Hurricane China Watch

22:40- Commodity Update

WTI CL- November ‘Crude oil rose, recouping part of the biggest loss in eight months, as China’s interest rate increase added to signs of economic growth and analysts forecast a decline in U.S. fuel stockpiles. Futures gained as much as 0.4 percent after dropping 4.3 percent yesterday, the biggest decline since Feb. 4.’

November Crude trades at $79.90/b up $0.30. December Crude trades at $80.50/b up .37%. Globex shows December contract volume of 4.8k. Due to impending expiration on Wednesday, November crude only traded 481 contracts as of writing.

‘The Energy Department report today may show U.S. gasoline inventories fell 1.5 million barrels, according to the median of 16 analyst estimates in the Bloomberg News survey.’ (Bloomberg.com)

Natural Gas- NG contracts expiring on October 27 continue to pick up traction from yesterday’s session in which prices rallied more than 2%. The front month contract is up by .51% to 3.538.

GC- Gold was crushed in yesterday’s session and traded down by $40 on December contracts. The precious metal is up by $3.50 to 1337.10/Toz.

Copper- After trading down to 3.7250 throughout the NYMEX session, HG gained some traction during Globex trading. The Red base metal December contract is up by .94% to 3.7655.

22:30- FX Commentary

EUR/USD- The Euro has weakened a bit since the blood bath, across all asset classes, at the close of NY trading. The pair traded as low as 1.3700 @ 20:00. The slight breach of 1.37 triggered heavy buying up to 1.3750. Since then the pair has bounced and now trades higher by 58 pips from the lows to 1.3758. The pair is up 34 pips on the session.

USD/CHF- The ‘Swissy’ traded down to .9680 at 21:50 from session highs of .97185 at 20:00.  The pair is weaker by 32.5 pips on the session and was last quoted at .9686.

AUD/USD- Watching this pair is almost as much fun if not more fun than the viewing the  EUR/USD trade.  The Aussie dropped to .9665 at 20:00 and paired all losses to touch a session high of.9742 at 21:45.  The pair now trades at .97375.

Trading Economics

Many Commodity traders who held Net long positions may have been caught off-guard when The People's Bank of China explicitly announced hawkish monetary policy in order to curb inflation:

"China's benchmark rates are not an overnight lending rate as is the case in the United States and other major western economies. Instead, it has a one-year interest rate on saving deposits, which increased to 2.5% and a one-year interest rate on loans, which rose to 5.56%." (CNNMoney.com)

GDP, CPI, PPI, Retail Sales, and Industrial Production data are to be released tomorrow evening.  Economists expect the Chinese economy grew by 9.5% yoy in the third quarter of 2010.  Any growth figures over 10% ought to unleash the commodity bulls from the proverbial cage they were placed in today.

-Patrick M. Ambrus

Sources: Bloomberg.com, Economy.com, listown.com, CNNMoney.com

Navigating Global Capital Markets

Trading FX is right now is like navigating the Amazon River, 'Grey Swans from Extremistan' lurk around every land mass..... As the often quoted John Maynard Keynes once advised, "The market can stay irrational longer than you can stay solvent."

Credit Default Swaps on Irish, Portuguese, Greek, and Spanish Debt continue to widen. Anglo Irish debt was downgraded by Moody's on Monday and now needs another lifeline of 5B Euros.  Yet, the Euro continues to strengthen.  Mr. Bernanke and Mr. Obama must be smoking a fine Cuban cigar at the moment because they are the only 2 policy makers of recent memory to weaken their currency without  significant lip service.  The Japanese MOF should take the lesson...start a trade war with China and watch your currency tank...There is much fear in holding US Dollars at the moment.  Mr. Guido Mantega of Brazil is right, we do have a full fledged currency war of devaluation and the U.S. is winning.

Also of note, Mr. Yu Yongding an advisor to The People's Bank of China spoke in Singapore  of a full fledged dollar crisis, to quote the man, "Such a huge amount of debt is terrible and the situation will be worsening day by day.  I think we are one step nearer to a US Dollar crisis."  Cheers to you too mate.

This morning AUD is off its highs of .9780 levels seen in Tokyo trading overnight and has pulled back toward .9700 levels.The AUD continues to test new highs as it inches towards parrity with the USD and makes new highs against the JPY.  Though, the latter has internal economic issues of its own which continue to put downward pressure on any of the Yen's major pairs.  The appreciation in large is due to sustained demand for Australian base/industrial metals from China and ASEAN countries in general.  Also, Australia maintains the highest nominal interest rates, currently at 4.5%, of any G20 country and thus is perfect for a reverse carry trade involving the USD.  Ironic how times have changed.  I can remember the days when U.S. assets became the beneficiary of an Asia Pacific carry trade.  And then we had a realestate market collapse in correlation with all other asset classes for that matter....Low rates, continued AUD strength!

