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Stocks Giving Back Ground Following Recent Strength - U.S. Commentary
(RTTNews) - After seeing considerable strength in recent sessions, stocks have shown a notable move back to the downside in early trading on Tuesday. The major averages have pulled back firmly into negative territory after ending the previous session at their best closing levels in over two months.
Recently, the major averages bounced off their lows for the young session, but they remain stuck in the red. The Dow is down 109.82 points or 0.9 percent at 11,803.80, the Nasdaq is down 23.55 points or 0.9 percent at 2,675.89 and the S& P 500 is down 10.85 points or 0.9 percent at 1,243.34.
The pull back by the markets was partly due to reports that Eurozone Finance Ministers have canceled a planned meeting on Wednesday, although it was later revealed that European leaders still plan to hold their highly-anticipated summit.
Profit taking also contributed to the initial weakness on Wall Street, with traders cashing in on the recent strength in the markets amid continued uncertainty about the economic outlook.
Disappointing earnings news from 3M Co. (MMM) has also generated some selling pressure, with the diversified manufacturer falling by 5.8 percent after reporting weaker than expected third quarter results and lowered its full-year guidance.
Share of Netflix (NFLX) have also come under significant selling pressure after the movie rental company reported a notable drop in U.S. subscribers in the third quarter and forecast fourth quarter results below analyst estimates. Netflix is currently down by 35.9 percent.
Airline stocks have shown a notable move to the downside in early trading, dragging the NYSE Arca Airline Index down by 3.8 percent. With the loss, the index is giving back ground after ending the previous session at its best closing level in well over two months.
Steel, financial, internet, and real estate stocks are also seeing early weakness on the day, moving to the downside along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. While Japan's Nikkei 225 Index dropped by 0.9 percent, Hong Kong's Hang Seng Index advanced by 1.1 percent.
Meanwhile, the major European markets have all moved to the downside over the course of the trading day. The French CAC 40 Index is tumbling by 1.7 percent, while the U.K.'s FTSE 100 Index and the German DAX Index are falling by 0.7 percent and 0.5 percent, respectively.
In the bond market, treasuries are seeing moderate strength amid the pullback on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.4 basis points at 2.20 percent.
By Lawrence H. Summers
Oct 24 (Reuters) - The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending.
Most policy failures in the United States stem from a failure to appreciate this truism and therefore to take steps that would have been productive pre-crisis but are counterproductive now, with the economy severely constrained by lack of confidence and demand.
Thus even as the gap between the economy's production and its capacity increases and is projected to increase further, fiscal policy turns contractionary, financial regulation turns towards a focus on discouraging risk taking, and monetary policy is constrained by concerns about excess liquidity.
Most significantly, the nation's housing policies especially with regard to Fannie Mae and Freddie Mac -- institutions whose very purpose is to mitigate cyclicality in housing and who today dominate the mortgage market -- have become a textbook case of disastrous and procyclical policy.
Annual construction of new single family homes has plummeted from the 1.7 million range in the middle of the last decade to the 450,000 range at present. With housing starts averaging well over a million during the 1990s, the shortfall in housing construction now projected dwarfs the excess of construction during the bubble period and is the largest single component of the shortfall in GDP.
Losses on owner-occupied housing have reduced consumers' wealth by more than $7 trillion over the last 5 years, and uncertainty about the future value of their homes, as well as the inability to refinance at reasonable rates, deters household outlays on durable goods.
The continuing weakness of the housing sector is a major source of risk for major U.S. financial institutions, raising significantly the costs of the loans they offer.
In retrospect, it obviously would have been better if financial institutions and those involved in regulating them--especially the FHFA--recognized that house prices can go down as well as up if more rigor had been applied in providing credit if the GSEs had been more careful in monitoring those originating and servicing loans and if all those involved had been more vigilant about fraudulent behavior.
The question now is what should be done to address the housing market, given the drag it represents on the national economy. With virtually all mortgages in the United States provided by the Federal government or guaranteed by the GSEs, this is inevitably a matter of government policy.
Unfortunately, for the last several years, policy has been preoccupied with backward-looking attempts to address the consequences of past errors in mortgage extension by addressing homeowners on a case-by-case basis, and decisions regarding the GSEs have been left to their conservator FHFA which has taken a narrow view of the public interest. FHFA has not acted on its conservatorship mandate to insure that the GSEs act to stabilize the nation's housing market, and taken no account of the reality that the narrow financial interest of the GSEs depends on a national housing recovery.
Instead of focusing on the stabilization of the housing market, its focus has been on reversing its previous policies heedless of changes in the environment, and in treating mortgage finance as a morality play involving homeowners, financial institutions and banks rather than an important component of national economic policy.
A better approach would involve a number of changes in policy.
First, and perhaps most fundamentally, credit standards for those seeking to buy homes are too high and rigorous in America today. This reduces demand for houses, lowers prices and increases foreclosures, leading to further tightening of credit standards and a vicious growth-destroying cycle. Publicly available statistics suggest that the characteristics of the average applicant in 2004 would make an applicant among the most risky today. Of course the pattern should be opposite, given that the odds of a further 35 percent decline in house prices are much lower than they were at past bubble valuations.
Second, as President Obama stressed in presenting his jobs bill, there is no reason why those who are current on GSE guaranteed mortgages should not be able to take advantage of lower rates. From the point of view of the guarantor as distinct from the mortgage holder, lower rates are all to the good since they reduce the risk of default. Yet, at least until now the GSEs have made refinancings very difficult by insisting on significant fees and by requiring that any new refinancier take on all the liability for errors in underwriting the original mortgage, at a cost to American households of tens of billions a year.
Third, stabilizing the housing market will require doing something about the large and growing inventory of foreclosed properties. The same property sold in a foreclosure sale nets about 30 percent less than if sold in the ordinary way and the knowledge that that there is a huge overhang of foreclosed properties deters home purchases. Aggressive efforts by the GSEs to finance mass sales of foreclosed properties to those prepared to rent them out could benefit both potential renters and the housing market.
