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The E-Mini S&P 500 consolidated on an inside day after Tuesday's sharp selloff. The US Consumer Credit increased by $17.776 billion in January while analysts were expecting only a $10.0 billion increase. The report is construed as an optimistic sign for the economy as people may have borrowed to finance auto purchases and education. The increase in this area expresses more confidence in the economy. The borrowing on revolving credit was down perhaps pointing to lesser credit card usage.

The US ADP private sector jobs report showed an added 216,000 jobs. This is occasionally viewed as a sign of the US Unemployment report data to come on Friday. The US Unemployment report is expected 210,000 new jobs created while 243,000 was last month's report. The Wall Street Journal reported that the US Federal Reserve may be considering a mortgage related bond-buying program to hold rates low and perhaps be considered yet another form of stimulus. The US Federal Reserve bought $1.969 billion of long-term treasuries as part of the "Operation Twist" program which concludes in June. The central bank is further supposed to buy longer-term treasuries on Thursday and to sell shorter-term securities on Friday.

A representative from the group of bondholders reminded the marketplace yesterday that a default could potentially cost $1 trillion euros worth of damage should Greece default. The creditors have until Thursday evening to accept a bond swap with about a 75 % loss on their investment. Greece has made no arrangements to extend the time period. Greece also needs to cut its debt by about $100 billion euros to qualify for the $130 billion euros bailout. Wednesday, progress seemed to take place as 30 major bondholders of the Greek debt, representing 39.3% of the debt, agreed to participate in the swap. That represents about $81 billion euros while a couple of banks holding about $10 billion euros may also participate.

They need 75 % participation in order to continue the swap. The Greek social security and other state funds holding about $22 billion euros of the debt may also participate. The pension funds that have refused the conditions of the debt swap were for journalists, hotel, police and self-employed workers that control about $2 billion euros worth of the debt. The German banks holding about $15 billion euros of the Greek bonds should also participate. Some of the German funds have not been able to participate as the union workers, or recipients of the fund have not agreed to the terms.

Nevertheless, the progress toward the bailout bode well for the marketplace. The euro FX did not get a boost as the recession fears and slowdowns in growth from the Euro Zone still pressure the region. We now face a European Central Bank meeting going into Friday's US Unemployment report as well. There is still the decision as to whether Greece will remain in the Euro Zone.

The EU's foreign policy chief, Catherine Ashton, which represents the US, Britain, Germany, France, China and Russia has stated that they have accepted Iran's proposal to begin talks again. Some have thought that the proposal was just buying time for Iran to complete more nuclear research. China and Russia have opposed the sanctions imposed on Iran feeling that they were confrontational rather than constructive. Iran still claims that the enrichment of the uranium and the added equipment is solely for peaceful purposes. Iran is enriching the uranium to a higher fissile purity claiming it to be for medical research while the grade becomes close to the enrichment necessary for military usage. The ban on crude oil from Iran had initially taken prices higher, but with the opening of potential talks and the EIA inventory build this week, oil has come off the highs. Some are still skeptical about the intentions of Iran, but diplomacy must take precedence.

On the stock side: JP Morgan Chase and Co. (JPM) was up 1.60 % to $39.95. Citigroup Inc. (C) was up 3.49 % to $33.20. Bank of America (BAC) was up 4.02 % to $8.01. Alcoa Inc. (AA) was up 0.84 % to $9.55. Boeing Co. (BA) was up 1.32 % to $73.52. Caterpillar Inc. (CAT) was up 2.22 % to $108.27. General Electric Co. (GE) was up 1.90 % to $18.83. Halliburton Co. (HAL) was up 0.23 % to $34.21. Hewlett Packard Co. (HPQ) was up 0.79 % to $24.36. SPDR Select Sector Fund - Financial (XLF) was up 1.28 % to $14.64

E-Mini S&P 500 Chart.

click to enlarge

Thursday, what to expect: We maintain a bearish bias unless the E-Mini S&P 500 penetrates $1375.50. Today, we anticipate an inside to higher day. Wednesday's range was $1354.25 - $1341.25. The market settled at $1353.00. Our comfort zone or point of control for this market is $1349.00. Our anticipated range for Thursday's trading is $1357.50 - $1341.50.

Source: E-Mini S&P 500: Quiet Before The Storm