Will they go for the gusto, .75 cut with a big market push and take the markets through the two resistance lines,
or
a weak .25 cut that drags us to 1260 and delivers the bull a kick to where it really hurts.
We shall see.
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Tuesday, January 29, 2008
FED rates for tomorrow.
U.S. Treasuries fell a second straight day as a report showed orders for durable goods surged last month, fueling speculation Federal Reserve interest-rate cuts will help bolster the U.S. economy. Notes also declined before the Treasury's auction today of $14 billion of five-year securities, the most since 2006, after demand waned at a two-year sale yesterday. Traders expect the Fed to lower its benchmark interest rate by at least a quarter- percentage point tomorrow, futures contracts indicate.
The yield on the benchmark 10-year note rose 10 basis points, or 0.10 percentage point, to 3.68 percent as of 11:18 a.m. in New York. The price of the 4 1/4 percent security due in November 2017 fell about 7/8, or $8.75 per $1,000 face amount, to 104 20/32.
Traders see a 72 percent chance of a half-point Fed rate cut to 3 percent tomorrow, down from an 86 percent likelihood yesterday, futures on the Chicago Board of Trade show. Policy makers, who lowered the target rate for overnight loans between banks by three-quarters of a percentage point on Jan. 22, begin their two-day meeting today. The rest of the bets are on a quarter-point cut. The chances the Fed will drop its rate to 2.75 percent at its meeting on March 18 are 61 percent, down from 67 percent yesterday, futures show.
The yield on the benchmark 10-year note rose 10 basis points, or 0.10 percentage point, to 3.68 percent as of 11:18 a.m. in New York. The price of the 4 1/4 percent security due in November 2017 fell about 7/8, or $8.75 per $1,000 face amount, to 104 20/32.
Traders see a 72 percent chance of a half-point Fed rate cut to 3 percent tomorrow, down from an 86 percent likelihood yesterday, futures on the Chicago Board of Trade show. Policy makers, who lowered the target rate for overnight loans between banks by three-quarters of a percentage point on Jan. 22, begin their two-day meeting today. The rest of the bets are on a quarter-point cut. The chances the Fed will drop its rate to 2.75 percent at its meeting on March 18 are 61 percent, down from 67 percent yesterday, futures show.
Friday, January 25, 2008
A little stimulus thank you.
As part of the economic stimulus package, an increase in the conforming limit could now be a reality, at least for a brief period. Congress and President Bush agreed, but have not voted yet, on a 1-yr increase in the conforming loan limit to $730K. There is not a lot of detail yet (there is confusion as to whether the $730K, or $725, is for high cost housing areas, or everywhere, and just what high cost areas are?). Just when mortgage originators everywhere were breaking out the bubbly, OFHEO's director James Lockhart (Office of Federal Housing Enterprise Oversight, who oversees FNMA & FHLMC) issued a statement saying "We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the GSEs' regulator has all the necessary safety and soundness tools. Yesterday Chairman Dodd talked about moving a GSE reform bill early this year.
Now what? Frankly, analysts feel that enactment is possible by mid-February but looks more likely by early March. No large investors will make any policy changes or announcements until the issues are less confusing, or even voted into law. Apparently, the bill would temporarily increase the limit on mortgages Fannie Mae and Freddie Mac may securitize from $417k to up to $730k. In addition, the bill would increase the limit on loans the Federal Housing Administration (FHA) may insure from $362k to $625k. This should help to reduce spreads in the jumbo mortgage market! One estimate mentioned that as many as $400-500 billion in loans could qualify for refinancing. As these loans refinance, it could ease pressure on capital-constrained bank balance sheets. And "temporary" items like this are difficult to rescind after a year, which would also be good news for originators.
Here in California Gov. Arnold Schwarzenegger wants Congress to raise the Fannie Mae and Freddie Mac lending limit from $417,000 to at least $625,000 as part of the economic stimulus package. State Assemblyman Ted Lieu is pushing for a bill that requires mortgage lenders to tighten up already strict guidelines to make sure homebuyers can afford their basic monthly bills before qualifying for a mortgage loan.
