3 Things To Know Before Trading

*Stocks were mixed in Asian trade. The Hang Seng added a half percent and Shanghai was up one third of a percent, but Australia lost two thirds of a percent and the Nikkei was down a slight fraction. European indexes are generally lower on the day, with the Footsie off by a third of a percent and the Dax is down about a quarter percent. US stock futures are down about a quarter percent.

*Mubarak surprised just about everyone yesterday when he reiterated that he would stay on until September. This morning the Armed Forces surprised just about everyone when they issued a statement saying they support Mubarak’s intention. To no one’s surprise protests are ongoing.

*The final January reading of Germany’s Consumer Price Index was revised higher by one tenth; now said to be -0.4% month on month and +2.0% annualized.

*The January reading of Germany’s Wholesale Price Index is +1.2% on the month.

*The January reading of the UK Producer Price Index is +1.0% on the month, double the forecast.

*The December reading of the US Trade Balance is due out at 7:30am CST, it is expected to be a deficit of $40.5 billion. The preliminary February reading of consumer sentiment from the University of Michigan is due out at 8:55am CST; it is forecast to rise to 75.0 from 74.2 in January.

*Fed Governor Raskin is scheduled to speak on mortgage servicing at 8:00pm CST.

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5 Things you Need to Know Before Trading

Stocks indexes in Asian trade took divergent paths. Shanghai gained more than one and a half percent and Australia was up a fraction, but the Hang Seng lost almost two percent and the Nikkei was down a fraction. European indexes are broadly lower on the day, with the Footsie down almost one percent and the Dax off by a third of a percent. US stock futures are down almost a half percent.

*The January reading of Australia’s Unemployment Rate was steady at 5.0%, as expected. But the net change in the number of employed was +24k, above the forecast for a gain of 17.5k.

*The December reading of Japan’s Machine Orders was +1.7% on a month on month basis, short of the expectation for a gain of 5.0%.

*The January reading of Switzerland’s Consumer Price Index was -0.4% on a monthly basis, twice the forecast decline and is +0.3% year on year, only half the expectation.

*The December reading of UK Industrial Production was up 0.5% from the month before, matching the estimate.

*The Bank of England held policy and rates steady at their policy meeting today.

*In their monthly bulletin editorial the ECB said that interest rates remain appropriate, but inflation warrants very close monitoring.

*The weekly report on Initial Jobless Claims is due out at 7:30am CST, it is expected to be 410k. The December reading of Wholesale Inventories is due out at 9:00am CST, it is forecast to increase 0.7%. The Treasury is set to announce their January Budget Statement at 1:00pm CST, it is expected to be a deficit of $55.0 billion, up from the year ago level of -$42..6 billion.

*The weekly report on Natural Gas inventories is due to be released at 9:30am CST, it is expected to be a decline of 196 bcf.

*Atlanta Fed’s Lockhart is again on the calendar today; he will participate on a panel about public debt and fiscal policy at 11:45am CST.

*The Treasury plans to sell $16 billion 30 Year Bonds today; the results of the auction will be announced just after noon CST.

*The New York Fed will release the next schedule for their Treasury buying habit at 1:00pm CST.

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3 Things to Know Before Trading

Stocks mixed in Asian trade. The Hang Seng was among the worst on the day with a loss of 1.5%, but the Nikkei gained almost a half percent and Australia added a fraction. Shanghai was again closed for the new year holiday. European indexes are generally higher with both the Footsie and Dax currently trading up about two thirds of a percent. US stock futures are up a slight fraction.

*The December reading of Australian Retail Sales rose 0.2% on a month on month basis, less than half the expected gain.

*The preliminary December reading of Japan’s Leading Economic Index matched the forecast with a gain of eight tenths to 101.4.

*Egypt: Mubarak still in power; protestors demanding that he leave are still in Cairo’s main square; stock market still closed; but banks have reopened for some services.

*The December reading of German Factory Orders was -3.4% on a month on month basis, more than twice as big a decline as was forecast.

*The Fed is scheduled to buy Treasuries today that are due to mature between 2/15/18 and 11/15/20; the results of the operation will be announced just after 10:00am CST.

*The December reading of Consumer Credit is due out at 2:00pm CST, it is expected to have grown by $2.5 billion.

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3 Things to Know Before Trading Today

Stocks were mixed in Asian trade. The Nikkei was among the best with a gain of a bit more than one percent and Australia was up almost 0.9%. The Hang Seng and Shanghai remain closed for the holiday. European indexes are generally higher on the day, with the Dax and Footsie both up about a third of a percent. US stock futures are higher by a fraction.

*In January UK house prices rose 0.8% on a month to month basis, according to Halifax, better than the decline of 0.3% that was expected.

*The Jobless Rate in Canada increased 0.,2% in January to 7.8%, it had been expected to be steady from December. But the net change in the number of employed was up 69.2k, well above the estimate for a gain of 15.0k.