Fourth, there is the issue of preventing foreclosures which was the initial focus of housing policy efforts. The truth is that it is far from clear what the right way forward is. While the Obama administration HAMP effort has been widely criticized for overly restrictive eligibility criteria, the reality is that a large fraction of those receiving assistance have ultimately been unable to meet even their reduced obligations.
This suggests that the task of helping homeowners without either damaging the financial system or simply delaying inevitable outcomes is more difficult than is often supposed.
Surely there is a strong case for experimentation with principal reduction strategies at the local level. The GSEs should be required to drop their current posture of opposition to experimentation and move on a more constructive posture.
Fifth, there were clearly substantial abuses by major financial institutions and most everyone in the mortgage industry during the bubble period. Just compensation to the victims is a legitimate objective of public policy. But allowing negotiation over the past to be the dominant thrust of present policy creates overhangs of uncertainty that impose huge costs on the financial system and inhibits current lending. It is equally in the interests of bank shareholders and the housing market that a rapid resolution of disputes be achieved. The FHFA should be striving to bring the current period of uncertainty to a rapid conclusion.
While the GSEs are by far the most important actors in the mortgage space (and hence the FHFA that serves as their conservator is the most important player in housing policy), there are others who can make a constructive difference. Bank regulators could facilitate inevitable restructuring of underwater mortgages by requiring banks to treat second mortgages and home equity loans in realistic ways.
The Fed could support demand and the housing market by again expanding purchases of mortgage backed securities.
With constructive approaches by independent regulators, far better policies could be in place six months from now. The anticipation of a change to supportive policies could change the tone of the market even sooner. There is nothing else on the feasible political horizon that can make as a large a difference in driving American economic recovery.
* EU leaders to meet again on Wednesday
* Differences remain over solution to euro debt crisis
* Restoration of production in North Sea weighs (Updates throughout)
By Philip Baillie
LONDON, Oct 24 (Reuters) - Brent crude oil rose above $110 a barrel on Monday after stronger Chinese manufacturing data suggested China's economy may not be in as much danger as feared, supporting fuel consumption and outweighing fears over weak European data.
China's vast manufacturing sector picked up in October, snapping a three-month contraction and underscoring the resilience of the world's second-largest economy and top energy consumer, according to HSBC's China Flash Purchasing Managers' Index.
The PMI data, which rose to 51.1 in October from September's 49.9, soothed investor fears of an abrupt slowdown in China's economy that could send an already fragile world economy into recession.
" The Chinese PMI number is better than expected and that is one of the main reasons for the rise," Christophe Barret of Credit Agricole said. " Prices are volatile so the price could be corrected later in the day."
" There is still much uncertainty around talks for a solution to the euro zone debt crisis and we are waiting for something more clear to emerge from the meetings," he added.
Strong Chinese data outweighed European growth fears as the European private sector tipped further into decline in October, according to business surveys on Monday that showed the bloc's economy is in serious danger of lurching from stagnation into outright recession.
Brent crude < LCOc1> was up 72 cents at $110.28 a barrel by 1334 GMT, down from an intraday high at $110.94 a barrel.
Brent prices have risen by about 16 percent so far this year, and are heading for a third straight year of gains.
U.S. crude < CLc1> rose $1.04 to $88.44 a barrel, after reaching an intraday high of $88.65 a barrel.
EU OPTIMISM
Investors were also encouraged by signs that a summit of euro zone leaders on Wednesday could produce a solution to the euro zone debt crisis, although sharp differences remain over the size of losses private holders of Greek government bonds will have to accept.
" It seems that despite recent prices the market seems to think that there is going to be some kind of agreement on the euro zone debt crisis," Roy Jordan of Facts Energy Global said. " What we are seeing is that if the market is satisfied with the agreement then the price will have an upward spike."
European shares rose in early trade on Monday on optimism that policymakers were closer to an agreement on measures to tackle the euro zone sovereign debt crisis.
By 1335 GMT, the FTSEurofirst 300 index of top European shares was up 0.3 percent to 981.05 points, after rising 2.5 percent on Friday.
The Brent-WTI spreads were at $22.16, down from record high levels of $27.88 at the Oct. 14 close.
DOWNWARDS PRESSURE
North Sea Forties crude differentials rose on Friday from their lowest level in more than two months as demand increased. [ID: nL5E7LL3MJ]
Also in the North Sea, Statoil's Grane oil and gas field is back to full production of some 150,000 barrels per day after technical problems reduced output to a fifth of its normal level for several weeks, the Norwegian firm said on Monday. [ID: nO9E7L401G]
In Yemen, gunfire and shelling in the country's capital, Sanaa, killed two people on Sunday, medics said, two days after the United Nations issued a resolution condemning the violence and urging President Ali Abdullah Saleh to step down.
The post-Gaddafi era could put further downward pressure on oil prices as foreign companies repatriate staff to repair damaged oil fields securing the supply of Libyan crude to the international market, while some estimates say production could reach 600,000 bpd by the end of the year, according to a report from PVM Oil Associates. (Additional reporting by Seng Li Peng in Singapore and Jane Lee in Kuala Lumpur editing by Christopher Johnson and Jason Neely)
Standard Of Living Vs. Quality Of Life
Standard of living and quality of life are often referred to in discussions about the economic and social well-being of countries and their residents, but what is the difference between the two? The definitions of these terms can be difficult to tease apart and may overlap in some areas, depending on whom you ask. It's more than just a matter of semantics in fact, knowing the difference can affect how you evaluate a country where you might be looking to invest some money.
