Home > July 2012 > Trading Diary July 5, 2012..Day 4th of Iran Oil Embargo

Trading Diary July 5, 2012..Day 4th of Iran Oil Embargo

July 5th, 2012
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HAPPY 4th of July. Shanghai Comp is down and so are Shanghai Futures. Yet, all moves don’t matter until we see what the ECB, BoE and our ADP/Challenger data rusults..So we just have to wait. So far Iran has backed down on Saber Rattling and more talks are being scheduled. Going into the Europe session we have a pull back and Eur/USD is at 1.2530 and AUD/USD at 1.0264.

July 2012

  • Trading_Nymph

    Repost from Tuesday…OK here are possible outcomes on Thru..
    1. ECB cuts rates to almost zero and BoE adds QE, Iran keeps threatening to block strait and no further talks are sceduled…Market rally like crazy, eur/usd could see 1.3000 again.
    2. ECB stays on hold and BoE adds QE, Iran on backburner…a lot of the BoE QE has been talked about and could be priced into the market last Friday with the EU rally we had. Market could start to fade the news.’
    3. ECB stays on hold and Merv King fails again (like last month) to get the votes to add QE, Iran backs off over fear that China won’t buy from them over this tanker issue. Eur/USD should retest 1.2400…and SPX 1290ish. Watching the NYSE advance-decline volume, market would most favor this path. Yet, QE esp Number One Senerio could break all rules of logic which we saw in 2010

    Edit
    Reply 1 day ago

  • Trading_Nymph

    For NYSE advance-decline volume…doesn’t matter if BoE gives us QE and ECB cuts rates. So we have to see how this shakes out.

  • Trading_Nymph

    From NY Times…latest on the talks…The Istanbul talks, which began on Tuesday and lasted into early Wednesday morning, were described by both sides as technical discussions involving lower-ranking experts representing Iran and the P5-plus-1 group of countries — the five permanent members of the United Nations Security Council plus Germany. Catherine Ashton, the European Union’s top foreign policy official and the lead negotiator for the group, said in a statement that “the experts explored positions on a number of technical subjects.” The statement said her deputy, Helga Schmid, would meet with the deputy of Saeed Jalili, the lead Iranian negotiator, at an unspecified future date.
    Iran’s official news media provided a similarly sterile appraisal of the Istanbul meeting, but added that the deputy-level meeting would be followed by a meeting between Ms. Ashton and Mr. Jalili.
    Iran and the P5-plus-1 group have held three rounds of formal talks since April about the Iranian uranium enrichment program, which Western powers and Israel suspect is a cover for achieving bomb-making capability despite Iranian denials.

  • Trading_Nymph

    Wow, What a interesting day so far. Eur/USD at 1.2368 and AUD/USD at 1.0257. ECB DID cut rates (which I didn’t think they would do) and BoE DID get their QE vote (which I didn’t think they would do)…and the market is selling off on Good News…which will really help us bears when ECB and BoE meet again.

  • Trading_Nymph

    Oil 87.00

  • Trading_Nymph
  • Trading_Nymph

    Well it’s June (when Draghi would know if LTRO is working), he indicated that Credit Flows are not up high. That there is three factors that effect Credit Flows and LTRO only dealt with one factor. France is a little better, but Credit Flows in other countries are actually down.

  • Trading_Nymph

    Draghi..Downside risk are materializing. Today’s lending rate is now Zero. He doesn’t see Deflation.

