MoreLiver's Daily: August 2012

Friday, August 31

31st Aug - US Close: Bernanke's Apology

We got nothing out of the Jackson Hole - except more promised that they are worried and are really carefully watching the situation and so on. Long US weekend coming, with Monday being a holiday. Take the time to relax, check these quick comments on the Fed and come back for my weekend posts.

Here are the best links from my ending week’s blog posts.

My views remain unchanged: check the Best of August for them. Both EURUSD and SPX have plenty of downside left, even within a largely bullish scenario - and September's main events are getting close... Yesterday's regular posts had plenty of good stuff on Europe, if you missed, do yourself a favor! I'm posting the usual Best of the Week later today in addition to the regular posts.

30th Aug - US Close

Source: Reuters by Flasseur & Donovan

Perfect chart to show how the markets in Europe have become 'renationalized'.

Plenty of good ones on Europe today...

Very nice short notes from the big banks in this post - also see yesterday's US Close for plenty of European thoughts.

29th Aug - US Close

Some charts from the past two days to kick off the evening post:

Still missing some, but posting early anyway and will update later. Some very nice articles in Finnish at the bottom.

28th Aug - US Close: Damn, BB

Nothing much going on, so I am just collecting interesting articles as usual... the stupid Bloomberg stopped showing CDS prices on sovereigns on the web for free - so be careful if you look at my Charts-page. As we are waiting for the dreaded September days and before that, the Jackson Hole, I thought this video of Europe's Final Countdown should be ok for comic relief.

To make matters worse, my less handsome partner has as of yesterday started to follow the Big Brother's local edition on television. Now she is constantly bugging me to open up the laptop, turn off the screen saver and so on. Oh, the humanity! Damn you, BB!

EURUSD continues drifting slowly lower after hitting the channel top around 1.26, with room left below. SPX seems to be settling into a horizontal range (my Sunday views and Monday's notes)

27th Aug - US Close

Most interesting development of the otherwise dull day: comments noticing that the fall in European crisis countries' bond yields has stopped - and actually slightly reversed, and CDS prices are moving up (see my chart page). The ECB's game changer is thus almost priced in, and the statement mill is bound to disappoint. Some of you have been following the "renationalization" of monetary policy within the eurozone. You might find bruegel's dataset interesting, as it shows who actually holds the bonds - and when the trends in ownership data have reversed.

Another Monday, another US open.

A credit guest post from Macronomics, enjoy!

Good morning and good luck. With the lack of calendar events (data or otherwise) ahead of the Jackson Hole symposium, followed by the all-important European mid-September events, this week could be range-driven and even minor commentary could be interpreted by the markets as a hint of policy. Thus, I think we might see some nervous but quiet trading and oversized reactions to minor comments - throwing away the news feeds and just looking at the charts is advised.

26th Aug - Weekender: Views & Finnish

My views on couple of charts, up next the EU Open briefer. Also, some Finnish article links.

Very nice material: good section on quants, Buffet’s alpha analyzed, book reviews. I will post yet another Weekender-post, with Finnish article links and my views later today.

Europe, USA and China article links. ECB’s delay and troubles in practically all the member nations seem to be the most pressing issues in Europe, while in US the Fed’s wait-and-see and the fiscal cliff are the main items.

This week's off-topic readings pay tribute to Neil Armstrong. May he rest in peace.

25th Aug - Weekender: Weekly Support

Here is the ending week in review and the next one previewed. I will update this post as new stuff comes online.

24th Aug - US Close

Quiet Friday on the blogs...better start writing the Weekender posts, then..

Picks from the ending week’s posts.

I included my updated views in last night's post - take a look, click the charts for larger versions and comments appreciated, as always...

23rd Aug - US Close: Turning Point

Plenty of charts today:

Plenty on the ECB's "double secret" plan + the latest Finnish headlines - again talking about complete side issues. I am getting nervous about the SPX - I guess the recent epic low-vol bull trend channel will be broken soon to the downside. It would be illogical to be bearish on Spanish bonds and bullish on SPX - so I guess there will be a correction soon. EURUSD target still arond the 1.26 level, but any deterioration in Spanish bonds would quickly turn the currency pair down as well.

The European PMI and GDP figures are today's main event. Probably the PMI's will not paint a rosy picture: Chinese PMI came out earlier today and it was simply terrible - just confirms what Japan's earlier trade figures showed - Europe is going down.

