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.
Monday, May 4, 2015
Daily Market Color 05/04/2015
Daily Market Color
05/04/2015
Economic Reports & Headlines
China’s Manufacturing PMI for April contracted more than expected, 48.4 vs. exp. 49.6. According to Zero Hedge, this is the largest contraction in one year.
French Manufacturing PMI for April contracted more than expected: 48.0 vs. exp. 48.4. The contraction is largely attributed to weakness in output, new orders and employment. All of the aforementioned components have declined at least eleven or more consecutive months.
German Manufacturing PMI for April expanded slightly more than expected: 52.1 vs. exp. 51.9. Employment was the most notable component in the report.
Manufacturing PMI for the European Union in April expanded slightly more than expected: 52.0 vs. exp. 51.9. Ireland, Spain and the Netherlands expansions were exceptionally strong from a regional perspective.
The US Department of Commerce Factory Orders report for March was in line with consensus by growing 2.1% on a month over month basis. According to Econoday.com, aircraft and motor vehicles were the main drivers of growth.
According to a report from Reuters, Greece is making progress in its effort to receive additional bailout funding. Greece is willing to negotiate the following: selling state owned assets, creating a value added tax and making minimal pension reforms. Labor reforms still appear to be a point of contention.
An article that was published by Ekathimerini is speculating that an emergency meeting of the Eurogroup might be held this week ahead of ECB’s weekly meeting. According to them, Greece will find common ground with its creditors. The ECB is expected to raise the haircut on collateral posted by Greek banks this week..
Trades
Negative sentiment on Greece is lighter today despite their inability to reach an accord on Sunday. According to a report published on Reuter’s website, Greece’s Labor Minister stated that they will be able to make its IMF debt payments this month. Financial pundits are speculating that European Central Bank will increase their haircut on collateral posted by Greek banks. In light of the progress being made in Greece’s debt negotiations, I’m unable to see the possibility of that happening. I do hope the speculation of an emergency Eurogroup meeting this week do come to fruition. Until a deal is made or debt payment is missed, I will remain on the sidelines.
05/04/2015
Economic Reports & Headlines
China’s Manufacturing PMI for April contracted more than expected, 48.4 vs. exp. 49.6. According to Zero Hedge, this is the largest contraction in one year.
French Manufacturing PMI for April contracted more than expected: 48.0 vs. exp. 48.4. The contraction is largely attributed to weakness in output, new orders and employment. All of the aforementioned components have declined at least eleven or more consecutive months.
German Manufacturing PMI for April expanded slightly more than expected: 52.1 vs. exp. 51.9. Employment was the most notable component in the report.
Manufacturing PMI for the European Union in April expanded slightly more than expected: 52.0 vs. exp. 51.9. Ireland, Spain and the Netherlands expansions were exceptionally strong from a regional perspective.
The US Department of Commerce Factory Orders report for March was in line with consensus by growing 2.1% on a month over month basis. According to Econoday.com, aircraft and motor vehicles were the main drivers of growth.
According to a report from Reuters, Greece is making progress in its effort to receive additional bailout funding. Greece is willing to negotiate the following: selling state owned assets, creating a value added tax and making minimal pension reforms. Labor reforms still appear to be a point of contention.
An article that was published by Ekathimerini is speculating that an emergency meeting of the Eurogroup might be held this week ahead of ECB’s weekly meeting. According to them, Greece will find common ground with its creditors. The ECB is expected to raise the haircut on collateral posted by Greek banks this week..
Trades
Negative sentiment on Greece is lighter today despite their inability to reach an accord on Sunday. According to a report published on Reuter’s website, Greece’s Labor Minister stated that they will be able to make its IMF debt payments this month. Financial pundits are speculating that European Central Bank will increase their haircut on collateral posted by Greek banks. In light of the progress being made in Greece’s debt negotiations, I’m unable to see the possibility of that happening. I do hope the speculation of an emergency Eurogroup meeting this week do come to fruition. Until a deal is made or debt payment is missed, I will remain on the sidelines.
Saturday, May 2, 2015
Daily Market Color 05/01/2015
Daily Market Color
05/01/2015
Economic Reports & Headlines
The Charter Institute of Purchase and Supply (CIPS) issued Great Britain's manufacturing PMI report for April. The report disappointed but still showed an expansion for the month, 51.9 vs. exp. 54.6.
