FOREX, COMMODITIES, STOCKS OUTLOOK March 11TH : Analysis, Key Events, Trends, Trades

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Stocks: Prior Day: Asia down, Europe USA up. Today: Asia, Europe up. Stocks modestly higher despite lack of major positive news, Greece paralyzed by strikes, raising questions about whether Greece will be able to implement and sustain spending cuts

.- FX: Slight bias to risk currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GBP in order of risk appetite appeal], as flat/down stocks reflect market seeking direction from news over the coming days.

- Main events: THUR: AUD Employment Rate/Change, CNY Ind. Prod., CHF Libor Rate, SNB Policy St. CAD Trade Bal. USD Trade Bal., Unemployment Claims, NZD Retail Sales, FRI: CAD Employment Change, Unemployment Rate, USD: Core and Retail Sales m/m, UoM Consumer Sentiment

- Big Theme: Stocks higher, despite threats of further Chinese monetary tightening and Greek strikes from spending cuts, but commodities and currencies flat, directionless. Note that commodities and forex often change direction ahead of stocks. In addition to Greece, Spain, Portugal, and Italy all need to sell bonds in the coming weeks, and global markets’ fate rests in how well bond markets respond to these sales. Failed sales or sharply rising rates could easily spook markets lower.

STOCKS:

US: Up: financials and tech issues led the major indices to varied gains in the face of choppy trade despite the lack of any noteworthy positive news. The S&P 500 has also advanced in eight of its last sessions, but it failed for the third straight day to close above its 52-week high, which was set in mid-January.

Because the S&P 500 is the bellwether index, failure to push through resistance left stocks to roll over and surrender gains.

Financials garnered support in the face of news that some Senate Democrats will propose to expand the Volker Rule with new limits on proprietary trading by banks and nonbank financial firms.

Banks were among the best overall performers in the sector as regional banks scored a 2.9% gain and diversified banks climbed 1.8%. The KBW Bank Index closed 2.2% higher.

Tech stocks also displayed relative strength, which helped take the Nasdaq Composite to a fresh 52-week high. The Nasdaq has advanced in eight of the past nine sessions, outperforming its counterparts in each of the past three sessions.

Buyers stepped in to help stocks recover from their slide, but the broad-based S&P 500 remains roughly five points shy of its high.

Wholesale inventories for January, the first noteworthy US data this week, slipped 0.2% when a 0.2% increase had been expected. Though the decline can undermine GDP, some suggested that it could be indicative of stronger-than-expected demand.

The Treasury’s budget statement for February showed a deficit of $220.9 billion, which was essentially in line with the $222.0 billion consensus, but deeper than the $193.9 billion deficit that was recorded in February 2009.

In a widely-watched $21 billion auction of 10-year Notes, bidders showed up in strong numbers, such that the bid -to-cover ratio was just shy of 3.5, which is well above recent averages. The indirect bid was relatively modest, though; it came in at 35.1%. That’s a negative sign, because it suggests an ongoing lack of foreign demand. The benchmark 10-year Note settled slightly lower, but that kept its yield a few basis points above 3.70%.

Trading volume on the NYSE hit its highest level in nearly two weeks by totaling 1.14 billion shares. That also put it above its 50-day moving average of 1.09 billion shares.

Advancing Sectors: Financials (+1.1%), Tech (+0.8%), Energy (+0.6%), Industrials (+0.4%), Consumer Discretionary (+0.3%), Health Care (+0.1%), Utilities (+0.1%)

Declining Sectors: Consumer Staples (-0.2%), Telecom (-0.1%), Materials (-0.1%)DJ30 +2.95 NASDAQ +18.27 NQ100 +0.8% R2K +0.8% SP400 +0.8% SP500 +5.16 NASDAQ Adv/Vol/Dec 1724/2.49 bln/957 NYSE Adv/Vol/Dec 2040/1.14 bln/985

Asia Stock Outlook: Up: The major Asian markets mostly rose Thursday following through on US market gains, which were supported by data showing U.S. wholesale inventories fell unexpectedly in January and sales hit their highest in more than a year.

European Stock Outlook Up: European shares opened modestly higher despite overall mixed economic data today, nationwide strikes in Greece casting doubt on the new spending cuts there, and earlier warnings this week from Fitch that both Spain and Portugal are at risk of downgrades, and that the UK’s deficit cutting is too slow.

ASIA- DOWN	N225I -0.04%	HS +0.00%		SSEC -0.66%	FTSTI +0.80%		AORD +0.01%
EUROPE UP	FTSE +0.59%	DAX +0.86%		CAC +0.86
US- UP	S&P +0.45%		DJIA +0.03%	NASDAQ +0.78%
THIS MORNING UP	N225I +0.96%		HS +0.09%	SSEC +0.08%	FTSTI +0.41%		AORD -0.09%
UP	FTSE +0.02%		DAX +0.19%	CAC -0.12%

Commodities Outlook: Futures mixed in Wednesday and early Thursday trade GMT as gold dropped and oil has advanced slightly to hover around $82/barrel.

