CL Redux
- Thread starter schizo
- Start date
Fishing. Economic Preview
April 24, 2011, 9:36 a.m. EDT
âLimitedâ first-quarter U.S. growth to be revealed
Signs of faltering recovery down to âone-off factors,â including oil
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) â The nationâs economy in the first quarter didnât grow nearly as quickly as it did in the fourth quarter, and on Thursday the government will release the grim data.
To be fair, none of the economists that MarketWatch tracks is expecting the Commerce Department to report that gross domestic product shrank in the January-to-March period. But the MarketWatch consensus for the GDP data, due for release Thursday at 8:30 a.m. Eastern, pegs growth as slowing to a 1.7% annualized pace from 3.1% in the fourth quarter.
MarketWatch consensus
See economic calendar
date report Consensus previous
April 25 New home sales 290,000 250,000
April 26 Consumer confidence 65.0 63.4
April 27 Durable goods orders 3.0% -0.6%
April 27 FOMC 0%-0.25% 0%-0.25%
April 28 GDP 1.7% 3.1%
April 28 Jobless claims 395,000 402,000
April 29 Personal income 0.3% 0.3%
April 29 Consumer spending 0.5% 0.7%
April 29 Core PCE price index 0.1% 0.2%
April 29 Employment cost index 0.5% 0.4%
April 29 Chicago PMI 68.0% 70.6%
April 29 Consumer sentiment 70.0 69.6
142096
Part of the drop will be put down to changes in the trade balance and inventories.
âThere were quirky numbers from the fourth quarter, an unusual narrowing in the trade balance and a significant drawdown in inventories,â said Thomas Simons, economist at Jefferies & Co., which is forecasting 2.6% growth for the first quarter. âBoth of those will reverse themselves to some degree; the question is which one wins.â
There are other factors at play as well.
Some readers will roll their eyes, but this winter actually was worse than normal in terms of snowfall. The Middle East, the dominant provider of world if not U.S. oil, isnât always in the throes of a revolution that both limits actual output (Libya) and raises fears about future output (Saudi Arabia, Iran).
âSeveral one-off factors â a significant jump in oil prices, weather-related disruptions and an anomalous shortfall in defense outlays â limited growth temporarily in the first quarter,â said Robert DiClemente, chief U.S. economist at Citi, in a note to clients. Heâs forecasting 1.8% first-quarter GDP growth.
âIn our judgment, these special factors alone were not enough to quash a recovery that otherwise exhibited healthy demand, accelerating employment gains and surprisingly stable financial conditions,â according to DiClemente.
Thatâs the typical view on Wall Street. Even though 38 out of 52 economists have reduced their annual GDP growth view in a poll by Blue Chip Economic Indicators earlier this month, the 2011 estimate still stands at 2.9%, which is how fast the U.S. economy grew last year.
âOur analysis indicates that current GDP growth is not a very good predictor of next quarterâs GDP growth, once we take into account other information,â said Goldman Sachs economist Zach Pandl in a note to clients. âWe therefore remain comfortable that growth will reaccelerate in the second quarter.â
That assumption depends on the bounce in gasoline prices â with its attendant restraint on consumer spending â being short-lived.
Much hinges on consumersâ behavior
âThe consumer has some positives to hang his hat on â the stock market has done well even in the face of troubling events and weak data, the labor market continues to heal itself, and the unemployment rate has come down,â said Simons. âBut the thing that kills consumers is when they have to pay for what they donât want to pay for â namely, gasoline.â
Two gauges of consumer confidence in April are set for release: the Conference Boardâs on Tuesday and the final University of Michigan-Thomson Reuters reading on Friday. Both are likely to show that consumers are still put off by the spike in gasoline prices, if less so than in March. Consumer confidence is a predictor, albeit an imperfect one, of retail activity.
U.S. week ahead: Fed in focus
Federal Reserve Chairman Ben Bernanke will begin holding news conferences following the central bank's policy-making meeting, MarketWatch's Greg Robb tells Kelsey Hubbard.
