Ready For War

So let there be no battle on a ground of dissolution, let there be no stopping on light ground, let there be no attack on ground of contention, let there be no cutting off a trafficked ground.  On intersecting ground form communications, on heavy ground plunder, on bad ground keep going, on surrounded ground make plans, on dying ground fight.  --Sun Tzu

Let us agree to disagree.  If any message is to be taken from this weekend's meeting of G20 finance Ministers that was it.  The Group agreed in principle not to wage a malicious currency war in which 'beggar thy neighbor' and 'fastest to the botton' monetary policies apply.  In addition, the Ministers of Finance also agreed that matters of foreign exchange policy are simply over their collective heads of wisdom. Hence, no 'Plaza Accord 2' will take place until The Group of 20 Seoul Summit on November 11-12.  Hurray!  Now we are free to continue speculation on impending Quantitative Easing from the FED without any worries of a 'currency war.'

We shall shift our focus to the United States.  This week we will receive stone cold housing data from Monday to Wednesday with Consumer/Investor Confidence reports and Durable Goods orders sprinkled on top.  What a sweet Cupcake this will be.  On Thursday the market will have a chance to digest with a soothing cup of tea or pepto depending on elusive Jobless Claims data. Finally, Friday may bring us a basket of fresh or moldy fruit with GDP, Employment Cost Index, Chicago PMI, and Consumer Sentiment.  

Wow, this week's economic calendar provides us with copious amounts of noise to trade around, into, and through.  The noise becomes deafening if we look at German CPI, BOJ announcement, British GDP, German Unemployment, and Japanese Industrial Production.  The aforementioned data set does not encompass the entire set of data releases, only what we think is important.

Switching gears, let us not forget about earnings from Ford, Kimberly-Clark, UBS, ConocoPhillips, Deutsche Bank, Visa, 3M, Banco Santander, Microsoft, China Construction Bank, Constellation Energy, Merck, NASDAQ OMX, and Total.  Ford, 3M, Visa, and NASDAQ OMX pique our interests the most.  

Alas, we arrive at the question of the hour; 'how does one trade markets this week?'  Unfortunately, we lack the definitive foresight necessary for profitable speculation at this time.  However, circumstances may change rapidly and swiftly.  Do yourself a favor and trade the trends.  If no trends exist trade the ranges.  If the range trades are missed be patient, make plans.  The Lords of Trading will part the waters in due time.

--Patrick M. Ambrus  

Sources: Bloomberg.com, Finance.yahoo.com, CMEgroup.com, The Art of War