Standard of Living
Standard of living generally refers to the level of wealth, comfort, material goods and necessities available to a certain socioeconomic class, in a certain geographic area. An evaluation of standard of living commonly includes the following factors:
- income
- quality and availability of employment
- class disparity
- poverty rate
- quality and affordability of housing
- hours of work required to purchase necessities
- gross domestic product (GDP)
- inflation rate
- number of paid vacation days per year
- affordable access to quality health care
- quality and availability of education
- life expectancy
- incidence of disease
- cost of goods and services
- infrastructure
- national economic growth
- economic and political stability
- political and religious freedom
- environmental quality
- climate
- safety
Standard of living is often used to compare geographic areas, such as the standard of living in the United States versus Canada, or the standard of living in Milwaukee versus New York City. If you live in a particular country, a certain number of vacation days per year will be the norm. In the United States, it's 10 to 20 days while in Denmark it's 31. Some companies within each country may be more or less generous, but one practice prevails.
Standard of living can also be used to compare distinct points in time. For example, compared to a century ago, the standard of living in the U.S. is considered to have improved greatly the same amount of work buys a larger quantity of goods, and items that were once luxuries, such as refrigerators and automobiles, are now widely available. Also, leisure time and life expectancy have increased and annual hours worked has decreased.
One measure of standard of living is the Human Development Index (HDI), developed in 1990 by the United Nations. It considers life expectancy at birth, adult literacy rates and per capita gross domestic product (GDP) to measure a country's level of development.
Quality of Life
Quality of life is more subjective and intangible. The United Nations' Universal Declaration of Human Rights, adopted in 1948, provides an excellent list of factors that can be considered in evaluating quality of life. It includes many things that citizens of the United States and other developed countries take for granted, but that are not available in a significant number of countries around the world. Although this declaration is 60 years old, in many ways it still represents an ideal to be achieved, rather than a baseline state of affairs. Factors that may be used to measure quality of life include the following:
- freedom from slavery and torture
- equal protection of the law
- freedom from discrimination
- freedom of movement
- freedom of residence within one's home country
- presumption of innocence unless proved guilty
- right to marry
- right to have a family
- right to be treated equally without regard to gender, race, language, religion, political beliefs, nationality, socioeconomic status and more
- right to privacy
- freedom of thought
- freedom of religion
- free choice of employment
- right to fair pay
- equal pay for equal work
- right to vote
- right to rest and leisure
- right to education
- right to human dignity
Comparing the Two
When people think about their own standard of living, the amount of money they bring in might be the first thing that comes to mind. If their income decreases, through job loss, for example, they might consider their standard of living to be decreasing along with it, however is this the case? If you consider the other factors that make up standard of living, then chances are your overall standard of living is still quite good, despite your present lack of income. For example, if you have a good chance of securing another quality job, your country's economy is generally strong, you still have access to health care, and if the cost of goods and services is reasonable enough that you can more or less get by in the meantime, until you find a new job, then you're doing all right.
Standard of living is somewhat of a flawed indicator, however. Looking at our earlier list, while the United States, for example, might be considered to rank highly in all of these areas, most people would agree that for some segments of the population, the standard of living in the United States is actually quite low. In East St. Louis, Ill., for example, the quality and availability of employment has historically been poor environmental quality is below average for the U.S., the incidence of disease is high and life expectancy is also below average. According to the U.S. Census Bureau's 2000 census , the number of families living below the federal poverty level in East St. Louis was 35.1%, compared to a national average of 12.4%.
Similar to standard of living, what would be considered a good quality of life by one person, may not be considered as such by another. The earlier list of quality of life factors might also be considered to be a list of things the United States offers. " The Economist" , for example, produces an index that attempts to rate the quality of life in various countries. Predictably, developed nations like Norway, Australia and Luxembourg come out on top and less-developed countries like Iraq, Afghanistan and Sudan come out on the bottom, according to " The Economist's" quality-of-life index . That said, there are certainly segments of the population, in countries like the United States, in which people don't have the right to marry whomever they choose, are discriminated against, are treated as guilty until proven innocent, do not have access to a meaningful and useful education and/or do not get equal pay for equal work.
The Bottom Line
The main difference between standard of living and quality of life is that the former is more objective, while the latter is more subjective. Standard of living factors such as gross domestic product, poverty rate and environmental quality, can all be measured and defined with numbers, while quality of life factors like equal protection of the law, freedom from discrimination and freedom of religion, are more difficult to measure and are particularly qualitative. Both indicators are flawed, but they can help us get a general picture of what life is like in a particular location at a particular time.
Dow Up 200, Dax Going Wild, Dollar Plunging, Bears Getting Creamed
Image: NASA
Markets around the world are going berzerk.
The Dow is up over 200.
Germany is up 3%
The dollar is tanking to post-WWII lows against the yen.
Yields are jumping: The 10-year yields a whopping 2.22%!
At least at the moment, nobody has any worries about going long risk into the weekend.
One interesting thing to note:Shares of Apple are lagging, up less than 1%.
One other interesting thing to note: The homebuilder ETF is up over 4%.
The world is changing.
11 Facts About Big Banks That The Protesters Should Memorize
Image: Daniel Goodman / Business Insider
The repeal of provisions in 1999 of the Glass–Steagall Act of 1933 has not only effectively made " Too Big To Fail" a reality and a moral hazard, the subsequent trillion's of dollars in bank bailout funded by the taxpayer has also saddled the already over-indebted nation with even more debt.
Even with the he Dodd-Frank financial reform, from a market perspective, there are still issues within the structure of the current banking operation that are not adequately addressed.
First of all, banks should not have prop trading in-house, period. At the very least, the clearing house and the trading arm now reside withing the same banks need to be completely separated into different companies, with a physical Chinese titanium wall in between.
The reason is that when the the banks, who are active players in trading the markets, can see where all the future market transactions are heading with their clearing house operation, they can position and front-run everybody. That's an unfair advantage not only disrupting the normal functioning of the markets, but also creates market volatility. Frankly, we are flabbergasted that with new government regulations coming out of almost everywhere everyday, there's no regulatory oversight in that aspect of the banking industry.
Another area that needs regulatory attention from a market perspective is that investment banking houses (rating agencies as well) should be banned from releasing any kind of market moving 'research notes' to the general mass media, unless they are released to everyone (clients as well as the general public) at the same time!