Another highlight will be data on durable-goods orders for March, due out Wednesday morning ahead of the dayâs big event: the Federal Reserve interest-rate decision, forecast on growth (currently 3.4% to 3.9%) and press conference with Fed Chairman Ben Bernanke. See more on potential questions to be asked of top U.S. central banker Bernanke.
The durables report is a volatile indicator but could shed light on the impact of the recent Japanese earthquake and tsunami on the U.S. supply chain.
âThe data from the manufacturing sector should be closely looked at, thatâs been biggest driver of the recovery so far,â said Simons. âThe implications from the Japan situation havenât really fleshed themselves out in data significantly.â
The big drop in the manufacturing survey for April compiled by the Federal Reserve Bank of Philadelphia could be the first demonstration of the Japan impact, he said. But the rebuilding of Japan, the worldâs No. 3 economy, should bolster spending on construction equipment during the second half of the year
April 24, 2011, 9:36 a.m. EDT
âLimitedâ first-quarter U.S. growth to be revealed
Signs of faltering recovery down to âone-off factors,â including oil
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) â The nationâs economy in the first quarter didnât grow nearly as quickly as it did in the fourth quarter, and on Thursday the government will release the grim data.
To be fair, none of the economists that MarketWatch tracks is expecting the Commerce Department to report that gross domestic product shrank in the January-to-March period. But the MarketWatch consensus for the GDP data, due for release Thursday at 8:30 a.m. Eastern, pegs growth as slowing to a 1.7% annualized pace from 3.1% in the fourth quarter.
MarketWatch consensus
See economic calendar
date report Consensus previous
April 25 New home sales 290,000 250,000
April 26 Consumer confidence 65.0 63.4
April 27 Durable goods orders 3.0% -0.6%
April 27 FOMC 0%-0.25% 0%-0.25%
April 28 GDP 1.7% 3.1%
April 28 Jobless claims 395,000 402,000
April 29 Personal income 0.3% 0.3%
April 29 Consumer spending 0.5% 0.7%
April 29 Core PCE price index 0.1% 0.2%
April 29 Employment cost index 0.5% 0.4%
April 29 Chicago PMI 68.0% 70.6%
April 29 Consumer sentiment 70.0 69.6
142096
Part of the drop will be put down to changes in the trade balance and inventories.
âThere were quirky numbers from the fourth quarter, an unusual narrowing in the trade balance and a significant drawdown in inventories,â said Thomas Simons, economist at Jefferies & Co., which is forecasting 2.6% growth for the first quarter. âBoth of those will reverse themselves to some degree; the question is which one wins.â
There are other factors at play as well.
Some readers will roll their eyes, but this winter actually was worse than normal in terms of snowfall. The Middle East, the dominant provider of world if not U.S. oil, isnât always in the throes of a revolution that both limits actual output (Libya) and raises fears about future output (Saudi Arabia, Iran).
âSeveral one-off factors â a significant jump in oil prices, weather-related disruptions and an anomalous shortfall in defense outlays â limited growth temporarily in the first quarter,â said Robert DiClemente, chief U.S. economist at Citi, in a note to clients. Heâs forecasting 1.8% first-quarter GDP growth.
âIn our judgment, these special factors alone were not enough to quash a recovery that otherwise exhibited healthy demand, accelerating employment gains and surprisingly stable financial conditions,â according to DiClemente.
Thatâs the typical view on Wall Street. Even though 38 out of 52 economists have reduced their annual GDP growth view in a poll by Blue Chip Economic Indicators earlier this month, the 2011 estimate still stands at 2.9%, which is how fast the U.S. economy grew last year.
âOur analysis indicates that current GDP growth is not a very good predictor of next quarterâs GDP growth, once we take into account other information,â said Goldman Sachs economist Zach Pandl in a note to clients. âWe therefore remain comfortable that growth will reaccelerate in the second quarter.â
That assumption depends on the bounce in gasoline prices â with its attendant restraint on consumer spending â being short-lived.
