Today's Major Market Move: Silver Futures Drop 5.7% in Wednesday's Session

Earlier today Ben Bernanke testified before the House Financial Services Committee and it appears his comments influenced today's trading. During his testimony U.S. equities sold off and there were several notable moves in commodities, particularly in gasoline futures which rose 7.4% and silver futures which declined 5.7%. The market somehow gleaned from his comments that the economy is improving faster expected and that there may be some tightening earlier than expected. Bear in mind that "tightening" in the current environment actually means "not easing", as opposed to actual tightening which would involve actions like, oh, raising rates or reducing the size of the Fed's balance sheet. You can go here to read a synopsis of his testimony courtesy of the NY Times and decided for yourself what the tone is. This line right here from the article most likely sums up the logic behind today's market action:

Mr. Bernanke gave no indication that the Fed was considering new efforts, like increasing its holdings of mortgage-backed securities to bolster the housing market.

Unfortunately for the Fed, the commodity sell off didn't impact the all important oil based commodities, Gasoline (up 7.4% as previously noted), Brent (up .9%) and WTI (up .4%). Gasoline futures, which had started to correct, have now surged to their highest level since May of last year. Here's the line chart:

Click here to go to the live chart.

Today's Major Market Move: PIIGS Combined CDS Surge 163% in February

One outstanding issue from the most recent Greek bailout involves Greek credit default swaps and how (or even if) they will pay out. The EU and the international body that governs swaps, the International Swaps and Derivatives Association (know affectionately as the ISDA), have become legal contortionists of the first degree in their quest to avoid the triggering of a credit event. I'm sure the fiscal and political authorities fear an AIG type event in which a company has so much CDS exposure (that ended up _not_ "netting-out" as many financial firms claim their CDS exposure does) that it ends up taking that company completely down (of course AIG ended up surviving thanks to massive intervention by the U.S. Government and the Fed) and threatens to send major reverberations through the economy.

Bloomberg, where we usually get our Greek CDS pricing info, hasn't provided a price on standalone Greek CDS since September of last year. So the next best thing we can do is observe the price for the combined PIIGS CDS (there's no indication of the duration), otherwise known as the .GIPSI. The .GIPSI has gone from just under 1800 at the beginning of the month to over 4500 as of today's close, for a gain of 163%. To give an idea of how much an outlier this is in the CDS complex, only 2 other sovereign CDS have risen this month, the Argentinian 5 Year (up 2.9%) and the French 5 Year (up 1.7%). Here's the list of the worst performing CDS over the past month:

Click here to go to the live table.

Now this time around we may actually see a Greek credit event officially acknowledged. This is because financial firms and investors have whittled down their Greek CDS exposure to under 4 billion Euros, a paltry amount when discussing global credit markets. Here's some more color from Felix Simon at Reuters:

... it’s important to understand the big picture. Greece has a lot of private-sector debt; most of it is held by banks. There is a small amount of sovereign CDS outstanding, which references that Greek debt. To give you an idea of the orders of magnitude here, we’re talking about roughly €200 billion in Greek bonds, and less than €4 billion in net CDS exposure. Even if all of the net CDS exposure was held by bank creditors, it wouldn’t remotely offset the write-down they’re going to have to take on their bonds.

In reality, the banks have de minimis net CDS exposure. They might trade the CDS, and have either a long or a short position on their trading books at any given time, but they’re not using the CDS to hedge their bonds.

Later in that same article he tries to justify how the financial authorities are using technicalities to avoid CDS sellers paying out on bonds that aren't being paid back at par. He talks about how bonds are fungible yet we are seeing subordination-after-the-fact (where the ECB isn't taking a loss on their Greek bond holding) as well as collective-action-clauses being put in place after the bonds were issued.

Today's Major Market Move: Gambian Dalasi Weakens 10.3% Against the Dollar YTD in 2012

The Gamabia Dalasi had been pegged to the USD at a rate hovering around 27.5 up until the middle of 2011 when the currency was allowed to depreciate. Since then the currency has weakened close to 11% against the US Dollar and has weakened a little over 10% in 2012.

Click here to go to the live chart.

The 10.3% decline in the USDGMD has made it the worst performing currency relative to the US Dollar in 2012, just ahead of the Iranian Rial at 10.1%.

Click here to go to the live table.