Meanwhile, the only commodities that want to rally are precious metals...Agri commodities crashed like the titantic yesterday and continue to hit icebergs today.   This is possibly due to the recent sanctions China placed on imported U.S. Chickens.  Chickens love grains as a main source of their diets.  Also, the recent run-up in Agri prices does justify a correction if prices are to move higher in the 4th Quarter.  Natural Gas is trading lower and Oil cannot hold on to any incremental gains.  Though API data from last night was somewhat bullish, and DOE data should help prices firm a bit, but their is no support in sight. Nat Gas is suffering from a lack of supply scarcity.  In fact new inventories appear every day and remain above our famous 5 year average range.  Yet, this makes little sense considering storage capacity and new LNG technologies make storage and shipment of the energy easier and cheaper than ever. I will note that Sugar, Cocoa, and Coffee performed well in yesterdays session largely attributed to you guessed it, dollar weakness.

Bill Gross published a grim outlook in his October outlook letter.  He highlighted Stan Drunkenmiller's retirement as a Harbinger of things to come in the fund management industry.  He argues that the days of double digit returns are over due to a lack of asset inflation, increased regulation, and deregulation.  Indeed these things are all true.  One must take Mr. Gross' comments with a grain of salt as he manages the world's largest bond fund in PIMCO.  His comments do coincide with a 10% workforce reduction at DE Shaw, one the world's largest Hedge Funds with approximately $21 B of assets under management.  HF's are struggling to produce alpha these days.  According to HFN Hedge Fund Aggregate Index funds are up only 0.14% YTD through June 2010.  The FT reports Hedge funds are up 1.45% YTD.  Times are grim when the best managers of money can't make a buck.

It is understandable that there is an underlying current of fear surrounding the developed markets of the world.  Emerging Markets were thrust into the spotlight during the most morbid of days during the credit crisis and have been in the spotlight since.  OECD economies continued to point to Emerging Market Demand and growth as the way of the future and how this shift is a 'structural' one that will change the way the global markets do business.  All I can say is, not so fast jack.  Without demand for emerging market exports from developed economies there will be no new growth.  Unless of course the ubiquitous Emerging Markets can create a sustainably contempory domestic demand system for domestically produced goods.  I doubt Malaysia needs all those those textiles and garments they continue to churn out.

Undoubtedly, big corporates still reside in developed markets.  Inventories have refilled after bone dry levels spawned a rampant increase in production over the last 2 quarters.  Thus, unless OECD demand returns to the global marketplace, emerging markets will not be able to maintain their 'robust' growth systems and will inevitably slow down.  Global 'Austerity' is in order.  We should all trade accordingly.

Patrick M. Ambrus
Contact: analyzecapital@gmail.com

Sources: Financial Times, The Gartman Letter, Bloomberg.com, HFN.com, The Black Swan, PIMCO.com

Do Your Own Homework-SPX Update

'Buying Gold is an excuse for people not to do their homework.'

-Alex

SPX: 1 Year Daily Chart:



Another day another dollar: that is true if you were long the SPX in U.S. trading today. The SPX rallied 1.45% to 1141.92 on the session led by Energy, Consumer Discretionary, and Industrial stocks. Many Tech bellwethers displayed robust performances as Google rallied 3.7% to 508 and AAPL closed above 280 up 2.85%.

Pop Quiz: Why did equities rally today class?



a. President Obama's Town Hall assured investors America is "The Greatest Nation"
b. The SPX broke resistance of 1131
c. Japanese Markets were closed
d. The Tea-Party will uproot American Politics
e. No significant economic data released
f. I forgot how to take these tests

The answer is probably a combination of b, c, and e. The S&P finally broke out of its uninspiring trading range on light volume. Though, this may be short lived. Early in the session gold rallied to new highs around 1284. However, these gains were unsustainable. In addition, agricultural commodities, base metals, and Natural Gas led commodities lower. The USD failed to sustain any gains against the Euro, Sterling, 'Aussie', and CHF. Also, the bond market lacked bullish convictions. Alas, capital flowed into equities by default.

October Nat Gas:1 Month Chart



December SPX E-mini: 1 Month Chart



Trades
We took advantage of the sharp sell-off in December Nat Gas contracts and entered a long position as prices firmed. Also, we are long the Dollar vs. CHF. U.S. Housing Starts come in at 08:30 and The Fed decision is at 14:15 EST. We expect equities to pair some of their gains in tomorrow's session.


Patrick M. Ambrus
Twitter: AnalyzeCapital

Sources: Stockcharts.com, Bloomberg.com, VanityFair

Japanese Denim With Money Tucked in 'em

'Fear Keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse his natural impulses. Instead of hoping he must fear; instead of fearing je must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may be a big profit.'

--Larry Livingston , Reminiscences of a Stock Operator

Alas, intervention from Japan. I have been patiently waiting for this move, and it came sooner than I anticipated. In case you were hiding under a rock somewhere:

The yen tumbled from a 15-year high versus the dollar after Japan intervened for the first time since 2004 to curb gains that threaten an export-led recovery. Japan’s currency slid the most since December after Finance Minister Yoshihiko Noda said the nation unilaterally sold yen.