22nd Aug - US Close

Fed minutes came out - and the message seems to be mixed and open for interpretations.

Perhaps there is room for one leg up in SPX, but that's it - if I am bullish on Spanish bond yields, implying weeks of European aversion to risk, there is very little room for more bullishness in the stock markets.

SPX lower this morning, but at support levels. Fed minutes ahead - hopes for QE have diminished as inflation and inflation expectations are on the rise, recent economic numbers have been ok and risk markets are at relatively high levels. Paralysis and "profit-taking" in the coming weeks, ahead of the mid-September Eurobonanza?

Our trusted source Macronomics is back with another great guest post.

21st Aug - US Close

Interesting day - the AAPL train finally stopped, and the SPX felt it immediately. Currently sitting at good short-term buying levels. EURUSD broke above the resistance area around 1.24, and looks like the next stop will be around 1.26. Do check my updated Calendar page.

I repeat my earlier view: now is a good time to go short the Spanish bonds across maturities. The Spanish yields (10y, 2y). Please check my yesterday’s posts, as the linked material was of exceptional quality.

20th Aug - US Close: Time for Guru

A special gift to my Finnish audience: check the VATT's 170-page giant on the Finland's depression of the early nineties. Given the amount of BS the dentally well-endowed people are pushing, it is a high time you as voters actually understood something about previous policy mistakes - and how we are again in a very similar situation. Every time they state there is no other option, they actually mean that there is no option for them. It is always about what's in it for them. I believe it is high time to start thinking about you and your future.

Today's latest ECB rumor shot down by ze Germans. This is probably a very good time to start shorting the Spanish bonds across the curve - not much room for improvement left anymore. In my previous post I outlined the technical ranges for some markets: in SPX a probable good buying level is around 1408.

Some market views and Off-Topic articles - sorry, usually I post this during the weekend.

The morning briefings and plenty of Finnish links.

19th Aug - The Economist on the euro break-up

The Economist on the controlled break-up of the Euro:

18th Aug - Weekender: Trading & Markets

Ridiculous: no criminal charges over MF Global and Corzine actually thinks about starting a hedge fund (would you invest?), drug money laundering continues, Swiss banks sacrifice their employees so that the banks would avoid any quilt. Finance is fair...game.

Enjoy the two attached videos: one is a lecture on momentum strategies, while the other one is Palantir's example of building a value/momentum trading system.

17th Aug - Weekender: Weekly Support

Here is the ending week in review and the next one previewed. Happy weekends and do take the time to see the classic lecture on the exponential growth – if you lose your will to live because of that, don’t blame me – it’s the math, stupid :=).

I will update this post as new stuff comes online, and the usual Weekender-posts are coming, so check back during the weekend. And do scroll down for some interesting articles (in Finnish) on Finland's recent fumbling.

...picked from my ending week's post. Come back later for my usual Weekender-posts.

16th Aug - US Close: Gimme all you've got!

Gimme all you've got, yells Al. The stock markets rallied, again on nothing but a bullish interpretation. The markets are bullish until they are not. There are no signs of an impending doom, no reason to be short - but not that many to be long, either. Next weekend's posts are going to be huge. I try to post them already on Saturday, so at least someone would have time to go through them before another week of sameness.

Sincerely,

MoreLiver

Good morning!

15th Aug - US Close: Still Waiting...

Articles on Europe are getting nastier. September deadlines and showdown is approaching. Will we see another muddle-through attempt in this Mexican stand-off?

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Previously on MoreLiver's:

Wed: US Open

Wed: EU Open (morning briefings)

Tue: US Close (plenty of articles+pics)

Just the morning regulars, for article hunger check last night's post: plenty of high-quality articles with pictures, too!

14th Aug - US Close

Posting a bit early, will update the missing ones as they come online. Boooring…. Getworkdonemusic for some EDM. MoreLiver's department of linguistics announces a new word for a boring asshole: borehole.

13th Aug - US Close

An American liberal is good at getting sex but bad at earning money. An American libertarian is is good at earning money but bad at getting sex. A conservative is not really good at anything and therefore wants a society where everyone must stay with their first contact of the opposite sex – J.R.

Still very sleepy holiday markets.

