The E-Mini S&P 500 moved in sync with the events leading to and revolving around the euro summit all week! The eurozone went through all of the challenges of potentially reaching an accord that would be “powerful” and a “fiscal compact” with stability and integrity of the Economic and Monetary Union and the European Union by the end of the summit. This was achieved without the funding end completed. Earlier on, the European Central Bank (ECB) had thought to possibly loan money to the International Monetary Fund (IMF), but could not with the EU Treaty in place banning the intervention. The U.S. Treaty, German Chancellor Merkel and French President Sarkozy worked to amend, but to no avail. Then the ECB was thought to perhaps increase bond purchase to boost one of both of the European Financial Stability Facility (EFSF) temporary fund and the European Stability Mechanism (ESM) permanent fund, but retracted the increases and maintains the capped maximum purchases of $20 billion euros a week. The investment world welcomed the stricter budget rules!
The Standard & Poor’s potential downgrade threats of 15 of the 17 euro nations, the EFSF and perhaps the European Union itself remains still a possibility. Investors were also hesitant to loan the IMF an additional $200 billion euros to the bailout fund. No country has lost money to the IMF to date, but no borrower has ever defaulted on a loan to date. The IMF clearly has credibility and experience in handled debt crisis circumstances, but to date has never had the exorbitant debts of Italy and Spain to deal with. The U.S. has some veto power over lending decisions with the IMF and so far has refrained from any participation in the bond purchases or loans. The IMF has about $380 billion available for lending, eclipsed by the potential amount needed for any countries with larger economies such as Italy. Euro leaders agreed to provide about $150 billion euros in loans to the IMF. The eurozone still face some challenges in the coming days and months, but then the China fund report bolstered the market more! China’s central banks are planning to create a $300 billion vehicle to manage the U.S. and euro investments. It could make funding easier for the debt ridden nations! The E-Mini S&P 500 will continue to be vulnerable to the eurozone debt crisis saga. For now the cup is half full!
The U.S. Thomson Reuters/University of Michigan index of consumer sentiment rose to 67.7 from the November 64.1. The expectations were for 65.8. The U.S. trade deficit narrowed in October to 1.6% the lowest in the last ten months. The trade gap was at $43.5 billion in line with expectations. Both imports and exports slackened. Imports from China were up to $37.8 billion and the imports from Japan were up to $12.3 billion. U.S. exports were down 0.8% to $179.2 billion.
On the stock side: JP Morgan (NYSE:JPM) was up 3 % to $33.18. Morgan Stanley (NYSE:MS) was up 3.2 % to $16.38. Citigroup Inc. (NYSE:C) was up 0.05 % to $28.77. Bank of America (NYSE:BAC) was up 2.3 % to $28.77. Caterpillar (NYSE:CAT) was up 3.3 % to $95.97. Halliburton (NYSE:HAL) was up 2.9 5 to $34.08. GE (NYSE:GE) was up 3.3 % to $16.84. McDonald’s (NYSE:MCD) was up 1.2 % to $98.03. Starbucks (NASDAQ:SBUX) was up 2.6 % to $43.96. DuPont (NYSE:DD) was down 3.2 % to $45.04.
Monday, we have no major U.S. economic reports due out!
E-Mini S&P 500 Chart
Monday, what to expect! We are technically in buy mode on the Daily Chart unless the E-Mini S&P 500 penetrates $1196.00! Monday, we anticipate an inside to higher day! Today’s range was $1260.50 - $1228.50. The market settled at $1258.75. Our comfort zone or point of control for this market appears to be $1247.75. Our anticipated potential range for Monday’s trading could be $1282.50 - $1236.50. Today may have restored some confidence in the marketplace with the stronger close. The eurozone has not totally overcome the vulnerable position.