Major currencies during the week just ended, they went out for a gain of refuge currency status by the British pound. With the economic situation in the U.S. and Europe is in crisis, the British currency is considered the safest among the other two, although to be fair it must be said that the economic situation in the United Kingdom is not of the most peaceful.
Regarding the exchange rate EUR USD, we have seen high volatility, which has pulled this currency peaks and lows of 1.4420 1.4120, 300 pips difference well. During the next week we expect a more volatile performance, since markets have not yet made a precise definition. For those who want to invest money in this exchange ratio, you must wait before confirmation.
The British pound has lost significantly against the U.S. dollar, breaking even decreasing the proportion of 1.6100. For the next week our graphs tell us that this exchange ratio may continue in this direction, even if at the end of the week we saw a partial recovery of the British currency. In any case wait for confirmation before acting.
Instead the dollar has lost ground against the Japanese yen, reaching an altitude of below 76.00, a clear sign that the Japanese government's intervention in an attempt to lose its strength to its currency has not yielded the desired results. For the next week we could see, however, a slight recovery of the U.S. dollar.
The exchange rate between the euro and British pound has seen our share of currency touched 0.8870, before falling again. Next week we might even see a trend in favor of the British pound, but before opening of the new positions are waiting for confirmation. But the fact that the situation in the euro zone's scary to investors could favor the exchange ratio to a decline.
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Monday, August 15, 2011
Friday, August 12, 2011
USA, the super committee is ready
The representative of the U.S. House, Nancy Pelosi, has appointed three people to join the "supercommittee" wanted by Obama, who has the task of finding at least 1,200 billion dollars in ten years. Democrat Pelosi appointed as a representative James Clyburn, Xavier Becerra and Chris Van Hollen.
The task of the Committee shall be to raise the prosperity of the country, which will then reflecting the prosperity of all Americans will enjoy. Pelosi said in a statement which called for a focus on economic growth and the creation of new jobs in order to reduce the deficit.
Inltre that this Committee should make decisions on investment, spending cuts and revenue increases in the reeds so as to stimulate growth while reducing the deficit. The Republicans have vowed to reject any tax increase and said that any increase in revenues resulting from revisions to the tax code should be offset by other cuts, while Democratic leaders have pushed to increase taxes on the rich and government-backed companies. The goal is to make a grand bargain that would reduce the frightening deficits when the country is in these moments, while strengthening Medicare, Medicaid and Social Security. The goal is really important, and we must work hard.
The United States is still in a critical situation, having lost the Triple A for the first time in their history. The key thing, to ensure the welfare in the long run, it is economic growth. This necessarily entails also an increase in jobs and a reduction in expenditure. But the question is one that keeps unemployment in check, according to economists and industry experts, the country.
The task of the Committee shall be to raise the prosperity of the country, which will then reflecting the prosperity of all Americans will enjoy. Pelosi said in a statement which called for a focus on economic growth and the creation of new jobs in order to reduce the deficit.
Inltre that this Committee should make decisions on investment, spending cuts and revenue increases in the reeds so as to stimulate growth while reducing the deficit. The Republicans have vowed to reject any tax increase and said that any increase in revenues resulting from revisions to the tax code should be offset by other cuts, while Democratic leaders have pushed to increase taxes on the rich and government-backed companies. The goal is to make a grand bargain that would reduce the frightening deficits when the country is in these moments, while strengthening Medicare, Medicaid and Social Security. The goal is really important, and we must work hard.
The United States is still in a critical situation, having lost the Triple A for the first time in their history. The key thing, to ensure the welfare in the long run, it is economic growth. This necessarily entails also an increase in jobs and a reduction in expenditure. But the question is one that keeps unemployment in check, according to economists and industry experts, the country.
Thursday, August 11, 2011
The price of gold rises, the EU area is scary
The Gold Rush marked the movement of the whole community of global investors, with prices of yellow metal, which rose to just under $ 1,800 for ounce on fears that France could lose its rating level. Gold is regarded as a safe haven, since it is a hedge against the economic and political risks because it tends to retain its value better than stocks or other assets.
French President Nicolas Sarkozy has interrupted a vacation to hold a cabinet meeting unscheduled where the government has said it would consider tax increases, spending cuts and other fiscal measures to support the country's fiscal position.
But concerns remain that the European financial system. If he will still have other problems of sovereign debt, which are initiated by small economies such as Greece and Ireland, the same could also spread in the major economies such as Spain, Italy and France.
Greece is smaller than Italy, Spain and France. The main reason why there is an increase in the gold price is because of the nervousness caused by Europe. People are trying to preserve their wealth and do not see many other options except gold.
Gold was also a record during the last week, before and after the U.S. reached an agreement last minute to increase their debt ceiling, then even after the unprecedented decision taken by Standard & Poor's of to downgrade the U.S. debt. However, while gold prices are rising fast, the risk of a sharp pullback is increasing. For this reason, should be careful who wants to invest in yellow metal in the coming weeks, as you might find to buy at the wrong time.
French President Nicolas Sarkozy has interrupted a vacation to hold a cabinet meeting unscheduled where the government has said it would consider tax increases, spending cuts and other fiscal measures to support the country's fiscal position.
But concerns remain that the European financial system. If he will still have other problems of sovereign debt, which are initiated by small economies such as Greece and Ireland, the same could also spread in the major economies such as Spain, Italy and France.
Greece is smaller than Italy, Spain and France. The main reason why there is an increase in the gold price is because of the nervousness caused by Europe. People are trying to preserve their wealth and do not see many other options except gold.
Gold was also a record during the last week, before and after the U.S. reached an agreement last minute to increase their debt ceiling, then even after the unprecedented decision taken by Standard & Poor's of to downgrade the U.S. debt. However, while gold prices are rising fast, the risk of a sharp pullback is increasing. For this reason, should be careful who wants to invest in yellow metal in the coming weeks, as you might find to buy at the wrong time.
Friday, July 09, 2010
Forget Double Dip, the Next Bottom May be Deeper
Stocks continued their now four-day rally with the weakest volume of the week on Friday. Most of the buying - mostly positioning for earnings releases beginning next week - occured in the final two hours of the session.
Nonetheless, it was a stellar performance for the holiday-shortened span, with stocks rebounding sharply after two months of relentless selling.
Dow 10,198.03, +59.04 (0.58%)
NASDAQ 2,196.45, +21.05 (0.97%)
S&P 500 1,077.96, +7.71 (0.72%)
NYSE Composite 6,808.71, +52.90 (0.78%)
Advancers buried decliners, 4901-1497, and new lows were trampled by an onrush of new highs, 168-72. Volume was the lightest it has been in weeks, typical for summer trading, though potentially disconcerting to some trend-watchers who have noted many recent higher moves on inadequate volume. It's called speculation, and there's still plenty to go around.
NASDAQ Volume 1,601,902,625
NYSE Volume 3,999,371,000
Commodities were again positive for sellers, with oil up 65 cents, to $76.09, gold rocketing higher by $13.80, to $1,209.60 and silver tacking on 20 cents to the price of an ounce, at $18.05.
Following up on a recent post - June 1, US Markets the World's Laughing Stock; Second Great Depression Still Looming in which I compared current stock market conditions to those of the Great Depression, along come two esteemed commentators, Donald Luskin of Trend Macrolytics LLC, writing for the Wall Street Journal, and Daryl Guppy of GuppyTraders.com to solidify my position and rationale.
Luskin's article, Why This Isn't Like 1938—At Least Not Yet, carries my argument about the similarities a step further and somewhat in another direction, comparing today's stock market, and economy, to that of 1937-38, a recession within the Great Depression which exhibits an eerily-similar pattern to the recent S&P 500. Offering an over-imposed chart of the two periods, it's difficult to argue against his analysis, especially when he mentions:
Those conditions sound quite a bit like what is directly ahead for the US economy, some of the same policies already set in motion.
Guppy's point is that there's a head-and-shoulders pattern developing that looks just like the one at the start of the Great Depression, the period to which I referred in my June 1 post. His analysis was released on July 5, when most of us were still enjoying the tail end of a three-day weekend, so it's unsurprising that many missed it.
Whether or not anyone agrees with history repeating itself, charting or comparisons, it certainly seems worth considering what might happen over the next 6 months to 6 years. Using reasonable market assumptions being a key tenet of any sound financial plan, might it not be time for people to begin using models which predict lower rates of return, possible deflation - instead of inflation - and benchmarks taken from actual conditions rather than the rosy assumptions (7-9% y-o-y gains, 3% inflation) usually thrown around by "respected" financial planners and analysts?
Which brings up yet another point of contention. Bull or Bear, optimist or pessimist, everyone has to have some kind of time horizon for investments, and, there being no better time than the present to plan for the future, one wonders just how long it might be before stocks return to the all-time highs of October, 2007.
I'll toss out a number here, just for argument's sake. With the Dow right around 10,000 today, I'll say that the index won't return to the 14,164 number (October 9, 2007) for maybe thirty years. How's that for perspective? Too gloomy? Bear in mind that it took more than 25 years years from stocks to recover from get back to the previous pre-crash high. The Dow Jones Industrials closed at 381.17 on September 3, 1929 and didn't rise back to that level until November 23, 1954, when they closed at 382.74. Surely, conditions were dire during the Great Depression and through world War II, but, considering the massive amount of debt overhang (still growing) and unfunded liabilities of around $130 Trillion (unfunded and unresolved), one might suggest that economic conditions are far worse, by degree, than they were some 80 years ago.
Just using a simple formula of 7% gains, compounded annually, it would take five years to retake the 14,164 level, and is anybody predicting five straight years of 7% returns? None that I know of, and if you know of any, do yourself a favor and seek out other opinions. With the ten-year treasury hovering around 3% and the 30-year around 4%, we all should be well aware that explosive growth is not in the near-term cards.
That's why I keep saying that cash is king, because if stocks and other assets decline in value, your cash will buy more down the road. That's what deflation is all about.
Nonetheless, it was a stellar performance for the holiday-shortened span, with stocks rebounding sharply after two months of relentless selling.
