Tuesday, November 29, 2011
The EUR-USD had an uneventful day and financial markets followed suit with gold, silver and stocks all holding near yesterday's close. Surprisingly, the Conference Board's consumer confidence index for November surged to 56, much better than the consensus of 45, and following the prior month's 39.8. However, the news barely made a debt in today's market action.
Overnight developments were once again less than good with Italy selling $10 billion of debt at yields in the mid 7% level. This is clearly unsustainable. A French newspaper warned that France's outlook could be lowered by Moody's in the next 10-days. France's AAA rating has been under threat of late, and while a negative outlook would not be surprising, it would crystallize a major fear in financial markets. In a separate Moody's report, the ratings on subordinated debt on European lenders are under review for possible downgrade. In a sign of growing tensions among Euro-area banks, reuters is reporting that the ECB was unable to fully sterilize its secondary market bond purchases which now top just over 200 billion EUR.
Markets remain buoyed on hopes that EU policy makers will finanlize details on boosting the EFSF. However, investors are already showing disdain for EFSF bonds, raising doubts whether the fund will have the means to bailout a heavyweight like Italy.
In a slight shocker, the S&P Case-Shiller Home Price Index for September fell 0.6%, much worse than the 0.1% decline that had been forecast. The news adds to concerns over the state of the U.S. economy and highlights the risks to U.S. banks which are trading near 52 week lows.
The key economic release for the week remains Friday's all important October non-farm payroll report. Current expectations are for a 116,000 gain, with no change in the unemployment rate at 9.0%. Wednesday ADP employment report will also be key.
Precious metals buyers showed a cautious tone following an up and down overnight performance, and Monday's surge. Spot gold prices edged up $6.53 at $1,719.05 per troy ounce. Spot silver prices slightly underperformed, down $0.14 at $32.00 per troy ounce. The gold-silver ratio is at 53.77.
Commodities outside precious metals were mostly higher. WTI crude futures were up $1.63 at $99.84 per barrel. Copper futures edged up $0.0395 at $3.411 per pound.
Treasuries were modestly lower with the yield on the 10-year Treasury edging higher to 2.00%. The USD showed a mixed performance, ending essentially unchanged against the EUR.
Tiffany (TIF) reported strong third quarter earnings, but fell over 8.5% after citing "weaknesses" in sales in Europe and eastern U.S.
Facebook, the world's largest social network, is reportedly planning a $10 billion IPO which values the company at $100 billion.
American Airlines (AMR) filed for Chapter 11. The airline had been unable to secure wage concessions from its workers. Shares of AMR plunged 81.3%.
In another excellent of the market's unlevel playing field, Bloomberg reports that in 2008, then Treasury Secretary Henry Paulson, tipped off a number of hedge fund managers of the governments plan to place Fannie Mae and Freddie Mac in conservatorship. This knowledge gave these select few advance knowledge of inside information of the highest order. While none of those that were told are implicated in trading in the two GSEs, it doesn't take a genius to take that knowledge and just short other mortgage dependent lenders. Many of the hedge fund managers that were informed were Goldman Sachs alumni and Henry Paulson was former CEO of Goldman. How Paulson Gave Hedge Funds Advance Word.
Take advantage of Gainesville Coins offer on the NTR 100 oz Silver Bar at as low as $0.55 over spot. Gainesville Coins is also offering the 2011 Fiji Taku 1 oz Silver Coin at a slow as $2.99 over spot.