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Overnight Sentiment: Crashy
Easy come, easier go. After yesterday's last hour ramp driven by a MarketWatch article that said absolutely nothing new about the Fed's monetization plans and an AAPL surge which saw the firm add $22 billion in market cap in one day (or more than the market cap of CBS Corp) sent stocks green, the overnight session has taken it all away and then some, with futures now trading roughly 12 ticks lower or at yesterday's lowest levels. The catalyst is, once again, Spain where Moody's downgraded five Spanish regions including Catalonia after the market close (for the reason, see our piece from the weekend "Spanish Regional Bailout Fund Runs Out Of Money"), coupled with news from Confidencial that Spain's budget deficit will overshoot the EU target of 6.3% and hit at least 7.3%, driven by a €10.5 billion deficit in the social security system, trashing the promises from last month's Spain's "reform" package, and as BNP said (confirming what we warned weeks ago), making the conditionality hurdle suddenly that much higher for Spain. And just as the world was getting comfortable that Spain will get away with using the OMP with virtually no conditions. The cherry on top came from France where the business conditions index slid to a 3 year low on expectations a trough had been put in place. The result is a tumble in the EURUSD to below the 1.3000 barrier, dragging stock futures, commodities, and of course Europe with it, sending the Spanish bond curve yield higher, and generally giving a very sour mood to the day as traders walk in.
What to watch out for today (via SocGen):
In the eurozone, France will be the first to publish its business confidence index. Expected flat at 90, it might indicate that pessimism in 2012 has bottomed out in the eurozone and the worst is behind us. It should also provide an initial indication before tomorrow's publication of confidence indices for the entire eurozone. Stabilisation would thus be good news, even if the road to returning to solid growth might still be long.
As noted above, this printed at 85, the lowest since August 2009, with the October production outlook indicator at -56 on estimates of a -50 print. Hardly inspiring.
Then investors will turn to Canada, with the BoC's meeting. All of the analysts questioned by Bloomberg expect rates to be unchanged at 1.00%. Indeed, except for jobs data, all of the economic indicators published in October showed rather satisfactory trends. Of course, the accompanying press release should be closely scrutinised. Nevertheless, status quo when the vast majority of G10 central banks are heading back toward ultra-accommodating monetary policy, by cutting rates for some (such as the RBA recently) or bolstering their unconventional policies (lately the Fed and BoJ, perhaps the BoE soon), could help slow the rise of the USD/CAD as the exchange rate is nearing the symbolic level of parity.
In the US, the calendar is almost empty, with just the opening of the US Treasury's quarterly refinancing programme. The week should really get going tomorrow with new housing sales and the FOMC.
For the rest of the overnight recap, here is DB's Jim Reid:
Asian markets are trading mostly weaker led by losses on the Shanghai Composite (-0.6%) and KOSPI (-0.3%). Volumes are generally low with Hong Kong closed for a public holiday. The Nikkei (+0.1%) is outperforming the rest of the region after Japan’s economy minister continued to call on the BoJ to increase monetary stimulus to achieve its inflation target, which helped the USDJPY reach 80 in overnight trading for the first time since July. Also weighing on sentiment was Moody’s overnight downgrade of five Spanish regions (Andalucia, Extremadura, Castilla-La Mancha, Catalunya, and Murcia) citing deteriorating liquidity positions.
Recapping yesterday’s markets, the S&P500 posted an impressive 0.75% rally in the final hour of trading to grind out a marginal gain (+0.04%) for the day. A late-day surge in hardware makers helped technology stocks close up 1.1%, impressive on a day when 8 out of 10 industry sectors closed in the red. Before that, the S&P500 traded all the way down to 1422.1 (or -0.77%) which marked the lowest intra-day level since 6th September as Caterpillar’s pre-open earnings/guidance weighed on broader markets. The equipment maker posted earnings 1.7% above consensus but disappointed on the revenue side (1.8% below). The company also revised 2012 and 2013 revenue guidance downwards reflecting a lower customer backlog (down 18% yoy). More broadly, it was a better day for earnings yesterday with an EPS beat:miss ratio of 80:20 and revenue beat:miss ratio of 60:40, albeit with only ten S&P500 companies reporting. Apple broke a 3-day slide to close up 3.97% (adding US$23bn in market cap, equivalent to half the market cap of Facebook) in its largest one day gain since May after some upbeat reports ahead of the company’s expected iPad-mini launch today.
Earlier in Europe, equities started the day on the front foot following Rajoy’s Peoples Party’s election victory on Sunday, but markets turned south following the Caterpillar result. The Stoxx600 ended 0.4% weaker, at the day’s lows, while in the credit space both the Xover (+4bps) and Europe Main (+1.5bps) closed wider.
DB’s Europe economist Gilles Moec thinks that with two key elections out of the way, and a nationalist push likely in the Catalonian elections on Nov25th, it makes less sense for Rajoy to hold out now. The most likely forums for requesting an MoU are probably the ECOFIN meeting on 12th November or at the European Council meeting on 22nd November. Outside of the Spanish elections, it was relatively quiet in Europe. Reuters reported that German officials are studying a plan for Greece to buyback or reprofile its debt. Greek finance minister said that Greece had to “run fast” over the next few days to agree the remaining issues with the troika, telling parliament that “We will go hungry if we do not get the next instalment” (Ekathimerini). A Der Spiegel article noted the growing divide between Merkel and Hollande which was borne out of differences in opinion over banking supervision and control of over national budgets.
Looking at the day ahead, the data docket remains fairly light with Eurozone consumer confidence and French business confidence readings the main highlights. In the US, the focus will remain on corporate earnings with 30 S&P500 companies reporting. Corporate bellwethers UPS and 3M report pre-market while Facebook’s results are due after US market close. Apple is expected to launch its iPad-mini at 10am Pacific time. Where do I queue.....?