Dow 10,198.03, +59.04 (0.58%)
NASDAQ 2,196.45, +21.05 (0.97%)
S&P 500 1,077.96, +7.71 (0.72%)
NYSE Composite 6,808.71, +52.90 (0.78%)
Advancers buried decliners, 4901-1497, and new lows were trampled by an onrush of new highs, 168-72. Volume was the lightest it has been in weeks, typical for summer trading, though potentially disconcerting to some trend-watchers who have noted many recent higher moves on inadequate volume. It's called speculation, and there's still plenty to go around.
NASDAQ Volume 1,601,902,625
NYSE Volume 3,999,371,000
Commodities were again positive for sellers, with oil up 65 cents, to $76.09, gold rocketing higher by $13.80, to $1,209.60 and silver tacking on 20 cents to the price of an ounce, at $18.05.
Following up on a recent post - June 1, US Markets the World's Laughing Stock; Second Great Depression Still Looming in which I compared current stock market conditions to those of the Great Depression, along come two esteemed commentators, Donald Luskin of Trend Macrolytics LLC, writing for the Wall Street Journal, and Daryl Guppy of GuppyTraders.com to solidify my position and rationale.
Luskin's article, Why This Isn't Like 1938—At Least Not Yet, carries my argument about the similarities a step further and somewhat in another direction, comparing today's stock market, and economy, to that of 1937-38, a recession within the Great Depression which exhibits an eerily-similar pattern to the recent S&P 500. Offering an over-imposed chart of the two periods, it's difficult to argue against his analysis, especially when he mentions:
In 1937 the economy was in a strong recovery from a severe crisis, and there was complacency that the worst was over—much like the exuberance about a "V-shaped' recovery this April. But after 1937 the economy relapsed into what historians call "the recession within the Depression," a downturn so severe that in any other context it would qualify as a depression itself.
It was triggered by a set of very specific policy mistakes. The Fed tightened by raising reserve requirements. Consumers were hit with new taxes to pay for the then-new Social Security program. Worried about excessive deficits, Roosevelt cut government spending. At the same time, his administration accelerated antibusiness rhetoric and regulation.
Those conditions sound quite a bit like what is directly ahead for the US economy, some of the same policies already set in motion.
Guppy's point is that there's a head-and-shoulders pattern developing that looks just like the one at the start of the Great Depression, the period to which I referred in my June 1 post. His analysis was released on July 5, when most of us were still enjoying the tail end of a three-day weekend, so it's unsurprising that many missed it.
Whether or not anyone agrees with history repeating itself, charting or comparisons, it certainly seems worth considering what might happen over the next 6 months to 6 years. Using reasonable market assumptions being a key tenet of any sound financial plan, might it not be time for people to begin using models which predict lower rates of return, possible deflation - instead of inflation - and benchmarks taken from actual conditions rather than the rosy assumptions (7-9% y-o-y gains, 3% inflation) usually thrown around by "respected" financial planners and analysts?
Which brings up yet another point of contention. Bull or Bear, optimist or pessimist, everyone has to have some kind of time horizon for investments, and, there being no better time than the present to plan for the future, one wonders just how long it might be before stocks return to the all-time highs of October, 2007.
I'll toss out a number here, just for argument's sake. With the Dow right around 10,000 today, I'll say that the index won't return to the 14,164 number (October 9, 2007) for maybe thirty years. How's that for perspective? Too gloomy? Bear in mind that it took more than 25 years years from stocks to recover from get back to the previous pre-crash high. The Dow Jones Industrials closed at 381.17 on September 3, 1929 and didn't rise back to that level until November 23, 1954, when they closed at 382.74. Surely, conditions were dire during the Great Depression and through world War II, but, considering the massive amount of debt overhang (still growing) and unfunded liabilities of around $130 Trillion (unfunded and unresolved), one might suggest that economic conditions are far worse, by degree, than they were some 80 years ago.
Just using a simple formula of 7% gains, compounded annually, it would take five years to retake the 14,164 level, and is anybody predicting five straight years of 7% returns? None that I know of, and if you know of any, do yourself a favor and seek out other opinions. With the ten-year treasury hovering around 3% and the 30-year around 4%, we all should be well aware that explosive growth is not in the near-term cards.
That's why I keep saying that cash is king, because if stocks and other assets decline in value, your cash will buy more down the road. That's what deflation is all about.
Wednesday, April 28, 2010
Why the FOMC Didn't Hike Rates; Tweet this. Or Don't.
I'm not going to win a Pulitzer Prize for this, but the reason the Fed did nothing again today is pretty simple.
1. The economy is being kept afloat by money being shoveled to banks, via nearly no interest loans, and people, via what the government likes to call "transfer payments," which are the usual, unemployment checks, social security checks, military and other federal retirement checks, disability checks, welfare checks.
2. The middle class pays most of their bills. They pay mortgages, taxes, utilities and they pay for necessities such as food, fuel, etc. Can anybody begrudge them the occasional splurge for a new shirt, car or iPad?
3. Private sector employment is becoming a myth and the more the government tries to tax every aspect of employment, the worse it's going to get. Private businesses must cut every imaginable corner just to stay in business.
Conclusion: the economy is still on the ropes. "Recovery" is an absolute joke. We are, as a nation, still scraping along the bottom. Public confidence in government is low and waning. Politicians grandstand for votes. Wall Street is still nothing more than a big casino. The Fed knows all of this and much more. They're scared to death. Eventually, the banks must give back all the money they stole from the middle class or the nation will never recover, probably splintering into a kind of new age Europe, which may, in fact, be the best thing that can happen.
Here's a plan: Expect the worst; enjoy what you have; don't pay retail for anything (including taxes; if you can get a deal on utilities, let me know how).
Dow 11,045.27, +53.28 (0.48%)
NASDAQ 2,471.73, +0.26 (0.01%)
S&P 500 1,191.36, +7.65 (0.65%)
NYSE Composite 7,499.72, +36.63 (0.49%)
Advancing issues, as expected, beat decliners, 3659-2857; there were 244 new highs (the lowest number in a month, at least) and just 48 new lows. Volume was solid.
NYSE Volume 7,046,415,500
NASDAQ Volume 2,728,942,500
Oil gained 78 cents, to $83.22. CNN Money ran a headline touting, Oil rises on Fed rate decision as if the two are somehow co-aligned. Maybe they are, but one has to really stretch imagination to figure out how that is.
Gold added $9.60, to $1,171.30, while silver fell a penny, to $18.11.
1. The economy is being kept afloat by money being shoveled to banks, via nearly no interest loans, and people, via what the government likes to call "transfer payments," which are the usual, unemployment checks, social security checks, military and other federal retirement checks, disability checks, welfare checks.
2. The middle class pays most of their bills. They pay mortgages, taxes, utilities and they pay for necessities such as food, fuel, etc. Can anybody begrudge them the occasional splurge for a new shirt, car or iPad?
3. Private sector employment is becoming a myth and the more the government tries to tax every aspect of employment, the worse it's going to get. Private businesses must cut every imaginable corner just to stay in business.
Conclusion: the economy is still on the ropes. "Recovery" is an absolute joke. We are, as a nation, still scraping along the bottom. Public confidence in government is low and waning. Politicians grandstand for votes. Wall Street is still nothing more than a big casino. The Fed knows all of this and much more. They're scared to death. Eventually, the banks must give back all the money they stole from the middle class or the nation will never recover, probably splintering into a kind of new age Europe, which may, in fact, be the best thing that can happen.
Here's a plan: Expect the worst; enjoy what you have; don't pay retail for anything (including taxes; if you can get a deal on utilities, let me know how).
Dow 11,045.27, +53.28 (0.48%)
NASDAQ 2,471.73, +0.26 (0.01%)
S&P 500 1,191.36, +7.65 (0.65%)
NYSE Composite 7,499.72, +36.63 (0.49%)
Advancing issues, as expected, beat decliners, 3659-2857; there were 244 new highs (the lowest number in a month, at least) and just 48 new lows. Volume was solid.
NYSE Volume 7,046,415,500
NASDAQ Volume 2,728,942,500
Oil gained 78 cents, to $83.22. CNN Money ran a headline touting, Oil rises on Fed rate decision as if the two are somehow co-aligned. Maybe they are, but one has to really stretch imagination to figure out how that is.
Gold added $9.60, to $1,171.30, while silver fell a penny, to $18.11.
Thursday, June 11, 2009
More Stocks Making New Highs
For the fifth consecutive day, new highs have exceeded new lows, today, by 91-69.
To some, that may sound like fairly mundane news, but to readers of this blog, it's an important turning point. Daily new lows have outnumbered new highs every day for some 21 months (with the exception of about 6 days) until last week.
So, has the spell been broken? Is the economy on the verge of recovery? Are we headed for a new bull market?
The answers, in order, are: YES, NO, and PROBABLY NOT.
Until the economy begins showing real signs of strength, such as, home prices increasing instead of declining, month-over-month; new jobs being created; corporate profits showing real improvement, not just "beat the (watered-down) street numbers"; and maybe getting the national debt under control, the US economy is in for a rough ride. While the solitary new lows-new highs indicator may be turning green, it's more likely because the new highs set in 2008, much like earnings forecasts, are of the low-bar variety. The new highs in '09 are likely well below the previous highs in '07 or '06. and, since the market was hammered so badly both in the fall of '08 and the first quarter of '09, there aren't many more new lows to be had. Some of the real losers have been delisted (see GM, etc.), while others are resting comfortably in the single digits.
As for a new bull market, well, such is the stuff of dreams and fairies. It would be more in the realm of Harry Potter to conger up a new bull market than for the economic conditions to present such a scenario. Stocks are currently overvalued, as will be seen some time later this summer or into the fall. Some selling would indeed be healthy right about now, though there is a general push-back from Wall Street, the federal government and mainstream media against any show of weakness. It's very odd, but much akin to the Japanese (or is it Chinese?) concept of "losing face," wherein one puts on the best show possible in order to appear wholesome, vibrant and strong.
Naturally, that's not what investing in equities is supposed to be about. It's supposed to consist of discounting future value, dividends and solid profitability, product lines and market share. Fundamentals of business and economy, dear Watson.
