Preview: Next week's big events (FOMC, ECB, NFP)

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swissaustrian

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Next week is going to be a busy one. Pms are going to be heavily affected by the following events:

1.) The FOMC is meeting once again. Their mouthpiece Jon Hilsenrath of the WSJ has telegraphed additional easing, potentially MBS (mortgage back securities) purchases or a lowering/elimination of the interest on excess bank reserves parked at the FED. Maybe they even do something that the Bank of England recently did: Pumping liquidity into banks if they lend it out to consumers (described here: http://www.pmbug.com/forum/f4/boe-goes-full-retard-invents-new-high-risk-qe-1136/ )

Hilsenrath signalled that they'd act either now in August or 6 weeks later in mid September at their next meeting. Markets have discounted instant action. This expectation might be disapointed causing a (mini) crash. My expectation is that they'd rather act in September because

a) The stock market needs to crash first.
b) Economic data is probably even worse than.
c) The international annual (informal) summit of the world's central bankers at Jackson Hole is in late August. Remember in 2010 QE2 was announced after that.

The FOMC decisions will be published on 8-1 at 2:15 pm ET.

2.) ECB chairman Mario Draghi (from Italy) has signalled potential sovereign bond buying of the crisis countries, especially Spain, but also Italy. Germany seems not to support that, usually they get their way. Tim Geithner is going to visit Germany's finance minister Schäuble at his vacation retreat on the island of Sylt on monday ( http://thehill.com/blogs/on-the-money/economy/240815-geithner-heading-to-europe ), probably to pressure him to let the ECB do the pruchases. Afterwards he'll fly to Frankfurt to meet Draghi at the ECB headquarters. (Keep in mind: Draghi is a former Goldmanite, so is Tiny Timmah). You see that plot here: The US seems to be very nervous about Europe. Otherwise the US treasury scretary wouldn't fly to Germany to visit the German finance minister during his vacation. :doodoo:
Markets have sharply rallied after the remarks of Mr Draghi. INaction might cause a sharp downmove in EUR/USD, dragging pms with it (at least in USD terms).

The ECB is going to announce their decisions on 8-2 at 7:45 am ET. The press conference at 8:30 am ET could cause additional volatility.

3.) Finally, US non-farm payrolls for July are due on 8-3 at 8:30 am ET. If the FOMC didn't act so far two days earlier, but left the door open for more easing should the labor market deteriorate further (likely scenario), bad data could trigger a QE hopium rally.


I'd suggest getting some :popcorn:
 
Thought the plan was to ensure everything looked normal till after November 6, 2012 ?

or have they abandoned hopey changey ?
 
Soon, at 2:15 pm ET, the real fun begins.
I expect nothing big from the FED (as you can read above).
It would be nice to hold supports at 1580 for gold and 27 for silver but I wouldn't hold my breath. These are the upper targets for the spike lows from my perspective.
Probably there is going to be an initial spike in pms then an impressive raid whose losses will be regained by 50%. I expect a close right below 1600 for gold (~1591, at the 50 dma) and arround 27 for silver.

The shares are holding up well so far, that's a rather good sign. Usually the telegraph a massive raid, so the impact of the FED should be limited.

If we get easing news, however, watch out for massive fireworks, especially in silver. I don't see this happening, though.
 
swissaustrian said:
Soon, at 2:15 pm ET, the real fun begins.
I expect nothing big from the FED (as you can read above).
It would be nice to hold supports at 1580 for gold and 27 for silver but I wouldn't hold my breath. These are the upper targets for the spike lows from my perspective.
Probably there is going to be an initial spike in pms then an impressive raid whose losses will be regained by 50%. I expect a close right below 1600 for gold (~1591, at the 50 dma) and arround 27 for silver.

The shares are holding up well so far, that's a rather good sign. Usually the telegraph a massive raid, so the impact of the FED should be limited.

If we get easing news, however, watch out for massive fireworks, especially in silver. I don't see this happening, though.
Click to expand...

You first projection has proven correct:
http://www.silverdoctors.com/no-qe3/#more-10890
http://money.cnn.com/2012/08/01/news/economy/federal-reserve-stimulus/index.htm?iid=Lead

Will the rest follow in due time?