The decline appears to have been facilitated by advice given by the IMF that the Gambian currency was overvalued by 17%. Here are some more details regarding the IMF report courtesy of the Africa News:

“The macroeconomic balance approach suggests that the Dalasi may be overvalued by 17 percent. The country’s underlying current account deficit is 12 Percent of Gross Domestic Product (GDP). The underlying fundamental driving this result is the large fiscal deficits in recent years.

Temporary factors such as Government’s financial external payments for a large telecommunications project also played a role. With an estimated current account norm of about 2 percent, roughly in line with estimates in past assessments, a depreciation of 17 per cent would be needed to restore sustainability.”

Granted this report wasn't made public until February 20, 2012, however most likely the IMF had been giving their recommendations earlier than that date which would explain why the peg was loosened back in mid 2011. Furthermore, the authorities would want to take action before the recommendations were revealed publicly to prevent the 'evil' speculators from taking advantage of the situation.

Today's Major Market Move: MetroPCS (ticker: PCS) Climbs 35% in February

US stocks have continued their strong performance in 2012 and among the best performers in February so far is wireless provider MetroPCS (ticker: PCS), which has gained 35% this month. The company announced its calendar Q4 2011 results just this past Thursday and they came in with a solid beat: .25 EPS vs .16 expected. The positive news along with the subsequent rally have provided some relief for PCS investors. The stock got slammed back in August 2011 when the company had a bad earnings miss. Here's the line chart of the stock price going back to the beginning of 2011:

Click here to go to the live chart.

This next chart shows the same data as the one above alongside EPS estimates and acutals (going back to 2008 and in terms of % change):

Click here to go to the live chart.

Rumors had been swirling that PCS was a potential takeover target for Sprint (ticker: S) however talks broke down just this past week. More details from Bloomberg:

The transaction would have valued MetroPCS at about $8 billion, said one of the people, who asked not to be identified because the discussions were private. It was rejected by Sprint’s board, this person said. The transaction included a 30 percent premium, CNBC reported yesterday.

Oddly enough, PCS shot up over 10% in extended trading when it was announced that talks had been broken off.

Today's Major Market Move: Nikkei 225 Climbs 10% in February

Unless your money is in natural gas or Greek bonds, chances are your investments are up in 2012. Equities and commodities in general are performing very well and bond prices for the most part have remained flat. Out of the 93 benchmark equity indexes that we track only 18% are in the red in 2012. The Egyptian EGX 30 Index is up a staggering 46% in a little under two months. Then there's the subject of today's post, the Japansese benchmark Nikkei 225, which is up 15% year to date and 10% month to date. The Nikkei has been the 5th best performing benchmark equity index in February.

Click here to go to the live table.

We assign two reasons for the solid performance of Japanese equities this year: 1) the improving overall global economic mood, which has had an amplified effect on those markets that were beaten down in 2011 and 2) the weakening of the Yen. The USDJPY cross, after threatening to plunge through its 2011 low of 76, has climbed over 5% in February. Here's the USDJPY side-by-side with the Nikkei going back to June of last year:

Click here to go to the live chart.

As much as fuel prices are a growing concern in the U.S., we suspect that they are creating even more stress in Japan because of the recent move in the Yen. According to the table at the bottom of this page on wikipedia, fuel prices at the pump in Japan back in April 2011 were $7.23/gallon. Brent, WTI and the USDJPY are all basically in the same place compared to April of last year, so Japanese gasoline prices should be back to close to $7.23/gallon. This is double the current average gasoline price in the U.S. of $3.59. If fuel prices are going to start having a dampening effect on economic activity, we expect that the first places we'll be seeing that happen is in countries like Japan with relatively high retail fuel prices.

Today's Major Market Move: WTI Crude Futures Climb 11.1% Year to Date

Oil related commodities have been on a tear this week and this includes WTI Crude with the front month future contracts up 6.3% for the week and  over 11% for the year. Even with an 11.1% gain in less than two months, WTI Crude is still only the ninth best performer out of the 29 commodities we track. Silver futures are up more than double that at +26.9%. Here are the top 10:

Click here to go to the live table.

WTI is now just under $110 and at the current rate it won't be long before it moves past the $114 level it reached back in April of last year. Here's the line chart going back to December of last year:

Click here to go to the live chart.

