Global markets are higher this morning on the heels of the German court upholding the constitutionality of the ESM bailout fund. There are still some limitations to the fund, including capping Germany's liability at 190 billion euros, but it still looks good that the ESM will come to fruition. Elsewhere in Europe rumors swirl that Spain is considering asking for aid from the ECB bond buying program, and that France is urging them to do so.
Asian markets rallied overnight ahead of the German court ruling after Chinese Premier Wen suggested there is room for more stimulus to spur consumption. Japan led the gains, while China lagged again.
In the US, investors are eagerly anticipating tomorrow's FOMC meeting and whether Bernanke will announce new QE initiatives. I have been saying I don't think it is likely and that they would prefer to save some bullets, but most strategists expect to hear something and say that is the primary reason that the markets have been rallying - in anticipation of further QE. So if we don't get anything from the FOMC, the market could be vulnerable.
Also later today we will hear from Apple at their San Francisco event where they will unveil the new iPhone5. We could also hear about a smaller iPad (7") as well as other software updates. But the stock has run quite a bit heading into this event, and I could see it taking a breather now that the news is out.
Yesterday Facebook CEO Zuckerberg spoke at a tech conference. He said a few positive things relative to the stock and their expectations for growth, but nothing earth shattering. Nonetheless the stock is 5% higher today. I think investors were just happy to see him in person and hear that he is engaged and taking the drop in the stock price seriously.
The dollar is lower today as the euro gets a bounce from the German court news. Commodities are mixed with oil slightly higher to $97.30 and gold down just a touch to $1733. Silver prices are also taking a breather.
The 10-year yield is lifting further to 1.74%. And the VIX is down 3% back below the 16 level but not giving that much back from Monday's upside reversal.
Trading comment: The S&P is back to making slight new yearly highs today. So far Monday's selloff looks like a 1-day wonder, but a lot could depend on the FOMC tomorrow. Many think that if the Fed doesn't announce new QE moves that the stock market could be disappointed and have a correction. This is certainly possible, but with the stock market making new highs I just don't think that the Fed feels the same pressure to do more QE as it has in past summers. Financials are leading the early action, which is always a positive sign. And more growth stocks are continuing to lead the market higher.
KAM Advisors has long positions in AAPL and FB
12 Eylül 2012 Çarşamba
11 Eylül 2012 Salı
Changing the blog
Unfortunately as so often happens with blogs that aren't purely a bear blog, the SMT has deteriorated to the point where it's mostly inhabited by trolls. The conversation has gotten to the point where it no longer serves any purpose, other than to offer a stage for the trolls to rant.
At this point I will be closing the comments section of the blog for the foreseeable future. If you want to join the discussion then you will have to be a member of the premium website from now on.
At this point I will be closing the comments section of the blog for the foreseeable future. If you want to join the discussion then you will have to be a member of the premium website from now on.
Moody's Warns Of Potential US Debt Downgrade
The market is higher this morning, likely bouncing back from yesterday's little drubbing. But there hasn't been a lot in the way of market moving corporate news or economic data.
The dollar index is lower after Moody's warned that it could downgrade the US debt rating if Congress doesn't pass some measures that "lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term". I just hope Congress heeds their warning. We all know what a disaster it was last year when the debt ceiling expired with no action.
High end retail stocks like COH, RL, and TIF are lower today after Britain's Burberry cut its profit expectations.
Asian markets were mostly lower overnight. China's Commerce Minister reiterated his skepticism on meeting the 2012 target of 10% growth.
In Europe, attention is turning to the German court which is expected to rule on the constitutionality of the European Stability Mechanism on Wednesday. German Finance Minister Wolfgang Schaeuble said that Germany remains opposed to Euro bonds and reiterated that shared liability or a printing press won't solve the crisis.
Commodities are mostly higher. Oil prices are up to $97 and gold prices are higher near $1738. Silver prices are also up again, as are copper.
The 10-year yield is hovering around 1.69%. And the VIX is slightly lower to 15.83 after a huge reversal yesterday. In my opening post yesterday I noted that the VIX was lower and approaching August's lows, but it soon began to reverse higher and by the end of the day had rocketed 16% off of its lows. We will see if there is any follow through to come, as the VIX remains below its 50-day average.
Trading comment: Yesterday's selloff was not accompanied by the rise in volume that would mark the sort of distribution that should worry investors. As of now it appears to be a price dislocation. As always, it is the follow through of the market that is meaningful. If we don't see any further downside this week, traders will chalk the selloff up as a one-day wonder. But we have some big announcements this week with the German ruling on the ESM Wednesday and the FOMC meeting Thursday. So I think that we are likely to see some bigger moves in the market one way or another. Tech really took it on the chin yesterday, led by AAPL which will announce the iPhone5 this week. Some wonder whether it will be a buy the rumor-sell the news type of even.
