Wild swings

What a day to start off the week

During the asian and early europe session, risk aversion was the call of the day as doubts about the global economic recovery came flooding back into the market. GBPUSD, a reasonably correlated currency pair with stocks, fell to as low as 1.6032 from an open near the 1.62 level, a 170 pips fall.

The over 2% fall in the Nikkei 225 started the ball rolling as PM Aso lost in the Tokyo election, which is widely seen as a national poll verdict for the ruling party. It seems the ruling party will be heading out of the government, sooner or later.

USDJPY once crashed to 91.72 (yes again), bringing down the EURJPY and GBPJPY crosses about 100 and 250 pips! at their lowest.

Then came Ms Meredith Whitney, the analyst who once famously predicted that Citi will cut their dividend payout at the onset of the whole credit crisis last year. She appeared on Bloomberg and CNBC interviews and said Goldman Sachs will outperform expectations. That lent support to risk appetite and gave optimissim that the banks are healing.

The Dow traded feebly within the first hour and then surged higher. At print (Spore time 11:44pm) it trades +130 pts. GBPUSD is just 40 pts short of its open, after recovering much of its losses on the day.

The optimissim is good, however, for it to last, more meaningful hard data has to be seen before we can conclude the US, the world's largest consumption market, has the recovery legs.

I think tomorrow's US Advance Retail Sales is an important econ indicator. The market expects an increment of 0.5%.

Q2 earnings are very important to watch this week as well. Goldman Sachs are out tomorrow (14 jul) before the bell and the rest are as follows for this week:

Intel - 14 Jul - after mkt - estimate: +3.5 / share
JP Morgan Chase - 16 Jul - estimate: +0.153 / share
IBM - 17 jul - +2.01 / share
Citi - 17 jul - -0.321 / share
GE - 17 jul - +0.24
BoA - 17 jul - + 0.088

I'd not bet big ahead of these important releases.