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Some Relief After Worst Weekly Performance Since November

Morning Notes

- Premarket strength at last
- Shanghai finally got a bounce in the o/n, closing up 1.4%
- On the flip side, Nikkei closed down 1.6%, which is the worst performance Japan has seen in two months
- European bourses are up this morning, financials leading the way for the most part
- German IFO data came in better than expected, which also rallied the euro
- UK December Retail Sales came in worse than expected- analysts are pointing to poor weather for those results
- Commodities are mixed
- Oil up, nat gas up, gold weak, silver weak
- S&P futures are up 8 handles from FV, breaking through the R4 pivot level- hence, we are on the R4 buy signal
- S&P is down about 1% for the week, worst weekly performance since November
- There is nothing on the economic calendar for today
- Note that today is January options expiration

Will the Strong ADP Number Be Enough to Push Futures into the Green?

Morning Notes

- Overseas markets are net lower today
- In China, the PBOC said that it may conduct a monthly review of reserves rates on banks
- China’s HSBC PMI came in in line
- Both Germany and Eurozone Services PMI came in solidly
- However, European markets are down
- Drop in commodities yesterday is adding noticeable pressure to the material sector, particularly in Germany
- UK Construction PMI showed a contraction
- Oil is weak again today
- Dollar is up again
- ADP Employment Change: 297K vs. 100K; prior revised down to 92K from 93K
- Latest ADP data is lifting futures as well as crude oil and dollar
- This ADP number is the highest in history
- ISM Non Manufacturing data out at 10a
- Gold is lower and making new lows ahead of the bell
- S&P futures are down 4 handles from FV ahead of the open and on the S3 buy signal

There Goes the Gas Money

Will there be Blood?

The average price of gasoline, as reported by the US Department of Energy has jumped to over $3.00 per gallon.  Compared to a year ago, this price increase means that filling up a 16 gallon tank has risen $7.20 from last year, to $48.80.  This price increase is unusual for the wintertime, as consumers usually drive less during these snowy months.  It primarily reflects increased demands from developing nations.

                Coupled with the increasing price of Crude Oil, which is comfortably over $90 a barrel, these rising fuel costs could begin to hinder the already unsteady economic economy.  Consumer spending is already expected to decrease after a robust holiday shopping season.  Additionally, one of the positive effects of increased oil prices is commonly said to be increased purchases of newer, more efficient or hybrid vehicles.  I doubt this will have much of an effect because of the Cash for Clunkers program, which may have already met this demand.   If energy prices continue to rise, expect economic recovery to be ever weaker than previously predicted.  Additionally, the public’s memory of the Deepwater Horizon spill may be clouded when they are shelling it out at the pump.

Futures Hovering Over S4 Pivot For First Time In A Few Weeks

Spain Potential Downgrade

Morning Notes
- Overseas markets are all lower this morning following news that Moody’s may downgrade Spain
- Adding further weakness in the markets is the Tankan Survey results in Japan, which showed that business confidence in the country has fallen for the first time in two years
- JPY weakness has added little support to Nikkei, which closed down just 10bps
- Also, UK unemployment rate came in higher than expected
- Dollar up small
- Gold and oil are down
- NY Empire Manufacturing Survey: 10.57 vs. 3.00; prior was -11.14
- November Core CPI: +0.1% vs. +0.1%
- November CPI m/m: +0.1% vs. +0.2%; prior was +0.2%

- Futures not really reacting to data release
- Other economic items on the calendar for today: Industrial Production and Capacity Utilization at 9:15a ET; NAHB Housing Idx at 10a; Crude Inventories at 10:30a
- S&P futures are down about 4 handles from FV
- Tight pivots in the Spooz today- we are on the S3 buy signal , although that could change quickly given that we are hovering right above S4 and we had been on the S4 sell signal earlier in the pre

Dollar Breaks Five Day Winning Streak: Market May Follow This Reversal

Morning Notes

-       Overseas markets down across the board

-       Weakness mainly due to China:

-       In China, speculation that the People’s Bank of China (PBOC) would hike rates as soon as this weekend  drove the Shanghai Comp down 5%

-       Above monetary policy tightening comes following yesterday’s worse than expected China CPI number, which measures inflation

-       European markets down as well, probably due to renewed debt concerns and euro weakness

-       Also mkt sold off on rumors of a 80B EUR bail out for Ireland, but Irish finance ministry comments that this was not true so the mkt recovered

