On Friday, 3/1/13, China manufacturing data shows activity slowing much more
than expected. Germany manufacturing data improves but the
U.K. worsens signaling a continued and now triple-dip recession. The European
unemployment rate hits 11.9% another higher high. The euro drops
towards 1.30. The S&P futures take a negative tone. Personal Income and Spending data shows
spending up and income down; the largest drop in income in many years but
some of it due to folks taking income in December to avoid the higher taxes
this year. Consumer credit data shows
loans increasing across all categories, house, student and auto. Think
about it. Americans
are buying more and more on credit while their incomes are dropping. Consumer Sentiment is better than expected. ISM data is better than expected. Construction Spending is down suggesting the housing recovery
is not as robust as advertised. F vehicle sales are lower than
expected. The small business and contractors should be buying F pick-ups if the
economy is strong. Toyota misses sales forecasts. The markets ignore bad news and only focus on happy news. After an
opening drop, the broad indexes move higher all day long. This move is counter to the copper, oil and
commodity markets that are all selling off strongly. The euro drops
under 1.30. The dollar moves above 82. All asset relationships are
working as expected except for equities, which should be selling off, but,
instead are rising higher (lower copper,
oil, commodities = lower euro = higher dollar = lower equities). There is a
clear disconnect with the Fed’s easy money the likely reason for the pump in
equities. The SPX is now called the
‘Teflon Market’. Speaker Boehner exits the White House meeting (Congress
has left town so the White House meeting is only for show) and repeats the same
message that the revenue increases occurred during the fiscal cliff, and now it
is time for cuts. President Obama
conducts a press conference stating his same position. The childishness on all
sides continues and the Sequestration is set to hit in a few hours. Markets finish the week flat after
the large roller coaster drop on Monday and then subsequent recovery during the
week. The SPX is 1518. The Dow is 14090
only 75 points away from the all-time high. The RUT
(small caps) finish lower on the week. AAPL is weak printing new lows. After
the close, President
Obama signs and announces the sequestration order. The cuts begin
with a paltry 85 billion slated for this year. Defense industries require
watching. The cuts should shave about 0.7% off GDP during the remainder of the
year. A can-kicking
solution will likely occur in March with all these political deadlines
becoming wrapped up into one big budget
discussion that will occur in late spring and through the summer, when the
politico’s typically negotiate during the year. Warren Buffett releases Berkshire-Hathaway
results (which hit all-time highs this week) saying that Berkshire will likely underperform the S&P 500 moving forward. Buffett chastises other CEO’s saying they
should be more optimistic and stop talking about uncertainty.
On Saturday, 3/2/13, China’s central bank governor Yi Gang said “China is
fully prepared for a currency war.”
------------------------------------------------------------------
On Sunday, 3/3/13, incoming BOJ head Kuroda says he will do “Whatever it
takes to end deflation,” obviously taking a lead from Draghi’s famous words in July 2012 about
‘supporting the euro by all means necessary’ and to do ‘whatever it takes’.
The race to debase continues. China
strengthens the property curbs to further slowdown the real estate bubble.
The 60
Minutes Sunday evening news magazine television show highlights a story on the empty cities in
China. The Shanghai
Index plummets 4% and copper, oil and commodities are weak.
On Monday, 3/4/13,
HSBC Bank misses expectations. Euro leaders meet to discuss a bailout for Cyprus.
The Italy
drama continues with the Italy 10-year yield at 4.82% moving toward
Spain’s 10-year yield at 5.06%; the spread narrowing. The deadline for Italy to announce a coalition is Friday, 3/15/13, only
ten days away, otherwise a new vote will have to take place in May or June.
The euro
falls under 1.30. The S&P futures are drifting lower but the Fed’s Yellen speaks
dovishly, pumping the markets, and the futures recover. Markets are
hooked on the easy money crack cocaine. Yellen’s soothing words helps the
markets start the week on a flat note instead of down and then the broad indexes run higher into the close.
