MoreLiver's Daily: October 2012

Wednesday, October 31

31st Oct - US Close

Bad European data: bank lending in eurozone just does not fly. Trilater commission to meet in Helsinki next weekend. Trichet leads, so expect stability, greatness and overall #winning.

Insurance vs. Home builder ETF's.

30th Oct - US "close"

Looks like the markets will be open in US on Wednesday. EURUSD turned up before properly meeting the trading range's bottom, but looks like it's on its way to the top end of the range.

EURUSD moving up from near the multiweek range's bottom. JPY 'surprised' everyone and after BoK printed, the yen strengthened. US markets still closed because the 'lady'.

Source: Bloomberg’s Nick Summer

Reporting seems slow because of the ‘Sandy’ in US. I'll update the missing ones if and when they are posted.

29th Oct - US "Close": Hold On

Stay sharp. Stay relaxed. There's something going on somewhere, all the time. In New York, the storm will pass. Others will come. We will stay.

News from Europe getting bad again - where to find the 30bn for Greece, Spain's economy continues getting worse beyond expectations. US markets largely closed due to "bad weather". EURUSD getting near the bottom of its multiweek range.

28th Oct - Weekender: Off-Topic & In Finnish

27th Oct - Credit Guest: When causation implies correlation

Another great credit post from MoreLiver's favorite blogger, Macronomics. Diverging France and Germany, trouble at the core, Spain. Pain, deflation ahead.

Se todellinen markkinavoima on se hiljainen raha, joka yrittää nähdä kakanpuhumisen läpi. Sekös poliitikkoja harmittaa, kun suunnitelmien ja ajatuksien ei pidä kelvata pelkästään äänestäjille, vaan alati maailman tilaa seuraaville lompakon päällä istuville.

Äänestäjät äänestävät yleensä koko elämänsä ajan sitä, mitä isi ja äiti jo kotona opettivat. Poliitikot tekevät teatteria näille ihmisille. Markkinavoima on se kollektiivinen n. parinsadan tuhannen ihmisen joukko, joka yrittää nähdä teatterin läpi, mitä oikeasti tapahtuu, ja mitä siitä seuraa.

Markkinamekanismin hyvä puoli on, että rahat tuppaavat kasaantumaan niille, jotka näkevät parhaiten. Sen takia se on äänestäjiä parempi poliisi. – Juhani Huopainen

Ohessa on kaksi ukkoa, toinen Turusta, toinen Espoosta. MoreLiver suosittelee molempia ja äänestää itse Helsingissä, joten jäävään itseni. Vantaalla Pauli Vahtera on hyvä - jopa lukee meikäläisen juttuja.

Henri Myllyniemi

Henri Myllyniemen tekstejä olen lukenut toista vuotta, ja kaveri on sähköasentajan koulutuksellaan tullut sen luokan talouskommentaattoriksi, etten epäile hetkeäkään hänen kykyjä, kunnianhimoa, ja arvomaailmaa hoitaa kunnallisvaltuutetun tehtävä menestyksekkäästi Turussa. Rauhallinen kuin viilipytty ja jatkaa argumentointia siinä vaiheessa kun vastapuoli on jo alentunut inttämään. Henri on Perussuomalaisten listalla ehdolla Turussa.

Jukka Kilpi

Jukka Kilpi on vanha työkaverini ja hyvä ystäväni, jonka mittava ja monipuolinen historia sekä elämänkokemus tekevät minuun aina vaikutuksen. Aina kun joku hyvä tyyppi on tarvinnut neuvoja yritysrahoitukseen liittyen, en ole edes miettinyt kenenkään muun suosittelemista. Halusit sitten keskustella kunnallistason korruptiosta, filosofiasta tai warranttien markkinatakaajista, Kilpi on mies paikallaan. Koska olemme vanhoja ystäviä, kehtaan laittaa tähän oman leikillisen ehdotukseni vaalisloganiksi: Jukka ei ole kakka! Jukka on sitoutumattomana Perussuomalaisten listalla ehdolla Espoossa.

27th Oct - Weekender: Weekly Support

Here are the links to review the past week and get ahead with the next one (previous Weekly Support here).

26th Oct - US Close: High GDP due to Defense

GDP came out, but most of bigger than expected growth came from aircraft purchases (volatile) and military spending (ahead of fiscal cliff, under budget review and the military's fiscal year ends in September), so the number was not as good as the headline would suggest. In the stock market language, the GDP growth was "low-quality". For acute reading needs, check my earlier posts, esp. the Best of The Week - I'll be back tomorrow with the usual Weekender posts, beginning with another Weekly Support. Have a good weekend - and if you're in Finland, remember to vote as your heart tells you.