This bill would also ban certain designer mortgage loans such as the option arm mortgage. The option arm mortgage, also known as the pay option arm, allows borrowers to pay less than the interest that is due by adding the unpaid interest to the balance of the mortgage loan. The bill would also allow some homeowners to refinance their homes without being responsible for any penalties or unnecessary fees.
Now what? Frankly, analysts feel that enactment is possible by mid-February but looks more likely by early March. No large investors will make any policy changes or announcements until the issues are less confusing, or even voted into law. Apparently, the bill would temporarily increase the limit on mortgages Fannie Mae and Freddie Mac may securitize from $417k to up to $730k. In addition, the bill would increase the limit on loans the Federal Housing Administration (FHA) may insure from $362k to $625k. This should help to reduce spreads in the jumbo mortgage market! One estimate mentioned that as many as $400-500 billion in loans could qualify for refinancing. As these loans refinance, it could ease pressure on capital-constrained bank balance sheets. And "temporary" items like this are difficult to rescind after a year, which would also be good news for originators.
Here in California Gov. Arnold Schwarzenegger wants Congress to raise the Fannie Mae and Freddie Mac lending limit from $417,000 to at least $625,000 as part of the economic stimulus package. State Assemblyman Ted Lieu is pushing for a bill that requires mortgage lenders to tighten up already strict guidelines to make sure homebuyers can afford their basic monthly bills before qualifying for a mortgage loan.
This bill would also ban certain designer mortgage loans such as the option arm mortgage. The option arm mortgage, also known as the pay option arm, allows borrowers to pay less than the interest that is due by adding the unpaid interest to the balance of the mortgage loan. The bill would also allow some homeowners to refinance their homes without being responsible for any penalties or unnecessary fees.
Tuesday, January 22, 2008
Bear comes to the SP 500
S&P 500 starts the bull cycle.
President Bush even agrees, if we don't do something it could be bad for the economy.
Meryl Lynch says, "we are in a recession"
Housing problems are just the start of our credit problems. In some states 50 % of car loans are past due, 20% of credit card balances are past due, commercial adjustables are also in trouble.
Watch out for Capital One Financial..........
Here is the daily chart.
SP 500 collapse to the breaker
Looks like the S&P 500 will collapse to the breaker zone of 5% in overnight trading.
It will be set loose at the markets open.
Watch out, it could be very volitale to say the least, the next breaker will be at the 10% mark and could be taken out very quickly.
It will be set loose at the markets open.
Watch out, it could be very volitale to say the least, the next breaker will be at the 10% mark and could be taken out very quickly.
Thursday, January 17, 2008
Just after market closed ES SP 500
Oh please President Bush, one more bowl of Financial Stimulus.
After Hours we will hit 56 to 58, big gap up on open.
If it closes, watch out for the bottom. More bad earnings and down we go.
Entering into a three day weekend, I can see us consolidating in the 56 to 58 and then down all into next week.
Correction on the way 1272
Small chance of a rally.
Trade what you see, and always use stops.
Futures Trader
Money cheap goods (oil, gold) expensive Get it?
1/2 a point cut gives us a cheaper money and inversly more expensive goods. Gold at $950 a real possibility. Oil, oh no. US Gov't increasing us stock piles of oil every day. They are buying, do you think this is the high.....not even close.
We shall see. I expect a move up tonight hitting resistance and then an open gap through mid am trading.
We are headed for a correction soon. Watch out below.
Rebel Trader.
We shall see. I expect a move up tonight hitting resistance and then an open gap through mid am trading.
We are headed for a correction soon. Watch out below.
Rebel Trader.
MBIA downgrade is coming
Treasuries rose as Federal Reserve Chairman Ben S. Bernanke reiterated the need for interest rate cuts and a report showed manufacturing in the Philadelphia area tumbled this month. The Fed chairman acknowledged before Congress that the economy is weak enough to need a fiscal stimulus and reinforced expectations for the Fed to lower interest rates at least half a percentage point this month. This year's bond rally has pushed yields on two-year notes to the lowest level since 2004.
