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 WARNING - R0 4.6 Outbreak Infection Rate! - 29th Feb 20
Stock Market Trend and Elliott Wave Analysis - Video - 29th Feb 20
The Greatest Economic Depression Just Began. This Is No Drill - 29th Feb 20
Stock Market Coronavirus Deviation from Overall Outlook for 2020 - Video - 28th Feb 20
Stock Market SPX to Rise back to 3350 - 28th Feb 20
Stock Performance in the Rising Coronavirus Fever - 28th Feb 20
Stock Market SPY Breaks Below Fibonacci Bearish Trigger Level - 28th Feb 20
Will CoronaVirus Pandemic Trigger Stocks Bear Market 2020? - 28th Feb 20
Dow Long-term Trend Analysis - Coronavirus Triggering a Stocks Bear Market? - 27th Feb 20
Trump or Sanders? Both will pile up the Debt - 27th Feb 20
Oil Price Is Now More Volatile Than Bitcoin - 27th Feb 20
A Digital “Fedcoin” May Be Coming… And It Would Be Terrifying - 27th Feb 20
India's Nifty 50 Stocks: Does the Bad Jobs Outlook Spell Trouble for Stocks? - 27th Feb 20
How Crypto Currencies Are Helping Players Go Private - 27th Feb 20 -
Gold and Silver The Die Is Cast - 27th Feb 20
US Economy Permanently Addicted to Zero Interest Rates - 27th Feb 20
Has the Stock Market Waterfall Event Started Or A Buying Opportunity? - 27th Feb 20
Advantages of Enrolling in a Retirement Plan - 27th Feb 20 - LS
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 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

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Stock Market Rallies Still Getting Sold Into

Stock-Markets / Stock Markets 2010 Jun 10, 2010 - 09:10 AM GMT

By: PaddyPowerTrader

Stock-Markets

Best Financial Markets Analysis ArticleA poor close on Wall Street last night with the pattern of attempted rallies getting sold into continues, driven in part by the corporate calamity that is BP which lost another 16% (on fears they may be forced to suspend their dividend) and BP CDS is now around 400bp 12x higher than before the leak. Also “Bear Sterns & Lehman style” put buying in BP is scaring the market. .Anadarko Petroleum Corp., which has a 25% stake in the leaking well, slid 19% to a 15-month low.


Exxon Mobil and Bank of America Corp lost about 2% as energy producers and financial companies also turned lower after the Federal Reserve’s very grey sounding Beige Book survey said economic growth was subdued. German Chancellor Angela Merkel’s comments that the time to withdraw the fiscal stimulus also didn’t help the mood. Earlier stocks had rallied in morning trading after Reuters reported China’s exports jumped about 50% in May and Fed Chairman helicopter Ben Bernanke said the central bank will act as needed to aid the economic recovery, spurring speculation policy makers are in no hurry to raise interest rates.

Overnight, there was favourable news on the Japanese economy (5% GDP growth), a reduction in Australian unemployment and confirmation of strong export growth in China which all bolstered sentiment in the equity markets. The euro is also a little firmer against the US dollar after the boss of China’s pension fund said that the euro can weather the debt crisis. I have a sneaking suspicion that the Chinese have indirectly been supporting the euro as there is increasing concern about the spill over on to the rest of the global economy from what is happening in the eurozone. So a better more sanguine backdrop for risk assets today has seen European markets push ahead. Notable movers include UK chip maker ARM Holdings on chit chat that Apple may be looking buy the company. But BP is again in the mire (off another 5%) on a news story that an Oceanographer at Florida State Univ has estimated that the infamous Gulf oil leak is spewing 26-30k barrels a day or far more than BP has admitted. Elsewhere Home Retail Group is down 5% after numbers showed sales at their Argos outlets fell 8% in Q1. To the upside is Daimler 4% after the company forecast that sales of their Mercedes Benz brand will gain at twice the rate of the overall market in 2010. Cement giants Lararge & St Gobain are better by 4% on a Citibank upgrade to a “buy” from a “hold”. So we could see CRH benefit

