Daily Market Color
06/24/2015
Economic Reports & Headlines
First Quarter GDP in France came in line with estimates on a quarter over quarter basis, 60bps. Year over year growth was slightly higher than expected, 80bps vs. exp. 70bps.
Over in Germany we got a read on business expectations from the Ifo survey. Business expectations missed (102.0 vs exp. 102.5), current conditions missed (113.1 vs. exp. 114.1) and economic sentiment missed (107.4 vs. exp. 108.1)
On the domestic front, US first quarter GDP was revised lower to show a contraction of 20bps
Greece is still the main headline today with the IMF submitting a counter-proposal to Greece which demands Value Added Taxes and pension cuts. Greek officials shot the proposal down.
Trades
I have been experiencing a stretch of losing trades due to my impatience to wait for Greece to default or receive a bailout. June 30 is the current deadline for a deal to be made, but another loop hole could further delay the “deadline.” The first deadline was delayed because Greece used the IMF money to service an IMF debt. The deadline following that one was delayed because Greece exercised a right to bundle multiple payments into one lump sum payment. And now they are reports circulating that states that the IMF has 30 days to delay the default after Greece misses the payment. I might just start looking for another trade.
I lost on the British Pound trade because I thought market players were betting on monetary policy tighten from the Bank of England, however, this was not expected in the immediate future. As a result, I gave back all of my paper profits from the British Elections trade. I learned from that trade that I should not give back profits.
I placed a short bet on Corn and took a small lost when it hit my stop. I expected Corn to decline from a technical stand point of view. I took a small lost in the US 10 year note. May jobs numbers came in stronger than expected, so treasuries declined as a result. I went short with the expectation of tighten commentary from the Fed at their next meeting. Janet Yellen press conference made it seem as if she were reluctant to raise rates by downplaying the strong jobs report and placing emphasis on “other” economic indicators that needed to show improvement.
Right now I am waiting until June 30th to profit from the Greek deadline. I am also paying attention to the New Zealand dollar which declined substantially after their central bank cut rates by 25 basis points unexpectedly.
Wednesday, June 24, 2015
Tuesday, May 12, 2015
Daily Market Color 05/12/2015
Daily Market Color
05/12/2015
Economic Reports & Headlines
Industrial production in the UK came in better than expected for March. MoM: +50bps vs. exp. 0. YoY: +70bps vs. exp. +10bps. According to Econoday.com, only six out of the thirteen reporting subsectors posted gains with pharmaceuticals making the largest contribution to the positive headline reading.
Greece made its 750 million to the International Monetary Fund by using funds from an IMF holding account according to an article from Reuters. The account needs to be refunded in one month.
According to Zerohedge.com overnight recap, there might be an EU referendum for the UK in 2016 instead of 2017 to avoid conflict with German and French elections.
According to Spanish newspaper El Mundo, the IMF signaled to the Eurogroup that it doesn’t want to participate in rescuing Greece.
Trades
The pound continues to rally and hit new highs for 2015 despite a news report indicating that the EU referendum in the UK may arrive sooner than expected. Maybe it was the stronger than expected industrial production report that provided further momentum to the rally. Tomorrow, the Bank of England will issue its quarterly inflation report. This report merits plenty attention and we could see commentary from the bank hinting towards tightening of monetary policy in the UK.
Over in Greece, they effectively defaulted on their IMF payment according to Zerohedge.com and I would have to agree that they did. Funds from an IMF holding account was used to help pay the IMF. If this fund did not exist, then maybe Greece would have missed the payment. IMF paid itself. On June 5th Greece will have to make a 298m euro payment to the IMF. It is unlikely that Greece will be able to make that payment without access to additional bailout funding. The Eurogroup is set to meet again June 18th. An emergency meeting can be called once an accord is reached.
On the domestic front, US 10 year treasury notes have been in a free fall for the past month. I will join the sellers if we receive a non-farm payroll report in June with a 250k headline figure. The Fed is targeting 2% inflation and maximum employment before lifting rates. I suspect that US 10 year treasury notes declined because market participants are expecting rates to start rising. At first, market players were expecting a June rate hike, but now September is the new month of renewed speculation in the Fed’s first rate hike in many years. A 250k June NFP print should accelerate the selling in US treasuries.