The Dow
Industrials print another high now only fifty points from the all-time high. The Dow
Jones Transports print another high as well further encouraging bulls from
a Dow Theory perspective. The SPX closes
at 1525. WTIC crude oil drops under 90 but recovers. The odd action continues with oil, copper, commodities, steel,
materials and industrials all weak but the broad indexes move higher. Typically,
weak copper and commodities should guarantee a down market. All that matters to
traders is the Fed’s easy money liquidity and the printing presses keep pumping
equities higher.
On Tuesday, 3/5/13,
the National People’s Congress convenes. China President Xi Jinping and Premier Li Keqiang are now
in control and the ten-year
transition of power is finished. China is targeting a 7.5% growth rate for 2013; 2012
grew at an average 7.8% rate. China will push to a domestic-led economy and private consumption, rather than an export-led economy, but
a domestic economy will grow at a slower pace. China announces plans to provide more
affordable housing which boosts the copper and commodities markets. Europe retail sales are up despite all the
turmoil. The markets are in a good mood to start the session and the Dow Industrials are on pace to take out the
October 2007 all-time highs at 14164.53 (closing high) and 14198.10 (intraday
all-time high). The Dow prints new highs directly after the opening bell with
the Dow now at the highest levels ever seen in its over 200 year history. The broad indexes remain elevated into the
closing bell. The Dow Industrials are up 125 points to close at a new
all-time high at 14253.77 and new all-time intraday high at 14286.37. The
celebration for the new all-time high is subdued, however, with very little
fanfare although the cable news commentators are hyping the historic event. SPX
remains about 30 or 40 handles from its all-time high and the Nasdaq is far
away from the dot-com bubble 5K highs.
The SPX closes at 1540 a new high
for 2013. Gold remains weak at 1575.
Chavez (Venezuela) dies and
oil bounces briefly but overall not much of an effect with WTIC crude oil at 91
and Brent 111. The cable business channels run specials in the evening to
celebrate the Dow’s milestone.
On Wednesday, 3/6/13,
Europe
leaders meet in Warsaw. Euro-area
economy continues to contract with a -0.6% GDP. Household consumption drops. Investment
in infrastructure and business is down. This is very troubling data for Europe mired in recession and depression. In
Italy, Bersani says the priority is to free Italy
from the “austerity cage.” The
USA Today newspaper
headline reads: “Dow May Just Be Getting Started!” (Euphoric
headlines have a history of identifying market tops.) All the morning
newspapers hype the Dow milestone. The ADP
Employment Report is far better than expected at 198K jobs now hinting that
the Friday jobs number may be over 200K
jobs. The markets move flat all day but the Dow
prints new all-time highs again at 14296 and the SPX prints a new high for 2013
closing at 1541.
On Thursday, 3/7/13,
The BOJ
meets for Shirakawa’s last meeting;
the money pumping and yen weakening will continue. Jobless Claims improve
providing the brightest outlook in many months. Productivity is dropping, however, which
dampens hopes for the unemployed. Crude
oil moves above 91. The markets move flat all day but the Dow prints new all-time
highs again at 14329 and the SPX prints a new high for 2013 closing at 1544. After
the closing bell, the bank stress test
results are as expected. Ally Bank
(the old GM finance division), was the only bank of the 18 top U.S. banks to
fail the stress tests due to capital requirements. GM is a national embarrassment
and testimony to the end of capitalism. The bank dividend adjustments will be announced next week. The banking
stocks are flat in AH trading with much of the move priced in. C jumps strongly higher on news of a
potential buyback of shares. GS, MS and
JPM lag, however, since the Fed will likely want them to maintain high
capital requirements moving forward. The CPC put/call ratio prints 0.71 signaling a significant market
top now in place.
On Friday, 3/8/13, China export data is twice as good as expected but import
data is twice as worse as expected.
Crude oil imports are at a
5-month low. Japan’s GDP is beginning to grow again.