Over in the US we received US Motor Vehicle Sales for April. Sales came in slightly lower than expected 16.5 vs. exp. 16.9
PMI manufacturing in the US for April showed an expansion that came below estimates, 54.1 vs. exp. 54.5. Exports weighed down the expansion due to the strong dollar.
The US ISM manufacturing index for April showed an expansion as well that came in below estimates, 51.5 vs. exp. 52.0; any reading above 50 is an expansion while any reading below 50 is a contraction. Employment weighed down the reading.
Trades
I have now new commentary. I am waiting for new developments from Greece.
05/01/2015
Economic Reports & Headlines
The Charter Institute of Purchase and Supply (CIPS) issued Great Britain's manufacturing PMI report for April. The report disappointed but still showed an expansion for the month, 51.9 vs. exp. 54.6.
Over in the US we received US Motor Vehicle Sales for April. Sales came in slightly lower than expected 16.5 vs. exp. 16.9
PMI manufacturing in the US for April showed an expansion that came below estimates, 54.1 vs. exp. 54.5. Exports weighed down the expansion due to the strong dollar.
The US ISM manufacturing index for April showed an expansion as well that came in below estimates, 51.5 vs. exp. 52.0; any reading above 50 is an expansion while any reading below 50 is a contraction. Employment weighed down the reading.
Trades
I have now new commentary. I am waiting for new developments from Greece.
Thursday, April 30, 2015
Daily Market Color 04/30/2015
Daily Market Color
04/30/2015
Economic Reports & Headlines
We received a slew of reports today starting with the Bank of Japan's monetary policy announcement. The bank decided to keep their aggressive policy unchanged with 80 trillion yen in annual bond purchases and a key interest rate of 10 basis points. It has been two years since the bank announced its quantitative easing program. The goal was to reach 2.0% inflation in Japan in two years; however they had to extend the goal by an additional fiscal year.
Eurostat's Harmonized Index of Consumer Prices for April was flat and in line with consensus on a year over year basis. Nevertheless, there was a slight improvement from March's reading of negative 10 basis points. HICP readings have been negative since November 2014.
Eurostat's unemployment report for March showed joblessness decline by 36k. Euro area unemployment rate remained unmoved at 11.3%. Markets were expecting the rate to tick down 10 basis points to 11.2%.
The US Department of Labor released its weekly jobless claims report for April 25th, which showed a drop of 34k bringing the total number of new claims to 262k. This is the lowest level since April of 2000, according to Econoday.com.
The US Department of Commerce released its monthly Personal Income and Outlays report for March. Personal Income on a month over month basis was flat versus an expected rise of 20 basis points. On a year on a year basis prices did grow 3.8%. Consumer spending grew 40 basis points on a month over month basis and 3.0% on a year over year basis. Personal Consumer Expenditures increased 20 basis points on a month over month basis and grew 30 basis points on an annual basis. The Fed is targeting a 2.0% increase.
Greece and Euro area partners will work together throughout the weekend to come up with a deal by May 3rd to be voted on at the next Eurogroup meeting on May 11th, according to an article from Bloomberg.
Trades
I am remaining firm in my position to trade once bailout funding is released for Greece or once a default occurs. European debt, equity and currency markets should move on May 3rd and May 11th. However, these moves have a low probability of developing into a trend that is worth trading for me. I will wait patiently on the side lines.
Wednesday, April 29, 2015
Daily Market Color 04/29/2015
Daily Market Color
04/29/2015
Economic Reports & Headlines
The economic calendar for Wednesday is crowded. In addition to that they were updates in Greece. Great Britain started the day off with a read an update on housing activity. Nationwide HPI for April beat surpassed Econoday’s consensus by increasing 100 basis points on a month over month basis versus an expected 20 basis point increase. On a year over year basis, prices increased 5.2% versus expectations of 4.1%. This is good news to counter the poor GDP reading UK received yesterday.
The European Commission issued the EC Economic Sentiment report for April, which is a survey of business and consumer sentiment in the region. The headline figure came in slightly below consensus, 103.7 versus 103.9.
Over in Germany we got a read on inflation for March. Consumer prices declined 10bps as expected on month over month basis. On an year over year basis, prices increased 40bps as expected.
