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FOREX, COMMODITIES, STOCKS OUTLOOK April 22nd: Cliff’s 2 Minute Drill 12:00 GMT


NB: THE FOLLOWING IS AN ABRIDGED VERSION FOR FULL DETAILS GO TO http://fxmarketanalysis.wordpress.com/   AND SELECT " Analysis, Key Events, Trends, Trade Ideas " FOR TODAY
Stocks: Prior day: Asia up, Europe down, US up/flat. Today: Asia down, Europe down as EU debt crisis worsens on rising PIIGS bond yields, Greek rates hitting new highs, complicating rescue, upwardly revised debt/GDP ratios, IMF sovereign debt warnings .
-          US Bonds: Up
-           FX: No clear bias to safety currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GBP in order of risk appetite appeal], as stocks pullback modestly. Mixed picture with GBP, CAD, NZD USD fairing best in that order
-           Main events: MON USD Bernanke speaks, NZD CPI q/q TUES  AUD Monetary Policy meeting Minutes, GBP CPI+ y/y, EUR German ZEW, EU ZEW sentiment+, CAD BoC Rate St.++ WED GBP Claimant Count Change+, MPC Meeting Minutes,  THURS GBP Public Sector Net Borrowing, Retail sales m/m, USD PPI, Unemployment Claims, Existing Home Sales, CAD BoC Monetary Policy FRI: AUD RBA Gov. Stevens Speaks, EUR German Ifo Sentiment, GBP Prelim GDP q;q, CAD Core CPI, CPI, Core Retail Sales, USD Core, Durable Goods, New Home Sales
-      Earnings:   Monday: Citigroup Inc (NYSE:C) Eli Lilly LLY Hasbro HAS, IBM (NYSE:IBM)   Tuesday: Apple (NASDAQ:AAPL), Bank of New York Mellon Corp (NYSE:BK), Goldman Sachs (NYSE:GS), Harley Davidson (NYSE:HOG), Johnson &Johnson (NYSE:JNJ),Novartis (NYSE:NVS), TDAMeritrade Holding Corp (NASDAQ:AMTD), Coca Cola (NYSE:KO), Yahoo (YHOO)  Wednesday: Altria (NYSE:MO), Amgen(NASDAQ:AMGN), AMR Corp (NASDAQ:AMR), AT&T (NYSE:T), eBAY (NASDAQ:EBAY), Genzyme (GENZ), MacDonald’s Corp. (NYSE:MCD), Moody’s Corp. (NYSE:MCO), Morgan Stanley (NYSE:MS), Novellus NVLS), QUALCOMM Inc. (NASDAQ:QCOM). Thursday: Amazon (NASDAQ:AMZN), American Express Company (NYSE:AMX), Baxter International (NYSE:BAX) Credit Suisse (NYSE:CS), Continental Airlines (NYSE:CAL), Southwest Airlines (NYSE:LUV)   Friday: Honeywell (NYSE:HON)      
        Big Theme: Long anticipated normal test of support after Friday’s big high volume drop back on the menu? Most risk assets pulling back on-surprise! (Not!)- worsening EU debt news in midday European trade after US closes flat, Asia down. As we warned, US earnings may well be upstaged by the EU debt crisis, as markets have overestimated EU’s ability to solve it, underestimated it’s threat of global contagion, which may be unavoidable given current sovereign debt levels in so much of the developed world. US will be needed, at least via the IMF, but may choose to stand aside: see More EU/Euro Bleeding And 3 Reasons Washington May Refuse Aid. NB: Many analysts note global stocks have risen to 200 week MA- very strong resistance, could signal at least a normal retest of recent support. IMF warnings to US/UK/EU on debt levels, and Fitch warning to Japan clearly make today’s theme: Sovereign Debt Worry Day. Risk assets remain in up trends for now.
 