Much hinges on consumersâ behavior
âThe consumer has some positives to hang his hat on â the stock market has done well even in the face of troubling events and weak data, the labor market continues to heal itself, and the unemployment rate has come down,â said Simons. âBut the thing that kills consumers is when they have to pay for what they donât want to pay for â namely, gasoline.â
Two gauges of consumer confidence in April are set for release: the Conference Boardâs on Tuesday and the final University of Michigan-Thomson Reuters reading on Friday. Both are likely to show that consumers are still put off by the spike in gasoline prices, if less so than in March. Consumer confidence is a predictor, albeit an imperfect one, of retail activity.
U.S. week ahead: Fed in focus
Federal Reserve Chairman Ben Bernanke will begin holding news conferences following the central bank's policy-making meeting, MarketWatch's Greg Robb tells Kelsey Hubbard.
Another highlight will be data on durable-goods orders for March, due out Wednesday morning ahead of the dayâs big event: the Federal Reserve interest-rate decision, forecast on growth (currently 3.4% to 3.9%) and press conference with Fed Chairman Ben Bernanke. See more on potential questions to be asked of top U.S. central banker Bernanke.
The durables report is a volatile indicator but could shed light on the impact of the recent Japanese earthquake and tsunami on the U.S. supply chain.
âThe data from the manufacturing sector should be closely looked at, thatâs been biggest driver of the recovery so far,â said Simons. âThe implications from the Japan situation havenât really fleshed themselves out in data significantly.â
The big drop in the manufacturing survey for April compiled by the Federal Reserve Bank of Philadelphia could be the first demonstration of the Japan impact, he said. But the rebuilding of Japan, the worldâs No. 3 economy, should bolster spending on construction equipment during the second half of the year
Market Snapshot
April 22, 2011, 1:47 p.m. EDT
Fed, Bernanke on investorsâ radar next week
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) â Investors will parse the U.S. Federal Reserveâs policy statement and every word Fed Chairman Ben Bernanke says in an unprecedented news conference, events sure to dominate stock trading in the week to come.
The week ahead also includes earnings reports for key consumer, tech and energy companies, including Exxon Mobil Corp. (NYSE:XOM) , the U.S.âs largest company by market capitalization, and a look later in the week at how the U.S. economy has performed in the first three months of the year.
The packed calendar will play amid concerns about inflation and the debate around what, if anything, is likely to replace the Fedâs $600 billion bond-buying program, set to end in June, and how soon interest rates could rise.
Fed's new way to get message out
Topping the coming week's news, Ben Bernanke of the Federal Reserve will debut an unprecedented series of news conferences following the central bank's policy-making meeting on Wednesday. MarketWatch's Greg Robb reports.
âThey are not changing the rates, that much is sure,â said John Praveen, chief investment strategist at Prudential International Investments Advisers. âBut the language in the Fed statement, thatâs what the market is going to focus a lot about,â looking for any clues about the central bankâs expectations on growth and inflation, and assessing their impact on U.S. stocks.
The Fedâs Open Market Committee meets Tuesday and Wednesday, and Bernankeâs news conference follows Wednesdayâs FOMC decision. First-quarter gross domestic product results are due Thursday.
Markets will react favorably to some indication that the Fed feels inflation is under control, and recent spikes are only temporary. Any signs of worry about rising prices will telegraph a faster end to the ultra-low rate policy.
Some investors also expect the Fed to signal some action to continue to support capital markets âwithout calling it [quantitative easing],â said James Cordier, a portfolio manager at Optionsellers.com in Florida.
âThatâs the tight rope that the Federal Reserve will be walking next week,â he said. âIf QE simply ends, thatâs a change in policy, thatâs going to make many markets roll over and they are going to avoid that. Anything short of QE3 is going to be called higher interest rates.â
Cordier expects oil futures to continue to rise next week, providing more fodder for concerns about inflation.
Crude-oil futures rose 2.4% in the shortened holiday week, and so far this year oil prices have rallied 23%. Energy and food prices have been at the center of the worries about inflation.
