Archive for July 2014

July 31st: Ed’s Daily IRA Summary   2 comments

I picked a good day to avoid daytrading.

Ed’s IRA: 0.00%
DJIA: -1.88%
Nasdaq: -2.09%
S&P 500: -2.00%

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Posted July 31, 2014 by edmcgon in Open Thread, Portfolio

Traders Corner   34 comments

The S&P 500 levels to watch today:

UPSIDE: 1972-1986 (25 data points and the 20 day moving average), 1989 (July 23rd’s high), 1990 (top of the Bollinger Bands), and 1991 (July 24th’s high and the all-time high).
LAST CLOSE: 1970, inside the 1967-1970 (5 data points and June’s high) range.
DOWNSIDE: 1965 (3 data points), 1962 (2 data points), 1959-1960 (3 data points and the bottom of the Bollinger Bands), 1955 (July 17th’s low), 1952 (July 10th’s low), and 1951 (50 day moving average).

S&P 500 Daily Momentum: Bearish
S&P 500 Daily Overbought/oversold: Neutral
S&P 500 Weekly Momentum: Mixed (trending bearish)
S&P 500 Weekly Overbought/oversold: Neutral
S&P 500 Futures: Strongly negative
Overall: If the S&P 500 were to drop to where the September futures are pointing, it would fall almost 0.9%. After the 4.0% U.S. GDP and the continued Federal Reserve policy of tapering QE, the markets are waking up today to realize all the extra liquidity is going away. However, I wouldn’t be surprised to see bargain hunters hopping in after an initial drop today. Remember, this is the last day of the month, so professional fund managers have to clean up their portfolios today.

Ed’s Daily Notes for July 31st   2 comments

Financial Times: US banks braced for large deposit outflows

US banks are steeling themselves for the possibility of losing as much as $1tn in deposits as the Federal Reserve reverses its emergency economic policies and raises interest rates.

JPMorgan Chase, the biggest US bank by deposits, has estimated that money funds may withdraw $100bn in deposits in the second half of next year as the Fed uses a new tool to help wind down its asset purchase programme and normalise rates.

Other banks including Citigroup, Bank of New York Mellon and PNC Financial Services have also said they are trying to gauge the potential effect of the Fed’s exit on institutional or retail depositors who might choose to switch to higher interest accounts or investments.

…An outflow of deposits would be a reversal of a five-year trend that has seen significant amounts of extra cash poured into banks thanks to the Fed flooding the financial system with liquidity. These deposits, which act as a cheaper source of funding, have helped banks weather the aftermath of the financial crisis.

Now the worry is that such deposit funding may prove fleeting as the Fed retreats. Banks might have to pay higher rates on deposits to retain customers – potentially hitting their profits and sparking a price war for client funds.

SNL Financial estimates that US banks have collectively increased their deposits by 23 per cent over the past four years, at the same time that their cost of deposit funding has dropped to a 10-year low.

…Banks also face the retreat of large institutional deposits as the Fed uses a new tool known as a “reverse repo facility,” or RRP, to stage its retreat. The RRP effectively allows non-banks such as money funds to have reserve accounts at the Fed.

This means the banks are facing a situation where a black swan event could put them back where they were in 2007-2008. But the government fixed everything, right?

Bloomberg: Argentina Declared in Default by S&P as Talks Fail

Standard & Poor’s declared Argentina in default after the government missed a deadline for paying interest on $13 billion of restructured bonds.

The South American country failed to get the $539 million payment to bondholders after a U.S. judge ruled that the money couldn’t be distributed unless a group of hedge funds holding defaulted debt also got paid. Argentina, in default for the second time in 13 years, has about $200 billion in foreign-currency debt, including $30 billion of restructured bonds, according to S&P.

I doubt any of you have Argentinian bonds, but do you have stock in a company with a lot of dealings in Argentina? I would be highly concerned about that.

Posted July 31, 2014 by edmcgon in Federal Reserve, News

July 30th: Ed’s Daily IRA Summary   6 comments

Ed’s IRA: 0.10%
DJIA: -0.19%
Nasdaq: 0.45%
S&P 500: 0.01%

Posted July 30, 2014 by edmcgon in Open Thread, Portfolio

Traders Corner   20 comments

The S&P 500 levels to watch today:

UPSIDE: 1972-1986 (24 data points and the 20 day moving average), 1989 (July 23rd’s high), 1990 (top of the Bollinger Bands), and 1991 (July 24th’s high and the all-time high).
LAST CLOSE: 1969, inside the 1967-1969 (4 data points and June’s high) range.
DOWNSIDE: 1965 (3 data points), 1962 (July 1st’s low), 1959-1960 (3 data points and the bottom of the Bollinger Bands), 1955 (July 17th’s low), 1952 (July 10th’s low), and 1950 (50 day moving average).

S&P 500 Daily Momentum: Bearish
S&P 500 Daily Overbought/oversold: Neutral
S&P 500 Weekly Momentum: Mixed (trending bearish)
S&P 500 Weekly Overbought/oversold: Neutral
S&P 500 Futures: Positive
Overall: The S&P 500 finally broke out of the 1972-1986 range, and even finished below the 20 day moving average. With futures pointing up today, will the market break out of the recent bearish momentum? I am leaning towards an SPXU play after the opening pop this morning. Of course, this could all change depending on the market’s reaction to this morning’s U.S. GDP report.

Happy Fed Day! Ed’s Daily Notes for July 30th   Leave a comment

janet-yellen-money-printer

And what a Fed Day it is! We open with the U.S. 2nd Quarter GDP report at 8:30 am EST, before getting the Federal Reserve’s Open Market Committee meeting announcement at 2 pm EST.

Bloomberg: Housing Market in France in ‘Meltdown’ After Hollande Rent Caps

For those of you looking for government to solve all problems, take a lesson from France:

French President Francois Hollande’s government may have made a housing slump worse, pushing the construction market to its lowest in more than 15 years.

Housing starts fell 19 percent in the second quarter from a year earlier, and permits — a gauge of future construction — dropped 13 percent, the French Housing Ministry said yesterday.

The rout stems from a law this year that seeks to make housing more affordable by capping rents in expensive neighborhoods. To protect home buyers, the law also boosted the number of documents that must be provided by sellers, leading to a decline in home sales and longer transaction times. While the government is now adjusting the rules, the damage is done, threatening France’s anemic recovery that’s already lagging behind those of the U.K. and Germany.

“Construction is in total meltdown,” said Dominique Barbet, an economist at BNP Paribas in Paris. “It’s difficult to see how the new housing law is not to blame.”

Barbet says the drop in home building lopped 0.4 points off France’s gross domestic product growth last year and cut the pace of expansion by a third in the first quarter. Expenditure in the sector was at its lowest level ever as a portion of total real GDP in the first quarter at 4.7 percent, down from 6.3 percent in the first three months of 2007, he estimates.

Sales of new-build homes fell 5 percent in the first quarter from a year earlier and are down by about a third compared with their level in 2007, according to Credit Agricole.

Posted July 30, 2014 by edmcgon in Economy, Federal Reserve, News, Real Estate

July 29th: Ed’s Daily IRA Summary   2 comments

SPXU was a good daytrade for me early today:

Ed’s IRA: 0.08%
DJIA: -0.42%
Nasdaq: -0.05%
S&P 500: -0.45%

Posted July 29, 2014 by edmcgon in Open Thread, Portfolio