05/12/2015
Economic Reports & Headlines
Industrial production in the UK came in better than expected for March. MoM: +50bps vs. exp. 0. YoY: +70bps vs. exp. +10bps. According to Econoday.com, only six out of the thirteen reporting subsectors posted gains with pharmaceuticals making the largest contribution to the positive headline reading.
Greece made its 750 million to the International Monetary Fund by using funds from an IMF holding account according to an article from Reuters. The account needs to be refunded in one month.
According to Zerohedge.com overnight recap, there might be an EU referendum for the UK in 2016 instead of 2017 to avoid conflict with German and French elections.
According to Spanish newspaper El Mundo, the IMF signaled to the Eurogroup that it doesn’t want to participate in rescuing Greece.
Trades
The pound continues to rally and hit new highs for 2015 despite a news report indicating that the EU referendum in the UK may arrive sooner than expected. Maybe it was the stronger than expected industrial production report that provided further momentum to the rally. Tomorrow, the Bank of England will issue its quarterly inflation report. This report merits plenty attention and we could see commentary from the bank hinting towards tightening of monetary policy in the UK.
Over in Greece, they effectively defaulted on their IMF payment according to Zerohedge.com and I would have to agree that they did. Funds from an IMF holding account was used to help pay the IMF. If this fund did not exist, then maybe Greece would have missed the payment. IMF paid itself. On June 5th Greece will have to make a 298m euro payment to the IMF. It is unlikely that Greece will be able to make that payment without access to additional bailout funding. The Eurogroup is set to meet again June 18th. An emergency meeting can be called once an accord is reached.
On the domestic front, US 10 year treasury notes have been in a free fall for the past month. I will join the sellers if we receive a non-farm payroll report in June with a 250k headline figure. The Fed is targeting 2% inflation and maximum employment before lifting rates. I suspect that US 10 year treasury notes declined because market participants are expecting rates to start rising. At first, market players were expecting a June rate hike, but now September is the new month of renewed speculation in the Fed’s first rate hike in many years. A 250k June NFP print should accelerate the selling in US treasuries.
Monday, May 11, 2015
Daily Market Color 05/11/2015
Daily Market Color
05/11/2015
Economic Reports & Headlines
The Bank of England made their monetary policy announcement today. The bank’s rate remained unchanged at 50bps and their quantitative easing program was at 375 billion pounds.
According to the chairman of the Eurogroup, Dijsselbloem, Greece negotiations have advanced and a comprehensive list needs to be submitted before any deal could be reached.
05/11/2015
Economic Reports & Headlines
The Bank of England made their monetary policy announcement today. The bank’s rate remained unchanged at 50bps and their quantitative easing program was at 375 billion pounds.
According to the chairman of the Eurogroup, Dijsselbloem, Greece negotiations have advanced and a comprehensive list needs to be submitted before any deal could be reached.
According to Jim Reid, the head of global fundamental credit strategy at Deutsche Bank, German Chancellor Merkel is facing growing pressure from members within her political party to discontinue Germany’s support to Greece.
Trades
Tomorrow I will be paying attention to Greece IMF payment of 744 million euros. It is a possibility that they will delay the payment or simply default. If Greece decides to miss the payment, then risk assets will likely decline and I will be there to short them. I’m currently long the British Pound and it has been rallying for the last two sessions. Cable (British Pound) could trade with risk assets in the event of a Greek default. Another event I will be looking forward to will be the ECB weekly meeting on Wednesday where they will discuss their Emergency Liquidity Assistance program. Additional funding to Greece from the ECB through the ELA program could be in jeopardy if the governing council decides to raise the haircut on collateral posted by Greek banks to access those funds.
Trades
Tomorrow I will be paying attention to Greece IMF payment of 744 million euros. It is a possibility that they will delay the payment or simply default. If Greece decides to miss the payment, then risk assets will likely decline and I will be there to short them. I’m currently long the British Pound and it has been rallying for the last two sessions. Cable (British Pound) could trade with risk assets in the event of a Greek default. Another event I will be looking forward to will be the ECB weekly meeting on Wednesday where they will discuss their Emergency Liquidity Assistance program. Additional funding to Greece from the ECB through the ELA program could be in jeopardy if the governing council decides to raise the haircut on collateral posted by Greek banks to access those funds.
