By mid- week, market had started to believe ECB may actually not intervene or just end up being late to the game. (Merkel, Draghi shooting down ideas). Funding stresses (w/ European banks) also heightened late in the week. Euro’ not imploding is a sign of no ‘big’ QE on the agenda, but it’s also a ‘funding stress’ result symptom, so hard to gauge.
Overall, investor sentiment starting to breakdown due to continues broken promises ie. Summits haven’t produced anything concrete for months as Europe still doesn’t have a ‘net’ over it. Last week, we’ve seen buyers spurn bonds and/or bonds being attacked in Europe’s core.
In all, the past week is demonstrating a shift in investor tolerance for anything and everything Europe.
Market backstop remains US eco’ data (initial claims best indicator last week) with GDP back on track for 3% in Q4 after week’s data had firms raising growth forecasts. Employment whispers for Dec 2 starting to come in at 200k~. We also had FED hints of acquiring MBS assets (targeting housing) QE.
As always, try to look forward here, things to look at during holiday shortened week coming up:
It seems there are quite a few possible ‘positive bias’ catalysts to coincide with seasonality for a bounce. Of course, this depends on no new house-of-cards, Europe revelations.
*FOMC minutes Tuesday, look for noise/stance of Fed on MBS QE
*European commission meeting on Wednesday, recall Wiseman/ Rehn notes from last week, proposal to take place here, maybe get something on Eurobonds from ECB as well.
*PMI’s from China/ Europe (Wednesday am), China should be on watch here closely.
*Avoided noting recently (“Supercommitte” November 23 deadline) due to fact it hasn’t been a major market direction theme, in this view, despite lots of chatter. The outcome is uncertain, expectations are dwindling. It may be a non-event unless 1.2trillion is pushed back, which will likely disappoint.
*SP updating ratings on world’s biggest bank by end of November, so this may fall into next week’s calendar??.
*ADI report for semi sector is important. Not much else is significant as far as reports go, CRM added to list of disappointments post CSCO as bookings slowed considerably. Example (CRM) of why you can’t dive into a stock immediately based on top/bottom line any more. Need to ‘dig’ inside.