Markets rallied across the board on the 7th July 2010. Reasons why for relief rally:
* Eurozone Q1 confirmed at +0.2% q/q, +0.6% y/y vs prev +0.2%/0.5%. As Exp
* German May Industrial Orders -0.5% m/m vs prev +3.2%. +0.5% Exp
* UK June BRC shop price index +1.5% y/y, May +1.8%
* EU Commission: Greek reform programme broadly on track
* Fed"s Fisher: Fed has "done enough" asset purchasing; have not seen European
contagion, but is always a risk; big bank shave too much concentration of power,
not healthy (CNBC)
* European bank stress tests will include 16-17% haircut on Greek bonds (Reuters
banking sources)
* Germany"s Merkel: EUR has stabilized, on stronger foundation than pre-crisis
* Irish Fin Ministry: Sees 2010 GDP +1%; Funding position comfortable for year
* EU Stress Test: Adverse scenario assumes 3 pct point variation of GDP from
forecasts; Scenarios include sovereign risk shock comparable to early May 2010
markets; Results to be disclosed in total and bank-by-bank July 23 (Cebs doc)
* Nikkei News: Exporters likely to shift EUR/JPY forecasts to 110-115
* Greek lawmakers agree in principle on pension reform in preliminary parl. Vote
* Fed Kocherlakota: reiterates call for US bank tax to fund possible future
bailout, capital cushions problematic
* Pres. Obama names Export Council appointments, council will focus on doubling
exports over next 5 years, Obama urges level playing field with China
* Fed Hoenig: favors 1% target, lowered exp. of growth to 3% for next year
* State Street: will report earning well above analysts forecasts as company has
seen revenue trends improve
* EIA: raised forecasts for world oil demand
A mixed bag of semi positive rhetoric and assumptions (will State Street deliver the 0.92 over the 0.72 earnings per share?).
In other words a nice 'bull trap' forming.
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