Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
South Korea Coronavirus Outbreak Data Analysis Warning Rate of Infection is Exponential! - 26th Feb 20
Gold Price Long-term Trend Analysis Forecast 2020 - 26th Feb 20
Fake Markets Are on Collision Course with Reality - 26th Feb 20
Microsoft is Crushing the S&P 500, Secret Trait Of Stocks That Soar 1,000%+ - 26th Feb 20
Europe's Best Ski Resorts For The Ultimate Adventure - 26th Feb 20
Samsung Galaxy S20+ vs Galaxy S10+ Which One to Buy? - 26th Feb 20
Gold Is Taking on $1,700 amid Rising Coronavirus Fears - 26th Feb 20
Is This What Falling Through the Floor Looks Like in Stocks? - 26th Feb 20
Gold Minsky Moment Coming - 26th Feb 20
Why Every Student Should Study Economics - 26th Feb 20
Stock Market Correction Over? - 26th Feb 20
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Markets Tread Water Amidst Low Volumes

Stock-Markets / Financial Markets 2009 Jun 15, 2009 - 03:43 AM GMT

By: PaddyPowerTrader


Best Financial Markets Analysis ArticleThe market eked out another few hard yards last Friday, ending up 28 points to move back into positive territory for the year to date. An early technical systems hitch had depressed volumes. Bank of America was the big winner after a broker upgraded their price target to $22 and also expected them to fully repay TARP funds by the end of 2010. Tech stocks and commodity-related equities were weaker on a fall in crude prices. Although we’ve seen a couple of decent attempts to break out, we remain deadlocked in the same trading range we’ve been in since the first day of June. Indeed according to Bloomberg, the S&P 500 hasn’t posted a daily rise or fall of 1% or more since June 4.

Today’s Market Moving Stories

  • On the ‘green shoots’ issue, note a couple of rather pessimistic comments from the UK’s biggest retailers. First from Tesco, chief executive Sir Terry Leahy said he felt rising unemployment was a critical threat to the retail environment. He said that was now the ‘darkest cloud’ over retailing now. Meanwhile, Terry Duddy, chief executive of Home Retail (owner of a number of big high street brands) said it was important not to be carried away by green shoot discussions. He said his group continued to plan cautiously for the year ahead. Improvements in disposable income as a result of lower interest rates and energy costs could easily be offset by rising unemployment, he said.
  • Germany’s DIHK chambers of commerce group has warned that, if anything, the credit situation for the industrial sector is getting worse. “The liquidity crunch is increasingly threatening the survival of companies, as well as finance for new orders.” He said Germany’s scrappage scheme had provided the autos sector with only a short-term artificial boost - hence the upturn there was more like a ‘flash in the pan’. A third of large German companies have said that credit conditions have been tightening further in recent months.
  • The ECB’s Orphanides tried to walk a fine line in his comments on Saturday. He noted that the world economy was still weak and faced huge difficulties, but at the same time, authorities raised significant challenges given the extremely accommodative state of monetary policy. No real bias one way or the other on a headline basis, but at least interesting to see he doesn’t talk about exit strategies. That perhaps puts him just on the side of the doves.
  • Former Bank of England MPC member Blanchflower (by far and away the most dovish member of the MPC through his term) once again urged current members to leave policy accommodative. He said talk of economic recovery was premature and that the economy remained extremely vulnerable.
  • BoE MPC member Dale provided a view on when and what the UK’s monetary exit strategies might look like. First he said that the decision to begin an unwind from super easy policy would be with regard to the two-year CPI target of 2%. In other words, it will be a medium term decision. He then said it was possible there’d be a policy combination - interest rates could rise before all the various additional measures were taken back. This is something that governor King has mentioned several times in the past. Meanwhile, he also added to be debate on macro-prudential policy, suggesting that while targeting should be retained, it should also be enhanced. He said short term interest rates were not well suited to managing asset price bubbles or economic imbalances. This all fits very well with the current debate on the additional regulatory powers (or at least the switch of power from the FSA to the BoE) such that the Bank has better supply side control as well as rates for the demand side.
  • The Baltic Dry index(BDI) is on the way back up after a week long slide from recent highs. However, there’s a special situation that needs taking into account (not only with the BDI, but also with all the talk of global economic recovery). China is sucking in such massive amounts of iron-ore that a tenth of the world’s entire iron-ore fleet is now at anchor and waiting to unload to Chinese ports. It is reported that a whopping 84 capesize vessels are currently queued to unload, with average waiting time of 10 days each.
  • Lloyds are set to take a £450m in its investment in pub group Admiral Taverns. Lloyds lent more than £850m to Admiral to finance a series of acquisitions to help expand its 2,000 pub footprint. The estate is now estimated to be worth less than £500m and with the bank now said to be sounding out potential buyers of its debt, the large write-off is set to be realised. Last month Lloyds warned that write downs on corporate loans were set to be 50% above last years write off’s, due to the continued impact of the HBOS acquisition, putting the figure around £11bn in writedowns.
  • The UK’s largest pub company, Punch Taverns is off 12.5% this morning on news that it plans to raise £350m via a Firm Placing and Open Offer.
  • A great image on the largest bankruptcies in history.
  • Is inflation the saving grace for the US?
  • Proving that there’s nothing new under the sun.

