5 Dec 2013 AMC- Market reacted negatively towards ECB's rate cuts

5 Dec 2013 AMC- Market reacted negatively towards ECB's rate cuts

Market Summary 

European Markets Closing Prices

European markets are now closed; stock markets across Europe performed as follows:

·         UK's FTSE: -0.2%

·         Germany's DAX: -0.6%

·         France's CAC: -1.2%

·         Spain's IBEX: -1.6%

·         Portugal's PSI: -0.8%

·         Italy's MIB Index: -1.8%

·         Irish Ovrl Index: -0.5%

·         Greece ATHEX Composite: -1.8%

Before Market Opens

Briefing Bullet Points: 29 minutes ahead of the open S&P Futures are -3 vs. fair value and DJ Futures are -20
US Equities

·         U.S. equity futures point to a flat open as both the S&P 500 and DJIA look to snap their four-day losing streaks. 

·         Yesterday's afternoon rally ran briefly both indices back into positive territory ahead of the close, but neither was able to hold the flat line. 

·         The Nasdaq managed to muster out a fractional gain to snap its three-day skid. 

·         Traders continue to monitor the VIX (14.70), which holds at an almost two-month high ahead of tomorrow's nonfarm payroll report.

·         Data out today has seen GDP - Second Estimate post a strong 3.6% (3.0% expected) and initial claims (298K) post their first sub-300K print since September 6.

Asia

·         The major Asian averages ended mostly lower with only India's Sensex (+1.2%) seeing a noteworthy gain. 

·         The Sensex rallied after exit polls showed India's opposition party, Bharatiya Janata, won three crucial state votes. 

·         Japan's Nikkei (-1.5%) led to the downside as continued strength of the yen weighed. 

·         A wider than anticipated trade deficit (AUD0.53bln actual v. AUD0.38 bln expected) dropped Australia's ASX (-1.4%), but the news wasn't all bad as exports to China rose 3% to $9.2 bln. 

·         China's Shanghai Composite (-0.2%) and Hong Kong's Hang Seng (-0.1%) ended little changed.     

Europe

·         Markets across Europe hold steady after both the Bank of England (0.50% and GBP375 bln) and European Central Bank (0.25%) kept policy on hold. 

·         Participants should instead be focused on debt markets in the region, which are seeing notable weakness, especially in the core. 

·         Germany's 10y is +10bps @ 1.400% while France's 10y is +8bps @ 2.235%. 

·         Only Italian BTPs are bid with the 10y -1bp @ 4.150%. 

Treasuries

·         Treasuries slumped to their worst levels of the session after today's data.

·         Modest selling has the 10y +2bps @ 2.861% with action holding at its highest level in nearly three months.  

Fx

·         The Dollar Index has slipped into the red with action fighting to hold support in the 80.50/80.60 region.

·         EURUSD is +35 pips @ 1.3625 following the ECB's decision to keep its benchmark rate unchanged @ 0.25%. The 1.3600 level had been a ceiling since Halloween.

·         GBPUSD is -30 pips @ 1.6355 after the BOE held both its Official Bank Rate and asset purchase program steady at their respective 0.50% and GBP375 bln. Also impacting trade was news the UK upped its 2013 growth forecast to 1.4% (0.6% previous) while also raising its 2014 forecast to 2.4% (1.8% previous).

Commodities

·         Precious metals press session lows with gold -$23 @ $1224 and silver -$0.52 @ $19.31.

·         Crude oil is ticking higher, +$0.27 @ $97.47. 