Six Questions for Yoshihiko Noda:
1. WiIll G-7 countries accept this policy and help Japan with coordinated intervention?
2. How Much Yen will the BoJ sell? (rumors circulating say 1 T Yen for today)
3. How much USD will be purchased in comparison to EUR?
4. Will traders test 'the line in the sand', a USD/JPY rate of 82.00?
5. WiIll Naoto Kan remain PM through 2010 and into 2011?
6. WIll potential 'QE 2' from The U.S. FED derail any unilateral intervention?

On Monday I was able to get long at an average price of Y83.36. Last night I pyramided and thus was able to get the maximum profits out of my trade. I exited the position around Y85.30. Recently I have tried various new trading strategies to get the most of my profitable positions. See Edwin Lefevre's Reminiscences of a Stock Operator to understand pyramiding better. Currently, I maintain no open position in the pair. I am uncomfortable with all of the fundamental uncertainty of 'unilateral intervention' as I adressed in my questions above. I will enjoy my profits and take the rest of the day to spend with family.



Check out my fellow trader's blog: http://blog.thelordoftrading.com/ . He had success trading this pair today as well. In addition, please utilize the forum on his site. It is packed with all sorts of trading goodies.

Patrick M. Ambrus
Twitter: AnalyzeCapital

Sources: Bloomberg.com

JPY Trade: Reloaded

Morpheus: I imagine that right now, you're feeling a bit like Alice. Hmm? Tumbling down the rabbit hole?
Neo: You could say that.

--The Matrix

I do feel a bit like Alice. TheUSD/JPY pair rallied in London and New York trading after selling off in Asian trading. The FX rate established a new 15-year low during the session, trading down to levels of 83.35. I took profits on the pop, during morning U.S. trading, around 84.00 levels. Prices recovered when Finance Minister Yoshihiko Noda 'said he is prepared to take “bold” steps on currencies if necessary.' However, I am contemplating a long position in the Yen until 82.50. I watched the tape for the majority of the past 48 hours (fun times) to get a feel for directionality. I am confident prices will move lower.

Part of me wants to believe all of this intervention talk, led by PM candidate Ichiro Ozawa, will lead to more 'normalized' price levels (i.e. 88-90). However, my sinister half believes this was a short-covering rally today. In the ten minutes preceding the Beige Book announcement the pair came to an abrupt slow down in trading. Once the words 'decelerated growth' were uttered on CNBC prices gapped down to 83.79-81. During President Obama's 'Economic Speech', shortly thereafter, prices jumped back up to 83.92-95 levels. Hence, U.S. economic speak was not a significant momentum catalyst, net of direction, for the pair.


JPY 2day chart- 5 minute bars



Will the tape top out at 84.125 resistance levels? What has changed over the past 48 hours to stunt the momentum of a six month downtrend in the USD/JPY pair? Clearly, many uncertainties and rapid-fire change engulf trading. Thus, I look to a glut of international economic data releases that may potentially impact price directionality:

19:50- JPY BSI Large Manufacturing Conditions
01:00- JPY Household Confidence
02:00- JPY Machine Tool Orders
02:00- German CPI (MoM)
04:30- ECB Monthly Report
07:00- BoE Interest Rate Decision
08:30- U.S. Trade Balance
08:30- U.S. Initial Jobless Claims
19:50- JPY GDP(QoQ)
19:50 BoJ Monetary Policy Meeting Minutes


If I have learned one thing in my short few years of trading it is, 'don't trade against the tape.' I will leave you with some wise words from Adam Smith:

"The chance of gain by every man is more or less overvalued, and the chance of loss is by most men undervalued and by scarce any man who is in tolerable health and spirits valued more than it is worth."

Patrick M. Ambrus
Twitter: AnalyzeCapital

---------------------------
USD/JPY = 93.9150 as of 19:37 EST. The 'Matrix' theme for this post was inspired by a fellow trader of mine, Sauros, please view his blog: http://blog.thelordoftrading.com/2010/09/welcome-back-to-real-world-neo.html. Yoshihiko Noda quote was borrowed from Bloomberg.com.

Japanese Machine Orders

Japanese machinery orders rose for a second month in July as overseas demand encouraged investment by companies. Orders, an indicator of business investment in three to six months, rose 8.8 percent from June, when they increased 1.6 percent, the Cabinet Office said today in Tokyo. The median forecast of 25 economists surveyed by Bloomberg News was for a 2 percent gain.

Bloomberg.com

I am short the JPY at these levels. I expect political instability to derail or at least correct the temporary risk aversion flows into the JPY. The Beige Book tomorrow ought to clarify the FED's stance on 'QE 2.'


Patrick M. Ambrus
Twitter: AnalyzeCapital

FX Briefing

The USD/JPY pair is yet to break out of its trading range established during the last 2 sessions between 84.00-to about 84.50. I'm still waiting for an entry around 83.75. I expect Non-Farm Payrolls to drive the pair lower in early trading tomorrow morning.