Good morning, the negative comments from Germany have not exactly crashed the markets yet, but a slight negative tone in both the EUR and S&P is evident.

12th Aug - Weekender: Views & Off-Topics

To round up the week, couple of thoughts on the markets and some relaxing bedtime reading.

In this week's edition, plenty on the stock market as the earnings season comes to a close. Also, the financial crisis is now five years old. Why do repos exist? Why should we care about higher corn prices? Can ratios like P/B or P/E be used to invest successfully? Find all the answers here.

In economics, Knightian uncertainty is risk that is immeasurable, not possible to calculate. Knightian uncertainty is named after University of Chicago economist Frank Knight (1885–1972), who distinguished risk and uncertainty in his work Risk, Uncertainty, and Profit – wikipedia and MIT

Selection of recent opinions on Europe, plus articles in Finnish.

11th Aug - Credit Guest: The Unbearable Lightness of Credit

Again a massive panopticon of the credit markets by Macronomics

Here is the ending week in review and the next one previewed. Happy weekend and check back on Sunday for another post. I will update this post as new stuff comes online.

10th Aug - US Close

SPX minor spike up right around the close, talk is algo-driven trading in a low-volume environment. All the other markets almost dead.

So this week ends with worse than expected numbers from China, about as bad as expected from Europe and somewhat better than expected from US. After the previous lessons, no-one is yelling decoupling this time.

Here are the best links from my ending week’s posts. Next up the US Open post, come back later for the usual weekend specials.

The current “dislocation” in the markets (EURUSD down, PIIGS yields up = risk-off but SPX up = risk.on) is again haunting the markets. Either the stock market is just slow to agree, like many times in the past. Or alternatively the stock market is really strong, as it brushes aside bad news and bad price developments in other assets.

But…the divergences between the stock indices (S&P 500 up at top of range, Russel horizontal, Nasdaq above its recent range and transports weak) suggest to me that the market is overbought.

After the strong performance since June, but directionless week, I expect a sell-off in the stock markets today.

Previously on MoreLiver’s:

US Close

US Open: Verbose ECB

9th Aug - US Close

Another dull day - EURUSD was weak, but SPX failed to follow. God I wish we were already in the end game of the euro crisis. My guess is September will be decisive no more muddling through.

EURUSD continues grinding down towards the next support levels, while SPX is reluctant to follow. ECB's monthly bulletin was published and the section on renationalization of monetary policy and banking in Europe is worthy of your time. In other developments, more soft-print-SMP-speak from ECB, a classic verbal intervention. Given the rise in Spanish bond yields during the past couple of days, an understandable timing.

Not much to report. I hope to punch in a post during the weekend outlining the coming "Great September of Europe".

8th Aug: US Close: Dull

Source: Zero Hedge

EURUSD acting weak, Spanish bond yields ticking up as the moods on the ECB's plan are now on the negative side. But SPX holding up still. Kind of dull, but luckily I've found some quality articles - and tons of sell-side research notes. I didn't remember how quiet the markets can get in August. Good that September is already looking like a month to remember.

Check their website

Spanish yields still moving up, stock markets and EURUSD have reached the first support levels. This correction ain't over yet.

Previously on MoreLiver’s:

EU Open: Softer?

US Close: Banging Lines (my comments)

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A bit softer, as I have been expecting (see previous post). Supports in S&P around 1385 and 1370 and in EURUSD around 1.2320 and 1.2230. DAX looks similar to S&P.

7th Aug - US Close: Banging Lines

Another strong day in the markets. My original idea for the week was to have minor strength first, followed by a sell-off. I am not changing my view from that, so if not short, at least try to get long at lower prices. If you look carefully enough, the EURUSD and S&P seem to "occasionally correlate" - and the EURUSD is also sitting below resistance levels. Meanwhile, Spanish 10y bond is back to recent highs, so all the risk markets are basically up against major resistances. Rest of the week negative, is my guess.

Couple of interesting articles: I didn't know that Bundesbank did QE in 1975. Makes its opposition today even weirder. Or actually it proves my hunch, that the Germans are really not interested in sound monetary policy for Europe - they are interested in sound monetary policy for Germany. And that's why this "thing of ours" will fail.