Earnings/Guidance

·         Aeropostale (ARO) misses by $0.05, misses on revs; guides JanQ EPS below consensus

·         CIBC (CM) beats Q4 ests

·         Conns (CONN) beats by $0.07, beats on revs; raises FY14 EPS above consensus; raises FY14 comp guidance; guides FY15 EPS above consensus; Q3 comps +35% YoY

·         Dollar General (DG) beats by $0.02, reports revs in-line; raises low end of FY14 EPS, lowers high end of FY14 sales/comp guidance; adds $1 bln to share repurchase

·         Francesca's (FRAN) reports EPS in-line, revs in-line; guides Q4 below consensus

·         Guess? (GES) beats by $0.05, reports revs in-line; guides Q4 EPS (midpoint), revs just below consensus

·         Jos. A. Bank (JOSB) beats by $0.01, beats on revs (in line with pre-announcement ranges)

·         Mattress Firm (MFRM) beats by $0.01, beats on revs; guides FY14 EPS above consensus, reaffirms FY14 revs guidance

·         Royal Bank of Canada (RY) beats by $0.02, beats on revs

·         Titan Machinery (TITN) misses by $0.21, misses on revs; guides FY14 EPS below consensus, revs in-line

·         Wet Seal (WTSL) misses by $0.06, misses on revs; guides Q4 revs below consensus 

News

·         American Apparel (AAP) reports Nov comps +1%

·         Reuters now reporting that China Mobile (CHL) is still negotiating with Apple (AAPL) on iPhone deal after earlier reports had indicated a deal was done.

·         Costco (COST) reports Nov same store sales +2.0% vs +3.5% Retail Metrics consensus; Q1 sales below consensus

·         Ford Motor (F) China November sales rise 47% YoY, according to reports

·         South Korea may take action against Goldman Sachs (GS) over breaking of capital markets rules, according to reports

·         Johnson & Johnson (JNJ): FDA reaches $1.25 mln settlement with Advanced Sterilization Products and company executives

·         L Brands (LB) reports Nov same store sales -5% vs -1.2% Retail Metrics consensus

·         McKesson (MCK) launches public takeover offer for Celesio

·         Newmont Mining (NEM) announces agreement to sell Midas underground operation and mill complex for total consideration in excess of $83 mln

·         Royal Bank of Scotland (RBS) and S&P unit of McGraw Hill (MHFI) are being sued by European investors for $250 mln related to losses during crisis, according to reports

·         Southwest Air (LUV) and Virgin America to purchase slots at LaGuardia that were owned by US Airways (LCC) and American (AAMRQ), according to reports

·         Verizon (VZ): AT&T (T) and T Mobile (TMUS) are considering bids for co's spectrum, according to reports

·         Walt Disney (DIS) increases annual dividend by 15% to $0.86 per share from $0.75 per share 

Syndicate

·         Polycom (PLCM) announces $115 mln accelerated share repurchase program

·         Regional Mgmt (RM) prices 2,045,065 shares of common stock at $31.00 by selling shareholders

·         Thermo Fisher (TMO) prices offering of Senior Notes 

Analyst Actions

·         Upgrades

o    Avago Tech (AVGO) target raised to $53 at RBC Capital Mkts folowing earnings

o    AutoZone (AZO) tgt to $500 from $450 at Barclays

o    Celgene (CELG) upgraded to Buy from Neutral at UBS; tgt raised to $200 from $163

o    CF Industries (CF) upgraded to Neutral from Sell at Goldman

o    FMC Tech (FTI) upgraded to Positive from Neutral at Susquehanna

o    Kohl's (KSS) upgraded to Buy from Neutral at BofA/Merrill; tgt raised to $65

o    Tiffany & Co (TIF) upgraded to Buy from Neutral at Goldman; added to Conviction Buy list

o    Union Pacific (UNP) upgraded to Strong Buy from Outperform at Raymond James

o    YUM! Brands (YUM) target raised to $85 at RBC Capital Mkts

·         Downgrades

o    Citigroup (C) downgraded to Hold from Buy at Deutsche Bank

o    Morgan Stanley (MS) downgraded to Hold from Buy at Deutsche Bank

o    J.M. Smucker (SJM) downgraded to Underperform from Market Perform at Wells Fargo

o    Exxon Mobil (XOM) downgraded to Outperform from Strong Buy at Raymond James

·         Initiations

o    Analog Devices (ADI) initiated with a Outperform at Oppenheimer; tgt $58

o    Covidien (COV) initiated with a Buy at The Benchmark Company; tgt $82

o    Boston Scientific (BSX) initiated with a Hold at The Benchmark Company; tgt $12 

Technical Factors

·         The S&P finished down for the fourth session in a row for the first time in two months but it was able to recover well off of the 50% retrace support to form a long lower tail and neutral doji pattern while Nasdaq ended slightly higher. 

