Bond & Equity Outlook for May 7

DATA RELEASES 05/07/10

  • 8:30 AM US Nonfarm Payrolls (200,000)
  • Unemployment Rate (9.6%)

DATA RESULTS 05/06/10

  • US Jobless Claims (445 K)
  • Nonfarm productivity (2.6%)
  • Unit labor costs (-1.0%)
  • EIA Nat Gas Inventory (83 BCF)

US DEBT REVIEW AND OUTLOOK
“RUN TREASURIES RUN” remained the sentiment on the street as stocks staged their worst one day drop since the 87 crash (a trading desk with fat fingers apparently contributed to the fall.) Risk aversion hit new heights today as the concern of sovereign debt contagion and a perceived lack of support and direction for strategies to lead many of these countries out of their unsustainable deficit spending refueled a “last resort” trade into government securities. Observations from certain financial networks stating that volatility had returned to the pre Lehman collapse should have been seen as the kiss of death and a likely floor that gains in treasuries could bounce off for the time being. Will the run up in treasuries end or are we returning to a 2.5% yield on US 10 years as capital freezes up around the world? This seems unlikely as the view of government intervention and handling of economic recovery becomes less popular around the world as the glimmer of self reliance may come to light, fueling a turn to capital support of balance sheets that show real fiscal management.

TECHNICALLY SPEAKING- Technically, this is a difficult market to gage beyond possible turnaround points for retracements. The market may have a need to retest 124-07 as resistance in the wake of the tense fundamental environment. A softening of tensions should allow for an initial pullback to 122-23.

US EQUITIES REVIEW AND OUTLOOK
A historically wrenching day for stock traders and investors took place in today’s session. Perhaps it will be known as “Queasy Thursday” as an already weaken equity market was pummeled by an apparent program trading mistake on an institutional trading desk (Million, Billion-what’s the difference in a letter?”). In the end, the market took its cues from the global retreat of risk exposure as the uncertainty regarding not only the direction of a global credit contagion but the seemingly lack of strategy and leadership to address the issue exacerbated the “Sell in May and Go Away!” The market appears ready to turn defensive as volatility levels reached recent highs.

The fall in the major indices was broad based as expected. Nearly every sector took in on the chin. Financials, Technologies, and material/energy stocks were again hit as uncertainty regarding the global growth picture and the extent that global credit costs will increase regionally and globally.

TECHNICALLY SPEAKING- Resistance in the event of a pullback for the June S&P sets up at 1142.50, with 1148.50 setting up as a significant recovery level. Near term support for a continued fall sets up at 1109.50, with a break of this level allowing a retest of 1098.50.

US DEBT FUTURES OPEN HIGH LOW CLOSE CHANGE
US M0 (US 30 YRS) 120-18 124-14 120-03 123-11 +2 26/32nds
SP M0 (S&P 500) 1157.80 1164.90 1060.00 1122.40 -41.50

Prepared by Rich Roscelli & Paul Brittain. PLEASE VOICE YOUR MARKET OPINIONS, THOUGHTS, AND QUESTIONS. EMAIL TO RICH@BINVSTGRP.COM. Additional Information can be found at WWW.WHITEHALLVEGAS.COM.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Whitehall Investment Management, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Comments
comments powered by Disqus