So how much does this rise have to do with escalating tensions in Iran? The fact that silver, gold, copper and cocoa are all also up double digits would point towards there being more to do with these gains than just the middle east. One could argue that gold also rises in times of geopolitical uncertainty but that still leaves the other three non-oil related commodities of which silver has seen the biggest gains by a fairly wide margin (26.9% for silver vs. 18.6% for gasoline). If you look across the entire commodity complex for the year, only 8 commodities of the 29 we track are in the red, and only two of those are down by more than 3% (coffee @ -10.2% and natgas @ -14.7% which we've discussed several times before, the most recent time being on January 31st). So we're inclined to believe that this commodity run has more to do with continued deficit spending, monetary stimulus and currency debasement by governments and central banks around the world.

We normally don't get into the prediction game here - but we believe one of two things (or possibly both) will happen next week: 1) there will be either a rumor of, or an actual release from the Strategic Petroleum Reserve 2) there will be some kind of hint from the Fed regarding the possibility of tightening sooner than expected - most likely in the form of asset sales and/or reverse repos.

Today's Major Market Move: Akamai Technologies (ticker: AKAM) Gains 14% in February

The S&P 500 is having another solid month having so far posted a 3.9% gain in February. One stock that is making a significant contribution to that performance is Akamai Technologies which is up 14.2% for the month, making it best overall in the index. Here's the top 10:

Click here to go to the live table.

AKAM stock price has been boosted by a better than expected final quarter in calendar year 2011. The company posted an EPS of .45 vs .33 expected with record setting revenues. We have yet to incorporate the latest results into our system, but here's a chart showing actual EPS, estimated EPS, and stock price performance going back to the beginning of 2008:

Click here to go the live chart.

AKAM is still a long ways away from the heady days of the dotcom bubble when its share price had reached levels over $300. Since the crash in 2000, the highest the share price has gone is the high 50s. If the macroeconomic situation doesn't deteriorate and they are able to build off this recent successful quarter, I would expect them to achieve a new post 2000 high this year. Here's the share price going back to the beginning of 2011.

Click here to go to the live chart.

Today's Major Market Move: Panamanian Stock Market Up 37% Since Beginning of 2011

It would be convenient to talk about the ongoing saga in Europe almost every day but in the name of variety we're going to focus on a different part of the world. The two best performing equity markets on the planet since January 2011 are: #1 Venezuela (last discussed on Feb 4th) and #2 Mongolia (last discussed on Dec 1st, 2011). For today we're going to move one more spot down on the list to third, which happens to be occupied by Panama. The Panamanian benchmark equity index (Bolsa de Panama General) is up over 37% since Jan 1st, 2011. Here's the top ten:

Click here to go to the live table.

To be frank, we haven't been able to identify specific reasons for the exceptional performance of Panama's equity market. They haven't engineered their success through currency devaluation since they utilize the US Dollar and the dollar is basically flat over that time frame, having strengthened against 64 out of 120 currencies that we track. One might suspect that increased canal traffic and/or canal rates might have provided a boost but if we use the Baltic Dry Index as a proxy, we would highly doubt that canal related business has increased significantly (chart courtesy of Bloomberg):

Click here to go to the live chart on Bloomberg.

Equity index performance is tracking fairly closely with GDP growth (depending on how over/under valued equities were relative to GDP back in 2007) and if GDP estimates are anywhere near accurate, Panamanian equities should continue to perform nicely over the next few years.

Click here to go to the live chart.

Today's Major Market Move: WTI Crude Oil Futures Up 1.7% After Tonight's Open

Commodities markets opened a little over four hours ago and right out of the gate WTI Crude Futures shot up 1.7% to breach the $105/barrel level. WTI is now up 35% since October of last year and is just $9 away from the 2011 highs:

Click here to go to the live chart.

Year to date WTI is up over 6% which is no small potatoes, however refined Gasoline is up over 14% which explains why I've been hearing more "high prices at the gas pump" stories in the main stream media lately (we present exhibit A courtesy of the AP via the Boston Globe). Here's a comparison chart of the pricing of petroleum based commodities going back to the beginning of the year:

Click here to go to the live chart.

We talked about the rising price of Brent just two days ago on Friday and in that post we quoted an article which speculated that the main driver for recent rising fuel prices was geopolitical tension in Iran, Syria, et. al. However the fact that we continue to see central bank intervention in propping up markets in Europe, Japan, the U.S. and other locales may be playing a significant role as well. Zerohedge recently posted a chart which shows the balance sheet expansion of the central banks of China, Japan, the U.S. and of Europe going back to 2002. Here's a reference point: the JCB came in last and their balanced grew by 100%.

