Throughout the recovery period European leaders have often looked to the export market for support, but evidence is mounting that recent actions by other central banks have hamstrung European exporters.  This morning’s disappointing revelations of merchandise trade numbers from both France and Germany showed evidence that European goods are losing their edge in global markets.  German exports fell 1.5% in February, the first decline in three months, while imports fell along the same trajectory they have followed for a similar period of time.  The numbers out of France were comparatively worse.

This sign of weakness from the Eurozone’s two largest economies could prove a blessing in disguise, as frustration from the smaller members of the currency push German and French governing forces towards a more open stance on quantitative easing, or other accommodative, growth-oriented monetary policy.  Draghi himself has shown an increasing level of interest in pursuing such policies, but has faced resistance from Germany and France, who desired to defend their own interests through implementation of selective austerity measures.  There is little evidence that these nations plan to alter their stance on the issue of monetary policy, but mounting empirical evidence and pressure from external forces will likely force a renewed discussion of alternative methods of rebalancing. 

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William Randall
KOTM Contributor
wrandall1@luc.edu

NUS, Nu Skin, another multi level marketing firm, had a 7% drop on the news, and implied volatility jumped about 500 bps on the day. 

The statement from KPMG goes as follows, “Late last week, we were informed that the partner in charge of KPMG’s audit practice in our Los Angeles business unit was involved in providing non-public client information to a third party, who then used that information in stock trades involving several West Coast companies. The partner was immediately separated from the firm….”

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salerno.mark.a@gmail.com

The slump in the data is confirmed by the price action. The USCI, which is a commodity sector Index fund, was down about 3% in recent trading action This fund invests in precious metals, industrial metals, energy, and agricultural products such as livestock, softs, and grains…a very diverse portfolio.

The gold section of the commodity space has been getting a lot of hate from the news. “The main driver behind gold’s weakness this year has been the focus on global growth and that’s meant rotation out of defensive assets like gold,” says UBS analyst Joni Teves.

The GLD’s RSI recently hit 22.5. A reading below 30 is normally considered ‘oversold.’ Moreover, GLD’s current IV is above its 20 year annual, perhaps it is prudent to take to other side of the recent commodity slump through a nice short vol bullish-to- neutral trade.

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salerno.mark.a@gmail.com