When the 'research notes' by, for example, Goldman Sachs, JP Morgan, etc. hit the mass media, those banks and their rich paying clients are already positioned to take advantage of the subsequent reaction en masse from retail investors, which, by the way, are 'properly' disclosed in the fine print of their research notes.
Why do you think banks make their " intellectual property" available to the non-paying public in the first place? Why do you think Goldman flip-flops their forecasts every six months? It is to move markets to their advantage, as they know they can.
A good example of this would be the market movement in the week before the S& P's " official" downgrade of the U.S. sovereign debt. It is quite obvious some big players knew ahead of time about the downgrade most likely from S& P. As we stated before:
As usual, retail investors were the last to know, and once again, Wall Street seemed somehow to know way ahead of even the White House and Secretary Geithner as nobody sells off 500 points on Dow based on 'rumors'.
S& P is reportedly under investigation of possible insider trading however, any good lawyer could argue the alleged " leak" by S& P does not exactly fit into the insider trading as stipulated by law. Again, that suggests an unfair market manipulation and advantage that's entirely not addressed in the current regulatory and legal framework.
Here are some more staggering statistics about the nation's biggest banks from Think Progress:
– Bank profits are highest since before the recession…: According to the Federal Deposit Insurance Corp., bank profits in the first quarter of this year were “the best for the industry since the $36.8 billion earned in the second quarter of 2007.” JP Morgan Chase is currently pulling in record profits.
– …even as the banks plan thousands of layoffs: Banks, including Bank of America, Barclays, Goldman Sachs, and Credit Suisse, are planning to lay off tens of thousands of workers.
– Banks make nearly one-third of total corporate profits: The financial sector accounts for about 30 percent of total corporate profits, which is actually downfrom before the financial crisis, when they made closer to 40 percent.
– Since 2008, the biggest banks have gotten bigger: Due to the failure of small competitors and mergers facilitated during the 2008 crisis, the nation’s biggest banks — including Bank of America, JP Morgan Chase, and Wells Fargo — are now bigger than they were pre-recession. Pre-crisis, the four biggest banks held 32 percent of total deposits now they hold nearly 40 percent.
– The four biggest banks issue 50 percent of mortgages and 66 percent of credit cards: Bank of America, JP Morgan Chase, Wells Fargo and Citigroup issue one out of every two mortgages and nearly two out of every three credit cards in America.
– The 10 biggest banks hold 60 percent of bank assets: In the 1980s, the 10 biggest banks controlled 22 percent of total bank assets. Today, they control 60 percent.
– The six biggest banks hold assets equal to 63 percent of the country’s GDP: In 1995, the six biggest banks in the country held assets equal to about 17 percent of the country’s Gross Domestic Product. Now their assets equal 63 percent of GDP.
– The five biggest banks hold 95 percent of derivatives: Nearly the entire market in derivatives — the credit instruments that helped blow up some of the nation’s biggest banks as well as mega-insurer AIG — is dominated by just five firms: JP Morgan Chase, Goldman Sachs, Bank of America, Citibank, and Wells Fargo.
– Banks cost households nearly $20 trillion in wealth: Almost $20 trillion in wealth was destroyed by the Great Recession, and total family wealth is still down “$12.8 trillion (in 2011 dollars) from June 2007 — its last peak.”
– Big banks don’t lend to small businesses: The New Rules Project notes that the country’s 20 biggest banks “devote only 18 percent of their commercial loan portfolios to small business.”
– Big banks paid 5,000 bonuses of at least $1 million in 2008: According to the New York Attorney General’s office, “nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008.”
Occupy Wall Street is spreading across the U.S. into Asia and Europe garnering support and media attention. While we do not believe the movement is entirely constructive to a already troubled U.S. economy, we do understand the elements behind the initiative.
When banks have this much power, and consecutive quarters of huge trading profits, it is a sign that 'Too Big To Fail' needs to be broken apart as they represent too much monopoly, as well as a major systemic risk over markets and the entire financial system.
Dollar falls to post WW II low vs yen euro climbs
(AP:NEW YORK) The dollar has fallen to its lowest point against the Japanese yen since World War II. The euro is climbing on hopes that European leaders can put together a comprehensive plan to solve the region's debt crisis.
European financial ministers are meeting this weekend and possibly next week. Reports of disagreement between France and Germany over terms of the plan have spooked investors.
Lack of consensus between the European Union's two largest economies could derail a solution to the crisis, which has slowed Europe's economic growth and threatens to inflict large losses on the region's banks.
The dollar fell as low as 75.76 yen early Friday was trading at 76.08 yen later in New York, down from 76.85 late Thursday. The euro has risen to $1.3882 from $1.3777.
Treasuries Seeing Modest Weakness Amid Optimism About Europe
(RTTNews) - Treasuries are seeing modest weakness in morning trading on Friday, as traders express renewed optimism about the financial situation in Europe.
Bond prices moved modestly lower in early trading and have seen some further downside since then. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.2 basis points at 2.212 percent.
The modest weakness among treasuries comes amid the optimism about Europe, where leaders are trying to reach an agreement on a plan that could potentially resolve the region's ongoing debt crisis.
While a statement from France and Germany indicated that the European leaders are not likely to reach an agreement on the debt crisis at a summit on Sunday, a second summit has been scheduled for Wednesday.
Citing European Union sources, Reuters reported that the move to delay the crucial decisions on dealing with the European debt crisis is designed to give German Chancellor Angela Merkel time to secure parliamentary support.
Peter Boockvar, equity strategist at Miller Tabak, said, " While we won't get a definitive response from the Europeans this weekend on how best to deal next with their debt crisis, officials are still holding out hope that just a few extra days will complete the job."
" With the S& P 500 above 1,200, the DAX near 6,000 and the euro closer to 1.40 than 1.30, markets are assuming something," he added. " Whether what is put in place actually works or not is a different discussion, markets just want satisfaction now."
A rally on Wall Street is also contributing to the weakness among treasuries, with some traders moving their money out of bonds and into stocks. The stock markets have befitted from the optimism about Europe as well as some upbeat earnings news.