*The January reading of the Employment Situation is due out at 7:30am CST. The Jobless Rate is expected to increase one tenth on the month to 9.5%; the estimate for total Non-farm Payrolls is 146k and the guess for the private sector is +145k; Average Hourly Wages is expected to rise 0.2% on the month and the Average Work Week is forecast to be steady at 34.3 hours. Remember there will also be some revisions announced. The benchmark revision for the twelve months ending March 2010 was estimated by the BLS to be -366k. There will also be some preliminary revisions for each month of 2010.

*The Fed is scheduled to buy Treasuries today that are due to mature between 8/15/13 and 1/31/15; the results of the operation will be announced just after 10:00am CST.

*Dallas Fed boss Fisher is set to speak on the economy at noon CST at the U of Texas.

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3 Things to Know Before Trading Today

Stocks were mixed in Asian trade. Australia gained a half percent, but the Nikkei was down a quarter percent. The Hang Seng and Shanghai were both closed for the holiday. European indexes are generally lower on the day; the Footsie is currently down about 0.4% and the Dax is a slight fraction lower. US stock futures are also a slight fraction lower.

*Cyclone Yasi is the first category 5 storm to hit Queensland, Australia since 1918. It is estimated that 178k homes and businesses are without electricity, and some areas might be without power for a month, officials say. No deaths have been reported as a result of the storm, but among the damages was the sugar cane, estimates are that half the area’s crop has been destroyed; Queensland is home to 15% of the country’s sugar cane production.

*The December reading of Australia’s Trade Balance was a surplus of A$1.98 billion, down a fraction on the month but above the estimates. For 2010 as a whole the trade surplus was a record A$16.6 billion.

*The January reading of China’s service sector Purchasing Managers Index was down one tenth on the month at 56.4.

*The final January reading of Germany’s service sector PMI was revised up three tenths to 60.3, the highest mark since June 2006. The Eurozone’s Composite PMI for January was revised up seven tenths to 57.0, the best level since last April.

*The ECB kept policy and rates steady at the meeting today. ECB boss Trichet will tell us all about it at his presser beginning at 7:30am CST.

*The January reading of the UK’s service sector PMI jumped almost five points on the month to 54.5, the highest mark since last May.

*The chain stores are releasing their January same store sales results this morning, some of the early reports include: Cato -4.0%, Stage Stores +5.1%, The Buckle +4.3% and Wet Seal +6.2%.

*The weekly report on Initial Jobless Claims is due out at 7:30am CST, it is expected to be 420k. Also due out at 7:30am is the Q4 reading of Non-farm Productivity, forecast to be +2.0%, and the Unit Labor Costs, which is expected to rise 0.2%. The January reading of the ISM Non-manufacturing Composite Index is due out at 9:00am CST, the estimate is for a steady reading on the month at 57.1. The December reading of Factory Orders is also set for a 9:00am release, it is forecast to be -0.5% on the month.

*The weekly report on inventories of Natural Gas is due out at 9:30am CST, it is expected to show a decline of 187 bcf.

*The Fed is scheduled to buy Treasuries today that are due to mature between 8/15/16 and 1/31/18; the results of the operation will be announced just after 10:00am CST.

*Fed boss Bernanke is scheduled to speak at the National Press Club at noon CST. No topic has been announced but there will be Q and A following the prepared remarks.

*Minneapolis Fedster Kocherlakota is set to speak at 7:00pm CST at the U of Minnesota. He is expected to deliver essentially the same speech he first gave in early January, with updated forecast and data.

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Market Climbs The Wall of Worry

Better than expected earnings reports and a lift in the manufacturing sector sent the stock market to two and half year highs Tuesday. The Dow Jones industrial average crossed 12,000 once again, and the Standard and Poor's 500 stock-index -- the benchmark for most U.S. mutual funds -- reached 1,300. Pfizer Inc., United Parcel Service Inc. and agriculture giant Archer Daniels Midland Co. all beat earnings forecasts.

The Institute of Supply Management said Tuesday that manufacturing activity expanded in January at its fastest pace in nearly seven years. Increased spending by businesses and consumers helped push the index higher, the company said. "This is a good indicator that businesses have come out of the gate strongly in 2011," said Burt White, chief investment officer for LPL Financial. "We are seeing businesses spend again and this is exactly what we needed to see for this economy to move forward." The better economic data helped push stocks broadly higher. All 10 company groups that make up the S&P index rose. Materials companies rose 2.4 percent, the largest gain of any group.

