Friday, February 26, 2010

EUR Update: 2.26.10

EUR Daily: for weekly forecast

EUR 60min for daily (1 week forecast)

My past post here: ---> " 2.25.10 EUR update Said that I expected a whipsaw to high 1.37. Looking at chart one, there seems to be mounting evidence against me. Based of my RSI and MACD trend-line drawings, indicators are meeting the trend-line resistance levels (see red circle highlights).

the 60 Minute chart is showing that morning levels will continue to peak off until the rest of the day and will continue lower. If that is the case a 1.37 (1st SD BB levels) was too far fetched for an entry point on a short and a mid 1.36 range(center line EMA levels) may see more appropriate.

Though, either way, going into next week, short is the correct position in my humble opinion. I also note prices are coming to a squeeze on the daily chart. Trend confirmation will happen. If prices push lower on the squeeze, we will see a revisit to the upper SD BB's and if a piercing of the bands occurs, a down trend will certainly be confirmed for next week.

My forecast will be at least until Wednesday next week we will see a strong USD and weak EUR. At this point there needs to be correction on the RSI and MACD before a continued downtrend can be sustained.


Alexander Lê
Managing Partner
Analyze Capital LLC

Thursday, February 25, 2010

Jobless Claims- 02/25/10

Via Bloomberg:

The number of jobless filing for initial unemployment claims increased in February, pointing to trouble for the February employment report and sending equities and commodities lower in immediate reaction. Initial claims jumped to 496,000 in the Feb. 20 week, the highest level since November. The four-week average, up 6,000 to 473,750, is also the highest since November and is more than 15,000 higher than January levels. In an ominous note for the monthly jobs report, claims offices said heavy weather increased the number of claims in the week. Continuing claims, where data lags by a week, were slightly higher at 4.617 million and are little changed from January levels. The unemployment rate for insured workers is unchanged at 3.5 percent.

Not sure what this report really tells markets. On one hand the weather over the last 2 weeks has caused an increase in claims. However, The U.S. employment is not showing significant improvement month over month. Futures continued to slide after this report was released.

*Update: Equities are selling off to start the trading day in New York.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Durable Goods Orders- 02/25/10

Via Bloomberg:

The durables report has lived up to its reputation as one of the most volatile indicators. Taking into account upward revisions to December numbers, January numbers look decent. At the headline level, new orders for durable goods in January posted a healthy 3.0 percent gain, following a revised 1.9 percent rebound in December. The December increase had previously been estimated to be 0.3 percent. The latest number topped expectations, compared to analysts' forecasts for a 1.5 percent boost. But we have a different picture for January excluding transportation. Excluding the transportation component, new durables orders fell 0.6 percent after a 2.0 percent gain in December. But the ex-transportation component was revised up for December from the original 0.9 percent rise. Overall, the headline number exaggerates strength but the core number is OK for such a volatile series after the upward revision to December.

Transportation spiked 15.6 percent in January after a 1.5 percent rise the month before. For the latest month, non-defense aircraft (mainly Boeing) surged a monthly 126.0 percent; defense aircraft rose 11.6 percent; and motor vehicles slipped 2.2 percent.

Looking at core components, weakness was rather narrow-most components posted gains. The 0.6 percent dip in durables excluding transportation was led by a sharp 9.7 drop in new orders for machinery after a 7.4 percent rise in December. Also slipping in the latest month was the "all other" component. But gains in the core were widespread with computers & electronics up 4.6 percent and communications equipment rising 3.1 percent. Also improving were primary metals, and electrical equipment. Fabricated metals were flat for January.

Year-on-year, overall new orders for durable goods jumped to plus 10.2 percent in January from minus 1.6 percent the prior month. Excluding transportation, new durables orders improved to up 8.6 percent from up 1.5 percent in December.

Unfortunately this data was offset by a spike in initial Jobless claims.

U.S. Futures @ 9:15 EST
DJIA- off -100.00 to 10,255.00
SPX- down more than 1% to 1091.00
NASDAQ 100- 1796.75 down 17.25 points

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

EUR update: 2.25.10

The EUR indeed seems to be leading the Major Pair trend (one can play GBP similarly at a more lagged pace via 60min charts) as confirmed by moves into early morning today. One can see my last post LAST POST CLICK HERE<--( and double check on 60min charts).