ENERGY MARKETS
December crude oil was higher overnight but remains below the May-July downtrend line crossing near 87.23. Stochastics and the RSI are overbought and are turning bearish hinting that a short-term top might be in or is near. If December extends this month's rally, the 38% retracement level of the May-October decline crossing at 90.65 is the next upside target. Closes below the 20-day moving average crossing at 83.52 are needed to confirm that a short-term top has been posted. First resistance is the 38% retracement level of the May-October decline crossing at 90.65. Second resistance is the 50% retracement level of the May-October decline crossing at 95.39. First support is the 10-day moving average crossing at 86.26. Second support is the 20-day moving average crossing at 83.52.
November heating oil was lower overnight as it consolidates some of Thursday's rally. Stochastics and the RSI are overbought and are turning bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 289.72 would confirm that a short-term top has been posted. If November extends this month's rally, the 62% retracement level of the April-October decline crossing at 311.63 is the next upside target. First resistance is the May-August downtrend line crossing near 308.58. Second resistance is the 62% retracement level of the April-October decline crossing at 311.63. First support is the 10-day moving average crossing at 298.51. Second support is the 20-day moving average crossing at 289.72.
November unleaded gas was lower overnight as it extends this week's decline. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing at 265.05 would confirm that a short-term top has been posted. Multiple closes above the May-August downtrend line crossing near 285.31 would open the door for a possible test of August's high crossing at 295.90 later this fall. First resistance is the aforementioned downtrend line crossing near 285.31. Second resistance is August's high crossing at 295.90. First support is the 20-day moving average crossing at 265.05. Second support is the reaction low crossing at 261.13.
November Henry natural gas was lower overnight as it extends this week's trading range. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near-term. Closes above Monday's high crossing at 3.777 are needed to confirm that a short-term low has been posted. If November renews this year's decline, monthly support crossing at 3.225 is the next downside target. First resistance is the 25% retracement level of the June-October decline crossing at 3.859. Second resistance is the reaction high crossing at 3.926. First support is last Thursday's low crossing at 3.446. Second support is monthly support crossing at 3.225.
CURRENCIES
The December Dollar was lower in overnight trading but remains above the 50% retracement level of the August-October rally crossing at 77.16. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short-term low might be in or is near. Closes above the 20-day moving average crossing at 78.24 are needed to confirm that a short-term low has been posted. If December extends the decline off this month's high, the 62% retracement level of the August-October rally crossing at 76.39 is the next downside target. First resistance is Tuesday's high crossing at 77.86. Second resistance is the 20-day moving average crossing at 78.24. First support is Monday's low crossing at 76.70. Second support is the 62% retracement level of the August-October rally crossing at 76.39.
The December Euro was lower overnight as it consolidates around broken trading range support crossing at 137.94. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 135.84 would confirm that a short-term top has been posted. If December extends the rally off this month's low, the 62% retracement level of the August-October decline crossing at 140.16 is the next upside target. First resistance is the 62% retracement level of the August-October decline crossing at 140.16. Second resistance is the 75% retracement level of the August-October decline crossing at 142.03. First support is the 20-day moving average crossing at 135.84. Second support is the reaction low crossing at 135.57.
The December British Pound was higher overnight as it consolidates above the 38% retracement level of the August-October decline crossing at 1.5717. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If December extends this month's rally, the 50% retracement level of the August-October decline crossing at 1.5883 is the next upside target. Closes below the 20-day moving average crossing at 1.5626 are needed to confirm that a short-term top has been posted. First resistance is Wednesday's high crossing at 1.5847. Second resistance is the 50% retracement level of the August-October decline crossing at 1.5883. First support is the 20-day moving average crossing at 1.5626. Second support is the reaction low crossing at 1.5532.
The December Swiss Franc was higher overnight as it this week's trading range above the 20-day moving average. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at .11065 would temper the near-term friendly outlook. If December extends the rally off this month's low, the reaction high crossing at .11596 is the next upside target. First resistance is the overnight high crossing at .11315. Second resistance is the reaction high crossing at .11596. First support is the 20-day moving average crossing at .11065. Second support is this month's low crossing at .10749.
The December Canadian Dollar was lower overnight as it extends this week's trading range. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If December extends this month's rally, the 50% retracement level of the July-October decline crossing at 99.82 is the next upside target. Closes below the 20-day moving average crossing at 97.02 are needed to confirm that a short-term top has been posted. First resistance is Monday's high crossing at 99.41. Second resistance is the 50% retracement level of the July-October decline crossing at 99.82. First support is the 20-day moving average crossing at 97.02. Second support is this month's low crossing at 93.67.
The December Japanese Yen was higher overnight while extending the trading range of the past two months. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If December renews this year's rally, August's high crossing at .13180 is the next upside target. If December renews the decline off August's high, the 25% retracement level of the 2010-2011-rally crossing at .12657 is the next downside target. First resistance is the reaction high crossing at .13158. Second resistance is August's high crossing at .13180. First support is the reaction low crossing at .12860. Second support is 25% retracement level of the 2010-2011-rally crossing at .12657.
Obama signs 3 trade deals, biggest since NAFTA
(AP:WASHINGTON) President Barack Obama has signed trade agreements with South Korea, Panama and Colombia, completing years of negotiations and fulfilling U.S. action on the biggest trade deal since the 1993 North American Free Trade Agreement.
Obama signed the agreements Friday and planned to join a Rose Garden reception with business and labor leaders and workers who could potentially benefit from the new pacts. Obama also signed legislation to provide assistance to U.S. workers displaced because of the agreements.
Congress approved the agreements last week, just as South Korea's President Lee Myung-bak arrived in Washington for a state visit. Colombia's and Panama's legislatures have approved the deals. The South Korean National Assembly still has to approve the pact.
The Obama administration says the agreement will boost exports and contribute to job growth
* Contango curve remains in place, some shorts rolling over to later months
* Any key resolution on euro zone debt crisis likely next week (Updates prices)
By Niluksi Koswanage
KUALA LUMPUR, Oct 21 (Reuters) - Malaysian palm oil futures inched up on Friday as investors waited for a weekend meeting of euro zone leaders for signs of resolving the region's debt crisis that could plunge the world into recession if left unchecked.
