Overview: The low, inconsistently applied standards, lack of transparency, key omitted details and suspiciously high pass rates have created more uncertainty about the EU banks rather than less and should backfire on the EU, sending markets and the EU lower in the near future. See Anticipating Market Response To EU Bank Stress Tests for details. Trading is quiet, range thus far, slight bias to downside as markets show little reaction to EU stress tests and the light news flow thus far. US New Home Sales key event today
STOCKS: US: Up – up about 1% Friday on optimism about the released but undigested EU Bank Stress Tests and some better than expected Q2 earnings reports. Stocks closed higher despite Bernanke’s dour economic outlook.
US Bonds: on Friday 2.9940%, +0.6200 prices up slightly Monday.
Asia Stock Outlook: Up at the close, Asian shares rose and the euro extended gains on Monday. Japan's Nikkei average rose 0.8 percent on Monday, having pared gains after failing to break above resistance as profit-taking emerged and investors waited for European markets to respond to the result of bank stress tests.
European Stock Outlook: Up at mid-day – European markets European shares turned negative on Monday morning after opening higher, with markets still digesting the EU bank news and deciding if passes for the banks is good news or if passes of speculated politically influenced and too lax tests are a negative for Europe.
Commodities Outlook Friday and early Monday trade GMT: Down-generally making modest pullbacks following stocks as of midday trading GMT
Crude Oil Daily Outlook: Down from 79 to 78.55- Oil futures followed stocks down again Monday after testing near key $80/bbl resistance early as positives like improved risk appetite and possible weather related supply disruptions are outweighed by negative fallout of disappointing EU bank stress tests and return of concern about EU banks.
Gold Daily Outlook: Little Changed from Friday at 1190 – Gold little changed early Monday as bargain hunting and purchases from jewelers are balanced by investor caution after a European bank stress tests have left uncertainty but have yet to evoke noticeable market reaction
FOREX Daily Outlook Friday and early Monday trade GMT: Bias to risk FX with exceptions: GBP strongest, CHF weakest, otherwise strength going mostly by rank in risk spectrum w/ AUD, NZD, CAD especially good vs. all but the GBP, which is feeling the better GDP data from Friday.
US Dollar Daily Outlook: Down vs. All except up vs. the CHF and JPY (but falling Monday vs. the JPY): down vs. the EUR (but gaining Monday), GBP, AUD, CAD, NZD
Euro Daily Outlook: Down modestly vs. all except still up vs. CHF, little changed vs. the USD @1.2903 as 1.3000 remains strong resistance for now – good data balanced by concern over EU banks.
Yen Daily Outlook: Up vs. the USD, CHF, down vs. the GBP (but recovering Monday, same for the EUR, CAD, NZD, AUD),
British Pound Daily Outlook: Up vs. the USD, CHF AUD, EUR (but losing gains Monday – same regarding the JPY, NZD, CAD )
Australian Dollar Daily Outlook: Up vs. the USD, EUR, CAD,JPY(but falling Monday) down vs. the GBP (but recovering Monday, same regarding the NZD)
New Zealand Dollar Daily Outlook: Up vs. the USD, JPY, EUR, CHF, CAD, down but recovering Monday vs. the GBP and AUD
Canadian Dollar Daily Outlook: Up vs. the USD, EUR, JPY, CHF down vs. the GBP, AUD, NZD,
Swiss Franc Daily Outlook: Down vs. all but recovering Monday vs. the EUR
DISCLOSURE NO POSITIONS