Prices are coming to squeeze on the BB's which in my opinion will confirm the downward trend (dollar strength). Fundamental news and sentiment confirms point to futures markets to confirmation of relative weaker economies outside the US.

Indicator analysis shows a lack of divergence giving more support to daily down trends. This daily down trend may lead to a more fuller piercing outside the lower 2nd SD BB on the weekly chart which all points to a temporary whipsaw to the upside that maybe see through next week. However, once resistance is retested around high 1.38, the trend will continue to the downside in the daily charts (SMA perfection bearish formation confirmation). Price pressure is certainly still to the downside.

Any correction to the upside should correct the RSI and MACD which will give indication and allowance for further moves to the downside post correction.

Relation to the SPX:

Past few days we have been seeing equities positively reacting in correlation to a strong dollar. If that is the case, SPX will be up short-term from a FX view point. I was more bearish, but once all the key resistance levels were broken, I had to admit I was wrong short term. Longer term out we will reassess our performance on the SPX. at this point I am looking for numbers closer in the high 1100's into the 1200's before hitting signficant resistence.

Morning Update- 02/25/10

Foreign Exchange

-Moody's and S&P warn on Greek Debt downgrade.

-EUR is down -.34% against the USD @ 1.3493 as of 6:27 EST.

-EUR is off -1.23% against the JPY at 120.5350.

-USD is strengthening against the JPY -.86% @ 89.3740


-Gold is down $5.30 sitting at 1091.90/troy ounce

-Silver is OFF -1.18% at $15.775/t oz.

-WTI Crude is down $0.48 this morning to $79.520/barrel

-Nat Gas continues to sell-off down 1.15% @ $4.803/MMbtu in early hours



-Nikkei 225- off -.95% @ 10,101.96

-Topix- down 4.28 points to 891.41

-Hang Sang- off -.33% to 20,399.57

-S&P/ASX 200- down 54.40 point @ 4594.10


-FTSE 100- 5344.78 up .03%

-CAC 40- 3710.14 down 15 basis points

-DAX 30- Positive by 6.04 points @ 5621.55

U.S. Futures

-DJIA- lagging by -36.00 to 10,319.00

-S&P 500- 1098.70 down -4.90 points


-UST 10 Y- Price: rallied .075 to sit at 99 22/34 Yield: 3.66%

-Bunds- Price: rallied .096 to 101.04 Yield: 3.12%

-JGB- Price: rallied .208 to 99.96 Yield: 1.30%

Economic Reports

-German Unemployment is 8.20%

-Durable Goods U.S. @ 8:30 EST

-Initial Jobless Claims U.S. @ 8:30 EST

-Fed Chairman Bernanke continues his testimony @ 9:00 EST

-Japanese Core CPI YoY @ 18:30

-Japanese Industrial Production @ 18:50

- Japanese Retail Sales @ 18:50

Patrick M. Ambrus

Managing Partner

Analyze Capital LLC

Wednesday, February 24, 2010

EUR and GBP update: 2.24.10

EUR lead

GBP - follow?

I would like to say my downtrend prediction was correct over the past few days. However, I apologize for not being more specific on time frames. Considering I was using 60min charts I was referring to downside moves within the week.

The daily chart says should should be a correction to the upside which could take 1 week to happen, though overall the weekly chart shows trend is down.

Key will be looking for higher lows and lower lows. Bollinger Band Analysis has been working decently with these time frames and setups (don't forget i supplement it with far greater analysis and tools; technical and fundamental).


Going forward my idea that the EUR is leading the major pair trend will be confirmed by the end of today or into the next day. Refer to the above charts.



Alexander Lê
Managing Partner
Analyze Capital LLC

Tuesday, February 23, 2010

Consumer Confidence- 02/23/10

Via Bloomberg:

The consumer's mood is definitely downbeat, a strong indication that the jobs market isn't improving. The Conference Board's consumer confidence index fell back in a surprising and sizable way, down nearly 10 points to 46.0 in February (January revised to 56.5). Expectations, the index's leading component, fell more than 13 points to 63.8 reflecting a sweeping sentiment downturn in income, employment, and business conditions. The expectations index never really got going last year, barely approaching the watershed 80 level, a level consistent in the past with economic expansion.

