Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Adaptive Fibonacci Price Modeling System Suggests Stock Market Peak May Be Near - 15th Aug 20
With Gold Above $2,000, Bulls Triumph! What’s Next? - 15th Aug 20
Stock Market, Asset Price Crash Dead Ahead - 15th Aug 20
NASDAQ vs. DJIA: Does the Recent Divergence Matter? - 15th Aug 20
AMD Ryzen 4900x / 5900x and 4950x / 5950x Zen3 4th Gen IPC and Clock Speed and Core Specs - 14th Aug 20
Stock Market Gap Fills Suggests Market Momentum May Stall - 14th Aug 20
Silver May Be Overextended – But It’s STILL Cheap - 14th Aug 20
A Short Guide To Making Your First Stock Market Investment - 14th Aug 20
Is Tech Reality Affects our Dating Possibilities? - 14th Aug 20
Will You Make Money in the New Silver Bull Market ? - 13th Aug 20
Hyper-Deflation Capital Destruction And Gold & Silver - 13th Aug 20
Stock Market Correction Approaching - 13th Aug 20
Silver Took the Stairs to $21 in 2008, Took Escalator to $29 2010. Is Silver on Elevator to 120th floor today? - 13th Aug 20
President Trump Signs Additional COVID Relief – What To Expect from the Markets - 13th Aug 20
Has Gold's Upward Drive Come to an End? - 13th Aug 20
YouTuber Ads Revenue & How to Start a Career on YouTube - 13th Aug 20
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Important Week Ahead For Economic Data

Stock-Markets / Financial Markets 2009 Jun 29, 2009 - 04:36 AM GMT

By: PaddyPowerTrader


Best Financial Markets Analysis ArticleEquity markets finished down again last week with the Dow Jones off 1.2% and the FTSE 100 down 2.2%. World indices had been on the back foot from the very start of the week due to a bearish World Bank report where they downgraded their forecasts for global economic prospects. Wednesday’s US Federal Reserve interest rate decision caused little movement as they left the target rate at between 0 and 0.25% as expected. It was a high volume week with the economic data a shade better than expected on average.

But consumers are saving the stimulus as the savings ratio has now climbed to a 15 year high, not good news when the consumer is 70% of the economy. Two of the big winners on the week were the car rental giants Hertz and Avis after positive comments from Hertz CEO Mark Frissora who sees US and European demand stabilising and said that the outlook for summer bookings had improved.

Oil’s rally showed further signs of stalling as Brent Crude Oil slipped 0.8% to 69 (taking the bid out of energy stocks). Gold had a volatile week and ended up 0.5% at 940. The US dollar lost some ground as improving economic sentiment dented haven demand and traders moved into the seemingly riskier Euro. EURUSD rose 0.9% to back over 1.40 at 1.4067. GBPUSD gained 0.16%.

Today’s Market Moving Stories

  • Japan’s industrial production rose 5.9% mom in May, the third monthly rise in a row, and the biggest rise since 1953. However, it was below +6.9% mom expected and still down 29.5% yoy. Retail sales fell 6.5% yoy in May, slightly up on -6.7% yoy in April, a bit weaker than -6.2% yoy expected.
  • China’s Caijing Magazine quotes Yu Dongming, an NDRC industry department official, as saying that China has completed stockpiling metals with 590,000 metric tons of aluminium, 159,000 tons of zinc, 235,000 tons of copper, 30 tons of indium and 5,000 tons of titanium. This news could pressure commodities and miners.
  • UK Hometrack Housing Survey showed that home prices were unchanged in June and the pace of decline slowed from -9.6% yoy to -8.7% yoy.
  • President Barack Obama could discuss a second stimulus package to boost the economy if needed, but at the moment no more new money looks necessary, senior adviser David Axelrod said. “Let’s see in the fall where we are, but right now we believe what we have done is adequate to the task. If more is needed, we’ll have that discussion.”
  • Looks like the heat and focus on the Greenback are set to ratchet up. China and Brazil are working on a currency arrangement to allow exporters and importers to settle deals in their local currencies, bypassing the US dollar, the countries’ central banks said. “It is agreed in principle,” a spokeswoman for the Brazilian central bank said. This comes after and on top of China, the world’s top holder of foreign exchange reserves, renewed its call for the creation of a super-sovereign reserve currency to reduce the dollar’s global domination, which it said had worsened the financial crisis. Russia, whose reserves are the world’s third largest, has also called for the world to become less dependent on the dollar.
  • The Guardian has a preview of tomorrow’s Bank for International Settlements (BIS) annual report, which does not mince its words about the crisis resolution. The BIS, which has been an early and persistent voice of warning in the run-up to the crisis, said that the failure to sort out the banking system would threaten the global recovery. “The lack of progress threatens to prolong the crisis and delay the recovery because a dysfunctional financial system reduces the ability of monetary and fiscal actions to stimulate the economy.” The BIS said governments had not acted quickly enough to unload the toxic assets from bank balance sheets, while blanket guarantees of bank lending have exposed the taxpayer to potentially large losses.
  • A number of news this weekend related to the unsustainable path of the UK’s national debt. Standard and Poor’s warned that it would quadruple unless the Government takes drastic steps to address the pensions and ageing crisis. Nothing very new there – the IMF in particular reported a daunting report on June 9 on long-term global public finances trends.
  • For fans of financial conspiracy theories – the great American bubble machine and is Goldman Sachs the root of all evil?
  • Beware the descent into credit card debt.

