Daily Market Color 08/30/2013

Daily Market Color

08/30/2013

Economic Reports & Headlines

Today’s economic calendar was just as busy as yesterday’s. Home prices in the UK were stronger than expected on a month over month basis, 60bps Vs 20bps according to the Nationwide HPI report.

Retail sales in Germany took an unexpected turn to the downside on a month over month basis, -1.4% Vs 0.5%. On a year over year basis, prices were better than consensus, 2.3% Vs 2.0%.

Italy’s second quarter unemployment report showed that the jobless rate increase was in line with consensus by rising to 12.1% from 11.9%.

Consumer prices in Italy, during August, came in higher than analysts’ estimates on a month over month basis, 30bps vs 20bps.

The European consumer sentiment index, which is a measure of business and consumer sentiment in the Eurozone, came in better than expected, 95.2 Vs 94.0. This is a two year high in the index according to Bloomberg.

The Harmonized Index of Consumer Prices Flash report for the Eurozone was below consensus in August, 1.3% Vs 1.4%.

The unemployment rate in the Eurozone was unchanged and better than consensus in July, 12.1% Vs 12.2%  

Over in the US, personal income and consumer spending was tepid, both rising 10 basis points on a monthly basis. Consensus was calling for personal income to rise 20bps and consumer spending to rise 30bps.   

The Institute for Supply Management’s Chicago PMI index was in line with consensus at 53. Any reading above 50 indicates an expansion, while a reading below 50 indicates a contraction.  

The University of Michigan and Reuters consumer sentiment survey was better than expected in August, 82.1 Vs 80.0.

Military action in Syria has been delayed.   

Britain will not join the US in Syria intervention according to Reuters.

China’s consumption of goods via the internet is expected to surpass the US this year according to Alibaba Group.

Future Reports

Over the weekend we will get two manufacturing PMI reports from China.

Although US markets will be closed on Monday, there will be a PMI manufacturing reports from France, Germany, the Eurozone, Great Britain, China and India.  

    

Trades

US delayed military strike on Syria, coupled with the UK’s decision to stay out of the intervention, subdued market volatility in today’s and yesterday’s session. When markets reopen on Tuesday, I forecast the focus shifting to PMI reports since many manufacturing PMI reports will be released between now and Tuesday. The only thing worth trading at the moment is the US T-Note.  

Daily Market Color 08/29/2013

Daily Market Color

08/29/2013

Economic Reports & Headlines

Thursday’s economic calendar is full, so let us get to it. The jobless rate in Germany remains unchanged at 6.8% in August. The number of people out of work in Germany increased by 7,000 in August

Consumer prices in Germany were unchanged in August on a month over month basis. On an annualized basis, prices increased 1.5% versus consensus of 1.6%.

Consumer confidence in Italy was stronger than expected in August. This marks the third consecutive month that the ISTAT survey improved. In addition to that, this report brings the consumer confidence level to its highest level since July 2011, 98.3 Vs 97.5.

ISTAT’s manufacturing and mining survey in Italy came in slightly better than expected in August, 92.9 Vs consensus 92.5. This is the strongest reading since November 2011 and the fourth consecutive monthly increase. New orders contributed the most to the positive headline figure.  

Second quarter gross domestic product in the US was better than expected on an annualized basis, 2.5% Vs 2.2%.  

Jobless claims fell 6,000k. The new claims level missed estimates by a tiny margin, 331k Vs 330k.

Japan released five reports which showed little support to Abenomics. Below you could find the actual figures versus the aggregates estimates:

PMI Manufacturing Index August: 52.2 Vs 50.7

Consumer Price Index July: 70bps Vs 60bps (ex-food year over year)

Household Spending July: 10bps Vs 40bps (year over year)

Unemployment Rate July: 3.8% Vs 3.9%

Industrial Production July: 3.2% Vs 3.7% (month over month)   

    

Trades

The Yen was a trade I advocated for and employed for months, until it stopped working. I was under the impression that the Yen was going to fall and be without a level of support for an indefinite period, or for a period that was contingent upon monetary policy and Prime Minister Abe’s rhetoric. My exit strategy turned out to be flawed. I forecasted the move correctly; however I decided to trade the fundamentals instead. In previous market color reports I stated that the continuation of the Yen’s trend would be conditional upon economic reports going forward, since the Bank of Japan’s aggressive polices were already in play and priced into the markets. The economic reports that were released, post the Bank of Japan’s policy announcements, defied Abenomics so far and made market participants question the rise in the Nikkei and the decline in the Yen. Will the Yen and the Nikkei resume the trend they held for months? I believe so. All we need is one out the follow three things to reignite the trend:

1.      Reoccurring commentary from Prime Minister Abe calling on the Bank of Japan to take further action to reach its target inflation rate.

