Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
This Invisible Tech Stock Threatens Amazon with 800,000+ Online Stores - 21st Nov 19
Crude Oil Price Begins To Move Lower - 21st Nov 19
Cracks Spread in the Precious Metals Bullion Banks’ Price Management System - 21st Nov 19
Why Record-High Stock Prices Mean You Should Buy More - 20th Nov 19
This Invisible Company Powers Almost the Entire Finance Industry - 20th Nov 19
Zig-Zagging Gold Is Not Necessarily Bearish Gold - 20th Nov 19
Legal Status of Cannabis Seeds in the UK - 20th Nov 19
The Next Gold Rush Could Be About To Happen Here - 20th Nov 19
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Stocks In Smackdown Mode

Stock-Markets / Stock Markets 2010 Jun 07, 2010 - 09:22 AM GMT

By: PaddyPowerTrader

Stock-Markets

Best Financial Markets Analysis ArticleVery ugly close on Wall Street Friday – and with DOW below 10.000 the next important levels are now how long 1.040 and even 1.000 will hold in S&P500. Rumours that giant French bank Soc Gen (déjà vu Mr Kerviel) was in a spot of bother on derivative losses combined with a Greek style mishandling of fiscal difficulties in Hungary mixed in with some very disappointing US jobs numbers (the private sector only created 41k jobs in May with the rest best temp census hires) made for a bearish cocktail that sent stockmarkets into a tailspin.


Indeed the markets had been set up for a far better print on non farm payroll than average economists predictions by Obama’s misleadingly upbeat references to jobs in a speech Wednesday i.e. the market assumed he’d had a whiff of the number. Still think that many of global TOP50 multinational corporates, will create huge cash flows, and soon sit on large amounts of cash. Apple, Pfizer, McDonalds, Danone, Nestle, Colgate, 3M, Johnson & Johnson could be names that will soon be seen as better credits as many governments, but the difference is still that corporates do not print money and decide how high taxation should be!

Today’s Market Moving Stories

•Overnight risk assets extend Friday’s slump as the Asian ’sell the red’ mentality kicks in. It has been right to take the other side of these moves, but we need confirmation that key supports on global risk barometers will hold when the real volume starts trading later in the day. Equities continue to dance to tune played by the FX market which seem to be sending a clear message to the ECB that austerity measures will not defeat the debt problem. Speculation that Germany is close to announcing a decisive round of budget cuts in favour of stimulating growth has pushed the Euro down dangerously close to where it was struck 1.1836.
•The world’s biggest economies sought Saturday to end market uncertainty over repairing battered banking systems, by sticking with targets for new capital rules but signalling flexibility over how fast to implement them.
•George Osborne, UK chancellor, plans to proceed with a levy on UK-based banks, even though G20 finance ministers at their weekend meeting in Busan, South Korea, scrapped global plans for a banking tax. Osborne is expected to outline key points of a unilateral British bank tax in his Budget on June 22, undeterred by the move by G20 ministers to drop the proposal from their final communique amid strong opposition led by Canada.
•Congressional negotiators meeting to resolve differences over bank-regulation legislation are likely to retain a proprietary trading ban and higher capital standards while stripping a measure that would bar commercial lenders from running swaps desks, said lawmakers and analysts. Senator Blanche Lincoln’s swaps-desk provision, which has been criticized by bankers and regulators alike, probably will be sacrificed in favor of Volcker rule trading curbs in House Senate talks that may begin this week. President Barack Obama’s call for new financial-industry rules after a global economic crisis that stemmed from the collapse of the U.S. subprime mortgage market in 2008. The House approved its version in December, and negotiators from both chambers will meet this month to merge the two bills into a single measure that Obama can sign into law.
•On another ban failure weekend three banks with total deposits of almost $2.3 billion were seized by regulators amid losses stemming from soured real-estate loans, raising to 81 the number of U.S. lenders that have collapsed this year. Banks in Nebraska, Mississippi and Illinois were shut yesterday, according to statements on the Federal Deposit Insurance Corp.’s website. The failures drained $313.6 million from the FDIC’s deposit-insurance fund. Regulators are closing banks at the fastest pace since the 1990s amid loan losses tied to real estate. The FDIC’s list of “problem” lenders is the longest since 1992. FDIC Chairman Sheila Bair said the confidential list rose to 775 banks with $431 billion in assets in the first quarter.
•A report in Der Spiegel states that the German constitutional court is considering imposing an interim ban against Germany participating in the EUR 750 Bn EU/IMF support package. The magazine cited a letter from the President of the Constitutional Court, Andreas Vosskuhle, to, amongst others, the German government, the ECB and the Bundesbank.
•G20: US Treasury Secretary Timothy Geithner states that China should resume letting the CNY rise as “a necessary part” of broader reforms.
•Hungary: Eurogroup Chairman Jean-Claude Juncker said “The situation in Hungary doesn’t worry me”. Juncker’s comments followed a statement by the government in which it aimed to meet this year’s budget deficit target and described talk of a debt crisis as “exaggerated.”
•EU Commissioner for Economic and Financial Affairs Olli Rehn said that talk of a possible sovereign default by Hungary is “wildly exaggerated”, and noted that “Recent comparisons between Hungary and Greece (are) misleading”. Ratings agency Moody’s also refutes any idea that Hungary “is the next Greece”, adding that the country has a “good track record”.
•UK: Prime Minister David Cameron tells the Sunday Times that are “serious problems” with the forecast of 3% growth in 2011 inherited from the previous administration, adding “There is a huge amount of debt that has got to be dealt with. Crossing our fingers, waiting for growth and hoping it will go away is simply not an option”.

