Registered: Feb 2012
08-22-12 01:52 AM
DAG 14.77 2.78%
FXE 123.90 0.95%
FXY 123.97 0.22%
GLD 158.83 1.00%
SPY 141.76 -0.30%
TLH 134.74 0.12%
TLT 122.39 0.44%
USO 35.98 0.42%
UUP 22.50 -0.66%
VXX 11.50 2.68%
8/2 ADP number was start of big leg down in bonds.
Tuesday has see little in the way of macroeconomic data, and much focus so far has remained
on speculation over whether the ECB will buy periphery debt. Comments from the German ECB
representative Jorge Asmussen overnight that he backs the ECB buying periphery debt as a
means to prevent the "disintegration of the Euro", a seeming change in stance given that
the Bundesbank continues to opposed such measures, lifted risk assets in early trade. As such,
the Spanish and Italian spreads over the benchmark Bund are seen tighter by 12.9bps and 14.4bps
on the day. Spain's 12- and 18-month T-bill was also well received, the country selling
slightly more than the indicative range at EUR 4.512bln, with lower yields, though only
the 18-month had a stronger bid/cover. Both the Spanish and the Italian 2-year yields
have declined to lows last seen in May of this year. Similarly, two separate comments
from German Christian Democratic Union (CDU) lawmakers concerning Greece and the possibility
of making "small concessions" for the country so long as they lie within the existing
programme also boosted risk appetite, as the probability of a Greek exit looks much less
likely if it has the full support of Germany.
FXE price above ma5 above ma20. EUR +100 today on hope of ECB bond buying
UUP down hard today. Risk on for Euro and commodities. US indices relatively weak.
Europe markets rally continues and Spanish spread smaller. close < ma5 < ma20
TLH bond and dollar price high +correlation not happenning today as 10 year TLH has
lost down momentum last 3 days. 8/2 ADP number was start of big leg down in bonds.
Concensus is no QE. FED out today probably delivering next weeks JH message.
No inflation, no deflation but .....dis inflation. Better data for the last month.
Have already read good source expecting 175k jobs again and along with less stressed
Europe = bond bad. Fed gotta like rotation into risk assets but cant like higher
yeild beyond "some point". No QE, no inflation in last CPI , latest FED comments
seem relatively bullish for bonds. Follow the PA . No opinion of direction here.
I have oversold then buy signals in bonds for short term counter-trend trade.
Express small posiiton here with long TMF or similar. However not strong reversal PA.
Plenty of time to enter. Could actually wait and see here. Stoch5 and ma5 xover but < ma20
GLD Break-out announced/observed by entire world. Congestion at 160. Cause = Euro/dollar action mostly?
Dollar now running into some good support. Move in dollar maybe done.
This seems like inflection point with SPY at 142. Bonds signaling reversal. Dollar near support.
(For my record) Expect this grind up will probably continue. AAPL never breaks out after 6 months and stops.
Without shock or surprise entering the market I cant see SPY pulling back to 139.
SPY+TLH is a smoother ride in 2012 than either alone.
TLH-SPY = MR trade.
SPY-TLH = continued divergence along established trends.
AAPL-SPY in some weight to express AAPL out-perform. Late?
PA today in SPY not significant but differnt as it trended down into close and Europe market
close didnt help.
Vertical bull spreads = a little more staying power and small goals in this grind up.
Important port-mortem for future reference that on 8/2 ,8/3 I recognized bonds trading different relative to others. Did not take signals and have not made money in big bond move. The ADP number was catalyst.
Recognize value quickly and execute. Invest 1st, investigate later.
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Registered: Feb 2012
08-27-12 03:03 AM
Missed a few days busy.
Fed minutes from Jul31 meeting dovish released at 2PM. Price action was very bullish.
Mark this as another central bank TalkDay in a series that move markets like it or not.
China data is weak overnight. Exports down.