  • Trading_Nymph

    Bank of England…LONDON, July 5 (Reuters) – Sterling cut losses against the dollar and rose to a five-week high versus the euro on Thursday on relief that the Bank of England had refrained from injecting a larger-than-expected stimulus to support the struggling UK economy.
    Investors had priced in a 50 billion pound cash boost, or quantitative easing from the central bank. But there were a few in the market who had been expecting a 75 billion pound injection and possibly a cut in the bank rate, which would be very bearish for the pound.
    Sterling rose to $1.5601 from around $1.5570 before the BoE announcement, still below this week’s high of $1.5723 with offers cited above $1.5650/60. The pound was also aided by China’s move to cut rates and was last trading at $1.5580.
    “This (BoE) easing is mildly positive for sterling,” said Paul Robinson, head of European FX research at Barclays.
    “Even though 50 billion was the consensus forecast, quite a few people saw a risk of it being greater than that. Some people were thinking they might cut the actual interest rate for the first time in a long time.”
    The pound also rose from lows against the euro. The euro fell to a five-week low of 79.78 pence, hurt by the European Central Bank’s decision to cut its main interest rate to a record low 0.75 percent and lower the deposit rate to zero. Traders said the euro was now on track to ease to 3-1/2 year lows of 79.505 struck in May.
    ECB President Mario Draghi will hold a press conference later in the day and there are expectations he may lay the ground for more easing in coming months.
    “For now we expect the BOE to remain on hold. We continue to expect euro/sterling to range-trade 0.79-0.82,” SEB said in a note. “Despite a troublesome and weak outlook for the UK, the euro remains more vulnerable.”
    While more quantitative easing is usually seen by the market as negative for sterling, many analysts expect the pound to gain against the euro as worries about Europe’s debt crisis offset looser UK monetary policy.
    Many also view the BOE’s move to ease monetary policy as a pre-emptive one, in contrast to the ECB, on which pressure is building to announce more stimulus and support a euro zone economy that is on the brink of a recession.
    Still, sterling is likely to struggle against the dollar and higher-yielding currencies like the Australian dollar in the near term as UK data provides more evidence that the economy is in the midst of a protracted recession.
    Data earlier this week showed the purchasing managers’ index for services, which accounts for around three quarters of output, fell to an eight-month low of 51.3 in June.
    That followed weak PMI surveys on manufacturing and construction this week and suggested the UK economy may have contracted for a third consecutive quarter in the June quarter.

  • Trading_Nymph

    China announces surprise rate cuts in
    less than two months

    GOV.cn

    Thursday, July 5, 2012

    The People’s Bank of China (PBOC), the central bank, announced
    Thursday it would cut the benchmark interest rate for one-year deposits by 25
    basis points on Friday, stepping up China’s stimulus measures to spur its
    slowing economy.
    The benchmark one-year lending rate will also be lowered by 31 basis points
    on Friday, the PBOC said in a statement on its website.
    It is the second time China’s central bank has cut the benchmark rates this
    year after a 25-basis-point cut in interest rates on June 7.
    The PBOC said in the statement that it will allow banks to offer 30 percent
    discount to borrowers, larger than the previous 20 percent, but the lower limit
    of the floating band of mortgage loan interests will remain unchanged.
    “Banking institutions should continue to strictly implement the
    differentiated housing loans policy and continue to curb speculative home
    purchases,” the PBOC said in the statement.
    After the latest cut, the one-year deposit interest rate will fall to 3
    percent while the one-year loan interest rate will be lowered to 6 percent.
    The upper limit of the floating band of deposit rates was previously adjusted
    to 1.1 times the benchmark.
    The surprise rate cuts came at a time when many economists fear the world’s
    second-largest economy will slow further in the second quarter.
    The latest rate cut took analysts by surprise as the PBOC was expected to cut
    the banks’ reserve requirement ratio (RRR) this month, and an interest rate cut
    is viewed to be more forceful than an RRR adjustment.
    “It was asymmetric cuts in borrowing and lending rates again,” said Li
    Xunlei, chief economist for Haitong Securities, in his flash comments on his
    microblog. “The PBOC aims to stimulate domestic consumption while transferring
    the banks’ profits to the real economy.”
    “I believe policymakers have more room in loosening monetary policy than
    fiscal policy,” he said.
    “The rate cuts (this year) came a little bit earlier than what the market
    expected,” said Li Huiyong, chief macroeconomic analyst for Shenyin & Wanguo
    Securities. “I think a declining inflation level gives more room for lowering
    the interest rates and it reflects that economic growth is not looking that good
    in the second quarter.”
    China’s gross domestic product slowed to a nearly three-year low of 8.1
    percent in the first quarter and key economic indicators for June continue to
    suggest downward risks.
    The National Bureau
    of Statistics has yet to release a string of economic data, including the
    GDP, for the second quarter and the consumer price index, next
    week.