KAM Advisors has long positions in AAPL and COH
The dollar index is lower after Moody's warned that it could downgrade the US debt rating if Congress doesn't pass some measures that "lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term". I just hope Congress heeds their warning. We all know what a disaster it was last year when the debt ceiling expired with no action.
High end retail stocks like COH, RL, and TIF are lower today after Britain's Burberry cut its profit expectations.
Asian markets were mostly lower overnight. China's Commerce Minister reiterated his skepticism on meeting the 2012 target of 10% growth.
In Europe, attention is turning to the German court which is expected to rule on the constitutionality of the European Stability Mechanism on Wednesday. German Finance Minister Wolfgang Schaeuble said that Germany remains opposed to Euro bonds and reiterated that shared liability or a printing press won't solve the crisis.
Commodities are mostly higher. Oil prices are up to $97 and gold prices are higher near $1738. Silver prices are also up again, as are copper.
The 10-year yield is hovering around 1.69%. And the VIX is slightly lower to 15.83 after a huge reversal yesterday. In my opening post yesterday I noted that the VIX was lower and approaching August's lows, but it soon began to reverse higher and by the end of the day had rocketed 16% off of its lows. We will see if there is any follow through to come, as the VIX remains below its 50-day average.
Trading comment: Yesterday's selloff was not accompanied by the rise in volume that would mark the sort of distribution that should worry investors. As of now it appears to be a price dislocation. As always, it is the follow through of the market that is meaningful. If we don't see any further downside this week, traders will chalk the selloff up as a one-day wonder. But we have some big announcements this week with the German ruling on the ESM Wednesday and the FOMC meeting Thursday. So I think that we are likely to see some bigger moves in the market one way or another. Tech really took it on the chin yesterday, led by AAPL which will announce the iPhone5 this week. Some wonder whether it will be a buy the rumor-sell the news type of even.
KAM Advisors has long positions in AAPL and COH
10 Eylül 2012 Pazartesi
Monday Morning Musings
The markets are slightly lower in early trading after a lackluster overnight session abroad.
Asian markets were mixed after a bevy of economic data was released in China. Imports and exports both came in below expectations. Industrial production was also lower than expected coming in at 8.9% yr/yr. CPI was in line at 2.0% vs. a year ago. The light data point to a continued slowdown in economic growth, and lend themselves to the notion that the PBOC will keep its foot on the stimulus pedal.
Material stocks continue to lead after China's stimulus plans announced last week. Tech stocks are lagging so far today after leading the action last week.
European markets are fairly quiet, with financials continuining to rally after the ECB's announcement last week for Outright Monetary Transactions (OMT). Italian Q2 GDP was revised lower to show a contraction of -2.6%. France also lowered its forecast for GDP to 0.8% from prior expectations for 1.2%. Spain's 10-year yield is hitting its lowest levels since April, near 5.64%.
There isn't a lot in the way of economic data or corporate news this morning in the U.S. Investors are eagerly awaiting this Thursday's FOMC meeting, but I still think that the Fed will merely reiterate its recent statements and not announce any new QE initiatives at this point. Oil and gas prices are up lately, and more QE at this point would likely just drive commodity prices higher.
The dollar is higher today, and commodities are flattish. Oil prices are steady near $96.33 while gold prices are down a little to $1734.
The 10-year yield is up a little to 1.67%. And the VIX is down -1.5% all the way down to 14.15 and getting close to its yearly lows seen in August.
Trading comments: The markets put in a very nice week last week. Breadth in the market improved with over 300 new highs seen on the NYSE. Moreover, more growth stocks are starting to lead the market vs. the defensive type of stocks we had seen leading previously. It looks like dips will continue to be bought by portfolio managers until something comes along and really rattles the market and shakes the newly minted bulls' confidence. We have seen bullish sentiment indicators rising lately. If more of the indicators begin to hit extreme bullish levels, that could leave the market more vulnerable to a pullback. But right now it still feels like folks are looking for spots to put money to work in stocks.
Asian markets were mixed after a bevy of economic data was released in China. Imports and exports both came in below expectations. Industrial production was also lower than expected coming in at 8.9% yr/yr. CPI was in line at 2.0% vs. a year ago. The light data point to a continued slowdown in economic growth, and lend themselves to the notion that the PBOC will keep its foot on the stimulus pedal.
Material stocks continue to lead after China's stimulus plans announced last week. Tech stocks are lagging so far today after leading the action last week.
European markets are fairly quiet, with financials continuining to rally after the ECB's announcement last week for Outright Monetary Transactions (OMT). Italian Q2 GDP was revised lower to show a contraction of -2.6%. France also lowered its forecast for GDP to 0.8% from prior expectations for 1.2%. Spain's 10-year yield is hitting its lowest levels since April, near 5.64%.