Preview To Q2 Earnings Season
A full fortnight before banks begin reporting Q2 results, the FT writes that buoyant capital markets activity underpinned US banks’ second-quarter earnings, with a boom in equity and debt issuance helping offset continued losses on toxic assets.’

Reuters reported an interesting update on earning expectations. According to Thomson Reuters data, quarterly earnings (S&P 500 companies) are estimated to drop 34.5% yoy in Q2 and fall by 21.4% in Q3. Come Q4, however, the earnings growth rate is expected to hit +180.2%, thanks to some impressive optimism about firms selling discretionary consumer goods and material firms. For full-year 2010 earnings are expected to gain 26.3% after -11.2% this year. “Although analysts have been rather aggressive in downgrading their 2009 earnings outlooks, they appear to be predicting a sharp recovery in 2010.”

Looking For An Exit
Last Thursday, Congress berated Ben Bernanke and accused him of acting improperly in the Bank of America/Merrill Lynch merger. They accused Bernanke of abusing his powers (with one Congressman throwing in the suggestion of perjury for good measure), and attacked the central bank for an ad hoc approach to the financial crisis. The actions of the Federal Reserve during the crisis will undoubtedly be hotly debated in the years to come, but it seems that the Fed is becoming more comfortable with the idea that it has indeed accomplished something, namely stabilising the US economy and financial markets following the freefall that began last September. The clearest evidence of this was last week’s announcement that the Fed was making a number of changes to its liquidity programs, and its suggestion that it expected most of the programs would be wound down by February 2010. The big question is whether this week’s key data will further strengthen the Fed’s forecast of a gradual recovery in H2 2009.

Nonfarm Payrolls This Thursday
This is a shortened holiday week as the US markets will be looking forward to the July 4 weekend, but all eyes will, of course, be on Thursday’s June nonfarm payrolls report. The May nonfarm payrolls report, which showed a smaller-than-expected decline of 345,000, led to a huge sell-off in US Government Treasury bonds and raised expectations that the Fed would increase rates before year-end. This time around, the consensus expects a drop of 350,000 payrolls, and an unemployment rate of 9.6%. A result in line with the consensus would provide further evidence that, while the labour market remains weak, the worst of the economic contraction is behind us.

Meanwhile, Wednesday sees the release of the ISM factory index, and the market is looking for a rise in that gauge to 44.5, which would be the best result since August 2008. Keep an eye on the new orders measure, which rose to 51.1 in May, the first time it exceeded breakeven since late 2007. Another increase in that gauge, or another reading above 50.0, would bolster the case for a gradual recovery into the second half of this year. Meanwhile, there are four Fed speeches lined up for this week with the most interesting for market participants may be St. Louis Fed president Bullard’s speech on Tuesday evening on “Fed Exit Strategies.”


  • Daiwa, Japan’s second largest brokerage, fell 12% overnight, on news that it plans a $2.5 billion rights issue. Markets hate dilution. Mizuho was also down on a story that it is considering a similar move.
  • Vodafone is thinking of making a bid for T-Mobile UK, the wireless subsidiary of Deutsche Telekom. The FT calls it an “audacious” move to create a dominant player in the UK mobile market. I wonder what the regulator would make of it?
  • Lots of weekend chit chat about Anglo American who are building their defences against a £41 billion merger approach from Xstrata by plotting talks about a major Chinese investment. They have opened talks with Aluminum Corp of China (aka Chinalco) and an unidentified Middle Eastern investor about a partnership to inject hundreds of millions of dollars into MMX, its Brazilian iron ore business. Anglo American has also reignited plans to appoint Sir John Parker as chairman and had made an attempt to recruit him in recent days. The Observer newspaper said South Africa’s National Union of Mineworkers, with 317,000 members, had intervened in the proposed merger saying it would lead to “unacceptable” job losses. A spokesman for Anglo American declined to comment on possible investment in the Brazilian iron ore business but said the process to appoint a new chairman was “progressing well”.
  • Media reports over the weekend suggest that Novartis is in talks to buy parts of Élan, including its MS drug Tysabri and its Alzheimer’s drug pipeline. Reports say talks are underway but the complexity of the deal makes any potential announcement a long way off. Élan has been actively looking for a merger or a takeover since Citigroup was hired in January to do a review of the group. Pfizer, Lundbeck and Bristol-Myers have also previously been mooted as buyers and a price of €8 per share has been mentioned in previous takeover talks.

Gordon Brown As Susan Boyle

And Finally… P.R.I.N.T. Money

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