Home > Uncategorized > 2012/02/13: Observations and Weekly Reports & Events Calendar Now Available

2012/02/13: 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. There is also the usual fundamental factor review. That is focused on the highly split (fancy legal metaphor for sharply split into two sections) politico-economic influences at this time. And you don’t likely need us to tell you that this is due to better sentiment toward the US in the face of still fraught issues around the European Debt Crisis. That remains so even as Greece seems to capitulate on Troika demands.

Ad hoc impacts from Europe and early week reports

The ad hoc impacts from the unsettled situation in Europe will continue to be a major influence on all of the markets. The Greek Parliament passing the additional austerity measures which the European Union and International Monetary Fund demanded has had a positive effect on equities into this morning, and a negative effect on US dollar and primary government bond markets.

And some important early week reports highlight the degree to which the world is becoming a two track economy. Much weaker than expected Japanese GDP represents a real problem for another economy grappling with low growth and a high Debt-to-GDP ratio. It is also not a very good general sign for the global economy. On the other hand this morning’s important OECD Composite Leading Indicators (CLI) came in with another split view of the global economy, yet with some further improvement in the US and select number of other countries. The bad news is that all of Europe (including Germany) and the UK are still on a path to below trend growth on a six-month forward view.

Additional reports this week

For a midmonth week there is also a goodly amount of regularly scheduled economic data. With a reporting vacuum in the US today, the most important influences might be tomorrow’s Greek GDP, Euro-Zone Industrial Production, German and Euro-Zone ZEW Surveys right into US Advance Retail Sales. Thursday sees important Australian Employment data, Spanish GDP, US Weekly Jobless Claims and the Philadelphia Fed Index. It all wraps up on Friday with the Chinese Flash Business Sentiment Survey into UK Retail Sales, followed by Euro-zone Construction Output, and US and Canadian CPI.

Only one rate meeting, but central banks still influential

The Bank of Japan is the only interest rate (non-)decision this week, as there is no chance it will raise the base rate from 0.10%. What will be very interesting is to see how the statement spins the continued weak economic data. The speechifying begins tomorrow with the Fed’s Plosser and Lockhart speaking on the economy in the morning and evening, respectively. Wednesday brings The Bank of England Inflation Report and press conference followed by the Fed’s Fisher speaking in the morning and the release of the January FOMC meeting minutes in the afternoon.

Some important bond auctions along the way as well

With the major US refunding out of the way, the focus will likely revert back to Europe. The most critical of those are likely to be tomorrow’s Greek T-bill and Italian bond auctions, followed by Wednesday’s Portuguese T-bill auction. Thursday kicks off with a 5-year Japanese Government Bond auction, and also sees Spanish, French and UK offerings followed by a US 30-year TIPS auction.

General Market Observations

In general, the March S&P 500 future push above the very important 1,310-15 area represented a fresh UP Break on a violation of some important congestion from the topping action in the first half of last year. That makes it a key level the market must drop back below to create any sort of real failure. However, it has also shown an inability to get through key higher resistances into 1,350-55 and 1,360-67 areas.

EXTENDED TREND IMPLICATIONS

Even if the March T-note future perversely (due to it being long-dated bond of the country which ostensibly is leading the economic recovery right now) has held up much better than Europe, it finally made it down for a test of interim support at 130-20. Yet that left it well above a late January test of its more important 129-24 support that would’ve been consistent with Europe dropping back to equivalent levels.

And that is where the govvies seemed to have a problem, as the downside leader March Gilt future slipped below its 115.00-114.85 support on the daily Close last Thursday. However, it was not much of a surprise that as the Greek news turned stale Friday morning it gapped right back above it and held. This only illustrates the degree to which the decision in the govvies will indeed be dependent upon the equities market now that classical intermarket counterpoint is reestablished.

It was also the case for the more resilient March Bund future that it Closed Thursday marginally below its 137.50-.30 support only to gap back above it on Friday mornings unsettled influence from Europe. Govvies all seem to be more resilient than a runaway equities bull would indicate, even allowing govvies stalled out into the recent highs against some very major oscillator and other technical resistance.

In foreign exchange, the significant US Dollar Index failure back below (i.e. Negation of) its .7950 UP Break on the Fed’s endless liquidity provision indications two weeks ago reversed what had been a reasonably firm trend early this year. Failure to get back above that area in recent trading is a weak sign, even if there is extended resistance back into .8070-50. Next lower support of any substance is into .7800 area, with more major supports into .7650.

That is also consistent with the reversal of the euro on a fresh EUR/USD 1.2925 UP Break out of its downward channel (from the major 1.4248 October high.) There is a somewhat higher interim support in the mid-1.3000 area previous resistance as well. While there is initial resistance above the market at 1.3400-1.3360, the more major resistance remains 1.3500-40.

Thanks for your interest.

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