STOCKS:
US: Up/Flat- Flat range bound trading, as participants digested the latest round of earnings results along with the deteriorating situation in the EU debt crisis due to soaring borrowing costs for the PIIGS block. The bellwether S&P 500 struggled to stay above the psychologically significant 1200 level, while the broad market measure was able to recover into the close to settle with a slight loss.
Adding to sovereign debt concerns was a warning from the IMF’s semiannual 'World Economic Outlook' that 'Sovereign risks in advanced economies (aka US, UK, EZ, and Japan) could undermine financial stability gains and extend the crisis. The rapid increase in public debt and deterioration of fiscal balance sheets could be transmitted back to banking systems or across borders'.
Main Stream Media Misses The True Morgan Stanley Story – See Full Length Version For Details
US Bonds: Up with the benchmark 10-year Note made its way 15 ticks higher, which took its yield down to 3.75%.
Asia Stock Outlook: Down- At the close in Asia early Thursday GMT, Japan's Nikkei average fell 1.3% as tech shares slipped, with traders saying a weaker futures market and the break of a key technical level helped trigger profit taking after Wednesday’s gain, as traders remained unsure that the current correction was over.
Japan Gets Warning From Fitch: A Sign of Things To Come – See Full Length Version For Details
European Stock Outlook: Down after a good start as the EU debt crisis weighs. Breaking EU announcements about greater than expected Euro-zone deficit/GDP ratios pressuring European stocks, in addition to the IMF’s warning on sovereign debt of the world’s leading economies cited above, and Fitch’s warning on Japan in particular, and PIIGS bond rates hitting new highs, lead by Greece, complicating rescue plan.
ASIA-UP N225I +1.74% HS -0.33% SSEC +1.80% FTSTI +0.14% AORD +0.63%
EUROPE DOWN FTSE -1.04% DAX -0.54% CAC  -1.22%  
US- UP/FLAT S&P -0.10% DJIA  +0.07% NASDAQ +0.16%    
THIS MORNING DOWN N225I -1.27% HS -0.33% SSEC -1.11% FTSTI +0.45% AORD -0.88%
                         DOWN FTSE -0.79% DAX -0.82% CAC  -1.01% DJSTOXX50 ETF  -0.52%
               
 
Commodities Outlook: In Wednesday and early Thursday trade GMT: Mixed – oil down, gold up
Crude Oil Daily Outlook: Down: giving back Tuesday’s gains, steady in early Thursday trade on profit taking as it remains near 17 month highs.
Gold Daily Outlook: Gold surged on Wednesday despite and weakness in the euro and decline in oil prices. Endless concerns over Greek sovereign crisis, as well as IMF's comments (noted above) on financial stability and inflation outlook helped boost gold price.
While gold generally rises with risk appetite as an inflation hedge, it also tends to rise other threats to currency value, like the sovereign debt concerns, which generally bring either more money printing for bailouts and falling demand for the currencies of the relevant governments.
FOREX Daily Outlook: In Wednesday and early Thursday trade GMT: No clear bias to risk or safety fx over the past 24 hours – a mixed picture with the GBP, CAD, NZD USD fairing best in that order
US Dollar Daily Outlook: Up vs. the EUR, CHF, CAD, AUD, down vs. the JPY (but recovery in early European trade), NZD, GBP. No clear bias to risk or safety despite support from a sliding EUR
Euro Daily Outlook: Down vs. all continuing into early Thursday GMT as EU debt crisis concerns grow on rising borrowing costs for all PIIGS:
  • Greece in talks with EU to activate the rescue plan: The need for parliamentary approval from various contributors could seriously delay funds, leaving the IMF to make the first loans
  • ECB’s Weber says that Greece alone may cost € 80 bln to rescue: more than double the amount provided for in the current rescue plan.
  • Interest rates too high: There are also concerns that the below market interest rates charged under the plan are still too high to allow Greece to recover given that it still spends more than it earns and will likely see further GDP reductions from the current spending cuts.
  • Threatened strikes may also cast doubt on Greece’s ability to implement currently planned cuts.
 
