Market Talk

Love that tax-cut deal, right? Dow Jones’ forex report Andrew Johnson wrote the following:

There’s more than one way to look at possible extension of Bush-era tax cuts and market coming up with strongly divergent viewpoints. USD/JPY and USD/CHF — as well as US stocks — rising to session highs on backs of renewed short-term confidence in fiscal responses to crawling US economy. Treasury yields are widening on news. But the dark side is a growing long-term fiscal deficit problem unnerving some, including Moody’s, which is sounding alarm on the US rating outlook. “This is the start of a long period of erosion in global confidence in all things US,” says David Gilmore of FX Analytics.

That’s because our elected officials obviously punted on making anything remotely resembling a hard call. For all the hysteria about the deficit, for all the bluster about austerity, for all the bashing of years-long unemployment benefits, what we got was a deal that addresses absolutely none of those things, and if it doesn’t add to the deficit, as the White House claims, I’ll eat my hat.

All we got was a feel-good, short-term sugar fix. Another one. Make no mistake, nobody in Washington is seriously addressing this nation’s problems. That in itself may be the biggest problem the nation faces.

So, there’s not much going on in the stock market, but over in the gold patch, the yellow metal is once again in record territory, and crude futures are pushing up against $90/barrel again, as investors wary of the ongoing macro-mishigas as jumping into commodities.

Stocks fall, but call it a moral victory for bulls who perform another one of those escapes that would make Houdini grin. Markets shake off ongoing concerns about euro-zone’s debt problems and erase much of their early substantial losses.

For the past several months, US markets have pulled moves similar to this with collaboration of a weaker dollar/stronger euro, but neither was present today. It almost looked like a reversal based on sheer will alone. Perhaps there was some of that, inspired by S&P 500 holding a critical level around 1174. Continue reading…

Stock markets in Asia saw some solid gains overnight, but Europe looks more tenuous as the car crash that is Ireland’s bailout passes into the rear-view mirror and investors wonder who’s next.

USD index recently up 0.4%, euro sinks well below $1.32, recently around $1.315. Busy week for US economic data, though today is thin, with just Dallas Fed’s November manufacturing outlook due at 10:30am ET. Regional as well as national ISM gauges due tomorrow and Wednesday. Readings on home prices, consumer confidence, construction spending, Nov chain-store sales, auto sales, pending home sales and Nov employment report all on tap this week.

Should be interesting to see if US stocks react to the euro’s weakness, or if they can shrug it off as they did last Wednesday.

S&P futures down 2.90; 10-yr note flat, yield at 2.87%.

US stocks and the euro have been pretty tight during the past few months, inseparable at times, but it looks as if the single currency is getting a cold shoulder this afternoon.

Sure, the two were spotted frolicking together this morning, but something’s missing. While stocks maintained solid gains, the euro just couldn’t keep up. Perhaps we should’ve seen this latest separation coming. After all, stocks are enjoying the elation of seeing a sharp drop in jobless claims and better consumer sentiment. The euro is carrying the baggage of renewed financial turmoil in the euro zone.

They’re in different places now. Maybe they’re growing apart. Euro recently at $1.323 and falling; DJIA recently up 134. Are stocks ready to give euro the “It’s not you, it’s me” speech? Or will they coming running back, saying “Baby, I just can’t live without you.”

Stocks locked in a holding pattern today as investors wait for either another shoe to drop, or for an all-clear sign. Focus is overseas, with anticipation building for some resolution to Ireland’s sovereign debt/banking problems.

Euro generally flat-lines today, dollar slightly lower, and stocks here mimic fluctuations in those currencies. Another big pullback in oil, prices down more than 8% in the last four trading sessions. Treasurys slip again, too. Decent earnings from some retailers lifts consumer discretionary sector; financials lag.

DJIA slips 15.62 to 11007.88, and Nasdaq Comp rises 6.17 to 2476.01. S&P 500 ends 0.25 higher at 1178.59.

Weekly jobless claims, Philly Fed’s November business index and October leading indicators all due tomorrow morning. Also, at least a trio of Fed officials stepping up to the mic, so expect to hear some bluster about even more QE if this latest dose doesn’t fly.

Stock futures slightly higher premarket as bulls look to bounce back from a rough week. Markets mixed in Asia overnight, edging higher currently in Europe, with the euro recovering a bit from earlier
lows.

USD index up 0.5%, Treasurys taking an early beating, perhaps on word that Republican lawmakers are trying to persuade the Fed to halt QE2 plans. Busy week for data, this morning brings Oct retail sales, and NY Fed’s Nov Empire State manufacturing survey at 8:30am ET. Sept business inventories set for 10:00am.

Also a lot of retailers reporting quarterly results this week, including Lowe’s this morning; Wal-Mart, Home Depot and Abercrombie & Fitch tomorrow. S&P futures up 3.70; 10-yr note hit hard, yield at 2.83%.

One thing’s fairly obvious in this broad stock-market selloff today — every asset that’s benefited from a strong bid courtesy of QE2 expectations is getting hit…hard.

Metals, oil, Treasurys, stocks and the euro all tanking, after a near vertical run-up since the Fed first began to telegraph its easing intentions at the end of the summer. Maybe this selling will end as a bout of short-term profit taking. Perhaps it turns into a well-deserved correction, a consolidation of gains reaped since September. Or could it be something more? At some point, the traders who’ve piled into risky assets at the Fed’s behest will decide the easy money has been made. Time to cash out and go elsewhere. Maybe we’re near that time.

It’s been a rocky week for the Fed’s latest monetary easing plan. Outside of Wall Street, QE2 has been savaged by nearly everyone, raising questions about a program that seems hard to defend. In addition, turmoil in Europe appeared to be under wraps when the QE2 trade really began to catch on, and the latest troubles with Ireland and others in the periphery presents a big fly in the ointment. If gains in the euro — a key beneficiary of the QE2 trade — come undone, so will much of the stock-market rally since September.

We suggested Tuesday there may be some cracks forming in the QE2 trade. It’s become crowded, and we may be seeing the least-committed heading for the exit. Certainly no panic evident in today’s action. But there is a whiff of smoke.

Bears are aiming for some follow-through to yesterday’s sell-off in US stock markets. Asian markets fell sharply overnight, with concerns about interest-rate hikes in China being cited as the catalyst, and European markets are edging lower as sovereign debt concerns — particularly in Ireland — continue to fester.

Interesting complexion premarket, with recent correlations — both positive and negative — appearing to loosen a bit . Euro recovering from big drop overnight, USD index softening, oil and gold in retreat (even as
the dollar eases) and Treasurys a shade lower.

Only data on tap is Reuters/Univ of Michigan prelim Nov consumer sentiment gauge, out at 9:55am ET. S&P futures down 9.30; 10-yr note down slightly, yield at 2.66%.

Investors are focused on a couple key influences this morning, namely the G-20 meeting, and Cisco’s weaker-than-expected outlook.

Hope is that cooperation at the G-20 gathering in Seoul can overcome any discord related to currencies, Fed’s QE2 and global trade. As for Cisco, its weaker outlook will weigh on the tech sector, and based on premarket decline, CSCO alone will be a roughly 31-point drag on the DJIA.

US bond market closed in observance of Veterans Day, no data on the calendar. Disney reports quarterly results after the close. Dollar’s stronger, USD index recently up 0.4%; euro strains to hold $1.37 level. S&P futures down 7.60.