Crude tops $100 in the premarket as prices at the pump in downtown Chicago have been above $4.50 a gallon and are now threatening $5.00, premium is $5.25. There has been and now continues to be plenty of renewed chatter regarding the release of the Strategic Petroleum Reserves being released – of course in a nonpolitical way…as consumers will be paying a hefty price over the coming months just to fetch their marked up necessities. Sorry, I must be showing my age. The past generations, even sharing the verbal thought of a sitting administration or the non partisan FOMC dramatically changing any type of policy leading up to an election was unheard of and would be heavily condoned. Actually, it just was not done. What is it that the politicos know – that we don’t?
Midmorning observation: Over the next couple of days the markets will need to digest the recent moves as the books square up and the next trend develops. Aside from the price action during the coming days, the volume will help to determine the conviction of the traders and the coming direction. At this point, it is hard to imagine a deep back and fill in the equities. Last night, while being torched by Green Bay Packers I was sent an email regarding simple mea culpa that was sent following Bernanke’s presser. It was from a money manager closing out about 15 positions for his customers. Capitulation, no mas – for many who know better than to fight the Fed – in this case, the Central Bankers who are fighting the crisis. The following has been posted here on and off since early September and may be reposted again as we close out the 3rd quarter and the money managers prepare to send out their own quarterly statements. “Pain trade,” a number of fund managers missed out on the summer rally and as a result are lagging the broader indices. The longer prices stay at present levels, the greater the impetus for managers to “chase” stocks will become. This could cause a virtuous cycle whereby higher prices beget higher prices. *WSJ = 2007http://on.wsj.com/Opy8hQ
CFTC says the net EUR short position is now USD 15bln, a decrease of 7% from the previous week, smallest since April 3rd (More …) – Net JPY long position USD 5.3bln, increase of 38% – Net AUD long position USD 7.1bln, increase of 12% – Net USD short position USD 7bln, was previously a USD short position
Egan-Jones downgrade of US reminds investors of a longer-term risk for bonds. Egan-Jones is a small rating firm compared to the big three — Moody’s, S&P and Fitch. The question is whether these big players will downgrade US in coming year. S&P already cut US to AA plus last year — which ironically pushed investors into Treasury bonds and the dollar on safe-haven demand. Moody’s has warned this week that it may strip US off the highest credit rating if lawmakers don’t reach an agreement to fix the country’s fiscal woes. If Moody’s cuts US, Treasury bonds might get hit this time if the downgrade reduces investors’ confidence to hold dollar-denominated assets. The potential pain will be on US consumers with higher interest rates. The 10-year note is recently 1 point lower in price to yield 1.868%. USD/JPY up more than 1.15% at 78.36.
Friday started with 388 ESZ and 2.3k SPZ traded on Globex, trading range 1458.50 – 1449.50 / Thursday’s pit range 1456.80 – 1428.50, settled at 1450.40 up 17.8 handles. Today’s RTH’s December contract gapped 5 handles higher to 1455.00 – 1456.00 marking the early low. The equities were stepping higher in the opening minutes, mts2 (08:43:21): XLF Oct 17 calls 250,000 getting BOUGHT right now in the mkt created 5.5mln to buy off the print someone is getting long 425mln notional of XLF on this trade paid 12c. The next set of buy stops and programs came in following the release of the upbeat University of Michigan sentiment 79.2 vs exp of 74.0 and helped to propel the spoos thru 1461/63 area as the SPZ printed 1467.50 HOD by 9:25CT. HLCAMP1 (09:12:31): Normal Program BUYING High = 1465.00 EUBIE (09:12:37): +965 tics @ 1464.50 that’s it? HLCAMP1 (09:12:45): watch your SPY volume closely / u never know Eub. when retail and funds run out of cash… Eub average holding period on ETF’s and stocks is 14 days on the winners and 1.5 days on the losers and the average holding period in the spoos is 55 minutes HLCAMP1 (09:32:31): you can sell em Eub. these guys (his favorite program traders) just bought….From 9:30ishCT the spoos lost their the bid, slowly and quietly faded back to 1457 area as the sideways market set in and those that could – left for the day…During the midday session the spoos traded in a tight range hovering just shy of 1460 until Jimmy_Osbiston (14:20:24): Egan Jones cuts US to AA- This comes following a warning earlier in the week from the agency they would downgrade their rating of the US if the Fed announced further easing measures. The spoos traded a LOD 1454.70, the closing imbalance showed 26 of the Dow 30 to sell decent size and the broader market showed a large $1.2Bil to sell and up go the futures… On the 3:00 cash close the SPZ traded 1459.00 before settling at 1459.00 up 8.6 handles.
“BONDS TO EQUITIES WIDEST SINCE MARCH! $SPZ 1465 $SPY $148 / $TLT $118″ http://tinyurl.com/8jduzje
Interesting article: http://seekingalpha.com/article/867361-there-s-no-longer-a-bernanke-put