On the domestic front, first quarter GDP came in way below estimates on a quarter over quarter basis, 20 basis points versus 100 basis points. The poor performance was attributed to a strong dollar and a horrid weather conditions.
The Federal Open Market Committee (FOMC) made their monetary policy announcement which was in line with expectations. There was no change in policy however, it appears that market participants are expecting a June rate hike due to the Fed’s commentary. Various of components of the economy was revised lower by the Fed, however, it appears as if the rate hike will remain on the table regardless of the revisions.
04/29/2015
Economic Reports & Headlines
The economic calendar for Wednesday is crowded. In addition to that they were updates in Greece. Great Britain started the day off with a read an update on housing activity. Nationwide HPI for April beat surpassed Econoday’s consensus by increasing 100 basis points on a month over month basis versus an expected 20 basis point increase. On a year over year basis, prices increased 5.2% versus expectations of 4.1%. This is good news to counter the poor GDP reading UK received yesterday.
The European Commission issued the EC Economic Sentiment report for April, which is a survey of business and consumer sentiment in the region. The headline figure came in slightly below consensus, 103.7 versus 103.9.
Over in Germany we got a read on inflation for March. Consumer prices declined 10bps as expected on month over month basis. On an year over year basis, prices increased 40bps as expected.
On the domestic front, first quarter GDP came in way below estimates on a quarter over quarter basis, 20 basis points versus 100 basis points. The poor performance was attributed to a strong dollar and a horrid weather conditions.
The Federal Open Market Committee (FOMC) made their monetary policy announcement which was in line with expectations. There was no change in policy however, it appears that market participants are expecting a June rate hike due to the Fed’s commentary. Various of components of the economy was revised lower by the Fed, however, it appears as if the rate hike will remain on the table regardless of the revisions.
The ECB decided to increase the amount of Emergency Liquidity Assistance to European banks by 1.4 billion Euros, according to a report from Bloomberg.
Euro area bank lending increased for the first time since 2012, according to a report from Bloomberg.
Trades
European stocks have been on a decline that exceeded 1.0% for the past two trading sessions. Today’s selling was based on tapering fears from the European Central Bank in light of the optimistic Euro area bank lending report. All of this selling could be reversed with commentary from the ECB downplaying an early cut off to their bond purchases. If Greece hint at progress with the Troika, that will reverse the selling as well. It’s an unfavorable headline driven market for me to be trading right now, which is why I am on the sidelines. The only headline I am concerned with is a Greek default or the unlocking of a Greek bailout package. The probability of a big move in those two scenarios warrants a trade. And I believe that trade will be arriving soon in light of the intense repayment schedule Greece is currently facing between now and the end of May.
Euro area bank lending increased for the first time since 2012, according to a report from Bloomberg.
Trades
European stocks have been on a decline that exceeded 1.0% for the past two trading sessions. Today’s selling was based on tapering fears from the European Central Bank in light of the optimistic Euro area bank lending report. All of this selling could be reversed with commentary from the ECB downplaying an early cut off to their bond purchases. If Greece hint at progress with the Troika, that will reverse the selling as well. It’s an unfavorable headline driven market for me to be trading right now, which is why I am on the sidelines. The only headline I am concerned with is a Greek default or the unlocking of a Greek bailout package. The probability of a big move in those two scenarios warrants a trade. And I believe that trade will be arriving soon in light of the intense repayment schedule Greece is currently facing between now and the end of May.
Tuesday, April 28, 2015
Daily Market Color 04/28/2015
Daily Market Color
04/28/2015
Economic Reports & Headlines
First quarter GDP in Great Britain grew less than expected on a quarter over quarter basis, 30bps versus consensus of 50bps. On a year over basis, UK's economy grew 2.4% versus consensus of 2.6%.
The Federal Open Market Committee (FOMC) meeting started today. The committee meets eight times a year and makes a decision on US monetary policy during these meetings. A decision will be issued tomorrow.
The S&P Case Shiller 20 City Home Price Index came in stronger than expected on a month over month basis for February: 90bps versus 70bps. Year over year growth in February was 5.0% versus expectations of 4.8%.
The Conference Board’s Consumer Confidence Index for April came in below consensus, 95.2 versus 103.0.