The two-year note's yield fell 6 basis points, or 0.06 percentage point, to 2.45 percent at 10:28 a.m. in New York. The price of the 3 1/4 percent security due in December 2009 rose 1/8, or $1.25 per $1,000 face amount, to 101 1/2.
The fallout from the collapse of the subprime mortgage market may widen. MBIA Inc. and Ambac Financial Group Inc., battered by losses from the collapse of the subprime mortgage market, fell the most ever in New York Stock Exchange trading on concern they will lose their AAA credit ratings. Losing the AAA ratings would cripple the bond insurers' business and throw doubt on the ratings of $2.4 trillion of debt the industry guarantees, causing as much as $200 billion in losses.
Merrill Lynch & Co., the largest U.S. brokerage, reported a record loss after writing down at least $15 billion of failed investments, ousting its chief executive officer and losing almost half of its market value in 2007. U.S. builders broke ground in December on fewer houses than forecast, making last year's decline in homebuilding the worst in almost three decades.
Many of you are wondering where rates are headed. One expert predicts..."rates are at extreme lows. The economy continues to slow and the Fed will cut short term rates further. These actions are inflationary and should drive long-term (fixed) rates higher.
The two-year note's yield fell 6 basis points, or 0.06 percentage point, to 2.45 percent at 10:28 a.m. in New York. The price of the 3 1/4 percent security due in December 2009 rose 1/8, or $1.25 per $1,000 face amount, to 101 1/2.
The fallout from the collapse of the subprime mortgage market may widen. MBIA Inc. and Ambac Financial Group Inc., battered by losses from the collapse of the subprime mortgage market, fell the most ever in New York Stock Exchange trading on concern they will lose their AAA credit ratings. Losing the AAA ratings would cripple the bond insurers' business and throw doubt on the ratings of $2.4 trillion of debt the industry guarantees, causing as much as $200 billion in losses.
Merrill Lynch & Co., the largest U.S. brokerage, reported a record loss after writing down at least $15 billion of failed investments, ousting its chief executive officer and losing almost half of its market value in 2007. U.S. builders broke ground in December on fewer houses than forecast, making last year's decline in homebuilding the worst in almost three decades.
Many of you are wondering where rates are headed. One expert predicts..."rates are at extreme lows. The economy continues to slow and the Fed will cut short term rates further. These actions are inflationary and should drive long-term (fixed) rates higher.
ES SP 500 Daily testing 49-50
Testing of 50
There is more in store for this one. Sentiment is more powerful than policy. Ben speaks and the market falls.
Futures Trader
Wednesday, January 16, 2008
Probably will test to 1398 1400 on ESMarket Notes
The 10-year note's yield rose 2 basis points, or 0.02 percentage point, to 3.70 percent at 11:54 a.m. in New York, according to bond broker Cantor Fitzgerald LP. It touched 3.61 percent, the lowest since July 2003. The price of the 4 1/4 percent security due in November 2017 fell 6/32, or $1.88 per $1,000 face amount, to 104 15/32. The two-year note's yield increased 4 basis points to 2.53 percent.
Fed funds futures on the Chicago Board of Trade showed a 40 percent chance the Fed will reduce its 4.25 percent target rate for overnight lending between banks by three-quarters of a percentage point by its Jan. 30 meeting, compared with odds above 50 percent earlier this week. The balance of bets is for rates to be cut by a half-point. The central bank hasn't eased by more than 50 basis points in a single move since Oct. 2, 1984, when it trimmed the target rate by 1.75 percentage points. Policy makers cut rates in increments of 50 basis points twice in January 2001.
The Fed will release its Beige Book regional survey at 2 p.m. in Washington. The report, a summary of anecdotal information on current economic conditions gathered by Fed banks and named for the color of its cover, is traditionally provided two weeks before a meeting of the policy-setting Federal Open Market Committee. Fed Chairman Ben S. Bernanke testifies to Congress tomorrow on his near-term economic outlook. In a Jan. 10 speech, he pledged ``substantive additional action'' to prevent a recession and said more interest-rate cuts ``may well be necessary.''