The trouble in expectations signaled trouble for the present-situation component which dipped into the teens and toward the record lows of the early 80s. The index fell nearly 6 points to 19.4, reflecting pessimism over current business conditions where only 6.2 percent of the 3,000-home initial sample describe them as good. Only a miniscule 3.6 percent describe jobs as currently plentiful with 47.7 percent, up 1.2 percentage points from January, describing them as hard to get. This latter reading, which gets a lot of attention, will raise talk of trouble for February's jobs report.

Note that consumer confidence may have weakened but momentum and recent indications on the retail sector suggest that consumers haven't pulled back their spending, at least yet. The Reuters/University of Michigan consumer sentiment index for February, which edged lower in an initial reading at mid-month, will be posted on Friday.

Wow, disappointing numbers. The Dow rallied about 33 points in early trading on strong earnings from Home Depot. However, when this report hit the market at 10 EST equities and commodities sold off. NYMEX Crude was off 1.84% midday from its highs of $80.31/barrel from yesterday's trading session. Natural Gas continues to sell-off as reports of warmer weather than usual in the Midwest began to circulate this week. Natural Gas is trading at $4.78 per British Thermal Unit down 2.35% at the close of NYMEX trading.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

GBP recap - 2.22.10 into 2.23.10 - hourly analysis

I made a good call yesterday, unfortunately I missed out on the "in" opportunity as I didn't wake early enough. I can see why some traders in FX don't sleep too much. But, truthfully, opportunity is constantly around the corner in FX, which is the beauty of it.

My opinion is that the short GBP trend continues, I believe the EUR to be leading this trend as yesterday the EUR was already trading down vs the GBP.

Check out my Buzz (2.22.10) and Chart (2.23.10):

The yellow indicates price consolidation points (a.k.a bollinger band squeezes - thinning channels can also indicate this). Price squeezes typically lead to directional moves to the up or down side. I fore-casted correction yesterday saying resistance would be met at high 1.55's and would be a good entry for a short.

The orange circle is where prices led to this morning as participants entered the market, pushing prices to the outter 2nd deviation BB. Which in turn led to a great shorting opportunity.

Friday, February 19, 2010

Turkey a Safer Investment than Greece?- 2/19/10

Paul Murphy posted this ratings update from Standard & Poor's on FT Alphaville this morning. I share his sentiments. How can a country like Turkey that is not part of The EU or EMU have a higher investment grade rating than a country within EMU parameters. A blow to the Euro, damn right. I continue to support long-term dollar strength throughout 2010.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Wednesday, February 17, 2010

Industrial Production- 2/17/10

Industrial production posted another strong gain for January-but this time the strength was real and not weather related. Industrial production in January advanced 0.9 percent, following a 0.7 percent jump in December. The January was marginally better than the market projection for a 0.8 percent gain.

The manufacturing component made a robust comeback, jumping 1.0 percent after edging down 0.1 percent the month before. For the latest month, utilities output increased 0.7 percent after spiking 6.3 percent in December on atypically cold weather. Mining output rose 0.7 percent after dipping 0.2 percent in December.

A big chunk of the manufacturing spike was due to a jump in auto assemblies-but gains were healthy elsewhere. Motor vehicles & parts jumped a monthly 4.9 percent after a 0.3 percent decline in December. Excluding motor vehicles, manufacturing rebounded 0.8 percent in January, following a 0.1 percent decrease the month before.

Net, industrial production is as strong or stronger than the January headline number but also not as healthy as the December headline figure. Lesson-pay more attention to the manufacturing component than to the headline figure.

On a year-on-year basis, industrial production in January improved to plus 0.9 percent from down 2.2 percent the month before.

These numbers were expected. As I noted in my report on the U.S. economy, Industrial Production is set to surge by a total of 620 basis points yoy for 2010. Equity markets didn't react much to the news. Stocks remain flat near the close with the S&P 500 up only 42 basis points at 1099.51. Will we see a legitimate test of 1100? My Partner Alex will provide some technical analysis on this topic shortly.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Commentary on Fed Minutes Press Release- 02/17/10

Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. Firms have brought inventory stocks into better alignment with sales. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.

