D&D Note (5-14-2012)
Markets are currently trying to price in the possibility of Greece leaving the Euro. Leaving the entire global markets in extreme correlation (meaning everything is trading together around 75% correlation, and today that was down).
Banks are still also adding to the downward pressure mainly thanks to JPMorgan (JPM). And the ax came down over the weekend on those responsible for the loss at JPMorgan. Tomorrow will be the third day of trading after the JPMorgan news and will most likely be the last down day on the news for the stock.
Spanish 10-year yields are back up 6% and anything over 6% is what gets investors edgy.
German Bunds are at record low 1.45% representing the other safe haven outside of the greenback.
China cut the RRR (reserve requirement ratio) for Chinese banks, although Asian markets shrug it largely off instead focusing on the Eurozone – Asian markets want a rate cut by the China Central bank, but probably won’t get one until July.
Oil and Gold continue to slide. Oil down $1.96 to $94.17 a barrel and Gold down $26.30 to $1,557.70 an ounce. When investors flock to the safety of the dollar this causes the dollar to weaken, and since Gold is priced in dollars puts downward pressure on the metal.
Retail reports are out tomorrow and we have earnings as well. One company D&D is watching closely is Ross Stores (ROST) which reports Thursday. If the stock gets cut down on the backs of other retailers this could be a good buying opportunity heading into Ross’s earnings which should buck the trend.
On the day; Dow down 125 points on the day, S&P 500 down 15 points, and the Nasdaq was down 31 points.
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