Tuesday, 17 December 2013
Trading the taper
On Monday, Europe received an alarming reminder that the great recession is still with us. The Greek GDP presented a Year over Year decrease of a rather depressing -2.9%. Analyst expectations anticipated a much moderate -1.7% decrease. Moreover, breaking down the change of different components in the index helped support the belief that weak demand factors were among those leading to the negative print; Durables such as Furnishing presented a -1.4% monthly decrease, while Clothing and footwear presented a -9.8% decline.
Tuesday supplied some more weak-demand evidence, but this time on the U.S. front. The U.S. Census Bureau revealed that day that Wholesalers Inventories presented a whopping 1.4% monthly increase in October, much larger than analyst estimation, which predicted a more moderate 0.3% increase. While the figure will necessarily trickle down to the US Q4 GDP, when it will be released, it is hard to believe that this is the way hoped to exit the great recession.
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Monday, 9 December 2013
Economic events of this week
Monday: Consumer and Producer Price Indices are due in China. Analysts expect further expanding of the two price indices as strong local private demand continues pushing the CPI higher amid moderate global demand. Industrial Production is also due in Germany.
Tuesday: The October Tertiary Industry Activity index is due in Japan. Industry activity will also be monitored by the release of Industrial Production in China, France, Italy and the U.K. China will also publish that size of its money stock.
Wednesday: Machine Orders data will be released in Japan – Analysts predict that Abe’s efforts will put us on a 15.1% increase versus last year. Domestic Corporate Good prices will also be published in Japan, with a previous print of Year over Year increase of 2.5% and analysts’ expectations for 2.7% to be published on Wednesday, Japan seems further away from the liquidity trap. The final estimation of the Consumer Price Index in Germany will also see light.
Thursday: The French CPI is scheduled to see light, but the stagnant state of the local economy will make it quite difficult for prices to rise much higher. U.S. Initial Claims will make their weekly appearance.
Friday: The Consumer Price Index will be released in Spain and in the U.S.
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On both sides of the Atlantic
Thursday saw a rather expected decision by the Bank of England to keep the official bank rate at 0.5%. The day’s protagonist, on the other hand, is probably the Department of Labor’s Initial Jobless Claims report, which indicated only 298,000 Initial Claims were submitted during the previous week. The last time this occurred was September and the figure has since surged to as high as 737,000, due to the Government’s shutdown. However, it seems that optimism regarding the labor data was already priced in the markets, as a result of the previous day’s positive ADP figure. Evidently, markets saw little change following the print.
Friday was somewhat of a different story. The day started with very positive indications regarding the U.S. labor market. These included U.S. Nonfarm Payrolls adding 203,000 Jobs in November, and perhaps more importantly U.S. Unemployment dropping to a level of 7.0%. Stock derivatives’ immediate response was to lose about 0.5%. Taper-induced trading was also evident in gold which took quite a blow and of course the USD which strengthened by almost 0.3% versus the EUR. Interestingly, things did not stop there - when the official trading started market opening was on average a tad higher than the previous day’s close. However, soon after that euphoria spread around equity markets, which lead both the Dow and S&P 500 to close their trading days more than a percentage point higher than the previous day’s close.
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Different news makes markets volatile
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Last week the PMI releases delivered on their highly anticipated comeback. It started with Manufacturing Purchasing Managers’ Indices showing mostly positive figures around the Eurozone. These included Italy, with a print of 51.4 versus the anticipated 50.8 and Germany with 52.7 versus expectations for 52.5, not to mention the U.K.’s PMI, which scored no less than 58.4 points, 2.3 more than analysts had predicted. Expectations for increased local demand seem to have weakened the Euro as it began trading at around 1.3540 USD soon after the release of the PMIs, 0.5% below the levels that were traded just before their release.
The Euro’s upside, however, came from a rather unpredictable front, as Tuesday saw surprising pessimism in its equity market. The German DAX index lost nearly 2% during the trading day, while the Paris CAC 40 presented even higher losses. One asset’s pessimism is another’s opportunity, it seems; as the Euro’s weakness from the previous day diminished rather entirely, with EUR/USD trading back at around 1.3600 levels.
