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
Buying a Custom Built Gaming PC From Overclockers.co.uk - 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
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Chinese Whispers A Worry For Stocks

Stock-Markets / Financial Markets 2009 Jul 29, 2009 - 03:46 AM GMT

By: PaddyPowerTrader

Stock-Markets

Best Financial Markets Analysis ArticleThe two potential market moving economic catalysts Tuesday pointed in opposite directions, with the Case Shiller survey suggesting that the pace in price declines in U.S. real estate is slowing, but with the consumer confidence number slipping to 46.3 (from 49.3 in June), the market decided to call it a draw stocks meandered into the close broadly flat.


U.S. health insurance stocks had a good day because it appears that the health care reform package working its way through Congress will not include a government-run health insurance option. To the downside were oil producers, after BP’s profit plunged by 53% and downbeat comments from CEO Tony Hayward. The fall in crude prices by $1.15 barrel didn’t help, needless to say.

For stocks though, as long as we continue to judge the performance of a company against the benchmark of horribly misguided guesstimates by a cabal of influential analysts instead of looking at the quality of the underlying earnings, then stocks will rally no matter what the underlying real story is (i.e. slashing costs is not long term substitute for revenue and profit growth).

Today’s Market Moving Stories

  • Japanese retail sales fell more than expected in June from a year earlier, suggesting that worsening job and income conditions were offsetting the positive effects on spending of government stimulus measures. The outlook for consumption is weak with summer bonus payments likely to fall from last year’s levels, which may add to downward pressure on prices as Japan struggles with its second spell of deflation in a decade. Retail sales fell 3.0 percent in June from the same month a year earlier, more than a median market forecast for a 2.5 percent decline, marking the 10th straight month of falls. While government subsidies on energy efficient appliances have boosted sales of flat screen TVs and air conditioners, spending on other items remains very subdued.
  • China State Construction Engineering Corp (CSCEC), whose $7.3 billion initial public offering last week was the world’s largest in a year, jumped 60% on debut, besting expectations, but also stirring concerns about asset price bubbles. It was the second big listing in Shanghai since China resumed IPOs last month, and followed on the heels of Sichuan Expressway’s runaway success on Monday. Local-currency A shares in CSCEC, China’s biggest homebuilder, kicked off trading at 6.70 yuan, well above their IPO price of 4.18 yuan, and then climbed to 90 percent above the public offer price within 15 minutes of trade.
  • San Franciso Fed’s Janet Yellen sees “first solid signs” of end of US recession, although the recovery is likely to be “painfully slow” as consumers spend less and save more, she warned. In response to audience questions, Yellen said the Fed would need to stay “ahead of the curve” and tighten policy before the unemployment rate returns to a more normal level of about 5 percent. “That said, this is not the time” to raise rates, she said, pointing to the fact that risks to the outlook remain, with the commercial property slump the biggest threat. Otherwise, Yellen expressed optimism regarding the price of US Treasuries, which she said should remain “strong because savings throughout the global economy is very strong and competition from private issuance is very weak.” We have indeed pointed out for a long time that overall the stock of US debt (public + private) will soon start to shrink.
  • In Irish news, ahead of the publication of the NAMA legislation on July 30th, the latest report from Richard Ellis CBRE suggests that demand in the Dublin office market showed a bit of a pick-up in Q2, albeit from a very low base. Dublin office take-up in Q2, at 23,242 square metres, was over double the Q1 level although it remains c.30% lower year-on-year and well below the five-year average for the quarter, which CBRE puts at 40,000 square metres. Meanwhile, prime yields reportedly held steady ay 7.5%. Regarding NAMA the Irish Times, quoting Government sources, reiterates that the value of the assets being taken over by NAMA will be ‘based on the underlying collateral, adjusted for the longer-term economic value in line with EU guidelines … on a case by case basis’.
  • According to Bloomberg the European Stoxx 600 is now valued at 28.1 earnings. It’s most stretchy level since January 2004. Be careful out there.
  • Always worth a read. Jeremy Grantham’s quarterly words of wisdom.
  • The safest place to put your money.
  • In spite of all the hype, it seems bank failures are picking up. No doubt we will be told that this is just another lagging indicator.
  • In politics William Shatner turns Palin’s speech into beat poetry.

Chinese Banks To Row Back On Lending
Chinese stocks are well off overnight (-8%) as it seems someone is about to take the punch bowl away. China’s two biggest state-owned commercial banks have put a lid on their 2009 lending targets, according to domestic media reports, in a move that will significantly slow overall Chinese credit growth in the second half. Industrial and Commercial Bank of China (ICBC) is aiming to issue full-year new loans of 1 trillion yuan ($146.4 billion), while China Construction Bank (CCB) has set a goal of 900 billion yuan, Caijing magazine reported.

The two banks, China’s largest by market value, granted new loans of 825.5 billion yuan and 709 billion yuan, respectively, in the first half. If they stick to their reported targets, this would imply that ICBC would have already issued 83 percent of its full-year lending total, while CCB would have already issued 79 percent. Overall, Chinese banks issued a record 7.37 trillion yuan in new loans in the first six months, easily topping the full-year figure of 4.91 trillion yuan in 2008 and igniting concern that excess liquidity was leading to stock and property bubbles.

Data Today
The German CPI and HICP that will be released today (no time announced at time of writing) I think will be on the weak side, possibly flat, such that annual inflation should turn negative for the first time since 1986.

There are signs of a pick-up in housing and UK mortgage lending fiures (released at 09:30) should rise by £600mln (new mortgage approvals should rise to 46K). Firmer retail sales should underpin net consumer credit of £300mln.

US Durable Goods Orders should disappoint with a 2% fall; it’s released at 13:30 today.

Earnings from ConocoPhillips, Sprint Nextel, Time Warner, WellPoint Health, Visa.

And Finally… Some Merle Hazard


Disclosures = None

By The Mole
PaddyPowerTrader.com

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 http://www.MarketOracle.co.uk - 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