Yen Daily Outlook: Up vs. EUR, USD, USD, CAD  down vs. CHF, AUD, GBP, steady vs. the NZD
British Pound Daily Outlook: Up vs. NZD, CAD, AUD, EUR, CHF, USD, JPY on good data
Australian Dollar Daily Outlook:  Down vs. the USD, JPY,GBP, CAD, NZD, up vs. the EUR
New Zealand Dollar Daily Outlook: Up vs. all except the GBP, CAD,
Canadian Dollar Daily Outlook: Down vs. the USD, JPY, GBP up vs. the EUR, AUD, NZD
Swiss Franc Daily Outlook:: Down vs. USD, GBP,   up vs. the EUR, JPY,  
CONCLUSIONS & Big Picture: Trends still favor risk assets as stocks and other risk assets recovering this week after the S&P 500’s high volume drop Friday- however as noted in the Big Theme section above, correction risk is strong on both technical and fundamental bases. Technically: The S&P 500, our key risk asset barometer, like other major stocks, near 200 week moving average- key resistance. Near Term Bias remains bullish as trend remains in out Bollinger Bands Buy Zone (price is between the 1st and second standard deviation) though risk remains that we getting the long awaited pullback, which should not be exceptional unless EU debt situation- the chief fundamental risk to the recovery- worsens significantly. Longer term, we are concerned especially about the latter part of Q3. In July, when 2 major events hit: Spain needs to sell about 30 bln euros in bonds AND a massive wave of US mortgage rate resets not seen since 2007 begins. The last time we saw this magnitude of rising mortgage rates markets stalled out and ultimately crashed. NB: Never fight the trend, no matter how irrational, as markets can stay irrational longer than you can stay solvent (Keynes). Therefore, as anyone who follows our trade recommendations knows, we always wait for some breach of key support/resistance as a signal to enter a position as odds appear to be in our favor, and even then only when the likely target is more than 2x as far away as out stop loss (which we ALWAYS USE, RIGHT?) so that our winning trade profits exceed out losses by at least 2:1.
Gold, oil, other risk assets testing key support, setting up for shorts if pullback continues. Growing indications that EU will need long time for individual parliaments to approve Greece aid suggests IMF may be needed first, raising risk that EU package may not work. We are not certain that the US will be willing to provide extra funding for the IMF, and more certain that the EU will be even less willing, given its foot-dragging on Greece.
DISCLOSURE AND DISCLAIMER: OPINIONS EXPRESSED ARE NOT NECESSARILY THOSE OF AVAFX, AUTHOR HAS NO POSITIONS IN ABOVE INSTRUMENTS. 
Stocks: Prior day: Asia up, Europe down, US up/flat. Today: Asia down, Europe down as EU debt crisis worsens on rising PIIGS bond yields, Greek rates hitting new highs, complicating rescue, upwardly revised debt/GDP ratios, IMF sovereign debt warnings .
-          US Bonds: Up
-           FX: No clear bias to safety currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GBP in order of risk appetite appeal], as stocks pullback modestly. Mixed picture with GBP, CAD, NZD USD fairing best in that order
-           Main events: MON USD Bernanke speaks, NZD CPI q/q TUES  AUD Monetary Policy meeting Minutes, GBP CPI+ y/y, EUR German ZEW, EU ZEW sentiment+, CAD BoC Rate St.++ WED GBP Claimant Count Change+, MPC Meeting Minutes,  THURS GBP Public Sector Net Borrowing, Retail sales m/m, USD PPI, Unemployment Claims, Existing Home Sales, CAD BoC Monetary Policy FRI: AUD RBA Gov. Stevens Speaks, EUR German Ifo Sentiment, GBP Prelim GDP q;q, CAD Core CPI, CPI, Core Retail Sales, USD Core, Durable Goods, New Home Sales
-      Earnings:  Monday: Citigroup Inc (C) Eli Lilly LLY Hasbro HAS, IBM (IBM)   Tuesday: Apple (AAPL), Bank of New York Mellon Corp (BK), Goldman Sachs (GS), Harley Davidson (HOG), Johnson &Johnson (JNJ),Novartis (NVS), TDAMeritrade Holding Corp (AMTD), Coca Cola (KO), Yahoo (YHOO) Wednesday: Altria (MO), Amgen(AMGN), AMR Corp (AMR), AT&T (T), eBAY (EBAY), Genzyme (GENZ), MacDonald’s Corp. (MCD), Moody’s Corp. (MCO), Morgan Stanley (MS), Novellus NVLS), QUALCOMM Inc. (QCOM). Thursday: Amazon (AMZN), American Express Company (AMX), Baxter International (BAX) Credit Suisse (CS), Continental Airlines (CAL), Southwest Airlines (LUV)   Friday: Honeywell (HON)      
        Big Theme: Long anticipated normal test of support after Friday’s big high volume drop back on the menu? Most risk assets pulling back on-surprise! (Not!)- worsening EU debt news in midday European trade after US closes flat, Asia down. As we warned, US earnings may well be upstaged by the EU debt crisis, as markets have overestimated EU’s ability to solve it, underestimated it’s threat of global contagion, which may be unavoidable given current sovereign debt levels in so much of the developed world. US will be needed, at least via the IMF, but may choose to stand aside: see More EU/Euro Bleeding And 3 Reasons Washington May Refuse Aid. NB: Many analysts note global stocks have risen to 200 week MA- very strong resistance, could signal at least a normal retest of recent support. IMF warnings to US/UK/EU on debt levels, and Fitch warning to Japan clearly make today’s theme: Sovereign Debt Worry Day. Risk assets remain in up trends for now.
 