·         This type of trade improves the very short term bias but the S&P still has work to do to suggest that the correction off of last week's high is complete. 

·         Resistances are at 1799/1800 and 1804/1805. 

·         Initial supports are at 1789/1787 and 1784/1783. 

Looking Ahead

·         Factory orders are due out at 10am ET.

·         Same-store sales figures will be released throughout the session.

·         AMBA, COO, CUB, CWST, DMND, ESL, FNSR, FIVE, MITL, PSUN, RALY, SEAC, ULTA, VEEV, ZUMZ will report following today's closing bell while AEO, BIG, BNS, FGP, GCO will release their quarterly results ahead of tomorrow's open. 

Market Internals

Market Internals
The Dow closed down 68 (-0.43%) at 15822, the S&P 500 closed down 8 (-0.43%) at 1785, and the Nasdaq closed down 5 (-0.12%) at 4033. Action came on slightly above average volume (NYSE 700 mln vs. avg. of 699; NASDAQ 1816 mln vs. avg. of 1764), with decliners outpacing advancers (NYSE 1044/2032, NASDAQ 1168/1386) and new lows outpacing new highs (NYSE 54/136, NASDAQ 88/37).

Relative Strength: 
Natural Gas-UNG +4.29%, Egypt-EGPT +1.26%, Brazilian Real-BZF +1.23%, Social Media-SOCL +1.22%, Chile-ECH +0.87%, Copper Miners-COPX +0.74%, Middle East and Africa-GAF +0.68%, Swiss Franc-FXF +0.64%, Metals and Mining-XME +0.51%, Sugar-SGG +0.50%.

Relative Weakness: 
Junior Gold Miners-GDXJ -3.51%, Coffee-JO -2.57%, Silver Miners-SIL -2.09%, Greece-GREK -2.01%, Singapore-EWS -1.79%, Indonesia-IDX -1.61%, Italy-EWI -1.55%, Spain-EWP -1.39%, Biotechnology-XBI -1.24%, Financial Services-IYG -1.04%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

16:20 ET Dow -68.26 at 15821.51, Nasdaq -4.84 at 4033.16, S&P -7.78 at 1785.03 : [BRIEFING.COM] The drive for five continued today and it was a success.  For the fifth straight session, the S&P 500 ended lower.  Like the previous four sessions, though, the losses were fairly modest in scope.  The S&P 500 declined 0.4%, bringing its total loss for the five sessions to 22 points or 1.2%.  All in all, that still qualifies as a pretty tame slide considering the S&P 500 had risen 150 points, or 9.1%, over the previous eight weeks.

Today's retreat came on moderate volume of 700 mln shares at the NYSE and was blamed on concerns the Fed might taper its asset purchase program as early as this month following some better-than-expected initial claims and Q3 GDP data. The headline print for each certainly aided such thinking.  Initial claims for the week ending November 30 checked in at just 298,000 (Briefing.com consensus 330,000) while the second estimate for Q3 GDP jumped to 3.6% (Briefing.com consensus 3.0%) from 2.8%.

The headlines had an undeniably encouraging feel to them.  That was the first sub-300,000 print for initial claims since early September and the 3.6% growth in Q3 GDP was the strongest since the second quarter of 2010.  Upon closer review, though, the headlines were a little misleading.

The Department of Labor acknowledged that seasonal adjustment problems biased the claims number lower (which means we are likely to see a higher print in subsequent weeks) while the change in private inventories accounted for 1.68 percentage points of Q3 GDP growth.  Take the change in inventories out of the equation and real final sales were up just 1.9% versus 2.0% in the first estimate.  Furthermore, the 1.4% growth rate in personal consumption expenditures was the lowest rate since the fourth quarter of 2009.

