fundamentals and also no reason to worry, simply buy stocks, which creates a very
sick economic environment.
On Friday, 2/15/13,
a meteor, the size of a bus, lands in
Russia injuring over 1000 people. Another meteor the size of a twelve-story
building thankfully sails by Earth without incident. The planet remains in a
period of increased meteor and solar activity for 2013. CCL’s floating toilet docks and passengers that were stranded at
sea for day’s dash for the showers. CCL
is down over 5% in the last three days. Weidmann,
Germany’s central banker (Bundesbank), and also ECB council member, says the “ECB will not cut rates.” Remember,
however, that Germany’s perspective will
always be towards a strong euro currency not a weak one. The euro
jumps higher towards 1.34. A short
time later Draghi
says the ECB will remain accommodative providing a counter balance to Weidmann’s
words, so the euro tumbles lower. The comments only serve to create mixed
messages and confusion. Currency wars
are becoming a larger worry as the G20 leaders meeting in Moscow struggle to
develop a communiqué. The nations that are devaluing their currency
are experiencing huge stock market jumps such as the U.S., Japan and Brazil at
the expense of other nations. Of
great interest are the disinflationary and deflationary winds blowing in
Australia with their dollar falling as commodities languish. Soros,
Julian Robertson and other big shots cut their gold positions as gold struggles
at 1620. JPM announces 2K job cuts adding to the tens of thousands of job losses
in financial and insurance industries globally over the last couple months.
Empire State Mfg Survey is better than
expected so futures return to the flat line.
Copper weakens. The markets open flat.
Consumer
Sentiment is better than expected but
markets sell off. At 10:30 AM, gold falls under 1600. Markets appear tired and leak lower all day long. At 2:00 PM, a WMT executive memo
is leaked to the news outlets that says “February retail sales are a disaster.”
WMT falls 3%. Other retailers such as TGT are thrown overboard. The RTH tumbles lower and the broad indexes
weaken. The markets settle and move higher into the close on the
pre-holiday lift. The SPX finishes at
1520, up a tiny two points for the week but that is enough to log seven winning weeks in a row without any down weeks in
2013. The Dow Industrials are
down a smidge on the week. Ditto the Nasdaq which ends its six-week winning
streak. The RUT
is the winner on the week up one percent continuing a seven-week winning streak
like the SPX. Small caps leading
the broad market is encouraging for bulls, however, much of the push is money-pumping
short squeezes in the speculative stocks, created to a large part by the Fed’s
easy money intervention. After the close, the SEC announces an investigation into unusual trading around Buffett’s HNZ
trade this week. Three traders cleaned up on the announcement since they
purchased HNZ calls ahead of time—they are either extremely lucky, or psychic,
or insider trading with information available to no one else. FB is hacked with a sophisticated cyber
attack but say that information was not compromised.
--------------------------------------------------------------------
On Sunday, 2/17/13, Cyprus elections.
On Monday, 2/18/13, U.S. Markets are Closed in Observance of President’s Day.
On Tuesday, 2/19/13, U.S. Markets Open for Trading. Housing Market
Index—housing is a key focus this week
and the economy needs to see stellar data. DELL, HLF.
On Wednesday,
2/20/13, Housing Starts. PPI. FOMC Minutes.
FLR, LL, OC, TOL.
On Thursday, 2/21/13,
CPI. Existing Home Sales. Philly Fed.
Leading Indicators. Fed talk form noon time
into the evening. CHK, FLS, HPQ,
JWN, MHK, NEM, WMT.
On Friday, 2/22/13,
Fed’s Powell speaks.
-------------------------------------------------------------------
On Sunday, 2/24/13, Italy’s two-day national election begins. Congress
returns from vacation to address the Sequester five days away.
On Monday, 2/25/13,
Chicago Fed and Dallas Fed Mfg data. The results of the Italy election are expected.
Full moon.
On Tuesday, 2/26/13,
New Home Sales. Consumer
Confidence. Chairman Bernanke speaks. 5-Year Note Auction.
On Wednesday,
2/27/13, Durable Goods. Chairman Bernanke speaks. 7-Year Note Auction.
On Thursday, 2/28/13,
GDP. Chicago PMI. EOM.
On Friday, 3/1/13, PMI.
Personal Income and Outlays. Consumer Sentiment. ISM. Construction
Spending. The Sequestration hits with one
trillion in automatic spending cuts for government. An 85 billion hit occurs immediately which should cut 0.7% off the GDP.
An estimated 400K to 750K job losses
should result moving forward.
------------------------------------------------------------------
Moving into March,
the National People’s Congress convenes. 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. China will push to a
domestic-led economy, private consumption, rather than an export-led economy, but a domestic economy will grow
at a slower pace. The GDP projections
are of particular interest, 2012 grew at
an average 7.8% rate.
On Wednesday,
3/27/13, the Continuing Resolution (CR) is required to fund the government.
In March and April,
the BOJ head’s will be replaced so stronger QE will
continue. Perhaps a pull-back and low in the Nikkei in February and
March may provide an attractive entry for a long trade once the money-printing
begins (weaker yen) in earnest.
On Sunday, 5/19/13,
the 16.4
trillion Debt Ceiling hits.
In September, Merkel (Germany) seeks re-election and will not want to see Greece exit the euro before
the election but will not care afterwards. Perhaps Greece and Germany will both
exit the euro in the future.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.