Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Markets Selling on the Bernanke News

Stock-Markets / Financial Markets 2009 Aug 26, 2009 - 02:57 AM GMT

By: PaddyPowerTrader


Best Financial Markets Analysis ArticleStateside Bernanke gets an encore, the Case-Shiller shows house prices were up MoM, consumer confidence soared 6.7 points through the 50 level and yet stocks finished only marginally ahead. Is the fat lady about to sing on the overbought summer rally? Maybe it will be called the Bernanke top in years to come?

This side of the pond in the UK the BBA reported that mortgage approvals rose in July to the highest level since February 2008. Meanwhile, the German GDP report was pleasing in as much as it confirmed the 0.3% QoQ increase in output with domestic demand proving stronger than expected, boding well for activity in the second half of this year. Later in the session the Belgian business confidence index rose slightly more than the market had expected to its higher level since last October.

Overnight News

  • Asian stocks edged higher this morning, with thin summer trading volumes keeping prices choppy and centred on short-term chart targets. Japan’s Nikkei share average drifted up 0.6%, within reach of a 10-month high reached earlier in August.
  • Japanese exports in July fell 1.3% MoM and 36.5% YoY. This compares to forecasts of a 38.6% YoY decline. Overall exports to China fell 26.5% YoY while exports to the United States fell 39.5% YoY.
  • The WSJ quotes estimates that hedge funds managing close to $15bn have moved to Switzerland in the past year (with more possibly to come) in order to avoid the rise in the top personal tax rate to 51% and concerns over tighter European Union regulations. The paper also reports that the Swiss cantons of Zug and Zurich plan UK shows designed to lure businesses from London.
  • Ba Shusong, a deputy director of the Chinese Development Research Centre (a think tank under the State Council) says that economic growth may exceed 10% in the first quarter of next year, with monetary policy likely to remain loose in the near term to support the economic recovery.
  • The Federal Reserve must for the first time identify the companies in its emergency lending programs after losing a Freedom of Information Act lawsuit.
  • The White House new pro jections suggest that the budget deficit would be $2,000bn higher over the next 10 years than it had earlier predicted.
  • The US ABC consumer comfort improved 1 point to -45 points, a 14-week high.
  • Toyota rose 1.5% on a report that the carmaker would cut global production capacity and post an operating profit in the 2010 financial year. However, while news of the output cut shored up the stock, it also reinforced worries about persistent weakness in global consumer demand, which is key to a solid recovery. A source also said that it is mulling halting a production line at its UK plant.
  • It gets even more ridiculous. MSNBC’s “Morning Meeting” invited Larry Levine of “Wall St. Prison Consultants” on the show to offer advice to Madoff on what he can expect in prison.

Does The Fall In Chinese Markets Signal A Slide Around The World?
Recent volatility in Chinese shares has been keeping investors guessing. The Shanghai composite index is down 14% so far in August, on track for the biggest monthly decline since the darkest month of the financial crisis in October 2008. The precipitous move triggered questions on whether other high flying equity markets were due for a correction. However, to what extent a decline in the Chinese market, which is largely closed to foreign investors, matters for global market trends and perceptions of risk is an open question.

Gains in Asian stock markets have been limited due to continued uncertainty over the direction of China’s stock market. For the moment, Beijing seems content to use rhetoric and jaw boning to tone down the pace of asset price appreciation, rather than by actually altering monetary policy. With clarity on policy action likely to be cloudy in the near term, I believe that markets may also endure an especially volatile period, even if there is no real consolidation. The longer term question to answer is whether markets can endure a scenario where China tightens independently.

Do you remember when it was said that China was the key. They were the beacon of sentiment and if that prop gave way, the whole house of cards would come tumbling down. Now all of a sudden, they don’t seem to matter. Why is that? No idea. But did you hear Premier Wen Jiabao yesterday? Man is he bearish or what? According to the man who should know there is still great pressure on exports, the impact of short-term policies were weakening, and the economy faces many new difficulties. Okay, and guess what China is doing? They are tightening policy. Some are in denial on this, but when two large banks say they are only going to lend 25% of what they did in the first half, that is tightening.

Earnings This Morning
Lots of companies reporting this morning – a bit of a mixed bag thus far.

Irish Life & Permanent released results at the lower end of expectations due to a high impairment charge on the banking division, and negative variances in the Life side. The group sees operating results same for H2 as H1, and comments that restructuring vote is to happen in H2. With all attention focused on the de-merger, these results do not detract from the breakup argument.

Food group Glanbia’s interim results show a 21.5% decline in EPS as commodity market weakness ate into profitability. However big picture they can justifiably claim to have delivered a reasonable first-half result given the impact that global dairy markets had on its Irish dairy ingredient activity with consumer Foods Ireland performed well in a very challenging environment.

Advertising giant WPP H1 results were substantially weaker than prior with headline operating profits down 25% including the impact of the TNS acquisition which occurred in the second half of 2008. Headline operating profits were £342M vs. a £419M expectation with margins squeezed by increased labour costs

Heineken released Q2 results this morning that beat consensus expectations as higher prices and cost savings helped to offset the anticipated decline in volumes. Reported sales of €7.1bn were up by 11%, driven entirely by first time consolidations, as organic sales were marginally down (prices +6.2%; volumes -6.6%).

Data Ahead Today
This week’s European highlight is the IFO index at 09:00 and it looks as though it will grow sharply. There is a 97% correlation between the German PMI manufacturing index and the IFO and so it could be claimed that the improvement in the IFO is mostly in the price following the PMI’s rise from 45.7 to 49.0. That said, I think that Eurozone bond prices are rather elevated and have not really responded to the better economic data, nor the improvement in equity markets.

In the US, Durable Goods Orders for July will be released at 13:30. Look for overall durable goods orders to have jumped by 3.5%, with core durable goods orders likely to have advanced by around 1%.

At 15:00, New Home Sales may have slipped in July, perhaps to around 375,000.

And Finally… The Man Of The Moment And His Top 10 Failures

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