Trades
Volatility is surely picking up in Europe. European stocks declined over 1.0% in today’s trading session on virtually no news. The optimism that followed the news of Greece’s Finance Minister being removed from leading the discussions with the Troika has fizzled. I envision that a move to the downside in the event of a Greek default would be temporary and short lived. Nevertheless it will warrant a trade. However, in the midst of that turmoil a strong rally could ensue if debt restructuring, in coordination with the Troika, takes place in Greece. That will set precedent in the Eurozone for other European countries that may be on the brink of being unable to service their debts. It would send a message that the troika will prohibit these countries from failing completely. It would send a message that Eurozone countries will be able to have an orderly default and still remain in the Eurozone. I will short any default, but I will switch that position if the Troika wants to keep Greece in the Eurozone despite defaulting.
Tonight we will get a policy announcement from the Bank of Japan. There could be a surprise policy action which could reverse the recent decline in Japanese stocks.
04/28/2015
Economic Reports & Headlines
First quarter GDP in Great Britain grew less than expected on a quarter over quarter basis, 30bps versus consensus of 50bps. On a year over basis, UK's economy grew 2.4% versus consensus of 2.6%.
The Federal Open Market Committee (FOMC) meeting started today. The committee meets eight times a year and makes a decision on US monetary policy during these meetings. A decision will be issued tomorrow.
The S&P Case Shiller 20 City Home Price Index came in stronger than expected on a month over month basis for February: 90bps versus 70bps. Year over year growth in February was 5.0% versus expectations of 4.8%.
The Conference Board’s Consumer Confidence Index for April came in below consensus, 95.2 versus 103.0.
Trades
Volatility is surely picking up in Europe. European stocks declined over 1.0% in today’s trading session on virtually no news. The optimism that followed the news of Greece’s Finance Minister being removed from leading the discussions with the Troika has fizzled. I envision that a move to the downside in the event of a Greek default would be temporary and short lived. Nevertheless it will warrant a trade. However, in the midst of that turmoil a strong rally could ensue if debt restructuring, in coordination with the Troika, takes place in Greece. That will set precedent in the Eurozone for other European countries that may be on the brink of being unable to service their debts. It would send a message that the troika will prohibit these countries from failing completely. It would send a message that Eurozone countries will be able to have an orderly default and still remain in the Eurozone. I will short any default, but I will switch that position if the Troika wants to keep Greece in the Eurozone despite defaulting.
Tonight we will get a policy announcement from the Bank of Japan. There could be a surprise policy action which could reverse the recent decline in Japanese stocks.
Monday, April 27, 2015
Daily Market Color 04/27/2015
Daily
Market Color
04/27/2015
Economic Reports & Headlines
We received
our first report for the week from the UK with the CBI industrials trends
survey for April. It’s a survey of manufacturing executives that started over
50 years ago. According to Econoday.com, the survey is supposed to indicate
trends in cost, output, prices and exports. April’s report indicated a
disappointment with the headline reading falling short of expectations.
On the
domestic front, Flash Services PMI came in strong for April. Consensus ranged
from 58.0 – 60.4 with the actual reading coming in at 57.8.
Over in
Greece there was a glimmer of hope due to the emasculation of Greece’s Finance
Minister, Yanis Varoufakis. Prime Minister Alex Tsipras removed the FinMin from
leading the bailout funding negations.
Trades
European
stocks rallied in light of Greece’s FinMin smaller role in the country’s debt
discussions with the Troika. I decided to close my short position in the Euro
Stoxx 50 because I will be unable to withstand the volatility. I still believe resistance
to the upside will remain in place as long as there is uncertainty in Greece.
If Greece fails to meet one of its debt payments or if the ECB decides to
discontinue emergency funding to Greek banks, then I will short European stocks
with more confidence. On the other hand, if a deal is struck between Greece and
the Troika then I will go long European stocks and trade alongside the ECB.
Later
this week, the Bank of Japan will issue its monetary policy announcement. Many
are expecting the BoJ to maintain its current policy. The bank failed to reach
its 2% inflation target that was set two years ago when they embarked on an unprecedented
amount of quantitative easing. BoJ extended their inflation forecast another
year. I will be looking forward to the BoJ to take further measures to weaken
the Yen. If they do, I will short the Yen or go long Japanese equities.