Today's Major Market Move: PIIGS 5 Year CDS Up 26% in February

Overall we've seen risk come off in CDS-land this month. Out of 30 credit default swaps that we track, 26 have declined in price in the month of February. Bucking that trend has been the combined PIIGS CDS which has climbed over 26%. Almost all of that rise is due to Greece since the CDS for Italy, Ireland and Portugal have all declined and Spain's were only up 3.9%. Here's the line chart for the combined PIIGS CDS (aka GIPSI) going back to the end of October 2011:

Click here to go to the live chart.

Even with this month's gains, combined PIIGS default risk is still well off of recent highs. However there's been more and more chatter, much of it rumored to be coming from German finance minister Wolfgang Schauble, that Greece sooner or later is going to have to default. This is "default" in the traditional sense; none of this "voluntary haircut so that we avoid a credit event" type nonsense, which means it would trigger a credit event and the Greek CDS would pay out. Here's some more color from the UK Telegraph courtesy of fxstreet.com:

The report states that according to unnamed EU officials - German Finance Minister Schauble believes that the austerity measures required to reign in Greece's debt burden are so severe that no government would ever be bale to implement them. According to the UK Telegraph - a secret "Troika" report concluded that even if Greece made good on its promises, it would not be enough to reach the target of bringing total debt to 120% of GDP by 2020. The EZ official was quoted in the article as saying: "He (Schauble) just thinks the Greeks cannot do what needs to be done. And even if by some miracle they did what has been promised, he - and a growing group - are convinced it will not pull Greece out the hole".

To this author it seems that we are closer to a non-negotiated default and possible Eurozone exit for Greece then we have ever been in any time previous to now. So the fact that credit and equity markets are acting so sanguinely is a head-scratcher. With many commodities up over 10% this year, comprehensively the markets appear to be saying that they expect the central banks to open the spigots at any signs of severe distress. Of course one would then also expect interest rates to be climbing higher, which hasn't been happening. "May you live in interesting times" indeed.

Today's Major Market Move: Brent Crude Futures Up Over 7% in February

There are no easy choices for the ECB as it has to continue to provide liquidity to overburdened European banks and nations yet at the same time contend with rising fuel prices. Front month Brent Crude Futures are up 7.5% month to date and briefly touched above the 120 level. Here's the line chart going back to the beginning of 2011:

Click here to go to the live chart.

WTI Crude is also rising and has gone up 4.7% in February so far and now sits over $103 per barrel. We get the feeling that anything over $100 starts to make the Federal Reserve a little uncomfortable. Although both Brent and WTI have been rising lately, the spread between the two has begun to widen again.

Click here to go to the live chart.

According to the WSJ, the latest gains in Brent are in large part due to geopolitical concerns with Iran and other oil producing nations in the ME and Africa:

Iranian tensions with the West remain a key focus for market participants, with a strong risk premium holding prices firm. This week focus has turned to South Sudan, Syria and Yemen where internal problems have caused severe disruptions to oil exports.

The combination of these elements is likely to keep prices elevated, analysts said.

"For as long as there are serious concerns about supply shortfalls and while optimism continues on the financial markets, the oil price is likely to continue to rise, especially since even investors with a short-term view will no doubt want to jump on the bandwagon now that the $120 [a barrel] mark has been exceeded," said Commerzbank in a note.

Today's Major Market Move: Sears Holding (ticker: SHLD) Up 14.6% WTD

While the S&P 500 is up a modest 1.1% week to date, Sears Holding has outperformed everyone else in the group with a 14.5% gain and remains the top performer for the year. Here are the top 10 performers in the S&P 500 week to date:

Click here to go to the live table.

We have yet to discover an exact reason for the upward movement of the stock price for either the week or for the year. The bulk of this week's gains came on Wednesday when the company announced they were laying off 100 workers at their headquarters in Hoffman Estates, IL. The strong gains for the year also seemed to be tied to cutbacks; Sears announced at the end of last year that it was planning to close 100-120 K-mart and Sears full-stores. Here's the line chart of the stock price going back to the beginning of 2011:

Click here to go to the live chart.

Even with the cutbacks, analysts haven't changed their estimates and are still projecting SHLD to lose close to five dollars a share in the calendar third quarter of this year. Sears announces calendar Q4 2011 results on Monday so maybe something positive has been leaked. The recent trend however is not good; they've missed the last three quarters in a row. Here's the comparison chart of EPS estimates and EPS actuals:

Click here to go to the live chart.