On another note, the EUR/USD pair is up marginally sitting at 1.2815. I'm looking for a rally to the 1.2950 levels before I get long. The Dollar Index is flat on the session pairing early morning declines.



'The US Dollar Index includes the exchange rates of the following six currencies: euro (EUR), Japenese yen (JPY), Pound sterling (GBP), Canadian dollar (CAN), Swedish krona (SEK), and Swiss franc (CHF).'

Investor Glossary.com



The table comes courtesy of Interactive Brokers


Patrick M. Ambrus
Analyze Capital LLC
Twitter: AnalyzeCapital

Market Update- 07.05.2010

Equity Indicies

Europe
ESTX 50 € Pr 2,516.09 -6.27 (-0.25%)
FTSE 100 INDEX 4,839.44 1.35 (+0.03%)
CAC 40 INDEX 3,340.48 -7.89 (-0.24%)
DAX INDEX 5,830.93 -3.22 (-0.06%)
IBEX 35 INDEX 9,317.40 66.60 (+0.72%)

Asia
NIKKEI 225 9,266.78 63.07 (+0.69%)
HANG SENG INDEX 19,842.20 -63.12 (-0.32%)
S&P/ASX 200 INDEX 4,222.10 -16.60 (-0.39%)

Commodities

Energy
BRENT CRUDE FUTR (USD/bbl.) $71.570 -0.080 (-0.11%)
WTI CRUDE FUTURE (USD/bbl.) $71.880 -0.260 (-0.36%)
GAS OIL FUT (ICE) (USD/MT) $614.750 -0.750 (-0.12%)
NATURAL GAS FUTR (USD/MMBtu) $4.798 0.111 (+2.37%)

Metals
GOLD 100 OZ FUTR (USD/t oz.) 1207.700 0.000 (+0.00%)
SILVER FUTURE (USD/t oz.) 17.780 0.061 (+0.34%)

Debt
UST 10Y Price: 104.47 Change:+0.03 Yield: 2.97 Change: +/- 0.00
GBund 10Y Price: 103.94 Change: +0.32 Yield:2.54 Change: -0.04
Gilt 10Y Price: 111.71 Change: +0.27 Yield:3.32 Change: -0.03
JGB 10Y Price: 101.66 Change: -0.20 Yield: 1.12 Change: +0.01

Foreign Exchange
EUR-USD 1.2518
GBP-USD 1.5093
USD-JPY 87.7510
EUR-JPY 109.873
AUD-USD 0.8389
USD-CAD 1.0662
USD-CHF 1.0673
USD-HUF 228.0350

Today I won't be trading. I am taking this Independence Day Holiday break to catch up on some work and clear my head for the rest of the week. Last week I closed out my long USD-CAD position and scored about 200 pips. Also, I managed to close out my short Nat Gas position unscathed with some decent profits.

NBA free agency began on Thursday July 1st. It already looks as if we have Amare Stoudemire wrapped up in 5 Year/$100 MM contract. Please Basketball gods, deliver LeBron to The Knicks.

Enjoy the beach!

Related ETFs: iShares MSCI Emerging Markets Index Fund/United States (EEM:US), Vanguard Emerging Markets ETF (VWO:US), Direxion Daily Emerging Markets Bull 3X Shares (EDC:US)

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC
ambrus.anlzgroup@gmail.com

Market Update-06.23.2010

Equity Indexes
INDU- 10298.40 4.92 (+0.05%)
NASDAQ- 2254.23 -7.57 (-0.33%)
SPX- 1092.04 -3.27 (-0.30%)

Commodities
WTI Crude Oil- $76.14 -0.21 (-0.28%)
Brent Crude Oil- $76.270 -1.770 (-2.27%)
Natural Gas- $4.7990 -0.005 (-0.10%)
Gold Spot- $1238.00 3.20 (+0.26%)
Silver Spot- $18.585 0.081 (+0.44%)

Bonds
2 Year UST- Price:99.89 (-0.02) Yield: 0.68% (+0.68)
10 Year UST- Price:103.20 (-0.02) Yield: 3.12% (-0.05)
10 Year Gilt- Price:110.75 (+0.17) Yield: 3.43% (-0.02)
10 Year Bund- Price:103.05 (+0.39) Yield: 2.64% (-0.04)
10 Year Oats- Price:103.51 (-0.11) Yield: 3.08% (+0.01)
10 Year JGB- Price:101.32 (+0.12) Yield: 1.15% (-0.04)
10 Year Greek- Price: 74.97 (-2.91) Yield: 10.36% (+0.59)

Foreign Exchange
EUR/USD = 1.2313
GBP/USD = 1.4973
USD/JPY = 89.9340
USD/CAD= 1.0394
EUR/JPY = 111.1698
EUR/HUF= 279.5028

Equity Index Futures
Nikkei 225- 9,950.00 +50.00
Hang Sang- 20,935.00 +96.00
SPI 200- 4,481.00 +8.00

10 year Greek debt is now trading at a whopping 772 bp over 10 year Bunds. It will be nearly impossible for the Greek government to roll over their debt in private markets or access short-term financing for their day-to-day operations, if spreads continue to widen. Unfortunately this story did not get enough play today.