US GDP ahead. Happy weekends, check back for my weekender posts.

The best articles from my posts of the ending week.

My previous post had plenty of article links and my own thoughts. ‘Best of’ coming soon.

25th Oct - US Close: Yen and Yawn

Is this Europe's "believe me"? Source: The Big Pictur

Apple posted earnings that were clearly below expectations. Right after taking a hit with Google, hedge funds are now hit on both two of their favorite holdings. I guess there might be the usual talk of redemptions, risk aversion and liquidity tightening by prime brokers as vol is up & price down. All of these could be seen causing selling pressure. Participants are trading the QQQ while the Apple's trading is closed - just as they did with Google. All this proxy trading and so on is good for - you guessed it - creating selling pressure.

UK’s GDP better than expected, recession over – but no reason to be too cheerful. ECB released latest lending figures, and they were low – money supply figures came in below expectations. The Greek bailout III is already almost certain, with leaked details on FT. Eyes now on the US durable goods orders, followed by the official agreement on Greece and US GDP tomorrow.

I'm expecting rising trouble with the European banking union plans: FT points out how unhappy Germany is. EURUSD and SPX are bouncing between clear technical levels, with an inclination to test the downside.

I updated my views in last night's post, so just the regular links for now.

24th Oct - US Close: Fed Slept, My views

After the Fed’s non-event, eyes turn to the EU-discussions on Friday, where Greece’s continued bailout payments are probably confirmed. Tomorrow UK’s GDP and US durable goods orders, Friday sees several less important European numbers and the main event, US GDP. Oh yes, click the charts below for larger versions.

The European economic data (PMI and Germany’s IFO) were terrible and markets reacted accordingly. Draghi’s comments are still ahead, and later the Fed’s FOMC conclusion. See my previous posts’ US sections for additional commentary – don’t expect much from the Fed, though.

China's PMI came out better than expected (see link section). Wednesday will be a busy day, as we get the first glimpses of the Q4 economic activity. Given the worries over the dismal Q3 earnings and the related recent drops in major indices, and the fact that both the FED and the ECB are already committed policy-wise, today’s numbers will be watched closely. Incidentally, FOMC will conclude today, but no press conference is scheduled and important policy changes are not expected before December’s meeting. In Europe, Draghi will be speaking in Germany’s Bundestag on the ECB’s OMT program, followed by a scheduled press conference.

23rd Oct - US Close: Pre-Open Dive

Markets were very weak after the bad Q3 earnings, signaling that the QE-effect is spent, and it’s back to fundamentals for now. Most of the reaction probably came from the bad Spanish news, and the yields on Spanish government debt increased somewhat. Incidentally, given the worries over the earnings, tomorrow we’ll see Q4 macro numbers from Europe and US, and these could set the tone for the rest of the week.

Fed is probably a non-event on Wednesday – but do notice that Draghi is visiting the lion’s den – he’s speaking to the Germany’s parliament, Bundestag, on the merits of the ECB’s OMT program. He will hold a press conference after the debate, and the market could use a word or two now. Perhaps he will provide that? Elsewhere, Canada's central bank surprised everyone and hinted that the end of easy monetary policy is going to end some day. Why? Are they worried about the house prices, or do they know something? Are they trying to do some "Chuck Norris"-monetary policy - creating growth by building up the inflation expectations?

EURUSD and SPX selling off on "low volume". Perhaps the Spanish lousy GDP estimates from the central bank, perhaps the growing pessimism on US earnings outlook or simply the realization that Europe still has not solved its crisis. In my view, the markets are still within the acceptable range for a range scenario. It is common for the markets to make marginal new lows or highs just to tease all the stop orders, but you people probably already knew that, right?

Another long piece of credit-goodiness from Macronomics

Looks like another test of the support areas in EURUSD and SPX is happening. Tactical longs, baby, tactical longs.

So, the stock market deciced to rally on the last minutes. I think it is safe to say now that the bottom of the daily range of the S&P 500 has been rejected, and a visit to the range's top is in progress.

22nd Oct - US Open: Bottom-fishing

Markets tried to move up, but failed for now. We might see some sort of bottom formation during the early part of this week, and perhaps then the markets decide whether the important support levels are taken out.

Long posts during the weekend. You probably missed a lot:

21st Oct - Weekender: Views, Off-Topics, Finnish

Last post of the week, with my market views, followed by some interesting off-topic articles and some in Finnish.

This week’s edition has sections on Regulation/Risk, Markets, Economics, Nobel prizes and Citigroup. The just resigned CEO of the bank made a cool one billion dollars from the bank. Your tax dollars at work. For fuck’s sake… EDIT: Calendar updated.