A big jump in inventories and a deceleration in personal spending isn't exactly a combination befitting a robust growth picture.  In that context, the tapering trade in our estimation probably had more to do today with the angst surrounding the November employment report on Friday than it did with a true read of today's data.

Following the strong ADP Employment Change report on Wednesday, there is a presumption that the nonfarm payrolls number on Friday will also produce a positive surprise.  The Briefing.com consensus estimate for nonfarm payrolls is set at 188,000 and at 200,000 for nonfarm private payrolls.

Some of that angst was reflected in the Treasury market today, which spent the entire session on the defensive.  The 10-yr note dipped eight ticks and its yield rose three basis points to 2.87%.  That bump in long-term rates weighed on rate-sensitive sectors in the stock market, like the financials sector (-0.9%), and particularly those sectors known for their higher dividend yields -- telecom services (-1.0%), utilities (-0.7%), and consumer staples (-0.9%).

Today's profit-taking action was centered primarily on large-cap issues.  The Dow Jones Industrial Average, S&P 500, and Nasdaq 100 all finished lower while the Russell 2000 (+0.1%) and S&P 400 Midcap Index (+0.1%) scored small gains.

Gains in a handful of influential large-cap stocks like Apple (AAPL 567.90, +2.90), Boeing (BA 132.72, +1.22), 3M (MMM 126.84, +0.38), Intel (INTC 24.27, +0.53), and Tiffany & Co. (TIF 89.71, +1.13) helped limit today's losses, yet every sector in the S&P still finished in red figures with the exception of the industrials sector which was unchanged.

Another laggard of note today was the US Dollar Index (80.27, -0.35).  It got clipped largely on account of the euro taking off after the ECB elected to keep its main lending rate unchanged and ECB President Draghi avoided any telltale hint at his press conference that further easing measures would be implemented in the very near future.  The euro crossed at 1.3669 against the dollar, up 0.6% from yesterday.

The dollar weakness did not benefit commodities much and it certainly didn't help gold prices, which slipped 1.7% to $1225.80/oz.

Friday's action is sure to be dictated by the details of the November employment report and the direction long-term interest rates take in its wake.

·         Nasdaq +33.6% YTD

·         Russell 2000 +32.1% YTD

·         S&P 500 +25.2% YTD

·         DJIA +20.8% YTD

..NYSE Adv/Dec 1032/1984. ..NASDAQ Adv/Dec 1168/1389

Commodities

Closing Commodities: Precious metals resume downtrend following better than expected Q3 GDP revision/weekly jobless claims
Precious metals pared yesterday's gains following encouraging economic data. Despite resuming their downtrend, both gold and silver futures closed near a (pit trade) session high. February gold futures fell 1.2% to $1227.10/oz while March silver futures fell 1.3% to $19.57/oz. 

The Market Vectors Gold Miners ETF (GDX 20.63, -0.59) hit a new 5 year low today. 

January crude oil futures rose again today and made a one month, settling up 0.2% at $97.39/barrel. 

January Natural Gas futures rose 4.3% to a near two month high at $4.13/MMBtu following bullish EIA storage.

COMEX Metals Closing Prices

·         Feb gold fell $15.50 to $1231.70/ounce 

·         Mar silver fell $0.27 to $19.56/ounce 

·         Mar copper fell 2 cents to $3.23/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Mar corn fell 3 cents to $4.34/bushel 

·         Mar wheat fell 10 cents to $6.52/bushel 

·         Jan soybeans rose 1 cent to $13.29/bushel 

·         Jan ethanol rose 1 cent to $1.88/gallon 

·         Jan sugar (#16 (U.S.)) settled down 0.20 cents at 19.90 cents/lbs

NYMEX Energy Closing Prices

·         Jan crude oil rose $0.21 to $97.39/barrel 

·         Jan natural gas rose 17 cents to $4.13/MMBtu 

·         Jan heating oil fell 1 cent to $3.05/gallon 

·         Jan RBOB gasoline fell 1 cent to  $2.71/gallon

Treasuries

Strong Data Weighs on Treasuries: 10-yr: -11/32..2.873%..USD/JPY: 101.82..EUR/USD: 1.3670

·         Modest selling dropped most maturities to their lowest levels since the middle of September as better than expected data fanned tapering fears. 