Dow 8,770.92, +31.90 (0.37%)
NASDAQ 1,862.37, +9.29 (0.50%)
S&P 500 944.89, +5.74 (0.61%)
NYSE Composite 6,163.13, +65.07 (1.07%)
As far as this week is concerned, the movement of the stock market has been kind of like a bad joke, or, watching paint dry. It's been a near-total waste of time. The big winner has been the NYSE Composite, up a whopping 80 points. The NASDAQ has put on 13 points; the S&P almost 5, and the Dow a miraculous 7 whole points!
Index traders are falling asleep at their desks, the excitement is so rare.
On the day, advancing issues outnumbered decliners, 4164-1405, though, while the disparity was large, the actual movement was tiny. You already know the score on the new highs vs. new lows, and volume was a little better than Wednesday's, which really doesn't say much. Investors worldwide are still awaiting some kind of pull-back, though it may be a long time in coming, if at all.
NYSE Volume 1,223,187,000
NASDAQ Volume 2,501,569,000
Oil hit a new high for the year, to nobody's surprise, rising $1.35, to $72.68. Gold was up as well, gaining $6.80, to $961.50, and silver added 27 cents, to $15.49. Commodity prices, outside of crude oil, have been trading up and down without much direction for the past three to four weeks, much like the stock market. The entire globe has been engulfed by an acute condition of indecisiveness, worse than any H1N1 Pandemic.
Tomorrow, we're hoping the market will be up, or down. Something to hang one's hat on would be welcome after a week of dullness.
To some, that may sound like fairly mundane news, but to readers of this blog, it's an important turning point. Daily new lows have outnumbered new highs every day for some 21 months (with the exception of about 6 days) until last week.
So, has the spell been broken? Is the economy on the verge of recovery? Are we headed for a new bull market?
The answers, in order, are: YES, NO, and PROBABLY NOT.
Until the economy begins showing real signs of strength, such as, home prices increasing instead of declining, month-over-month; new jobs being created; corporate profits showing real improvement, not just "beat the (watered-down) street numbers"; and maybe getting the national debt under control, the US economy is in for a rough ride. While the solitary new lows-new highs indicator may be turning green, it's more likely because the new highs set in 2008, much like earnings forecasts, are of the low-bar variety. The new highs in '09 are likely well below the previous highs in '07 or '06. and, since the market was hammered so badly both in the fall of '08 and the first quarter of '09, there aren't many more new lows to be had. Some of the real losers have been delisted (see GM, etc.), while others are resting comfortably in the single digits.
As for a new bull market, well, such is the stuff of dreams and fairies. It would be more in the realm of Harry Potter to conger up a new bull market than for the economic conditions to present such a scenario. Stocks are currently overvalued, as will be seen some time later this summer or into the fall. Some selling would indeed be healthy right about now, though there is a general push-back from Wall Street, the federal government and mainstream media against any show of weakness. It's very odd, but much akin to the Japanese (or is it Chinese?) concept of "losing face," wherein one puts on the best show possible in order to appear wholesome, vibrant and strong.
Naturally, that's not what investing in equities is supposed to be about. It's supposed to consist of discounting future value, dividends and solid profitability, product lines and market share. Fundamentals of business and economy, dear Watson.
Dow 8,770.92, +31.90 (0.37%)
NASDAQ 1,862.37, +9.29 (0.50%)
S&P 500 944.89, +5.74 (0.61%)
NYSE Composite 6,163.13, +65.07 (1.07%)
As far as this week is concerned, the movement of the stock market has been kind of like a bad joke, or, watching paint dry. It's been a near-total waste of time. The big winner has been the NYSE Composite, up a whopping 80 points. The NASDAQ has put on 13 points; the S&P almost 5, and the Dow a miraculous 7 whole points!
Index traders are falling asleep at their desks, the excitement is so rare.
On the day, advancing issues outnumbered decliners, 4164-1405, though, while the disparity was large, the actual movement was tiny. You already know the score on the new highs vs. new lows, and volume was a little better than Wednesday's, which really doesn't say much. Investors worldwide are still awaiting some kind of pull-back, though it may be a long time in coming, if at all.
NYSE Volume 1,223,187,000
NASDAQ Volume 2,501,569,000
Oil hit a new high for the year, to nobody's surprise, rising $1.35, to $72.68. Gold was up as well, gaining $6.80, to $961.50, and silver added 27 cents, to $15.49. Commodity prices, outside of crude oil, have been trading up and down without much direction for the past three to four weeks, much like the stock market. The entire globe has been engulfed by an acute condition of indecisiveness, worse than any H1N1 Pandemic.
Tomorrow, we're hoping the market will be up, or down. Something to hang one's hat on would be welcome after a week of dullness.
Thursday, February 26, 2009
Game Over! Stocks Swoon on Stress Test Suspicion
Stocks opened higher despite more sour economic news, but ended the day in the red as the reality that Treasury's "stress test" for the ailing banking sector was more smoke, mirrors, politics and PR than an actual remedy.
Secretary Tim Geithner's "plan" to resolve the banking and financial crisis has good probability to extend the recession by not addressing the core problems. (See earlier post below for details on Treasury's plan.)
Blow by blow, here's how the day went, as interpreted by Wall Street's desperate price discovery process (at least somebody's working).
8:30 am: The Commerce Dept. issues monthly Durable Goods Orders report for January, citing a deep decline of 5.2% from the previous month, the sixth straight monthly drop. It's evident that Americans have their wallets and purses closed tight. Some even have forsaken carrying such.
The Labor Dept. announces 667,000 new weekly unemployment claims nationally. The 5.1 million currently receiving benefits is the highest since the department began keeping records in 1967. The federal government celebrated the occasion by adding $25 to the weekly benefit. Each week, an additional $127,500,000 of taxpayer money will be spent, beginning immediately.
9:30 am: The markets open with sharp gains, ignoring the dire economic reports. The Dow is up 80 points in the first ten minutes. the other major indices are up more than 1%. Bank of America is up 0.69 at 5.85.
10:45 am: The Dow reaches what will eventually be the high of the day - 7400 - up 130 points. 26 of 30 Dow stocks show gains. Bank of America peaks at 5.89, up 0.73.
1:13 pm: Having given up all of the day's gains, the Dow briefly falls into negative territory. Bank of America is up only 0.24 at 5.40.
3:15 pm: Stocks are in full retreat, with the Dow lower by 97 points. Bank of America is down 0.05 at 5.11. There are now only nine Dow components with gains. Most have completely rolled over.
4:00 pm: Markets close with all indices near the day's lows. It's the 8th losing day in the last 10. The Dow closes below 7200 for the second time this week. 22 Dow components close with losses, 8 with gains. Bank of America finishes with a cheerless win of 0.16, at 5.32.
Dow 7,182.08, -88.81 (1.22%)
NASDAQ 1,391.47, -33.96 (2.38%)
S&P 500 752.83, -12.07 (1.58%)
NYSE Composite 4,713.02, -40.15 (0.84%)
Market internals verified the session's finish. Declining issues outgunned advancers, 3755-2761. New lows: 460; new highs: 4, the lowest number of new highs I have seen since October of 2007. Volume was high once again, as investors alternately test and flee from equities.
NYSE Volume 1,482,993,000
NASDAQ Volume 2,348,150,000
Commodities were split. Crude oil for April delivery was up $2.72 to an unsustainable $45.22. Gold continued to correct on profit-taking, losing $23.60, to $942.60. Silver tumbled 94 cents, to $12.98, an excellent buying opportunity for long term investors.
Today's results were startling, stunning, unprecedented in the level of pessimism on display, expressing a remarkable distrust of government and overwhelming lack of confidence in the economic future. There is little doubt among investors that the government has failed to offer reasonable solutions to stem bank losses, job losses, income deterioration and revive - or even stabilize - the economy.
Secretary Tim Geithner's "plan" to resolve the banking and financial crisis has good probability to extend the recession by not addressing the core problems. (See earlier post below for details on Treasury's plan.)
Blow by blow, here's how the day went, as interpreted by Wall Street's desperate price discovery process (at least somebody's working).
8:30 am: The Commerce Dept. issues monthly Durable Goods Orders report for January, citing a deep decline of 5.2% from the previous month, the sixth straight monthly drop. It's evident that Americans have their wallets and purses closed tight. Some even have forsaken carrying such.
The Labor Dept. announces 667,000 new weekly unemployment claims nationally. The 5.1 million currently receiving benefits is the highest since the department began keeping records in 1967. The federal government celebrated the occasion by adding $25 to the weekly benefit. Each week, an additional $127,500,000 of taxpayer money will be spent, beginning immediately.
9:30 am: The markets open with sharp gains, ignoring the dire economic reports. The Dow is up 80 points in the first ten minutes. the other major indices are up more than 1%. Bank of America is up 0.69 at 5.85.
10:45 am: The Dow reaches what will eventually be the high of the day - 7400 - up 130 points. 26 of 30 Dow stocks show gains. Bank of America peaks at 5.89, up 0.73.
1:13 pm: Having given up all of the day's gains, the Dow briefly falls into negative territory. Bank of America is up only 0.24 at 5.40.
3:15 pm: Stocks are in full retreat, with the Dow lower by 97 points. Bank of America is down 0.05 at 5.11. There are now only nine Dow components with gains. Most have completely rolled over.
4:00 pm: Markets close with all indices near the day's lows. It's the 8th losing day in the last 10. The Dow closes below 7200 for the second time this week. 22 Dow components close with losses, 8 with gains. Bank of America finishes with a cheerless win of 0.16, at 5.32.
Dow 7,182.08, -88.81 (1.22%)
NASDAQ 1,391.47, -33.96 (2.38%)
S&P 500 752.83, -12.07 (1.58%)
NYSE Composite 4,713.02, -40.15 (0.84%)
Market internals verified the session's finish. Declining issues outgunned advancers, 3755-2761. New lows: 460; new highs: 4, the lowest number of new highs I have seen since October of 2007. Volume was high once again, as investors alternately test and flee from equities.
NYSE Volume 1,482,993,000
NASDAQ Volume 2,348,150,000
Commodities were split. Crude oil for April delivery was up $2.72 to an unsustainable $45.22. Gold continued to correct on profit-taking, losing $23.60, to $942.60. Silver tumbled 94 cents, to $12.98, an excellent buying opportunity for long term investors.