There isn't a lot in the way of economic data or corporate news this morning in the U.S. Investors are eagerly awaiting this Thursday's FOMC meeting, but I still think that the Fed will merely reiterate its recent statements and not announce any new QE initiatives at this point. Oil and gas prices are up lately, and more QE at this point would likely just drive commodity prices higher.
The dollar is higher today, and commodities are flattish. Oil prices are steady near $96.33 while gold prices are down a little to $1734.
The 10-year yield is up a little to 1.67%. And the VIX is down -1.5% all the way down to 14.15 and getting close to its yearly lows seen in August.
Trading comments: The markets put in a very nice week last week. Breadth in the market improved with over 300 new highs seen on the NYSE. Moreover, more growth stocks are starting to lead the market vs. the defensive type of stocks we had seen leading previously. It looks like dips will continue to be bought by portfolio managers until something comes along and really rattles the market and shakes the newly minted bulls' confidence. We have seen bullish sentiment indicators rising lately. If more of the indicators begin to hit extreme bullish levels, that could leave the market more vulnerable to a pullback. But right now it still feels like folks are looking for spots to put money to work in stocks.
7 Eylül 2012 Cuma
China Pumps Up The Stimulus
Markets are mixed in early trading after gains in overseas markets. Markets soared yesterday after ECB President Draghi announced his new bond buying program, the Outright Monetary Transactions (OMT). Asian markets soared overnight with Hong Kong up by 3.1% and Shanghai spiking 3.7%, its best single day in three years.
As speculated China announced some big stimulus plans yesterday and today. Yesterday Beijing said that 18 cities in China would get subway systems. Today the govt. laid out plans to build more than 1250 miles of road (more roads to nowhere). Materials stocks shot higher on the news. Copper prices are also spiking to 4-month highs (JJC) and stocks like FCX, JOY, and CLF are all rallying stongly today.
In economic news, the big bad payrolls report once again disappointed investors, but the damage in the market has been contained. I said yesterday that the strong ADP report does not have a great history of predicting how strong the govt. payrolls report will come in. Lo and behold today's jobs report showed just 96k jobs created in August vs. 130k consensus estimates. On the plus side, the unemployment rate fell to 8.1% from 8.3%, but I presume that this is more from a continued decline in the labor force.
In corporate news, Intel (INTC) stock is lower after the company lowered revenue guidance due to weak demand. On the flip side, retails stocks LULU and ULTA are both spiking higher today after reporting strong earnings and guidance.
In Europe, optimism is present today as peripheral bond yields continue to come down. Spanish yields have fallen back to 5.64% and Italian yields are down to 5.08% on 10-year debt.
In the US, our 10-year yield is falling today on the weak jobs report, back down to 1.62%.
The VIX is also another 5.7% lower today back down to the 14.70 level.
Trading comment: The action in the market has been solid. Yesterday's breakout held into the close with the market finishing right near its highs of the day. Also, more growth stocks are starting to breakout and lead the market. This is a change from the last couple of months when defensive stocks were leading the market. If you look at utility stocks as an example you can see that the bloom has really come off the rose in that sector. Today materials stocks are leading the rally by a wide margin. And despite Intel, other tech stocks have been rallying nicely. AAPL and GOOG are both at new highs.
KAM Advisors has long positions in AAPL, GOOG, ULTA
As speculated China announced some big stimulus plans yesterday and today. Yesterday Beijing said that 18 cities in China would get subway systems. Today the govt. laid out plans to build more than 1250 miles of road (more roads to nowhere). Materials stocks shot higher on the news. Copper prices are also spiking to 4-month highs (JJC) and stocks like FCX, JOY, and CLF are all rallying stongly today.
In economic news, the big bad payrolls report once again disappointed investors, but the damage in the market has been contained. I said yesterday that the strong ADP report does not have a great history of predicting how strong the govt. payrolls report will come in. Lo and behold today's jobs report showed just 96k jobs created in August vs. 130k consensus estimates. On the plus side, the unemployment rate fell to 8.1% from 8.3%, but I presume that this is more from a continued decline in the labor force.
In corporate news, Intel (INTC) stock is lower after the company lowered revenue guidance due to weak demand. On the flip side, retails stocks LULU and ULTA are both spiking higher today after reporting strong earnings and guidance.
In Europe, optimism is present today as peripheral bond yields continue to come down. Spanish yields have fallen back to 5.64% and Italian yields are down to 5.08% on 10-year debt.
In the US, our 10-year yield is falling today on the weak jobs report, back down to 1.62%.
The VIX is also another 5.7% lower today back down to the 14.70 level.