Saturday, April 25, 2015
Daily Market Color 04/24/2015
Daily
Market Color
04/24/2015
Economic Reports & Headlines
The
economic calendar was light today and it began in Japan with the Ministry of
Economy, Trade and Industry (METI) All Industry Index. This report combines
Japan’s Tertiary Index with activity from construction, agricultural and
fishing industries along with activity in the public sector. This index is
moderately similar to a gross domestic product report. February reading showed
an increase of 10 basis points over the previous month and a drop of 110 basis
points over the past year.
Over in
Germany, the IFO institute released its closely watched Business Climate Index
report. It’s a survey of 7,000 enterprises that serves as an indicator of
business expectations, current conditions and economic sentiment in the German
economy. The report for April was slightly better than expected. However,
business expectations came in slightly lower than expected: 103.5 versus 104.6.
The report is broken down into three segments: current conditions, economic sentiment
and lastly business expectations, which happens to be the segment that garners
the most attention.
Across
the Atlantic over in the US, the Bureau of Consensus and the US Department of
Commerce released their Durable Goods Orders report for March. The report was
mixed and it turned out to be an overall disappointment once you looked beyond
the headline figures. New Orders grew 4.0% on a monthly basis and beat
expectations of growing 50 basis points. However, New Orders minus transportation
declined 20 basis points in March on a monthly basis versus a widely expected
climb of 30 basis points. Examples of durable goods are industrial machinery,
appliances, cars and computers.
All eyes
were on Latvia, a small country located in northern Europe, for the meeting of European
Union finance ministers. Greece’s finance minister, Yanis Varoufakis, was under
pressure to provide a list of reforms along with a comprehensive plan for
implementing them to secure bail out funding. Instead of providing the list and
the plan, he offered a partial list in an attempt to unlock a fraction of the
bailout funding. Minister Varoufakis offer was shot down by the increasingly
impatient group of finance ministers.
Trades
Greece merited most of my attention today. I’m currently short Euro Stoxx 50 futures, which is a basket of 50 blue chip stocks in Europe. European equities have been on a rapid ascent ever since the European Central Bank (ECB) decided to embark on an aggressive form of quantitative easing. The ECB will purchase one trillion euros of European government bonds at a rate of $60 billion a month until September 2016. It is obvious that you refrain from trading against a powerful central bank such as the ECB; however, Greece is a temporary hurdle in 2015’s European bull market. Stocks on the right side of the Atlantic will face heavy resistance hitting new highs the longer Greece takes to meet the demands of the Troika. The Troika is compromised of the European Central Bank, European Union and the International Monetary Fund. If the Troika fails to ease their demands, then European equities will continue to face resistance to the upside. Time is ticking and Greece may very well default on one of its repayments to either the IMF or the ECB. More than likely it will be the IMF they will default on. Below you could see Greece’s debt repayment schedule according to UBS and the IMF:
Greece merited most of my attention today. I’m currently short Euro Stoxx 50 futures, which is a basket of 50 blue chip stocks in Europe. European equities have been on a rapid ascent ever since the European Central Bank (ECB) decided to embark on an aggressive form of quantitative easing. The ECB will purchase one trillion euros of European government bonds at a rate of $60 billion a month until September 2016. It is obvious that you refrain from trading against a powerful central bank such as the ECB; however, Greece is a temporary hurdle in 2015’s European bull market. Stocks on the right side of the Atlantic will face heavy resistance hitting new highs the longer Greece takes to meet the demands of the Troika. The Troika is compromised of the European Central Bank, European Union and the International Monetary Fund. If the Troika fails to ease their demands, then European equities will continue to face resistance to the upside. Time is ticking and Greece may very well default on one of its repayments to either the IMF or the ECB. More than likely it will be the IMF they will default on. Below you could see Greece’s debt repayment schedule according to UBS and the IMF:
May
1st 2015:
€195.1m
(IMF)
May
12th 2015
€744.9m
(IMF)
June
5th 2015
€297.9m
(IMF)
June
12th 2015
€335.2m
(IMF)
June
16th 2015
€558.7m
(IMF)
June
19th 2015
€335.2m
(IMF)
June
19th 2015
€89.4m
(ECB)
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