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Daily US Opening News And Market Re-Cap: October 12

Tyler Durden's picture




 

From RanSquawk

  • The Slovak Parliament rejected the EFSF ratification bill late yesterday. However, risk-appetite re-emerged following news that a new bill could be introduced in the Slovak Parliament as soon as this afternoon
  • A much lower than anticipated allotment in the ECB’s 3-month USD operation waned some concerns surrounding the Eurozone banks’ funding
  • Strength in equities together with a “technically uncovered” 30-year bond auction from Germany weighed upon Bunds
  • Renewed risk-appetite allied with the release of the FOMC minutes later in the session exerted downward pressure on the USD-Index

Market Re-Cap

The Slovak Parliament rejected the EFSF ratification bill late yesterday, which spurred risk-aversion overnight and in early European trade. However, in a stark reversal of fortunes, market sentiment changed following news that a new bill could be introduced in the Slovak Parliament as soon as this afternoon. Also, markets took positively comments from Chancellor Merkel who said that the EFSF changes will get full approval before the EU summit on the 23rd October, as well as a much lower than anticipated USD-allotment in the ECB's 3-month USD-operation, which waned some concerns surrounding the Eurozone banks' funding. Strength in equities weighed upon Bunds, whereas the Eurozone 10-year government bond yield spreads with respect to Bunds narrowed across the board. Bunds came under further pressure following a "technically uncovered" 30-year bond auction from Germany. In the forex market, the USD-Index came under extensive pressure amid renewed risk-appetite, which provided a boost to EUR/USD, GBP/USD and commodity-linked currencies. EUR/USD received additional support on the back of market talk of Swiss names and US bulge bracket names buying in the pair. Also, GBP/USD moved higher after an unexpected decline in the Jobless Claims Change data from the UK. Elsewhere, moving into the North American open, WTI and Brent crude futures ventured in positive territory as risk-appetite gathered pace and the USD-Index weakened.

Moving into the North American open, markets look ahead to minutes from the FOMC meeting of 20th-21st September, together with the API inventories report. Any comments pertaining to the EFSF ratification in Slovakia will also be keenly watched. In terms of fixed-income, USD 21bln 10-year Note auction, allied with Fed's Outright Treasury Coupon sales in the maturity range of Mar'13-Oct'13, with a sale target of USD 8-9bln are scheduled for later in the session. The BoE is also conducting its asset purchase operation worth GBP 1.7bln in the maturity range of 2022-2036.

Asian Headlines

•    Japanese Machine Orders (Aug) M/M 11.0% vs. Exp. 3.9% (Prev. -8.2%)
•    Japanese Machine Orders (Aug) Y/Y 2.1% vs. Exp. -3.6% (Prev. 4.0%) (RTRS)

US Headlines:

President Obama said the Senate vote on jobs package is not the end of the fight for his proposal, and he said Republicans obstructed the Senate from moving forward on the jobs bill. (RTRS)

In other news, Fed, seeking to reduce operational costs for banks, is asking for comments from the public on proposals that would simplify the administration of reserve requirements. The Fed said it is proposing to provide more flexibility to banks on the way they satisfy reserve requirements by creating a common maintenance period, lasting two weeks. (Fox Business)

Elsewhere, PIMCO’s Gross leaves treasury holdings unchanged in September, and boosts MBS holdings in flagship bond fund in Sept. (Sources)

•    US MBA Mortgage Applications (Oct 7) W/W 1.3% vs. Prev. -4.3% (RTRS)

EU and UK Headlines:

EU’s Junker said the next tranche of aid to Greece will not be paid if the Troika report finds Athens completely missing targets. Junker said can only consider alternatives to ensure Greek debt sustainability when all consequences are considered. He also called for automatic sanctions should Euro-zone member states repeatedly miss fiscal targets. (Handelsblatt)

•    Eurozone Industrial Production SA (Aug) M/M 1.2% vs. Exp. -0.8% (Prev. 1.0%, Rev. 1.1%)
•    UK Jobless Claims Change (Sep) M/M 17.5K vs. Exp. 24.0K (Prev. 20.3K, Rev. to 19.1K)
•    UK Claimant Count Rate (Sep) M/M 5.0% vs. Exp. 5.0% (Prev. 4.9%)
•    UK ILO Unemployment Rate (Aug) 3M/Y 8.1% vs. Exp. 8.0% (Prev. 7.9%) (RTRS)