The Nikkei prints 12284 at a high not
seen in five years, back when the 2008 crash was occurring. The dollar/yen is 95.57 the highest in 3 ½ years. European
markets are firmly higher in front of the U.S. jobs data. There remains no
government in Italy. The 10-year
yield is over 2% and the dollar is higher. The Monthly Jobs Report blows out to the upside with 236K
jobs and the unemployment rate drops from 7.9% to 7.7%. The consensus
was 165K jobs and 7.9% but the professional
traders expected over 200K and that occurred. The move up in the 10-year
yield today to 2.08% verifies the strong jobs number. Hours worked and wages were flat so folks
looking for work may have to continue looking despite the encouraging headline
number. The futures jump higher on the news. At the opening bell the broad indexes move higher with the Dow
printing a new all-time high and the SPX printing a new 2013 high, but
the sellers come in minutes later. The VIX drops under 13 which helps the bulls. The
DAX Index
(Germany) prints 8K for the first time since 2008. As the morning
continues the markets recover and
the SPX plays around at the strong S/R
at 1548. Fitch
downgrades Italy at lunchtime which drops the SPX about five handles.
The euro
plummets over the last couple hours from over 1.31 to now under 1.30 at 1.2988.
Financials are weak today, after the
stress test results last evening, with JPM,
MS and GS selling off over one percent but C maintains gains. The broad indexes move higher into the close
and the Dow prints a new intraday all-time high
at 14413.17 and new closing all-time high at 14397.07. The SPX prints a
new intraday high for 2013 at 1552.48 and new closing high for 2013 at 1551.38,
but remains 25 points under the all-time
high. The NYA closes above 9K. The broad indexes were up about 2% this week
with the RUT (small caps) up 3%. Volume is light. Traders remain complacent
fully expecting markets to move higher due to the Fed pumping.
On Saturday, 3/9/13, China says inflation is at multi-month
highs and consumer spending and factory output data are weaker than consensus.
The data casts doubt on the projected
recovery in China. Middle East turmoil continues as protestors in Egypt attempt to disrupt
shipping on the Suez Canal and an
Afghan bombing threatens the new Secretary of State Hagel. Brent oil price
movement is useful for gauging Middle East tensions.
-----------------------------------------------------------------
On Monday, 3/11/13,
the Sequester
drama continues and CR deadline is 15 days away.
On Tuesday, 3/14/13,
NFIB Small Business Optimism Index.
On Wednesday,
3/13/13, Import and Export Prices. Retail Sales.
Business Inventories. Oil Inventories. 10-Year Note Auction.
On Thursday, 3/14/13,
PPI. Jobless Claims. 30-Year Bond Auction.
On Friday, 3/15/13, Italy has to decide if there is a new coalition
government, or, if a new vote is required in April-May. CPI. Empire
State Mfg Survey. TIC data. Industrial
Production. Consumer Sentiment.
------------------------------------------------------------------
On Tuesday, 3/19/13, Housing Starts.
On Wednesday,
3/20/13, FOMC Meeting Announcement, Forecasts
and Press Conference.
On Thursday, 3/21/13,
Jobless Claims. Existing Home Sales.
Philly Fed.
-----------------------------------------------------------------
On Tuesday, 3/26/13,
Durable Goods. New Home Sales. Consumer Confidence.
On Wednesday,
3/27/13, the Continuing Resolution (CR) is
required to fund the government.
On Thursday, 3/28/13,
GDP.
Jobless Claims. Chicago PMI. EOM. EOQ1.
On Friday, 3/29/13,
Personal Income and Outlays. Consumer Sentiment.
-----------------------------------------------------------------
On Monday, 4/1/13,
ISM Mfg Index. Construction Spending.
On Tuesday, 4/2/13,
Factory Orders.
On Wednesday, 4/3/13,
ADP Employment Report. BOJ meets with new members for two-day meeting;
the money pumping and yen weakening will continue.
On Thursday, 4/4/13, Jobless
Claims.
On Friday, 4/5/13, Monthly Jobs Report. International Trade. Consumer
Credit.
------------------------------------------------------------------
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.
In Q4 2013, European bank stress tests will occur.
On Friday, 1/31/14,
Chairman
Bernanke’s term ends at the Fed, unless there is news during Q4 2013
that he will stay on.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.