    Editor:
    Yang Lina

    Source:
    Xinhua

  • Trading_Nymph

    EIA Oil inventory was down, Oil Spikes to 87.90

  • Trading_Nymph

    Draghi says that it is not as bad as 2009, but has zero growth but hopes end of the year is better. Improvement in sentiment by financial markets. Stabilization of global growth.

  • Trading_Nymph

    WTI pulling off that pop, 87.61…

  • Trading_Nymph

    Draghi says that LTRO, etc was not even discussed. He indicated that “non standard” options must satisfy a niche concern, and he doesn’t see any “non standard” options that can help at the time.

  • sub

    this move up  are cow chips, yo want to be long at the end of day/..?

  • Trading_Nymph

    Bank of England Official Statement…Bank of England maintains Bank Rate at 0.5% and increases size of Asset
    Purchase Programme by £50 billion to £375 billion

    05 July
    2012
    Page
    Content

    The Bank of England’s Monetary Policy Committee today voted to maintain
    the official Bank Rate paid on commercial bank reserves at 0.5%.
    The Committee also voted to increase the size of its asset purchase
    programme, financed by the issuance of central bank reserves, by £50 billion to
    a total of £375 billion.

    UK output has barely grown for a year and a half and is estimated to
    have fallen in both of the past two quarters. The pace of
    expansion in most of the United Kingdom’s main export markets also appears to
    have slowed. Business indicators point to a continuation of that
    weakness in the near term, both at home and abroad. In spite of
    the progress made at the latest European Council, concerns remain about the
    indebtedness and competitiveness of several euro-area economies, and that is
    weighing on confidence here. The correspondingly weaker outlook
    for UK output growth means that the margin of economic slack is likely to be
    greater and more persistent.

    CPI inflation fell to 2.8% in May and is likely to edge
    down further in the near term. Commodity prices have fallen, which
    should help to moderate external price pressures. And pay growth
    remains subdued. Given the continuing drag from economic slack, that
    should ensure inflation continues to ease into the medium
    term.

    At its meeting today, the Committee agreed that the Funding for
    Lending Scheme, which would be launched shortly, was a welcome
    initiative. It also noted recent and prospective actions to ease
    liquidity constraints within the banking system. Taken together
    with reduced pressure on household real incomes, on the back of lower commodity
    prices, and the continued stimulus from past monetary policy actions, that
    should sustain a gradual strengthening of output growth.

    But against the background of continuing tight credit conditions and
    fiscal consolidation, the increased drag from the heightened tensions within the
    euro area meant that, without additional monetary stimulus, it was more likely
    than not that inflation would undershoot the target in the medium term.
    The Committee therefore voted to increase the size of its
    programme of asset purchases, financed by the issuance of central bank reserves,
    by £50 billion to a total of £375 billion. The Committee also
    voted to maintain Bank Rate at 0.5%. The Committee expects the announced
    programme of asset purchases to take four months to complete. The
    scale of the programme will be kept under review

  • Trading_Nymph

    Sub, leading into the NFP.. Ok lets go thru the analysis
    1. Oil Prices, Oil has pulled off with Iran backing off the “closing the Straits” talk, it tried to rally on surprised bullish drop in inventory, but that is fading.
    2. ECB, BoE and China gave us rate cuts and QE, that gave us Crazy Wild rallies in 2011, but look, no buying…they say when good news doesn’t move markets that is a sign of a top. ECB is now at a deposit rate of Zero, LTRO really didn’t work (even thought Draghi still says he has all of his tools). If BoE sees nothing coming from QE will they continue to go thru it?

