In the past 30 minutes the UK FTSE has moved from -0.61% to
+0.58% at 5317; French CAC from -0.14% to +0.63% at 4253; and the German DAX
from -0.12% to +0.79% at 6321.
The reason for the swing is that Citigroup
lost much less than consensus estimates (ie, -$0.54/share vs -$0.66).
Yesterday the US bond market sagged as yields lifted. The 30-year T-Bond lost
-0.74% to 114.64. Two days ago $USB closed at 116.88.
Yields on the 30-year, 10-year and 5-year gained +1.2% to 4.638; +2.6% to
4.038; and +4.6% to 3.332. The T-Bill yield gained 3.4% to 1.390.
The
$USD was stronger yesterday: $USD +0.21% to 0.7221; Euro +0.16% to 1.5848; Yen
-1.19% to 93.98; Pound +0.12% to 200.11; and Loonie -0.36% to 0.9943.
Crude Oil futures closed at 130.18, down -$5.14/bbl. This morning the Sept
futures are at 132.66, up +2.48/bbl.
$GOLD yesterday gained +8.00 to 970.70, with the stronger Euro, despite the
stronger $USD (which gained off the Yen weakness).
Precious metal prices (spot) at 7:33am ET for gold, palladium, platinum and
silver are (compared to the prior three day’s morning prices): 957.05 (959.65,
970.81, 984.43); 418 (424, 432, 447); 1866 (1942, 1946, 2008); and 18.42 (18.72,
18.74, 19.355), respectively. In fact, in the past half hour, the $USD has
strengthened from 0.72355 to 0.7244 and the Euro weakened from 1.5803 to 1.5797,
following the Citi report.
The DJIA futures at 7:30am ET are at 11430 +29 (since midnight) whereas it
was at 11396, down -5 just a half-hour ago.
Comments & Outlook
Based on the spin involved in explaining bank
losses, it looks like more short-covering in the Banks and Brokers to start the
day, with Oil prices rising a bit. Then after selling into the XLF strength, the
oil price might start to fade in the afternoon.
The Goldminer
shares are under pressure as the $USD strengthens, but technical analysts
will point to the support of the 50-day Moving Average. I don’t think that will
hold because I believe traders are using hot money to goose and then pull-back
the broad market on any profit-taking they can gain. It looks to me like a
stronger $USD is in order here, with more downward pressure on the precious
metals.
For long-term oriented traders, this is a nervous time. A rally of +485
points in the DJIA is unsustainable. From this point, every major loss by the
banks (see Citi and now Merrill
Lynch), and the need to raise capital (see the $10
billion raise-up by Freddie Mac) requires even more spin and hype from the
Talking Heads to keep the Bulls interested.
The Street is now examining the eight-month track
record of John Thain at Merrill Lynch. Do you recall from his tour in the
Asia-Pacific several months ago he flat stated that Merrill was in good shape
and not in need of capital?
Nothing much is happening in the market these days that we didn’t anticipate.
Have a good day. I’ll be in meetings in the afternoon and will miss the
close.