Sunday, May 10, 2015
Daily Market Color 05/08/2015
Daily Market Color
05/08/2015
Economic Reports & Headlines
General elections in the UK showed that the Conservatives was able to get a slight majority in parliament. Prime Minister Cameron will be back to serve a second term.
German Industrial Production for March contracted unexpectedly on a month over month and year over basis. MoM: -50bps vs. exp. +40bps. YoY: -10bps. vs. exp. +40bps.
Germany’s trade surplus in March came in slightly below consensus 19.3bn vs. exp. 20.0nb. Imports increased 2.4% on a month over month basis. Exports increased 1.2% on a year over year basis.
Heading over to the UK, Halifax issued their monthly read on home prices in the UK for April. Prices increased 160bps vs. exp. 30bps. On a year over year basis prices increased 8.5% vs. exp. 7.8%.
The trade deficit in the UK came in slightly higher than expected for March: -10.1bn vs. exp. -9.5bn. Imports declined 1.0% on a month over month basis. Exports increased 1.4% on a month over month basis.
On the opposite side of the Atlantic, US Non-Farm payrolls for April came right above consensus: 223k vs. exp. 220k. The unemployment rate dropped to 5.4% from 5.5%.
Consumer prices in China came in at 1.5% on a year over year basis; consensus was 1.7%
Trades
Greece and its creditors are expected to make their 744m euro payment to the IMF this Tuesday. However, Greece is unlikely to reach an agreement with the Troika by Monday, which was previously anticipated. Monday’s deadline was important so an accord could have been submitted to the Eurogroup at their meeting this Monday. Not reaching an agreement by Monday might encourage the ECB to raise the haircut on collateral posted by Greek banks for Emergency Liquidity Assistance. I am on the sideline with trading the Greek Bailout.
On the hand, I am not on the sidelines with the UK. I bought cable after it was clear that the Conservative party was going to be the majority in parliament. The pound rallied in light of this news. I expect Sterling to continue upwards due to the sheer magnitude of the move and the unexpected outcome of the elections. The EU referendum is expected to occur in 2017.
05/08/2015
Economic Reports & Headlines
General elections in the UK showed that the Conservatives was able to get a slight majority in parliament. Prime Minister Cameron will be back to serve a second term.
German Industrial Production for March contracted unexpectedly on a month over month and year over basis. MoM: -50bps vs. exp. +40bps. YoY: -10bps. vs. exp. +40bps.
Germany’s trade surplus in March came in slightly below consensus 19.3bn vs. exp. 20.0nb. Imports increased 2.4% on a month over month basis. Exports increased 1.2% on a year over year basis.
Heading over to the UK, Halifax issued their monthly read on home prices in the UK for April. Prices increased 160bps vs. exp. 30bps. On a year over year basis prices increased 8.5% vs. exp. 7.8%.
The trade deficit in the UK came in slightly higher than expected for March: -10.1bn vs. exp. -9.5bn. Imports declined 1.0% on a month over month basis. Exports increased 1.4% on a month over month basis.
On the opposite side of the Atlantic, US Non-Farm payrolls for April came right above consensus: 223k vs. exp. 220k. The unemployment rate dropped to 5.4% from 5.5%.
Consumer prices in China came in at 1.5% on a year over year basis; consensus was 1.7%
Trades
Greece and its creditors are expected to make their 744m euro payment to the IMF this Tuesday. However, Greece is unlikely to reach an agreement with the Troika by Monday, which was previously anticipated. Monday’s deadline was important so an accord could have been submitted to the Eurogroup at their meeting this Monday. Not reaching an agreement by Monday might encourage the ECB to raise the haircut on collateral posted by Greek banks for Emergency Liquidity Assistance. I am on the sideline with trading the Greek Bailout.
On the hand, I am not on the sidelines with the UK. I bought cable after it was clear that the Conservative party was going to be the majority in parliament. The pound rallied in light of this news. I expect Sterling to continue upwards due to the sheer magnitude of the move and the unexpected outcome of the elections. The EU referendum is expected to occur in 2017.
Thursday, May 7, 2015
Daily Market Color 05/07/2015
Daily Market Color
05/07/2015
Economic Reports & Headlines
Germany Manufacturers' Orders report for March came in strong on a monthly and annual basis. MoM: +90bps vs. exp +100bps. YoY: +190bps vs. exp. +160bps.