Today's Major Market Move: Benchmark Greek Equity Index Drops 7% in Wednesday's Session

It looks like the good vibes in Europe resulting from the passing of the Greek austerity measures on Sunday may have already fizzled out. Earlier today Greece reported worse than expected GDP figures for the previous quarter: -7% (annualized) vs -5% expected. One of the fears has always been that by imposing austerity measures too drastically or too quickly, Greece may be forced into a deflationary spiral. The reaction in the equity markets was severe with all four of the Greek equity indexes that we track dropping by over 5% and the benchmark FTSE/ASE Index dropping by almost 7%. Here are the top 10 declining equity indexes from today's session:

Click here to go to the live table.

As usual, Greece's conjoined twin Cyprus felt the effects as well, with the General Market Index CSE dropping 5.1%. Not to diminish the importance of our Cypriot friends but the primary focus of the authorities in Europe and other markets around the world had to be preventing the contagion to spread further to the next country in line: Portugal. Luckily for Portugal and the rest of Europe, there was little sign of any metastasizing, yet. Portugal's benchmark equity index was only down half a percent and its 5 year CDS only climbed .8%. But that's not to say that there were zero ripple effects outside of Greece and Cyprus. Several other European countries saw sizable gains in their 5 year default swaps. Here's the top 10:

Click here to go to the live table.

Four out of the top five gainers in that list are considered part of the 'core' of the EZ that is expected to provide the backstop for everyone else. If the borrowing costs of these other countries continue to rise, they are going to lose by the ability and the desire to provide bailout funds for others.

Today's Major Market Move: Brazilian Real Strengthens 8% Against the USD MTD

We last wrote about the Brazilian Real back on January 18th after it was up 5.5% month to date. Well it wasn't long after that move when the Brazilian Central Bank stepped in to the currency markets to try to push the Real back down. From the WSJ on February 4th:

Following a five-week rally that saw Brazil's currency gain about 8% against the greenback, the central bank intervened to buy dollars on Friday. Such measures tend to weaken the real and haven't been used since September, when the currency was in the midst of a selloff that saw it end 2011 at 1.8625 reais to the dollar. Late Friday in New York, the dollar bought 1.7168 reais from 1.7207 reais late Thursday.

The Real has essentially held its gains for the year despite this latest intervention. The USDBRL cross has declined 8% since January 1st and the Real has been the third best performing currency against the Dollar in 2012. Here are the top strengthening currencies:

Click here to go to the live table.

US based investors that have invested in Brazilian fixed income securities have found a windfall in 2012. All government bonds, regardless of duration, have yields of over 9% and then you combine that with the strengthening real. Here's the table from Bloomberg showing the yields of Brazilian government bonds:

Click here to go to the live table on Bloomberg.

Today's Major Market Move: Greek Stocks Climb 6.2% After Passage of Austerity Vote

Just like with the second TARP vote here in the U.S., when legislatures are threatened with financial armageddon, they can be browbeaten into voting for pretty much anything. So it should have come with no surprise to anyone that yesterday the Greek parliament passed the most recent version of austerity measures.

Here are some of the quotes leading up to the vote:

• “We have to sacrifice a lot so as not to sacrifice everything,” Papandreou, leader of the Socialist Pasok party, told lawmakers in Athens. “We must speak honestly and tell Greeks what bankruptcy really means. It means chaos.”
• “It won’t solve the problem, but it will help,” [Leader of New Democracy Party] Samaras told party lawmakers today in Athens, in live comments on state- run NET TV. “It distances us from bankruptcy, looting, the chaos that would follow.”
• “It should be evident that whoever disagrees and doesn’t vote for the new program cannot remain in this government,” Papademos told his ministers. Failure on the package threatens 11 million Greeks with a default that would halt the payment of wages and pensions and shut schools, hospitals and businesses, he said. The vote amounts to a ballot on euro membership, Finance Minister Evangelos Venizelos said today.
• “From today until the next meeting of the eurogroup, our country, our homeland, our society has to think and make a definitive, strategic decision,” Venizelos, 55, told reporters after the Brussels talks. “If we see the salvation and future of the country in the euro area, in Europe, we have to do whatever we have to do to get the program approved.”

