The Early Look: Futures Point To Rally At Open

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The Early Look

Here’s a brief look at the pre-market action…

Good morning. A global rally today on hopes for coordinated global central bank action.

ECB rate announcement and news conference before the bell today with watchers generally not expecting rate cuts but hoping for indications of further coordinated action in the Euro zone. The European commission it has been reported, "is preparing plans for far-reaching powers for regulators to deal with failing banks."

Yesterday it was reported:

"Pressed by a banking crisis and turmoil in the markets, Germany has indicated that it is prepared to accept a grand bargain that would provide greater support for its most indebted euro zone partners in exchange for more centralized control over government spending in Europe."

Asian markets rallied fairly hard, with the exception of China, and the region was up about +1.2%. Australia reported GDP which far exceeded estimates.

Europe also trading much higher as we write this, up about +1.6%.

Aside from the hope and optimism, however, data out of Europe not encouraging.

Moody's cut bank ratings in Germany and Austria and German Industrial Production well below forecasts. Euro area GDP 2nd release reporting for the 1st QTR. "stable but sluggish". Spanish industrial data very weak.

U.S. futures soaring as we write this, with the S&P up about 11-14 points and the Dow up 90-115. Continued speculation that the Fed will announce some further action at its June meeting.

The Euro, gold and other commodities also higher as we write this.

Net, net, this appears to be a "hope" rally and a lot rides on what comes out of Europe in the next few days and especially today. However, the 30 point bounce in the S&P futures in 24 hours is impressive.

Data out today in the U.S. includes mortgage data, productivity and costs and the release of the Fed's beige book. Several Fed speakers over the next two days and Bernanke testifying on the Hill tomorrow

Good Trading!
David W. (aka The Underground Trader)

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

• Major Foreign Markets:
  • Australia: +0.30%
    
  • Shanghai: -0.10%
    
  • Hong Kong: +1.43%
    
  • Japan: +1.81%
    
  • France: +2.14%
    
  • Germany: +1.55%
    
  • Italy: +2.10%
    
  • Spain: +2.30%
    
  • London: +1.47%
  
  
• Crude Oil Futures: +$0.94 to $85.23
  
• Gold: +$18.70 to $1635.60
  
• Dollar: lower against the yen , euro and pound
  
• 10-Year Bond Yield: Currently trading at 1.589%
  
• Stock Futures Ahead of Open in U.S. (relative to fair value):
  • S&P 500: +12.70
    
  • Dow Jones Industrial Average: +114
    
  • NASDAQ Composite: +27.40

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