The overnight futures are what moved the market to gap up this morning, but the catalyst behind any improvement in the market is difficult to pinpoint based on the overnight activity. As mentioned, a 15 min divergence doesn't develop overnight and not in a day. Yesterday I put out quite a few posts about a rounding type bottom and the need for the market to gap higher to squeeze shorts, it seems this is a Wall Street orchestrated move as 3C is showing and not anything fundamental, which tells us what we have known for a while, Wall Street manipulates the market in the near term and has for some time. It's important to understand the reasons why and I think I've covered that fairly extensively as well.
As for the overnight data:
In Europe and China:
China posted a larger than expected trade surplus, but it was due to a greater than expected drop in imports.
European industrial production was slightly better in Italy but offset by worse than expected news out of France. UK Manufacturing came in a little stronger than expected.
In what can only be seen as bad news (unless you are looking for ECB stimulus), the ECB forecasters revised 2012 GDP estimates for the Eurozone downwards to -0.2% from -0.1%, and revised up inflation expectations for the year to 2.3% from 1.9%.
BoE keeps benchmark borrowing rate at 0.50% and APF at GBP 325bln; as expected.
We heard about a letter of memorandum yesterday between Syriza, the anti-bailout party and PASOK, Greece’s PASOK leader Venizelos has taken the mandate and will attempt to form a coalition government. Each party starting with the New Democracy has had up to 3 days to form a coalition government, each party leader with Syriza yesterday (whose turn it was) has thus far given up in less than a day.
The focus will remain on Greece as the PASOK leader Venizelos grabs the baton and now attempts to form a stable coalition. Venizelos has reiterated that he wishes to remain within the Eurozone and affirmed that his party has not changed its policy with respect to the bailout.
The worst possible outcome is a new round of elections if a coalition government can't be formed, it looks VERY unlikely that one will be formed at this point with the 3rd place party now trying their hand at coalition building against the odds of voter sentiment.
Furthermore, as Reuters reports, "Greece's jobless rate hit a new record in February, underscoring the pain austerity policies required by the EU and IMF have inflicted on the debt-laden country which is struggling to form a government. More than one in five Greeks and one in two youths are out of a job, statistics service ELSTAT data showed on Thursday. The unemployment rate hit 21.7 percent from a revised 21.3 percent in January. In the 15-24 age group, joblessness stood at a record 54 percent."
There are less than 4 million people who are working to pay off the country's bailout package and debt which at last check was about 200% of GDP.
Italy's Q2 GDP is now expected to shrink more than 1% in Q2: the worst print since 2009, cementing the country's "double dip".
Still the focus remains on Greece.
The Spanish IBEX index jumped 3.5% in European trade, most are attributing this to an oversold bounce, however there is speculation that Germany may be ready to abandon their long standing resistance to anything inflationary and back ECB outright printing of money.
Thus ES's negative action near the EU open was choppy and slightly negative.
In the US...
The subterfuge continues...
Initial Claims
| Released On 5/10/2012 8:30:00 AM For wk5/5, 2012 | ||||||||||||||||||||
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Last week's 365K number has been revised higher to 368K, which is where the expectations for this week's print were. Instead, we got 367K claims this week, which because of the revision higher, the financial media will report a headline: "Initial Claims improve by 1,000." even though it is only because last week's data was revised to the upside (worse!).
The same thing happened for continuing claims, which beat expectations of 3275K, printing at 3229K, with the last week's print revised to 3290K from 3276K. The more disturbing form an end demand standpoint data, is that yet another 40K dropped off extended claims and EUCs. Finally in what is the best news for the market, and worst for the Economy, is that the March trade deficit soared to $51.8 billion, on expectations of -$50 billion, which was the biggest trade balance drop in 10 months. What this means is that Q1 GDP which already is tracking at 1.9%, just got lobbed to 1.5%. Yes: the Q1 GDP first revision will likely show the 2.2% number is now in the low to mid 1% range.
None of this seems to be a catalyst for the market to move higher leaving us only with what we have seen and knew before any of these events occurred, which would be charts like the ones featured in last night's market wrap.
It seems clear that any move higher in the market was pre-determined and planned by Wall Street. It is important to understand the degree of manipulation of the market and why.
Hopefully the indications in 3C will hold, we sill see higher prices and be able to short in to them. Just remember, should we see what appears to be a VERY strong bounce, why this is occurring and that price above all right now is deceptive.
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