-       Eurozone GDP came in in line

-       Gold and oil down (commodities weak this AM; CRB Commodity Index is at worst level in more than three weeks)

-       Dollar down, breaking its five day gain streak; given inverse correlation to market and that the market was weak this week on dollar gains, I would expect to see the market recover in today’s session (or the dollar should pick itself up)

-       On economic calendar for today is UMich Consumer Sentiment number out at 9:55a EST

-       S&P futures down about 7 handles from FV; they have recovered nicely off the o/n lows though

-       Market is down about 1% already this week

EU Debt Concerns Not Really A Concern

Morning Notes

-       Overseas markets are mixed this AM with Asian markets down (but on low volume) and European bourses up nicely

-       Shanghai Comp down with weakness attributed to worse than expected inflation number, which would result in tightening by Beijing

-       Nikkei weakness attributed to yen strength

-       Headlines that EU debt concerns may be weighing down markets, especially given light U.S. news front; however, European markets are all up and S&P futures are up in the pre market so renewed EU debt concern appears to be a mere excuse (not a major issue)

-       VOD and BCS in Europe reported today, which may be helping boost European mkts

-       Dollar down, gold up, oil up

-       Ahead on economic calendar today: Wholesale Inventories @ 10a EST; other than that, light news day again; in fact, it will be a light week

-       10-yr note auction results out @ 1p

-       S&P futures trading up about 2.5 handles from FV

-       Tight pivot levels on the futures today; we are currently trading around R3 on an unconfirmed R3 sell signal

Futures Down in the Pre Market with No Major Catalysts Ahead

Morning Notes

-       Strong jobs data out from Japan on Friday helped rally the Nikkei, up 1.1% (hit 3 month high)

-       Asian markets all up in the o/n (Hang Seng hit two year high)

-       European markets down small

-       Dollar up, adding pressure to U.S. equity market

-       Gold and oil down

-       Extremely light on economic data calendar today and this weak (nothing ahead for today)

-       3-yr note auction results at 1pm EST

-       S&P futures down about 4 handles from FV

Weak Data Overseas While GDP Comes In In-Line

Morning Notes

-       Overseas mkts all down

-       Japan Industrial Production and Household Spending came in weaker than expected

-       Meanwhile JPY showing strength, adding further pressure to Nikkei, which is down 1.75%

-       Eurozone CPI and unemployment rate worse than expected

-       Gold and oil down, but seeing spike now

-       Dollar is up a bit

-       Q3 Advanced GDP: +2.0% vs. +1.8%

-       Personal Consumption: +2.6% vs. 2.5%

-       S&P futures now down about 3 handles from FV, getting a very slight lift after GDP data

-       S&P futures on the S3 Buy pivot signal

-       Up ahead, we have Chicago PMI and UMich Confidence data out at 9:45a and 9:55a, respectively

-       Note that today is the last trading day of the month, for whatever that’s worth

oil getting ready?

I like the way oil traded today. It’s been basing here for a few weeks. The dollar was strong today and oil didn’t want to retreat. A number of  other commodities have made big moves. I think oil can get to 85 over next week or two.

Slow day…

Kicked the day off with some torrential downpour. What I don’t understand, is the lack of flood control across all five boroughs of the city. I’m glad my Bronx apartment is situated on the fourth floor ’cause the entire first floor resembles Atlantis. IMAX is performing extremely well. It seems like everyday they are announcing deals, I think today it was with RGC.

Oil is trading north of $80 which is very weird, since the U.S. has ample supplies of oil. As oil continues to mystify so does the exodus of Obama’s cabinet members. Rahm Emanuel is the latest defection today, leaving his post to be become the mayor of Chicago. To me that’s like quiting the Lakers to join the Clippers. I might be exaggerating but stepping as White House Chief of Staff to become the mayor of Chicago doesn’t look like a step up to me. Then again, my knowledge of politics is as deep as ankle deep water.

While I’m on the subject of politics, I have to say it saddens the amount of backlash that President Obama nowadays. There’s nothing wrong with being critical about an individual’s performance but at the same time he’s not a miracle worker. Sure his stimulus package has not been as effective as we had hoped, but that shouldn’t negate the few good things that he done in his two years. Again, I don’t know the guy but I believe have to be realistic in their expectations of what can be accomplished.

Anyway it’s Friday and my country’s independence day, this weekend is looking to be great.