The U.S. economy was front and center. Bernanke reminded us he and his team can continue to drop money out of the FED's helicopter if needed. Kansas City President Hoening was the lone dissenter today.

I took some profits on my SPX puts early in the session today. Tomorrow I'm looking to go long Nat Gas for part of the session. Crude is in play too.

By the way, All Kobe does is win! Good luck trading tomorrow!

Related ETF's: United States Oil Fund LP (USO:US), United States Natural Gas Fund LP (UNG:US), United States 12 Month Natural Gas Fund LP (UNL:US)

Patrick M. Ambrus
Analyze Capital LLC
ambrus.anlzgroup@gmail.com

Market Update- 06.21.2010

Equity Indexes
INDU- 10,442.41 -8.23 (-0.08%)
NASDAQ- 2,289.09 -20.71 (-0.90%)
SPX- 1,113.20 -4.31 (-0.39%)

Commodities
WTI Crude Oil- $77.49 -.33 (-0.42%)
Brent Crude Oil- $78.560 -0.260 (-0.33%)
Natural Gas- $4.870 -0.003 (-0.06%)
Gold Spot- $1237.400 -3.300 (-0.27%)
Silver Spot- $18.780 -0.074 (-0.39%)

Bonds
2 Year UST- Price:100.06 (-0.02) Yield: 0.72% (+0.01)
10 Year UST- Price:102.13 (-0.05) Yield: 3.25% (+0.03)
10 Year Gilt- Price:110.09 (+0.26) Yield: 3.51% (-0.03)
10 Year Bund- Price:102.01 (-0.33) Yield: 2.76% (+0.04)
10 Year Oats- Price:103.28 (+0.03) Yield: 3.10% (+0.00)
10 Year JGB- Price:100.67 (-0.11) Yield: 1.23% (+0.02)
10 Year Greek-Price: 79.53 (-0.36) Yield: 9.48% (+0.07)

Foreign Exchange
EUR/USD = 1.2320
GBP/USD = 1.4760
USD/JPY = 90.9250
USD/CAD= 1.0238
EUR/JPY = 112.2393

Equity Index Futures
Nikkei 225- 10,140.00 -90.00
Hang Sang- 20,970.00 591.00
SPI 200- 4,575.00 -24.00

I don't have too much to say about market movements today. Though, I will leave you with this:

One of the practical limitations of Black-Scholes is that the actual behavior of shares in the real world appears not to conform to the pattern we would expect from a single bell curve.

--A. Chisholm

N. Taleb would call this "The Great Intellectual Fraud". Good luck trading tomorrow.

Related ETF's: FXC:US CurrencyShares Canadian Dollar Trust, USL:US United States 12 Month Oil Fund LP, SSO:US ProShares Ultra S&P500

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC
Twitter: AnalyzeCapital

U.S. Steps up its Rhetoric on China’s Yuan Policy

Bloomberg:
“The distortions caused by China’s exchange rate spread far beyond China’s borders and are an impediment to the global rebalancing we need,” Geithner said in testimony to the Senate Finance Committee today.

The Senate will vote “soon” on a measure aimed at getting China to raise the value of the yuan, Senator Charles Schumer of New York told Geithner at the hearing.
“This is fair warning,” said Schumer. Lawmakers, “despite the administration asking us not to do it, are going to move forward with our bipartisan legislation to provide specific consequences for countries that fail to adopt appropriate policies.” Schumer said yesterday that the Senate would vote within two weeks.

“We want China to provide a level playing field for the products of American workers and investments by American companies,” Geithner said. “And we want China to change its growth strategy to rely less on exports and more on consumption.”

Since July 2008, the yuan has been held by officials around 6.83 per dollar, after Premier Wen Jiabao’s government allowed a 21 percent advance in the prior three years. In April, Geithner delayed the release of a twice-yearly report on whether China or any other country is manipulating its exchange rate.

Thoughts:
With the U.S. increasing its pressure on China to adjust its currency, China may decide to give into the pressure soon (possibly by the end of the year?). However, the U.S. does not have much leverage, being that it relies heavily on China to purchase its debt. Premier Wen Jiabao might be laughing out loud after hearing Geithner’s comments, especially since China’s exports recently increased the most in six years. Other than maintaining good political relations, there is little incentive for China to make changes.

Daniel A.
Summer Analyst
Analyze Capital, LLC

Update on Eurozone

Via Bloomberg:

European finance ministers put the finishing touches on a rescue fund being backed by 440 billion euros ($524 billion) in national guarantees, seeking to halt the spread of Greece’s debt crisis.

The European Financial Stability Facility would sell bonds backed by the guarantees and use the money it raises to make loans to euro-area nations in need, the finance ministers agreed yesterday in Luxembourg. The new entity would sell debt only after an aid request is made by a country.

The ministers aim for ratings companies to assign a AAA rating to the facility, whose bonds would be eligible for European Central Bank refinancing operations. The fund will be based in Luxembourg.