Not much happening - everyone is waiting for the central bankers to make their move - and in Europe, the national politicians. The picture is again looking somewhat negative. I wrote elsewhere today that

-after Draghi's speech, everyone got bullish
-when the ECB meeting produced nothing, everyone got bearish
-after thinking for couple of days, many believed the ECB plan makes perfect sense
-now we are hearing that the plan is currently not workable

The verbal war between Italy and Germany is in full swing. Spain and Italy do not want to apply for official bailouts, as they hate the idea of loss of sovereignty, but would still want to have the mun-uh. The attack on creditor countries is not limited to Germany. Also Finland is getting its fair (?) share. You really think Monti visited Finland for its beautiful nature and Prime Minister Katainen's fascinating personality? And met the heads of the most important parliamentary committees out of courtesy? As in many other countries, any legislative change is prepared by the committees before parliament votes on them. Something is again prepared in the background, and most likely it is unlimited firepower from ECB via ESM, without seniority or guarantees. Read: stealth bailout, stealth fiscal union, stealth confiscation.

6th Aug - US Close

What are we waiting for, Christmas? At least the Spanish yield curve is taking Draghi very seriously indeed (or was it SMP?), see the 10year and 2 year bond yields - the short end has had an amazing move.

Here we go! Another post-traumatic week is here!

Someone requested a collection of research reports on the (eventual?) breakup of the eurozone. Here you go. Spread the word and honor MoreLiver's Daily.

Market risk factors, source: Lighthouse IM

Good morning everyone and congratulations on the successful landing of the latest Mars rover. As someone said, let's hope they don't find any new bailout targets there. I will update the missing articles when they are published - several really good ones on Europe. See the Special: ECB WATCH for more.

5th Aug - Weekender

Not much material, so only one Weekender-post. Views: Euro crisis to drag on, risk markets bullish for the early part of the week, but I am expecting a reversal around mid-week: stock markets are still in a modestly rising but wildly sawing channel, and we’re near the upside again. If I had to trade, cautious longs on Monday, flat after a day or two, and prepare to get long during the possible correction. See the Special: ECB WATCH for more.

4th Aug - Credit Guest: The European fight of the Century

This is the moment you’ve all been waiting for. Someone who actually understands something – and is prepared to tell his view – legendary Macronomics – is back with a guest post.

Here are the week in review and next week previewed-links, I will update this later. Come back later for my longer Weekender-posts.

3rd Aug - Weekender: Best of The Week

Surprisingly strong Friday, even though there was general disappointment over the inaction of the central banks. Anyway, here are the best picks from the ending week’s posts. Notice that the central bank articles can be found in dedicated posts Special: ECB WATCH and Special: FED WATCH. The ECB is more important to understand right now.

Quick post for the US Open – payrolls day ahead to top the uncertainty. For full coverage of the ECB’s latest meeting, see my continuously updated ECB WATCH.

EURUSD not crashing

Markets are not behaving as risk-averse as many thought after ECB's Draghi "failed to deliver". Either the ECB's impasse was already priced in, or the plan is there, but early commentators just failed to see it. Bailouts and securities purchase yes - but only after an official request for help and succumbing to a Troika program? Spanish yields moving up this morning (10y, 2y)

2nd Aug - US Close: Yo soy un hombre sincero

Spanish 10y yield, intraday

ECB came and went. I guess no-one was expecting unconditional “going nuclear” from Draghi – but after his speech expectations were very high. Strategy seems pretty clear and even makes some sense to me. ECB shall perform some SMP in shorter maturities while the ESM and EFSF shall purchase the longer maturities – but only after an official request for help has been sent. This is something Italy and Spain do not want to do. There are two explanations:

Time for this week’s main event: the dreaded ECB meeting. For full coverage, see my continuously updated specials ECB WATCH and FED WATCH.

1st Aug - US Close: Fed failed

FED did nothing, and while expectations were lowered before the event, EURUSD dropped moderately ahead of tomorrow's ECB meeting. For full coverage, see my continuously updated specials ECB WATCH and FED WATCH.

Waiting for the FED. Then it’s Europe’s turn. For full coverage, see my continuously updated specials ECB WATCH and FED WATCH.

On this day in 1981, MTV made its cable-television debut. The first music video aired on MTV was “Video Killed the Radio Star“ by the Buggles. – MarketBeat / WSJ

Still nothing new to say. See my continuously updated specials ECB WATCH and FED WATCH.

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