Friday, May 11, 2012

3 Things to Know Before Trading

3 Things to Know Before TradingPalm Beach, FL 5/11/12 (StreetBeat) -- Stocks were broadly lower in Asian trade. The Hang Seng was among the worst with a decline of 1.3%, both Shanghai and the Nikkei fell two thirds of a percent, and Australia was off by a quarter percent. European indexes are also weak this morning with the Dax and Footsie both lower by about 0.4%. US stock futures are down about a half percent or so as I write.

*A lot of April data was released in China overnight, including: the Consumer Price Index matched the forecast at 3.4% year on year: the Producer Price Index was down 0.7% in the last year, two tenth more of a decline than expected; Industrial Production rose 11.0% year on year, or seven tenths less than the estimate; and Retail Sales were up “only” 14.1% year on year, one percent less than expected.

*The European Commission’s Economic Growth forecast maintains the expectation for a euro area GDP contraction of 0.3% in 2012. Among the other forecasts is that they see Spain’s budget deficit at 6.4% this year and 6.3% next year; missing the 5.3% target that had been set for 2012. Spain’s PM Rajoy is expected to announce the details of a plan to save his country’s banking system today; timing not clear.

*The final April reading of Germany’s Consumer Price Index, EU harmonized basis, was revised down one tenth to +0.1% month on month, but was steady at 2.2% year on year.

*The April reading of the UK Producer Price Index was +0.7% month on month, at the factory gate; this was three tenths greater increase than expected.

*JP Morgan reported yesterday afternoon that an attempt to hedge its portfolio went wrong, $2 billion, or so, wrong; and says Jamie Dimon it could go further wrong for a time, maybe another billion or so. This news (said by Dimon to be the result of poor modeling, poor risk management and poor monitoring) and the fact that it is JP Morgan that has reported it (If this can happen to JPM then it could happen to any bank!?!?!) has put some pressure on banking stocks etc., here and around the world.

*The April reading of the Producer Price Index is due out at 7:30am CDT. The headline PPI is expected to be unchanged on the month and the estimate for the Core measure is +0.2% on a monthly basis. The preliminary May reading of consumer sentiment from the University of Michigan is due out at 8:55am CDT; it is expected to be 76.0, down four tenths from the month before.

*The Fed is scheduled to buy Treasuries today that are due to mature between 2/15/36 and 2/15/42; the results of the operation will be announced just after 10:00am CDT.

*Dallas Fed boss Fisher is set to speak at 8:15am CDT.

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