The fund, being created for three years, is the main part of a 750 billion-euro aid package that European Union finance ministers hammered out a month ago to combat a sovereign debt crisis. Another 60 billion euros will come from the European Commission -- the EU’s executive arm -- and 250 billion euros from the International Monetary Fund.

Also Via Bloomberg:

European finance ministers endorsed Estonia’s bid to adopt the euro, setting aside the European Central Bank’s warning that the Baltic state may struggle to keep inflation under control.

“Estonia will become the 17th member of the euro area on Jan. 1, 2011,”

Thoughts:

The fund is a somewhat positive sign for the euro, but it does not prevent the possibility that debt problems will spread beyond Greece. With Hungry and the UK recently making statements about their debt struggles, it may be only a matter of time before Portugal, Spain, or another country follows the path of Greece.

Daniel A.
Summer Analyst
Analyze Capital LLC
email:analyzecapital@gmail.com

Morning Updates- 03.04.2010

Good Morning fellow market junkies. Today there is a glut of economic data that should and could potentially give the equity markets some type of direction. Today we will see interest rate decisions from BOE and ECB. I will be looking for any type of details on winding down QE programs. Hence, I want to know when liquidity will start to drain from the system. Also, I want to hear ECB commentary on the sovereign debt problems in Greece and elsewhere. Trichet will probably speak to these issues specifically.

Other Notable Economic Data today:

•05:00 Euro Zone GDP (QoQ)

•08:30 ECB President Jean-Claude Trichet Speaks

•08:30 U.S. Initial Jobless Claims- Forecast (475,000 lost)

•08:30 U.S. Nonfarm Productivity (QoQ)- Forecast 6.2%

•10:00 Canadian Ivey PMI- Forecast 55.00

•10:00 U.S. Pending Home Sales- Forecast 1.7%

•10:30 U.S. EIA Natural Gas Report


BOE Rate Decision

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 maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.

Not too much of a surprise here. Minutes will be released on March 17th.


ECB Rate Decision (Update1)

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 1.00%, 1.75% and 0.25% respectively.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 08.30 EST today.

I am waiting for some clarity from Trichet before I digest.

Update:

link to full Trichet opening comments: http://www.ecb.int/press/pressconf/2010/html/is100304.en.html


Euro Zone GDP

GDP increased by 0.1% in both the euro area1 (EA16) and the EU271 during the fourth quarter of 2009, compared with the previous quarter, according to first estimates released by Eurostat, the statistical office of the European Union. In the third quarter of 2009, growth rates were +0.4% in the euro area and +0.3% in the EU27.

Compared with the fourth quarter of 2008, seasonally adjusted GDP declined by 2.1% in the euro area and by 2.3% in the EU27, after -4.1% and -4.3% respectively for the previous quarter.

GDP was the weakest in Latvia (-3.2%) and Romania (-1.5%). Estonia had the most robust growth (+2.6%).
Full details: http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

U.S. Jobless Claims (update 2)

In the week ending Feb. 27, the advance figure for seasonally adjusted initial claims was 469,000, a decrease of 29,000 from the previous week's revised figure of 498,000. The 4-week moving average was 470,750, a decrease of 3,500 from the previous week's revised average of 474,250.

U.S. Non-Farm Productivity (QoQ) (update 4)

Both productivity and costs were revised better than expected for the fourth quarter. Businesses clearly are focusing on cutting labor costs to try to boost profits or cut losses. Nonfarm business productivity was revised up to a sharp 6.9 percent boost from the initial estimate of 6.2 percent. This followed a revised 7.8 percent surge in the third quarter. Today's report includes annual revisions which raised the Q3 figure. The consensus had called for a 6.3 percent revised gain for the latest period. Unit labor costs fell an annualized 5.9 percent in the fourth quarter, compared to an initial estimate of minus 4.4 percent and a revised third quarter plunge of 7.6 percent. The market forecast was for a 4.5 percent drop in costs.

U.S. Pending Home Sales Index (Update5)

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December, but remains 12.3 percent higher than January 2009 when it was 80.5.

Lawrence Yun, NAR chief economist, said weather is likely to impact housing data. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.

Nat Gas Inventories (Update 7 last one)
Working gas in storage was 1,737 Bcf as of Friday, February 26, 2010, according to EIA estimates. This represents a net decline of 116 Bcf from the previous week. Stocks were 71 Bcf less than last year at this time and 21 Bcf above the 5-year average of 1,716 Bcf. In the East Region, stocks were 9 Bcf below the 5-year average following net withdrawals of 74 Bcf. Stocks in the Producing Region were 24 Bcf below the 5-year average of 604 Bcf after a net withdrawal of 27 Bcf. Stocks in the West Region were 54 Bcf above the 5-year average after a net drawdown of 15 Bcf. At 1,737 Bcf, total working gas is within the 5-year historical range.

Natural Gas sold off after this report was released.