Industrial Production in France was soft according to Econoday.com. MoM: -30bps vs. exp. +20bps. YoY: +130bps vs. exp. +120bps.
On the domestic front, US weekly jobless claims for the week ending 05/02 came in at 265k vs. exp. 280k.
Britain general elections are underway today. The Conservative party plans to further continue government spending cuts. The Labour party would like to increase taxes on the rich. According to a report from Reuters, opinion polls show that neither party will win enough seats to claim a majority in the 650 seat parliament.
Government bonds are selling off globally, with German bunds leading the decline. The steep drop in German bund valuations is actually its largest decline since Germany's reunification, according to Reuters Chief Markets Correspondent Jamie McGeever in a twitter post.
Trades
It's unlikely that Greece will come to an agreement with its creditors by May 11th according to Greece's and Germany's finance ministers. I am looking forward to the Eurogroup meeting and the ECB meeting next week. Market participants are speculating that additional assistance from the European Central Bank will be contingent upon progress being made at the Eurogroup meeting. The ECB might make it difficult for Greece to receive emergency funding in an effort to expedite a bailout agreement if progress is not made by May 11th.
05/07/2015
Economic Reports & Headlines
Germany Manufacturers' Orders report for March came in strong on a monthly and annual basis. MoM: +90bps vs. exp +100bps. YoY: +190bps vs. exp. +160bps.
Industrial Production in France was soft according to Econoday.com. MoM: -30bps vs. exp. +20bps. YoY: +130bps vs. exp. +120bps.
On the domestic front, US weekly jobless claims for the week ending 05/02 came in at 265k vs. exp. 280k.
Britain general elections are underway today. The Conservative party plans to further continue government spending cuts. The Labour party would like to increase taxes on the rich. According to a report from Reuters, opinion polls show that neither party will win enough seats to claim a majority in the 650 seat parliament.
Government bonds are selling off globally, with German bunds leading the decline. The steep drop in German bund valuations is actually its largest decline since Germany's reunification, according to Reuters Chief Markets Correspondent Jamie McGeever in a twitter post.
Trades
It's unlikely that Greece will come to an agreement with its creditors by May 11th according to Greece's and Germany's finance ministers. I am looking forward to the Eurogroup meeting and the ECB meeting next week. Market participants are speculating that additional assistance from the European Central Bank will be contingent upon progress being made at the Eurogroup meeting. The ECB might make it difficult for Greece to receive emergency funding in an effort to expedite a bailout agreement if progress is not made by May 11th.
Wednesday, May 6, 2015
Daily Market Color 05/06/2015
Daily Market Color
05/06/2015
Economic Reports & Headlines
Today’s economic calendar is filled with an abundance of PMI composite reports. You could find the results below:
France PMI composite April: 50.6 vs. exp 50.2
Germany PMI Composite April: 54.1 vs. exp. 54.2
EMU PMI Composite April: 53.9 vs. exp. 53.5
Great Britain PMI Services April: 59.5 vs exp. 58.3
Leaving Europe and heading over to the US, we received a read on American’s appetite for homes from The Mortgage Bankers Association weekly mortgage application report. For the week ending 5/1, purchase applications grew 1.0% while refinance applications declined 8.0%.
April’s ADP monthly employment report disappointed with a print of 169k vs. exp. 205k. March report was revised lower to 175k versus the 189k originally reported.
In Washington today, during an event with IMF head Christine Lagarde, Fed Chair Janet Yellen stated that stock valuations are high.
Trades
Speculation surrounding Greece’s bailout continues to circulate. The latest development in the talks is that an agreement will not be reached by May 11th according to Greece’s Finance Minister. This signals to me that Greece may have more cash in their coffers than everyone thinks. While the troika, or the Brussels Group, continues their talks with Greece, I will be impatiently waiting on the side lines for an agreement or a default. A default would make me short Euro area stocks while an agreement would make me buy. It’s a simple trade.