âIâm positive for next week,â said Praveen. âThe Fed will likely acknowledge inflation as a concern but say itâs a temporary phenomenon, and GDP will not be as bad as expected.â
Prudential expects first-quarter GDP to show growth of 2.5%, more optimistic than consensus around 2%.
The next batch of earnings reports is also likely to present investors with good news, he added.
The full macroeconomic calendar includes March sales of new U.S. homes and durable-goods orders.
The housing figure due Monday âshould be much better than Februaryâs but only because Februaryâs miserable number appears to be an outlier,â analysts at IHS Global Insight said in a report to clients Thursday. New-home sales tumbled to a record low in February.
Durable-goods orders come on Wednesday, and IHS analysts expect a rise of 3.7%, with analyst consensus around a rise of 2%.
âWe are expecting a solid gain, with a robust gain in aircraft orders combining with a rebound in machinery orders,â they said. âAn exceptional rebound could even take overall durables growth above 5%,â they said.
Earnings take limelight
Two-thirds of the 137 companies in the S&P 500 Index reporting first-quarter results in the previous week showed earnings above analyst expectations, according to Thomson Reuters.
Next week, 180 S&P 500 companies are scheduled to report.
They include bellwethers such as Netflix Inc. (NASDAQ:NFLX) on Monday; Amazon.com Inc (NASDAQ:AMZN) , Coca-Cola Co. (NYSE:KO) , and United Parcel Service Inc. (NYSE:UPS) on Tuesday; Starbucks Corp. (NASDAQ:SBUX) and eBay Inc. (NASDAQ:EBAY) on Wednesday; Exxon and Microsoft Corp. (NASDAQ:MSFT) on Thursday; and Sprint Nextel Corp. (NYSE:S) on Friday.
âThereâs a chance that the easy money has been made,â with the economic recovery at least in part âturbochargedâ by the near-zero interest rates and a depleted tool chest for Fed officials, said Rob McIver, co-portfolio manager of The Jensen Portfolio in Oregon.
Higher-than-expected earnings lifted stocks this past week, counterbalancing some worrying macroeconomic data that included a slip for manufacturing activity in the Philadelphia area.
The Dow Jones Industrial Average ended Thursday at its highest since June 2008.
The weekâs earnings included Apple Inc. (NASDAQ:AAPL) , which reported a 95% surge in earnings on strong sales of iPhones and Mac computers; General Electric Co. (NYSE:GE) , which reported first-quarter profit of $3.43 billion from $1.95 billion in the same year-ago period; and Citigroup Inc. (NYSE:C) , which saw net profit fall 32% in the first quarter.
Earnings also obfuscated how the week had started with a bang: on Monday, debt-ratings company Standard & Poorâs announced it revised its outlook on the U.S. debt to negative from stable, dealing a blow to most markets.
Stocks and most commodities eventually recovered to close the week with gains, but the dollar spent the week plagued by weakness versus most major currencies, even as it recovered from the initial negative, knee-jerk reaction following the S&P news.
The U.S. unit on Thursday fell to a 16-month low against the euro and the British pound.
Gold, already on fire the week before on safe-haven buying and concerns about dollar debasement, used the S&P news and the accompanying weaker dollar as a springboard for a record-studded week.
Most-active June contract (COMMODITIES:GCM11) ended at a settlement record of $1,503.80 an ounce on Thursday, and traded as high as $1,509.60 an ounce, an intraday record for the metal. Gold gained 1.2% on the week.
April 22, 2011, 1:47 p.m. EDT
Fed, Bernanke on investorsâ radar next week
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) â Investors will parse the U.S. Federal Reserveâs policy statement and every word Fed Chairman Ben Bernanke says in an unprecedented news conference, events sure to dominate stock trading in the week to come.
The week ahead also includes earnings reports for key consumer, tech and energy companies, including Exxon Mobil Corp. (NYSE:XOM) , the U.S.âs largest company by market capitalization, and a look later in the week at how the U.S. economy has performed in the first three months of the year.
