August 15th, 2012
in Gary's blogging
Opening Market Commentary For 08-15-2012
Most of us use the premarket action to get a feel on which way the markets are likely to go. The past month hasn't been much help as the opening bell seemingly moves Mr. Market in what ever direction it feels like contrary to the premarket ambiance. When the numbers, displayed in this morning's financial reporting, turned out not to be very good, the SP500 futures did absolutely nothing. It should have as the CPI is at the lowest since November 2011 and this is first sub zero Empire manufacturing report since October 2011. New York Manufacturing Index Falls Much More Than Expected (Chart below)
The market opening bell sounded and the markets opened mixed and fractionally to the red side. Opening green volume was on the low side and not much happened for the first 10 minutes as most investors sat on the sidelines waiting and watching. The Russell was up 0.03, the Dow down 14, SPY at 0.00 and the SP500 down 0.13, not very exciting. The 10:30 am reports of the low rated NAHB Housing Market Index and 'oil' inventories didn’t appear to affect market numbers as there was a slight bullish melting up going on anyway as the DOW had melted up 8 points and the SP500 2.15 points. I think we will see a moderate run-up followed by a decline later in the morning while remaining in the tight narrow channel the markets have forged since 8-6-12.
The first column is what was reported this morning and the second what was expected. The third is the last reporting.
And The Downtrend Returns: Inflation Disappoints As Empire Manufacturing Posts First Sub-Zero Print Since October 2011
The X-12/13-ARIMA seasonal adjustments on today's data were not quite up to snuff as both the CPI, printing at 0.0% (or 1.4% Y/Y) on expectations of 0.2%, the biggest CPI miss since January and the Empire Manufacturing index, at -5.85 on expectations of a +7.00 print, posting the biggest miss in 14 months.
Notably, the number of employees declined in August from 18.52 to 16.47, while margins got crushed as Priced Paid soared from 7.41 to 16.47 as Prices Received slide from 3.70 to 2.35.
And so baffle with bullshit returns, as following several weeks of better than expected, if largely seasonally adjusted, the speculation that NEW QE may be coming back is here again.
In other words, yesterdays scorching retail data was good, but today's horrible NY manufacturing miss is better. At least to the complete idiocy that the market, and its "discounting mechanism" have become.
Sure enough both EURUSD and gold spike on the weak news as the ghost of Bernanke's printing press is back in the room.
The RRR** is too narrow to trade, risk factor is way too high. Swing trading is neutral this morning.
The DOW at 10:30 is at 13178 up 6.65 or 0.05%.
The 500 is at 1405 up 2.05 or 0.15%.
The $RUT is at 800.00 up 3.13 or 0.39%.
SPY is at 140.98 up 0.18 or 0.13%.
The trend is neutral and the current bias is up.
WTI oil is at 93.40 trading between 92.68 and 93.52 and the bias is positive.
Brent crude is at 114.61 trading between 113.49 and 114.66 and the bias is positive.
Gold is up today at 1603 trading between 1589 and 1606 with a positive bias.
Dr. Copper is at 3.36 down from 3.37 earlier.
Earlier the USD rose from 82.50 to 82.84 and is currently at 82.78.
Interesting article this morning regarding thoughts of additional QE. The Romney / Ryan Presidential candidates will have some influence over additional QE it seems.
Representative Paul Ryan, writing less than a month after the Federal Reserve announced a new round of bond-buying in 2010, said the move to purchase another $600 billion in securities risked stoking inflation and pushing down the dollar. . . . inflation has stayed below the Fed’s goal of 2 percent.
While off target so far, the warning by Ryan parallels Romney’s criticism of the unprecedented Fed program known as quantitative easing to spur growth by purchasing a total of $2.3 trillion in securities. Romney and Ryan oppose the policy even as Chairman Ben S. Bernanke says he stands ready to provide more accommodation if necessary to achieve a steady decline in the 8.3 percent U.S. unemployment rate.
A Fed led by a Romney-Ryan administration appointee “would be less inclined to frequently fiddle with the knobs” of economic policy, said Stephen Stanley, chief economist for Pierpont Securities LLC in Stamford, Connecticut. “There would be a strong sense in the markets that a different strategy is probably forthcoming,” with higher odds the Fed would raise interest rates and a lower probability it would buy more bonds. (Read More . . .)
** RRR = Risk Reward Ratio
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Written by Gary