We are seeing economic growth due to large stimulus measures, but this has not really helped unemployment. Banks are still unwilling to lend to consumers who are unemployed and can no longer pull equity out of their home to stimulate the economy. Corporate earnings have picked up but not enough to stop the laying people off and creating cost “synergies.” Due to abating demand it took a while but inventories are finally bone dry. The liquidity we pumped into the system has caused Equities and other asset classes to surge. The economy will get healthy later then sooner without inflation.

With substantial resource slack continuing to restrain cost pressures and with longer-term inflation expectations stable, inflation is likely to be subdued for some time.

Deflation is currently a more realistic setback than inflation at this point.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter. The Committee will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in financial markets.

The economy cannot recover without liquidity in the system. Fed Funds rates will not be raised until 2011. We would like to start winding down Quantitative easing by deadline (March) set on the outset. Though, we reserve the right to extend the program as long as Obama/Summers tells us to.

In light of improved functioning of financial markets, the Federal Reserve will be closing the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility on February 1, as previously announced. In addition, the temporary liquidity swap arrangements between the Federal Reserve and other central banks will expire on February 1. The Federal Reserve is in the process of winding down its Term Auction Facility: $50 billion in 28-day credit will be offered on February 8 and $25 billion in 28-day credit will be offered at the final auction on March 8. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30 for loans backed by new-issue commercial mortgage-backed securities and March 31 for loans backed by all other types of collateral. The Federal Reserve is prepared to modify these plans if necessary to support financial stability and economic growth.

Many of our QE programs were not very successful and therefore must come to an end. The TALF was a very successful program and it is unlikely we terminate it by the deadline; who will take on toxic paper as collateral besides us? We will do all we can to keep the U.S. financial system on artificial life support.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.

We have a tight nit group were everyone agrees with Mr. Beranke except one person. Mr. Thomas M. Hoenig doesn’t believe in group think. He may have good ideas but he needs to study something called chain of command.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Tuesday, February 16, 2010

Regulation, Reform, and Gekko- 02/16/09

Someone reminded me that I once said that greed is good, now it seems its legal
--Gordon Gekko

This year the SEC will collect $1.3B in fees related to transaction fees paid by exchanges and securities corporations when securities are sold. The other fees are collected when companies register new stocks and bonds. However, the Securities and Exchange Commission will only be allowed to spend the $960 million approved by the U.S. Congress. This raises an important question. Should the SEC be a self-sustaining firm that sets its own budget independent of Congress?

Since Mary Schapiro has taken reigns of the SEC the organization has aimed for sweeping reform of the U.S. Financial institution. These reforms include regulating derivatives, limits on commodity contracts, and discovering more Ponzi schemes. However, the argument persists that with a fixed budget from the House of Representatives the SEC will not have enough money to reinvest in operations. Specifically, reinvestment in technology could help speed up regulatory processes, expand oversight, and prevent error. Yet, the government has dragged its feet on this matter. The Securities and Exchange Commission projects income of $1.5B in 2010, though only about $1B will be in their budget. This is counterproductive in my eyes. The Obama Administration has promised sweeping reforms in financial regulation, but we are still stuck in the 20th century.

The solution must be global in order to ensure regulatory change and correction. As the Greek debt situation unfolds, new details will be discovered (i.e. swaps classified as loans or not). The regulatory culture must provide real transparency through an interconnected information processing system that connects the dots from bank loans to securities to sovereign debt to credit ratings to risk control. This may be too much to ask to soon, but this type of infrastructure needs to be put into place in order to sustain confidence and assurance in the global financial system. Hence, regulation needs to be a team effort not just focused on banking risk but also systemic risk.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Monday, February 15, 2010

SPX Update 2-15-10

SPX Update 2-15-10:

Markets moved in with my expectations. Short term pressure is down on equities. 1080 will present decent short term key resistance. This would confirm RSI 50 resistance; which in turn means a double confirmation (resistance fail in price pattern and RSI indicator) pointing to a possible longer term down trend (and don't forget lower highs).