Today's results were startling, stunning, unprecedented in the level of pessimism on display, expressing a remarkable distrust of government and overwhelming lack of confidence in the economic future. There is little doubt among investors that the government has failed to offer reasonable solutions to stem bank losses, job losses, income deterioration and revive - or even stabilize - the economy.
Friday, May 30, 2008
U.S. Personal Spending Rises in April
Personal consumer expenditure (PCE) rose 0.2% in April in line with market expectations. This represented a slowing in growth from the 0.4% gain seen in March. Personal income rose 0.2%, a touch faster than market expectations, although down from the 0.4% gain in March.
On a volumes basis, spending was down slightly in April. The level of spending was essentially unchanged in April compared to the first-quarter average. Consumer spending growth should accelerate through the second and third quarters as the rebate cheques (which equate to roughly 12% of personal income) buoy income levels.
From a policy perspective, this report does not alter the landscape in any substantial way. In the near-term, we expect the Fed to remain on hold as it assesses the impact on the economy of their substantial policy actions and the sizeable fiscal stimulus package.
On a volumes basis, spending was down slightly in April. The level of spending was essentially unchanged in April compared to the first-quarter average. Consumer spending growth should accelerate through the second and third quarters as the rebate cheques (which equate to roughly 12% of personal income) buoy income levels.
From a policy perspective, this report does not alter the landscape in any substantial way. In the near-term, we expect the Fed to remain on hold as it assesses the impact on the economy of their substantial policy actions and the sizeable fiscal stimulus package.
Monday, May 26, 2008
Top 5 Tips For Good Home Loans
Buying a house and making it your home is a dream for almost everyone. Fortunately we have services that help buyers make their dreams come true faster: such as home loans. The world of home loans is varied, full of layers and sometimes confusing. However, many companies offer support and a set of options for new borrower. It makes easier the moment of choosing which loan best fits your situation.
Good home loans are easy to be found if you know where to search and how to negotiate. Low interest rates can make a sizeable difference in your savings, both on a long term and short term basis. It can be decisive in the moment of choosing a larger space as well. I've prepared some tips that may help you in order to get the best interest rate on your first home loans:
1. Research a good lender
It's very important that borrower do a lot of research to discover the lender best fits his needs. Even when you are opting for a home loan and you don't have a good credit history, you can look around and choose the one that is best suited to your financial situation.
2. Bad credit is not a big problem
You are not destined to take the very first opportunity that you find just because you suffer from bad credit. If you have such an attitude you may suffer for long time due high interest rate. You may end up being not able to meet the commitment and this may worsen your financial credit score.
3. Compare the interest rates
The mortgage rates tend to vary depending on the type of loan. Choosing adjustable home loan make sure you are aware such loan has possible risks associated. Don't hesitate to ask about taxes, costs, terms and other issues. Mortgage brokers are likely to serve you with the best services to beat enemies.
4. Bargain and negotiate
Now that you chose the lender it's time to get the best deal. Usually, loan officers and brokers can help you get some really good discounts on your home loan. Don't show anxiety to get deal closed, be direct and let the company officer knows you have resources. It's also important to state you are not negotiating he unique possible deal for you.
5. Be critical
Remember a loan is like a simple product, but with many terms issued. Seller wants you purchase, he usually show only the good factors. You should have critical sense to decide and bargain for better prices. Doing this you assure you got the best lender and closed the best deal.
Get more quality information and services for home loans.
Visit: Choice Home Loans
Good home loans are easy to be found if you know where to search and how to negotiate. Low interest rates can make a sizeable difference in your savings, both on a long term and short term basis. It can be decisive in the moment of choosing a larger space as well. I've prepared some tips that may help you in order to get the best interest rate on your first home loans:
1. Research a good lender
It's very important that borrower do a lot of research to discover the lender best fits his needs. Even when you are opting for a home loan and you don't have a good credit history, you can look around and choose the one that is best suited to your financial situation.
2. Bad credit is not a big problem
You are not destined to take the very first opportunity that you find just because you suffer from bad credit. If you have such an attitude you may suffer for long time due high interest rate. You may end up being not able to meet the commitment and this may worsen your financial credit score.
3. Compare the interest rates
The mortgage rates tend to vary depending on the type of loan. Choosing adjustable home loan make sure you are aware such loan has possible risks associated. Don't hesitate to ask about taxes, costs, terms and other issues. Mortgage brokers are likely to serve you with the best services to beat enemies.
4. Bargain and negotiate
Now that you chose the lender it's time to get the best deal. Usually, loan officers and brokers can help you get some really good discounts on your home loan. Don't show anxiety to get deal closed, be direct and let the company officer knows you have resources. It's also important to state you are not negotiating he unique possible deal for you.
5. Be critical
Remember a loan is like a simple product, but with many terms issued. Seller wants you purchase, he usually show only the good factors. You should have critical sense to decide and bargain for better prices. Doing this you assure you got the best lender and closed the best deal.
Get more quality information and services for home loans.
Visit: Choice Home Loans
Friday, May 23, 2008
The Vulnerabilities of the US Dollar
- Euro: Headed Back to 1.60?
- Can the British Pound Hold Onto its Gains?
The Vulnerabilities of the US Dollar
The US dollar weakened significantly this past week as rising oil prices revealed the vulnerabilities of the US economy. Companies are beginning to struggle and have been forced to come up with more creative ways to deal with the energy crisis. With crude oil prices hitting $135 a barrel and gasoline in many states topping $4 a gallon, US companies are making cuts across the board. Ford Motors Co for example plans on reducing production while American Airlines will be lowering capacity by 15 percent and adding bag charges. According to the futures market, some traders even expect gas prices to hit $7 to $8 a gallon. However the US is not alone in having to deal with the oil crisis which is one of the major reasons why the dollar has weakened. Over the past few weeks, the market had been slowly pricing in a pause from the Federal Reserve. At the same time, there was a growing consensus that other central banks may need to begin or continue to cut interest rates. The surge in oil prices and hawkish comments from the European Central Bank, the Bank of England and the Reserve Bank of Australia dramatically altered the outlook for these central banks. With strict inflation targets, traders came to realize that interest rates for these 3 countries will remain unchanged for the foreseeable future and as a result, currency rates adjusted for these expectations. In the coming week, the vulnerabilities of the US economy may become even more apparent. The US markets are closed for Memorial Day on Monday, but we still have a busy week ahead of us with consumer confidence, new home sales, durable goods, first quarter GDP, personal income, personal spending and Chicago PMI due for release. We expect most of these numbers to be dollar bearish as US consumers continue to struggle under the weight of deteriorating personal finances.
Euro: Headed Back to 1.60?
The Euro staged a dramatic recovery against the US dollar this past week as hawkish comments from the European Central Bank fueled speculation that a rate hike may be around the corner. Although we think that a rate hike would be a dramatic move, the stability of recent Eurozone economic data is certainly encouraging as the market's focus shifts from fears for growth to inflation. Earlier this week, German business confidence for the month of May showed a surprising improvement. Today, the PMI numbers explain why German businesses are not worried. Service and manufacturing PMI numbers both deteriorated from the prior month, but remain in expansionary territory. Next week, it may be US rather than Eurozone economic data that help the EUR/USD inch towards 1.60. The only significant reports from the Eurozone are German employment, Retail PMI and German retail sales. We expect the labor market in Germany to continue to improve because the employment component of the manufacturing PMI report actually accelerated this month. Meanwhile it will also be a busy week for Switzerland who will be releasing their trade balance, UBS Consumption and KoF leading indicator reports. The currency has performed very well against the Japanese Yen this past week and it remains to be seen whether this strength can continue.
Can the British Pound Hold Onto its Gains?
It has been a great week for the British pound, which rallied more than 300 pips against the US dollar. Upside surprises in economic data as well as hawkish minutes from their latest monetary policy meeting confirmed that it will be months before we see another rate cut from the Bank of England. In fact, for all intents and purposes, the next move from the BoE may have to be a rate hike. Unlike the US, the Bank of England has a strict inflation target and if inflation is more than 3 percent, the central bank governor is forced to write a special letter to the Chancellor to explain why inflation has increased and to outline the time frame for bringing inflation back to target. Earlier this month, consumer prices hit 3 percent on a yearly basis, and now, the BoE must do all that they can to rein in inflation. The recent stability in economic data has helped their cause as long as the economy does not fall back into a downward spiral. With no major economic data due for release next week, the British pound stands a chance at holding onto its gains as long as there isn't surprisingly strong US data.
Great Week for the Australian, New Zealand and Canadian Dollars
Rising commodity has been the story of the week, helping to take the Australian, New Zealand and Canadian dollars higher. The Aussie rose to a 24 year high, putting itself within an arm's reach of hitting parity against the US dollar. Rising inflationary pressures and stronger economic data leaves the RBA far closer to a rate hike than any of the other major central banks. We do not believe that they are ready to raise rates, but tighter monetary policy could be a final option. The lack of meaningful economic data next week leaves the action for the Canadian and New Zealand dollars. Canada will be releasing its Current Account balance and GDP while New Zealand will be reporting its trade balance.
Fate of USDJPY Tied to Movements in the Dow
This past week, the fate of USD/JPY has been tied to the movements in the Dow but there has been vastly divergent behavior in all of the Yen crosses. EUR/JPY, AUD/JPY and CHF/JPY for example have performed well while USD/JPY has remained depressed. The sell of in US stocks continued to help the Yen, but the slew of market moving data scheduled for next week will heighten the event risks for the low yielding currency as we expected much of the data to reflect the pressure of rising oil prices. On the economic calendar are the retail sales, jobless rate, consumer prices and industrial production reports.
DailyFX
- Can the British Pound Hold Onto its Gains?