2.      Commentary from Governor Kuroda that the BOJ intends to do more to reach their target inflation rate.

3.      An upward trend in Japan’s economic indicators such as CPI, household spending, PMI etc.

In addition the three scenarios mentioned above, you need the power of the masses to influence speculation. Until one of the three above scenarios come to fruition, I forecast the Yen and the Nikkei to keep trading sideways, or even trade counter to the trend it formed for the past ten months.   

Daily Market Color 08/28/2013

Daily Market Color

08/28/2013

Economic Reports & Headlines

The global economic calendar for Wednesday was light. Retail sales in Italy surprised market participants by declining 20 basis points on a month over month basis in June. Consensus was calling for a 10 basis point rise.

Over in the UK, CBI distributive trade for August, which is a gauge of short term trends in retail and wholesale trade in the UK, surprised many analysts’, 27 versus consensus of 19. This is the strongest the report has ever been since November 2012 according to Econoday.

In the US, The National Association of Realtors released their pending home sales report for July which disappointed. Analysts were expecting pending homes sales to drop 1.0%, however, pending home sales fell 1.3%. The northeast and the West regions of the US attributed the most to the weak headline figure. The Midwest and the South was virtually unchanged.

Retail sales in Japan were bad. Sales in July contracted 30 basis points versus consensus of 0%. Auto sales and machinery sales were down 6.2% and 7.9%, respectively.

Trades

Wednesday was an uneventful day. I expected the markets to intensify its downward move. The pending homes sales report was surprisingly ignored. I thought it would have added fuel to Tuesday’s fire, however, the markets carried on without a care. Trends are remaining firm and are also being tested, fundamentally. In light of the developments in Syria, we saw market players bombard assets that are deemed to be safe havens, such as US Treasuries, the Yen and other government bonds in developed countries. All of these safe havens are questionable, but I am most concerned with the Ten year Treasury note. This note has been in a downward trend for months, and I find it hard to believe that this trend could be obstructed by rising uncertainty in Syria. We are only 3 weeks away from a highly anticipated Fed meeting which could push the price of the Ten Year Treasury note even lower. I am curious to see how the remainder of this week plays out for the Ten Year Treasury Note. 

Daily Market Color 08/27/2013

Daily Market Color

08/27/2013

Economic Reports & Headlines

The Ifo institute released their German business climate index for August. The three headline figures were generally better than expected. The index has risen for four consecutive months. This is the highest level the index been since April 2012 according to Econoday. Below you could find the actual figures versus consensus:

Economic Sentiment: 107.5 Vs 107.0

Current Conditions: 112.0 Vs 111.0

Business Expectations: 103.3 Vs 103.5

Over in the US, home prices increased below forecast in June according to the SP 500 Case-Shiller 20-City Index. On a month over month basis, prices increased 90 basis points while the street was expecting prices to climb 100 basis points. On an annualized basis prices missed consensus by only ten basis points, 12.1% Vs 12.2%.  Year over year growth rates were between 20% and 25% in cities on the west coast. Prices in New York and Cleveland were the lowest on an annualized basis coming in at 3.2% and 3.4%, respectively.

The Conference Board’s consumer confidence index for August surpassed analysts’ expectations, 81.5 Vs 78.0.

The Federal Reserve Bank of Richmond released their manufacturing index for August which came in better than expected, 14 Vs 0.

CNBC reported that the US is prepared to launch a missile strike on Syria as early as thus Thursday.

Obama is not going to negotiate over the debt limit according to Treasury Secretary Jack Lew; a mid-October deadline is looming.      

 

Future Reports

Tomorrow we will get a read on pending homes sales in the US. Over in the island nation of Japan, we will get a read on retail trade.

     

Trades

Stocks fell off and the uncertainty is beginning to loom in light of rising tensions in Syria. CNBC reported that the US is prepared to launch a missile strike in Syria as early as Thursday. I expect stocks to fall this week, or at least during the period prior to the actual strike. In addition to that, I am anticipating oil to continue rising prior to any military action from the US. Once, or if, the attack actually happens, I will go so far to say that this will cease to be of major relevance to market movements post five to ten trading sessions after the attack.