Could see some upward bias on the ES We shall see the 1398 to 1400 Tested
Fed funds futures on the Chicago Board of Trade showed a 40 percent chance the Fed will reduce its 4.25 percent target rate for overnight lending between banks by three-quarters of a percentage point by its Jan. 30 meeting, compared with odds above 50 percent earlier this week. The balance of bets is for rates to be cut by a half-point. The central bank hasn't eased by more than 50 basis points in a single move since Oct. 2, 1984, when it trimmed the target rate by 1.75 percentage points. Policy makers cut rates in increments of 50 basis points twice in January 2001.
The Fed will release its Beige Book regional survey at 2 p.m. in Washington. The report, a summary of anecdotal information on current economic conditions gathered by Fed banks and named for the color of its cover, is traditionally provided two weeks before a meeting of the policy-setting Federal Open Market Committee. Fed Chairman Ben S. Bernanke testifies to Congress tomorrow on his near-term economic outlook. In a Jan. 10 speech, he pledged ``substantive additional action'' to prevent a recession and said more interest-rate cuts ``may well be necessary.''
Could see some upward bias on the ES We shall see the 1398 to 1400 Tested
Tuesday, January 15, 2008
The News and the market
Wholesale inflation increased 2007 by the largest amount in twenty-six years. The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.
Meanwhile, the Commerce Department reported that retail sales fell by 0.4 percent in December. It was a worse-than-expected decline and increased worries that the country could topple into a recession.
The combination of rising inflation pressures and a weak economy represent a dilemma for the Federal Reserve over whether to cut rates to boost economic growth even at the risk of making inflation worse. Last week, however, Federal Reserve Chairman Ben Bernanke sent a strong signal that the Fed is more worried at the moment about weak growth than inflation -- given a series of weaker-than-expected data in recent weeks.
Business confidence is essential now as business capital investment helps lead the manufacturing sector and the economy overall.
Futures Trader
Meanwhile, the Commerce Department reported that retail sales fell by 0.4 percent in December. It was a worse-than-expected decline and increased worries that the country could topple into a recession.
The combination of rising inflation pressures and a weak economy represent a dilemma for the Federal Reserve over whether to cut rates to boost economic growth even at the risk of making inflation worse. Last week, however, Federal Reserve Chairman Ben Bernanke sent a strong signal that the Fed is more worried at the moment about weak growth than inflation -- given a series of weaker-than-expected data in recent weeks.
Business confidence is essential now as business capital investment helps lead the manufacturing sector and the economy overall.
Futures Trader
The market is searching for supportMonday, January 14, 2008
S P 500 and this weeks news
There is no data today, aside from some pro-IBM news, the week's most important releases are coming tomorrow morning with December's Retail Sales (expected +.1%) and the Producer Price Index (PPI, expected +.2% and +.2% for the core rate). On Wednesday we'll see the Consumer Price Index (CPI), one of the most important monthly reports that we see since it measures inflationary pressures at the consumer level of the economy. It is expected to rise 0.2% while the core data is also expected to increase 0.2%. December's Industrial Production report is the second report to be posted Wednesday, expected -.1%, and then Wednesday afternoon the Fed Beige Book report will be posted, detailing economic activity regionally throughout the U.S. December's Housing Starts report will be released early Thursday morning, and then Friday we have December's Leading Economic Indicators and January's preliminary reading to the University of Michigan Index of Consumer Sentiment.
hope this helps,
Joel Wissing
Futures Trader
hope this helps,
Joel Wissing
Futures Trader
S P 500 Daily January 14 2008 AM
Declining volume in to this consolidation range. When will it continue down? A little respite for now? Sentiment is we are headed for new market highs, I doubt that. We shall see.
Wednesday, January 9, 2008
S P 500 After close Jan 9
Levels were touched, support held and daily new high came in.
Let's see if we hit 22.50 to 25 and if volume is there we could see 40.
We shall see.
Joel
S P 500 Consolidating to make next move
Looks like we will consolidate today to retrace.
We shall see.
Always trade with stops.
futures trading
Tuesday, January 8, 2008
S P 500 Bull is capitulating
The Bull looks like it is capitulating......
