Skip to main content

Morning Update

On the back of declining Chinese industrial profits Premier Wen Jiabo “urged for measures to boost exports, such as faster payment of export tax rebates, greater use of export credit insurance, and reduced inspections and fees to ease the burden on companies. He also said that financial products for hedging foreign exchange risk should be expanded” (Bloomberg).

The IFO survey in Germany has shown that for the fourth time in a row firms have become more pessimistic. This is concerning considering that the Euro is near multiyear lows against the dollar, which is beneficial to Germany’s export driven economy.

A California court ruled on August 24th that Samsung infringed on 6 of 7 of Apple’s patents and must pay Apple $1 billion in damages. This has sent shares of Samsung down 7.5% and Apple up 2.5% premarket. On Sept. 20th a US district judge Lucy Koh will hear Apple’s request for a complete US sales ban on Samsung devices such as the Galaxy S and S II smart phones and the Galaxy Tab 10.1 computer.

In US markets this week traders will be looking forward to chairman Bernanke’s speech in Jackson Hole on Friday. We would not be surprised to see the light summer volume to continue along with tight, choppy trading ahead of Bernanke’s speech.

Comments

Post a Comment

Popular posts from this blog

Morning Update

ECB officials said last night that ECB President Mario Draghi will likely wait to hear Germany’s Constitutional Court’s ruling on the EFSM before publicly unveiling his plans. Many were hoping Draghi would unveil his plan after the ECB’s September 6th meeting, but this is becoming increasingly unlikely. Today Reuters is reporting that Germany is the latest European nation to begin studying the possible impact of a Greek exit from the Euro. This comes ahead of Chancellor Merkel’s meeting with Greece’s Prime Minister today. Merkel has repeatedly said that she would like Greece to remain in the common currency, though clearly someone in Germany believes a Greek exit is possible outcome worth preparing for. This morning US new durable goods orders numbers we released for July, coming in at a gain of 4.2% M/M. Though this was strong than expected, it was primarily driven by strong aircraft sales. Non-defense orders excluding aircraft were down a sharp 3.4% M/M versus a 0.2% decline expecte...
Post a Comment
Read more

Is the KCJ Foreshadowing a 2008 Repeat?

The CBOE Correlation Index (KCJ) is close to the lowest level we have seen since it was first listed in 2007. The KCJ measures the implied movement of the S&P 500 components options, compared to the implied movement of the S&P 500 index options. Simply put, the higher the number, the more likely all stocks are going to move together. Conversely, a low number will be characterized by sector rotation, and flat markets; one sector moves higher, another moves lower.  (Source: Access Hollywood) Correlation, for lack of a better term, is correlated with volatility. Not surprisingly, 30-day S&P 500 historical volatility is near the low level of 6.5%. Currently at 33.5, KCJ is sitting close to rock bottom, lower than where it was in 2007, (but not lower than where Lindsay Lohan was in 2007).  So far this year, the market has been able to grind higher, characterized by leadership in FANG(Facebook Apple/Amazon, Netflix, Google) and sector rotation. A...
Post a Comment
Read more