Daily Market Color 08/26/2013

Daily Market Color

08/26/2013

Economic Reports & Headlines

Over the weekend, New Zealand posted the largest trade deficit since July 2008, NZ$ -774m Vs Prior NZ$ +414m. Exports declined 4.0% on a month over month and 4.9% on an annual basis. Imports increased 27.20% on a monthly basis and 17.1% on an annual basis. The surge in imports could be attributed to aircrafts and part along with crude oil. The main culprit in the sharp export decline was dairy products and crude oil.

Durable goods orders dropped 7.3% versus consensus of 4.0%. The headline number was dragged down by low aircraft orders. Despite the downbeat figures for aircraft orders, the report still turned out to be bad. Durable goods orders minus the transportation component dropped unexpectedly as well, -0.6% Vs consensus +0.3%.

The Dallas Fed manufacturing survey for August beat consensus, 5.0 Vs Consensus 4.5. The survey gauges sentiment among manufactures in Texas. Any number above zero indicates growth while numbers below zero indicates a decline in manufacturing.  

Future Reports

Tomorrow we will get the Ifo report from Germany, which is a business climate index that includes responses from approximately 7,000 enterprises regarding current conditions and business expectations.

On the other side of the Atlantic, in the US, we will get a read on housing prices from the SP Case-Shiller 20-city index Home Price Index. Market participants are expecting prices in to increase 100 basis points.

The Conference Board consumer confidence index will be released tomorrow at 10:00am. Economists’ are expecting the confidence level to come in at 78.0  

    

Trades

The world might end in September. And if it does, I want to be short S&P 500 index futures and short 10 year US treasury notes futures. If the world remains standing, then I would like to be long both of the aforementioned contracts.

The more attention that tapering draws upon itself, the more uncertainty that builds in advance of the Federal Open Market Committee meeting in September could only create the perfect trade. I have my thoughts as to what the FOMC may do next month; however, I am more concerned with making money than making the correct forecast. Regardless of what the Fed does next month, I believe the probability is high for the markets to pick a direction. Regardless of what the Fed does next month, I believe the probability is high for volatility, above average volume and the start of an intermediate trend. 

Daily Market Color 08/23/2013

Daily Market Color

08/23/2013

Economic Reports & Headlines

Germany second quarter Gross Domestic Product was in line with economists’ estimates by growing 50 basis points on an annual basis and 70 basis points on a quarterly basis.

Second Quarter GDP in the UK was slightly better than expected on both a quarterly and annual basis. Quarterly: 70bps Vs 60bps, Annual: 160bps Vs 150bps.

Consumer prices in Canada grew 10 basis points in July. Economists’ were forecasting a 20 basis point rise in consumer prices.

Canada’s southern neighbor, the US, posted disappointing new home sales in July, 394k Vs 487k.

  

Future Reports

Over the weekend we will get a read on merchandise trade in New Zealand.

 

Trades

The likelihood of tapering continued to decline in light of comments from Fed bankers at their annual conference in Jackson Hole Wyoming. St. Louis Fed President James Bullard stated that there is no need to hurry taper. The attention surrounding tapering is setting up the perfect trading opportunity in September. Gold, Treasuries and US index equities futures will surely be in play. 

Daily Market Color 08/22/2013

Daily Market Color

08/22/2013

Economic Reports & Headlines

Flash composite PMIs for France, Germany and the Eurozone were released today. All the flash reports that were released today accounts for manufacturing and service activity changes in August, relative to July.

Flash reports are estimates that are released ahead of the actual report. The estimates are based off of responses from 85 percent of PMI survey participants. This gives a strong indication of how the final report will turn out. Below are the actual figures versus consensus.

France: Manufacturing 49.7 Vs 50.2, Services 47.7 Vs 49.5

Germany: Manufacturing 52.0 Vs 51.1, Services 52.4 Vs 51.9

Eurozone: Manufacturing 51.3 Vs 50.8, Services 51.0 Vs 50.2

On the domestic front, jobless claims in the US climbed 13k this week. The report missed consensus this week by a modest margin, 336k Vs 329k. However, the four week average declined to 330.5k.

The flash manufacturing PMI in the US beat analysts’ estimates, 53.9 Vs 53.5. August report showed an expansion that marked a five month high, according to Econoday.   