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iPAD-mini ... really? Fuck me.
Wonder what Art Crashons opine is.
No one gave a shit when AMZN made a penny. WHo gives a shit now.
It's not APPL or any specific thing, it's "mass mood". Prechter and Elliott Wave are on top of this. I thought we'd see a seasonal mass panic into the 10/15 new moon, but I may have been off a 1/2 lunar cycle. The 10/29 full moon, which happens to involve a Puetz eclipse crash window associated with the 11/13 total solar eclipse, might be more relevant to man's seasonal lunacy.
http://thespiritoftruth.blogspot.com/2012/09/mans-seasonal-insanity.html
If the Mideast lights up, head for a bunker.
iPad Touch...iPad Mini. Glad to see aapl is watering down their offering...again.
VIX should take out yesterday's highs around 17.94 today and then spike to 30 by month-end.
The ratings agencies should downgrade the US a few days before the election for the lulz.
In other news... bullish news...
http://www.jpost.com/Headlines/Article.aspx?id=288920
PM: Tough response to Gaza attack, hints Iran involvedhttp://www.breitbart.com/Big-Government/2012/10/21/Obama-Bagged-Over-2-M...
Obama Bagged Over $2 Million In Invalid Donations For Septemberhttp://www.telegraph.co.uk/news/worldnews/europe/italy/9626075/LAquila-e...
L'Aquila earthquake scientists sentenced to six years in jailhttp://www.breitbart.com/Big-Peace/2012/10/21/UN-Warns-Americans-Do-Not-...
The United Nations Special Rapporteur on Counter-Terrorism and Human Rights has warned Americans not to elect Republican Mitt Romney in next month’s presidential election, saying that doing so would be “a democratic mandate for torture.”
http://freebeacon.com/obama-campaign-borrows-15m-from-bank-of-america/
Obama For America took out a $15 million loan from Bank of America last month, according to the campaign’s October monthly FEC report. The loan was incurred on September 4 and is due November 14, eight days after the election. OFA received an interest rate of 2.5% plus the current Libor rate...
http://washingtonexaminer.com/1.5b-contract-in-iraq-for-bidens-little-br...
$1.5B contract in Iraq for Biden’s little brother exposes Obama ahead of debate
http://www.naturalnews.com/037622_Presidential_elections_riots_preparati...
10 urgent preparations for possible riots after the Presidential election
SGS warning http://www.silvergoldsilver.com/
I found stuff from last year, but it appears Shanghai isn't biting the election crap but may use it to break Goldman, they only need to hike it for Options and then snap the banks in half.
Of course JPM captures the wind fall...however it would also mean the Chinese lose buying power on other things.
head on, pedal to da metal...
laws of physics, econ. and nature coming into play. finally!
what is central planner/manipulator to do?
engine of growth done over, but print your growth ben, cause you just fucked
us over big time. china aint gonna like what you doin...
got gold? got glock?
Breaking...
Anti Aircraft Rocket hits Turkish Health Care Center Near Syria Border
More details to follow.
Update :
http://www.hurriyetdailynews.com/syrian-shell-hits-health-center-in-sout...
An anti-aircraft shell fired from Syrian territory hit a health center in the southern province of Hatay today, daily Hürriyet has reported.
It remains unknown if the shell was fired by Syrian army or opposition forces.
No casualties were reported in the incident.
At the break neck speed the Turkish/syrian war is going, I could plant a garden and it would be done before the tenth shot is fired.
Always a bad idea to short going into an FOMC meeting. This is a two day meeting with statement tomorrow and no press conference, but even so, I'd be very cautious about shorting given the speed with which any Fed rumour can spike prices and cause a squeeze. Conditions look ripe to me to skin some shorts.
I can't completely disagree, but it's gonna have to be one hell of a rumor. Turn those algos up to 11...
this thingy is getting out of control. body bags on order?
black swan a speading those big black wings-she flys again...
watch those treasuries; when the bid dies, ya know it is time to rice up!
S&P is still over 1400. It's not that bad.
Sent from my Obamaphone.
Fuck you MarketWatch...two bit fucking Barrons piece of shit wannabe's.
Crashy is my favorite street sentiment. If only it came around more than once in a blue moon.
Remember when corrections used to be considered healthy - now CNBC thinks a 3% pullback is worthy of panic or Fed action.
keeping it simple - this faith based system has a human element and when peoples figure out they are fucked they will act accordingly. lehman on steroids; commonly called derivatives. yea they in effect have a cancelling effect(counter party), but if they get out of wack, ie whale trade, look out - this thingy comes unglued fast.,..
whole lotta money heading out of some pretty narrow openings, think hft plus mutual fund outflows and bank runs for da money.
got gold? got glock?
DuPont continues to fall apart, announcing they will cut 1,500 more jobs. Demonstrating once again that they have "core competencies" in the technical areas, but consistently lousy management, CEO Ellen Kullman babbled:
"Today, we are taking additional actions to improve competitiveness and accelerate market-driven innovation and growth by fine-tuning the organization, eliminating costs and expanding beyond our everyday focus on productivity".
Wilmington, DE still longs for the days when Irv Shapiro was CEO.
http://finance.yahoo.com/news/dupont-cut-1-500-jobs-104044742.html
Ancient Greece, Bitchez.
SP500 impending sell off...
Despite recurring short squeezes, SPX etc daily charts continue to break down.
DOW 8 hour chart shows possible H+S (bearish pattern)
http://trader618.com
http://www.zerohedge.com/news/2012-12-24/market-analysis