FMX | Connect – www.fmxconnect.com - (Reported 10/25/2010)
Source: FCStone
This Week’s Major Economic Data
(Key: Bold statistics are already published, red indicates an actual decline or a number worse than market expectations,
green indicates positive growth or better than market expectation, black indicates a positive number that was below
market expectations)
G-20 Meets This Weekend....
-It will be interesting to wait and see if anything particularly interesting comes out of this weekend’s G-20 meeting in Seoul. The “currency war” or more specifically the race to see who can devalue their nation’s currency most effectively will no doubt be a major topic of interest for those in attendance. Treasury Secretary Geithner sent a polite letter to the G-20 members seeking a truce of sorts in asking that nations “"commit refrain
from exchange rate policies designed to achieve competitive advantage by either weakening their currency or preventing appreciation of undervalued currency." I wonder how many readers of said letter erupted into uncontrollable laughter as the US policy seems to be in direct conflict with this request- the only difference is one of magnitude- sure, the RMB is massively undervalued and so the letter does certainly ring true with respect to the Chinese (who were undoubtedly the real target of the letter), but as the Fed continues to meddle with its own monetary policy, generally in a fashion that would drive down the value of the dollar in an effort to prop up export business, it is unlikely that many nations can take Geithner’s request seriously despite our hope that they will.
An Interesting Employment Heat Map
While I am not a regular reader of the news magazine Slate, I did find an interesting link to their “Jobs Map” which is sort of a heat map of sorts that looks at employment levels in individual counties and color codes the results. From the most recent version of the map- Florida, California and other parts of the South and Northeast look particularly hard hit; and the ability to track the results going back to January 2007 provides some interesting perspective on where things were and were they are now; blue means the county has increased its overall employment, red indicates a decline in those employed: http://labs.slate.com/articles/slate-job-mapupdated/. Take a look at the November 2009 slide- it looks like the vast majority of the country had been engulfed in a see of bright red joblessness...pretty much exactly what happened
S&P 500
-Tech stocks were leading the way higher in the S&P 500 today, strong earnings reports from SanDisk, the flash memory manufacturing heavyweight, as well as Baidu, a Chinese web search engine, were seen leading the way for the sector. Technology has clearly led the way recently as the Nasdaq is up 17% since the end of August, which compares favorably even to the strong gains across the spectrum in the S&P 500 which is up 12.6% over
the same period. This may bode well for the market in general as it would seem to indicate that real sector growth is driving the price action (or at least a good deal of it) as opposed to something more nefarious like looming quantitative easing or other Fed intervention. If QE was having a major effect it seems the effect would only be that which is typical of a bull market- the bearish news (bad jobs numbers for example) is ignored in favor of good news (stronger than expected corporate profits for example).
Worst Performer: Leggett and Platt (LEG) had the biggest drop in the S&P losing about 9% to 20.91 after poor 3rd quarter
earnings.
Top Performer: Nvidia Corp. was seen joining the hot tech sector- adding 6.2% to 11.78, though some of the gain may be
speculation that Nvidia is a takeover target.
Daily S&P Candlestick Chart
Dr. Copper
-LME copper is reaching back toward its annual high after a strong Thursday while Comex copper has languished this week as the price action has been closely following the USD, and now Comex copper is potentially looking to finish today with its first weekly decline in six week despite a decent show today – not surprising this would also be the first week in 5 weeks that the USD index has finished the week higher. Keep in mind that fundamentals still aren’t changing-.production in Chile, the world's biggest copper producer will still be likely to drop (strike or none) as much as 10 percent in 2011- there just isn’t much that can be done about lower ore grades as the mine’s deplete the existing high quality grades. Dollar action dominates in the short term, but long-term there its tough to argue with fundamentals.
LME Copper- Cash, 3 Month and 15 Month Forwards
(Key: Black-cash, blue- 3 month, red- 15 month, Aqua- 30 day MA, Green- 100 day MA)
Source: FCStone, LLC
Website: www.fcstone.com
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