The Dow Jones industrial average gained 136 points, or 1.1 percent, to 12,028. It last closed above 12,000 in June 2008, although it traded above that level several times last week before settling lower. The S&P 500 index gained 20 points, or 1.6 percent, to 1,306. It last closed above 1,300 in August 2008. The Nasdaq composite index rose 51, or 1.9 percent, to 2,751. Before the market opened, Archer Daniels Midland said that its profit jumped 29 percent last quarter because of growing demand for grains. The agriculture conglomerate easily beat analyst estimates. Its stock jumped 6 percent. United Parcel Service Inc. said its 2011 earnings will likely top its pre-recession levels from 2007. UPS gained 4 percent. Pfizer Inc. said its fourth-quarter profit nearly quadrupled. The company narrowly beat analyst estimates and gained 5.2 percent.

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3 Things to Know Before Trading Today

*Stocks were mixed in Asian trade, but many of the main indexes managed a gain. Shanghai and the Nikkei were both up about a third of a percent and the Hang Seng rose a fraction, but Australia was lower by a slight fraction. European indexes are broadly higher on the day, with the Dax and Footsie both up about 0.9%. US stock futures by a half percent.

*The Reserve Bank of Australia kept their key cash target rate steady at 4.75%, as expected.

*The January reading of China’s manufacturing sector Purchasing Managers Index was down one point on the month to 52.9, it had been expected to fall just a few tenths; this is the second decline in a row.

*Jordanian Prime Minister Rifai has resigned, after weeks of protests calling on the government to step down. King Abdullah II has asked a fromer prime minister, Marouf Bakhit to form a new government.

*Egypt continues to be in a state of flux; mass rallies continue, financial markets remain closed and Mubarak is still trying to hold on to power.

*The EU is said to be near, but not at, agreement on buying sovereign debt in private placements. They would need to make rule changes to the EU440 billion EFSF to buy bonds directly for governments rather than using the fund to offer bailout loans.

*The January reading of Germany’s Unemployment Rate fell one tenth to 7.4%, the forecast was for unchanged. Also, the net change in the number of Unemployed was down a few thousand more than expected at -13k.

*The final January reading of Germany’s manufacturing sector PMI was revised up three tenths to 60.5, down a couple tenths from the month before.

*The December reading of Switzerland’s Retail Sales is -0.4% on a year over year basis, well below the +1.8% seen the month before.

*The January reading of Switzerland’s PMI was down seven tenths on the month to 60.5, but this was from a sharply higher revision for December.

*UK house prices fell 0.1% on the month in January, according to Nationwide; on a year over year basis prices are -1.1%.

*The January reading of the UK manufacturing sector PMI was much better than forecast, up more than three points to 62.0, which is four points higher than the estimate and the highest result since the survey began in 1992.

*In December there were 42.6k UK mortgage approvals, according to the Bank of England; down almost 5k on the month and four thousand under the expectation.

*The weekly report on chain store sales from ICSC showed a 1.0% decline on a week on week basis for the week ended January 29; the four consecutive decline by this measure. The Johnson Redbook report on the same thing is due out at 7:55am CST.

*The January reading of the ISM Manufacturing Index is due out at 9:00am CST. The headline ISM is expected to be 58.0, down a half point from the revised higher December result. The ISM Prices Paid component is forecast to rise one point on the month to 73.5. Also due out at 9:00am is the December reading of Construction Spending, which is expected to be +0.1% on a month on month basis.

*The automakers will be releasing their January sales figures this morning; total vehicle sales are expected to be 12.60 million units at an annualized rate, up from 12.53 million the month before.

*The Fed is scheduled to buy TIPS today that are due to mature between 4/15/13 and 2/15/40; the results of the operation will be announced just after 10:00am CST.

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Geopolitical events in Egypt impacting Financial Markets: Thoughts from Economists

By: Joseph A. LaVorgna

Geopolitical events in Egypt appear to be impacting financial markets. However, as an isolated event we expect it to have little impact on the US economy. The dollar value of Egyptian GDP (as of 2010) was $214B USD for a
population of roughly 85 million people. Annual exports to Egypt from the US over the past several years have been roughly $5B-6B, so the direct implications from stalled demand should be relatively small.

The main risks as we perceive them are threefold:
1) a disruption of oil exports through the region;
2) geopolitical contagion into petroleum producing areas which would lift oil prices; and
3) heightened risk aversion.

While Egypt is not a major oil producer, a significant amount of oil flows through both the Suez Canal (2 million barrels per day) and the Sumed pipeline (3 million barrels per day)—or about 6% of daily oil production.
Any disruption would be temporary, since crude could be rerouted around the Horn of Africa. While WTI crude prices are up $3-4 per barrel today, prices are still about $3 below their high for the year ($92.87 per barrel). Near current levels, we do not expect oil prices to pose a significant risk to the economy; we would become more concerned about an oil-shock if prices approach $125 per barrel. However, we do not believe this would happen unless there was more significant spillover in the region, and our best guess is that these incidents will remain contained. In conclusion, we think there are only minimal marginal risks to the economy from the unrest in Egypt .