·         Q3 GDP - Second Estimate blew past estimates (3.6% actual v. 3.0% expected) thanks to a large build in inventories and initial claims (298K) dropped below the 300K mark for the first time since September 6 as seasonality continued to impact the number. 

·         Sellers remained in control for the third time in four sessions despite the data quirks. 

·         The 5y climbed +3.3bps to end the day @ 1.475%, its highest close since September 19. Today's selling ran action back above the 100 dma (1.439%), and has traders eying the 1.650% region if the breakout is able to hold. Click here to see an intraday yields chart.

·         Selling of 10s ran the benchmark yield up +2.1bps to 2.862% with action now testing the final resistance level guarding the September highs near 3.000%. 

·         Outperformance at the long end saw the 30y tick up 0.9bps to 3.914%. The yield on the long bond posted its highest close since August 2011, and holds just below the November high print of 3.938%. 

·         Modest steepening of the yield curve saw the 2-10-yr spread widen to 257.5bps. 

·         Precious metals gave up a good portion of yesterday's gains as gold fell -$21 to $1226 and silver shed $0.48 to near $19.35. 

·         Tomorrow's Data: Nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, average workweek, personal income and spending, PCE Prices - Core (8:30), Michigan Sentiment (9:55), and consumer credit (15). 

·         Fed Speak: Chicago's Evans will be on his home turf, taking part in Loyola University's Symposium on "The Federal Reserve at 100" (15).

Next Day In View 

Economic Commentary

Economic Summary: Q3 GDP revised sharply higher; Jobless Claims fall below 300K, due to Thanksgiving Holiday issues; NFP's tomorrow at 8:30
Economic Data Summary:

·         November Challenger Job Cuts -20.6% vs Briefing.com consensus of ; October was -4.2%

·         Weekly Initial Jobless Claims 298K vs Briefing.com consensus of 330K; Last Week was 316K

o     That drop brought the initial claims level to its lowest point since early September when the Labor Day holiday and computer glitches from California biased the data. Like that reading, the current initial claims level also was biased by poor seasonal adjustments data from the Thanksgiving holiday. Thus, the decline in the initial claims level, in all likelihood, was not the result of an improvement in labor market conditions. In fact, the Labor Department announced that seasonal adjustment problems have produced unreliable data for each of the past three weeks. 

·         Weekly Continuing Jobless Claims 2.744 M vs Briefing.com consensus of 2.850 M ; Last Week was 2.776 M

·         Third Quarter GDP Second Esimate 3.6% vs Briefing.com consensus of 3.0%; Second quarter was 2.8%

o    While it is easy to look at the headline and assume the revision showcased a strong improvement in economic conditions, the reality is the report was virtually identical to the advance report with the exception of a massive increase in inventories. Real final sales, which exclude inventories and is a less volatile measure of real economic activity, was actually revised down 0.1 percentage points to 1.9% and is down from a 2.1% increase in Q2 2013. Furthermore, real final sales increased at a little over 2.0% q/q for four out of the previous five quarters. The only outlier came in Q1 2013 when real final sales increased a minuscule 0.2%. This trend tells us that the large headline move in the third quarter growth rate is in no way a result of an acceleration in economic activities.

·         Third Quarter GDP Deflator - Second Estimate 2.0% vs Briefing.com consensus of 1.9%; Second quarter was 1.9%

·         October Factory Orders -0.9% vs Briefing.com consensus of -1.0%; September was 1.7%

o     As the advance durable goods orders report already showed, the big decline in orders was mainly the result of a large drop in aircraft orders. Defense and nondefense aircraft orders declined 16.6%. Durable goods orders fell 1.6% in October. That compares favorably to a 2.0% decline reported in the advance release. Excluding transportation, durable goods orders increased 0.4% in October after originally showing a -0.1% decline. The consensus expected these orders to increase 0.2% prior to the advance release.