Thursday 8/24 opened slightly lower and equities spent the remainder of the session in negative territory.
July home sales were reported at an annualized rate of 372,000. Meanwhile, initial unemployment
claims data before the open came in a little worse than expected, as the reading increased
to 372,000 from the 368,000 observed in the prior week. United States Steel (X 20.81, -0.38)
slid 7.0% after Dahlman Rose downgraded the steel sector. Iron ore is at lows. VALE, BHP, RIO, CLF
Friday 8/25 After beginning the session in the red, stocks rallied after rumors suggested the European Central Bank
is considering setting a yield band target as part of the new bond buying program. The news broke
15 minutes before the European close and caused a 50 pip spike in the euro as well as a rise to
session highs by the major indices. The euro ended up giving up those gains, while U.S. stocks
managed to build on the strength. At the end of the day, the S&P 500 closed higher by 0.7% on
below average volume.
Aug 22 07:00 MBA Mortgage Index 08/18 -7.4% -4.5%
Aug 22 10:00 Existing Home Sales Jul 4.47M 4.37M
Aug 22 10:30 Crude Inventories 08/18 -5.412M -3.699M
Aug 22 14:00 FOMC Minutes 7/31
Aug 23 08:30 Initial Claims 08/18 372K 368K
Aug 23 08:30 Continuing Claims 08/11 3317K 3313K
Aug 23 10:00 New Home Sales Jul 372K 359K
Aug 23 10:00 FHFA Housing Price Index 0.7% 0.6%
Aug 24 08:30 Durable Orders Jul 4.2% 1.6%
Aug 24 08:30 Durable Orders -ex Transportation Jul -0.4% -2.2%
Bond PA story seems to me to be NFP and QE hopes along with decreased europe risk perception (FXE strong
as are 4 markets) caused recent selloff.
Wednesday bonds went up at 2PM with other riskons( spy,gld,euro) as Fed seems to be acknowleging
poor outlook and stagnent growth/employment and increased need for QE. Bonds rising last 3 days would
match that outlook offsetting downside pressure from more likely QE along with increased inflation expectations.
Satety/risk off + oversold beats QE inflatoionary expectations.
QE hopes here and Europe are supporting markets. Quite a turn around from last FOMC minutes where only
1 member wanted QE and now it seems many more members and much more likely. No inflation last CPI and estimated expectations
at 2% slightly lower than actual.
Gold, platinim, silver ripping. QE hopes and South Africa mining.
SPY is pulling back a bit here. No reason to not expect continuation in this PA. I dont think fed message will disapoint market so I think new highs
more probable than SPY 136-139.
Euro trending up . Words and hopes of bond purchases bailaout
Yen spiked up big on minutes as dollar fell hard with QE more likely because they said so.
AUD down channel 12 days with China/exports/demand issues. Look/learn Yen bond correlations/drivers.
Fed Jackson Hole yearly meeing this week. PA since fed minutes Wednesday weak (actually a day before )Hourly chart SPY
a 10 day trendline broken and rally Friday into it but not above.
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Registered: Feb 2012
08-31-12 02:23 AM
Graph of asymmetry of inflation vs. deflation on growth.
* Second quarter GDP was revised higher in the second estimate, UP to 1.7% from 1.5%. The Briefing.com consensus expected GDP to show 1.6% growth.
* More importantly, real final sales -- which exclude inventories -- were revised up from a 1.2% gain to show 2.0% growth. That revision depicts a much healthier economy and is more in-line with trends going back to Q2 2011.
Trade deficit actually declined to $42.9 bln in June. That move resulted in net exports contributing 0.3 percentage points to second quarter GDP as opposed to subtracting 0.3 percentage points in the preliminary release.
* Personal consumption (1.7% vs. 1.5%),
* Inventory changes were revised down from $66.3 bln in the preliminary estimate to $49.9 bln in the second estimate. That revision subtracted 0.2 percentage points from second quarter GDP growth. Inventories had added 0.3 percentage points to growth in the preliminary estimate.
