Home > Uncategorized > 2012/10/01: Quick Post: Weekly Calendar available and QE influence still a factor

2012/10/01: Quick Post: Weekly Calendar available and QE influence still a factor

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

The weekly Report & Event Calendar is available through the link in the right hand column. The Technical Projections and Select Comments from late last week are also available and still relevant. This week’s Summary Perspective on Key Influences will be posted later this evening, and we hope you find that useful as well.

As is typical of the first week of the month, it is going to be a heavy data week all week, and that began today with Global Manufacturing PMI’s. Continued disappointment with Asia (including Australia) and Europe was offset to a fairly interesting degree by the better-than-expected US ISM Manufacturing. However here as well, there was some bad news…

 

…in the form of negative US Construction Spending data that had been expected to bounce back into positive territory after significant weakness last month.

And it is going to be an interesting week all week, even prior to the highly influential US Employment report on Friday. In spite of all the other data, it is often the case that the post-ECB meeting press conference makes Thursday the other critical horizon. However, as you will note, we also get the Reserve Bank of Australia rate decision and statement early tomorrow, followed by important European political influences.

All of that said, one of the most interesting aspects this morning was the very buoyant early morning equity market activity in spite of that weak Asian and European economic data. That was based to a goodly degree on further extensive discussion of the US and other central bank quantitative easing efforts, and curiously fizzled out into lunchtime. Seems another manifestation of our QE-Infinity ‘Pie in the Face’ metaphor post from last Friday.

The early rally was at least in part based upon CNBC interview comments by Super-Dove Chicago Federal Reserve president Charles Evans. In addition to his avid support for the recently announced major extension of the Fed’s quantitative easing program (QE3), he laid out the reasons why almost no amount of further easing is too much until the US Unemployment Rate drops below 7.0%. His only answer to the specific mechanism by which further liquidity expansion was going to accomplish that was essentially “confidence.”

Of course, his lack of any specific mechanism by which lower mortgage rates are going to help the housing market already experiencing record low rates but a lack of qualified buyers remains a mystery. While we had figured that out quite a while ago, some of the more hawkish Federal Reserve governors have been very vocal about that as well in recent days. No business we know of is hiring anybody just because the Fed is expanding its balance sheet when the real problems are uncertainty over a dysfunctional fiscal and regulatory environment.

And possibly most curious of all was that the equities slippage became more pronounced right as quantitative easing ringleader Buzz Lightyear (“To infinity and beyond”) Bernanke spoke at lunchtime in the US.

General Market Observations

It was indeed especially of note that the initial surge in equity prices this morning that took the December S&P 500 future up to the 1,450 area (our residual resistance above the key 1,440-45 zone) fizzled at that most interesting time. It was right into the Fed chairman Bernanke’s discussion (speech followed by Q&A) in Indiana of the merits of QE3 in assisting with the very weak US employment situation.  

For various technical reasons it will take another failure Close back below 1,445-40 to indicate a broader top may be evolving for a bigger downward swing. If it does happen to fail once again, last week’s 1,424.50 trading low will become that much more important into Friday. That is because it is just slightly above the significant daily chart upward channel from the major early June low. It’s going to be interesting. Extended key supports remain 1,410 and ultimately 1,390.

EXTENDED TREND IMPLICATIONS

And with the intermarket influences operating in a classical fashion right now, that will inform our trend views on all the other asset classes. That basically means that primary government bond markets and the US Dollar Index will trend opposite to whatever is transpiring in the equities (even allowing the significant buffer below the US government bonds from all that quantitative easing.) Of course, the euro, commodity currencies, both precious and base metals, and Crude Oil along with other commodities will likely trend in the same overall direction as equities.

Thanks for your interest.

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