STOCKS:
US: Up/Flat- Flat range bound trading, as participants digested the latest round of earnings results along with the deteriorating situation in the EU debt crisis due to soaring borrowing costs for the PIIGS block. The bellwether S&P 500 struggled to stay above the psychologically significant 1200 level, while the broad market measure was able to recover into the close to settle with a slight loss.
 
Adding to sovereign debt concerns was a warning from the IMF’s semiannual 'World Economic Outlook' that 'Sovereign risks in advanced economies (aka US, UK, EZ, and Japan) could undermine financial stability gains and extend the crisis. The rapid increase in public debt and deterioration of fiscal balance sheets could be transmitted back to banking systems or across borders'.
 
Main Stream Media Misses The True Morgan Stanley Story – See Full Length Version For Details
 
US Bonds: Up with the benchmark 10-year Note made its way 15 ticks higher, which took its yield down to 3.75%.
 
Asia Stock Outlook: Down- At the close in Asia early Thursday GMT, Japan's Nikkei average fell 1.3% as tech shares slipped, with traders saying a weaker futures market and the break of a key technical level helped trigger profit taking after Wednesday’s gain, as traders remained unsure that the current correction was over.
 
 
Japan Gets Warning From Fitch: A Sign of Things To Come – See Full Length Version For Details
 
European Stock Outlook: Down after a good start as the EU debt crisis weighs. Breaking EU announcements about greater than expected Euro-zone deficit/GDP ratios pressuring European stocks, in addition to the IMF’s warning on sovereign debt of the world’s leading economies cited above, and Fitch’s warning on Japan in particular, and PIIGS bond rates hitting new highs, lead by Greece, complicating rescue plan.
 
 
ASIA-UP
N225I +1.74%
HS -0.33%
SSEC +1.80%
FTSTI +0.14%
AORD +0.63%
EUROPE DOWN
FTSE -1.04%
DAX -0.54%
CAC -1.22%
 
US- UP/FLAT
S&P -0.10%
DJIA +0.07%
NASDAQ +0.16%
 
 
THIS MORNING DOWN
N225I -1.27%
HS -0.33%
SSEC -1.11%
FTSTI +0.45%
AORD -0.88%
                         DOWN
FTSE -0.79%
DAX -0.82%
CAC -1.01%
DJSTOXX50 ETF -0.52%
               
 
Commodities Outlook: In Wednesday and early Thursday trade GMT: Mixed – oil down, gold up
 
Crude Oil Daily Outlook: Down: giving back Tuesday’s gains, steady in early Thursday trade on profit taking as it remains near 17 month highs.
 
Gold Daily Outlook:Gold surged on Wednesday despite and weakness in the euro and decline in oil prices. Endless concerns over Greek sovereign crisis, as well as IMF's comments (noted above) on financial stability and inflation outlook helped boost gold price.
 
