Archive - Oct 20, 2010 - Story

• Bank of America Accused of Racketeering in Foreclosure Lawsuit in Indiana (Bloomberg)
• Fed to Buy ’Plenty’ of Debt, If Needed, O’Neill Says (Business Week)
• China-Japan South China Sea fiasco returns: Spokesman: Japan FM's remarks are 'shocking' (China Daily)
• FBI Investigating foreclosures (AP)
• Chicago sheriff says no to enforcing foreclosures (Reuters)
• France faces more protests as pension vote looms (Reuters)
• Pimco Says U.S. Economy Will Disappoint With 1.75% Growth (Bloomberg)
• China Rate Move May Lure Capital, Complicating Policy (BusinessWeek)
• Michael Pettis on FOMC Rate Hike (Mpettis)

After successfully pinning the 2% move in the DXY, the question everyone is asking themselves is: is this a trend change or just a bump on the road? Technically, nothing indicates in AUDUSD or S&P for now that it cannot be a trend change. The Shanghai composite index remains stuck against resistance, we still have in place the VIX signal dated October 13 which usually precedes a top in price by between 5 and 10 business days, and the Nikkei has failed so far to take out the 9,750 resistance which would call for at least 3% further upside. Looking at the price action more closely, we can see on the S&P 10-minute and AUDUSD 60-minute charts that we possibly have a 1)-2)-i)-ii) Elliott formation. What does it mean? Well it means if 0.9850 on AUDUSD and 1,175 in S&P future are not bypassed there is a distinct chance we accelerate to the downside, and if that is the case the market will go bypass 1,129 and dip much lower from here. Full disclosure long term I am VERY bearish, the key is to find the timing when Keneysian policies breakdown. - Nic Lenoir

Following news of a setback in mortgage loan applications, we hear from another Fed speaker around lunch time and from the regional banks in the beige book shortly thereafter…

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 20/10/10