The only favorable bullish evidence arguably is the possibility of short term mometum reversal via MACD. Though if this is indeed a down trend, an inter-temporal comparison of a down trend period is more relevant. Hence comparing today to the 08 crisis period may mean that the MACD may open to lower levels, well below center balance.

The other slightly bullish evidence is light volume on the bearish days.

Overall, a bearish picture in short/mid/long time frames still.


Alexander Lê
Managing Partner
Analyze Capital LLC

Sunday, February 14, 2010

U.S. Economic Report- 02/14/10

2010 U.S. Economic Outlook: USD Implications

Growth Coupled with Dollar Strength

•The USD has room to strengthen against all G10 currencies since those currencies were overvalued against the USD by an average of 5.6% in 2009

•The U.S. economy grew by 5.7% in the 4th quarter of 2009 as interbank spreads narrowed, Equity, and corporate debt markets have rallied signaling a stronger dollar and return to normal growth

•Industrial output declined by 970 basis points in 2009,but is forecast to grow by 620 basis points for the year 2010, thus signaling a rebound in manufacturing and perhaps job creation

Inflation Story

•The U.S. Treasury, Federal Reserve, and FDIC have pumped enormous amounts of Liquidity into the Capital markets throughout the Great Recession in the form of Tarp, Stimulus Packages, PPIP, Legacy Securities Program, TALF

•The BOE and ECB are likely to tighten monetary policy before the FOMC because The U.S. federal Reserve will most likely keep interest rates unchanged in 2010 due to The Committee’s responsibility of handling Inflation and Unemployment

•Consumer Price Index Inflation declined by -0.4% in 2009 and is expected to increase to an average of 2.1% in 2010

Unemployment and Fiscal Deficits

•United States unemployment peaked in 4th quarter of 2009 at 10.0%, with nearly 8.4 million people out of work since the beginning of The Great Recession. The unemployment rate for 2009 was 9.28% and is expected to grow to 9.60% in 2010

•The Current Account deficit as a percentage of GDP widened to -3.0% in 2009 and will amplify to -4.0% in 2010

•The 2009 budget Deficit in the U.S. is expected to be $1.42 trillion which represents 9.98% of Gross Domestic Product

USD Drivers

Balance of Payments
The U.S. maintains a current account deficit of -3.0% as a percentage of GDP and is expected to grow to 4% in 2010. This can be attributed to 2009 net exports of -354 Billion. Also, the U.S. sees investment inflows into their equity and debt markets to offset such a large trade gap. China invested $790 billion in U.S. Treasuries as of November 2009. Fundamentally, this goes a long way of explaining long-term dollar weakness.

The United States Economy grew by 20 basis points in 2009 boosted by 4th quarter GDP output of 5.7%. This signals a return of demand to the world’s largest economy. Much of the growth story can be attributed to the excess liquidity put into the system by the Fed’s quantitative easing programs and government stimulus package. Additionally as The S&P 500 rallied 70% off the lows of March 2009 to January 2010, consumers have reason to spend as their net wealth increases even in the face of continuous declining real-estate values. In addition, Industrial output surged 700 basis points in the 4th quarter of 2009 to contribute to GDP growth. However, one caveat remains; U.S. unemployment remains at 9.7% currently and is expected to be flat with moderate increases/decreases in 2010. It is hard to justify an economic recovery without job growth. Though the Euro area has greater difficulties with unemployment.

The 2009 budget Deficit in the U.S. is expected to be $1.42 trillion, which represents 9.98% of Gross Domestic Product ($14 trillion). Careful maneuvers will decrease the 2010 fiscal deficit to $1.14 trillion or 8.02% of GDP. According to John Maynard Keynes deficits can be have a positive economic influence by helping economies climb out of recession.

The United States saw deflation in 2009 as CPI decreased by 40 basis points on average. Inflation is expected to pick back up in 2010 by 2.1%. However, the Federal Reserve will surely act quickly to spur inflation. The lesson was learned last go around when Alan Greenspan kept The Fed Funds rate at low for a historic period. This helped fuel the Credit crisis. Additionally, tightening monetary policy would increase the value of the dollar global and kill any potential dollar carry trade.