With that kind of rhetoric flying around, how could any patriotic, self respecting Greek politician place a vote that would be perceived as causing the downfall of their country? But if they were to take a longer term view to the issues at hand, which way to vote might become less obvious. If Greece had defaulted two years ago, is it possible that they might be better off today? Most certainly a default would cause additional turmoil in the near term, however weighing the negatives vs the positive of a default over a 2,5 or 10 year time frame is much more complicated.

The markets dispensed with all of that mental hand-wringing and received the outcome of the vote with the trader's equivalent of thunderous applause: a multitude of buy orders. The benchmark Greek equity index, the FTSE/ASE 20, climbed 6.2% today, and it's 1.5X ETF cousin, the Cypriot General Market Index, surged 8.1%. Here were the top 10 benchmark equity index performers:

Click here to go to the live table.

Anyone looking for volatility in today's markets need look no further than Cypriot equities. Today's gain is the equivalent of a 1000 point move in the DOW and there are consistently daily moves above the 3% level (equal to 400 DOW points). Here are daily alerts that have been fired on the General Market Index CSE over the past 2 weeks whenever there has been a move > 3%:

Today's Major Market Move: Iranian Rial Weakens 8% Against the Dollar Last Week

Yesterday Ahmadinejad caused a little bit of a stir by 'pre-announcing' that Iran was about to announce something big regarding its nuclear development program. You can call us cynical, but we wonder if he might be trying to draw some attention away from this:

Click here to go to the live chart.

The Rial took a big hit this past week, dropping 8% against the Dollar. If we look back to the beginning of 2011, the USDIRR is up 18% (meaning the Rial has weakened)  and is the 4th worst performing currency over that time frame. Here's the bottom ten:

Click here to go to the live table.

For two of the three currencies that have performed worse, Belarus is going though hyperinflation and Syria is in the midst of a revolt with some economic sanctions thrown in. Of course, Iran is dealing with their own sanctions although that hasn't (yet) affected their ability to find buyers for their oil. Here are some more details from BusinessWeek:

More trade with Iran may be blocked if a U.S. Senate Banking Committee bill approved Feb. 2 becomes law, making U.S. companies responsible for the actions of their foreign units when dealing with Iran. A spokesman for committee chairman Tim Johnson, a South Dakota Democrat, declined to comment.

While the Japanese government said last month it would curb imports from Iran, India’s Foreign Secretary Ranjan Mathai said Jan. 17 his country won’t. China, the Persian Gulf country’s largest customer, needs the oil for development, Vice Foreign Minister Zhai Jun told reporters Jan. 11.

Everyone knows that Iran has plenty of oil, but they have to import just about everything else that they consume and one of the major imports is wheat. Fortunately for the Iranians, wheat futures (when priced in dollars) haven't gone up in recent times and are actually down over 20% since the beginning of 2011. However when priced in Rials wheat is basically flat. Here's the comparison chart:

Click here to go to the live chart.

Here's some commentary regarding Iranian imports of food from a few days ago courtesy of Reuters:

New financial sanctions imposed since the beginning of this year to punish Tehran over its nuclear programme have ended up playing havoc with Iran's ability to buy imports and receive payment for key food items.

The sanctions have drastically cut its ability to obtain euro and dollar denominated financing, forcing Tehran to find alternative ways to pay for its imports.

Traders believed the Iranian government had used companies based in Switzerland capable of financing themselves in Asia, and used yen-based contracts to finance the 200,000-tonne deal.

A fall in maize supplies from major exporter Ukraine due to sanction-related payment problems prompted Iranian animal feed makers to turn to wheat, reducing volume for food and compelling the Islamic Republic to turn to the world market.

Today's Major Market Move: FCOJ Futures Down 11.5% in February

Since today's topic is frozen concentrated orange juice futures, we have to provide the obligatory Trading Places reference. "You idiot! Get back in there at once and sell...sell!" Prices have dropped 11.5% in the current month and are now below where they were when the great "Brazilian Fungicide OJ Boom of 2012" started back on January 10th.

Click here to go to the live chart.

Commodities priced in US dollars in general have done well in 2012, with 22 out of 29 of the commodity futures we track in the black. This is largely due to the declining value of the dollar, which this year has weakened against over two thirds of the world's currencies.  Even with this month's decline, FCOJ is still the 6th best performing commodity going back to the beginning of the year, with a 9.9% gain. Here's the top 10:

Click here to go to the live table.

