The E-Mini S&P 500 traded higher on light volume. Volume is the foremost element in this marketplace to make the E-Mini S&P 500 vulnerable.
U.S. CPI increased 0.4% after a 0.2% increase the month before, attributing energy costs for more than 80 % of the rise. The University of Michigan sentiment index's preliminary reading for March had confidence dropping to 74.3 in March from 75.3 in February. This is the first decline since August.
Manufacturing activity increased 0.3% in February after a revised 1.1% increase in the preceding month. Capacity utilization decreased to 78.7 % in February from 78.8 % in January. Real average hourly earnings decreased 0.3% from January to February, seasonally adjusted. Average hourly earnings increased 0.1%. Real average weekly earnings fell 0.3% over the month.
The US economic growth forecast by the Economic Cycle Research Institute reported the index increased to 125.1 last week from 124.6 the previous week. The forecast remains bullish but some may look for a potential resistance level at $1421.00 - $1434.00.
US banks had a fairly positive score on their stress tests and the German economic data has been positive leading to the sentiment that the European Central Bank may hike interest rates sooner than 2014. The Greek cabinet officially approved the bailout terms as the Euro Zone leaders approved the $130 billion euros bailout. The fiscal compact has been the core of the summit activities to contain the debt crisis from the contagion effects.
The creditors or bondholders of the Greek debt had agreed to a proposed loss of about 74% on the investment. Some investors holding about $9 billion euros of the Greek debt have held out in opposition of the terms of the bond swap. About 95% of the creditors participated in the bond swap making it a viable swap. Greece's jobless rate increased to 20.7 in the last quarter of 2011.
The European Central Bank has released over a trillion euros into the banking system to increase liquidity and stimulate lending within the banks to consumers and businesses alike! The cash infusion is thought to have had a decisive impact on the Euro economy. Euro leaders are still tossing around their plans for both the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM). The Euro Zone may allow the two funds to work jointly raising the combined funds to about $750 billion euros.
The next meeting to discuss the issues will be in Copenhagen on March 30 - 31st. There is opposition to boost the funding of the entities, but they really want to take the threat of the debt crisis out of the global economy. The EFSF was to expire in July after lending $192 billion euros of the $440 billion euros to Greece, Ireland and Portugal. They would like the ESM to start off with the $500 billion euros, but have initially planned a $200 billion lending capacity to start. It will still take time to stabilize the nations, but the global community has some confidence in the fiscal compact.
Britain decided to join the US in a bilateral agreement to release some of the strategic oil stocks. In front of an election, it is important to the current administration to keep inflation and the economy stable. Iran has been subject to sanctions on reports of potential uranium enrichment sites that may impose a threat to the world peace! The US began the ban and the European Union has put a grace period on the sanctions to July 1st to see that the Euro countries may find additional supplies as they cut their Iranian oil imports.
The ban has imposed financial constraints for Iran where they may have had to drop prices to persuade countries to do business with them. They have gone to bartering gold, oil and Rupees to import/export maintaining the economy of their country. To further the constraints, Belgium based SWIFT or Society for Worldwide Interbank Financial Telecommunication has agreed upon the ban to enforce the asset freeze. SWIFT will disconnect the Iranian banks on Saturday. This entity typically transmits about $6 trillion a day and will be a severe detriment to Iran's business activities.
Further, issues such as insurance for shipments to or from Iran is under supervision as part of the ban. The embargo prohibits financial assistance, financing, insurance, re-insurance and environmental insurance. This perhaps could mean that any voyage coming from or going to Iran may have insurance revoked whereby any consequences of loss of product, loss of ship and/or environmental cleanup cost would not be covered. Iran has been thought to be stockpiling food shipments in an effort to keep the food warehoused for its people. Some of the transactions have been run through Russia.
In anticipation of a shortage, the US has asked Saudi Arabia to fulfill the oil supplies normally supplied by Iran. Iran produces about 3.5 million barrels a day and exports about 2.2 million bpd. This accounts for about 2.5% of the global demand. Saudi Arabia has allayed any concerns of the US by offering to increase production from 10 million bpd to 12.5 bpd if necessary. Saudi Arabia is thought to already have increased shipments to the US by 25%.
Some of the Iranian neighbors such as China, South Korea, Japan and Turkey may have difficulty abiding by the sanctions. Shipping is costly and finding supplies is difficult. Iran is said to welcome nuclear discussions with European Union policy chief Catherine Ashton establishing a desire to set a date and a venue for the talks.
Just as we may find peaceable talks yet with Iran, North Korea would celebrate the birth of leader Kim Il-sung by launching a satellite with ballistic missile technology. This would breach the signed moratorium on nuclear research. This would halt the 240,000 tons of food aid earmarked for Korea from the US should they carry through with the launch.
On the stock side: JP Morgan Chase and Co. (JPM) was down 0.29 % to $44.50. Citigroup Inc. (C) was up 1.16 % to $36.69 Bank of America (BAC) was up 6.06 % to $9.83. Alcoa Inc. (AA) was up 1.84 % to $10.54. Boeing Co. (BA) was down 0.30 % to $75.20. Caterpillar Inc. (CAT) was up 0.11 % to $113.57. General Electric Co. (GE) was up 0.20 % to $20.23. Halliburton Co. (HAL) was up 1.86 % to $34.54. Hewlett Packard Co. (HPQ) was up 0.37 % to $24.49. SPDR Select Sector Fund - Financial (XLF) was up 0.38 % to $15.72.
Today, we have no major US economic reports due out.
E-Mini S&P 500 Chart.
Monday, what to expect: We maintain a bullish bias unless the E-Mini S&P 500 penetrates $1344.50. Monday, we anticipate an inside to higher day or outside day. Friday's range was $1400.50 - $1394.00. The market settled at $1398.50. Our comfort zone or point of control for this market is $1397.50. Our anticipated range for today is $1407.50 - $1397.50.