Interest Rate Differentials
Currently a 10 Year U.S. Treasury yields a nominal rate of 3.625% and a real rate after inflation is accounted for of 3.925%. The U.S. nominal 10 year rate beats out 10 year German Bunds yielding a nominal rate of 3.25% and 10 year Japanese Government Bonds with a nominal rate of 1.3%. Also, Bunds and JGB on average yield real rates of only 2.95% and 2.6% respectively. This has positive implications for dollar strength.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Saturday, February 13, 2010

SPX brief update - 1.14.10

I've become increasingly bearish on the SPX. Doing some more intense inter-temporal analysis with multiple indicator confirmations. A short term whipsaw to the upside maybe more minimal than i thought. 1100 presents significant downside risk. I still maintain my bearish stance across short mid and longer time frames.


I will elaborate on later posts.

In the mean time...

Happy Valentines Day and Happy Lunar New Year!

Wishing everyone much Love, Good Health, and Lots of Luck

-Analyze Capital


Alexander Lê
Managing Partner
Analyze Capital LLC

Thursday, February 11, 2010

Initial Jobless Claims/Retail Sales Preview- 2/11/10

Via Bloomberg:

The administrative backlog from the New Year holidays was supposed to have already cleared up. But not so fast! The Labor Department attributes a stunning 43,000 drop in initial claims to 440,000 for the Feb. 6 week -- not to economic improvement -- but to the final end of the backlog, a backlog that inflated levels in prior weeks. In only a very partial offset, the prior week was revised 3,000 higher to 483,000. Given the haze of the backlog effect, the four-week average offers the best handle on the data, falling for the first time in four weeks, though only by 1,000 to 468,500 and little changed from mid-December before the backlogs started to build.

The number filing continuing claims continues to come down, falling 79,000 in data for the Jan. 30 week to 4.538 million. The improvement here masks, to a degree, those falling out of the insured workforce where the unemployment rate remains steady at 3.5 percent. In unadjusted data for the Jan. 23 week, those filing emergency claims fell nearly 185,000 to an total of 5.45 million. Those filing for extended benefits rose more than 13,000 to about 236,000.

Financial markets showed very little reaction and no clear direction from today's report with the dollar easing slightly, in what could be a sign of demand for risk, though equities and commodities fell slightly, in what could be a sign of risk aversion. Snow-storms will begin clouding the claims report this time next week, likely producing fewer claims but pointing to another backlog as the unemployed, once the streets are clear, make their way to the claims office.

Not great Data. However, I am encouraged to see a 40,000 job improvement from last week, especially since economists missed the target handily. It will be critical to test the strength of this weeks claims decrease against the future reports to come. Headline unemployment remains at 9.7% currently. I will look to the February unemployment report on Friday March 5th, for verification and/or support of these numbers.

Tomorrow morning at 8:30 EST Retail sales will be released for the Month of January. Economists surveyed by Bloomberg expect an increase of 50 basis points from last month. Retail sales declined slightly in December by 30 basis points. If The report beats estimates I expect to see a rally in U.S. equities and a sell-off in Treasuries. Though, these fundamentals may be displaced pending new developments in the European Sovereign Debt Crisis.

P.S. I am continuing my break from trading and indulging in research and Philosophy. I am reading LAO-TZU today. I'll leave you with this:

"When the government is muddled and confused, the people are genuine and sincere. When the government is discriminate and clear, the state is crafty and cunning."

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Wednesday, February 10, 2010

International Trade Update- 2/10/10

Via Bloomberg:

The U.S. trade deficit unexpectedly surged. But it is all about higher oil prices and restocking oil inventories. The overall U.S. trade deficit ballooned to $40.2 billion from a revised $36.4 billion gap in November. The December shortfall came in much worse than the market forecast for a $35.7 billion differential. Exports, however, rose 3.3 percent while imports jumped 4.8 percent. The worsening in the trade deficit was largely due to a widening of the petroleum deficit, which came in at $23.5 billion and up sharply from a differential of $19.9 billion the previous month. This was due to both higher prices and increased barrels imported. The non petroleum gap actually shrank to $26.9 billion from $27.2 billion in November.

