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INTRA-DAY NEWSLETTER ~ Aug 25 2014
Key Events In The Current Week
Submitted by Tyler Durden on 08/25/2014
Key highlights in the coming week:
US Durable Goods, Michigan Conf., Services PMI, PCE, and CPI in Euro area and Japan. Broken down by day: Monday - US Services PMI, New Home Sales (Consensus 4.7%); Singapore CPI; Tuesday - US Durable Goods (consensus 7.5%) and Consumer Confidence; Wednesday - Germany GfK Consumer Confidence; Thursday - US GDP 2Q (2nd est., expect 3.70%, below consensus) and Personal Consumption; Euro area Confidence; CPI in Germany and Spain; Friday - US Michigan Conf. (consensus 80.1), PCE (consensus 0.10%), Chicago PMI; Core CPI in Euro area and Japan (consensus 2.30%). Additionally, with a long weekend in the US coming up, expect volumes into the close of the week to slump below even recent near-record lows observed recently as the CYNKing of the S&P 500 goes into overdrive.
France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government
Submitted by Tyler Durden on 08/25/2014
Earlier this morning, those expecting an out of control European deflationary tumble got one step closer to their goal when French President Francois Hollande asked his prime minister, who only assumed the post a few short months ago in March, to form a new government, following what Reuters reported was him "looking to impose his will on the cabinet after rebel leftist ministers had called for an economic policy U-turn" spearheaded by economy minister Arnaud Montebourg demanding an end to French "austerity." The Guardian is somewhat more direct and to the point: "France has entered uncharted political waters after the prime minister, Manuel Valls, presented his government's resignation amid a political crisis triggered by his maverick economy minister who called for an end to austerity policies imposed by Germany."
S&P 500 To Rise Above 2000 On Hopes Euro Collapse Accelerates, Euro Yields Hit New Records
Submitted by Tyler Durden on 08/25/2014
It's been one of those days. First, the CME broke for 4 hours due to what some suggested were HFT connectivity issues, then Russia announced it would send a second humanitarian convoy into Ukraine (a big risk off move the first time it was announced, now not even an algo stirred), then Germany reported that the IFO Business Confidence/Climate dropped for the fourth consecutive month to 106.3 from 108.0, below the 107.0 expected, with the IFO chief economist stating that German GDP expectations are likely to be cut to 1.5% from 2.0% later in the year, and finally the French government collapsed due to disagreement over policy between finance minister Valls and economy minister Montebourg. All in all, a typical day in Europe's slow-motion implosion. So why are Spanish and Italian bank stocks soaring and European bond yields reaching new record highs? Simple: following Draghi's speech on Friday at Jackson Hole, which at initial read was hardly as dovish as many had expected, the FT and various other media outlets promptly changed the narrative and made it seem as if the ECB head was about to unleash QE.
Here We Go Again: Ukraine Claims It Destroyed Two Tanks That Entered From Russia
Submitted by Tyler Durden on 08/25/2014
It's Monday; which means it’s time to ramp up the war rhetoric once again as another weekend goes by without 'escalation'. Ukraine's military spokesman Lysenko, or as he is better known as Lie-senko for those who actually ask for some evidence of anything that he claims, says, suggests or otherwise talks about, is reporting that:
•UKRAINE SAYS TWO TANKS THAT ENTERED FROM RUSSIA WERE DESTROYED: BBG
•LYSENKO SAYS UKRAINE CAPTURED CREW MEMBERS OF DESTROYED TANKS: BBG
•UKRAINE SEIZED SOME VEHICLES THAT ENTERED FROM RUSSIA: LYSENKO: BBG
Unfortunately no one had their iPhone or camera-on-a-sticks to record the action as "proof." but we are sure that won't matter. Cure NATO's comments. Now, how will the market react to this 'proven invasion'? Actually scratch that: more escalation is simply a catalyst for even more pent-up de-escalation in the future.
New Home Sales Drop To Lowest Since March As Northeast Craters; Biggest Supply Since October 2011
Submitted by Tyler Durden on 08/25/2014
Following last week's housing starts data, everyone was expecting a new home sales number that was even better than the consensus 430K. Instead, the July print of 412K was not only the 5th miss in the last 6 prints, but also the lowest number since March's 403K. The biggest drop took place in the Northeast where the sequential plunge was some 31% to just 18K new houses, and a whopping 44% from a year ago. There were declines in the Midwest which dropped 8.8% and in the West, which dropped 15.2%, while the only increase was recorded in the South which rose 8.1%. In fact, of all regions, only the South posted an increase from July 2013, surging by 33%, with new home sales in all other regions dropping.
Services PMI Drops Most In 6 Months, "Recovery Has Lost Some Momentum", Markit Says
Submitted by Tyler Durden on 08/25/2014
US Services PMI dropped from multi-year highs to a still expanding 58.5, 3 month lows and the biggest month over month drop in 6 months. This is the 10th month of expansion in a row but employment growth continues to slow, as opposed to the priced-in escape velocity to the moon levels the market expects, even if this particular piece of bad news may just be the good news the "market" needs for that nudge above 2,000.
One of Every Two Cyprus Loans Is In Default
Submitted by Tyler Durden on 08/25/2014
Far be it for us to comment that anything like "fundamentals" matters anymore, or that, blasphemy, bad news is anything but good news, however what the Central Bank of Cyprus revealed today is a little troubling to say the least: as of the most recent, June, data, the total percentage of non-performing loans in the Cypriot banking system just rose to a mind-blowing 45%, up from 44.3% in May, and nearly double the 23.6% which was reported at March 2013 when the local banking system cratered, leading to the first European forced "bail-in" of (mostly Russian) depositors.
Our thanks to www.zerohedge.com for the above articles.
Gold Overview
So far the gold seasonal factor has been a complete dud. The best chance for a low is this week as the short term cycle turns ideal timeframe is Aug 25th (plus or minus 72 hours.)
Gold Chart
Gold’s failure of the GOLD UPTREND LINES on the chart last week at the 1300 area ushered in yet another wave down. The most likely place for support is the lower blue channel line in the 1265-1272 area. Resistance is going to be 1285-1294 for the remainder of the session. Weekly resistance will be the 1302-1312 and our key 1322 reversal point. If we close below 1260, then things will get dicey for gold on the downside. In summary, shorter time frames are bearish in trend at the moment. IF we get a drop to 1265-1272 that should be the most likely place for a low to be established this week. Be careful.
 
Cycles
At some point it is going to take another cycle inversion to get the blue cycle making lows in gold. Thus it is not out of the question for gold to continue lower to the bottom of this trend line over the next two weeks. Odds are about 30% of such an event and about 70% that a turn can develop this week. IF we can’t hold the 1260 area on a closing basis, things will begin to favor the downside. At the moment, the 1265-1272 area is support on the hourly chart. On the daily chart below the key channel line is near 1210 on a price basis.
Silver
Silver continues to grind down and key support this week is 1870-1880. Resistance is the 1960-1980 area and then 2020. Odds favor strong support near 1880.
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