Seeking Alpha

Proprietary Tra...'s  Instablog

Proprietary Trading
Send Message is the web's largest resource for Proprietary Trading Reviews, Breaking News, Rumors & Opinions! Share your experiences and help us bring transparency to the industry.
My company:
Proprietary Trading
My blog:
Proprietary Trading Firm Reviews, News, Rumors & Opinions
My book:
Free Proprietary Trading Training
View Proprietary Trading's Instablogs on:
  • Proprietary Trading Weekly Market Recap For Friday, June 13, 2014

    Stocks Close Lower and Break Three Week Winning Streak as Mid-east Tensions Erupt

    U.S. equities experienced a defensive week as stocks were under pressure mid-week as escalating oil prices and instability in Iraq are discounted into future earnings growth. NYMEX crude topped $107 bbl in early trade, and is a salient reminder of the risk of the oil-based economy, as usual coming just ahead of peak summer usage. U.S. Secretary of State Kerry said he expected "timely decisions" from Obama on the Iraq situation. Retail Sales came in slightly worse than expected while PPI posted negative prints for both headline and core prices in May, curiously just ahead of next week's Fed meeting. For the week the S&P 500 index declined 0.68%.

    Crude Oil

    NYMEX topped $107 per barrel, with events in Iraq driving prices higher. Government forces in Baghdad are reportedly being helped by Iranian Special Forces to defend against insurgents, which are advancing toward the city. Officials have asked for U.S. airstrikes to hold off the advance, which so far have been denied. There have been no oil production/export delays from the south of Iraq to date, where most of Iraqi oil emanates. Oil fields in the North however, are now under Kurd control.

    Central Bank News

    The Bank of Englands Carney delivered an unexpected hawkish message at the keynote Mansion House speech Thursday. He said that interest rates "could rise sooner than markets currently expect," and that the housing market was now "the greatest risk to the domestic economy." This will invite markets to re-price a 25 basis points hike before year-end. Carney's comments also chime with recent remarks by his MPC colleague, Weale, who has argued that small, incremental rate rises would be better started sooner rather than later if potentially disrupting bigger and more sudden tightening's were to be avoided further down the road. Stocks did not react kindly to the increase in rate expectations.

    ECB deposits plunge in tandem with interbank rates as the negative deposit rate takes effect. Germany's Commerzbank already announced that it will no longer deposit surplus cash at the ECB and with banks looking elsewhere to park funds, interbank rates have dropped sharply. The move is designed to boost interbank lending, but could backfire if banks pass on the higher costs to costumers instead, which remains to be seen.

    US Economic News

    U.S. retail sales rose only 0.3% in May, and were up 0.1% excluding autos. The 0.1% April headline gain was boosted to 0.5%, and the flat ex-auto reading was revised to 0.4%. Sales excluding autos, gas, and building materials dipped 0.1%. Vehicle sales climbed another 1.4% after solid gains since February.

    U.S. PPI final demand slid 0.2% in May with the core rate dipping 0.1%, weaker than expected. There was no revision to the 0.6% headline gain in April, or to the 0.5% ex-food and energy component. The Fed doves can use such data to underpin their arguments for continued policy stimulus.

    Jun 16 9:50 AM | Link | Comment!
  • Proprietary Trading Weekly Market Recap For Friday, June 6, 2014

    Stocks Hit New Highs; ECB Cuts Interest Rates and Jobs Data is Robust

    The past week was cluttered with data, which included interest rate decisions from three major central banks, manufacturing and services data, as well as, multiple US employment reports. Both the S&P 500 index as well as, the Dow Industrials hit all-time highs, as investor sentiment continued to improve.

    The Bank of England and Bank of Canada announced that interest rates would remain unchanged which seemed to be a non-event for market participants. The European Central Bank cut rates by 10 basis points, which means the main refinancing rate is now at 0.15% and the deposit rate at -0.10%. This was in line with forecasts.

    Additionally, Mario Draghi, the President of the ECB introduced a negative deposit rate. At the same time Draghi announced and extension of the 100% allocations in the tenders, an end to SMP sterilization as well as targeted LTROs, which are hoped to improve lending to the private sector. The package is very broad and helped European stock to rise and proprietary trading volume to resume.