Take a look at this long term daily and the roll over. Remember the market falls twice as fast as it rises.
2008 what is in store......watch out.
I would like to touch a few areas I will be watching this year. I know this is a little out side our trading scope but it might be of interest for you as your perspective changes to the money maker/market maker plays.
Commodities,,,,I expect this to be a big year for commodities especially food products.
1. Livestock This Past year China and India have added almost 80 million middle class families to their burgeoning group of 300 million middle class. One of the key areas we have seen the impact on is fishing industry; the next will be beef and poultry. The yearly consumption of beef this last year went up 50% in both Chinese and Indian households.
2. Corn Biofuel and the 138 Biofuel processing plants in the Midwestern United states have pushed demand through the roof. We no longer ship corn to Asian countries for feed which has wiped out Japan’s poultry farming. Corn Syrup is also been affected and being our largest commercial sweetener I can assume that we shall see some price increases on some of our every day food products.
3. Gold and Silver the increasing world demand, (see Above) and the dwindling supplies of mines world wide are increasing the price of gold as we speak. I would not be surprised to see gold going to $1100 this year and $950 by February if the market starts to Tank. Technically we can see this occurring already.
4. Oil- supplies dwindling, dollar is falling as Fed pumps more dollars in to curb the credit markets….Project around $148 to $160 a barrel. Since August, the Bush administration has been adding 50,000 barrels a day to the Strategic Petroleum Reserve — the nation's emergency oil stockpile — with plans to kick up the pace to 70,000 barrels a day by the end of January. (at what looks like a high price)
Financial Markets
1. Foreign investors have helped save our markets. The Collapse of the dollar against major currencies has made it a bit of a bargain to pick up companies in the US. CIC the China Investment Corporation bought close to 10% of Morgan Stanley, and a large interest in the Blackstone Group the largest private equity firm in the US. The CIC has 200 billion at its disposal with a lot more available considering the Chinese government holds 1.43 trillion dollars in reserve and couple this with another 9% increase in gross domestic product they foresee in 2008. One more respectable world player is the Dhabi’s Investment Authority that bailed out Citigroup with 7.5 billion and has another 875 billion in cash earmarked for investment.
2. Bonds- MBIA, the world's largest bond insurer, is on the verge of losing its triple-A rating. This alone could trigger a veritable ratings collapse — downgrades on the one hundred and seventy-three thousand municipal bonds, mortgage-backed securities and other collateralized debt obligations (CDOs) that MBIA guarantees. Investors may begin to seriously question Wall Street's entire system for rating the nation's $2.6 trillion in municipal bonds ... $10.6 trillion in corporate bonds ... and $1.9 trillion of commercial paper and other money market instruments. A ratings collapse will affect all sectors of investing.
3. The Fed- dumping dollars – expect to see the dollar heading down and the Pound sterling as they are also dumping into their markets.
4. Housing Market - Existing home sales have collapsed 31% from their 2005 peak. New home sales are down even more — 48%. IT IS NOT OVER. Some people are making their moves into the market and they are premature. Unless you are getting in at 50 to 60 LTV’s be careful……
Home prices dropped 4.5% from a year ago in the third quarter, according to S&P/Case-Shiller, the biggest drop on record (the data goes back to 1988). New home prices, for their part, plunged 13% in October, the sharpest decline in 37 years.
Single family home starts have cratered 55% from their January 2006 peak. Meanwhile, the issuance of building permits for future construction has dropped to its lowest level since 1991.
An index that measures home builder optimism, buyer traffic, and expected sales sits at record lows — 19 compared with readings in the 70s during the boom.
The nationwide home vacancy rate is running at a near-record of 2.7%, a testament to the dramatic glut of empty, unproductive homes piling up on the market.
About 5.6% of the nation's homeowners have fallen behind on their mortgage payments — the most since 1986.
The percentage of homes in some stage of foreclosure has surged to 1.7%, the highest rate the Mortgage Bankers Association has ever found (its data goes back to 1972).