According to this article from Reuters there are potentially two positive outcomes to the current Brazilian ban that will avoid a prolonged contraction in supply:
1) Brazil will come to an agreement with the FDA to allow it to resume importing or 2) if the ban persists, California growers will be able to make up for the difference.

Today's Major Market Move: Greek Stock Market Drops 4.7% During Friday's Session

The tragicomedy in Greece continues. The most recent version of Greek austerity measures are slowly making their way through the legislative process. The next step takes place this weekend where the legislature will give their thumbs up or down. For us, the big question is not whether or not the measures pass (we have little doubt that they will) but how long it will take the legislators to get the heck dodge after casting their votes. Although apparently the current protests are relatively subdued to the ones that took place last year. Here are some details from Reuters:

Outside Greece's parliament, police fired teargas at black-masked protesters who threw petrol bombs, stones and bottles at the start of a 48-hour general strike against the cuts ordered by the "troika" of international lenders.

But the street protests against the austerity - which many Greeks blame on Germany - were relatively small compared to last year's mass rallies.

Unions have called protesters to rally again in Saturday and Sunday after they chanted on Friday: "Do not bow your heads! Resist! No to layoffs! No to salary cuts! No to pension cuts!"

The biggest police trade union said it would issue arrest warrants for Greece's international lenders for subverting democracy, and refused to "fight against our brothers."

That last part made us chuckle but in all seriousness, it demonstrates the circularly convoluted universe in which Greece is currently operating. The police, whose salaries and pensions are being affected by the austerity measures, are expected to provide protection from those people protesting the austerity measures. Careful, think about that too much and your head may explode.

The reaction in the equity markets in Greece and their conjoined twin Cyprus were, no shock here, negative. The benchmark Greek FTSE/ASE 20 Index dropped 4.7% and the benchmark Cypriot index was down 5.1%. Less expected was the muted reaction in the other European stock markets, particularly in the fellow PIIGS countries. Italy, Spain, Ireland and Portugal were only down 1.8% or less. Here's the bottom 10 performing benchmark equity indexes in Friday's session:

Click here to go to the live table.

The FTSE/ASE 20 Index still has some breathing room above the 2011 lows:

Click here to go to the live table.

However the situation looks a little more precarious if we extend our view back to 2007. We also have GDP in growth in the following chart (estimates provided by the IMF), which is expected to be flat through 2015. Those estimates are a few months stale and it will be interesting to see what adjustments will have been made when the new estimates are released in April.

Click here to go to the live chart.

Today's Major Market Move: Vietnamese HNX Index Rises 6% In Thursday's Session

Even with the continued optimistic feelings about a successful outcome to the Greek debt negotiations, the best performing equity index in Thursday's session ended up being outside of Europe. Vietnam's HNX Index led all of the equity indexes that we track with a 6% gain, followed by a 5.3% rise in the Greek FTSE/ASE Midcap Index. Here's the top 10:

Click here to go to the live table.

The other main Vietnamese equity index, the Ho Chi Minh Stock Index (the HNX Index is based out of Hanoi), didn't follow suit and only rose .5%. In general the HNX Index tends to be the more volatile of the two. Here's a comparison of the two indexes alongside GDP growth (actuals and estimated) for the time period 2007 to 2015:

Click here to go to the live chart.

So even with today's 6% surge, the HNX Index still has a ways to go to get back to where it was at the start of 2007. Perhaps the fact that Bloomberg recently named Vietnam the #1 "Most Exciting Frontier Market" will help propel it, although "Exciting" is not synonymous for "We think it is going to go up". More from Bloomberg:

A stellar economic expansion rate puts Vietnam at the top of the list, but that's not the Southeast Asian country's only extreme — inflation is also sky-high, and its government debt load is among the biggest of the frontier markets analyzed. Meanwhile, Vietnamese currency volatility and stock prices are lower than those of many of its peers.

Today's Major Market Move: Whirlpool (ticker: WHR) Up 45% In 2012

We talked about the top performer in the S&P 500 so far in 2012 back on January 22nd and Sears (ticker: SHLD) continues to hold the top spot. Today we're going to focus on the next best performer, Whirlpool (ticker: WHR), which is up almost 45% and just recently moved into second place. Here's the top 10:

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In the January 22nd post we discussed how many of the best performers so far in 2012 were severely beaten down in 2011. If we look at the line chart going back to the beginning of 2011, we see that WHR follows that meme:

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It's not completely obvious where all the optimism is stemming from. Earnings did rebound nicely in calendar Q3 2011 after a big disappointment in calendar Q2 2011. WHR hasn't reported calendar Q4 2011 results yet and the estimates aren't particularly aggressive with EPS expected to come in about even with the previous quarter, even though we just went through the holiday season.