In US trade yesterday, a mixed finish for commodities gave the CRB Commodity Index a fractional loss. Gold was a primary source of weakness — it settled 1.3% lower at $1108.20 per ounce. Oil prices gained 0.7% to close pit trade at $82.09 per barrel. Oil prices had traded around $83 per barrel, which marked a multi-week high, in the wake of a smaller-than-expected inventory build of 1.43 billion barrels.

Crude Oil Daily Outlook: Up slightly to around $82 in Wednesday and early Thursday trade GMT, following the EURUSD moves. Likely to remain range-bound unless further major news good or bad.

Gold Daily Outlook:Futures down in Wednesday and early Thursday trade GMT, despite USD weakness, as stronger than expected Chinese inflation data stirred concerns of further Chinese monetary tightening, which would limit global growth and commodity prices. Also, easing fear about a Greek default (for now) and its possible damage to the Euro has undermined demand for gold.

FOREX Daily Outlook: Mixed in Wednesday and early Thursday trade GMT, no clear theme to risk or safety from FX itself, though rising stocks cause us to lean towards to risk currencies as risk appetite moves modestly higher despite the lack of any major positive news and the significant negatives of rising inflation in China (suggests more Chinese tightening, bad for Chinese, global recovery) and nationwide strikes in Greece protesting the critical spending cuts.

Paralyzing nationwide strikes in Greece over the latest austerity plan raise questions about whether Greece will be able to implement and sustain its new spending cuts in the face of fierce popular opposition, which sees the pain unfairly borne by the working class.

Note that over the next month, Spain, Portugal and Italy will all need to sell more bonds to fund current operations and debt repayments, and the fate of the euro is likely to be determined by the degree of investor appetite for such paper. This uncertainty should continue to weigh on the Euro over the coming months until it is removed, regardless of oversold indicators. For the time being however, the storm appears to have passed and markets are content to tread water with euro shorts vulnerable to further squeezes on any positive EZ eco news. Balancing this however, is the fact that even if Greece can get through the coming months, the above nations also need to sell bonds and any failed bond sales or even spiking interest rates on these bonds could further pressure the Euro on doubts of PIIGS block solvency.

Note how even the seemingly near term resolution of Greece has no lasting effect on EUR, as markets (justifiably) quickly shift concerns to other PIIGS. EUR to remain under pressure until comprehensive solution for PIIGS calms markets, because there are always other PIIGS in trouble, though unclear if any will be arranged. If there isn’t a comprehensive solution for the PIIGS, continue to use the ‘good news days’ for the Euro as selling opportunities, as the Euro continues to sit on 5 separate ticking bombs. Spain needs will need to raise about 25 bln in July ($34.31 bln) to pay off maturing bonds and debt, and will need to sell bonds to do so, barring rescue from another source. Greece has gotten no direct aid thus far.

Spain’s only hope may be that Greece and others PIIGS are not in immediate trouble or seeking bonds at that time, as EU may be unwilling to even consider more loan guarantees. Much depends on if and how Greece gets through April and May.

See what’s happening, without a comprehensive solution that markets trust (none on the scene) the EU is facing a perpetual ‘crisis of the month’. With no final price tag on such a resolution, and the Euro still above its average 1.300 level vs. the USD, the Euro retains considerable downside.

US Dollar Daily Outlook: in Wednesday and early Thursday GMT trade: No clear theme- up/ vs. JPY, GBP, NZD steady vs. the AUD, CAD, down vs. the EUR, CHF

Euro Daily Outlook: in Wednesday and early Thursday GMT trade: Up vs. the JPY, AUD, USD, CAD, down vs. the CHF, steady vs. the GBP,

Yen Daily Outlook: in Wednesday and early Thursday GMT trade: down vs. the EUR, USD, AUD, GBP, CHF, CAD

British Pound Daily Outlook: in Wednesday and early Thursday GMT trade: steady vs. the CHF, EUR, up vs. the USD, AUD,

Australian Dollar Daily Outlook: in Wednesday and early Thursday GMT trade: up vs. the USD, JPY, steady vs. the EUR, down vs. the GBP, CHF

New Zealand Dollar Daily Outlook in Wednesday and early Thursday GMT trade down vs. the USD, begins ‘death cross as the 50 day SMA crosses under the 200 day SMA, sharing that dubious honor with the Euro

Canadian Dollar Daily Outlook: in Wednesday and early Thursday GMT trade: steady vs. USD, down vs. EUR, AUD

Swiss Franc Daily Outlook in Wednesday and early Thursday GMT trade: up vs. EUR, USD, JPY, AUD, down vs. GBP

CONCLUSIONS & Big Picture: Short term: markets up slightly but still most near or at strong longer term resistance levels. The S&P 500, our key risk asset barometer, continues slightly higher (though ended near session lows) without any noteworthy positive news. Is that a sign of strength or a fading rally. Much depends on US retail sales data Friday. If good, it confirms the good US jobs data and strengthens the slow but steady growth thesis for the US, which is certain to help the US Dollar, possibly stocks as well.

No trade recommendations today due to technical difficulties

DISCLOSURE: NO POSITIONS