The G8 Jamboree
There was a stark contrast between the outcome of this weekend’s G8 meeting in Lecce, Italy and April’s G20 summit in London. For a start, the tone was far more positive than in London, with Finance Minster’s attending the meeting indicating that economic forecasts may need to be revised upwards rather than the steady stream of downward revisions seen over recent months. Officials even began discussing “exit strategies” in terms of withdrawing massive global monetary and fiscal stimulus, requesting the IMF to look at the issue in more detail. Whilst it is somewhat premature to even discuss exit strategies the comments were clearly aimed at easing bond market concerns about widening fiscal deficits and inflation risks. It is doubtful that the communiqué will be sufficient to ease either concern.

Perhaps the communiqué was more relevant for what was left out. The issue of stress tests on European banks was not mentioned even though it was discussed at the meeting. Reported disagreements with Germany and France over transparency over the publication of stress test results meant that an agreement could not be reached. This is a disappointment. At the least it will make it increasingly likely that in addition to a sharp decline in European growth this year, GDP will also drop in 2010.

Lack Of Confidence In The Dollar
Also missing in the final G8 communiqué was any reference to currencies. Given the slide in the Dollar and recent concerns by foreign official investors raised the prospect that there would be some international backing of the “strong Dollar” policy. In the event there was no such reference, but comments on the sidelines of the meeting will likely help the Dollar this week. One such comment was from Russian Finance Minister Kudrin who stated that he has full confidence in the Dollar with no immediate plans to move to a new reserve currency.

Geopolitical tensions including the protests over the results of Iran’s elections as well as more jawboning from North Korea alongside market positioning will also work in favour of the Dollar this week. The CFTC IMM commitment of traders’ data for last week showed a big jump in net aggregate short Dollar positioning to the biggest net short since July 2008 and in contrast the report showed a jump in Euro long positioning. What this means is that the market is now very short Dollars giving more scope for short covering squeeze in the wake of increased risk aversion, geopolitical risks and positive comments from Russia.

Data Ahead Today
The US New York Fed Empire PMI for June is out at 13:30 and is expected to remain unchanged at -4.6 after rapidly improving from its March low of -38. Later at 18:00, June’s US NAHB survey will be released. The housing market seems to have tentatively stabilised and conditions should tick up to 17, up from January’s low of 8.

Economists Do Make Me Laugh

And Finally… Save Our CEOs

Disclosures = None

By The Mole

The Mole is a man in the know. I don’t trade for a living, but instead work for a well-known Irish institution, heading a desk that regularly trades over €100 million a day. I aim to provide top quality, up-to-date and relevant market news and data, so that traders can make more informed decisions”.

© 2009 Copyright PaddyPowerTrader - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PaddyPowerTrader Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules