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| | Fri, 10 Feb 2012 09:25:05 +0100 | | DJIA down 65 at 12,825
S&P down 6 at 1,345
US stock index futures are weaker this morning and point to a lower open later today. Investors have been net sellers of European equities this morning despite yesterday's late news that Greek policymakers have agreed to a package of additional austerity measures. There are concerns that the Greek deal falls short of EU/IMF/ECB requirements, and this puts a question mark over the release of the second bailout tranche, and the private sector bond swap.
As far as the US markets are concerned, all the major indices look overstretched to the upside currently. Would-be buyers are desperate for a pull-back as no one wants to risk going long at a potential market top. Yet with the Fed pledging to keep rates low for the forseeable future, plus holding the door open to further stimulus (despite improving economic data), equities remain an attractive prospect for investors. But it is worth remembering that the earnings season has been mixed so far and analysts are anticipating slower earnings growth next quarter. While bullish investors ardue that P/E multiples are relatively low, it is worth remembering that the developed world is now firmly stuck with a zero rate interest policy, and still relies on central bank intervention to backstop a crippled financial system.
Today we'll see the US Trade Balance, Consumer Sentiment and Inflation Expectations, and Fed Chairman Ben Bernanke speaks about the housing market.
Have a good weekend.
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| | Thu, 09 Feb 2012 09:33:54 +0100 | | DJIA up 10 at 12,894
S&P up 1 at 1,351
US stock index futures are a touch firmer this morning, following strength in European equities. Once again, investors are waiting for news from Greece yet appear completely unfazed by further delays and confusion. Given the strength of the euro and risk markets in general, it looks as if Greece is becoming a sideshow. Policymakers and bondholders are expected to come up with deals at some stage, but the prevailing view is that Greece's problems will be contained. Of far greater importance is the willingness of the major central banks to continue to hose liquidity into the market place. Today's meetings from the Bank's MPC and the ECB are expected to confirm their ongoing interventions.
We'll see weekly jobless claims from the US today and wholseale inventories. We also have earnings reports from Credit Suisse, Dunkin brands, Noble Energy, Pepsico and Philip Morris amongst others. While the US earnings season continues to produce a mixed set of results, it has certainly been better than the European season so far. The big question now is whether the US equity markets still have the momentum to push higher from their present elevated levels.
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| | Wed, 08 Feb 2012 09:35:12 +0100 | | DJIA up 12 at 12,890
S&P up 2 at 1,349
US stock index futures are inching higher this morning, although given the substantial moves in Asian Pacific markets overnight the US reaction looks muted. European equity markets are also more buoyant than their US counterparts, although all risk assets are benefiting so far from a stronger euro.
Despite numerous delays and missed deadlines, investors have convinced themselves that Greece is about to finalise details of a debt swap with bondholders, and its policymakers are close to accepting further austerity measures. Agreement on the latter will allow the EU/IMF/ECB troika to finalise the second Greek bailout package. But often it is better to travel than to arrive, and the austerity measures already in place have contributed to a slump in Greek budget revenues. Further cuts in spending will only exacerbate current troubles. Traders should bear this in mind once any agreement is announced.
There is no US data due out today but there are earnings reports from Cisco, Groupon, CVS Caremark, Time Warner, Visa and Wholefooods. So far the fourth quarter season has been mixed, but once again investors are giving companies the benefit of the doubt even as analysts continue to cut earnings estimates for the next quarter. FOMC (voting) member Williams speaks later, but yesterday's testimony from Ben Bernanke has convinced most investors that the Federal Reserve stands ready to supply additional liquidity to the markets.
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| | Tue, 07 Feb 2012 09:27:29 +0100 | | DJIA down 15 at 12,830
S&P down 1 at 1,343
US stock index futures are little-changed this morning and point to a flat open. Although equities were a touch weaker yesterday, they closed well off the day's lows. Nevertheless, investors seem in no hurry to increase their exposure to stocks as the Greek odyssey proceeds. Despite weeks of negotiations and missed deadlines, there is still no agreement between Greece and its private bondholders over the proposed debt swap. On top of this, the government of national unity has yet to unite and agree to the tougher austerity measures demanded by the EU/IMF/ECB troika as a contition for the release of the next bailout tranche. Today sees the start of a 24-hour strike by Greece's two biggest unions. There is considerably more debate about the likelihood of an outright Greek default. Although this is getting priced into the market, the assumption remains that any default will be contained, and will not suck in any other troubled countries. This complacent attitude may soon be tested.
There is little on the US data front today, just Economic Optimism and Consumer Credit. Fed chairman Bernanke testifies before the Senate Budget Committee, but it is unlikely that he will expand much on his statement to the House Budget Committee last week, despite strong payroll numbers on Friday. Earnings come from Arcelor Mital, BP, Coca Cola, Disney, GlaxoSmithKline and UBS.
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| | Mon, 06 Feb 2012 09:28:46 +0100 | | DJIA down 72 at 12,790
S&P down 9 at 1,336
US stock index futures are sharply lower this morning, and point to a weak open this afternoon. Last week saw equities push higher, helped by surprisingly strong US jobs numbers on Friday. But with no US economic data due out today, the focus has shifted back to Europe. Investors are trimming their exposure to equities as Greece and its private bondholders are still unable to agree terms for a debt swap. On top of this, Greek policymakers must agree to further austerity measures in order to secure the next bailout tranche from the EU/IMF/ECB troika. The Greek coalition government must signal its acceptance of harsher reforms today.