:popcorn:
 
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Gold in Euros is up since the announcement, so is silver:
gold_1d_o_EUR.png
 
The VIX reacted like always when the FOMC has something to say:
Falling down before the announcement, then spiking and finally selling off. Free money for options traders...

t
 
You called this well, SA! :cheers:
I had prepositioned in GLL myself (short gold) and closed it just so a little while ago. Nice, and it allowed me to keep the real gold untouched.

Long HDGE and short FB have been real nice of late too.

But then there's always tomorrow...what will the pimp on your side of the pond have to say? Priced in?
 
Seems like the pundits are predicting a .25% rate cut to 0.5% (still higher than the FED funds rate).
That should be USD bullish as the interest rate spread between the USD and the EUR gets smaller.
If the ECB announces something more radical like bond purchases, the EUR could rally in relief. Germany has indicated that they wouldn't support that and they usually get their way.

So my gut tells me: more weakness for pms tomorrow.
 
The ECB announcement tomorrow is quite early for you guys in the US at 7:45 am ET.
The CRIMEX hasn't open yet then, so London has to do the pm raid on it's own. Therefore the action could start as early as the London opening at 3 am ET. Many times the wait until HongKong closes at 4:45 am ET, so only Europe is present in the markets and Asian dip buying is absent. Anyway, once you guys get up tomorrow, take a look at the pm charts, there might be a waterfall somewhere. :cheers:
 
So the ECB did ...


nothing :flushed:

EUR is rallying probably because of the expectation of a rate cut which would have narrowed the interest spread between the USD and the EUR.

Pms (especially gold) were taken down right BEFORE the announcement right after the HongKong closing bell, just as expected...

gold.gif
 
It should be entertaining at the very least. Wonder if he'll squirm, or in what way he'll shine on the fact he can't deliver what he simply can't (alone).
 
Market is not happy although Draghi basicly assured bond purchases.
Eurostoxx50 moved from +2 to -2%. EUR/USD briefly touched 1.24 and is now sub 1.22.
Gold underperfomed during the upmove but held up rather well to the downside and is now slightly green in EUR.
 
Market is in for a lot of (necessary) pain if central banks stay the course.
 
The exception to the ECB vote was probably from Germany, but they're keeping it anonymous.
 
It was largely squirming. In response to a question he pulled a "my original statement said "within our mandate"" many times.

I turned that off and flipped back to bberg tv (online) to watch Bill Gross and Siegel fight it out. Now that was *hilarious*, hope they make the clip available so I can link it. I never figured Bill would be so good at delivering severe insults in polite language.
 
"It's pointless to go short the Euro. The Euro will stay" - M. Dragi, 8-2-2012

Let's see what the halflife of this statement is...
 
I don't know what it is keeping them up but mining shares across the spectrum from the giants to the juniors are green or just slightly red. Usually the miners are frontrunning the metals, so maybe somebody knows something about Friday's NFP? Maybe a massive miss?
 
swissaustrian said:
I don't know what it is keeping them up but mining shares across the spectrum from the giants to the juniors are green or just slightly red. Usually the miners are frontrunning the metals, so maybe somebody knows something about Friday's NFP? Maybe a massive miss?
Click to expand...

Okay, I am blanking here. What does NFP stand for?

Google told me it stands for Natural Family Planning. For some reason I don't think that is correct?
:shrug:
 
It's a measure of un/employment.
 
Silver managed to close CRIMEX trading above 27 which was really important.
Gold closed below the 50 dma (1592) but 1580 held which was also important.

Brent oil is in a world of it's own today up 0.3% against heavy risk aversion. Maybe we get some Syria/Iran news soon. Yesterday, Brent had been outperforming up until the FOMC announcement, too.
 
http://www.zerohedge.com/news/full-time-jobs-197000-part-time-jobs-31000

We got the pre-spun job quantity data already, where we learned that nearly 3 times the headline print was due to seasonal and B/D adjustments and is thus nothing but noise. Now we get the quality. As can be seen below, courtesy of Table A9 from the Household Survey, in July the number of part-time jobs added was 31K, bringing the total to 27,925, just shy of the all time record of 28,038. Full time jobs? Down 228,000 to 114,345, lower than the February full-time jobs print of 114,408. Once again, more and more Americans are relinquishing any and all benefits associated with Full Time Jobs benefits, and instead are agreeing on a job. Any job. Even if it means working just 1 hour a week. For the BLS it doesn't matter - 1 hour of work a week still qualifies you as a Part-Time worker.

Full time and part-time jobs summary:

Part%20vs%20Full%20Time%20July_0.jpg
Click to expand...
 
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