Recap 10-24-12


The FOMC statement suggests additional QE is forthcoming when we see additional economic weakness, or earlier if it is fiscal related.

Separately, a follow up on yesterday’s note that projected a 1375 low for the S&P: over the past couple years, the 200 day moving average has provided a good support & resistance levels on the chart. It currently sits at 1375:

Also interesting is this quote from Grantham: “I think next year will be a dangerous year. It is the first year of a presidential cycle. I have always paid close attention to it as a reliable indicator. It is the time when the Fed and the U.S. government typically try to get things more in order.” Grantham continues: “History is quite clear. There has been, on average, no money made in year one and two of after a Presidential election going back to 1932, after you adjust for inflation.”

I think that’s something to keep in mind as we get closer to year end. How the Fed reacts will also be important, as well as how other economies react. Another thought: the fiscal multiplier is probably not constant. I.E. it is higher during austerity than in booms.


  • Oct PMI:
  1. EU Mfg PMI decreased to 45.3 vs 46.5 exp and 46.1 prev
  2. EU Services PMI stable at 46.2 vs 46.4 exp and 46.1 prev
  3. Germany Mfg was particularly weak, while French Services surprised on the upside
  4. China HSBC PMI improved to 49.1 vs 47.9 prev
  5. US Market Preliminary PMI stable at 51.3 vs 51.5 exp and 51.1 prev

German IFO Business Climate Index declined to 100 vs 101.6 exp and 101.4 prev

Australia CPI increased to 2.0% YoY in 3Q vs 1.6% exp and 1.2% prev. The less volatile measure also surprised to the upside.

Freddie Mac and MBA are forecasting 2013 mortgage originations to decline year-over-year. MBA sees them down 25% versus 2012 with refinancing the bulk of the projected decline.

Obama’s odds on Intrade plunge overnight, falling to under 55%.

Upcoming Data:

  • Thu: US DGO, Jobless Claims, Pending Home Sales,
  • Fri: U Michigan Consumer Confidence
  • Mon: South Korea Business Survey, US Personal Income, Spending
  • Tue: BoJ, Japan PMI
  • Wed: Month End, EU CPI, Unemployment,