* Economic growth slowed in every sector except for exports and government spending.
* Income rose 0.3% in July, the same rate as June and matched the Briefing.com consensus estimate.
* Personal spending increased 0.4%, up from no growth in June but slightly lower than the 0.5% gain expected by the consensus.
* As expected, the personal savings rate ticked down in July as spending growth exceeded income gains for the first time since April.
* Income growth was slightly stronger than the 0.1% gain in aggregate wages foreshadowed in the July employment report.
* Sales of goods rose 0.7% in July after declining 0.3% in June. The pickup was in-line with the retail sales data. Services spending increased 0.3%.
* Both headline and core inflation growth were flat in July.
* With the employment sector scuffling and uncertainty becoming more prevalent, consumption growth will remain weak.
Beige Book has been summarized as "modest improvements in the economy"
ES hourly chart , 1395 level is pre- FOMC minutes and market bounced off this at noon. We have put in 2 or 3 LH's and a
break of 1395 puts in a 3rd LL and takes out a little support a couple weeks ago.
From Zerohedge: on Germany's cheif central banker Weidmann.
Perhaps the most notable part of the interview is Weidmann's comparison between the ECB and the Fed, and why one is allowed to monetize bonds, while the other shouldn't be: "The Fed is not bailing out a cash-strapped country. It's also not distributing risks among the taxpayers of individual countries. It's purchasing bonds issued by a central government with an excellent credit rating. It doesn't touch Californian bonds or bonds from other US states. That's completely different from what we have in Europe....When the central banks of the euro zone purchase the sovereign bonds of individual countries, these bonds end up on the Eurosystem's balance sheet. Ultimately the taxpayers of all other countries have to take responsibility for this. In democracies, it's the parliaments that should decide on such a far-reaching collectivization of risks, and not the central banks." Of course, when the wealth of the status quo is at risk, such trivialities as democracies are promptly brushed by the sideline...
Don't underestimate how close the Court verdict is" is the warning that Morgan Stanley's European Research group sends out in a note today. In their view, there is a non-negligible risk that the German Constitutional Court will voice concerns about the ESM and, potentially, also the fiscal compact on September 12. Given that the EFSF is still in operation, given that the Court views the scope of the German constitution as being exploited already, and given its record of voicing concerns about European integration, MS sees a 40% chance that the Court bans Germany from ratifying the ESM treaty (with major repercussions for financial markets), at least for now, and while their base case is for ratification of both treaties, they believe the market is not priced appropriately for the downside tail-risk of a possible 'no' verdict (and the asymmetric scenarios below).
Europe continues to spew weaker data and this morning was no exception. Confidence amongst the eurozone consumers (-24.6 vs. -21.5) and businesses (86.1 vs. 87.9) fell to its lowest in almost three years last month, well below the Street's expectations and suggests that the economy has further to fall. The euro fiscal crisis continues to shatter periphery confidence where individuals and businesses are mostly affected by high unemployment and tough austerity measures.
Adding to the downbeat mood was data that showed the number of German unemployment claims rose for a fifth consecutive month in August. The number of claims rose by +9k, mostly as a result of the economic slowdown of Europes official crutch. The total number of unemployed rose to +2.905m from an unrevised +2.876m print in July.
10Y Spanish government bond spreads jumped 19bps today, the largest gain in almost a month, and are trading back above 525bps over Bunds (the worst in over three weeks). Even the front-end of the Spanish and Italian bond curves lost ground today - as the game of chicken between Rajoy and Draghi continues - with the ridiculous brinksmanship highlighting the entirely dysfunctional dis-union that really exists behind the scenes. European equity markets drifted lower all day, slammed lower after the US opened (with Germany's DAX underperforming - thanks to weak Autos - no surprise there for us), but bounced a little into the European close. EURUSD slumped 70 pips from its post-US-open intraday highs today - ending at 1.2500. Europe's VIX jumped back above 28% (from 21% just 10 days ago) - its highest in a month. Credit widened on the day, financials underperformed, and notably credit did not jump into the close like stocks did.