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Last week the PMI releases delivered on their highly anticipated comeback. It started with Manufacturing Purchasing Managers’ Indices showing mostly positive figures around the Eurozone. These included Italy, with a print of 51.4 versus the anticipated 50.8 and Germany with 52.7 versus expectations for 52.5, not to mention the U.K.’s PMI, which scored no less than 58.4 points, 2.3 more than analysts had predicted. Expectations for increased local demand seem to have weakened the Euro as it began trading at around 1.3540 USD soon after the release of the PMIs, 0.5% below the levels that were traded just before their release.
The Euro’s upside, however, came from a rather unpredictable front, as Tuesday saw surprising pessimism in its equity market. The German DAX index lost nearly 2% during the trading day, while the Paris CAC 40 presented even higher losses. One asset’s pessimism is another’s opportunity, it seems; as the Euro’s weakness from the previous day diminished rather entirely, with EUR/USD trading back at around 1.3600 levels.
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Monday, 2 December 2013
Economic Events of this week
Monday: Japan’s third quarter Capital Investment data will be published, analysts expect it to indicate an annual 2.8% increase, versus a previous, completely muted figure. In China, “Fiscal forward guidance” will be provided by the HSBC Manufacturing Purchasing Managers’ Index. Manufacturing PMI survey results will be published in Italy, France, Germany, and the U.K. the U.S. will see the Markit, and the ISM PMIs being published.
Tuesday: Japan’s Monetary Base will be published; following October’s figure indicating no less than a 45.8% annual increase of currency in circulation at the BoJ’s vaults. Spanish Unemployment data is also due that day.
Wednesday: PMI Indices for the services sector will be published throughout the Eurozone. Additionally in the Eurozone, the Preliminary Q3 GDP figure will be published, as analysts expect a barely positive quarterly increase of 0.1%. In the U.S., MBA mortgage applications are due with much anticipation, given last week’s surge of building permits. Some U.S. labor data will be provided by the ADP National Employment report. Later that day, the U.S. Trade Balance data for October and U.S. New Home Sales data will be published.
Thursday: The BoE will announce U.K.’s bank rate, currently set to 0.5%. Public interest will probably be drawn to the ECB’s rate announcement later that day. U.S. Initial Jobless Claims data will be published, as well as the U.S. 3Q GDP’s second estimate. The day will conclude with the U.S. Factory Orders data.
Friday: Unemployment Rate will be published in the U.S., providing further guidance on when Bernanke\ Yellen will finally have justification to start tapering. U.S Consumer data is also due with the publishing of Personal Income and Spending figures for October, as well as the University of Michigan’s Consumer Confidence Sentiment.
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Black Friday optimism
Friday presented opportunity for market optimism on both sides of the Atlantic. The Eurozone saw positive data published regarding the demand side, with prices increasing by an estimated 0.9%. Unemployment also provided its fare share as it decreased to 12.1%. That supported the German DAX index and the Spanish IBEX35, closing the week at +1.6% and +1.1% weekly increases respectively. At first, U.S. markets didn’t appear to need any data derived support; Although no positive figure was released in the U.S. on Friday, markets opened with a positive trend, due to optimism based on what appeared to be strong "Black Friday" consumer demand. The S&P 500 gained +0.2% throughout the trading day and the NASDAQ and DJIA complimented with similar figures. This reverted, however, as reports from leading U.S. retailers suggested local demand wasn't as strong as it seemed, leading both the Dow, as well as the S&P to conclude the day in negative territory. Register at ANYOPTION and start trading TODAY! |
Positive data-backed momentum
Last week, equity trading provided another opportunity to admire the optimism recently present in the markets.
Tuesday, provided an opportunity for the NASDAQ to really shine as it passed the 4K mark again, and closed the trading day there, for the first time in 13 years. The positive trading day was backed by U.S. Building Permit statistics, which indicated that 1,034K annualized new permits were granted in October. On the one hand, this is the highest figure since January 2008. On the other hand, it could be a latent response to the recent Federal Government Shutdown, so it will be interesting to re-examine those figures in November.
The day also saw the Conference Board's Consumer Confidence Index losing two points to a level of 70.4. The same positive momentum continued on Wednesday as Initial Jobless Claims dropped by 10K versus the previous week.
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