The packed calendar will play amid concerns about inflation and the debate around what, if anything, is likely to replace the Fedâs $600 billion bond-buying program, set to end in June, and how soon interest rates could rise.
Fed's new way to get message out
Topping the coming week's news, Ben Bernanke of the Federal Reserve will debut an unprecedented series of news conferences following the central bank's policy-making meeting on Wednesday. MarketWatch's Greg Robb reports.
âThey are not changing the rates, that much is sure,â said John Praveen, chief investment strategist at Prudential International Investments Advisers. âBut the language in the Fed statement, thatâs what the market is going to focus a lot about,â looking for any clues about the central bankâs expectations on growth and inflation, and assessing their impact on U.S. stocks.
The Fedâs Open Market Committee meets Tuesday and Wednesday, and Bernankeâs news conference follows Wednesdayâs FOMC decision. First-quarter gross domestic product results are due Thursday.
Markets will react favorably to some indication that the Fed feels inflation is under control, and recent spikes are only temporary. Any signs of worry about rising prices will telegraph a faster end to the ultra-low rate policy.
Some investors also expect the Fed to signal some action to continue to support capital markets âwithout calling it [quantitative easing],â said James Cordier, a portfolio manager at Optionsellers.com in Florida.
âThatâs the tight rope that the Federal Reserve will be walking next week,â he said. âIf QE simply ends, thatâs a change in policy, thatâs going to make many markets roll over and they are going to avoid that. Anything short of QE3 is going to be called higher interest rates.â
Cordier expects oil futures to continue to rise next week, providing more fodder for concerns about inflation.
Crude-oil futures rose 2.4% in the shortened holiday week, and so far this year oil prices have rallied 23%. Energy and food prices have been at the center of the worries about inflation.
âIâm positive for next week,â said Praveen. âThe Fed will likely acknowledge inflation as a concern but say itâs a temporary phenomenon, and GDP will not be as bad as expected.â
Prudential expects first-quarter GDP to show growth of 2.5%, more optimistic than consensus around 2%.
The next batch of earnings reports is also likely to present investors with good news, he added.
The full macroeconomic calendar includes March sales of new U.S. homes and durable-goods orders.
The housing figure due Monday âshould be much better than Februaryâs but only because Februaryâs miserable number appears to be an outlier,â analysts at IHS Global Insight said in a report to clients Thursday. New-home sales tumbled to a record low in February.
Durable-goods orders come on Wednesday, and IHS analysts expect a rise of 3.7%, with analyst consensus around a rise of 2%.
âWe are expecting a solid gain, with a robust gain in aircraft orders combining with a rebound in machinery orders,â they said. âAn exceptional rebound could even take overall durables growth above 5%,â they said.
Earnings take limelight
Two-thirds of the 137 companies in the S&P 500 Index reporting first-quarter results in the previous week showed earnings above analyst expectations, according to Thomson Reuters.
Next week, 180 S&P 500 companies are scheduled to report.
They include bellwethers such as Netflix Inc. (NASDAQ:NFLX) on Monday; Amazon.com Inc (NASDAQ:AMZN) , Coca-Cola Co. (NYSE:KO) , and United Parcel Service Inc. (NYSE:UPS) on Tuesday; Starbucks Corp. (NASDAQ:SBUX) and eBay Inc. (NASDAQ:EBAY) on Wednesday; Exxon and Microsoft Corp. (NASDAQ:MSFT) on Thursday; and Sprint Nextel Corp. (NYSE:S) on Friday.
âThereâs a chance that the easy money has been made,â with the economic recovery at least in part âturbochargedâ by the near-zero interest rates and a depleted tool chest for Fed officials, said Rob McIver, co-portfolio manager of The Jensen Portfolio in Oregon.
Higher-than-expected earnings lifted stocks this past week, counterbalancing some worrying macroeconomic data that included a slip for manufacturing activity in the Philadelphia area.
The Dow Jones Industrial Average ended Thursday at its highest since June 2008.