•    ECB allotted USD 1.353bln in its 3-month USD operation vs. Exp. USD 5bln
•    ECB allotted USD 500mln in its 7-day USD operation
•    German Bund auction for EUR 1.625bln, 3.25% 04-Jul-42, bid/cover 1.10 vs. Prev. 1.30 (yield 2.820% vs. Prev. 3.430%, retention 18.8% vs. Prev. 17.90%) (RTRS)

EQUITIES

Asian equities came under pressure overnight after the Slovak Parliament rejected the EFSF ratification bill. However, in a stark reversal of fortunes, market sentiment changed following news that a new bill could be introduced in the Slovak Parliament as soon as this afternoon. Also, markets took positively comments from Chancellor Merkel who said that the EFSF changes will get full approval before the EU summit on the 23rd October, as well as a much lower than anticipated USD-allotment in the ECB's 3-month USD-operation, which waned some concerns surrounding the Eurozone banks' funding. Elsewhere, weakness in the USD-Index provided support to basic materials and oil & gas sectors, and moving into the North American open, equities continue to trade higher with basic materials and financials as the best performing sectors.

**US Corporate Earnings**

Alcoa – Co.’s Q3 cont-ops EPS USD 0.15 vs. Exp. USD 0.22, and Q3 sales USD 6.42bln vs. Exp. USD 6.23bln. (RTRS)

FX

The USD-Index came under extensive pressure amid renewed risk-appetite, which provided a boost to EUR/USD, GBP/USD and commodity-linked currencies. EUR/USD received additional support on the back of market talk of Swiss names and US bulge bracket names buying in the pair. Also, GBP/USD moved higher after an unexpected decline in the Jobless Claims Change data from the UK.

Elsewhere, the US senate approved a controversial bill aimed at forcing China to raise the value of the CNY in an effort to save American jobs. China said the US currency bill is protectionist and legislation would hurt China-US ties. They reiterated concern it could hurt global recovery efforts. (RTRS)

COMMMODITIES

WTI and Brent crude futures traded higher during the first half of the European session as the USD-Index weakened over 1% and a boost in risk appetite was seen across the markets.

Oil & Gas News:

•    IEA Monthly Oil Report:
-    Global oil demand is revised down by 50KBPD for 2011 and by 210KBPD for 2012
-    Global oil supply fell by 0.3MBPD to 88.7MBPD in September
-    OPEC crude oil supply nudged down to 30.15MBPD in September
-    Global crude runs estimates for Q3 2011 and Q4 2011 are revised down by 50KBPD and 75KBPD respectively
•    Libya’s interim oil and finance minister said the country’s output was expected to ramp up to about 1 million barrels of oil per day within a year and confirmed output from a major oilfield was expected to resume within days.
•    Norway directorate chief said he expects Norway oil and gas output to stay at current level for the next decade.
•    The head of Norway’s oil agency has sounded the alarm over high drilling costs on the country’s continental shelf that are putting a serious restraint on its ability to tap new reserves to reverse a production decline.
•    Bank of America sticks to their view that Brent crude oil will average USD 114 per barrel in 2012 and Brent will trade in a range of between USD 90 – USD 115 per barrel, averaging USD 103 per barrel over the next six-months.

Geopolitical News:

•    The US accused Iran yesterday of backing a plot to kill the Saudi ambassador to Washington, escalating tensions with Tehran and stirring up a hornet’s nest in the Gulf, where Saudi Arabia and Iran have long jostled for power. The US state department issues worldwide travel alert for US citizens for potential anti-US actions after a plot linked to Iran discovered.

 

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Wed, 10/12/2011 - 08:07 | 1764988 msmith
msmith's picture

Should be an interesting day today with a possible reversal ahead of us with equities.  Here is a look at the DX, GC, and the EURUSD.  http://bit.ly/pm0tLD

Wed, 10/12/2011 - 08:28 | 1765026 LeonardoFibonacci
LeonardoFibonacci's picture

Market will be up today regardless of the bad news.  Let's stay positive even if it a malignant cancer.