Hope this helps you see what is happening a little bit and look forward to connecting with you again this year
ES Trader
Commodities,,,,I expect this to be a big year for commodities especially food products.
1. Livestock This Past year China and India have added almost 80 million middle class families to their burgeoning group of 300 million middle class. One of the key areas we have seen the impact on is fishing industry; the next will be beef and poultry. The yearly consumption of beef this last year went up 50% in both Chinese and Indian households.
2. Corn Biofuel and the 138 Biofuel processing plants in the Midwestern United states have pushed demand through the roof. We no longer ship corn to Asian countries for feed which has wiped out Japan’s poultry farming. Corn Syrup is also been affected and being our largest commercial sweetener I can assume that we shall see some price increases on some of our every day food products.
3. Gold and Silver the increasing world demand, (see Above) and the dwindling supplies of mines world wide are increasing the price of gold as we speak. I would not be surprised to see gold going to $1100 this year and $950 by February if the market starts to Tank. Technically we can see this occurring already.
4. Oil- supplies dwindling, dollar is falling as Fed pumps more dollars in to curb the credit markets….Project around $148 to $160 a barrel. Since August, the Bush administration has been adding 50,000 barrels a day to the Strategic Petroleum Reserve — the nation's emergency oil stockpile — with plans to kick up the pace to 70,000 barrels a day by the end of January. (at what looks like a high price)
Financial Markets
1. Foreign investors have helped save our markets. The Collapse of the dollar against major currencies has made it a bit of a bargain to pick up companies in the US. CIC the China Investment Corporation bought close to 10% of Morgan Stanley, and a large interest in the Blackstone Group the largest private equity firm in the US. The CIC has 200 billion at its disposal with a lot more available considering the Chinese government holds 1.43 trillion dollars in reserve and couple this with another 9% increase in gross domestic product they foresee in 2008. One more respectable world player is the Dhabi’s Investment Authority that bailed out Citigroup with 7.5 billion and has another 875 billion in cash earmarked for investment.
2. Bonds- MBIA, the world's largest bond insurer, is on the verge of losing its triple-A rating. This alone could trigger a veritable ratings collapse — downgrades on the one hundred and seventy-three thousand municipal bonds, mortgage-backed securities and other collateralized debt obligations (CDOs) that MBIA guarantees. Investors may begin to seriously question Wall Street's entire system for rating the nation's $2.6 trillion in municipal bonds ... $10.6 trillion in corporate bonds ... and $1.9 trillion of commercial paper and other money market instruments. A ratings collapse will affect all sectors of investing.
3. The Fed- dumping dollars – expect to see the dollar heading down and the Pound sterling as they are also dumping into their markets.
4. Housing Market - Existing home sales have collapsed 31% from their 2005 peak. New home sales are down even more — 48%. IT IS NOT OVER. Some people are making their moves into the market and they are premature. Unless you are getting in at 50 to 60 LTV’s be careful……
Home prices dropped 4.5% from a year ago in the third quarter, according to S&P/Case-Shiller, the biggest drop on record (the data goes back to 1988). New home prices, for their part, plunged 13% in October, the sharpest decline in 37 years.
Single family home starts have cratered 55% from their January 2006 peak. Meanwhile, the issuance of building permits for future construction has dropped to its lowest level since 1991.
An index that measures home builder optimism, buyer traffic, and expected sales sits at record lows — 19 compared with readings in the 70s during the boom.
The nationwide home vacancy rate is running at a near-record of 2.7%, a testament to the dramatic glut of empty, unproductive homes piling up on the market.
About 5.6% of the nation's homeowners have fallen behind on their mortgage payments — the most since 1986.
The percentage of homes in some stage of foreclosure has surged to 1.7%, the highest rate the Mortgage Bankers Association has ever found (its data goes back to 1972).
Hope this helps you see what is happening a little bit and look forward to connecting with you again this year
ES Trader
Daily for S&P 500 January 8, 2008
S&P 500 January 8, 2008
Long term trend line adding to support.
Could be an Inverted H&S
Trade what you see,
Always use stops.
Http://www.TradingOnlineMadeEasy.com
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