This is a big week for earnings and today we'll get releases from Anadarko, Coinstar, Hasbro, Humana and Yum Brands, amongst others. So far, fourth quarter earnings have been mixed, although still good enough to support stocks rather than trigger a selling stampede. But expectations have been low, and earnings estimates for the next quarter are being revised down again. P/E multiples are reasonable, but can only be considered cheap if the global economic outlook is genuinely improving. Unfortunately, that is far from certain, as the expectation of further central bank intervention and near-zero interest rate policy makes clear.
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| | Wed, 01 Feb 2012 10:08:05 +0100 | | DJIA up 90 at 12,923
S&P up 10 at 1,322
US stock index futures were little-changed first thing but have rallied strongly since the European open. Overnight, Amazon released a
disappointing set of earnings and some downbeat forward guidance. This took some of the bounce out of the major indices, although investors remain
upbeat ahead of the expected Facebook IPO filing today.
Yesterday saw the release of some surprisingly weak US
economic data. This helped to dampen sentiment, although not enough to prevent
this January being the best start to the year for stocks since 1997. But there
is no let-up in the numbers as today brings weekly mortgage applications,
Challenger job cuts, ADP employment, ISM manufacturing, auto sales,
construction spending and oil inventories. We'll also see earnings from Aetna,
Electronic Arts, Qualcomm and Marathon Oil amongst others.
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| | Tue, 31 Jan 2012 10:56:46 +0100 | | DJIA up 50 at 12,704
S&P up 5 at 1,318
US stock index futures are firmer this morning carrying on the more positive tone of yesterday's late trade. Expectations are growing of a break-through in negotiations over a Greek debt swap deal, and this has helped to lift the euro and generally raise risk appetite. On top of this, investors were cheered after 25 out of 27 EU leaders signed an agreement yesterday which is a precursor to a closer fiscal union, which is seen as vital for keeping the single currency together.
But it isn't all about Europe. Today sees the release of earnings reports from ADM, Amazon, Exxon Mobil, Lilly, Pfizer and UPS amongst others. On the data front we'll see the Employment Cost Index, S&P/Case Shiller House Price Index, Chicago PMI and CB Consumer Confidence numbers.
Investors are still in "buy the dip" mode, and will be encouraged as the 50-day moving average has now crossed back above the 100-day moving average on the S&P 500. This now confirms the technical set-up already in place for the DOW and Nasdaq.
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| | Mon, 30 Jan 2012 09:23:43 +0100 | | DJIA down 60 at 12,600
S&P down 8 at 1,308
US stock index futures are lower this morning as traders react to weakness across Asian Pacific and European markets. There is yet another EU economic summit today, but the main concern is that talks over the Greek debt swap are ongoing. European finance ministers and private holders of Greek debt continue to negotiate terms. Despite numerous assurances that a deal is near completion, it is evident that there are still significant difference between the parties. Worse than that, it is still unclear how many private bondholders are represented in the negotiations, so there are worries that even if agreement is reached, then it won't be the end of the matter. Then of course, it seems inevitable that Portugal (and Ireland) would request more favourable terms with its bondholders.
Investors were disappointed by the US's fourth quarter GDP number on Friday, especially as inventory rebuilding made a major contribution to the number, yet recent Retail Sales have weakened recently. This suggests that the rate of US growth could undershoot expectations in 2012. The earnings season gets busy now with around 20% of S&P 500 companies reporting this week. Today we'll see numbers from Philips, Enbridge Energy and Gannett. The big economic data point is the Core PCE Price Index. This will be watched closely as it is the US Federal Reserve's preferred inflation measure, and last week the FOMC said that it is now running an inflation target of 2%.
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| | Fri, 27 Jan 2012 09:30:58 +0100 | | DJIA up 5 at 12,740
S&P up 1 at 1,319
US stock index futures are barely changed this morning, although they have recovered from early weakness. Yesterday, the major indices pulled back sharply after a strong start following Wednesday's doveish FOMC statement. The Dow tested resistance around the 12,850 area while the S&P failed to hold above 1,325 - previously resistance in April last year. Investors are asking themselves if stocks are due a correction now given their relentless rally since mid-December. Certainly, some consolidation would be welcomed now, even by bulls, as it will provide a breathing space and a platform from which to launch a further assault on last year's highs.
But there are reasons to fear a deeper correction. Investors have digested the US Fed's commitment to low base rates and the hint of further stimulus. Now they are wondering if expectations of stronger US growth and decoupling have been overdone. On top of that, many worry that there is too much complacency surrounding Europe's ability to deal effectively with its debt crisis. And any agreement between private Greek bondholders and finance ministers (assuming it happens) does nothing to solve the country's long-term solvency issues. In addition, it could open the door to calls from Portugal and Ireland for similar treatment.
Today we will have the first look at fourth quarter GDP, plus the revised University of Michigan Consumer Sentiment and Inflation Expectations. Also there are earnings reports from Chevron, Ford, Honeywell and Procter & Gamble.
Have a good weekend.
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| | Thu, 26 Jan 2012 09:24:00 +0100 | | DJIA down 40 at 12,717
S&P down 5 at 1,321
US stock index futures are drifting lower this morning, giving back around half of yesterday's gains. Investors are considering the implications of the FOMC decision not to raise rates until late 2014 or beyond. While this appears to bring certainty for the US interest rate outlook, some analysts are concerned that the Fed has painted itself into a corner, and will find it difficult to alter course if economic conditions change. The Fed also opened the door to the possibility of additional stimulus and expects inflation to undershoot its target rate. The dollar fell sharply while gold and silver soared. Yet the reaction of equities has been more muted. Investors are worried that the FOMC is unconvinced by the recent improvement in US economic data and is still concerned about the outlook for Europe.
Today we have a host of earnings reports, including AT&T, Caterpillar, Nokia, Motorola, Starbucks and Juniper Networks. We also have Durable Goods, Weekly Jobless Claims and New Home Sales.
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