Wed, 10/12/2011 - 08:10 | 1764990 drwillia
Wed, 10/12/2011 - 08:19 | 1765005 Goldenballs
Goldenballs's picture

What part of " NO " do the EU not understand.They are so corrupt they give hardened criminal a bad name.

Wed, 10/12/2011 - 08:21 | 1765010 celticgold
celticgold's picture

new bill , same as the old bill ....but DIFFERENT this time

Wed, 10/12/2011 - 08:36 | 1765042 disabledvet
disabledvet's picture

Talk about bailing out the the elites! This is TARP on a Continental Scale--with Grece, Portugal, Italy, Irealnd, Spain, Belgium...and England?...caught up in the boondoggle. It sure looks like the fix is in with French banks being recapitalized to keep the German economy moving...while everyone else is left in the lurch. A lot of things can go wrong with this wild one!

Wed, 10/12/2011 - 08:41 | 1765045 MFL8240
MFL8240's picture

The US markets are no longer worth investing in.  This is no more than a casino, no value, no logic, no intergrity.  A total shithole rigged by the gansters on Wall Street and in the bowels of Chicago.  Collapse coming, buy Gold.

Was pleased to see that Bernanke and Geithner got their due respect last night at the Republican debate.  2 clowns and the country knows it.  Can add Holder to that list too but for different reasons.

Wed, 10/12/2011 - 08:42 | 1765059 Dumpster Fire
Dumpster Fire's picture

Sell the news then buy the rumor.  Groundhog day will never end.

Wed, 10/12/2011 - 09:03 | 1765105 Village Smithy
Village Smithy's picture

Have you ever opened the door of the tool shed and startled a mouse? They instantly scurry for cover underneath some pile of junk. There they will stay burrying their heads in the sand so to speak, as you dismantle the "hiding place" piece by piece until you know they are right there under that last old shingle. They seem to think that as long as they can't see you, you can't see them and they are safe. The situation in Europe has some striking similarities. Now, I don't know how it turns out for the mice in your tool shed but I know in mine...

Wed, 10/12/2011 - 09:05 | 1765110 John Law Lives
John Law Lives's picture

Good ole Wall Street shenanigans. 90 days ago, analysts were forecasting Pepsico would report EPS of $1.36 today. That EPS estimate was systematically ratcheted downward to $1.30 this week. Pepsico just reported $1.31, so naturally the MSM reports that Pepsico beats EPS. Shares are higher in pre-market. http://finance.yahoo.com/q/ae?s=PEP+Analyst+Estimates Amazing that this song & dance routine still works on the masses. Then again, maybe it is not so surprising... Maybe one day the sun will let loose on a massive solar flair and deactivate the 'bots that run the financial world. Somehow, that would end up being bullish once power is restored.

Wed, 10/12/2011 - 09:13 | 1765132 Johnny Lawrence
Johnny Lawrence's picture

Amazing...the Dow is almost close to flat for the year now.

European markets down 13-16%.  Brazil down 22%.  India down 26%.  China down ~ 18%.

And somehow the Dow is nearly flat.

Wed, 10/12/2011 - 09:22 | 1765160 John Law Lives
John Law Lives's picture

Such is the power of the printing press and currency devaluation. Give the Chairsatan his due.

Wed, 10/12/2011 - 09:14 | 1765134 warchopper
warchopper's picture

"Ron Greiss posted a chart in his blog that compares the move down from 2007 to the current move. He states that "The current market has many similiarities with the first move down off the 2007 high. We have circled both the price in the upper panel and the MACD indicator in the bottom panel. The retest low in 2008 came 8 weeks after the initial low. The ensuing rally lasted 9 weeks and travelled 14.58%."

I hope he is wrong, but as usual, he looks to be spot on, again. I have some pretty bearish bets that I don't want to hold through a 14% upswing. Conversely, I do not want to hedge them because of downside risk.

Wed, 10/12/2011 - 09:38 | 1765251 Gene8696
Gene8696's picture

Saudi wants Iran taken off China & Russia's vender list... They need oil north of $110-115 over next 12 months. Anyone been to Dubai lately?

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