Upcoming Economic Data:

·         November Nonfarm Payrolls due out Friday at 8:30 (Briefing.com consensus of 188K; October was 204K)

·         November Nonfarm Private Payrolls due out Friday at 8:30 (Briefing.com consensus of 200K; October was 212K)

·         November Unemployment Rate due out Friday at 8:30 (Briefing.com consensus of 7.2%; October was 7.3%)

·         November Hourly Earnings due out Friday at 8:30 (Briefing.com consensus of 0.2%; October was 0.1%)

·         November Average Workweek due out Friday at 8:30 (Briefing.com consensus of 34.5; October was 34.4)

·         October Personal Income due out Friday at 8:30 (Briefing.com consensus of 0.3%; September was 0.5%)

·         October Personal Spending due out Friday at 8:30 (Briefing.com consensus of 0.3%; September was 0.2%)

·         October PCE Prices -- Core due out Friday at 8:30 (Briefing.com consensus of 0.1%; September was 0.1%)

·         December Michigan Sentiment - Prelim due out Friday at 9:55 (Briefing.com consensus of 75.1; November was 75.1)

·         October Consumer Credit due out Friday at 15:00 (Briefing.com consensus of $15.8 bln; September was $13.7 bln)

Upcoming Fed/Treasury Events:

·         Dallas Fed President Richard Fisher (2014 voter, hawkish) to speak today at 13:15

·         Philadelphia Fed President Charles Plosser (2014 voter, hawkish) to speak tomorrow at 10:15

·         Chicago Fed President Charlie Evans (2013 voter, dovish) to speak tomorrow at 15:00

Other International Events of Interest

·         A wider than anticipated trade deficit (AUD0.53bln actual v. AUD0.38 bln expected) dropped Australia's ASX (-1.4%), but the news wasn't all bad as exports to China rose 3% to $9.2 bln. 

On other news.... 

Time Warner Cable shares spiking to highs as headlines cross that CHTR, CMCSA and Cox have all considered bids for TWC; TWC likely to accept a bid of $150-160/share(135.00 +2.87)
For some background: 

·         There were reports on November 27th that CHTR was arranging $25 bln in debt for TWC bid. Also, there were reports November 22nd that CHTR is nearing funding deal for TWC bid. That same day, CNBC reported that CMCSA is seeking advice on anti-trust on FCC concerns on TWC deal and that CMCSA may also bid for TWC. CNBC reported that CMCSA is TWC's preferred buyer. On November 1st, there were new reports that TWC may receive bid from CHTR. On November 5th, there were comments from David Faber on CNBC that TWC and CHTR are not in active talks. There were reports on June 16th, that indicated TWCand Liberty Media (LMCA) execs have met to talk about mergers in the cable industry. On June 27th, Bloomberg discussed speculation that CHTR could acquire TWC; also said CHTR may be interested in Cablevision (CVC). Related Peers: TWC, CVC, CMCSA, CHTR, DISH, DIS, LMCA, DTV, NFLX, LINTA, LMCA,CBS, FOXA.

Recent Analyst Color: 

·         From Friday November 29th -- Wunderlich believes that a CMCSA bid participation, especially if limited to the near 3.5mm video customers they assume that Washington could tolerate, is likely to filter entirely into the cash component of any TWC bid. Under a bullish merger assessment, this dampens upside on current CHTR shares to $192 with TWC share upside at $158 due to a higher $113 total cash component but with only 34.4% NewCo ownership via 0.2342 NewCo shares per TWC share.

