Hedge Fund LIVE - An Interactive Trading Community

Tag Archives: Euro

Another Day of No Economic Data Releases and Light Volumes

Morning Notes
- Seeing pre market strength again today
- Strength comes amid lack of response by N.Korea to S.Korea’s military test yday
- Comments out of China: Chinese Vice Premier showed support of measures taken by EU and IMF and suggested China has taen steps to help EU with sov debt issues
- BOJ left rates unch’d, as expected; also kept its asset purchase plans unch’d
- In Europe, Moody’s warned that it may downgrade Portugal, which pulled back European stocks (which had initially pushed higher following Chinese Vice Premier’s positive comments)
- Seeing some choppy action in the pre around the euro, commodities
- S&P futures are up 5 handles from FV- no pivot signal generated, but respecting R3 and R4 in the pre
- Expecting to see continued light volumes, especially in light of no economic items on the calendar for today

Kim Jong Il: The Asian Napoleon and the World Equity Indices

Last month North Korea incited tensions in East Asia when they shelled a South Korean military base killing four people.  North Korea claimed they were conducting military drills and claimed the firings were not directed toward South Korea.  Either way this is caused South Korea to take action and the two enemies are at it once again.

Japan is now starting to feel a sense of crisis from North Korea and will step up their cooperation with the United States and South Korea.  As Japan gets involved we may start to see more uncertainty in the Nikkei, which could bleed down through the world equity markets.

Last week we got some clarity out of the ECB.  Although Trichet was vague with his words his actions were not.   While he was saying nothing of real substance the ECB was buying paper across the board in support of Europe’s economic troubles.  As we see clarity in Europe and the SPX decouples from the Euro the next catalyst that will drive our market could be this crazy napoleonesk mother f*cker in North Korea.

If shorty decides to take more aggressive action the Nikkei and Eastern markets will most likely take a hit.  With the SPX Euro correlation declining, look for the Eastern markets to drive our markets for the next few weeks.

Nonfarm Payrolls Sucked

Morning Notes
- Overseas markets were mixed
- Comments out of China suggesting a switch from its looser monetary policy to a “prudent” one next year
- Mixed comments around Greece where S&P warned about a possible downgrade whereas an ECB official said he sees solid improvements in the country
- ECB President Trichet said he does not see a euro crisis coming, basically supporting the currency
- Dollar showing weakness this morning; euro up
- Futures quiet ahead of Nonfarm Payrolls @ 8:30a ET
- Other economic items on the calendar for today: Factory Orders @ 8:30a; ISM @ 10a
- Nonfarm Private Payrolls: 50K vs. 140K; October revised up to 160K from 159K
- Nonfarm Payrolls: 39K vs. 130K; October revised to 172K from 151K
- Unemployment Rate: 9.8% vs. 9.6%; prior was 9.6%
- S&P futures sold off harshly upon data release
- Dollar and treasuries sold off as well
- S&P futures are now down 6.5 handles from FV, trading up against S3 pivot level

ECB President Trichet’s Not Helping Here

Morning Notes
- Overseas markets posting another day of solid gains
- ECB President Trichet begins conference at 8:30a ET- probably will not disclose any clear details around plan, and a simple reassurance of backing troubled nations may be good enough for the markets
- Nikkei closed up 1.8% as yen weakened and exporters were strong following yday’s US economic data
- Reuters report out speculating that China is mulling a $1.5 trillion investment in strategic industries, e.g., alt energy, biotech, adv materials, alternative fuel cars, and green technologies
- ECB left interest rates unc’d @ 1%, which was expected
- S&P futures were up about 5 handles from FV, but has pulled in since- after Trichet conference began
- Retails reported November same stores sales, almost all beat expectations, but names are trading mixed in the pre market, slightly skewed to the upside
- Initial Jobless Claims: 436K vs. 424K; prior revised up to 410K from 407K
- Continuing Claims: 4.27M vs. 4.2M; prior was 4.217M
- Now just awaiting Pending Home Sales @ 10a ET
- S&P futures continued to see weakness following commencement of ECB President Trichet’s press conference
- Trichet did not address an expanded bond purchasing program; did mention though that refinancing and special terms offers will continue at least through April 2011 as scheduled; all this pulling in the futures
- Euro also pulled in, dollar recovered as did Treasuries
- S&P futures are now up 2.5 handle from FV ahead of the open

Month of December Off to a Solid Start in the Pre Market

Morning Notes
- Overseas markets are all up with strength being attributed to China’s better than expected PMI data (although note that the Shanghai did not really rally with this news; probably weighed down by ongoing monetary policy tightening concerns)
- Eurozone PMI came in slightly worse than expected; UK PMI came in strong (highest level in 16 years)
- Australia’s GDP came in weaker than expected; noteworthy economic item because the Australian economy was one of the few that remained resilient during the global recession
- Recovery in the euro this morning while the dollar and treasuries take a breather and are down
- ECB Pres. Trichet made comments stating he did not believe financial stability in Europe is questionable, suggesting bond purchases may be increased
- Sov debt yields have pulled back
- Gold and crude bid up as well
- A decent number of data releases today, starting with ADP Employment Change @ 8:15a ET; Nonfarm Productivity @ 8:30a; ISM and Construction Spending @ 10a; Beige Book @ 2p
- November ADP Employment Change: 93K vs. 70K; prior revised up to 82K from 43K
- This ADP number is the best level it has been at since June 2007
- Am reading this ADP number in context of Challenger Job Cuts, which came out this morning down 3.3% y/y, making it the worst level since May 2009; employers plan to cut 48K jobs, the most in eight months, primarily in gov’t positions
- Q3 Nonfarm Productivity: 2.3% vs. 2.3%
- S&P futures are currently up 15.75 handles from FV, improving with the data releases so far

Ireland, the Market, Sarah Palin and other items…

I’m feeling a little under the weather today and it is really cold in the office this morning yet I am still endeavoring to write a blog this am… what a trooper!

