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Proprietary Trading Weekly Market Recap For Friday, May 9, 2014

Draghi Grabs the Spotlight from Yellen

The Fed and the ECB were in the spotlight this week, with Yellen's testimony before the Joint Economic Committee on Wednesday and the Senate Banking Committee on Thursday as the focal points. Mario Draghi did his best to overshadow the Fed using polished rhetoric to engage investors. Proprietary trading sentiments remained mixed throughout the week.

Yellen approached the testimony with a glass half full approach regarding the April jobs report and other recent data reflecting a strong rebound in Q2 growth, but also indicated the need to keep rates very low and hinted beyond 2015. Despite the obvious improvement in much of the data since the winter slump, several indicators on her job dashboard are still blinking a cautionary yellow signal. Hence, she's did not take on a hawkish tone.

Both the ECB and the BOE met to determine interest rates. While no fireworks appeared after the ho-hum Bank of England decision, the European Central Bank was a different story. Draghi must be pleased with himself. Despite the naysayers who clamor for action, once again the adroit central bank head was able to prevail by words alone. Draghi said nothing new, but managed to say it in a new way. The message that the ECB is alarmed by the persistence of low inflation has been delivered before, but at the same time part of the low inflation is understood to be a competitive adjustment in the periphery.

The goal of the ECB seemed to be to erode the Euro which they seemed to be successful in accomplishing. From the time the Draghi press conference began on Thursday in the US morning to the close on Friday, the Euro tumbled 2.5 big figures from 1.3990 to 1.3740.

Economic Data

Initial jobless claims declined 26,000 to a seasonally adjusted 319,000 for the week ended May 3, according to the Labor Department. Economists had forecast first-time applications for jobless benefits falling to 325,000 last week. The four-week moving average for new claims, rose 4,500 to 324,750. It remained at levels consistent with an improving labor market.

China's exports and imports unexpectedly rose in April, helping leaders put a floor under a slowdown in the world's second-biggest economy. Exports increased 0.9 percent from a year earlier, which compared with the median estimate for a 3 percent drop. Imports gained 0.8 percent, leaving a trade surplus of $18.46 billion.

Corporate News

Apple is reportedly nearing an agreement to pay $3.2 billion to acquire headphone maker Beats Electronics, which was founded by rapper Dr. Dre. A deal would be the biggest in Apple's history and represent a departure from the reticence that Steve Jobs showed for large purchases. It would also include Beats Music, a streaming service launched in January to compete with Spotify and Pandora.