Brian's Friday recap: No news is good news as big banks beat

Brian Shepard
July 12, 2013

Collective Intelligence!

Today started with a light 202k ESU and 700 SPU traded on Globex, trading range was 1672.50 – 1666.70. Thursday’s regular trading hours (RTH’s), pit session trading range was 1671.80 – 1661.00 before settling at 1670.10, up 21.5 handles.
So, now good news is no news…as the equities tread the unchanged level after earnings leap at both [JPM] and [WFC]. Traders were so excited that they goosed [GS] up nearly 1.5% on the news.

Today’s RTH’s opened fractionally lower at 1670.20 to 1669.50, traded an early high of 1672.30 before quietly and slowly fading back to an intraday low of 1667.20 - holding yesterday’s opening range - in spite of the JPM and WFC beat. So, now good news is no news…as the equities tread the unchanged level after earnings leap at both [JPM] and [WFC] while WFC CEO states: “We continue to be optimistic in a rising rate environment.” WFC, the biggest U.S. mortgage lender, reported a 20% rise in second-quarter profit on Friday as it set aside less money to cover bad loans, but suggests if mortgages decline so too will staff. [BKX] and [XLF] were both up about .5%, far cry from leading the markets, but still at levels not seen since 2008.

During the lunch hour Fitch downgraded France one notch to AA+; outlook stable - in-line with Moody's and S&P. No market reaction…and bad news proves to be no news on a lonely Friday afternoon in the summer. The BKX and XLF gradually added modestly to their early gains during the afternoon, but not enough to lead the broader markets higher as volumes just dried up. Going into the closing imbalance the SPU took out the opening range and was trading in the 1671 area when the closing imbalance showed a huge $2.6Bil to the buy side. A new intraday high of 1674.20 followed. The cash close traded 1673 area before settling at 1670.30, up 0.2 handles on the day. Minis trade only 1.135M on a Friday in the summer - last Friday’s settlement was 1627.30. Looking forward to the pickup in earnings and the expiration! See ya on the beach!!!
Brian Shepard is a 20-year exchange member of the CME Group.

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