The Rooster Call: Current State of German Exports and Eurozone

Euro ECB

Hit the Mark Trading’s Brief Review of Overnight Market Action Setting the Tone for the Trading Day

Global Economic News

Germany is the economic powerhouse of Eurozone. Today we have additional negative news of concern suggesting the ECB might be forced to expand their QE currently scheduled to wind down in March.  Here’s what Reuters’s reports.

German exports to Britain and the United States dropped sharply in the third quarter, data from the Federal Statistics Office obtained by Reuters showed today.

Exports to Britain, Germany’s third-largest export market, were down 4.7 percent in the July-Sept period compared with last year, when they rose by some 11 percent in the third quarter.

Exports to the United States, Germany’s biggest trading partner, fell by 10.5 percent year-on-year in the third quarter, the data showed. They also fell by 6.3 percent in the first nine months of this year.

Separately, Germany’s Finance Minister says the Eurozone should not deviate from strict deficit and debt rules (ft.com). Something has to give…monetary policy is not getting the job done.

Contrast the German Finance Minister’s opinion to Count Draghi, who also spoke today commenting on the entrenched very low inflation rate. Policymakers at the European Central Bank are yet to see evidence of a sustained rise in inflation, suggesting they will continue with their easing policies for some time into the future, president Mario Draghi has said (ft.com)

France is the number two economic powerhouse of Eurozone. The French government has revised down its growth target for this year to 1.4 per cent from 1.5 per cent previously as the eurozone’s second largest economy is hampered by terrorism and strikes (ft.com).

Stock Indexes

The number of global corporates that have defaulted on theirs bonds has notched up to 146 for the year so far, the highest level seen at this point in the calendar since the financial crisis, according to rating agency Standard & Poor’s (ft.com).

Looking at DAX and STOXX 50, we see a troubled rise in price, not breaking out into new highs, but rather on thin ice, rising with ES during the day and falling overnight.

The USA equity index futures are UN-believe-ably dangerous for day traders due to the tight range. It is choppy…slow…and incremental movement. When you trade trend and momentum style, you expect a pop instead of “inch by inch we take the mile.”

USA equity index futures are over-bought and due for a pull-back. Our normal seasonal long trade starts next week…I certainly would have preferred some kind of pull-back.

Yesterday, USA economic reports counter-acted an ES price pull lower from crude falling. Crude saw no news from the Russian/OPEC informal gathering described here yesterday. Crude contracts are rolling over, which could have pressured price too.

Crude Oil

In order to SAVE crude from falling further, OPEC manipulates the press as Reuters eagerly laps up a story put out by “un-named” sources saying…”OPEC is moving closer toward finalizing this month its first deal since 2008 to limit oil output, with most members prepared to offer Iran significant flexibility on production volumes, ministers and sources said on Friday.” Separately, Russian energy minister Alexander Novak said he was confident the cartel would be able to reach an agreement by their official meeting on November 30 (investing.com). Presto! Crude higher today! 

I still expect crude shall rise going into the November 30 OPEC meeting.  Consider options on USO entering on your technical analysis signal from the price charts.

US Dollar

Yesterday, Yellen appeared in Congressional testimony as reinforcing a FED rate increase at the FOMC meeting December 13-14. Her comments dropped bonds and pushed US dollar higher…and gold cried! 

Today gold hit our $1200 target area. Breaking below this level and $1180 is next objective.

The Japanese Yen CME futures position gained over $3K for anyone entering after the November 10 evening client video. An option trade in FXY was also suggested.

Today, we have New York FED President Dudley speaking at 9:35AM ET. He can move markets…just be aware!

Economic Events

  • James Bullard Speaks – 5:30 AM ET
  • Esther George Speaks – 9:30 AM ET
  • William Dudley Speaks – 9:35 AM ET
  • Leading Indicators – 10:00 AM ET
  • Kansas City Fed Manufacturing Index – 11:00 AM ET
  • Baker-Hughes Rig Count – 1:00 PM ET
  • Robert Kaplan Speaks – 1:30 PM ET
  • Jerome Powell Speaks – 9:45 PM ET

Markets

Nikkei 225, DAX, and STOXX 50 are all lower. USA equity index futures are incrementally higher. We normally expect at least an initial pull lower in USA index futures at the open, yet rising crude could support. Today is equity options expiration day.

If you feel equity index futures are likely moving tight and incremental…follow gold and crude for day trading as a suggestion.

Looking at the price charts of various futures, nothing seems interesting quite frankly. Be careful and remember we have another week of trading coming if nothing seems worthy of trading today.

Think About This!

At some point traders are going to realize the strength of US dollar shall produce a negative effect on USA multinational firms. This thinking, if manifests in a pull-back on ES, is likely the signal for entry into the best equity index seasonal trade of the year. The cheap and easy method of participating is buying March call options on SPY, IWM, QQQ…or their brethren Powershares. I suggest waiting for a pull-back. This is just my opinion!

To learn more from Martin, visit HitTheMarkTrading.com to join his mailing list and receive blog updates.