    Draghi said the central bank has now pretty much reached the lower boundary on rates, although he left the door open for additional measures, including a broad based asset purchase program. ECB cuts inflation forecast, with the new staff projections predicting inflation at 0.7% this year, versus 1% expected previously. The 2015 forecast was cut to 1.1% from 1.3% and the forecast for 2016 was cut to 1.4% from 1.5%.

    There were a number of upbeat data points in the US during the week. The Fed's Beige Book characterized growth as "moderate" to "modest," and indicated all 12 Districts expanded. The report of conditions also indicated consumer spending expanded in almost all Districts, to varying degrees. Non-auto sales were up moderately, with improved weather helping boost activity. Manufacturing activity expanded throughout the country.

    The U.S. ISM May Services Index increased to 56.3 extended the April pop to 55.2 from 53.1 in March and a 51.6 four-year low in February, as the index climbs toward the 57.9 seven-year high last August. The ISM-adjusted ISM-NMI measure rose to 56.1, after popping to 55.3 in April from 52.2 in March and a 51.4 two-year low in February, versus a 57.5 seven-year high last August. The employment gauge also rose, to 52.4, after dropping to 51.3 in April from 53.6 in March and a 47.5 four-year low in February. For the May factory surveys, the ISM rose to 55.4 from 54.9.

    On the employment front, U.S. nonfarm payrolls climbed 217k in May from a revised 282k April surge and a 203k gain in March, for a 3-month average of 234k. The unemployment rate was steady at 6.3%. Household employment rose 145k, with the labor force up 192k. Average hourly earnings edged up 0.2% following the flat reading for April. The workweek was steady at 34.5. Private employment increased 216k, with goods producing employment up 18k, construction up 6k, and manufacturing up 10k. The service sector added 198k jobs. Federal government employment declined 5k.

    Jun 09 9:40 AM | Link | Comment!
  • Proprietary Trading Weekly Market Recap For Friday, May 30, 2014

    S&P 500 Hits All-time High; Yields Tumble to 50-week Low

    The final week of May saw the S&P 500 index notch up fresh all-time highs while yields tumbled to a 50-week lows. The rally in stocks was met with complacency, while many market participants where focused on the decline in yields. The 10-year yield hit support levels near the 200-day moving average, but held steady as stronger than expected Chicago PMI data released Friday could foreshadow robust economic gains for May. For the week the S&P 500 index hit an all-time high of 1,923.

    Another driver of the strong proprietary trading markets is the anticipation of potential rate cuts in the coming week by the European central bank. Again, the markets are set to explode to the upside if Mario Draghi delivers on his rhetoric, but he has proven before that he is a wordsmith with immense talent, and will likely have a bark that is stronger than his bite.

    (click to enlarge)

    The two most interesting economic releases during the weak were the weak than expected second look at Q1 GDP in the US, and the stronger than expected Chicago PMI report.

    The commerce department reported that Gross domestic product shrank to an annual rate of 1% in the first three months of the year. This compared to an initial reading of 0.1%. Expectations were that the economy would contract, but the decline of 1%, was greater than expected. Stock investors seemed to ignore this data point and instead looked forward to May economic data.

    US Yields reversed their downtrend Friday following the jump in Chicago ISM for May, which gave a more contemporary positive spin on the data, though the employment component sank. The Chicago PMI climbed to 65.5 in May, the highest level since October. This beat expectations for a fall to 61 and is up from 63 in April. The increase in the Barometer chimes with other economic data, which has shown a continued recovery in the economy.

    The final data point of the week was U.S. consumer sentiment, which fell 2.2 points to 81.9 in the final May reading from the University of Michigan survey. That shaves off about half of the 4.1-point increase in April to 84.1, and it's little changed versus the preliminary May reading was 81.8. Most of the weakness was in the current conditions index, which fell to 94.5 from April's 98.7. The outlook index slipped to 73.7 versus 74.7 in April.

    Jun 02 9:46 AM | Link | Comment!
Full index of posts »
Latest Followers


More »

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.