    So, Econ data sucks and the world is only in rally over QE/Stimulus..at this moment its not working. Spain is over 6% and Italy is kissing the 6% again. If our NFP is better, but not great with revisions up, then dollar should rally. If NFP is worse, then market sells off too. Even a flat number should not give cause for buying. That darn SPX is over 1360ish so we have strong support..that could hold us up today, but with central banks out of the way and Iran on the backburner..I would expect a down day today..probably around 1360

  • Trading_Nymph

    Darn AAPL rally, imho that is the only thing holding this up.

  • sub

    apple . products are throw aways …and litigation

  • Trading_Nymph

    But, So many traders love it ala 2007.

  • sub

    yes

  • http://pulse.yahoo.com/_BYIE4IB7HKSGYHBPVW6MT4DEIE Iron

    I just can’t gin up any love for this market.

    While the market was never a “free market”…..it was a lot more dependent upon earnings and corporate reports and less dominated by government monetary intervention.  

    No big fun here….:-)

  • Trading_Nymph

    Part of the ISM report that missed..(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in June for the 30th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
    The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. “The NMI registered 52.1 percent in June, 1.6 percentage points lower than the 53.7 percent registered in May. This indicates continued growth this month at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 51.7 percent, which is 3.9 percentage points lower than the 55.6 percent reported in May, reflecting growth for the 35th consecutive month. The New Orders Index decreased by 2.2 percentage points to 53.3 percent, and the Employment Index increased by 1.5 percentage points to 52.3 percent, indicating continued growth in employment at a faster rate. The Prices Index decreased 0.9 percentage point to 48.9 percent, indicating lower month-over-month prices for the second consecutive month. According to the NMI, 12 non-manufacturing industries reported growth in June. Respondents’ comments are mixed and vary by industry and company.”
    INDUSTRY PERFORMANCE
    The 12 non-manufacturing industries reporting growth in June — listed in order — are: Educational Services; Arts, Entertainment & Recreation; Management of Companies & Support Services; Retail Trade; Utilities; Transportation & Warehousing; Accommodation & Food Services; Public Administration; Construction; Information; Finance & Insurance; and Wholesale Trade. The five industries reporting contraction in June are: Mining; Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Real Estate, Rental & Leasing; and Professional, Scientific & Technical Services.WHAT RESPONDENTS ARE SAYING …
    “General state of business this month is flat, with no changes.” (Construction)”Business is steady and an increase over last month, as we begin our peak season.” (Arts, Entertainment & Recreation)”We are starting to experience a slowdown from the modest, grinding improvements our market areas have been experiencing of late.” (Finance & Insurance)”Patient counts continue to be lower than budget.” (Health Care & Social Assistance)”Business is still growing, but there has been a definite slowing in growth.” (Wholesale Trade)”We have noticed a slowing of customer counts and sales over the last 30 to 60 days, compared to the same period last year.” (Accommodation & Food Services)”Stable business globally, but softening backlog as clients further tighten discretionary spend.” (Professional, Scientific & Technical Services)

  • Trading_Nymph

    Iron, What is interesting is that in 2007 when I was first learning what a P/E was, I thought everything was earnings and corp reports. Then Chattem sold off in Oct 2008 and I couldn’t understand Why a good company could go down so hard. Sadly, following this journey..85% or more is Macro and only 15% on what the company is all about. Now, lol, if I can master Central Bank Analysis we can go back to focus in on that 15% of looking at the company..I agree, the big fun is there.