05/06/2015
Economic Reports & Headlines
Today’s economic calendar is filled with an abundance of PMI composite reports. You could find the results below:
France PMI composite April: 50.6 vs. exp 50.2
Germany PMI Composite April: 54.1 vs. exp. 54.2
EMU PMI Composite April: 53.9 vs. exp. 53.5
Great Britain PMI Services April: 59.5 vs exp. 58.3
Leaving Europe and heading over to the US, we received a read on American’s appetite for homes from The Mortgage Bankers Association weekly mortgage application report. For the week ending 5/1, purchase applications grew 1.0% while refinance applications declined 8.0%.
April’s ADP monthly employment report disappointed with a print of 169k vs. exp. 205k. March report was revised lower to 175k versus the 189k originally reported.
In Washington today, during an event with IMF head Christine Lagarde, Fed Chair Janet Yellen stated that stock valuations are high.
Trades
Speculation surrounding Greece’s bailout continues to circulate. The latest development in the talks is that an agreement will not be reached by May 11th according to Greece’s Finance Minister. This signals to me that Greece may have more cash in their coffers than everyone thinks. While the troika, or the Brussels Group, continues their talks with Greece, I will be impatiently waiting on the side lines for an agreement or a default. A default would make me short Euro area stocks while an agreement would make me buy. It’s a simple trade.
Tuesday, May 5, 2015
Daily Market Color 05/05/2015
Daily Market Color
05/05/2015
Economic Reports & Headlines
The global economic calendar starts off in Australia with the country’s central bank monetary policy announcement. The Reserve Bank of Australia cut its key interest rate by 25 basis points to 2.0%. The rate cut was expected unlike the rate cut in February 2015.
In the UK we got a read on the country’s construction activity through Markit’s PMI Construction report for April. The report showed an expansion that came in below consensus: 54.2 vs. exp. 57.4. According to Econoday.com this is the weakest out turn since July 2013 and it was most likely due to shortages in supplies.
Eurostat’s Produce Price Index for March came in lower than expected on a month over month basis: 20bps vs. exp. 30bps. On a year over year basis, prices declined 2.3%. Cyprus, Latvia and Italy posted month over month declines. Ireland, Belgium and Spain posted month over month increases. Only one country, Luxemburg, posted an annual increase.
On the domestic front, the US trade deficit for March came above analysts’ expectations: $51.4bn vs. exp. 42.0bn. This is the largest deficit since October 2008. The unexpected increase was attributed to the West Coast port strike.
April’s PMI services report barely missed consensus: 57.4 vs. exp. 57.7. Nevertheless, this was a strong reading for the month of April.
The Institute of Supply Management expanded more than expected in April: 57.8 vs. exp. 56.5.
The European Commission increased its 2015 GDP forecast for the 19 nation currency bloc to 1.5% from 1.3%.
Greece is set to make a 200mln euro payment to the IMF tomorrow, 05/06.
05/05/2015
Economic Reports & Headlines
The global economic calendar starts off in Australia with the country’s central bank monetary policy announcement. The Reserve Bank of Australia cut its key interest rate by 25 basis points to 2.0%. The rate cut was expected unlike the rate cut in February 2015.
In the UK we got a read on the country’s construction activity through Markit’s PMI Construction report for April. The report showed an expansion that came in below consensus: 54.2 vs. exp. 57.4. According to Econoday.com this is the weakest out turn since July 2013 and it was most likely due to shortages in supplies.
Eurostat’s Produce Price Index for March came in lower than expected on a month over month basis: 20bps vs. exp. 30bps. On a year over year basis, prices declined 2.3%. Cyprus, Latvia and Italy posted month over month declines. Ireland, Belgium and Spain posted month over month increases. Only one country, Luxemburg, posted an annual increase.
On the domestic front, the US trade deficit for March came above analysts’ expectations: $51.4bn vs. exp. 42.0bn. This is the largest deficit since October 2008. The unexpected increase was attributed to the West Coast port strike.
April’s PMI services report barely missed consensus: 57.4 vs. exp. 57.7. Nevertheless, this was a strong reading for the month of April.
The Institute of Supply Management expanded more than expected in April: 57.8 vs. exp. 56.5.
The European Commission increased its 2015 GDP forecast for the 19 nation currency bloc to 1.5% from 1.3%.
Greece is set to make a 200mln euro payment to the IMF tomorrow, 05/06.
Trades
I am waiting for a bailout deal to be reached or a default in Greece to buy or sell European stocks.
I am waiting for a bailout deal to be reached or a default in Greece to buy or sell European stocks.
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