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Friday Market Recap.

  • Written by Syndicated Publisher 51 Comments51 Comments Comments
    September 5, 2011

    Something weird is going on here. Why did FHFA wait until 3:58 to file suit agains the big banks. Especially on a Friday into a long weekend. More importantly why is FHFA suing the banks when all it will do is push them, especially BAC closer to receivership or some form of bankruptcy. Regardless today was a horrible day for those optimistic market participants. Jobs data was truly horrible and the noise out of the EU appears to be growing louder again.

    Earlier in the week we discussed two groups in the market. Group 1 would bid up stocks on bad news in hopes of QE3 while Group 2 would not bid up stocks under the belief QE3 is not coming or if it comes the benefits are negligible. Well after a few days you have to give it to Group 2 right now. Group 2 is also supported by the price action in bonds and the US dollar whereas Group 1 does find the support of precious metals.

    With that said below are  few charts.

    10 Year Treasury

    Now at multi year lows with a close at 1.996% and lower than the height of the 2008 financial meltdown. Part of this is driven by those gaming the Fed and buying 10 year and 30 year treasuries ahead of what is believe to now be a change to the duration of the balance sheet (which doesn’t necessarily mean higher equity prices).

    SPX

    The bear flag is clearly in play and this time at current SPX levels versus early August the RSI is no where near oversold on a daily basis so if and when the recent lows is tested markets may very well be able to break through.

    US Dollar (DXY)

    I would not declare the USD in a bullish uptrend far from it but it does look to be finally catching a bid with higher highs and more importantly closing above the 200MA for the second consecutive day.

    EUR/USD

    The EUR may finally be under selling pressure. It is quite the messy chart but does appear to be breaking down. Possibly a sign of reality being priced in as the Eurozone debt grows amidst a slowing economy.

    Getting back to FHFA, arguably one of the best bank analysts and former Fed employee Chris Whalen is out with a great interview on King World News discussing the banking sector and how a BAC restructuring would look. I highly recommend the 15 minutes it takes to listen to a very brilliant and genuine man (the interview can be found here.)

    Enjoy your long weekend!

    From  Market Recap Friday September 2, 2011- Macro Story.

    Images: Flickr (licence attribution)

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