Where Now for the Embattled and Spilt ECB?

The current financial crisis has taught us to expect the unexpected, and not rule out any form of policy action that central banks are willing to take in order to stabilise markets. Indeed the unexpected nature of events has meant that the even the ECB, arguably one of the more predictable of central banks, has been forced to make significant U-turns – and I think markets will force ECB to make another U-turn.

Below a few suggestions to what ECB might do (not all at this weeks meeting):
1) Renew the 12m LTRO in JULY
2) Cut refi rate from 1% to 0.5%
3) Give itself a much more flexible approach to its “bond purchase” programme – markets will test ECB – and ECB needs to win this battle. Why are ECB not buying Spanish Bonos ? Or Italian BTPS ? Guy Quaden from Belgium might even soon ask why ECB don’t buy OLO’s (Belgium gov. bond). Contagion is for sure real – should it be allowed to escalate ? Many questions – Few answers.
When ECB wakes up and realise that inflation isn’t the immediate threat – then they will also agree on a much more large scale QE programme – and this is very much needed – Europe’s “subprime problems” are individual sovereigns – and imagine if these sovereigns can’t borrow anymore – how should banks then get access to covered bond and senior debt funding ?
The roll-off of European bank debt is very large and this is the next problem no one is talking about yet.
4) I also think they might need to halt the slide in Euro Fx rate – I know that Europe will become much more competitive with a lower FX rate – but the speed and magnitude scares many overseas investors away from Euro zone bond market – especially Asia don’t like this – and I doubt Japanese investors think a EUR/JPY rate at 1.00 is very fun, for a long term investment done at 1.40-1.60. But it seems that FX markets has become the chicken game playfield – with large competition about having the weakest currency!

Company / Equity News

•Steve Jobs will probably unveil a new iPhone today, with analysts predicting that Apple Inc.’s chief executive officer will deliver a refashioned chassis and added features designed to fend off a threat from Google Inc. Jobs is set to give the keynote address at the company’s Worldwide Developers Conference in San Francisco.
•Hewlett-Packard Co., the world’s largest printer maker, is adding a Web connection and setting up an e-mail address for all its printers as part of a long-term plan to enable printing from any device to any of its machines. Four Photosmart all-in-one printers, priced from $99, debut tomorrow, along with a new ePrint cloud-computing platform that lets customers e-mail documents and store them on the Internet, the Palo Alto, California-based company said.
•Texas Instruments , the chipmaker may rise more than 40 percent as demand for customized “smart” chips expands.
•Xstrata, which has shelved spending on A$6.6 billion of Australian projects because of a planned mining tax, said it’s “optimistic” the levy will be changed after future talks with the government.
•European aerospace giant European Aeronautic Defence & Space could revise up its 2010 sales forecast thanks to the euro’s weakness against the dollar, the company’s finance chief said in a newspaper interview to be published Monday. “Sales could be better than expected” due to the euro’s recent depreciation against the dollar, chief financial officer Hans Peter Ring told the Financial Times Deutschland.
•Over the weekend another caja merger in Spain has been announced. Caja Espana de Inversiones and Caja Duero (Caja de Ahorros de Salamanca y Soria) are considering merging and combining their EUR42bn of assets, provided they receive financial support from Fondo de Reestructuracion Ordenada Bancaria (FROB). According to Bloomberg, the plan was approved by Caja Espana’s governing assembly.
•BSkyB announced on Friday the acquisition of Virgin Media’s TV channels for GBP 160M as well as securing a more substantial presence on the cable operators’ TV platform including HD channels and on demand content. This, together with the imminent sale of Five, is one of the two remaining significant stages in the consolidation of the UK broadcast sector, but has little credit impact in its own right.

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”.© 2010 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