Palm oil futures are set for their smallest weekly gain in October with prices see-sawing this week on conflicting reports over European governments reaching a deal to contain the crisis that could slow economic growth and commodity demand.
France and Germany cleared the confusion by saying on Thursday that leaders would discuss a holistic solution to the crisis on Sunday although no decision will be adopted before a second meeting to be held by Wednesday.
Palm oil is widely used in Europe, the second-largest consuming region after Asia, for food and fuel. A slowdown in Europe could weaken some demand although palm oil could maintain its market share in the region as it is the cheapest edible oil.
" It is all eyes on the euro zone. They better get it right this time as there is too much uncertainty in markets like palm oil that are not fully reflecting fundamentals," said a trader with a brokerage in Kuala Lumpur.
Benchmark January palm oil futures < FCPOc3> on the Bursa Malaysia Derivatives Exchange settled up 0.6 percent to 2,883 ringgit ($921.292) before going as high as 2,903 percent.
Traded volumes were light at 21,057 lots of 25 tonnes each, compared to the usual 25,00 lots as most of the market was cautious ahead of the European summit.
Reuters technical analyst Wang Tao said palm oil will revisit the previous trading session's low of 2,822 ringgit as it will continue a short-term downtrend that started at the Oct. 17 high of 2,946 ringgit.
The palm oil market has been trading in a weak contango -- where the third month or the most active month is at a discount to later contracts -- on expectations of production continuing to rise in the short term.
" Fundamentals tell part of the story, but the contango is getting more pronounced as some players could be rolling their shorts to later months," said another trader in Malaysia.
The market on Thursday came under pressure after cargo surveyors said Malaysian palm oil exports were above 1.03 million tonnes for Oct. 1-20 compared to the same period a month ago, meeting expectations. European demand lifted exports.
October exports have largely been driven by higher crude palm oil shipments out of Malaysia after Indonesia kept export taxes on its cargoes virtually unchanged, triggering a shift.
But Malaysian crude palm oil has lost that discount to the Indonesian grade, potentially slowing down orders in the coming days as Indonesia has ample production, traders said.
U.S. soyoil for December delivery rose 0.3 percent in Asian trade on cautious optimism ahead of the European meeting although gains were curbed by a rapid U.S. soy harvest.
China's most active May 2012 soybean oil contract < 0#DBY:> and RBD palm olein < 0#DCP:> both rose more than 1 percent.
" The rebound seen in the Dalian market today is mostly technical. Most traders are still cautious as the outlook for the euro zone crisis still remains unclear," said Li Xiaoli, an analyst with Beite Futures.
Palm, soy and crude oil prices at 1008 GMT
* Global equity markets extend gains on debt crisis hopes
* Crude oil gains on expectations Europe to resolve crisis
* Dollar falls to record low against the yen on EBS
* Prices slide on optimism about EU summit outcome=2 (Adds opening of U.S. markets, byline, dateline previous LONDON)
By Herbert Lash
NEW YORK, Oct 21 (Reuters) - Global equity markets rose and the euro gained on Friday amid investor optimism that European leaders over the next few days will come closer to resolving the euro zone's two-year-old debt crisis.
Brent crude oil rose more than $1 per barrel to above $110 after Paris and Berlin said a comprehensive euro zone debt deal was on its way. For details see:
" It seems like any negative surprise from this weekend's summit has been been diminished by news European leaders will have a follow-up session on Wednesday," said Mike Cloherty, head of U.S. rate strategy at RBC Capital Markets in New York.
" Overall, I don't think anyone is looking for a complete solution that quickly."
Equity markets gained on the optimism and were also buoyed by strong earnings reports from U.S. corporate icons.
McDonald's Corp reported higher-than-expected quarterly profit, Honeywell International Inc's quarterly earnings increased 45 percent and the company lifted its full-year outlook, while General Electric Co posted an 18 percent profit rise that met Wall Street's expectations.
MSCI's all-country world equity index gained 1.6 percent and the FTSEurofirst 300 index of top European shares rose 1.9 percent at 972.01 points.
Wall Street jumped more than 1 percent shortly after the open.
The Dow Jones industrial average was up 142.52 points, or 1.23 percent, at 11,684.30. The Standard & Poor's 500 Index was up 14.57 points, or 1.20 percent, at 1,229.96. The Nasdaq Composite Index was up 26.25 points, or 1.01 percent, at 2,624.87.
The euro gained 0.8 percent to 1.3881 against the dollar, which fell to a record low against the yen after breaking through stop loss and options barriers. It was the dollar's biggest one-day decline in nearly two months.
One trader said Japanese banks then stepped in to buy dollars against the yen at 76.00 yen.
The benchmark December Brent crude contract rose $2.08 to $111.84 per barrel.
U.S. light crude oil futures were up $2.75 at $88.82.
Government debt prices on both sides of the Atlantic fell. German Bund futures extended losses to hit session lows while U.S. benchmark 10-year notes fell.
Bund futures fell as much as 77 ticks on the day, while the benchmark 10-year U.S. Treasury note was down 7/32 in price to yield 2.21 percent.
Gold rose more than 1 percent to a session high of $1,636.99 an ounce on the dollar's weakness
FUNDAMENTALS
* NYMEX crude for new front-month December delivery < CLc1> was up 24 cents at $86.31 a barrel by 0000 GMT, after settling down 22 cents. The November contract expired on Thursday, settling down 81 cents at $85.30, pressured by liquidations ahead of the expiry.
* London Brent crude for December delivery < LCOc1> was up 15 cents at $109.91 a barrel, after settling up $1.37 at $109.76.
* Oil futures got some support after France and Germany assured markets that European leaders at a summit on Sunday will discuss a comprehensive solution to the euro zone crisis, though no decisions will be adopted before a second meeting next week. [IDnL5E7LK5QI]
* A strengthening La Nina in the United States this winter will cause colder and wetter weather to the North and drier and warmer conditions in the South, government forecasters said.