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The Contagiousness of Conflict and Spirit

By: Lou Brien


Mohamed Bouazizi had for years sold produce from a cart on the streets of a Tunisian city. From this occupation it is said he made enough money to feed his extended family, but not much more than that. On December 17 Mr. Bouazizi’s day was interrupted by the petty demands of government inspectors, who were said to regularly hassle him and others plying a similar trade. It was generally considered to be an irritation that was usually looked upon as a cost of doing business; degrading, but unavoidable. However on that day in December as the low level bureaucrat was attempting to confiscate his produce, Mr. Bouazizi pushed back. Maybe he had gone through this deflating ritual one too many times, but on this occasion he resisted the government representative, who slapped him in the face for his disobedience and then he was beaten by two of her colleagues. But his resistance was noted by the others in the crowd, and that part of the story is important. Later that day the twenty-six year old produce salesman went to the municipal building to demand the return of his property, at which time it is reported that he was again beaten. From there he went front gate of governor’s office and when he was once more rebuffed it is reported that he doused himself in paint thinner and set himself on fire; he died a couple of weeks later.
In a dictatorship, such as Tunisia had been for decades, such events may usually pass by without much of a public reaction; better to internalize the plight of someone like Bouazizi than to act out and face government retribution. But, for whatever reason, the people of Tunisia did not ignore the incident, they took to the streets, a tipping point had apparently been breached and the way that the government had treated its people would no longer be endured, the lack of economic opportunity would no longer be tolerated. Seemingly a long dormant sentiment had been awoken by the desperate act of young countryman who sold produce from a cart. On January 14, less than a month after the Bouazizi incident, Zine El Abidine Ben Ali fled the country he had ruled for twenty-three years.


“Every fight consists of two parts: (1) the few individuals who are actively engaged at the center and (2) the audience that is irresistibly attracted to the scene.”

“To understand any conflict it is necessary therefore to keep constantly in mind the relations between the combatants and the audience because the audience is likely to do the kinds of things that determine the outcome of the fight. This is true because the audience is overwhelming; it is never really neutral’ the excitement of the conflict communicates itself to the crowd. This is the basic pattern of all politics.”

“The first proposition is that the outcome of every conflict is determined by the extent to which the audience becomes involved in it…The second proposition is a consequence of the first. The most important strategy of politics is concerned with the scope of conflict.”

“It follows that conflicts are frequently won or lost by the success that the contestants have in getting the audience involved in the fight or in excluding it, as the case may be.”

The Semisovereign People, by E. E. Schattschneider



The scope of the conflict in Tunisia expanded exponentially once it had begun; in essence in went viral. “Well, Twitter mattered, as did Facebook, YouTube, SMS and a whole range of social media. But for them to have the full impact that they had, they needed to get those images out into the mass media where people who weren’t in the network would be able to see them,” said Marc Lynch, the director of the Institute for Middle East Studies at George Washington University, in an interview on National Public Radio. He noted that the media with journalists in Tunisia had their offices shuttered by the government, but they were still able to get images off the internet and “then they rebroadcast them. That then brought those images and videos to a much broader audience, and it couldn’t be controlled by the Tunisian government anymore.” It is likely those images were hugely important for the pace at which events unfolded, but there is little doubt that the key to the uprising was the new found courage to express the previously suppressed frustration with their lot in life and their perception that the government was responsible. I don’t know why this was the moment for this spirit to reawake, but it did and now it seems as though spirit is contagious, judging by the situation that is bubbling over in Egypt and threatening to do so elsewhere in the region as well.
But there is no reason to assume that a movement such as has occurred in Tunisia is anything but contagious, and is so in a manner for which geography and culture matter very little; we have seen it before and interestingly at somewhat regular intervals. My point is that this is the sort of Tunisian event that can inspire people to stand up and be counted in unrelated places for unrelated issues, real or perceived. And, further, that the timeline and ramifications can unfold faster than conventional wisdom can either recognize or adjust.
1968 is remembered as a tumultuous year; although for this example I will exclude the assignations that occurred in the US and the urban unrest that ensued. The year began with the political liberalization in Czechoslovakia; a step toward democracy that included a loosening of restrictions in areas such as the media, speech and travel and by April the people of Prague were acting in ways that were very un-Soviet. Or course it ended badly that August when tanks from the Warsaw Pact rolled in and shut it down, but in its time it was seen as a movement that was both brave and inspiring. I don’t know if the spirit of the Prague Spring motivated the students and workers of Paris to shut down the French economy for a couple of weeks that May in an action that almost toppled the De Gaulle government, but I don’t know that it wasn’t. One could also wonder if Prague was the muse that turned the protests at the US political conventions into a massive demonstration of political dissatisfaction in late summer to a degree that caught most observes by surprise, but it might have been the case here too.
Although the issues may differ, the sentiment of a people rising up can indeed be contagious. Fast forward to April, twenty-one years hence, and we find a gathering of students in Tiananmen Square in Beijing, China. At first they came mainly to mourn the passing of a Party official known for tolerating dissent, but as the days turned to weeks the disparate group gained a voice, calling for economic and democratic reforms. By early June this too ended badly. But for some reason a similar sentiment was on the rise in the eastern bloc of Europe as well. It was in August in Hungary that a leak sprung in the Iron Curtain. By September thousands of East Germans and others were flooding into Hungary and then out to the West. Then it was Czechoslovakia that became the exit route. Soon there were mass protests in East Germany as well, which remarkably forced the resignation of long-time leader Erich Honecker on the eighteenth of October. The pace of events quickened dramatically, but up until the day the Berlin Wall fell on November 9, 1989 there was little or no anticipation that it would be so. Within a couple of years so too did the Soviet Union collapse, and again it was an event that was unanticipated, both the outcome and the speed at which it arrived.
Now, twenty one years after students in China and the peoples of Eastern Europe found their long dormant voices and forty two years removed from 1968, we find kindred spirits in the north of Africa. I have no special insight as to how the events there will play out, in Tunisia, Egypt or elsewhere. Nor do I know if they will inspire the people of other countries to follow suit. But if history is a guide then it is within the realm of possibility that other nations in the Middle East or elsewhere will see its people stand to be counted. Maybe even the Irish will decide that they care little to suffer through years of austerity in order to pay the price demanded by Brussels.
Although it may seem that such scenarios are unlikely, remember so too did the events of 1968 and 1989 also seem to be farfetched. Conflict is contagious and so too is the spirit that causes a people to rise up.

