Happy Thanksgiving

I was told by my mom that she has only one request for the thanksgiving dinner table; "don't talk about Occupy Wall Street". Oh but it will be so hard. As I sat down to write, I looked up at my muted TV to see the CNBC  headline "Occupy Wall Street Protests cost cities 13 million dollars"; how ironic. I would love to say that I've matured to the point where I'll manage to withhold commenting, but if someone else initiates, I'll have no choice but to participate in the open dialogue.

The biggest news of the morning, and unquestionably the reason for the sell off today was a very pour German bond auction. While the German Bunds have been the safest in the EU, today's auction indicated the markets' sense that Germany is still an E.U. nation with a risk profile that makes petty yields unattractive to investors.Tack on to that the first Chinese PMI (industrial measure) contraction for the first time since 2009, you have a pretty ugly picture. And, JP Morgan came out saying that they are underweight the commodities space.

I can't say that the underweight from JPM doesn't make sense. If Chinese industrial growth is too slow, then it will curtail the demand for commodities. However, I cannot speak to the outlook for China, as even if I were well versed in the economy, who really knows what is real and what is government fabricated over there. The Bund auction fiasco is actually also bearish for commodities in dollar terms, because the dollar becomes even more of a safe haven play. Eur/USD had held near the 1.35 level, but as I write is trading 1.3335 (front month contract). 

One thing i have heard repeatedly over the last few days is the concern traders have about the fact that the US markets are closed tomorrow for Thanksgiving when Europe is open. It shows just how Euro-driven the world is right now when we see Americans nervous about being unable to get out of positions because "Europe is open". The Atlantic truly is starting to seem more like a small pond.

I don't think that people will have to much to fear in the way of news jolting markets tomorrow. We have sold off a great deal since I began getting bearish in my last two posts. I continue to think negatively, as I believe that encouraging political action will only take place following enough pain to force politicians' hands. As such, we dip before we rise. However, This move has gotten about 60 points down on the S&P from the 1225 level (where I started getting bearish). markets are currently off their lows, and Friday will likely be a low volume day. Of course, you never want to be short a quiet market. The greatest reason I am not panicked about tomorrow is just how much bad news came out today. The market absorbed the bad headlines rather well today, and more headlines such as bad German auctions and poor industrial production in China, will be tough to top.

A Happy Thanksgiving to you and yours

Ben