The following comes form a major US trading desk
From support to resistance…to support…to resistance… Yesterday was notable more for gold’s decline than anything else, really. The precious metal was crushed, spot prices falling below $1100 per ounce briefly after opening at $1138, and the gold mining stocks really got hammered. The financials were in play, with Meredith Whitney casting doubt on the level of trading activity at Goldman Sachs and Morgan Stanley (those stocks lost -2.5% and -4%, respectively) and Citigroup’s $17 billion secondary really looking like a disaster…although those participating in the offering made a nickel per share as the stock closed at $3.20. The transports were hit on FedEx’s lower guidance, but there was a sideshow in the space that involved YRC Worldwide’s attempts to stave off bankruptcy (Goldman Sachs allegedly encouraged clients to wager on the trucking company’s demise through CDS, an allegation that Goldman later denied). The other trucking names traded higher on speculation that YRC might capitulate. The strong dollar was a factor in the weakness, despite the fact that it was mainly (again) euro weakness masquerading as dollar strength. When all is said and done, though, movement between SPX 1110 and 1087 is just noise. The real story yesterday was this morning’s and this afternoon’s expirations of various options and futures contracts, all of which were anchored by the S&P 500 futures at the 1100 level. (source: Bloomberg)
Asian markets declined again last night, wrapping up a dismal week for the Chinese markets in particular (most markets closed lower four days out of five this week): Nikkei -0.2%; Hang Seng -0.8%; Shanghai Composite -2.1%; Shenzhen Composite -3.5%; Kospi -0.1%; S&P/ASX 200 Index -0.4%; Sensex -1%; Straits Times Index -0.4%. The sell off is being partially attributed to news from the Bank of International Settlements that it plans to implement more stringent capital requirements by 2012. Earlier, unsourced reports from the Nikkei business daily suggested that implementation might be put off for a decade or more. As a result, the bank stocks which enjoyed such massive gains on Wednesday pulled back. Our negative session didn’t help the cause either. Miners were crushed across the board (Sydney, Hong Kong), joining the downtrodden financials. Transportation stocks outperformed, and tech held up well (see RIMM’s results) providing the only real bright spots of the session. (source: Bloomberg)
• Department store sales increased by 6.4% y/y in November, down from October’s heady 11.4% y/y pace.
• Discount store sales fell off by -2.8% y/y in November after rising by 4.5% y/y in October.
• The Bank of Japan left its benchmark interest rate at 0.1% last night as expected.
• Department store sales fell -11.8% y/y in November, a bit worse than October’s -10.5% y/y decline.
• Tokyo department store sales were off -11.8% from a year ago, a bit better than October’s -13.1% y/y decline.
• 3rd quarter real GDP expanded by 4.2% y/y, better than Q2’s 2.1% y/y expansion and better than estimates for a 3.5% y/y print.
Europe is chopping back and forth in schizophrenic fashion this morning as traders attempt to verify the accuracy of reports from Al-Arabiya TV that Iranian forces have stormed and captured an Iraqi oilfield: DAX +0.6%; CAC flat; FTSE +0.4%. Crude is also trading schizophrenically, having spiked from $73 per barrel to $74.32 (WTI) in a matter of minutes. Also a factor was the expiration of futures on the FTSE, which saw the December contract spike some 40 handles higher (or +0.8%) into expiration. Energy and mining stocks are higher in London, while financials are dragging. It’s a similar story in Paris where auto stocks are also lower. Germany’s holding up better, with tech stocks (RIMM’s results having an impact) leading the way higher. (source: Bloomberg)
• The seasonally adjusted current account deficit narrowed a bit in October to –Eur4.6 billion from September’s –Eur5 billion.
• The seasonally adjusted trade surplus widened out to Eur6.3 billion in October from September’s Eur4.3 billion.
• Consumer confidence (GfK survey) dipped in December to -19 from November’s -17. A rise to -15 was expected.
• The Public Sector Net Cash Requirement (PSNCR – consisting of the Central Government Borrowing Requirement, the Local Authorities Borrowing Requirement, and the Public Corporations Borrowing Requirement), which is basically an aggregated budget deficit, was Gbp14.7 billion in November, up from October’s Gbp6.6 billion. The expectation was for a Gbp17.3 billion PSNCR.
• Money supply growth (M4) was flat from October to November, while November’s 9.2% y/y growth dipped from October’s 10.8% y/y growth.
• Mortgage approvals from “major banks” ticked up to 63,000 in November from 60,000 in October. The consensus expectation was for 64,000 approvals.
• Producer prices (PPI) increased by 0.1% m/m in November, enough to cut the year-on-year decline to -5.9% from -7.6%.
• The IFO Business Climate Index (a survey of ~7,000 manufacturing, construction, wholesaling, and retailing firms) improved slightly in December to 94.7 from November’s 93.9. The consensus expectation was for a 94.5 print, so it was a slight “beat.”
• The Current Assessment component of the IFO index drifted up to 90.5 in December from 89.1 in November, while the Expectations component inched up to 99.1 from 98.9.
• Industrial orders increased by 0.3% m/m in October after jumping by 5.5% m/m in September. The year-on-year rate improved to -17% (in line with expectations) from -20.4%.
• Industrial sales fell by -1.6% m/m in October, dragging the year-on-year rate down to -18.4% from September’s -17.3%.
• Business confidence dipped to 89 in December from 90 in November, although that November figure was revised up from 89. In any case, that is the first decline in this series since it dropped to 68 in February from 73 in January. The 89 print was slightly below expectations for a 90.
• The Own-Company Production Outlook, which reflects the production expectations of 2000 corporate executives, dipped to -7 in December (below expectations for 0) from -4 in November. That’s the second month of pullback from October’s peak of -3.
• The Production Outlook Indicator, another component of the survey for which I don’t have any details unfortunately, dipped to -11 in December from -9 in November. Expectations were for an improvement to -7.
• Producer prices fell -0.9% m/m in October, dragging the year-on-year rate down to -3.3% from September’s -2.4%.
• Consumer confidence improved to -11 in December from -14 in November. The expectation was for a -12 print.
• The current account deficit widened to –Eur2.49 billion in October from –Eur1.56 billion in September.
Source for all data is Bloomberg
Category: Think Tank
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