Quotes

Foreign Exchange
-EUR is down -0.2775% against the USD @ $1.3657 as of 9:36 EST.
-EUR is up 0.4666% against the JPY at 121.66.
-USD is strengthening against the JPY by 0.6327% @ 89.0650.
-GBP is up against the USD by 17 basis point at $1.5124.

Commodities
-Gold is down $3.70 sitting at 1139.00/troy ounce
-Silver is off 37 bp @ $17.265/t oz.
-WTI Crude is down $0.56 this morning to $80.31/barrel
-Nat Gas is down @ $4.72/MMbtu

Equities

Asia (closed)
-Nikkei 225- off -1.05% @ 10,145.72
-Topix- down 8.01 points to 897.64
-Hang Sang- off -1.44% to 20,575.78
-S&P/ASX 200- down 14.80 point @ 4750.50
-CSI 300- down 84.51 points to 3250.57

Europe
-FTSE 100- 5521.31 off -.22%
-CAC 40- 3833.06 down -.25%
-DAX 30- negative by 21.40 points @ 5796.48

United States
-Dow Jones- up 25.32 points @ 10,422.08 (as of 09:30 EST)
-NASDAQ- up .14% @ 2283.94
-s&P 500- up 2.9% to 1121.99


Bonds
-UST 10 Y- Price: off .035 to sit at 99 30/32 Yield: 3.63%
-Bunds 10 Y- Price: off .047 to 100.89 Yield: 3.14%
-JGB 10 Y- Price: rallied .044 to 100.57 Yield: 1.34%


I will try and Update this throughout the trading day

Good luck trading


Patrick M. Ambrus
Managing Partner
Analyze Capital LLC
ambrus.anlzgroup.gmail.com

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
ambrus.anlzgroup@gmail.com

FXE trade: jumping the gun - 12.15.09

As my friend "Sauros" <--- click here pointed out; I am playing a dangerous game. I am trying to catch the whipsaw while long on the EUR.

It seems for 3 straight trading days FXE has gaped down against me. Luckily I am not using a leveraged FX pair and only exposed to the general trend so my lost is at a minimal. But, Id hate to imagine it what it would be like on an open fx leveraged trade.

It seems that the EUR participants are factoring in more US econ data, a fundamental valuation perhaps is changing. This is the third significant gap down day of dollar up SPX up.

After reviewing a long chart, Perhaps Sauros is correct in being short longer term out on the EUR. The full discussion can be found here: " THE LORD OF TRADING <----

Looking at the first 3 year chart we see 50 support on the RSI has held throughout this entire rally. Perhaps this is a foreshadowing that equities are due for a correction? But ... Perhaps not, as we have been seeing dollar up/down and SPX still goes up. There is an inherent bias for us equity markets. And what is this underlying factor?

USD safe haven and confidence and that the US Fed will back up the US if the safe haven fails.


Either way my trading notes can be found on the charts above...

I am expecting a retrace back to 1.48 range and will reassess the fundamental factors to see if this is indeed a long term trend change or if this is just an interim correction.


-----

Alexander Lê
Analyze Capital LLC
Managing Partner
email: le.alex48@gmail.com

Money Never Sleeps, but People Do - 12.09.09

Via Bloomberg:

Oil whipsawed in reaction to weekly petroleum inventory data. On the negative side for prices are a large 2.5 million barrel build in crude stocks at the WTI delivery point at Cushing, Oklahoma together with a 2.2 million barrel build in total gasoline stocks and a 1.6 million build in distillates. On the plus side is a sizable 3.8 million draw in total crude inventories to 336.1 million barrels. Oil and gasoline imports were down in the week while domestic output of gasoline and distillates were both up. Refineries operated at 81.1 percent of capacity, up from the prior week but still very low. On the demand side, demand for gasoline was steady in the week while demand for distillates dipped. Oil first fell $1 then rebounded $1 to trade at $73 following today's data. Supply in the petroleum market, despite the week's draw in crude, is still very heavy and is a threat to the oil industry should the global economic recovery stall.

If crude continues to stay in a lower range short term ($70-72) I will look to jump in via USO. Tomorrow we will get Natural Gas Inventories at 10:30.

Tommorow's Action:

The U.S. international trade gap in September widened to $36.5 billion from $30.7 billion worth of red ink in August. Exports rose 2.9 percent while imports jumped 5.8 percent. The worsening of the trade deficit was led by a wider petroleum shortfall which came in at $20.5 billion compared to $16.6 billion the previous month. The nonpetroleum gap increased to $25.9 billion from $24.3 billion in August. Looking ahead, the sneak peak indicators are mixed. First, there could be a drop in auto imports from Canada as not as many are needed with cash for clunkers having concluded. But a drop in shipments of nondefense capital goods in October could show up in lower capital goods exports. Also, higher oil prices will cut into any potential improvement in the trade gap.

Consensus is -34.6B. I don't expect this to be much of a market mover unless the gap increases significantly. Data should be flat or slightly improve. If data is week I expect a dollar sell off.

Also,Watch out for initial Jobless claims at 10:30. The combination of initial claims and trade deficit data have potential to move markets in either direction.