The Vulnerabilities of the US Dollar
The US dollar weakened significantly this past week as rising oil prices revealed the vulnerabilities of the US economy. Companies are beginning to struggle and have been forced to come up with more creative ways to deal with the energy crisis. With crude oil prices hitting $135 a barrel and gasoline in many states topping $4 a gallon, US companies are making cuts across the board. Ford Motors Co for example plans on reducing production while American Airlines will be lowering capacity by 15 percent and adding bag charges. According to the futures market, some traders even expect gas prices to hit $7 to $8 a gallon. However the US is not alone in having to deal with the oil crisis which is one of the major reasons why the dollar has weakened. Over the past few weeks, the market had been slowly pricing in a pause from the Federal Reserve. At the same time, there was a growing consensus that other central banks may need to begin or continue to cut interest rates. The surge in oil prices and hawkish comments from the European Central Bank, the Bank of England and the Reserve Bank of Australia dramatically altered the outlook for these central banks. With strict inflation targets, traders came to realize that interest rates for these 3 countries will remain unchanged for the foreseeable future and as a result, currency rates adjusted for these expectations. In the coming week, the vulnerabilities of the US economy may become even more apparent. The US markets are closed for Memorial Day on Monday, but we still have a busy week ahead of us with consumer confidence, new home sales, durable goods, first quarter GDP, personal income, personal spending and Chicago PMI due for release. We expect most of these numbers to be dollar bearish as US consumers continue to struggle under the weight of deteriorating personal finances.
Euro: Headed Back to 1.60?
The Euro staged a dramatic recovery against the US dollar this past week as hawkish comments from the European Central Bank fueled speculation that a rate hike may be around the corner. Although we think that a rate hike would be a dramatic move, the stability of recent Eurozone economic data is certainly encouraging as the market's focus shifts from fears for growth to inflation. Earlier this week, German business confidence for the month of May showed a surprising improvement. Today, the PMI numbers explain why German businesses are not worried. Service and manufacturing PMI numbers both deteriorated from the prior month, but remain in expansionary territory. Next week, it may be US rather than Eurozone economic data that help the EUR/USD inch towards 1.60. The only significant reports from the Eurozone are German employment, Retail PMI and German retail sales. We expect the labor market in Germany to continue to improve because the employment component of the manufacturing PMI report actually accelerated this month. Meanwhile it will also be a busy week for Switzerland who will be releasing their trade balance, UBS Consumption and KoF leading indicator reports. The currency has performed very well against the Japanese Yen this past week and it remains to be seen whether this strength can continue.
Can the British Pound Hold Onto its Gains?
It has been a great week for the British pound, which rallied more than 300 pips against the US dollar. Upside surprises in economic data as well as hawkish minutes from their latest monetary policy meeting confirmed that it will be months before we see another rate cut from the Bank of England. In fact, for all intents and purposes, the next move from the BoE may have to be a rate hike. Unlike the US, the Bank of England has a strict inflation target and if inflation is more than 3 percent, the central bank governor is forced to write a special letter to the Chancellor to explain why inflation has increased and to outline the time frame for bringing inflation back to target. Earlier this month, consumer prices hit 3 percent on a yearly basis, and now, the BoE must do all that they can to rein in inflation. The recent stability in economic data has helped their cause as long as the economy does not fall back into a downward spiral. With no major economic data due for release next week, the British pound stands a chance at holding onto its gains as long as there isn't surprisingly strong US data.
Great Week for the Australian, New Zealand and Canadian Dollars
Rising commodity has been the story of the week, helping to take the Australian, New Zealand and Canadian dollars higher. The Aussie rose to a 24 year high, putting itself within an arm's reach of hitting parity against the US dollar. Rising inflationary pressures and stronger economic data leaves the RBA far closer to a rate hike than any of the other major central banks. We do not believe that they are ready to raise rates, but tighter monetary policy could be a final option. The lack of meaningful economic data next week leaves the action for the Canadian and New Zealand dollars. Canada will be releasing its Current Account balance and GDP while New Zealand will be reporting its trade balance.
Fate of USDJPY Tied to Movements in the Dow
This past week, the fate of USD/JPY has been tied to the movements in the Dow but there has been vastly divergent behavior in all of the Yen crosses. EUR/JPY, AUD/JPY and CHF/JPY for example have performed well while USD/JPY has remained depressed. The sell of in US stocks continued to help the Yen, but the slew of market moving data scheduled for next week will heighten the event risks for the low yielding currency as we expected much of the data to reflect the pressure of rising oil prices. On the economic calendar are the retail sales, jobless rate, consumer prices and industrial production reports.
DailyFX
Dollar Slides as US Housing Recession Deepens
The lack of improvement in the housing sector continued to weigh on the US dollar, and kept traders from bidding the currency before the extended holiday weekend. Looking at price action, the low yielding Yen and Swiss franc rounded up the biggest gains against the US dollar. In turn the euro regained its footing and pushed back to yesterday highs just short of 1.58. The British Pound however held steady throughout the session as growth concerns led the currency to hold in the 1.98 range. The greenback also declined against the Australian and New Zealand dollar as commodity prices pushed higher - though the Canadian dollar didn't join the crowd as traders squared their books for the weekend.
On the economic front, the National Realtors Association's existing home sales report dampened hopes that the worst housing recession in a quarter century may be coming to an end. Sales fell 1.0 percent in April - posting its eighth consecutive decline in the past nine months. And, though this figure did have a positive side in that it was better than the 1.6 percent drop forecasted, the details of the report clearly spelled out a deteriorating market. Buyers continued to search out bargains though the median housing price dropped 8.0 percent from the same month a year ago. Interestingly enough, prices actually rose on a monthly basis for the second time, which may have in turn led inventories to rise to a new record high.
Rising commodity prices mixed with falling home prices pressed on the stock markets, and led investors to cutback on high risk-reward investments. As a result, the DJIA fell 145.99 points to 12,479.63 points, with 27 of the 30 components declining. The broader S&P500 also slipped 18.42 points to hold off at 1,375.93 points, with 172 stocks falling to a new 52 week low.
Heightened economic concerns fueled demands for US Treasuries, and led risk-adverse investors to seek the safe haven of risk-free bonds. As a result, the benchmark 10-Year yield fell to 3.852 percent from 3.911 percent, while the 2-Year yield plunged to 2.446 percent from 2.528 percent.
US capital markets will be closed through Monday due to the Memorial Day holiday; and the dollar will suffer from the low liquidity and could experience high volatility in turn. When US-based traders return to the markets, fundamentals will be there to meet them. Tuesday is packed with the S&P/Case-Shiller housing data, new home sales report and consumer confidence. Looking over the entire week's listings, there will be particular interest in the first quarter GDP revision which is expected to benefit from a boost in consumer spending and exports.
DailyFX
On the economic front, the National Realtors Association's existing home sales report dampened hopes that the worst housing recession in a quarter century may be coming to an end. Sales fell 1.0 percent in April - posting its eighth consecutive decline in the past nine months. And, though this figure did have a positive side in that it was better than the 1.6 percent drop forecasted, the details of the report clearly spelled out a deteriorating market. Buyers continued to search out bargains though the median housing price dropped 8.0 percent from the same month a year ago. Interestingly enough, prices actually rose on a monthly basis for the second time, which may have in turn led inventories to rise to a new record high.
Rising commodity prices mixed with falling home prices pressed on the stock markets, and led investors to cutback on high risk-reward investments. As a result, the DJIA fell 145.99 points to 12,479.63 points, with 27 of the 30 components declining. The broader S&P500 also slipped 18.42 points to hold off at 1,375.93 points, with 172 stocks falling to a new 52 week low.
Heightened economic concerns fueled demands for US Treasuries, and led risk-adverse investors to seek the safe haven of risk-free bonds. As a result, the benchmark 10-Year yield fell to 3.852 percent from 3.911 percent, while the 2-Year yield plunged to 2.446 percent from 2.528 percent.
US capital markets will be closed through Monday due to the Memorial Day holiday; and the dollar will suffer from the low liquidity and could experience high volatility in turn. When US-based traders return to the markets, fundamentals will be there to meet them. Tuesday is packed with the S&P/Case-Shiller housing data, new home sales report and consumer confidence. Looking over the entire week's listings, there will be particular interest in the first quarter GDP revision which is expected to benefit from a boost in consumer spending and exports.
DailyFX
U.S. Market Update
Dow -147 S&P -20 NASDAQ -33.7
Indices opened and moved lower this morning as oil resumed its upward march, topping $133/bbl overnight. The climbing cost of crude is seen hitting various industries, as RCL-5% was cut overnight at Morgan Stanley. F-4% was still sinking after lowering its outlook yesterday; last night, Ford's CEO declined to say when or whether the company will set a revised profit target. Meanwhile, the US Department of Transportation reported this morning that vehicle miles traveled in March fell 4.3% y/y, representing the first drop in the month since 1979. GM opened lower after reporting that the American Axel strike had further impacted operations, cutting production by 230K units in Q2, with a pretax EPS impact of $1.8B. Several major retailers reported after the close yesterday, painting a broadly mixed to positive picture. FL+10.8% after beating revenue estimates, HIBB+6.8% after guiding significant SSS improvement in May and ZUMZ+5.2%. PSUN-11.7% was the exception, with the company cutting its SSS and earnings guidance. CA+6.3% came in under estimates but guided strong for FY09 (garnering a price target hike at RBC). In M&A news, BUD+8% after the Financial Times reported that the Belgian brewing giant was working on a $46B bid for the company; CNBC's Faber later reported that sources were saying BUD had no interest in answering any potential bid amicably. AGL+30% after announcing it had signed a merger agreement with LEH-4% for $22/shr.
Bond markets are benefiting from the softened equity markets and the better-than-expected headline April US existing home sales data. It is worth noting the figures did reveal April's supply rose to a 22-year high above 11 months, which may have added to the pressure in stocks. The 10-year yield has slipped back below 3.85% after testing 3.95% during yesterday's session.
The USD continued its soft tone in the session as higher commodities continued to weigh on sentiment. The dollar was unable to gain any momentum as growth in European service and manufacturing industries slowed in May. US existing home data was above expectations, but the rise in inventory remains a concern. The spread between the US-German two-year notes continues to widen at -172 bps from -150 a few days back. The JPY was broadly firmer as the BoJ expressed worries on inflation as oil prices continue to rise. In addition, Japan's top economic advisory panel urged diversification in the state-run pension fund. JGB futures were sharply lower overnight as chatter that pension monies would flow out of bonds into equities. Dealers were paying close attention to a downward sloping trendline in EUR/JPY cross that is currently place at the 164.70 approach. A break above would open upside momentum in the cross. Commodity-related currencies are slightly firmer with USD/CAD at 0.9850 and AUD/USD at 0.9615 Thin market conditions will prevail on Monday with both the US and UK on holiday.
Trade The News Staff
Trade The News, Inc.