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3 Things to Know Before Trading Today

*Stocks were mixed in Asian trade. Shanghai was among the best with a gain of almost 1.4%, but the Nikkei fell about 1.2%, the Hang Seng was down 0.7% and Australia lost 0.4%. European indexes are generally down a bit currently, with the Dax and Footsie both off about 0.4%. US stock futures are up a fraction on the session.

*The preliminary December reading of Japan’s Industrial Production was a few tenths better than forecast at +3.1% month on month, but that result was three times the increase seen the previous month.

*The January reading of Japan’s manufacturing sector Purchasing Managers Index was up three points on the month to 51.4, the best result since last July.

*The December reading of German Retail Sales badly missed the estimate, it was -0.3% on the month, well short of the forecast for a gain of two percent. The annualized reading at -1.3%, was also well under the estimate for a gain of 1.1%.

*The events in Egypt are ongoing. President Mubarak has thus far refused to cede control of the country, he has instead installed a new vice President and a new cabinet, which is being selected and sworn in today. The stock market there has not reopened so far this week and is now expected to be closed tomorrow as well.

*The December reading Personal Income and Spending is due out at 7:30am CST. Income is expected to be +0.4% month on month and the estimate for Spending is +0.5%. The December reading of the PCE Core inflation rate is +0.1% month on month and +0.8% year on year. The January reading of the Chicago Purchasing Managers Index is due out at 8:45am CST, but remember it is release three minutes earlier for subscribers. The Chicago Index is expected to be 64.5, down a bit from the December result of 66.8.

*The January reading of the Dallas Fed Manufacturing Index is due out at 9:30am CST, it is forecast to be 15.0, up from 12.8 in December.

*The Fed is scheduled to buy Treasuries today that are due to mature between 8/15/13 and 12/31/14; the results of the operation will be announced just after 10:00am CST.

*Atlanta Fed boss Lockhart is scheduled to speak in Miami today at 11:00am CST.

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3 Things to Know Before Trading

*Stocks were generally higher in Asian trade. Shanghai was among the day’s best with a gain of 1.8%, the Hang Seng was up one percent, Australia added two thirds of a percent and the Nikkei was up a third. European indexes are slightly lower on the session, with the Footsie currently off 0.2% and the Dax about unchanged. US stock futures are essentially unchanged.

*The January reading of Australian Consumer Confidence was down more than six points to 104.6, for the lowest result since last June. according to Westpac’s index.

*The November reading of Japan’s Tertiary Industry Index was up 0.6%, one tenth better than expected.

*The November reading of the UK Unemployment Rate is steady at 7.9%, as forecast. In December the net change in the number of jobless claimants was down 4.1k, a bigger drop than expected.

*US mortgage applications were up 5.0% in the week ended January 14, according to the Mortgage Bankers Association. Applications for refinancing were up for the third week in a row, this time by 7.7%, but applications for purchase fell 1.9% and this index is now at the lowest level since early November.

*Goldman Sachs is among the companies that are reporting earnings today; the estimate calls for an eps of +$3.79. Wells Fargo, Bank of New York Mellon, US Bancorp and State Street are some of the other financials that are set to report today.