This week’s edition has sections on United States, Markets, Portfolio/Quant, Trading, High-Frequency/Algo, Hedge Funds and Other. EDIT: Calendar updated.

20th Oct - Weekender: Europe

The European summit turned out to be a dud, even given the very low expectations. Dedicated sections on both the summit and European banking union design.

Last week in review – next one previewed! For entertainment, see my special on the '87 crash.

Special: 25th Anniversary of The Crash of '87

You still remember this? I joined the game in 1991, and experienced this as an outsider.

Stock markets selling off nicely, making another swing towards the daily range's bottom - but EURUSD hanging in there - perhaps joining the "fun" later? Anyway, getting ready to long any decent intraday setup will be the order of the day for Monday.

Disappointment on the EU summit, technical resistance levels and general anxiety over the 25th birthday of the stock market crash of '87 could turn the session to negative territory. (EDIT: Calendar updated)

This week's main events were: EU summit agreeing on the banking union, Spain still playing time, better than expected data from China, US presidential election uncertainty increasing. A very important, but currently less discussed topic is the possibility of the central banks to write off the QE-acquired sovereign debts. As debt monetization has a bad ring to it, the discussion will be held in the background for political reasons.

First day of the EU summitteering confirmed the schedule for the common supervisor part of the banking union. This is a prerequisite for bailing out the Spanish banks, but it will be a long way to that result, and there are plenty of parties ready to change their opinion later. Markets nervous after Google's blunder.

18th Oct - US Close: Googod...

If there is a way to fail, we will find it. Google's outsourced paperwork did not work that well - but neither did their earnings. In Europe, plenty of stuff on the presummit statements - I'm not expecting much, and it looks like markets are preparing to a good old-fashioned "buy the summit, sell the news".

Some really good ones on the EU summit.

Chinese data came out, and on surface they were good. Summit time in Europe. Updated views later - meanwhile, after a pause of couple of days, I posted a very, very nice post last night - check it out.

17th Oct - US Close

Back from blogging holidays! Plenty of stuff going on - Spanish bailout waiting game, summit and more time for Greece. Someone asked for updated views on EURUSD, after my view from last Sunday. Here it was. It seems currently all the issues appear to be solved. It will not be long before we see the cracks appear, so I will update views and comment on Thursday. I guess that tactical shorts or at least an opportunity to get long in EUR or SPX will soon become available.

On Holiday

I'm taking a holiday from blogging. Family matters.

15th Oct - EU Open: Bounce from range's bottom

Plenty of material to open up the week. Both SPX and EURUSD are keeping the ranges and the Chinese positive news helped to reject the lows of the range for now. If you had a life during the weekend, take some time to review what I posted during the weekend.

14th Oct - Weekender: Off-Topic, Finnish & Views

The final post of the weekend! First some market views (pics are clickable), followed by some Off-Topic articles that I've come across during the ending week. And finally, some article links in Finnish.

This week the main themes are the need for banking reform – limiting the scale and scope of banks, and the resistance to, and perhaps futility of such efforts. The IMF’s recent economic outlook pointed the underestimation of fiscal multipliers. This is just a fancy way of stating that making budget cuts tends to lower growth and thus the previous “cult of austerity” was wrong.

The week was dominated by the European crisis with suggestions of Spanish bailout, while the plans for an ever-closer union are made in the background. Greece seems to be getting more time, so it is of less immediate interest to markets right now. In US, the fiscal cliff, elections and possible trouble with corporate earnings are the most important themes.

13th Oct - Credit Guest: Growth Divergence

Here's the latest overview of the credit markets from the Macronomics.

12th Oct - Weekender: Weekly Support

Here are the links to sort out your review of last week and prepare for the next one. I will update the missing ones as soon as they are published.

The best article links from my ending week’s posts. Spain's downgrade, Liikanen's report on reforming banking and IMF's confession that austerity is not working.

Just the regulars.

11th Oct - US Close

Quote of the Day: Did you know that Ireland and Spain were once rated AAA? For Ireland, Oct 2001 to March 2009; and for Spain, Dec 2004 to Jan 2009. – Rebecca Wilder / EconoMonitor

Markets near the lows.

10th Oct - US Close: Bottom - or double top?

Weak day in SPX, but EURUSD held nicely. Now the stocks are sitting at the support. Either it breaks, or we visit the top half of the range quickly. False breakout to downside would be classic. MoreLiver's old saying is that the objective of the markets is to hurt as many people as possible. Which way you think the really clever people would now position?

Surprising numbers.