Indices opened and moved lower this morning as oil resumed its upward march, topping $133/bbl overnight. The climbing cost of crude is seen hitting various industries, as RCL-5% was cut overnight at Morgan Stanley. F-4% was still sinking after lowering its outlook yesterday; last night, Ford's CEO declined to say when or whether the company will set a revised profit target. Meanwhile, the US Department of Transportation reported this morning that vehicle miles traveled in March fell 4.3% y/y, representing the first drop in the month since 1979. GM opened lower after reporting that the American Axel strike had further impacted operations, cutting production by 230K units in Q2, with a pretax EPS impact of $1.8B. Several major retailers reported after the close yesterday, painting a broadly mixed to positive picture. FL+10.8% after beating revenue estimates, HIBB+6.8% after guiding significant SSS improvement in May and ZUMZ+5.2%. PSUN-11.7% was the exception, with the company cutting its SSS and earnings guidance. CA+6.3% came in under estimates but guided strong for FY09 (garnering a price target hike at RBC). In M&A news, BUD+8% after the Financial Times reported that the Belgian brewing giant was working on a $46B bid for the company; CNBC's Faber later reported that sources were saying BUD had no interest in answering any potential bid amicably. AGL+30% after announcing it had signed a merger agreement with LEH-4% for $22/shr.
Bond markets are benefiting from the softened equity markets and the better-than-expected headline April US existing home sales data. It is worth noting the figures did reveal April's supply rose to a 22-year high above 11 months, which may have added to the pressure in stocks. The 10-year yield has slipped back below 3.85% after testing 3.95% during yesterday's session.
The USD continued its soft tone in the session as higher commodities continued to weigh on sentiment. The dollar was unable to gain any momentum as growth in European service and manufacturing industries slowed in May. US existing home data was above expectations, but the rise in inventory remains a concern. The spread between the US-German two-year notes continues to widen at -172 bps from -150 a few days back. The JPY was broadly firmer as the BoJ expressed worries on inflation as oil prices continue to rise. In addition, Japan's top economic advisory panel urged diversification in the state-run pension fund. JGB futures were sharply lower overnight as chatter that pension monies would flow out of bonds into equities. Dealers were paying close attention to a downward sloping trendline in EUR/JPY cross that is currently place at the 164.70 approach. A break above would open upside momentum in the cross. Commodity-related currencies are slightly firmer with USD/CAD at 0.9850 and AUD/USD at 0.9615 Thin market conditions will prevail on Monday with both the US and UK on holiday.
Trade The News Staff
Trade The News, Inc.
Housing, HOUSING!
And that concludes our week dear reader as we head off to the long weekend and the official Memorial Day kick start to the summer; we depart the week with more weakness in the Housing sector. The U.S. session revealed that sales of previously owned homes fell in April though less than expectations but they are still falling and inventories of unsold properties set yet another record high, proving that the problem is far from over in the US economy.
The single currency now is ending the week strongly bullish against the dollar, while now the euro is attempting to build a higher base to continue the new initiated upside wave 1.5690s -1.5670s is going to be the strong demand point for now. While the daily basis heavily saturated with buying orders the weekly basis is still indicating the upside potential; thought the correction might take place which might take the euro down until 1.5611 as the first level and even if it extend the wave will be valid as long as 1.5585 remains intact.
The pound is creating a new upside wave on the medium term as today's closing if manages to be above 1.9779 at least will indicate the breach of the major descending channel and the beginning of a new wave as still on the weekly basis momentum indicators are reflecting upside potential. On the daily basis the pound is heavily over bought still which on the intraday helped the pound decline after setting the high at 1.9850 which is a strong level for the pound that might take the pound down till strong support levels at 1.9770s which as mentioned above need to close above to indicate the upside reversal.
The USDJPY continued the downside headings to set the low at the strong support level of 103.20s yet on the intraday basis reversal signals have appeared as the pair is excessively oversold affected by ongoing carry trades reversals in the market. On the short though as long as the pair remains trading below 104.20s then the downside current waves is still valid.
Crown Forex
The single currency now is ending the week strongly bullish against the dollar, while now the euro is attempting to build a higher base to continue the new initiated upside wave 1.5690s -1.5670s is going to be the strong demand point for now. While the daily basis heavily saturated with buying orders the weekly basis is still indicating the upside potential; thought the correction might take place which might take the euro down until 1.5611 as the first level and even if it extend the wave will be valid as long as 1.5585 remains intact.
The pound is creating a new upside wave on the medium term as today's closing if manages to be above 1.9779 at least will indicate the breach of the major descending channel and the beginning of a new wave as still on the weekly basis momentum indicators are reflecting upside potential. On the daily basis the pound is heavily over bought still which on the intraday helped the pound decline after setting the high at 1.9850 which is a strong level for the pound that might take the pound down till strong support levels at 1.9770s which as mentioned above need to close above to indicate the upside reversal.
The USDJPY continued the downside headings to set the low at the strong support level of 103.20s yet on the intraday basis reversal signals have appeared as the pair is excessively oversold affected by ongoing carry trades reversals in the market. On the short though as long as the pair remains trading below 104.20s then the downside current waves is still valid.
Crown Forex
U.S. Existing Home Sales Drop; Inventories Soar
Existing home sales dropped by 1% in April, sending the annualized level down to 4.89 million units from March's 4.94 million level. Markets were expecting a 1.6% drop. The monthly decline reflected drops both in single-family homes (down 0.5%), while condos/co-ops sales dropped 5.2%.
The number of unsold homes on the market soared 10.5%. Measured in terms of months' supply, inventories were at 11.2 months, the highest level on record. The median price of existing homes increased 1.1% in April, although it was 8% lower on a year-over-year basis.
Existing home sales are now a full 3.3% below their September 2005 peak. They are also an annualized 5% lower than their first-quarter average, consistent with our forecast calling for another outsized decline in residential investment in the second quarter. Inventories in the sector jumped 10.5% and are now approximately 1.8 times their historical average. This implies that no near-term bottom is in sight for the housing market. Indeed, the NAHB housing market index ticked lower in May.
The elevated level of inventories also suggests that prices will have to fall further in order to assist in clearing the inventory glut. Eroding household net worth will be a weight on the consumer. However, disposable income has historically been the most important driver of consumer spending and the fiscal rebate checks should prop spending up in the second and third quarters.
RBC Financial Group
The number of unsold homes on the market soared 10.5%. Measured in terms of months' supply, inventories were at 11.2 months, the highest level on record. The median price of existing homes increased 1.1% in April, although it was 8% lower on a year-over-year basis.
Existing home sales are now a full 3.3% below their September 2005 peak. They are also an annualized 5% lower than their first-quarter average, consistent with our forecast calling for another outsized decline in residential investment in the second quarter. Inventories in the sector jumped 10.5% and are now approximately 1.8 times their historical average. This implies that no near-term bottom is in sight for the housing market. Indeed, the NAHB housing market index ticked lower in May.
The elevated level of inventories also suggests that prices will have to fall further in order to assist in clearing the inventory glut. Eroding household net worth will be a weight on the consumer. However, disposable income has historically been the most important driver of consumer spending and the fiscal rebate checks should prop spending up in the second and third quarters.
RBC Financial Group
Calm as We Await...
The greenback remains weak against major currencies as the housing slump deepens while the soaring of crude oil prices continue to negatively affect growth in the US economy while upside risks to inflation remain as result of rising food and energy prices. The markets remain calm as we await the release of existing home sales later on this afternoon as sales are projected to decline even more, and if this case happens the USD will remain deteriorating since the US still did not find a bottom to the housing sector.
The Euro Zone released its PMI manufacturing advanced reading for the month of May coming in line with projections at 50.5 but still less than the prior reading of 50.7. As for the services reading, it declined to 50.6 from 52.0 while it was forecasted at 51.7. The composite advanced reading for May also slipped to 51.1 from both the expected and previous readings of 51.5 and 51.9 respectively. Although the service and manufacturing industries grew at the slowest pace since five years due to the massive rise in crude oil prices seen lately, the euro is neutral versus the falling greenback due to banks making it harder to lend companies money. The EUR/USD is currently traded at 1.5723 while recording a high of 1.5741 and a low of 1.5696.
The UK released its first quarter GDP preliminary reading coming in line with predicted and prior readings at 0.4% respectively. As these readings were widely expected in the market it did not move the market much while sterling is neutral too as it awaits for the release of the US fundamental data concerning home sales. The GBP/USD is currently traded at 1.9792 while recording a high of 1.9808 and a low of 1.9755.
Currently in the market people are lacking confidence as investors fear the market while they sell high yielding currencies and buy low yielding currencies in which we call unwinding of carry trades. The yen is finally rebounded gaining some of its losses witnessed the past couple of days at it gains against major currencies. The USD/JPY is traded at 103.62 while recording a high of 104.26 and a low of 103.46.
Crown Forex
The Euro Zone released its PMI manufacturing advanced reading for the month of May coming in line with projections at 50.5 but still less than the prior reading of 50.7. As for the services reading, it declined to 50.6 from 52.0 while it was forecasted at 51.7. The composite advanced reading for May also slipped to 51.1 from both the expected and previous readings of 51.5 and 51.9 respectively. Although the service and manufacturing industries grew at the slowest pace since five years due to the massive rise in crude oil prices seen lately, the euro is neutral versus the falling greenback due to banks making it harder to lend companies money. The EUR/USD is currently traded at 1.5723 while recording a high of 1.5741 and a low of 1.5696.
The UK released its first quarter GDP preliminary reading coming in line with predicted and prior readings at 0.4% respectively. As these readings were widely expected in the market it did not move the market much while sterling is neutral too as it awaits for the release of the US fundamental data concerning home sales. The GBP/USD is currently traded at 1.9792 while recording a high of 1.9808 and a low of 1.9755.
Currently in the market people are lacking confidence as investors fear the market while they sell high yielding currencies and buy low yielding currencies in which we call unwinding of carry trades. The yen is finally rebounded gaining some of its losses witnessed the past couple of days at it gains against major currencies. The USD/JPY is traded at 103.62 while recording a high of 104.26 and a low of 103.46.
