It may have taken a day longer, actually yesterday morning the forecast was for the base to finish up yesterday and the bounce to begin today, so actually we are right on schedule, even though it was very difficult to find solid objective or rather confirmable data backing the anticipated bounce.
Although it was difficult to find confirmable evidence rather than bits and pieces and mostly gut instinct, we finally do have the bounce without doubt which opens up a lot of nice possibilities.
As far as the overnight action and what has led us to this point, there were another two rate cut/easing measures (one surprise) by the South Korean and Thailand's Central Banks. How much of a role the easing played directly is questionable as you may recall 3 surprise easing events last week didn't even grab the market's attention for a moment, however what may have is the increase in the global currency wars.
As you might be able to see on the EUR/USD and $USDX charts above, the 3C readings look like the current state of price isn't going to hold much longer.
We also got confirmation overnight that the ECB has bought the first $9.8 bn euro bond purchase, part of the anticipated $60 bn euro a month, this sent the German 10-year yield down to .20% and Spain's down below 1% for the first time ever. One has to wonder what a month of buying is going to do to yields with the bunds likely to go negative sooner than later with the ECB still having not figured out how to handle purchases at a negative yield being they don't have a lot of choice with net issuance less than the expected QE program! Things are indeed different this time.
The F_E_D reported on the second half of the stress tests with 2 Bank Santander and Deutsche Bank failing and Bank of America needing to resubmit its capital return plans by September 30th, 28 of 31 passed without conditions.
US Import prices also fell for February at -9.4% Y.O.Y., the biggest drop since the month after Lehman's bankruptcy. January was also revised lower . Petroleum was the main factor accounting for -43.2%, but on a month on month basis rather than year o. year, petroleum came in at a +8.1%.
Ex Fuel, Imports fell 1.2% Y.o.Y. Imported Capital Goods fell the most since March 2009.
The big one though was Retail Sales (keep in mind that all 3 data points were released at 8:30 a.m.). Retail Sales for February missed big, making this as predicted, the 3rd consecutive miss in a row, The headline print came in at -.6% vs consensus of a +.3% boost. The chain of misses now looks like: December -.9, Jnuary -.8 and February -.8.
Excluding autos and gas they were down .2% vs consensus of up +.3%, which was a print that was below even the lowest consensus estimate and obviously worse than last month's revised -.1 print making this the worst since Lehman.
It does seem though from the data that the sub-prime auto debacle may be over.
On top of all that, Intel slashed Q1 revenue forecasts by 7% citing "Weak demand".
It seems FX market volatility has sparked off more market action, however we have been anticipating this bounce since Tuesday so it's not much of a surprise.
We'll be looking for areas to re-establish putts and or new/add-to short positions and maybe even some longs if they look worthwhile, I suspect VXX/UVXY will look worthwhile.
As for the rest of the world, Asia was green overnight with the Shanghai Comp at +1.78%, Hang Seng at +.40% and Nikkei +1.43%.
Europe is trading mixed.
Well here we go...
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