NASDAQ trading was halted today.

Future Reports

Tomorrow we will get a read on growth in two major countries, Germany and Great Britain.

In the US, the government will release their report on New Home Sales.

 

Trades

The FOMC report was released yesterday and markets rallied today. Financial pundits appeared to be mixed in their interpretation of the minutes. Bloomberg stated that the majority of FOMC members are looking to taper. Econoday’s summary of the FOMC’s minutes states that FOMC members are cautious of tapering in the short term. When I looked at the minutes, all I saw was one FOMC member utilizing her vote to voice her desire to taper. Tapering appears to be something that can happen soon, but not as soon as next month. I really like ten year treasury notes. I expect for them to decline in value as the year progresses. In addition to that, I expect the move to accelerate once tapering is announced or when the jobless rate begins to approach 7.0% 

Daily Market Color 08/21/2013

Daily Market Color

08/21/2013

Economic Reports & Headlines

The economic calendar today was filled with a hand full of reports that merit extra attention. We will start off in Great Britain. The latest CBI industrial trends survey, which measures manufacturing activity, was better than expected, 0 Vs -7.

On the domestic front, the National Association of Realtors' existing home sales report for July surpassed analysts’ estimates, 5.390m Vs 5.150m.

The FOMC minutes showed that most members are unwilling to begin tapering in light of subpar inflation and sluggish job growth. Some members expressed concern over the medium term risks that asset purchases may have on inflation.

HSBC’s Flash manufacturing Purchasing Managers Index for China, in August, expanded unexpectedly and came in at a four month high according to CNBC, 50.1 Vs 48.3.

Future Reports

Tomorrow we will get flash PMI reports from the US, France, Germany and the Eurozone.  

Weekly jobless claims will be issued at 8:30am.

 

Trades

The Federal Open Market Committee minutes were uneventful and seem to be in line with my train of thought. Only one FOMC member dissented from the committee’s stance because she wants to taper. I strongly feel that tapering will not occur in September’s meeting because there is only one month of reports left between now and September’s meeting. I highly doubt that reports on unemployment and inflation, between now and the middle of September, will garner enough support to make a motion to taper pass. In light of that, I really like 10 year treasury notes. These are a good short play at the moment. I would be cautious trading them around the jobs report. 

Hit or Miss 08.20.13 for 08.21.13

Hit or Miss 08.20.13 for 08.21.13

Preamble

Tomorrow's session is short of any products worth taking a risk on. There is no technical or fundamental picture, when coupled, that warrants a trade on any products.    

08.20.13 One Day Forecast:

Yen: Higher, Correct

08.21.13 One Day Forecast:

No forecast 

Daily Market Color 08/20/2013

Daily Market Color

08/20/2013

Economic Reports & Headlines

Today was another light day for the international and domestic economic calendar. First we will start off with Japan’s All Industry Index for June. The report was disappointing and was practically an additional wave of resistance to Abenomics. On a month over month basis, production activity in the country fell 60 basis points. May’s report showed an increase 110 basis points.

Producer prices in Germany declined 10 basis points in July. The markets were expecting producer prices in Germany to increase 10 basis points on a month over month basis.

Future Reports

Tomorrow should prove to be somewhat exciting for capital markets since we will get minutes from the Federal Open Market Committee’s most recent meeting.

In addition to that, we will get a read on existing home sales in the US. Consensus is calling for 5.150 million homes to be sold in July.

Across the Atlantic in Great Britain, global markets will get a read on manufacturing with CBI’s Industrial Trends Survey for August.

  

Trades

If you love opportunity, then you should love capital markets. You could always find a forthcoming event that market participants find themselves developing an obsession over. It always appears as if the world’s survival is contingent on decisions from the federal government or the Federal Reserve. Maybe I am too optimistic and should heed the warnings from those who are formally educated in finance and economics. Or maybe I am just too opportunistic and like to take risks, because it is events like September’s Fed meeting that creates perfect trading environments. If the Fed tapers, stocks should be sure to sell off. If the Fed does not taper, then stocks should rally. It is a simple trade. 

Hit or Miss 08.19.13 for 08.20.13

Hit or Miss 08.19.13 for 08.20.13

Preamble

They are hardly any markets that offers a good trade set up for tomorrow. Only the Yen seems right for a trade. In light of poor economic reports that defied Abenomics, market participants appear to be weary of taking the Yen to new lows and the Nikkei to new highs. So for tomorrow's session, I expect the Yen to rise in value against the US dollar.  