Earlier weakness in the dollar and Asian economic growth continue to boost the trend in U.S. exports. Year-on-year, overall exports in December rose to plus 7.4 percent from minus 2.4 percent in November. Of course, a low base for the comparison helps. Meanwhile imports increased to up 4.6 percent from down 5.6 percent the month before. Despite the low base starting point, it is clear that international trade – exports and imports – is recovering.

The headline number for the December deficit is scary. But seeing that the non-oil deficit actually contracted indicates that the trade picture may actually be improving after swings in oil imports are discounted. The jump in oil imports likely will reverse next month. And exports are still on an uptrend. Nonetheless, the widening of the trade gap is bad news for the dollar.

The United States Economy maintains a foaming appetite for petroleum products. However, I am encouraged to see the non-petroleum gap shrink marginally. All things considered this report was a wash.

Equities sold off early in the trading session as $ strength continued. However gains have been paired and the S&P is now positive by 1/10th of a percent@ 1071.

P.S. No trading for me today or tomorrow. I am taking the next 2 days of "stormagedon" to research the current issues at hand and plan out my strategies for the upcoming trading sessions. Chinese Philosophy will be read.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Friday, February 5, 2010

Employment Situation/Currency and Commodity update- 2/5/10

Via Bloomberg:
Today's employment report had conflicting trends between the payroll numbers and the household survey. Although the unemployment rate fell unexpectedly, payroll jobs continue to contract. Nonfarm payroll employment in January fell 20,000, following a revised 150,000 drop in December and revised gain of 64,000 for November. In the previous employment situation report, December showed an 85,000 drop and November rose 4,000. However, today's report contains annual revisions and they were down significantly. The December payroll decrease fell short of the consensus forecast for no change in payroll jobs.

The December decline was led by 60,000 drop in the goods-producing sector which included a 75,000 decrease in construction. Manufacturing employment actually rose 11,000 after a 23,000 fall the month before. Mining advanced 4,000 in the latest month.

The service providing sector rebounded 48,000 after dropping 69,000 in December. The biggest gain in the latest month was in professional & business services with a 44,000 increase, including a 52,000 boost in temp help. This jump in temps may be the biggest positive in today's report. Temp hiring tends to be a leading indicator for overall payrolls. A sizable gain of 42,000 also was seen in retail trade.

An improvement in the headline employment rate but a further loss in jobs? Not great data. Equity markets rallied early on the news, however fears about the European economic climate and domestic recovery have the markets spooked.

The USD strengthened against all 16 major pairings and continues its climb.
EUR/USD- 1.3619 (-.75%)
USD/JPY- 89.346 (+.33%)
GBP/USD- 1.5626 (-.81%)

NYMEX Crude for March delivery was fighting marginal losses early in the trading session but has since declined sharply sitting at $70.65/barrel down 3.40% on the session. Natural Gas rallied early due to concerns over the "stormagedon" predicted to crush the east coast. Currently prices stand on the positive side @ 5.52/ British thermal unit up 1.96% on the session.

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC

Tuesday, February 2, 2010

Currency Update: 2.2.09

** The trend is similar across most major pairs so I won't bother replicating charts for now.


I'm starting to see dollar strength longer term out. After we experience this current correction (weak dollar) across the major pairs (EUR, AUS, JPY, GBP, and CAD); its highly possible the dollar will resume its upward trend.

The Central Bank of Australia's decision reflects this technical trend, how ever has even greater implications on the fundamental macroeconomic picture.

In addition, it seems to me that the EUR is leading the dollar trend... Though I will have to review more charts to confirm this.

In addition, at this point it is very crucial to also analyze commodity fundamentals and their respective correlations to the dollar.

Unfortunately, all this news means that for the past month I have been completely wrong on the EUR. I am waiting for the best opportunity to correct my position, which will be coming soon enough.

I will have more in depth analysis posted later...


Alexander Lê
Managing Partner
Analyze Capital LLC
This Blog has been developed by Analyze Capital LLC, and as an independent organization we provide “AS IS” information without warranty. The ideas and opinions expressed by the contributers of this blog are personal and do not represent the actions or policies of Analyze Capital LLC. The contents of this blog do not intend to assert recommendations or to offer advice of any kind. We are not responsible the consequences, be they gains or losses, that may result from using any of the information from this blog.