CitiFX is out with a note today that extends our concern as their proprietary CitiFX Positioning Indicator shows a rise from a record short in EUR in mid-July to a record long by last week. The EUR buying has been broad based and not just concentrated against the USD, with investors covering short exposure on pairs such as EURAUD and EURCAD. The shift in positioning came as peripheral spreads tightened and US yields fell, implying that it was kick-started by the surge in expectations for Fed and ECB easing. With equity markets roughly steady in recent days and data flow still relatively weak, this leaves the impression that the continued shift in FX positioning has been more about momentum than improvement in sentiment. This suggests that FX markets may be pricing in a higher degree of confidence on easing (or signs thereof) at the Jackson Hole conference and later ECB meeting. Given that absolute positioning for EUR is now long, this sets a high bar for policymakers to exceed and suggests risks are skewed in favor of a reversal on disappointment with Chairman Bernanke and President Draghi.
new and important bullish indicator for the gold market is that gold calls are at highs not seen since the October 2008 low as option traders go long gold in the belief that it will go higher. It suggests that option traders believe that U.S. Federal Reserve Chairman Ben Bernanke will hint at or announce additional money printing and monetary easing at the Jackson Hole, Wyoming, symposium. Alternatively, it suggests that they are bullish on gold due to the risks posed to the dollar and the risk of inflation taking off. The ratio of outstanding calls to buy the SPDR Gold Trust versus puts to sell jumped to 2.69 to 1 on August 24th and reached 2.76 earlier this month, the highest level since October 2008, according to data compiled by Bloomberg. Ownership of calls is up 26% since the July 20th options expiry. Ten of the most owned actively owned ETF option contracts are bullish. Option traders are regarded as savvier and tend to be more sophisticated then the more speculative futures traders.
UUP in a 5 week swing down consolidating last 4 days. Setup for bounce on no QE and any positive fed words. Hit hard on dovish FOMC minutes that Wednesday. Well below ma20 but xover on ma5
SPY is pulling back, 8 trading days from last HH.
GLD and EURO bull flags.
TLT treasuries seem to be trading with low inflation expectations ( matching JUL 0.0% CPI), low rates forever pledge, some fear of risk in Europe, and no US QE.
Today, I dont think QE happens tommorrow. Data on economy nfp/gdp/spending/income/retail sales/inflation/housing are recently not signalling recession/deflation.
FED minutes seemed gloomy to me as unemployment and lack of fiscal solutions/risks here and in Europe have members worried.
Wait and see what happens tommorrow. I am still bullish. Where/when is the frying pan in the face? Probably not tommorrow.
Expect GLD and VXX to sell off most with no QE. Treasuries and dollar to benefit. Euro main driver seems Europe. SPY to pullback till more fed talk and ADP/NFP next week.
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Registered: Feb 2012
09-03-12 08:01 AM
Historical income/debt/gdp research paper. Bleak.
Table of returns for stocks and corperate bonds
VXX 11.51 -3.44%
UUP 22.30 -0.62%
FXA 103.54 0.31%
FXY 125.41 0.44%
SPY 141.16 0.48%
FXE 124.98 0.54%
TLT 127.72 1.41%
USO 35.89 1.79%
GLD 164.22 2.31%
SPY over the last 10 days has put in 2 LL's and 1 LH and is working on next attempt to make a new HH.(closing prices daily bars)
GLD continuation of move that surged on FOMC minutes release on WED Aug xx. Upcoming NFP important.
PA is king. Cant guess/game these moves on opinion as GLD reaction to speech surprising.(No QE yet but its likely is good enough for gold).
FED says QE effective and has manageable risks.