Crown Forex
U.K Grow Yet Outlook Is Bleak
The week is finally coming to an end, this week though was highlighted by the dollar's weakness which helped push oil prices to hit record highs, and this rise in energy prices is affecting inflation globally and threatening both consumers and businesses.
Both Germany and the Euro Zone reported the purchasing mangers index for May, the PMI manufacturing rose Germany to 53.5 after rising 53.6 back in April and higher than median estimates, while the PMI for services dropped to 53.7 from 54.9 and below the 54.0 expected estimate.
While for the 15-nation economy, PMI manufacturing slowed to 50.5 from 50.7 inline with median estimates, while the services PMI declined to 50.6 from 52.0 and below the 51.7 expected in the markets.
Rising food and energy prices are weighing down on consumers and businesses in the Euro area while the rising Euro is doing the rest, the ECB still see growth in the Euro area though moderating but the outlook remains way better than that in the United States and the United Kingdome, and the ECB accordingly are able to maintain their Hawkish stance to fight skyrocketing inflation.
The Office for National Statistics in U.K reported today that the preliminary Gross Domestic Product estimate for the first three months of this year, the U.K economy grew 0.4% over the quarter unchanged from the previous estimate and inline with the previous estimate, while over an annualized estimate the economy grew by 2.5 percent also unchanged from the previous and inline with median estimates.
Going through the details we can see that investments fell 1.6% after rising 1.8% the previous quarter, while consumer spending rose 1.3% after rising 0.1%, the BOE expected the economy to continue slowing throughout this year, yet the bank seems to have set his eyes on rising inflation…
The BOE are now stuck in a difficult position as prospects of rising inflation would limit the bank's options against downside risks to growth, many members of the MPC have set their eyes on growth even if their worst case scenario suggests the economy might go through contraction, as house prices continue to fall and access to credit is seen to continue tightening…
Global inflation is rising due to the fact that oil and food prices continue to soar, central bankers all around the globe are trying to find their balancing act among growth and inflation, with some expected to go through stagflation while others are seen to go through recession, and both hope that emerging markets alongside China, India, and Russia can weather the storm!
Crown Forex
Both Germany and the Euro Zone reported the purchasing mangers index for May, the PMI manufacturing rose Germany to 53.5 after rising 53.6 back in April and higher than median estimates, while the PMI for services dropped to 53.7 from 54.9 and below the 54.0 expected estimate.
While for the 15-nation economy, PMI manufacturing slowed to 50.5 from 50.7 inline with median estimates, while the services PMI declined to 50.6 from 52.0 and below the 51.7 expected in the markets.
Rising food and energy prices are weighing down on consumers and businesses in the Euro area while the rising Euro is doing the rest, the ECB still see growth in the Euro area though moderating but the outlook remains way better than that in the United States and the United Kingdome, and the ECB accordingly are able to maintain their Hawkish stance to fight skyrocketing inflation.
The Office for National Statistics in U.K reported today that the preliminary Gross Domestic Product estimate for the first three months of this year, the U.K economy grew 0.4% over the quarter unchanged from the previous estimate and inline with the previous estimate, while over an annualized estimate the economy grew by 2.5 percent also unchanged from the previous and inline with median estimates.
Going through the details we can see that investments fell 1.6% after rising 1.8% the previous quarter, while consumer spending rose 1.3% after rising 0.1%, the BOE expected the economy to continue slowing throughout this year, yet the bank seems to have set his eyes on rising inflation…
The BOE are now stuck in a difficult position as prospects of rising inflation would limit the bank's options against downside risks to growth, many members of the MPC have set their eyes on growth even if their worst case scenario suggests the economy might go through contraction, as house prices continue to fall and access to credit is seen to continue tightening…
Global inflation is rising due to the fact that oil and food prices continue to soar, central bankers all around the globe are trying to find their balancing act among growth and inflation, with some expected to go through stagflation while others are seen to go through recession, and both hope that emerging markets alongside China, India, and Russia can weather the storm!
Crown Forex
Euro Economy Weakening
The generally weak Euro-zone data will make it difficult for the Euro to regain momentum in the short term.
The Euro pushed to just above the 1.58 level against the dollar in early Europe on Thursday, but was unable to sustain the gains and generally drifted weaker during the day. Energy and gold prices again had an important impact on the US currency.
Oil advanced to a new record high in Asia around US$135 per barrel before a retreat. As gold prices also weakened, there was increased pressure for a Euro correction weaker while there was also pressure for a correction after recent gains.
The latest Euro-zone industrial orders data recorded a 1.0% monthly decline for a 2.5% annual fall, maintaining the recent weak trend. Although the German evidence has been generally firm this week, data from other Euro-zone economies has been less favourable, illustrating the risk of further divergence within the Euro area.
The Euro-zone PMI index for the manufacturing sector weakened to 50.5 in May from 50.7 while the services-sector index dipped sharply to 50.6 from 52.0 and suggests that the economy has stalled given that both sector are close to the 50.0 level. There was also a further reported decline in French consumer spending.
Investica
The Euro pushed to just above the 1.58 level against the dollar in early Europe on Thursday, but was unable to sustain the gains and generally drifted weaker during the day. Energy and gold prices again had an important impact on the US currency.
Oil advanced to a new record high in Asia around US$135 per barrel before a retreat. As gold prices also weakened, there was increased pressure for a Euro correction weaker while there was also pressure for a correction after recent gains.
The latest Euro-zone industrial orders data recorded a 1.0% monthly decline for a 2.5% annual fall, maintaining the recent weak trend. Although the German evidence has been generally firm this week, data from other Euro-zone economies has been less favourable, illustrating the risk of further divergence within the Euro area.
The Euro-zone PMI index for the manufacturing sector weakened to 50.5 in May from 50.7 while the services-sector index dipped sharply to 50.6 from 52.0 and suggests that the economy has stalled given that both sector are close to the 50.0 level. There was also a further reported decline in French consumer spending.
Investica
Dollar Supported by Oil Prices Correction
After reaching fresh record highs, oil prices eased on Friday, giving the Dollar some support in the early trading; but the US currency stayed in sight for a one-month low against the Euro on worries that inflation could lead to a deeper US slowdown. The Dollar traded at 1.5725 against the Euro at 7:00am GMT. The Dollar tends to move in the opposite direction of the oil, and it registered a hit on Thursday as the oil traded above $135. Also, earlier this week, the Federal Reserve downgraded its 2008 US economic growth forecast and raised its inflation outlook.
The Dollar traded at 104.03 against the Yen at 7:00am GMT, after slipping below 103 Yen yesterday. The Yen came under pressure as rising energy prices would also hurt Japan's growth, which is showing signs of slowdown. Traders said the Dollar was supported by buying from Japanese retail investors and importers but resistance was firm around 105 Yen due to Japanese exporter selling.
The Euro was supported by solid data that came from the Euro Zone's strongest economy, Germany, which leaded to speculation that the European Central Bank was more likely to raise interest rates than to cut, after keeping them on hold at 4 percent this month. The currency was little changed against the Yen at 163.74 in the early trading and it dropped to 163.55 at 8:00am GMT.
The Pound fell against the Dollar before a government report that may show UK economic growth in the first quarter of the year matched the slowest pace in three years. The British currency also traded near the weakest level against the Euro. The Pound traded at 1.9773 against the Dollar and at 0.7949 against the Euro at 8:00am GMT. Later today will be revealed UK's revised GDP, which is expected to stay at the 0.4 percent level.
US sales, revealed later today, probably fell in April to a record low, signalling no let-up in the housing recession and pushing the Dollar down, economists believe. According to a Bloomberg News survey to 67 economists, the National Association of Realtors may report that home resales dropped 1.6 percent to a 4.85 million. “As the Dollar lacks direction, the focus will be on crude if home sales data come weak as expected”, said Tomoko Fujii, Bank of America's head of economics and strategy for Japan.
Finotec Group Inc.
The Dollar traded at 104.03 against the Yen at 7:00am GMT, after slipping below 103 Yen yesterday. The Yen came under pressure as rising energy prices would also hurt Japan's growth, which is showing signs of slowdown. Traders said the Dollar was supported by buying from Japanese retail investors and importers but resistance was firm around 105 Yen due to Japanese exporter selling.
The Euro was supported by solid data that came from the Euro Zone's strongest economy, Germany, which leaded to speculation that the European Central Bank was more likely to raise interest rates than to cut, after keeping them on hold at 4 percent this month. The currency was little changed against the Yen at 163.74 in the early trading and it dropped to 163.55 at 8:00am GMT.
The Pound fell against the Dollar before a government report that may show UK economic growth in the first quarter of the year matched the slowest pace in three years. The British currency also traded near the weakest level against the Euro. The Pound traded at 1.9773 against the Dollar and at 0.7949 against the Euro at 8:00am GMT. Later today will be revealed UK's revised GDP, which is expected to stay at the 0.4 percent level.
US sales, revealed later today, probably fell in April to a record low, signalling no let-up in the housing recession and pushing the Dollar down, economists believe. According to a Bloomberg News survey to 67 economists, the National Association of Realtors may report that home resales dropped 1.6 percent to a 4.85 million. “As the Dollar lacks direction, the focus will be on crude if home sales data come weak as expected”, said Tomoko Fujii, Bank of America's head of economics and strategy for Japan.
Finotec Group Inc.
More Housing For U.S
The week is about to end and our exist queue is to be the sales of previously owned properties in the United States as in April the downside trend for the sector is expected to have continued as not much Americans are convinced yet that it is the time to bargain…
With the vaporizing sentiment in the economy and especially the housing market consumers are not at the place to hunt for new homes since their finances are tight already and face the ghost of unemployment and mounting gas and food prices.
In April Existing home sales are expected to have shed another 1.6% to an annual pace of 4.85 million after 4.93 million in March. The continued degradation in the sector was the leak that spread the contagion into the rest of the economy infecting severely the financial sector as with the collapse of the credit market after subprime loans and households foreclosures mounted the rules have tightened further to mortgage qualifications which is still limiting the drive into the housing spree.
After the dicing and chopping of those mortgages was sold to investors and left no one shielded from the horrific aftermath, still markets are gradually starting to adjust as they try to compensate their losses and strengthen their financial positions. Mortgages to those with bad credit history and the famous products that were highly risky and popular is what set Americans to default on their mortgages and lose their homes, such as those known to be famous with what is called price shocks, which are the negative amortization adjustable rate mortgages, which for the first couple of years allows the borrower the opportunity to pay small monthly payments and then starts escalating at light speed to the extent they can not afford it anymore.