The weekâs earnings included Apple Inc. (NASDAQ:AAPL) , which reported a 95% surge in earnings on strong sales of iPhones and Mac computers; General Electric Co. (NYSE:GE) , which reported first-quarter profit of $3.43 billion from $1.95 billion in the same year-ago period; and Citigroup Inc. (NYSE:C) , which saw net profit fall 32% in the first quarter.
Earnings also obfuscated how the week had started with a bang: on Monday, debt-ratings company Standard & Poorâs announced it revised its outlook on the U.S. debt to negative from stable, dealing a blow to most markets.
Stocks and most commodities eventually recovered to close the week with gains, but the dollar spent the week plagued by weakness versus most major currencies, even as it recovered from the initial negative, knee-jerk reaction following the S&P news.
The U.S. unit on Thursday fell to a 16-month low against the euro and the British pound.
Gold, already on fire the week before on safe-haven buying and concerns about dollar debasement, used the S&P news and the accompanying weaker dollar as a springboard for a record-studded week.
Most-active June contract (COMMODITIES:GCM11) ended at a settlement record of $1,503.80 an ounce on Thursday, and traded as high as $1,509.60 an ounce, an intraday record for the metal. Gold gained 1.2% on the week.
Got stuck in one of those trades where the market goes 1 tick in your favor and then reverses.
However, we did not break the highs of the day, and the market initially sold off hard, so I added to the position where I probably should have entered the position to start with.
Chart based stop was above the highs, and I decided I will either lose or win and not trade more today.
I decided to get out a BE for 1 contract since that way if I am wrong and market goes higher, I will only take a small loss.
2nd contract I was targeting for a decent profit, but it went down to previous entry and bounced off. So I decided I will just like to get out with a small profit and took 3 ticks of profit.
Now this is pretty silly, but if you look at the fact I had a draw down of around 15 ticks that I turned into a slightly profitable trade, that is not bad.
I keep thinking about poker when I trade, I felt that the market was trying to bluff me out of my position, and we ended up running it twice for a chop of the pot. This happens more on ES than CL where the market will run stops a little then reverse to go to your original profit target.
Looking back on trade, I think I should have waited for either a LL to confirm the trend had changed since we got 2 HL even after a trend break, or just wait and take a short at the place of my 2nd short entry. There was no real justification to go short the 1st level since we were not close to any levels and had no real indicator edge based setups. Instead my indicator was actually showing an oversold area, so I had no 2nd confirmation.
However, we did not break the highs of the day, and the market initially sold off hard, so I added to the position where I probably should have entered the position to start with.
Chart based stop was above the highs, and I decided I will either lose or win and not trade more today.
I decided to get out a BE for 1 contract since that way if I am wrong and market goes higher, I will only take a small loss.
2nd contract I was targeting for a decent profit, but it went down to previous entry and bounced off. So I decided I will just like to get out with a small profit and took 3 ticks of profit.
Now this is pretty silly, but if you look at the fact I had a draw down of around 15 ticks that I turned into a slightly profitable trade, that is not bad.
I keep thinking about poker when I trade, I felt that the market was trying to bluff me out of my position, and we ended up running it twice for a chop of the pot. This happens more on ES than CL where the market will run stops a little then reverse to go to your original profit target.
Looking back on trade, I think I should have waited for either a LL to confirm the trend had changed since we got 2 HL even after a trend break, or just wait and take a short at the place of my 2nd short entry. There was no real justification to go short the 1st level since we were not close to any levels and had no real indicator edge based setups. Instead my indicator was actually showing an oversold area, so I had no 2nd confirmation.
Sorry I prefer not to get jerked out of winning trades on pullbacks, only to see the market resume its trend shortly thereafter without me.
Different strokes for different folks, which is why i directed my question to swing/LT traders
I currently have a core position with a longer term target. However I don't want to leave myself totally exposed to any surprises Obama has in store for the "evil" oils speculators.
Again any comments from CL traders using options in conjunction with the underlying is appreciated
SS 112.77 , target : 112.00