Click here to go to the live chart.

Today's Major Market Move: Polish Zloty Strengthens 8.7% Against the Dollar in 2012

Yesterday when discussing the missed deadline for the Greek bailout, we surmised that the talks could continue on for a few more days and weeks because the real deadline, when the next bond payment is actually due, is March 20th. So it didn't come as much surprise when we saw the following headline among today's newswires: "Greece Delays Talks On Political Deal On Reforms Amid Strikes, Protests". Here's more from the Wall Street Journal:

A meeting between Greek Prime Minister Lucas Papademos and the three party bosses supporting his coalition government over a new loan deal for the country has been pushed back for yet another day as the government continued efforts to finalize a raft of painful reforms.

The delay marks the second time that the high level meeting on the loan deal--and accompanying reform program--has been delayed, as Greece scrambles to clinch a badly needed EUR130 billion rescue plan for the country.

It also comes as public outcry against years of austerity is building up. Thousands of Greeks took to the streets Tuesday to protest against the threat of more cutbacks while civil servants and private-sector workers staged a nationwide strike.

However just like yesterday, as well as for the last few weeks, the markets continue to show no concern that a deal won't get done. The Greek and Cypriot equity markets had another strong day with gains of 4.7% and 3.2% respectively. In the currency markets, the Hungarian Forint strengthened 1.6% against the US Dollar and the Czech Koruna 1.5%. Then there's the subject of today's post, the Polish Zloty, which also moved stronger with the USDPLN cross delcining 1.3%. The USDPLN cross has now dropped 8.7% for the year making it the Zloty the third best performing currency relative to the dollar.

Click here to go to the live table.

As has been the case with many of the, what we refer to as, "Fringe" European countries (Turkey, Czech Republic, Iceland, Hungary, etc.), when the currency strengthens the equity market rises proportionally. Poland has been no different:

Click here to go to the live chart.

Below is the overall comparison chart of the performance of the fringe European currencies which we last showed on January 14th. One can see that all of the currencies have shown some level of improvement since the beginning of the year (marked by the vertical light blue line).

Click here to go to the live chart.

Just like the markets, we have very little doubt that a deal will get done well before 3/20. The main uncertainty lies in the Greek politicians' response to the strikes and protests (in fact there was already a general strike today) that will surely follow the deal. This is a long shot, but the unrest may even reach a point where the EU decides it needs to send in outside forces (I would assume through either NATO or the UN) to help maintain order.

Today's Major Market Move: Greek Equity Market Up 4.8% in Monday's Session

Most of the finance world's attention remains focused on Greece and Europe as the debt deal talks are now in limbo with the deadline having passed but no official declaration of a default (yet). Greece's stock market closed six hours ago and at that time the equity markets were expressing optimism with the Greek and Cypriot benchmark equity indexes closing up 4.8% and 3.6% respectively. Here's the top 10:

Click here to go to the live table.

According to this blog posting from the WSJ, the real deadline (as opposed to today's 'fake' deadline) is March 20 when the next debt payment is actually due, so don't be surprised if the debt negotiations remain in this limbo state for days if not weeks. Just like with the Greek and Cypriot equity markets, there's no sign of distress in the Euro either with the EURUSD holding steady just above the 1.30 level.

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Even Portuguese 5 year sovereign credit default swaps, which earlier had shown major signs of spreading contagion, have came back in are now showing no signs of distress of recent developments.

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Today's Major Market Move: Best Performing Commodity in 2012: Silver

With the US currency declining in value, 2012 has been a positive year for commodities priced in dollars. Twenty-one out of twenty-nine of the front month commodities futures that we track are in positive territory for the year. With a gain of 20.9% since the beginning of January, the best performer of the lot has been silver. Here's the top 10:

Click here to go to the live table.

Silver prices are rebounding from a rough finish in 2011 and are now hovering at a level that they were unable to break through back in the beginning of November.

Click here to go to the live chart.

We haven't been able to come up with any obvious reasons for why silver is outpacing most of the other commodities. This article from Daniels Trading indicates that there's been an uptick an industrial demand but we haven't been able to independently confirm that fact.