Still the sector's bottoming is one of the major concerns and is one of the bases that need to be achieved to help the U.S economy rise once again. The feds have reached the end of their easing cycle and now the 2.0% rate is lucrative enough to stimulate the economy. Inflation is the concern now especially with the surge in commodities and the amounts of liquidity that was added into the economy whether to the financial sector or the rebates to the public is excess money supply that will reflect the effects of it as well.
The American induced credit crunch has affected world economies as well, as UK is the first runner up to suffer severe slowdown this year. Today will be the second revision to the first quarter GDP estimate which is expected with no change at the sluggish pace seen of 0.4% on the quarter and 2.5% on the year. As for the second European economy it's the advanced PMI day as we are expecting slight softening in May in both the Union and Germany yet rest ashore that till now their fundamentals are 'sound' and they have conquered and survived compared to other nations.
Let's wait and see as the mover will be the home sales in the U.S for today as we are upon the week end squaring as well so be ware, and after the surprise pick up in housing starts you never know we might see one here, which will be taken strongly positive for the dollar, especially that the woes are once more concentrating on the credit turmoil and the need to a bottom in the housing sector. So stay tuned until the data is with us to devour…
Crown Forex
With the vaporizing sentiment in the economy and especially the housing market consumers are not at the place to hunt for new homes since their finances are tight already and face the ghost of unemployment and mounting gas and food prices.
In April Existing home sales are expected to have shed another 1.6% to an annual pace of 4.85 million after 4.93 million in March. The continued degradation in the sector was the leak that spread the contagion into the rest of the economy infecting severely the financial sector as with the collapse of the credit market after subprime loans and households foreclosures mounted the rules have tightened further to mortgage qualifications which is still limiting the drive into the housing spree.
After the dicing and chopping of those mortgages was sold to investors and left no one shielded from the horrific aftermath, still markets are gradually starting to adjust as they try to compensate their losses and strengthen their financial positions. Mortgages to those with bad credit history and the famous products that were highly risky and popular is what set Americans to default on their mortgages and lose their homes, such as those known to be famous with what is called price shocks, which are the negative amortization adjustable rate mortgages, which for the first couple of years allows the borrower the opportunity to pay small monthly payments and then starts escalating at light speed to the extent they can not afford it anymore.
Still the sector's bottoming is one of the major concerns and is one of the bases that need to be achieved to help the U.S economy rise once again. The feds have reached the end of their easing cycle and now the 2.0% rate is lucrative enough to stimulate the economy. Inflation is the concern now especially with the surge in commodities and the amounts of liquidity that was added into the economy whether to the financial sector or the rebates to the public is excess money supply that will reflect the effects of it as well.
The American induced credit crunch has affected world economies as well, as UK is the first runner up to suffer severe slowdown this year. Today will be the second revision to the first quarter GDP estimate which is expected with no change at the sluggish pace seen of 0.4% on the quarter and 2.5% on the year. As for the second European economy it's the advanced PMI day as we are expecting slight softening in May in both the Union and Germany yet rest ashore that till now their fundamentals are 'sound' and they have conquered and survived compared to other nations.
Let's wait and see as the mover will be the home sales in the U.S for today as we are upon the week end squaring as well so be ware, and after the surprise pick up in housing starts you never know we might see one here, which will be taken strongly positive for the dollar, especially that the woes are once more concentrating on the credit turmoil and the need to a bottom in the housing sector. So stay tuned until the data is with us to devour…
Crown Forex
Thursday, May 22, 2008
U.S. Market Update
Dow +25 S&P +4.3 NASDAQ +13.4
Soaring oil prices continued to dominate markets and headlines this morning, although unlike the previous two sessions indices have been gaining ground since the open. Traders appear to be using the heavy losses of the last two days as a buying opportunity, with confidence further bolstered by the better than expected weekly jobless claims data out before the open. Front-month oil hit a new high of $135.09 a barrel before pulling back to trade at $133.05 this morning; OPEC Secretary General Badri responded by calling the oil market "crazy." Ford opened in the red after dropping its standing goal of returning to profitability in 2009 and slashing production for 2008 "to respond to the rapidly changing business environment." Tech name BCSI is down 26% after missing earnings estimates and declining to offer specific guidance for the coming quarter besides saying that results would be "flat." Retailers were reporting a gloomy picture of the US consumer this morning: DKS-16.6% after missing revenue estimates and cutting its earnings and SSS outlook, ANN-4% after guiding SSS "slightly negative" for the year, BONT-5% after a mixed quarterly report and cuts to guidance, and GME-9.4% even after beating estimates and raising guidance. Two retailers managed to buck the trend, with LDG+9.7% after reaffirming its positive outlook and ZLC+10.3% on improving revenues and positive SSS. ESLR was a big winner, opening up more than 20% after reporting two new contracts worth approximately $1B. CPN gained nearly 9% after the company confirmed an unsolicited merger offer from NRG Energy that would create the largest power company in the US. In other M&A news BCE is sliding 14% after a Quebec court upheld an appeal by debt holders who claimed the buyout LBO offer as is it currently constituted is unfair.
Treasury markets are losing some ground, sending the 10-year yield back above 4.90% bringing it back within reach of the 2008 high. There has been some flattening in the benchmark yield curve with the spread dipping below 140 basis points helped by the two-year yield climbing back above 2.50%. The Oct fed fund future has seen the odds of a 25 basis point hike by later this year rise above 25%.
The USD rebounded from its earlier lows against the majors aided by better weekly jobless claims data and cautious comments from European officials on the 2008 growth outlook. The EUR/USD was retesting the 1.57 level after hitting 1.5814 in early European trading. The Italian Business Group noted that a strong euro was harming exports, adding that the ECB must not underestimate the slowdown in GDP. The EU's Juncker stated that he did not expect the euro to develop "extremely favorably" over the coming months, noting that there will not be a recession in Euro Zone while lowing estimates for 2008 GDP to 1.4% "at best" vs the 1.7% EU forecast provided back on April 28. The dollar was also aided by oil retracing from its latest all-time high. The JPY was broadly softer following the downgrading of the Japanese export and housing sector in a report issued by the government. EUR/JPY up 90 pips at 163.50, USD/JPY above 104 and GBP/JPY firmer by 300 pips at 206. The GBP rose to a three-week high of 1.9768 on the back of the smaller-than-expected 0.2% decline in UK April retail sales and an upward revision to UK March retail sales. EUR/GBP was lower by 75 pips to 0.7930 level.
June Bud -28 ticks at 112.69 and June Gilts -75 ticks at 106.18. European equities recovered from earlier losses to move into positive territory ahead of the close. Euro Stoxx 50 flat at 3,795, FTSE unch at 6,200, CAC 40 +0.1% at 5,030 and DAX +0.3% at 7,061
Trade The News Staff
Trade The News, Inc.
Soaring oil prices continued to dominate markets and headlines this morning, although unlike the previous two sessions indices have been gaining ground since the open. Traders appear to be using the heavy losses of the last two days as a buying opportunity, with confidence further bolstered by the better than expected weekly jobless claims data out before the open. Front-month oil hit a new high of $135.09 a barrel before pulling back to trade at $133.05 this morning; OPEC Secretary General Badri responded by calling the oil market "crazy." Ford opened in the red after dropping its standing goal of returning to profitability in 2009 and slashing production for 2008 "to respond to the rapidly changing business environment." Tech name BCSI is down 26% after missing earnings estimates and declining to offer specific guidance for the coming quarter besides saying that results would be "flat." Retailers were reporting a gloomy picture of the US consumer this morning: DKS-16.6% after missing revenue estimates and cutting its earnings and SSS outlook, ANN-4% after guiding SSS "slightly negative" for the year, BONT-5% after a mixed quarterly report and cuts to guidance, and GME-9.4% even after beating estimates and raising guidance. Two retailers managed to buck the trend, with LDG+9.7% after reaffirming its positive outlook and ZLC+10.3% on improving revenues and positive SSS. ESLR was a big winner, opening up more than 20% after reporting two new contracts worth approximately $1B. CPN gained nearly 9% after the company confirmed an unsolicited merger offer from NRG Energy that would create the largest power company in the US. In other M&A news BCE is sliding 14% after a Quebec court upheld an appeal by debt holders who claimed the buyout LBO offer as is it currently constituted is unfair.
Treasury markets are losing some ground, sending the 10-year yield back above 4.90% bringing it back within reach of the 2008 high. There has been some flattening in the benchmark yield curve with the spread dipping below 140 basis points helped by the two-year yield climbing back above 2.50%. The Oct fed fund future has seen the odds of a 25 basis point hike by later this year rise above 25%.
The USD rebounded from its earlier lows against the majors aided by better weekly jobless claims data and cautious comments from European officials on the 2008 growth outlook. The EUR/USD was retesting the 1.57 level after hitting 1.5814 in early European trading. The Italian Business Group noted that a strong euro was harming exports, adding that the ECB must not underestimate the slowdown in GDP. The EU's Juncker stated that he did not expect the euro to develop "extremely favorably" over the coming months, noting that there will not be a recession in Euro Zone while lowing estimates for 2008 GDP to 1.4% "at best" vs the 1.7% EU forecast provided back on April 28. The dollar was also aided by oil retracing from its latest all-time high. The JPY was broadly softer following the downgrading of the Japanese export and housing sector in a report issued by the government. EUR/JPY up 90 pips at 163.50, USD/JPY above 104 and GBP/JPY firmer by 300 pips at 206. The GBP rose to a three-week high of 1.9768 on the back of the smaller-than-expected 0.2% decline in UK April retail sales and an upward revision to UK March retail sales. EUR/GBP was lower by 75 pips to 0.7930 level.
June Bud -28 ticks at 112.69 and June Gilts -75 ticks at 106.18. European equities recovered from earlier losses to move into positive territory ahead of the close. Euro Stoxx 50 flat at 3,795, FTSE unch at 6,200, CAC 40 +0.1% at 5,030 and DAX +0.3% at 7,061
Trade The News Staff
Trade The News, Inc.
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