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EUR and Commodity Strength Supports Modestly Positive ES Open
While EURUSD is off its highs of the evening so far, it remains 20-30pips higher and is mildly supportive (given EURJPY's move) of the 7pt better open in ES (the e-mini S&P 500 futures contract). The Italian austerity measures seem the main driver which is odd given this is not news and was fully expected. Oil is also popping (WTI above $101.50 now and Brent popping), on the Iran news we assume (both at 3 week highs now), and Gold is above $1750 as Silver outperforms +1.3% (over $33) from Friday's close - both handily outperforming USD's drop.Copper futures are almost 2% higher so far, over $360. AUDJPY is helping but the 2nd month in a row of AUS services contraction (and lowest since March) may dull that as a driver in the short-term.
Back of the envelope, given the markets that are open, ES is 3-4pts rich to CONTEXT but we will update when TSYs open and the opening skirmish quiets down. ES is backto Friday's VWAP closing level - holding just about the knee-jerk post-NFP print level for now.
Chart: Bloomberg
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I saw a headline that Monti had implemented tax hikes and pension cuts.
Then another says he is ' calling ' the cabinet about the austerity measures..
Uhh huhh..
Get the riot cam ready..
Yes, of course, another hundo on the DOW and 10 handles on the ES.
It just all makes good old fashioned sense.
This shit will be 30 handles by 4 am.
Should be more commodity strength when MF'n Global continues to unwind in regards to farmers, ranchers, and grain elevators.
http://news.yahoo.com/shock-waves-mf-global-collapse-felt-farms-19363028...
"The shock waves from the collapse of commodities trading firm MF Global Inc. are hitting hard across rural America, where farmers, ranchers and agricultural business owners are nervously waiting to learn how much money they've lost.
Many of the farmers who traded with MF Global, which is being investigated over what federal regulators say is an estimated $1.2 billion that may be missing from customer accounts, used the futures markets to reduce the risks of volatile prices. Locking in prices through the futures market — something farmers have been doing for a century — allows them to plan ahead while knowing what their costs will be."
10 point gap up on first tic. glad the euro/dollar wasn't up 1%. that would have been a 40 point gap up
Gold's getting a little pop right now. So are futures.
To paraphrase what Kyle Bass recently said, 'There is $80 billion in open interest in gold futures and options, and there is $2.4 billion in deliverable gold at the exchange. The exchange is a fractional reserve system, and they plan for a one percent redemption. In the event of a greater demand for redemption, they assume that price will take care of it. The decision for a fiduciary is simple; take your billion in gold out now.'
And the situation in the silver market is even worse. It is a disaster waiting to happen.
At some point a 'black swan' event, or perhaps something the classical world would have simply called 'nemesis,'is going to knock the US futures market off its foundations. The government and exchanges will seek to force a solution on market participants through the de facto seizure of positions and accounts, with a settlement dictated by the Banks. MF Global looks like a dry run for that much larger default.
http://jessescrossroadscafe.blogspot.com/
Yes, silver as well. Late last week, maybe just Friday, silver and gold seemed to be diverging from each other quite a bit.
Both have popped higher nicely tonight, so far:
http://www.oilbull.com/silver-price/
http://www.oilbull.com/gold-price/
How much do the two correlate, directionally? Does anybody have studies? I know silver is much more volatile, so is a 1-day divergence common?
correction, the gap is 4 but the opening candle reached 10.
What would E.F. Hutton do?
Nobody knows how to listen anymore, so what does it matter?
As long as it reliant on government. They are dead.
Have The Fed and Treasury Run Out of Magic Bullets? It Takes a Village … to Destroy a Global Economy
http://confoundedinterest.wordpress.com
Holiday Hopium and a Sunday to boot.
Modestly positive? We're up 10 handles.
It is the keynesian war premium that is beginning to be priced in since all other options have been exhausted
The dollar is the bastion of freedom because the U.S. has been the leader of the free world for so long. Yes, U.S. debt is high, but compared to other Nations such as Japan and Greece, it is fine. An economic collapse could never happen here anyway. For example, look how we tackled the problem in 2008. And again this summer. Bernanke will do what it takes, if not enough to generate high revenue, to find economic equilibrium.
Europe on the other hand is positive austerity will solve the problems. Their technocrats have ideas of crushing the pension system, which will surely kill growth. Monti and others should know that debt is not the problem, the problem is growth. I did an article on British debt to GDP this week and it should show that austerity is not needed because, in the case of Britain, their debt is at a historical low.
The rest of Europe may not be as lucky as Britain, but it does not mean they should hide their heads in the sand. To spur growth now, we must invest in the system, and invest in the firms that are around us. Without this investment, growth will not happen.
Needs are different from desires, and even though some think we can not create more stimulus, we need to. The Central Banks took a step in the right direction by targeting one world interest rate last week, now we need those very same institutions to stimulate their economies. They can do this by creating lending programs. And they can and should do this.
Krugman, China is crashing (re: iron ore, copper, indust metals) but oil is at 100+. You flood the global economy with more liquidity you'll push oil further up towards the 140 breaking point. Now remember EZ is stuffed, slowing/recession economies + China (net importer of oil) slowing = you are going to have global stagflation that will make the 70's look like nothing + global geopolical tensions that are happening now. CB's policies are now pushing us closer to all out war, and i mean not fighting bandits in Afghanistan or Iraq. But war with major players.
Oil is going through a bullish cyclical phase because demand has been strong. Yes China's banking system has slowed a little, but this is due to their raising interest rates, not their demand. People in China are buying cars hand over fist! They are turning into a consumer nation.
Oil's price will come down because increased technology will stabilize the price. The U.S. and Canada are increasing exports, and so is Russia. As long as support is given to fund and develope new projects so the projects can get online, the price will drop.
Wow I could have made that post a few years ago before the meltdown started with a few word changes:
Oil is going through a bullish cyclical phase because demand has been strong. Yes america's banking system has slowed a little, but this is due to their raising interest rates, not their demand. People in america are buying houses and cars hand over fist!
In reality china is experiencing bubbles in a variety of areas. Thats why the chinese increased interest rates.
As for oil, when I look at a 10 year chart I wouldn't call that a "bullish phase". I would call that. . Well I would call that normal based on normal commodity pricing.
What i see is a drop in demand coupled with inflation and uncertainty that still drives the price higher, demand lower and exports up. Similar to gold but I would say they're a bit decoupled and of course the markets are a bit different.
krugman, blow a goat
bearish on stabiiileeeteee'
Ha, ha. Commodities and stocks going to the moon. Must be signalling an upcoming global economic boom. Right?
WAY beyond Kafka-esque.
IT's all fraud. The only assets are hard assets, and MF Global is proof of that. They stole the hard assets and declared the losses in paper.
Read:
http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref
Oil news:
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/8530144/Shell-shuts-Caspian-office-50bn-Kashagan-project-on-ice.html
Big project suspended. IEA has been banking on Kashagan flow.
Check the print on the date.... old news....
That being said, if Kashagan is what passes as an Elephant field in this day and age, then anyone with a clue should be able to figure out how bad things are....
SP500 bull vs bear battle maintains bearish bias after Friday price action and more downside expected.
My long term indicators have continued to warn of US Dollar strength and EURO weakness and these signals have increased since 2009. The overdue dollar rally should be substantial.
http://stockmarket618.wordpress.com
But the real news, i.e. China posted worst PMI in 32 months, and Germany's, a.k.a. Euroland's only income source blowing up, is totally ignored. :) Gotta love it......