08.20.13 One Day Forecast:

Yen: Higher

Daily Market Color 08/19/2013

Daily Market Color

08/19/2013

Economic Reports & Headlines

The economic calendar is light today with virtually no reports scheduled for release on the domestic front. Only bill auctions are happening today.

Later on this evening, the Reserve Bank of Australia will be releasing the minutes from their most recent meeting.

Future Reports

Japan’s All Industry index will be released at 12:30am. The report gives market participants a read on production in all sectors of the Japanese economy.

Germany’s producer price index will be released tomorrow at 2:00am. The report measures the growth in prices of raw materials and industrial products in the country.

Trades

The talk of the Federal Reserve tapering is becoming somewhat of a broken record.  Tapering is not a real threat in my opinion since inflation and unemployment failed to reach the threshold that was set by monetary policy makers. Do we expect the unemployment rate to decline 40 basis points and inflation to spike upwards by 100 basis points in a month? Or do we expect the Federal Open Market Committee to renege on the thresholds they currently have in place? The possibility of tapering next month is nonexistent. I look forward to putting on a trade shortly after the Fed’s meeting in September.

Daily Market Color 08/16/2013

Daily Market Color

08/16/2013

Economic Reports & Headlines

The Harmonized Index of Consumer Prices in the European Union, for July, was in line with consensus by declining 50 basis points on a month over month basis.

Eurozone’s merchandise trade report showed the region surplus was marginally lower than expected in June, 14.9bn Vs 15.0bn.

Housing starts in the US was lower than expected for July, 896m Vs 900m.

The University of Michigan consumer sentiment report came in below consensus. According to Econoday.com, this was the lowest reading since April of this year, 80.0 Vs 85.5.

Manufacturing sales in Canada declined unexpectedly for June, -50bps Vs 30bps. 

Daily Market Color 08/15/2013

Daily Market Color

08/15/2013

Economic Reports & Headlines

The international calendar is light today, however, the domestic calendar is filled with reports. Let us start off in the UK and then cross over the Atlantic. Great Britain’s retail sales in July were better than expected on a monthly basis, 1.1% Vs 0.7%.

On the domestic front, consumer prices in the US for July were in line with consensus on a monthly basis by growing 0.20%.

Jobless claims in the US came in at another pre-recession low in addition to surpassing economists’ estimates, 320k Vs 330k.

The Empire State Manufacturing survey came in below consensus in August, 8.24 Vs 10.00; however, the report still signified an expansion nonetheless.

The treasury international capital report shows that foreign demand for long term US securities is declining. Outflows in June totaled $66.9bn.

Industrial production in the US was unchanged on a month over month basis in July, 0.0% Vs 0.3%.  

The national association of home builders released housing index report for August. The report was marginally higher than consensus, 59 Vs 56.

The Federal Reserve Bank of Philadelphia released its Philadelphia Fed Survey for August. The report came in below consensus, 9.3 Vs 15.0.

Daily Market Color 08/14/2013

Daily Market Color

08/14/2013

Economic Reports & Headlines

Today we have three GDP flash reports that were released. Below you could find the actual figure versus consensus on a quarterly:

France: 50bps Vs 10bps

Germany: 70bps Vs 60bps

EMU: 30bps Vs 20bps

The consumer price index report in France for July was lower than expected on a month over month basis, -30bps Vs -20bps.

Great Britain’s labor market report for July was better than expected. The claimant count declined 29.2k versus expectations of a 15k decline. June’s report was revised lower as well to 29.4k from 21.2k. The International Labor Organization unemployment report ticked down ten basis points to 4.3%.

In the US, producer prices for July were unchanged on a month over month basis. Consensus was calling for prices to rise by 30 basis points. 

Daily Market Color 08/13/2013

Daily Market Color

08/13/2013

Economic Reports & Headlines

Today’s economic calendar started off with two consumer price index reports. The actual growth rates versus consensus, on a month over month basis, could be found below:

Germany: 50bps Vs 50bps

Great Britain: 0bps Vs -10bps

Producer prices in the UK came in below consensus in July. On a month over month basis, input prices grew 110bps versus consensus of 150bps.

Industrial production in the European Monetary Union was mixed. On monthly basis the report was lower than consensus, 70bps Vs 80bps. On an annualized basis the report showed that industrial production in the region is better than economists’ estimates, 30bps Vs 10bps.