While gold generally rises with risk appetite as an inflation hedge, it also tends to rise other threats to currency value, like the sovereign debt concerns, which generally bring either more money printing for bailouts and falling demand for the currencies of the relevant governments.
 
FOREX Daily Outlook: In Wednesday and early Thursday trade GMT: No clear bias to risk or safety fx over the past 24 hours – a mixed picture with the GBP, CAD, NZD USD fairing best in that order
 
US Dollar Daily Outlook:Up vs. the EUR, CHF, CAD, AUD, down vs. the JPY (but recovery in early European trade), NZD, GBP. No clear bias to risk or safety despite support from a sliding EUR
 
Euro Daily Outlook: Down vs. all continuing into early Thursday GMT as EU debt crisis concerns grow on rising borrowing costs for all PIIGS:
·         Greece in talks with EU to activate the rescue plan: The need for parliamentary approval from various contributors could seriously delay funds, leaving the IMF to make the first loans
·         ECB’s Weber says that Greece alone may cost € 80 bln to rescue: more than double the amount provided for in the current rescue plan.
·         Interest rates too high: There are also concerns that the below market interest rates charged under the plan are still too high to allow Greece to recover given that it still spends more than it earns and will likely see further GDP reductions from the current spending cuts.
·         Threatened strikes may also cast doubt on Greece’s ability to implement currently planned cuts.
 
 
Yen Daily Outlook: Up vs. EUR, USD, USD, CAD  down vs. CHF, AUD, GBP, steady vs. the NZD
 
British Pound Daily Outlook: Up vs. NZD, CAD, AUD, EUR, CHF, USD, JPY on good data
 
Australian Dollar Daily Outlook: Down vs. the USD, JPY,GBP, CAD, NZD, up vs. the EUR
 
New Zealand Dollar Daily Outlook: Up vs. all except the GBP, CAD,
 
Canadian Dollar Daily Outlook: Down vs. the USD, JPY, GBP up vs. the EUR, AUD, NZD
 
Swiss Franc Daily Outlook:: Down vs. USD, GBP,   up vs. the EUR, JPY,  
 
CONCLUSIONS & Big Picture: Trends still favor risk assets as stocks and other risk assets recovering this week after the S&P 500’s high volume drop Friday- however as noted in the Big Theme section above, correction risk is strong on both technical and fundamental bases. Technically: The S&P 500, our key risk asset barometer, like other major stocks, near 200 week moving average- key resistance. Near Term Bias remains bullish as trend remains in out Bollinger Bands Buy Zone (price is between the 1st and second standard deviation) though risk remains that we getting the long awaited pullback, which should not be exceptional unless EU debt situation- the chief fundamental risk to the recovery- worsens significantly. Longer term, we are concerned especially about the latter part of Q3. In July, when 2 major events hit: Spain needs to sell about 30 bln euros in bonds AND a massive wave of US mortgage rate resets not seen since 2007 begins. The last time we saw this magnitude of rising mortgage rates markets stalled out and ultimately crashed. NB: Never fight the trend, no matter how irrational, as markets can stay irrational longer than you can stay solvent (Keynes). Therefore, as anyone who follows our trade recommendations knows, we always wait for some breach of key support/resistance as a signal to enter a position as odds appear to be in our favor, and even then only when the likely target is more than 2x as far away as out stop loss (which we ALWAYS USE, RIGHT?) so that our winning trade profits exceed out losses by at least 2:1.
 
Gold, oil, other risk assets testing key support, setting up for shorts if pullback continues. Growing indications that EU will need long time for individual parliaments to approve Greece aid suggests IMF may be needed first, raising risk that EU package may not work. We are not certain that the US will be willing to provide extra funding for the IMF, and more certain that the EU will be even less willing, given its foot-dragging on Greece.
 
 
DISCLOSURE AND DISCLAIMER: OPINIONS EXPRESSED ARE NOT NECESSARILY THOSE OF AVAFX, AUTHOR HAS NO POSITIONS IN ABOVE INSTRUMENTS.