Looks like Ireland made a deal on a bailout package.  $113 billion with about 40% of it going to the banks and the rest to the country’s coffers.  And they were able to do it without hitting bondholders on future bailouts.  Given that the Euro is down another 90 ticks as I write this, it doesn’t look like traders believe that the contagion risk has been eliminated.

Thankfully, because I am about $3.7mln net long, our market is taking the continued selloff in the Euro in stride as SPOOZ are up about 1.75 handles as of 7:15am.  They were up about 4.50 handles about 20 minutes ago and they have been selling off ever since.  This sucks because I was on the offered side for 3,000 SPYs but wasn’t lifted.  If the Euro continues to selloff then I will likely get more short as it will impact European bourses which, in turn will negatively impact our market.  However, I am hoping that the positive economic data that has been coming out of the US over the last couple of months will help our market decouple from Europe’s at least for the rest of the year.

Sarah Palin was in West Des Moines, Iowa, at a Borders over the weekend signing autographs for her new book, American by Heart.  She said that the book signing in Iowa had no political motives.  Yeah, right.  Iowa is a major political state as the Iowa Caucuses are held there which is very important as they are the first major electoral event and they receive a lot of media attention.  So, Sarah decides to sign books in Iowa a little over a year before the Iowa caucuses and she said she had no political motives.  Not only do I call bullshit but I call on everyone to do whatever they can to keep this woman from winning the republican nomination in 2012.

North Korea continues its bellicose ways as it has moved SAMs to launch pads on the Yellow Sea.  Looks like nobody knows what to do about North Korea and thus the country will continue to create uncertainty for US markets.

May-ja Vu: Looks like May 2010 all over Again

Negative and uncertain headlines out of Europe, Governments are predicted to be on the verge of collapse, sovereign debt spreads are at wides, news commentators are fearful, the euro is on the verge of breaking up, people know where Portugal is again.  Is it May 2010 or is it simply, “May-ja Vu”?

Are we really going to go through this again.  Well if we are then I have to believe that the US markets are much better prepared, holders of sovereign debt have hedged to some higher degree than six months ago, the bailout mechanisms are in place now, the offsets to euro weakness are better understood (ie much improved German/European exports driving better economic performance), and finally the US economy is showing some tentative signs of life.

I am sticking by my prediction of a rally in US equity markets into year end and thus instead of calling this latest selloff May 2010 all over again, I will call it May-ja Vu.

Prepare The Bear For The Rug He Will Become

Prepare The Bear For The Rug He Will Become

The Inflation trade is still on. Buy Gold and take huge advantage of this sell off in the financials. It is a holiday gift. Europe has the blueprint for its bailouts; they are always months behind us in resolving these issues. But they always wind up taking care of their own. There is no threat to the euro. This is a very different world than the vacuum we existed in when Greek citizens were rioting in the street and we were experiencing the flash crash. At the beginning of every great bull market, there is the death of the bear. It takes months. He doesn’t give up easily. He dies slowly. Each dip that is bought is a pitchfork plunged into his gut. Each short squeeze is a knife jabbed in his back, and finally a massive rally slices the bear open and prepares him for the rug he will be in the bull’s lair.

Mario Killed The Bear

The Greeks killed the Bear

Padme Killed the Bear

....and Burt killed the bear

CSCO Will Make For Decent Action in the Market Despite Veterans Day Holiday

Morning Notes

-       European markets down this morning

-       ECB’s monthly bulletin suggested inflation on the rise, however growth is projected to exceed previous expectations

-       CSCO earnings weighing down European markets as well as domestic market

-       Asian markets are up however with strength attributed to Moody’s upgrade of China debt

-       China CPI data came in higher than expected (highest in two years), but not pushing Asian markets lower as I mentioned above that Moody’s upgraded China’s debt

-       Australian unemployment rate came in much higher than exp., hence weakness in their market

-       Gold up, oil up

-       G20 summit meeting began o/n

-       Dollar is up again today (fifth day in a row)

-       Euro at lows

-       S&P futures down about 8 handles from FV

-       CSCO earnings last night pushed market lower, particularly due to co.’s downside guidance (suggests slow spending in sector)

-       CSCO weighing down other big tech names, and hence Naz futures lower than S&P futures as Naz has more tech weightings

-       Note today is Veterans Day so U.S. bond mkt is closed; no items on economic calendar for today as well- may have made for light trading, however given CSCO’s earnings results, expecting decent action in the mkt today

Yesterday’s Strength Carrying Over In The Pre Market

Morning Notes

-       Asian markets mixed in the o/n session

-       China GDP came in at +9.6%, which is 52 week low

-       China CPI beat expectations (3.6%) by small margin, but still heavy, may be adding  further pressure to Shanghai Comp

-       European markets up small this AM

-       German and Eurozone Manufacturing PMI data better than expected, helping lift European mkts

-       UK Retail Sales were weak

-       Gold up small, crude down small

-       Earnings season in full gear with several regional banks reporting this AM- FITB, PNC, STI, HBAN all beat on bottom line

-       Dollar down small; note that Geithner today said he does not foresee dollar dropping further against yen and euro

-       In other news, GS considering paying back Buffett’s investment of $5B; also in financial news, BAC and JPM have initiated talks with state attorney generals re: foreclosure proceedings

-       Initial Jobless Claims: 452K vs. 455K; prior revised up to 475K from 462K

-       Continuing Claims: 4.441M from 4.450M

-       S&P futures up about 5 handles from FV and are on the R3 sell pivot signal (have pulled in a bit after initial move higher following jobless claims data)