On the domestic front, retail sales in the US for July was mild and came in lower than expected on a monthly basis, 20bps Vs 30bps.

Export prices for July was down on a month over month basis, -10bps Vs 20bps. Import prices were lower than expected as well on a monthly basis, 20bps Vs 90bps.

Business inventories were unchanged for June; consensus was calling for a 20bps increase.

Across the Atlantic in the resource rich country of Australia, second quarter retail trade was below consensus on a quarterly basis, 90bps Vs 140bps.

Daily Market Color 08/12/2013

Daily Market Color

08/12/2013

Economic Reports & Headlines

Monday’s session started off with a disappointing read on second quarter GDP from Japan. On an annualized basis GDP grew 2.6%, consensus was calling for GDP to grow by 3.6%.

The US treasury budget for July, which is a monthly account of the federal government’s budget surplus or deficit, missed consensus by a small margin, -97.6bn Vs -96.0bn.

Japan’s machine orders report was better than expected in June on a month over month basis, -2.7% Vs -7.5%.

Hit or Miss 08.09.13 for 08.12.13

Hit or Miss 08.09.13 for 08.12.13

Preamble

This week has been choppy and uneventful. Noise has been made out of reports that markets were historically known to be insensitive too. Meanwhile, good reports are apparently lingering throughout the markets without much merit. Is tapering that much of a fear among market participants? Richard Fisher, the president of the Federal Reserve Bank of Dallas, had an interview on CNBC yesterday and he made a good point. He said that corporations are not voicing their concerns over monetary policy; according to him, they are more concerned with regulation and uncertainty surrounding taxation. I would have to agree with him. I foresee tapering causing a momentary selloff that would be calmed by corporate earnings and economic reports.

Anyhow, below you could find my forecast for the following trading session along with the results from the previous forecast. 

08.09.13 One Day Forecast:

Nikkei 225: Higher, wrong

Gold: Lower, wrong

Silver: Lower, wrong

Soybeans: Lower, right

Ten Year Treasury Note: Lower, wrong

Australian Dollar: Lower, wrong

08.12.13 One Day Forecast:

Gold: Lower

Silver: Lower

Coffee: Lower

Ten Year: Lower

Daily Market Color 08/09/2013

Daily Market Color

08/09/2013

Economic Reports & Headlines

The economic calendar is light for today, however, it was active overnight. China released four reports last night that merit extra attention. Japan also released a report as that gauges business activity in the island nation.

First we will start off with Tertiary index in Japan. The index measures activity in 13 industries in Japan. On a month over month basis, the report missed consensus by declining more than expected, -30bps Vs -20bps.  

Moving over to China, we got a read on inflation in the country via the CPI. Consumer prices for July were slightly below consensus on a year over year basis, 2.7% Vs 2.8%.

Producer prices in China declined in July on a year over year basis. The decline was more than expected, 2.3% Vs 2.2%. 

Industrial production in the China for July was stronger than expected on a year over year basis, 9.7% Vs 9.0%.

China’s retail sales report for July was strong on a year over year basis, despite it missing consensus by a tiny margin, 13.2% Vs 13.5%.  

Heading over to France, industrial production in the country plummeted unexpectedly on a month over month basis, -1.4% versus 0.0%.

Italy’s merchandise trade report was somewhat lower than the previous reading; nevertheless, it was still a surplus, E$3.1bn versus E$3.2bn.

Consumer prices in Italy were for July better than the previous reading on a month over month basis, 10bps Vs -180bps

UK’s trade report was marginally better than expected in June, -S$8.1bn Vs –S$8.5bn.

Crossing back over the Atlantic to US northern neighbor, Canada, the oil and fresh water rich country released a report on housing starts which hardly deviated from consensus, 192,853 Vs 191,000.

We also got a read on jobs in Canada for July. Employment took an unexpected fall this month, 39.4k Vs 6.0k. The jobless rate ticked up ten basis points to 7.2%.

On the domestic front, the wholesale trade report in the US, for June, disappointed and took an unforeseen dip, -20bps vs 40bps.

Forthcoming Reports

Over the weekend, Japan will be releasing GDP. Economists’ are anticipating an annualized growth rate 3.6%.

Trade

Chinese numbers were great today. The selloff in the SP 500 is unwarranted because the fundamental data needed to validate this move is absent. A wholesale trade report from the US merits passive attention. The deviation from reality should have been easily spotted by market participants throughout today’s session. Let us delve into the details.