Employment is primary concern. Concensus is that it will occur shortly( Sep 13 meeting). Gold is the purest QE play.
Europe may do QE also. Effects on employment and economy being debated. Much of QE3 discounted with another big Talk Day here. I will look for a long
entry in SPY and GLD. Im a believer in positive market PA to this QE stuff. Dont know how much is discounted.
Bad is good regarding the NFP. CPI is low and Bernanke probably wants this higher anyway.
TLT treasuries in a 12 day rally. Most gains came in the two CB talk days.(Minutes release and JHole.) Yeilds are surprisingly falling as most belive QE very likely.
Stock and bond PA has changed since minutes released. Tone of feds outlook is worse especially regarding employment.
Strong risk-off in bonds. Weak risk-off in SPY. One day not enough to digest JH. SPY must atleast break out of 12 day channel.
Bond prices fell hard in both QE1 and QE2. Europe risk also a renewed factor as vacation over and important dates sep12 coming.
UUP dollar weak as expected and other commodities up also.
FXA Lot of ET comment on short AUD with China weakness and this is working.
FXE out of touch with this and have not participated in recent trend since JUN1. WHY? the PA required is there.
4 major European markets strong with debtors strongest.
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Registered: Feb 2012
09-06-12 10:55 PM
Important day for reference/look back with ECB speech.
ADP jobs number is big upside surprise. NFP on Friday may/may not match.
Sep 04 10:00 ISM Index Aug 49.6 49.0 50.0 49.8
Sep 04 10:00 Construction Spending Jul -0.9% 0.5% 0.5% 0.4%
Sep 04 14:00 Auto Sales Aug 5.3M NA NA 5.0M
Sep 04 14:00 Truck Sales Aug 6.3M NA NA 6.0M
Sep 05 07:00 MBA Mortgage Index 09/01 -2.5% NA NA -4.3%
Sep 05 08:30 Productivity-Rev. Q2 2.2% 1.8% 1.8% 1.6%
Sep 05 08:30 Unit Labor Costs - Rev Q2 1.5% 1.4% 1.4% 1.7%
Sep 06 07:30 Challenger Job Cuts Aug -36.9% NA NA -44.5%
Sep 06 08:15 ADP Employment Change Aug 201K 150K 143K 173K 163K
Sep 06 08:30 Initial Claims 09/01 365K 375K 373K 377K 374K
Sep 06 08:30 Continuing Claims 08/25 3322K 3300K 3300K 3328K 3316K
Sep 06 10:00 ISM Services Aug 53.7 51.0 52.4 52.6
Sep 06 11:00 Crude Inventories 09/01 -7.426M NA NA 3.778M
Read more: http://www.breifing.com/investor/ca...7#ixzz25ivNlbaL
The Drahgi speech full text follows:
SPY 43.77 2.03%
FXA 102.85 0.91%
GLD 164.90 0.36%
FXE 125.60 0.35%
FXY 124.40 -0.67%
USO 35.23 -0.96%
TLT 124.61 -1.67%
SPY upside break of channel to new highs. All work down by CB bond purchase program. SPY PA was better than other riskon assets. SPY uptrend continues ma5 above ma20 etc...
FXA in 15 day swing low below ma(20). Risk-on day, bounce, sell into strength to trade with trend and China/Iron ore, commodity demand weakness. Dont consider counter trend trade.
GLD Setup right here for a pullback/swing low. Good jobs data . Risk off for right now Europe. QE3 backburner for a while. New trend still up for now, inflationary, but probably but conterrend trade for a few days. Monitor.
FXE Nice uptrend/ swing high on daily/hourly bars. Stiff resistance at 127. Last couple weeks anticipating Drahgi/ECB news discounted. Next trade setup is sell.
TLT Did not take setup over last few days to sell. Tough to take before such "an event as Drahgi" but signal was there.
********* Way too much to follow , keep up with the story on OIL and YEN but have simple methods in place that test well to just trade them.
