Collective Intelligence!
This was originally posted last Friday, Aug. 30 by William Blount – chatting up a little Elliott Wave: Simply put, they need enough CUSHION to weather the ‘normal pattern’..IF THEY FAIL and we take out the 1632.5 as a first TELL and CONFIRM with new lows for the overall move THEN the (C) is back in GEAR FOR ITS’ 3 OF (C) AS THE FAVORED LEAN CONTINUES TO TRACK…If they SUCCEED then price is still in 2 of (C) or on the way to (B) and the more probable bounce targets of 1651.5 and 1667. FRIDAY held the lows — the 1651.5 was hit, now are we in the endgame for 2 of (C) OR do we head to the 1669+ cash.
Today started with 377k ESU and 2k SPU traded on Globex, trading range was 1663.40 – 1648.70. Thursday’s regular trading hours (RTH’s), SPU pit session trading range was 1658.00 – 1651.70 before settling at 1653.00, down .4 handles. The 10yr yield briefly breached the 3% plateau in a fairly quiet overnight session as traders awaited the jobs data – click the related links: http://bit.ly/1acP5HB and http://bit.ly/14qtqg7 Roger_Volz (05:35) Twitter scour: G20 ‘split down the middle’ on Syria… US Non-farm Payrolls Exp. 180k (low 79k to high 220k) Prev. 162k, Jun 188k)… Obama Seen Delaying Fed Choice Until After Syria Vote…Germany July industrial production -1.7% m/m (vs rev. +2.0% in June), Reuters poll was -0.5%…UK data mixed manufacturing lite/housing prices better; Spain miss; French confidence better.
In the U.S. non-farm payrolls, NFP checked in at 169k vs exp of 180k-ish and the unemployment rate dropped to 7.3% vs exp of 7.4% as some drop out of the hunt for a job. The Bureau of Labor Statistics, BLS: The change in total nonfarm payroll employment for June was revised from +188,000 to +172,000, and the change for July was revised from +162,000 to +104,000. With these revisions, employment gains in June and July combined were 74,000 less than previously reported. Roger_S pointed out the Fed could just change the composition of its asset purchases — more MBS, fewer treasuries, to help the housing sector. jmatthew adds: I believe stocks were waiting to see if 3% 10yr yield held before marching on. Delayed taper FOR SURE = Higher equities.
Fed’s Evans: U.S. growth expected to rise above 3% by 2014 Fed should buy bonds until jobless rate falls to about 7% and heading lower. EVANS EXPECTS FOMC WILL PROBABLY TAPER QE ‘LATER THIS YEAR,’ liking later. Chicago Fed’s Evans sees first rate hike in late 2015.
RUSSIA SAYS DIFFERENCES ON SYRIA REMAIN AFTER LEADERS MET
The following are updated expectations summary / comments made after the August NFP release – overall these show almost no change to prior expectations.
CS – Sept taper, -$10b MBS and -$10b Tsys or Opt2 of -$10b Tsys, -$5b MBS
Moodys – Sept taper of -$10b Tsys
MS – Sept taper of modest amount w/ explanatory language
TD – taper is on; BMO- Sept 18 taper if next data don’t disappoint
RBS – Sept taper of -$10b Tsys and -$10b MBS, cld be trimmed if ylds rise
SG – small Sept taper; Wrightson- Sept taper is on
HFE – Sept taper is on; Jefferies- Oct taper more logical
BAML – “more likely to wait (to Dec) but it remains game-day decision.”
FannieMae – Sept taper likely; FTN- Sept taper, did not say size
Goldman – Sept taper, perhaps a dovish taper
RBC – Sept taper
Nomura – SepT taper
Goldman’s Hatzius: “While the August employment report was a moderate disappointment, we believe it is probably not weak enough to prevent the FOMC from tapering in September. However, it does raise the likelihood of a “dovish taper,” which could include a small size of the overall adjustment to purchases, and which we think would likely coincide with an enhancement of the forward guidance.
Obama to address Syria on Tuesday and Congress will be in session. I hope they enjoyed their respite. GOP senator calls Syria vote in Senate “jump ball,” prospects worse in the House. William Blount added: when John Harwood criticizes the president you know he was BAD–Harwood has been a cheerleader the whole way and not a journalist…
Today’s pit session gapped 6 handles higher to 1659.20 – 1659.00, traded a high of 1660.50, [DJIA] was up 50 points before the news-generated deterioration took the SPU down to 1639.00, 21.5 handles from the high by 9:04. The S&P was trading about 5 handles off the early high on its way to a 21.5 handle downdraft in the opening 34 minutes which was created by the poor jobs data, tapering guesswork, squaring up positions for the weekend and quite possibly by iceChat (08:44) Putin headlines: SAYS RUSSIA WILL HELP SYRIA IF STRIKES LAUNCHED, *PUTIN SAYS RUSSIA ALREADY ASSISTING SYRIA WITH ARMS. President Obama will address the situation regarding Syria and chemical weapons on Tuesday. It appears the world is waiting on the UN and their findings/guidance.
Resilient? You tell me …The macro data appears to be inline with those calling for a slimmed-down tapering to be announced by the FOMC on 9/18. The [DJIA] erased the nearly 150-point decline as the equities were back retesting their opening ranges going into the European close with the DJIA up nearly 50 points. Then the late morning grind started and the SPU traded sideways in the 1658 area throughout the midday session. william_blount (13:41) BEARS own this chart to 1689 BUT they NEED TO COME Back to WORK (see top story above – William Blount post from last Friday, Aug. 30).
The SPU printed an intraday high of 1663.80 at 1:08 and found some comfort trading sideways above the opening range. The early look on the closing imbalance showed (14:08) MiM – MrTopStep Imbalance Meter showing 90%, $450M to the sell side. At 2:45 the SPU was trading 1657 area when the closing imbalance showed a huge SPX MOC IMBALANCE: $1.2Bil for SALE and the [NYSE] showed to 500M to the sell side. The cash close traded 1653.70 area before settling at 1653.50, up .5 handles on the day.