* Oil product inventories in the Amsterdam-Rotterdam-Antwerp hub have fallen to their lowest in nearly three years as backwardation, a condition in which prices are lower in months further out than the front month, has reduced the incentive to store products.
* The demise of Muammar Gaddafi will speed up the recovery of Libya's oil industry, said Nouri Berouin, chairman of the National Oil Co. Current output has already ramped to 430,000 barrels per day, he added.
MARKETS NEWS
* U.S. stocks ended with modest gains on Thursday, shifting back and forth on incremental developments in Europe where leaders sought to reassure investors that a solution to the debt crisis would come soon.
* The euro clung to overnight gains early in Asia on Friday but looked set to stay in a tight range with traders wary of taking big positions ahead of a weekend summit on tackling Europe's debt crisis.
ENERGY MARKETS
November crude oil was higher overnight as it extends Tuesday's breakout above the May-July downtrend line crossing near 86.92. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If November extends this month's rally, the 38% retracement level of the May-October decline crossing at 90.50 is the next upside target. Closes below the 20-day moving average crossing at 82.87 are needed to confirm that a short-term top has been posted. First resistance is the 38% retracement level of the May-October decline crossing at 90.50. Second resistance is the 50% retracement level of the May-October decline crossing at 95.28. First support is the 10-day moving average crossing at 85.68. Second support is the 20-day moving average crossing at 82.87.
November heating oil was higher overnight as it consolidates some of Monday's decline but remains below the May-August downtrend line crossing near 308.90. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If November extends this month's rally, the 62% retracement level of the April-October decline crossing at 311.63 is the next upside target. Closes below the 20-day moving average crossing at 288.05 would confirm that a short-term top has been posted. First resistance is the aforementioned downtrend line crossing near 308.90. Second resistance is the 62% retracement level of the April-October decline crossing at 311.63. First support is the 10-day moving average crossing at 295.71. Second support is the 20-day moving average crossing at 288.05.
November unleaded gas was lower due to profit taking overnight as it extends Monday's key reversal down. Stochastics and the RSI are turning bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 264.03 would confirm that a short-term top has been posted. Multiple closes above the May-August downtrend line crossing near 285.79 would open the door for a possible test of August's high crossing at 295.90 later this fall. First resistance is the aforementioned downtrend line crossing near 285.79. Second resistance is August's high crossing at 295.90. First support is the 10-day moving average crossing at 273.64. Second support is the 20-day moving average crossing at 264.03.
November Henry natural gas was higher overnight as it consolidates some of Tuesday's decline. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near-term. Closes above Monday's high crossing at 3.777 are needed to confirm that a short-term low has been posted. If November renews this year's decline, monthly support crossing at 3.225 is the next downside target. First resistance is the 25% retracement level of the June-October decline crossing at 3.859. Second resistance is the reaction high crossing at 3.926. First support is last Thursday's low crossing at 3.446. Second support is monthly support crossing at 3.225.
CURRENCIES
The December Dollar was lower overnight and below the 50% retracement level of the August-October rally crossing at 77.16. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short-term low might be in or is near. Closes above the 20-day moving average crossing at 78.41 are needed to confirm that a short-term low has been posted. If December extends the aforementioned decline, the 62% retracement level of the August-October rally crossing at 76.39 is the next downside target. First resistance is the 10-day moving average crossing at 77.72. Second resistance is the 20-day moving average crossing at 78.41. First support is Monday's low crossing at 76.70. Second support is the 62% retracement level of the August-October rally crossing at 76.39.
The December Euro was higher overnight and remains poised to extend this month's rally. However, stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 135.59 would confirm that a short-term top has been posted. If December extends the rally off this month's low, the 62% retracement level of the August-October decline crossing at 140.16 is the next upside target. First resistance is the 62% retracement level of the August-October decline crossing at 140.16. Second resistance is the 75% retracement level of the August-October decline crossing at 142.03. First support is the 10-day moving average crossing at 136.83. Second support is the 20-day moving average crossing at 135.59.
The December British Pound was higher overnight as it consolidates above the 38% retracement level of the August-October decline crossing at 1.5717. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If December extends this month's rally, the 50% retracement level of the August-October decline crossing at 1.5883 is the next upside target. Closes below the 20-day moving average crossing at 1.5586 are needed to confirm that a short-term top has been posted. First resistance is Monday's high crossing at 1.5839. Second resistance is the 50% retracement level of the August-October decline crossing at 1.5883. First support is the 20-day moving average crossing at 1.5586. Second support is this month's low crossing at 1.5179.
The December Swiss Franc was higher overnight as it consolidates above the 20-day moving average. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If December extends the rally off this month's low, the reaction high crossing at .11596 is the next upside target. Closes below the 20-day moving average crossing at .11052 would temper the near-term friendly outlook. First resistance is Monday's high crossing at .11272. Second resistance is the reaction high crossing at .11596. First support is the 20-day moving average crossing at .11052. Second support is this month's low crossing at .10749.
The December Canadian Dollar was higher overnight as it extends this month's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If December extends this month's rally, the 50% retracement level of the July-October decline crossing at 99.82 is the next upside target. Closes below the 20-day moving average crossing at 96.90 are needed to confirm that a short-term top has been posted. First resistance is Monday's high crossing at 99.41. Second resistance is the 50% retracement level of the July-October decline crossing at 99.82. First support is the 20-day moving average crossing at 96.90. Second support is this month's low crossing at 93.67.
The December Japanese Yen was lower overnight while extending the trading range of the past two months. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near-term. If December renews this year's rally, August's high crossing at .13180 is the next upside target. If December renews the decline off August's high, the 25% retracement level of the 2010-2011-rally crossing at .12657 is the next downside target. First resistance is the reaction high crossing at .13158. Second resistance is August's high crossing at .13180. First support is the reaction low crossing at .12860. Second support is 25% retracement level of the 2010-2011-rally crossing at .12657.