It will be interesting to see how dollar strength or weakness influences equity investors for the rest of the trading week.

On Friday we will get a real feel for how well the U.S. consumer is doing with retail sales and consumer sentiment reports.

The ASX 200 and Nikkei 225 are sitting on slight gains to start the trading session in Asia, up .25% and .06% respectively. Futures are negative in the Eurozone and U.S. equity markets are poised to open slightly to the upside.





Patrick M. Ambrus
Managing Partner
Analyze Capital LLC
ambrus.anlzgroup@gmail.com

Early Market Action Thoughts: Oil- 10.26.2009

I spent much of the morning on the Blooomberg looking at charts. CL1 is definitely overbought at the moment and I expect a pull back to $78 as I said in my last post. This morning Nymex Crude was trading around $80.50/barrel. Momentum on the upside is topping out. Additionally, the upper Bollinger band(30, 2.0) has been pierced for too long. However, one must keep in mind that crude will not follow technicals or fundamentals in the long run. Much will depend on the Greenback.

-Pat

Patrick M. Ambrus
Analyze Capital LLC
ambrus.anlzgroup@gmail.com

Food for Thought: SPX and USD - Market Direction 10.09.09

This morning I spent a substantial amount of time looking at stock charts from various sectors in order to decipher the mystery that is the S&P 500. I looked at the SPY, XBI, XLF, GS, AAPL, GOOG, AMZN, QQQQ, IWM, MDY, and VIX. Undoubtedly, the market is overbought. It is overbought from a fundamental valuation standpoint . Technical Analysis of these charts support this thesis. Especially, when examining the SPX and $USD. Though one can argue the SPX is in a bullish trend, the index is yet to show markets it can break resistance around 1075. As for the USD, the chart shows a bottom forming very soon with momentum trending upward. I maintain my position in cash for the time being until I unlock Standard & Poor's Box .


--Pat

Forex Update: August 3, 2009

Just looking reviewing some charts as I have been busy. I must say I the Pound just shot way up and is over extended giving me some lovely profits. In general the 3 major pairs that I am trading all shot up. The Eur completely recovered and is making gains, while the AUD also shot up to a lesser extent.


Here are the Charts:

EUR/USD




GBP/USD




AUD/USD





Here are the results:



As you can see I traded within approximately a two week time frame. My trading thesis was based off overall fundamental macro trend. However only confirmed and directed by short term technical analysis.


----------------

I closed out my positions so I can focus on my work and incorporation. In addition, due to possible trend changes or significant corrections coming at the end of this week or the end of next week. Hopefully the Group Forecast can be posted soon since we had our weekly meeting yesterday. In addition, hopefully Group ANLZ will be trading together soon.


If there are any questions about this trade please post a comment or forward your concerns to GroupANLZ@gmail.com

-Alexander Lê

Spot Forex daily Commentary - July 15, 2009

Made some bets against the dollar on MT4 last night on the 14th. Through the day it proved that I made the right call. I guess after I left work the Aussie decided to move out of whack and trade down for the short term opposite to the other major pairs current short term trends.

Overall, I will be long on the Aussie, and the same goes for the pound. I swear I had entered a short for the looney but I guess I must have hesitated on conflicting indicators. Considering the whole "bear on the dollar" theme I should have just shorted it, though I didn't bother with correlation studies.

To be honest All pairs are screaming bear on the dollar over the next few weeks. Though Arguably on the EUR we are getting conflict on short term indicators as by the end of the week the EUR may hit highs in the 1.41XX + to 1.42 and then retrace. The conflict being between short term bearish pattern formation versus possible bullish trend developments. Considering the other major pairs and the RSI Id be leaning towards dollar weakness thus confirming the bullish trend develop, and short term indicators just maybe temporary whipsaws out of trend.

The Aussie and the Pound are definitely trend wise and indicator wise bullish.

Interestingly we are seeing a fundamental economic divergence between the US economy and the Canadian economy or perhaps oil prices are currently more relevant to the Canadian Currency. It looks to me as if the dollar is set to advance against the looney.

----


I apologize for my jumbled thoughts, as I post more Spot Forex Updates Ill be more precise and organized in my blogs.

As of now, I expect the Aussie to gain back what I'm currently loosing over the next week. While I question the trend of the EUR though it seems to be favorably bullish in relation to other major pairs. The Pound definitely has room to continue upward into 1.65.

For now I'll opt out of the CAD. The yen I also will opt out of since its correlation is out of sync right now.

Hopefully tomorrow I can provide some charts and annotations.



*******
Warning
*******

Terrible mistake on the AUD I used the shortcut key and entered a short vs a long. Luckily this is all on paper only. I know one of my friends have entered real trades opposite to what he wanted even though his analysis and call were correct. Goes to show how carelessness can lead to disaster. Even though I was just playing around and was only trying to catch trends and swing in a sideways market, this experienced how serious and how much concentration one needs as one tiny mistake can ruin it all. These are the benefits of paper trading, a good lesson learned that I will carry with me for the rest of my life.