Between today and yesterday, China released better than expected trade numbers, better than expected industrial production figures and Chinese consumption, by anyone’s standards, was contrary to Bears’ belief. Retail sales in the country were robust, they grew 13.2%. The consumer price index in China beat economists’ consensus as well. On the domestic front, US jobless claims came in at a pre-recession level. Since we received five good reports that merit extra attention, should the markets teeter in light of a report that historically never garnered any attention? This is why I trade. I trade to take advantage of deviations from reality like the one we all witnessed today.

Now don’t get me wrong, they are some markets that are questionable at the moment. For instance, the Australian dollar could rally from this point until the next catalyst presents itself and consequently resume the longer term selloff. The SP 500 is slightly difficult to make a directional bet on at the moment. I would give it a few days until I pick a direction on it. The Japanese Yen seems as if it could continue to rally, but who wants to open a trade ahead of Japan’s GDP report this Sunday?

I would just stay on the side lines for now. We need more news to further develop conviction for directional bets.

Hit or Miss 08.08.13 for 08.09.13

Hit or Miss 08.08.13 for 08.09.13

Preamble

Below you could find my predictions on the direction of various future contracts for the forthcoming trading session. The report will vary from day to day in terms of the number of future contracts I will cast predictions on. The predictions will only let you know if I think the future contract will close higher or lower than the previous trading session.

Futures:

Nikkei 225: Higher

Gold: Lower

Silver: Lower

Soybeans: Lower

Ten Year Treasury Note: Lower

Australian Dollar: Lower 

Daily Market Color 08/08/2013

Daily Market Color

08/08/2013

Economic Reports & Headlines

We will start the Daily Market Color off with a buoyant report that was released from China last night. The country’s trade surplus for July came in below consensus, $17.82bn Vs $26.85bn; however, the year over year growth in imports and exports surpassed market expectations. Imports: 10.9% Vs 4.0%, Exports: 5.1% Vs 3.7%.

This morning over in Germany, the country’s trade surplus beat analysts’ estimates for June, E$15.7bn Vs E$14.6bn.

On the domestic front, jobless claims in the US were better than expected, 333k Vs 336k. This is the lowest level since 2007 according to Bloomberg.com.

Trade

Despite the poor trading week overall, we got some encouraging news from China and the US. Jobless claims practically reached a six year low. In addition to that, China is in better shape than the financial media is making it out to be. Although the actual trade surplus fell below consensus, the underlying figures were pleasing to the Bulls. Annual export and import growth surpassed economists’ expectations by a wide margin.

Now some analysts are calling this trade report the end of the forecasted slowdown in China, at least for the remainder of the year. I find myself wondering if the decline in the Australian dollar would come to a halt in light of China’s trade report. I could only make projections based off of the masses at this point. Will market participants vote with their dollars and buy Aussie dollars? Probably not at this point, we need a series of positive reports from China and Australia to make a turnaround in the currency sustainable.

Daily Market Color 08/07/2013

Daily Market Color

08/07/2013

Economic Reports & Headlines

France released their trade report this morning June which was better than expected but still a deficit nonetheless, E-4.4bn Vs E-5.7bn.

Germany’s industrial production in June beat consensus by a wide margin on a monthly basis, 2.4% Vs 0.5%.

Consumer prices in Switzerland was below consensus in July on a month over month basis, -40bps Vs 10bps.

Daily Market Color 08/06/2013

Daily Market Color

08/06/2013

Economic Reports & Headlines

The Reserve Bank of Australia cut their key rate by 25bps to 2.50%.

The Halifax House Price Index, UK’s longest running index on UK’s home prices, was released for July. The report came in stronger than expected, 90bps Vs 30bps.

Italy’s industrial production report for June was in line with expectations on a monthly basis, 30bps.

Industrial production in the UK during June was stronger than expected, 1.2% Vs 0.8%.

Second quarter GDP in Italy was better than expected but it still showed negative growth on a quarterly basis, -20bps Vs -40bps.

Germany’s Manufacturer Orders, in June, was better than expected on a month over month basis, 3.8% VS 1.4%.

On the domestic front, the international trade report for June was the most narrow it has been in four years. The report beat consensus, $-34.2bn vs $-43.0bn.

Canada’s trade deficit in June came in lower than expected, C$-469m vs C$-520m.