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***Notes/Observations
from around the world***
-
Fed Chairman Bernanke signals years of low interest rates ahead with potential
more stimulus.
- US Fed stance appears
to be pro inflationary
-
Dow approaching 3 highs
-
US Tsy Sec Geithner will not participate in any Obama second term
-
Reports that private creditors were willing to accept a lower coupon in the PSI
negotiations
- European equity
indices opened the session higher, as the US Fed disclosed that 11 out of 17 of
its members saw the FOMC raising the Fed funds rate in 2014 or later.
Ahead of the Fed meeting, there were expectations in the market that the Fed
would not raise rates until at least mid-2014. Since the open, indices have
continued to gain on renewed optimism related to the Greece private sector
involvement talks, after a Greek press report, without citing sources, said Greece's
private lenders were said to be willing to accept a coupon rate of below 4% on
new Greek bonds. In the past, it was reported that Greece's private lenders
were seeking a coupon of at least 4%.
Speakers:
-
Greek Press report stated that private lenders were said to have accepted lower
interest rate in Greek PSI deal with creditors are said to be willing to accept
a coupon rate of below 4% on new Greek bonds. The report did not name sources,
but said private sector creditors would submit a new improved offer with an avg
interest rate of 3.75%. EU finance ministers had been seeking a rate of no more
than 3.5% and in the past private lenders said that they would not accept less
than 4%.
-
German Fin Min Schaeuble reiterated its view that European crisis must be
addressed at its source during an address to the Bundestag (lower house). He
noted that it was likely that German banks would hit capital goals in June and
could fill capital gaps without aid. The SoFFin was preventive medicine for
euro zone contagion.
-
German Econ Min Roesler commented that the ESM rescue fund had 'clear
borderlines' and that there was no clear link with its funding and fiscal pact.
Germany was doing every thing possible to defend the Euro
-
Senior German Official commented that Greece was not on the agenda at the Jan
30th EU Leader Summit and did not expect Troika report on second package for
Greece to be ready by then
-
(ES) Spain Budget Min Montoro commented that Spain was in a recession and it
was worse than Europe's
-
Russian Central Bank Deputy Ulyukaev commented that inflationary risks have not
disappeared and that conditions were not appropriate for an interest rate cut.
On the reserve currency issue, Russia might diversify into AUD assets in early
Feb
Currencies:
-
FX markets continued to digest the impact of the Fed's extended zero policy
guidance from Wednesday. The overall
effect has seen a weaker USD coupled with renewed risk appetite and higher
commodity prices. The greenback was at one-month lows against the Euro and GBP
and two-month lows against the CHF.
Political/
In the Papers:
-
The Irish Independent confirmed that the EU Commission will 'carefully
consider' Ireland's bid to cut the Anglo Irish Bank's bailout costs. The ECB
said it is open to proposals to replace Anglo Irish Bank's €30B promissory
note, or government IOUs for another instrument. Ireland is paying around 6%
(although it could be refinanced at 3% by the EFSF) on the outstanding €31B in
promissory notes, issued mostly to deal with the collapse of Anglo Irish Bank.
-
Iranian policy maker Emad Hosseini said lawmakers are finalizing a bill to stop
all oil trade with Europe. The FT reported that according to Hosseini, if the
plan is approved, the government will stop oil sales to Europe before the EU
begins its embargo. The bill could be taken up by parliament before Sunday. On
January 23rd, EU officials agreed to impose an embargo on Iranian oil,
including plans to ban Iran's petrochemical shipments from May 1st.
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Today's Economic News:
Our
day trading
strategies today will use the news, and this morning we have a
lot of action to prepare for. We begin
our day with the biggest news at 830am Jobless Claims and Durable Goods
orders. You can see by the chart posted
below that there has been a steady downtrend in jobless claims over the long
term, but the recent 6 months data shows that 2 weeks ago we were much higher
than expected, and last week we were well below expectations. Both of the last 2 weeks of reports have shown
sub-400,000 in the report so they have been very strong, but today’s jobless
claims report will be a confirmation of this downward trend continuing. Now…if only there were some more JOBS along
with these lower ‘claims’ we would be in business for a recovery!
 |
| Jobless Claims 2 years |
 |
| Jobless Claims 6 months |
Looking
at the durable goods orders we can see a very strong correlation to the recent
manufacturing data here in the US. The
last 10 days we have seen nothing but strong manufacturing data, and this 6
months of Durable Goods clearly supports that we have more orders coming in and
more people headed back to work.
 |
| Durable Goods 6 months |
Moving
through the US Open at 930am EST we have New Home Sales at 1000am EST. This is considered to be a major news report among
professional traders, however, it wont move the market at all because none of
us TRUST this report right now. Too many
inflated figures and ‘window-dressing’ used to spice-up the housing market so
these numbers aren’t tremendously useful, used mostly as background noise to
support other claims to the economic changes in the US. We can see from the chart below that our New
Home Sales are at 10 year lows, and not looking very promising at this time considering
we have very little stimulus left in the bank to keep it propped up.
 |
| New Home Sales 10 year |
At
1030am and 1100am today we have some minor news to be aware of. I marked them down because I wanted to know
when they were today, but they wont have much impact. Natural Gas Inventories are on our radar, but
unless you trade natty-gas you really don’t need to care much about it, and
Kansas City Fed is another manufacturing index that we like to watch because it
will further confirm/support the Empire State and Philly Fed manufacturing
numbers we saw last week, which were very strong suggesting growth in that
sector of the US economy.
Lets
also remember that today is day 2 of 3 for the WEF Meetings, which is open to
the press so we can expect to hear bits and pieces of news coming out of these
meetings today and tomorrow, so always on our toes today.
This
morning we will be wrapping up with members-only after 1130am EST and we look
forward to working with members in training today, so bring questions and be
ready to learn!
 |
| Day Trading News Strategy |
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