*The weekly report on chain store sales from ICSC showed a decline of 0.1% on a week on week basis for the week ended January 15; sales were up 1.4% for the week when compared to the corresponding week from a year ago, the lowest rate of growth since the end of May. The Johnson Redbook report on the same thing is due out at 7:55am CST.

*The December reading of Housing Starts is due out at 7:30am CST. Starts are expected to be down 0.9% on the month for an annualized rate of 550k units; Building Permits are forecast to be up 1.8% on the month to 554k units annualized.

*The weekly report on energy inventories is delayed until Thursday because of the holiday.

*The Fed is scheduled to buy Treasuries today that are due to mature between 7/31/13 and 12/31/14; the results of the operation will be announced just after 10:00am CST.

*China’s leader, Hu Jintao, arrived in DC yesterday and will meet today with Obama in the Oval Office and be feted with a state dinner tonight. He is expected to travel to Chicago to sign a series of trade and investment agreements later in the week.

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5 Things to Know Before Trading

*Stocks were mixed in Asian trade. The Hang Seng and Australia each gained a slight fraction, while the Nikkei fell more than 0.8% and Shanghai was down a bit more than one and a quarter percent. European indexes are broadly lower; the Footsie is currently down about 1.1% and the Dax is off by a half percent. US stock futures are down about a third of a percent.

*China has again raised the required reserve ratio for commercial banks; the fifty basis point increase now means that the major banks need to have a minimum of 19% of their deposits on reserve, the smaller banks are still required to retain 15.5%.

*The final December reading of Germany’s Consumer Price Index were unrevised at +1.2% month on month and +1.9% annualized.

*The December reading of Switzerland’s Producer and Import Prices Index was up 0.3% for the month and for the year on year result; both readings were two tenths more than forecast.

*The December reading of the UK Producer Price Index showed the cost of goods at the factory gate to be +0.5% month on month, one tenth higher than expected.

*JP Morgan reports Q4 eps of +$1.12, above the estimate for +$1.00; revenues were $26.1 billion also above the estimate for $24.22 billion.

*The December reading of the Consumer Price Index is due out at 7:30am CST. Headline CPI is expected to rise 0.4% on a month on month basis and the estimate for the CPI Core +0.1% from the month before; the forecasts for the annualized rates are +1.3% and +0.8% respectively. (I will note that absent a revision to previous months, it is my opinion that if the monthly reading on the CPI Core comes in at +0.1%, as is expected, the annualized rate will only be +0.6%.) Also due out at 7:30am is the December reading of Retail Sales; headline Sales is expected to be up 0.8% from the month before and Sales ex-autos are forecast to be +0.7% month on month. The December readings of Industrial Production and Capacity Utilization are due out at 8:15am CST. Production is forecast to increase 0.5% on the month and Capacity is expected to rise four tenths from the month before to 75.6%. The preliminary January reading of consumer sentiment from the University of Michigan is due out at 8:55am CST, it is expected to be 75.5, up one point from December. The November reading of Business Inventories is due out at 9:00am CST, it is expected to be +0.7% on the month.

*The Fed is scheduled to buy Treasuries today that are due to mature between 1/31/15 and 6/30/16; the results of the operation will be announced just after 10:00am CST.

*There are a couple of Fed speakers on the calendar today. Richmond Fed boss Lacker will talk about the US economic outlook at 11:45am CST and Boston Fed’s Rosengren is set to speak at an expo on mortgages at 12:15pm CST.

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3 Things U need to Know Before Trading

*Stocks in Asia were generally higher. Australia was among the strongest with a gain of 1.5%, the Nikkei added three quarters of a percent, the Hang Seng was up a half percent and Shanghai rose a quarter percent. European indexes are mixed, with the Footsie off by a slight fraction and the Dax essentially unchanged at the moment. US stock futures are also unchanged.

*The December reading of Australia’s Unemployment Rate was down two tenths on the month to 5.0%, it had been expected to fall only one tenth. However, the net change in the number of employed was only +2.3k, well under the 25k increase that was forecast and down sharply from the gain of 54.6k the month before.

*The November reading of Japan’s Machine Orders is -3.0% on a month on month basis, it had been expected to increase 2.0%.

*The December reading of Germany’s Wholesale Price Index is +1.8% on a month on month basis.

*The November reading of UK Industrial Production is +0.4%, just one tenth under the estimate.

*The Bank of England maintained both their benchmark rate at 0.50% and the asset purchase plan at BP200 billion, as expected.

*The ECB was also steady as she goes, key rate unchanged at 1.00%. Bank President Trichet will tell us all about it at his presser at 7:30am CST.

*Three bits of data are due out at 7:30am CST: The weekly report on Initial Jobless Claims which is expected to be 410k; the December reading of the Producer Price Index is forecast to be +0.8% on a monthly basis and the estimate for the PPI Core is +0.2% month on month; the November reading of the Trade Balance is expected to show a deficit of $40.5 billion.