Just updated the IMF post. The recent negative market reaction can be attributed to the growing vision that Europe cannot seem to solve its problems, partly based on the IMF's latest publication. Couple of comments on the USE (United States of Europe) and Saxo Bank published its quarterly outlooks. My posting will be erratic in the coming days, please bear with me. Markets bouncing somewhat from the previous lows, but I guess pushing all the way to upside again would require some really good newsflow - and that is not coming. Current best guess "descending triangle".

After the deeper drop than I was expecting, the previous lows came close. (1.28-12850 in EURUSD - 1.285 visited, 1427 in SPX - 1432 visited). Good chance of a relief rally and perhaps a horizontal trading range of 1.30-1.2850. But the weakness scares me and increases the probability of a "double top"-scenario in both markets. Sorry about the missing updates - I just updated the yesterday's US close and will update the IMF post next. The next post will be big.

9th Oct - US Close

Strange and "no news" drop in EURUSD and stock index futures down as well. Macr0man tweeted Euro falling.. some idiot or computer looking at germany/spain spreads seeing 36bp wider not realising benchmark bonds changed?

The regular European morning briefing will be delayed today due to my commitments - but do not despair! The IMF's updated reports are out and by the time you've finshed with these, I'll be back!

8th Oct - US Close: ESM straight to negative

European morning post on Tuesday will be delayed - sorry!

US bank holiday, but stock market is open. Expecting low volume and possibly erratic price behavior. The drop in EURUSD and SPX has been deeper and faster than I expected, but still within a bullish scenario = tactical buy levels now.

If you are just returning to the office: PLEASE, take a look at my weekend posts linked below. They are long and I push the week's best stuff into them. You might be surprised. EDIT: US bank holiday today - low-volume day, but not sure if that translates into low volatility as well.

7th Oct - Weekender: Off-topics, Finnish & Views

6th Oct - Weekender: Markets & Economics

This weekend’s edition has plenty to chew on. In addition to the ongoing discussion on central bank policy, Basel 3 reports from BIS and the very helpful “understanding repo markets” are some of the highlights. For traders, the absolute must-read is the piece on how Keynes traded for 25 years. And do take the time to see the free coursebook on international economics!

My usual weekend's reading package comes this week with a special section on Iran. The "Liikanen paper" on banking reform, Spanish crawl to bailout request, plans for fiscal union and continuing trouble with Greece were the main themes of the week. All of these will move to closer focus ahead of the European summits.

Last week in review, next one previewed. This post will be updated later.

5th Oct - US Close: Payroll aftermath

Just the regulars and all the commentary I could find on the US payrolls.

Just the regulars, I'm sorting articles for the weekend postings. Payrolls largely a non-event, with SPX pushing higher and EURUSD basically unchanged but with positive tone.

The best ones from my past seven day’s postings.

This is a joke. Free consulting to commentators who notice what I edited.

Payrolls are clearly the day's most important number (presidential elections coming in US). French, Italian and Spanish prime ministers are meeting in the evening. I expect a risk-positive day based on technicals and sentiment.

I am currently purging my postings so that the "less immediate" articles get pushed to the weekend posts. Any wishes or complaints?

4th Oct - US Close: CB's happy & waiting

Nothing came out of today's central bank meetings - everyone is waiting for the Spanish bailout request so that the ECB's resolve can be measured, but perhaps even more importantly, the political will and ability of the creditor countries as well. Plenty of economics articles floating around - on the European imbalances and the QE effects. I am saving those for the weekender posts. I'm expecting more risk-loving on Friday.

EURUSD and SPX somewhat positive ahead and immediately after the European central banks - both unchanged but sending positive messages. Or thus thinks the market. Wednesday's late minirally in US was attributed to Romney's perceived good performance in debate vs. Obama. The (coming) European roadmap to closer union (banking & fiscal) will be the defining moment of the euro crisis.

This is the key. Everything else is just central banks flailing about.

nice bull channel

Markets waiting for another round of central bank meetings later, and guessing when Spain officially begs. SPX is pushing higher and looks technically really nice - the bull trend channel is now four months old and after recently visiting the bottom of the channel, has now turned up. EURUSD has not joined the fun - yet?

3rd Oct - US Close: Positive Services ISM

2nd Oct - US Close

1st Oct - US Close

General europessimism in articles. The solution seems obvious to most (full fiscal and banking union combined with much easier monetary policy), but most are doubtful if there can ever be political will - and mandate from the electorate - to do that. Calendar page updated.

Plenty of material, but that's the way we like it. New week, new month, new quarter. This month will either see the roadmap for fiscal and banking union presented to euroleaders. If the presentations suck and political leaders deem them to be unmarketable to their respective electorate, that's it for euro.(edit: Calendar page updated)

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