Home > Uncategorized > 2012/01/30: Quick Post: Observations and Weekly Reports & Events Calendar Now Available

2012/01/30: Quick Post: Observations and Weekly Reports & Events Calendar Now Available

© 2012 ROHR International, Inc. All International rights reserved.

The full calendar is available through the link in the right hand column. Apologies for the delayed posting this week due to significant technical challenges. Since two weeks ago we have been adding color-coding to the various reports and events to indicate the nature of the key influences or items of somewhat elevated importance.

There are no central bank meetings this week, due to the ‘split’ old month into new month week pushing the Bank of England and European Central Bank out into next week. Yet, it is always the case that these sorts of weeks see a lot of economic data

 

As just the briefest of highlights, along the way mixed Euro-zone confidence indicators have already been released today, Tuesday brings German Retail Sales and French Consumer Spending, Wednesday is Manufacturing PMI’s into Thursday’s US Weekly Initial Jobless Claims, all leading into the US Employment report on Friday along with Services PMI’s.

Of course, all that might be less important than the outcome of the EU Summit into tomorrow. So far it is another case of “The Ecstasy and the Agony” out of Europe on lofty claims of ‘done deal’ into a weekend that ends in disappointment early the following week (like now.) The EU Summit was supposed to be another one of those culminations of all of the intense negotiations. And as such, any failure is likely to leave a vacuum of constructive anticipation.

And in light of the potential failure of the EU Summit, it is probably a good thing that Italy has already completed its current long-dated government bond offering in fairly good form this morning. In spite of there being no central bank rate decision meetings this week, there are a goodly number of reports and expositions that might impact the markets. The most important will likely be Thursday’s House testimony by Fed Chairman Bernanke on the US economic outlook and federal budget situation.

General Market Observations

As for the markets, much of the overall trend activity remains consistent with our skepticism over whether last week’s Federal Reserve move will really do much to improve economic conditions. The attempt at de facto QE3 by ‘Gusher Ben’ just had too many problems with risk asset price elevation to really be economically constructive. All of that was reviewed at some length in Friday’s Rohr-Blog …Risk Fizzle… post. Our skepticism had already been noted in the individual asset class and market trend implications in Thursday morning’s post.

Those chickens began to come home to roost on Thursday’s lack of ability of the March S&P 500 future to remain out above some very important 1,310-15 area technical resistance. It extended into slippage below near term critical 1,300 area this morning. However, it will need to Close below there to reverse even the short term up trend, with the 1,280-75 area remaining far more telling trend support. Our sense of things is that a combination of the now intractable problems in Europe (the Greeks freaked on Germany’s fiscal ‘oversight’ suggestion) along with some likely weakening of recent robust signs in the US has not yet been discounted by still resilient the equities.

EXTENDED TREND IMPLICATIONS

And that is a good part of why primary government bond markets still at so strong after the pre-Fed selloff into last week. Holding key supports levels like March T-note future 129-24, March Gilt future 115.00-114.85 and March Bund future 137.50–.30 kept their up trends intact. And in the typical recent game of leadership musical chairs, the T-note is now strongest back up around its mid-December lead contract 132-07 high. Any further equities weakness will likely encourage further strength in the govvies.

Of course, the Fed’s ‘risk-on’ trade created a return to weakness of the US dollar. There was a quick reversal into a psychological condition very similar to last spring: a US dollar “carry trade” mentality. On both a technical and psychological level the weakness of the US Dollar Index below its .7950 UP Break is a significant failure. It points to a potential retest of the interim congestion back down in the .7700 area, or a drop to even lower levels.

The euro push above EUR/USD 1.3050-1.3100 has established a base that may well see this weakest of the weak sisters retest its mid-upper 1.3300 resistance. That said, it is important to note the recent UP Break support is back down around 1.2950-25. And it is also important to keep in mind that, at least so far, this is mostly secular weakness of the greenback, and not a broad reversal of the euro down trend against other currencies.

Thanks for your interest.

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