Trading comment: The action in the market has been solid. Yesterday's breakout held into the close with the market finishing right near its highs of the day. Also, more growth stocks are starting to breakout and lead the market. This is a change from the last couple of months when defensive stocks were leading the market. If you look at utility stocks as an example you can see that the bloom has really come off the rose in that sector. Today materials stocks are leading the rally by a wide margin. And despite Intel, other tech stocks have been rallying nicely. AAPL and GOOG are both at new highs.
KAM Advisors has long positions in AAPL, GOOG, ULTA
6 Eylül 2012 Perşembe
Draghi Lives Up To His "Whatever It Takes" Comment
Markets are sharply higher in early trading on the heels of some good economic data combined with comments out of the ECB that support Mario Draghi's recent statement that he will do "whatever it takes" to save the euro.
The ECB will commit to buying unlimited amounts of sterilized bonds, acting strictly within its mandate and focusing on bonds with maturities of less than three years. Countries will still need to first make a formal request for aid first. But global markets are pleased with this commitment, and markets from Asian to Europe are rallying.
The ECB held its benchmark rate at 0.75%, the Bank of England stayed at 0.5%, but in a surprise move Sweden's central bank cut their key interest rate by 25 basis points to 1.25%. Separately, the Eurozone Q2 GDP report showed a contraction of -0.2%. It remains unclear what the eurozone will be able to do to spur growth in the region in the face of much belt tightening and austerity measures.
In the US, the August ISM services index rose to 53.7 from 52.6 last month. Also, the ADP employment report showed that private payrolls rose by 201k in August, well above expectations for 143k. In addition last months figures were revised higher from 163k to 173k. This comes ahead of tomorrow's govt. payrolls report, but the ADP report has not always been a good forecaster of that report. Current consensus estimates for tomorrow's figures are for 130,000 new jobs.
The euro was lower in early trading after the ECB announcement but has since moved back into positive territory vs. the dollar. Commodities are higher with gold trading up to $1710 and oil prices higher near $97.15. Silver prices are also higher as well as copper prices.
The 10-year yield is getting a nice boost to 1.68%. And the VIX is getting crushed, down -9.5% almost back to the 16.0 level. Recall that a month ago the VIX got down to 13.45.
Trading comment: The other day I commented that I could easily see the markets breaking out in the near term before any sort of pullback. That prediction is coming to fruition today as the S&P 500 breaks out to a new high for the year. At current levels, the SPX is also at a 4 1/2 year high and back to levels we haven't seen since May 2008. I still think a lot of this price action in the market comes from a combination of the world being awash in liquidity and looking for a home to invest with interest rates near 0%. Also, I think a lot of portfolio managers continue to underperform their benchmarks and so they are forced to put money to work and scramble to keep up as the market continues to move higher and not offer a good pullback to allow them a better entry point.
The ECB will commit to buying unlimited amounts of sterilized bonds, acting strictly within its mandate and focusing on bonds with maturities of less than three years. Countries will still need to first make a formal request for aid first. But global markets are pleased with this commitment, and markets from Asian to Europe are rallying.
The ECB held its benchmark rate at 0.75%, the Bank of England stayed at 0.5%, but in a surprise move Sweden's central bank cut their key interest rate by 25 basis points to 1.25%. Separately, the Eurozone Q2 GDP report showed a contraction of -0.2%. It remains unclear what the eurozone will be able to do to spur growth in the region in the face of much belt tightening and austerity measures.
In the US, the August ISM services index rose to 53.7 from 52.6 last month. Also, the ADP employment report showed that private payrolls rose by 201k in August, well above expectations for 143k. In addition last months figures were revised higher from 163k to 173k. This comes ahead of tomorrow's govt. payrolls report, but the ADP report has not always been a good forecaster of that report. Current consensus estimates for tomorrow's figures are for 130,000 new jobs.
The euro was lower in early trading after the ECB announcement but has since moved back into positive territory vs. the dollar. Commodities are higher with gold trading up to $1710 and oil prices higher near $97.15. Silver prices are also higher as well as copper prices.
The 10-year yield is getting a nice boost to 1.68%. And the VIX is getting crushed, down -9.5% almost back to the 16.0 level. Recall that a month ago the VIX got down to 13.45.
Trading comment: The other day I commented that I could easily see the markets breaking out in the near term before any sort of pullback. That prediction is coming to fruition today as the S&P 500 breaks out to a new high for the year. At current levels, the SPX is also at a 4 1/2 year high and back to levels we haven't seen since May 2008. I still think a lot of this price action in the market comes from a combination of the world being awash in liquidity and looking for a home to invest with interest rates near 0%. Also, I think a lot of portfolio managers continue to underperform their benchmarks and so they are forced to put money to work and scramble to keep up as the market continues to move higher and not offer a good pullback to allow them a better entry point.
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