Markets look to Europe in hopes for crisis plan
By PAN PYLAS
AP Business Writer
(AP:LONDON) Hopes that Europe is close to agreeing a package of measures to deal with its debt crisis supported market sentiment on Wednesday, though fears of disappointment kept the gains in check.
A report in The Guardian newspaper in London suggested that France and Germany, Europe's two biggest economies, were putting the finishing touches on a massive expansion of the region's bailout fund, the European Financial Stability Facility, or EFSF.
The report, which said the two countries were considering raising the EFSF's firepower to euro2 trillion ($2.8 trillion) from euro440 billion, helped boost stocks in the U.S. and Asia late Tuesday.
The buying momentum carried through to Europe on Wednesday, though Wall Street's rally ran out of steam soon after the open. The German government denied a deal had been reached on boosting the bailout fund.
Amid the conflicting signals, investors remained cautious in the run-up to Sunday's meeting of eurozone leaders in Brussels where a comprehensive solution to the debt crisis has been promised.
" Despite the fact that the market has appeared pre-disposed to react to good news over the past couple of weeks the potential stumbling blocks over the issues of bank recapitalisation and the development of the EFSF are still huge," said Jane Foley, an analyst at Rabobank International. " There is clear risk that this weekend's crucial leaders' meeting will provide disappointment."
In Europe, Germany's DAX was up 0.5 percent at 5,904 while the CAC-40 in France rose 0.2 percent at 3,148. The FTSE 100 index of leading British shares was 0.6 percent higher at 5,441.
European markets had been higher before Wall Street's uninspiring start _ the Dow Jones industrial average was up 0.2 percent at 11,598 while the broader Standard & Poor's 500 index rose 0.1 percent to 1,226.
Over the past couple of weeks, stocks recovered a chunk of their losses for the year as investors became confident that the 17 countries that use the euro were preparing a three-pronged solution to the debt crisis. That would include measures to boost the firepower of the bailout fund, a recapitalization of a large part of the banking sector and a plan to get the banks to take a bigger hit on their Greek debt holdings.
However, hopes for such a plan were diminished in the early part of the week, after German officials, including the finance minister, cautioned investors against believing that Sunday's summit would mark a definitive turning point in the crisis.
" The market risk remains disappointment with whatever is decided at the weekend summit," said Neil MacKinnon, global macro strategist at VTB Capital.
Investors will be closely monitoring all commentary from key players in the summit, especially if anything emerges later from a telephone call between French president Nicolas Sarkozy and German Chancellor Angela Merkel. A French government spokeswoman said Sarkozy emphasized to cabinet members earlier Wednesday that " Europe has a rendezvous with its history."
While stocks have advanced, the euro has perked up and appears headed back towards the $1.40 mark for the first time in six weeks _ when investors are willing to take on more risk the euro usually rises.
By mid afternoon, it was 0.4 percent higher at $1.3800.
Oil prices have also recovered ground on optimism of a comprehensive solution in Europe but were trading flat on the back of the muted performance in stock markets, particularly in the U.S. The benchmark rate for November delivery was down 8 cents at $88.46 a barrel in electronic trading on the New York Mercantile Exchange.
Earlier in Asia, Japan's Nikkei 225 index rose 0.4 percent to 8,772.54 and Hong Kong's Hang Seng added 1.3 percent to 18,309.22. South Korea's Kospi gained 0.9 percent to 1,855.92.
However, mainland China's Shanghai Composite Index fell 0.3 percent to 2,377.51. That comes on top of a 2.3 percent loss Tuesday, when data showed China's economic growth eased last quarter to 9.1 percent. The smaller Shenzhen Composite Index lost 0.6 percent to 1,004.20.
* German finmin spokesman: no change to euro zone aid fund
* Focus remains on Oct 23 EU summit
* U.S. housing starts rise more than expected
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 19 (Reuters) - U.S. Treasury prices edged lower on Wednesday in volatile trading on renewed hopes this weekend's European Union summit will provide a feasible solution to the euro zone debt crisis.
A sharper-than-expected rise in U.S. housing starts for September added to the market's overall optimism, lifting long bond yields for a second straight session.
Safe-haven demand for Treasuries soured late on Tuesday after Britain's Guardian newspaper reported that France and Germany had agreed on a deal to increase the euro zone bailout fund five-fold.
The reported agreement was later denied by two senior EU officials, including a spokesman for the German finance minister, but Treasuries remained largely under pressure..
" The Treasury market is still very much Europe-driven," said Jacob Oubina, senior economist at RBC Capital Markets in New York. " For now, it seems the market wants to believe that European leaders will produce something at the summit."
Conflicting statements about a meeting of finance ministers and central bankers of the Group of 20 major economies on Oct. 23 have anchored this week's Treasury price action. Optimism for the summit had initially ramped up on expectations for a solution to the debt crisis, but that was subsequently downplayed by German Finance Minister Wolfgang Schaeuble.
German Chancellor Angel Merkel's comments that she expected European leaders to produce a " work plan" for Greece at the summit seemed to have calmed markets down, analysts said.
Wranglings in Europe have overshadowed U.S. economic data, which have firmed the last two weeks, prompting investors to cover short positions on Treasuries built up on expectations of a much more severe slowdown in the world's largest economy.
In morning trading, benchmark 10-year notes fell 2/32 in price to yield 2.18 percent. Benchmark yields were well off Tuesday's low of 2.077 percent, which was the lowest since Oct. 7.
Treasuries also gained ground against German government bonds, narrowing the 10-year T-note yield gap over Bunds to 9 basis points from 11 basis points in late European trade on Tuesday, after a 4.075-billion-euro auction of German 10-year debt drew weak demand.
U.S. 30-year bonds fell 16/32 in price to yield 3.2 percent. The long bond fell more than a point after the release of U.S. housing starts data. (Editing by Padraic Cassidy)
rpires ( Date: 19-Oct-2011 17:11) Posted:
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