*The weekly report on inventories of Natural Gas is due out at 9:30am CST, it is expected to be a decline of 148 bcf.

*The Fed is scheduled to buy Treasuries today that are due to mature between 7/31/16 and 12/31/17; the results of the operation will be announced just after 10:00am CST.

*The Treasury plans to sell $13 billion re-opened 30 Year Bonds today; the results of the auction will be announced just after noon CST.

*Fed boss Bernanke is schedule to take part in a panel discussion at the FDIC on small business lending, slated to begin at noon CST; not likely a market moving event, but you never know.

*Intel is scheduled to report its Q4 earnings after the close today; an eps of +53 cents is forecast.

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3 Things U need to Know Before Trading

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Stocks Lower: Portugal and Job Numbers Press Market Lower

Europe's debt crisis and mildly disappointing U.S. jobs data weighed on stocks Monday, with reports claiming Portugal is under mounting pressure to accept an aid package to prevent contagion to other countries. In Europe, the FTSE 100 index of leading British shares closed down 28.03 points, or 0.5 percent, at 5,956.30. Bigger losses were posted in the markets of euro countries, with Germany's DAX falling 90.78 points, or 1.3 percent, to 6,857.06 and the CAC-40 in France ending 63.55 points, or 1.6 percent, lower at 3,802.03.

The losses weren't just confined to Europe, though -- on Wall Street, the Dow Jones industrial average was down 65.92 points, or 0.6 percent, at 11,608.84 around midday New York time, while the broader Standard & Poor's 500 index fell 5.56 points, or 0.4 percent, to 1,265.90. "There is still an air of caution following the worse-than-expected U.S. employment numbers on Friday and... investors are mindful that the risk of another European sovereign debt crisis has not gone away," said Yusuf Heusen, a sales trader at IG Index. Fears that Portugal was heading towards a bailout, like Greece and Ireland before, were acute in early trading in Europe. At one stage, the yield on Portugal's ten-year bonds rose nearly half a percentage point to 7.18 percent, before falling back to 6.94 percent on speculation that the European Central Bank was propping up Portugal's bond market -- buying bonds helps lower the yield. "According to market talk the ECB bought bonds issued by Portugal directly from banks this morning following a rocky start," said Andrew Wilkinson, senior market analyst at Interactive Brokers. "As usual the remedy worked and sent the bears into hibernation for now."

Despite the modest pullback, the cost Portugal is facing to service its debt is prohibitively high. Many think that even current rates are unsustainable in the medium-term and that the country will have to join Greece and Ireland in getting massive financial help from its partners in the European Union and the International Monetary Fund.
A test will be an auction of euro1.25 billion in three year and nine year bonds on Wednesday and how much Portugal will have to pay to get investors to effectively lend it money. On Thursday, Spain and Italy are also scheduled to sell bonds and the big worry in Europe's capitals is that Spain, in particular, will be dragged into the mire.

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3 Things To Know Before Trading

*Stocks were generally lower in Asian trade. Shanghai lost one and a third percent and the Hang Send was down about 0.7%, but Australia gained a slight fraction and the Nikkei was closed. European indexes are broadly lower on the session, with the Dax currently down about one percent and the Footsie off by about a half percent or so. US stock futures are moderately lower.

*The November reading of Australia’s Retail Sales hit the forecast with +0.3% on a month on month basis.

*The December reading of China’s Trade Balance showed a surplus of $13.1 billion, but this was more than seven billion below the expectation. Exports were up about 18% versus a year ago, only half the annualized gain seen in December 2009 and about five percent less than forecast; Imports were up almost twenty six percent from last year.

*The November reading of Switzerland’s Retail Sales was +2.5% on a year over year basis, well above the estimate of an increase of 0.9%.

*There were reports over the weekend that France and Germany would pressure Portugal to ask for a European bailout, causing the debt spreads to widen earlier today. But spreads have again narrowed after denials that this was the case and on the apparent persistent buying of Portugal’s debt by the ECB today.

*UK house prices fell 1.3% on a month on month basis in December, according to Halifax; the decline was three times the forecast.

*The Chicago Purchasing Managers Index annual revisions of its seasonal adjustment is due to be announced at 8:45am CST, I don’ think this will particularly matter, but there is no telling if the announcement itself will move the market for a minute or two.

*The Fed is scheduled to buy Treasuries today that are due to mature between 2/15/18 and 11/15/20; the results of the operation will be announced just after 10:00am CST.

*Alcoa kicks off earnings season today after the close.

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Expect Gold Volatility to Explode in 2011

I was reading where portfolio manager John Paulson had a huge position in Gold (NYSE:GLD) and it helped turn his portfolio around in 2010. It is clear that pro traders will be utilizing Gold as the flight to quality tool for portoflio's in 2011. You can bet Paulson is not the only one who will use the metal ETF's as a portfolio tool, and this will bring volatility for all metals in 2011. My view of Gold is that it is way to expensive and is nothing more than a specualtive bubble waiting to shake out weak holders.