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Registered: Feb 2012
09-10-12 06:13 AM
96000 jobs added ADP 201k yesterday 3 out of 4 wrong...ignore in future.
In August, two months ahead of the presidential election ahead of which this number will be one of the most critical and talked about, the US generated just 96,000 non-farm payroll jobs, on expectations of 130K additions, and compared to the July number of 163,000, now revised to 143,000K. Private payrolls rose by a modest 103,000, much lower than the expected number of 142K, and down from July's revised 162K. -15,000 manufacturing jobs were lost, compared to the expected +10K, and sadly just a little bit short of Obama's recent promise to add 1 million manufacturing jobs by 2016. Finally, while the unemployment rate came lower (surprise, surprise: this is what appears in newspapers) at 8.1%, far lower than expectations of 8.3%, and below last month's 8.3%, the broad total underemployment rate (U-6) continues to be sticky at 14.7%. Birth Death added 87,000, up from July's 52,000. The reason for the drop in the unemployment rate: labor force participation dropped to 63.5%, down from 63.7%. Oddly enough, this report leaves the NEW QE door open, even as Obama can take the accolade for a declining unemployment rate. Win-win for everyone.
Lot of data with Fomc decision Thursday
Germany Wednesday 12th with court ruling on bond buying.
SMP2.0 , the ECB going to buy 1-3 year Spain bonds. Stopped SMP1. Couldnt sterilize.
"9 bil euros sloshing around" they said" . Find out why banks wouldnt park cash at ECB longer than overnight.
Trade balance, PPI, retail sales, Initial claims, CPI on tap for coming week.
GLD 168.44 2.15%
USO 35.88 1.85%
FXE 127.29 1.35%
FXA 103.99 1.11%
FXY 125.46 0.85%
SPY 144.33 0.39%
TLH 136.25 -0.12%
TLT 124.03 -0.47%
UUP 22.01 -1.08%
Overwhelming response to ECB , bad NFP hence qe3, China easing speculation etc...
Europe markets EWP,I,G,Q up big last two days.
Copper , FXI , KOL, CLF ! ,VALE,RIO,BHP....X,AKS up big as steel dumped on market.
FAS up big.
GOLD and EURO short term RS very high , AUD large 2 day reversal, covering
Volatility new lows.
Strong momentum everywhere but in treasuries and oil. Maybe more realistically factoring the economy for now.
Do they throw in the towel in favor of inflation trade. Maybe opportunity here. Lagging in the inflation trade.
(At least last week for oil).
There are two key events in the coming week: first, on September 12, is the decision of the German Constitutional Court, aka the Krimson Kardinals of Karlsruhe, whether the ESM, or the ECB's primary market bond monetization program, is legal. A no vote would severely cripple the European "make it up as you go along" bailout and leave Europe's peripheral nations with little recourse, and Spain with even less cash as it faces a wall of bond maturities in both October and 2013. Then, on Thursday, the Federal Reserve will most likely underwhelm the market which is expecting a new substantial round of outright Asset Purchases, aka NEW QE, which however as we explained will almost certainly not occur due to various reason first described here last Friday. A third, and perhaps far more important event, will be the Dutch parliamentary election also on September 12, but more on that in a further post. For now, looking at Germany, and the piecemeal attempt to put back together the European house of monetary cards, we find that in Germany - the country taksed with funding the European implosion - the population has decided, by a 2 to 1 margin - that the constitutional court should just say "nein" to the ESM, and let Europe go on its merry way without German backing (because as a reminder, the primary source of ESM funding is Germany). From Spiegel: "A survey shows that the majority of Germans hope that the judges in Karlsruhe reject the permanent rescue fund ESM. 54% want a reversal of the Bundestag decisions on the ESM and Fiscal Pact, which should be legally halted. Only 25% believe that the court should dismiss the urgent appeals of the Euro-skeptics."
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