  • Trading_Nymph

    On that note..Time for Daily Homework, Central Bank Analysis
    ECB..Draghi cut rates and saw that LTRO didn’t really work. Rate is Zero, Draghi says he still has Tools but I don’t see any. 8/2/12 is next meeting. Nothing should come out during the Aug Euro Vacation time imho.
    BoE..Well Merv King got his QE vote today and FTSE closed down. He may try and argue that it is not enough, but with the vote so divided everyone on the other side is going to say..”See you got your QE and it did nothing”. (so far the QE is a no go, vs the killer rally off QE BoE in Oct 2011).
    FOMC…Tomorrow NFP should see a little revision to the upside on last months numbers, (surprise drops normally get revisited up). Fed is off until August after another NFP data point so we may not get much play off the data tomorrow.
    Swiss…They are still going to deal with Iran, fwiw, Eur/CHF 1.2011 so within range. No action.
    Aussie…Didn’t cut rates and off for 6 week holiday. No action for awhile and will key off China.
    China…OMG ANOTHER RATE CUT!!! THEY ARE BEYOND IN TROUBLE. This is even before the new China Govt takes over. With our Corn so high, they of course are going to have Food inflation problems…and yet they cut/
    Bank of Japan..They meet next week, 11-12. They have a cash for clunkers and surprise, lol, Auto sales are helping their econ data (where did we hear that before). Chance of easing is decreased USD/JPY is near that 80.00ish level..not bad, BoJ gets worried about it dropping in the 79ish

  • Trading_Nymph

    Oil is 87.09 now…back to where it was before EIA data juiced it. Eur/USD at 1.2390 though..it should be softer.

  • Trading_Nymph

    OMG, Iran is doing it still..Saber Rattling..From Politico..Iran declared Thursday that it can target U.S. bases in the Middle East and Israel within minutes of an attack, upping the ante in the war of words over security in the Persian Gulf.
    “The Islamic Revolution Guard Corps and the Iranian Army’s missiles can target and destroy any threatening target in the region,” Mansour Haqiqatpour, a member of the Iranian parliament’s National Security and Foreign Policy Commission, was quoted as saying by the Iranian Fars News Service.
    Continue ReadingText Size-+reset
    Latest on POLITICO
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    Haqiaqtpour said Iran regularly monitors American bases in the region and the “slightest mistake (on their part) will cause them and their regional allies regret.”
    “They will definitely incur losses,” he warned.
    The United States has military bases in Kuwait, Bahrain, Qatar, the United Arab Emirates and Turkey, as well as Afghanistan and Kyrgyzstan.
    The warning came as Iran conducted a third day of testing of its missile program, according to several news reports. The operation is dubbed “Payambar-e Azam 7” – or “The Great Prophet 7.”
    “The main aim of this drill is to demonstrate the Iranian nation’s political resolve to defend vital values and national interests,” said Revolutionary Guards Deputy Commander Hossein Salami, according to MSNBC.com.
    U.S. officials have begun moving “significant military reinforcements” into the region, including a buildup of Navy ships and minesweepers in the Strait of Hormuz to head off any military action over Iran’s nuclear program, according to The New York Times.
    “The message to Iran is, ‘Don’t even think about it,’ ” one senior Defense Department official told the Times. “Don’t even think about closing the strait. We’ll clear the mines. Don’t even think about sending your fast boats out to harass our vessels or commercial shipping. We’ll put them on the bottom of the gulf.”
    1
    1Short URLURL

    Read more: http://www.politico.com/news/stories/0712/78150.html#ixzz1zlwgrNpA

  • Trading_Nymph

    This explains why our eur/usd is not falling so fast. Funny Oil is not that phased at all about Iran talk.

  • Trading_Nymph

    86.97 for Oil right now.

  • Trading_Nymph

    August FOMC is too close to Presidential Elections and they won’t act.

  • Trading_Nymph

    Oil  at 86.97…Brent is just over that 100 resistance.

  • Trading_Nymph

    Eur/USD at 1.2389, AUD/USD at 1.0293…got to get off the desk to celebrate nieces birthday…ciao. Watch Brent to fade.

  • sub

    hey ,TN..has  anyone  heard  from baron , since the  storms

  • Trading_Nymph

    Sub, Noooo, I have to go look for him.