Currencies 

Dollar Drops to Five-Week Low Ahead of Tomorrow's Jobs Report: 10-yr: -05/32..2.852%..USD/JPY: 101.67..EUR/USD: 1.3666
The Dollar Index hovers on session lows near 80.30 as action remains on track to post its worst close since Halloween. The Index spiked to session highs near 80.80 following this morning's data, but saw steady selling over the remainder of the morning as comments from Mario Draghi sparked a rally in the euro. Action has spent the entire afternoon drifting near 80.30 as trade remains on hold ahead of tomorrow's jobs report. Click here to see a daily Dollar Index chart.

·         EURUSD is +70 pips @ 1.3665 as trade readies for its best close since the end of October. The single currency saw some initial selling after the European Central Bank opted to keep its Minimum Bid Rate unchanged at 0.25%, but a rally ensued despite Mario Draghi's attempts to talk down the currency. Mr. Draghi reiterated his prior comments suggesting the ECB has more tools left at its disposal and will not be afraid to act if needed. The 1.3700 area provides the next level of resistance. Eurozone data will see just German factory orders. 

·         GBPUSD is -60 pips @ 1.6320 with action looking at its worst close in a week. Sterling has been under pressure since this morning's Bank of England rate decision, which saw the central bank hold both its Official Bank Rate and asset purchase program unchanged at their respective 0.50% and GBP375 bln. The decision followed headlines suggesting the UK upped its 2013 growth forecast to 1.4% (0.6% previous) while also raising its 2014 forecast to 2.4% (1.8% previous). A breakdown of minor support in the 1.6300 region sets up a test of more solid support near 1.6200. British data is limited to consumer inflation expectations. 

·         USDCHF is -55 pips @ .8970 as trade presses lower for a third session. Today's weakness has put the October lows (.8900) on many traders' radars. Switzerland's foreign currency reserves and CPI will be announced tomorrow. 

·         USDJPY is -65 pips @ 101.70 as sellers remain in control for a third session. The three-day slide comes after action tested the May highs near 103.00, but was unable to move through the level. Minor support in the 101.50 area has so far been able to hold, but a retest of more important support near parity cannot be ruled out. 

·         AUDUSD is +35 pips @ .9065 as action holds just off the best levels of the session. The hard currency came under pressure following the wider than expected Australian trade deficit (AUD0.53 bln actual v. AUD0.38 bln), but buyers put up a staunch defense near yesterday's lows (.9000) and have been able to maintain control. 

·         USDCAD is -30 pips @ 1.0650 as trade slides off yesterday's three and a half-year high. Today's selling comes following mixed economic data out of Canada as building permits posted a big beat (7.4% MoM actual v. 1.2% MoM expected) and the closely followed Ivey PMI (53.7 actual v. 59.0 expected, 62.8 previous) fell well short of estimates. Recent gains have made for a rather steep move so a pullback into the 1.0500 support area cannot be ruled out. Canada's employment change, unemployment rate, and labor productivity will cross the wires tomorrow.

Jason's Commentaries


Last night the market started with a lot of volatility as ECB decided to cut their rates once again. Market started with some bearish bias, then market started to cover their shorts by 945am ET. However, that covering did not last, market decided to sell down further. Only by the last hour, Nasdaq was able to lead the rest of the market to erase some losses. Volumes were at 699m shares traded on the NYSE and the internals were pointing towards a flat towards downside sentiment. It seems that the support levels wasn't able to hold up the market. The main laggards in the market is the Financials and the Consumer Staples which lost 0.94% and 0.91% respectively. Only Discretionary and Industrials managed to stay in the positive zone last night. The financials were being dragged down by JP Morgan, Goldman Sachs, Citi and Morgan Stanley which lost more than 1.5% last night. 

On top of the market, the commodities and treasuries also experienced much volatility. I suspect the volatility will last till the end of next week at most. Currently we're in retracement phase and we're likely to up higher. Prolly Santa Claus rally might come a little late this year. We're having the employment report coming out today and there will be a lot of volatility involved at the open. That would prolly set tone for the rest of the trading session. The employment report is expected to be good as ADP employment report came out positive. Let's see if the employment report can beats expectation =D

Market Call: ABSTAIN

Date: 6 Dec 2013