Gold has its own rules, which explain its price performance and form the foundation of what we call "the gold mindset." This is completely different from the debt-based mindset that has prevailed since 1971, when President Nixon removed the U.S. dollar - the world's reserve currency - from its international peg with gold. Eliminating the gold standard has resulted in anywhere from $14 trillion to $200 trillion of debt for the U.S., which now relies on a phenomenon called "Quantitative Easing" (QE) for economic survival. QE, or money printing, has triggered global currency devaluations and protectionism worries.

Trading Gold is not the place to speculate for investors who read these articles, leave that to Billion Dollar Hedge Funds.

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3 Things To Know Before Trading

*Stocks in Asia were generally bid overnight. The Nikkei and Shanghai both gained more than 1.5% and the Hang Seng was up one percent, but Australia was down a slight fraction. European indexes are also higher on the session; the Dax is up almost a half percent and the Footsie is making up for yesterday as well with a gain of about two and a half percent. US stock futures are about a third of a percent .

*The December reading of Germany’s Unemployment Rate is steady at 7.5% as was forecast. However the net change in November in the number of unemployed is +3k, this had been expected to fall 15k.

*The December reading of the UK’s manufacturing sector PMI was up almost one point to 58.3, a decline of about that much was the expectation.

*In November in the UK there were 48.0k mortgage approvals, according to the Bank of England, up fraction rather than down as was forecast.

*The weekly report on chain store sales from ICSC showed an increase of 0.4% on a week on week basis for the week ended January 1, and up 3.6% versus the same week from a year ago. The Johnson Redbook report on the same thing is due out at 7:55am CST.

*The November reading of Factory Orders is due out at 9:00am CST, it is expected to decline 0.1% on a month on month basis.

*The Fed is scheduled to buy TIPS today that are due to mature between 7/15/12 and 2/15/40; the results of the operation will be announced just after 10:00am CST.

*The automakers are scheduled to announce their December vehicle sale results today. The estimate for the annualized sales rate is 12.21 million units, down just slightly from the November total.

*The FOMC minutes from the December 14 meeting are due to be released at 1:00pm CST.

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3 Things you need to know before Trading Today

Many stock markets in Asia have not yet opened for the year. Among those that did it was the Hang Seng that led the way with a gain of one and three quarters percent. Aside from the UK, Europe is open for business and well bid; the Dax is currently trading up one and a quarter percent. US stock futures are up about three quarters of a percent.
*Manufacturing growth slowed in China according to a Purchasing Managers report released on Saturday by the China Federation of Logistics and Purchasing; the index was down 1.3 points to 53.9.

*The final December reading of Germany’s manufacturing sector Purchasing Managers Index was revised down two tenths to 60.7, but still up about two and a half points from the month before.

*The December reading of Switzerland’s manufacturing sector PMI was down a couple of points on the month to 59.6, it had been expected to rise a couple of tenths.

*The December reading of the ISM Manufacturing Index is due out at 9:00am CST. The headline index is expected to rise a fraction on the month to 57.0 and the Prices Paid component is forecast to increase a couple of points to 71.3. Also due out at 9:00am is the November reading of Construction Spending; the estimate calls for +0.2%.

*The Fed is scheduled to buy Treasuries today that are due to mature between 2/15/18 and 11/15/20; the results of the operation will be announced just after 10:00am CST.

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5 Things you Need to Know Before Trading

*Stocks in Asia were generally higher on the session, but the Nikkei was an exception, it fell 1.1%. But Australia was up a third of a percent, Shanghai rose about the same and the Hang Seng added a fraction. European indexes are lower on the day, with the Dax down one and a quarter percent and the Footsie is off by a quarter percent. US stock futures are a fraction lower.

*According to HSBC, the December reading of China’s Manufacturing Sector Purchasing Managers Index fell one point to 54.4.

*The weekly report on Initial Jobless Claims is due out at 7:30am CST, it is expected to be 415k. The December reading of the Chicago Purchasing Managers Index is due out at 8:45am CST, but three minutes earlier for the subscribers; it is forecast to be 61.0, down a bit from the November result of 62.5. The November reading of Pending Home Sales is due out at 9:00am CST and is expected to be +0.8% on a month on month basis.

*The weekly report on inventories of Natural Gas is due out at 9:30am CST, it is expected to show a decline of 143 bcf. The rest of the energy inventory data is due out at 10:00am CST. Stocks of Crude Oil are forecast to fall 2.85 million barrels, Gasoline inventories are expected to rise 1.5 million and the estimate for Distillates is -625k.

*The Kansas City Fed Manufacturing Index is due out at 10:00am CST; no estimate on the report.

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