Today’s Market Moving Stories

•Euro-zone/China: Dai Xianglong, chairman of the USD 114 Bn National Social Security Fund said “I think it is quite normal for the EUR to be experiencing swings because of the European debt crisis… I do believe the EUR will gradually stabilise and survive the crisis.” On the USD he said “The US fiscal deficit is still big, so there is a risk that the value of China’s forex assets will contract”.
•Japan: GDP growth was unrevised at 1.2% q/q in Q1 despite the consensus forecast pointing to a downward revision to 1.0%. The GDP deflator, however, fell a record 2.8% year on year although separate data that showed wholesale prices.
•The economy improved across the U.S. in April and May but growth was considered modest, while labour market conditions got a little better, the Federal Reserve said. In its rather grey looking Beige Book report, the Fed said consumer spending increased. Tourism also rose, but there were concerns about the impact of the Gulf of Mexico oil spill. Business spending climbed, and employment in the U.S. edged up. “Economic activity continued to improve since the last report across all 12 Federal Reserve districts, although many districts described the pace of growth as ‘modest.
•Goldman Sachs Group Inc. reversed a forecast for the euro to rise, saying it will fall to a seven- year low of $1.15 as the concerns about sovereign debt and political uncertainty spur investors to sell the currency. The euro weakened 2.5 percent last week and traded at a four-year low of $1.1877 on June 7. Emerging-market currencies including the Mexican peso, South Korean Won and Malaysian ringgit will appreciate at a slower pace, the bank said. Goldman also lowered estimates for the Australian dollar and British pound. The shared currency will probably trade at $1.15 in three and six months and at $1.25 in 12 months, down from $1.35 previously at all three forecast horizons, Goldman said in the report.
Controversial Global Banking Tax Idea

A controversial idea for a global bank tax will be brought up at the next meeting of the Group of 20 industrial and developing nations, French Foreign Minister Bernard Kouchner said Wednesday. “The bank tax is mentioned everywhere why wouldn’t it be brought up at the G-20?” Kouchner said at an economic conference in Montreal. “It can’t just be prattle,” he told reporters. “It has to be implemented and the rules must be international so that nobody can escape it, but (in such a way that)it doesn’t hurt economic growth.” Leaders of the G-20 will meet in Toronto June 26-27. In preliminary talks in South Korea last week, G-20 finance ministers and central bankers agreed that further financial repairs, especially at banks, were needed to secure the recovery. But they made no mention of the global tax on banks to fund future bailouts. The tax is supported by the International Monetary Fund, European powers and the United States. It is resisted by some developing nations, as well as Canada and Australia, who argue they should not have to pay to clean up a mess they did not create. Canada and Brazil, whose banking sectors emerged largely unscathed from the financial crisis, favour higher capital reserve requirements instead.

Company / Equity News

•Davy’s have a bullish piece out of Smurfit Kappa today. They note that over the past month, SKG has underperformed the European paper and packaging sector by almost 20%. SKG is down over 12% while the sector is up over 7%. The stock is now trading at a 20% valuation discount to the European sector.
•Irish Continental Group (ICG) issued a positive statement at its AGM today a follow-on to its IMS of May 13th. The company indicates that generally positive trends have continued. Passenger numbers year-to-date are up 11%; car numbers are down 4% (2% lower on Irish Sea and 13% lower on Ireland/France following a winter vessel refit). The lower car volumes were offset by higher yields. In Roll-on/Roll-off freight (RoRo), the overall market is showing signs of modest growth for the first time in approximately 18 months, although excess capacity continues. RoRo volumes are now down 13% on the previous year. Container freight volumes are up 10%, although rate levels are lower and units handled at terminals in Dublin and Belfast are up 6% year-on-year. Forward bookings have been strong with ICG indicating that the weak euro – while a negative for fuel costs, which are running 25-30% higher – is a positive for its core business flows of inbound tourism to Ireland and Irish exports to the UK. Davy’s have a Eur 19 target on the stock which is rated as “outperform.”
•BP Plc bonds and credit-default swaps are now trading as if the energy company has lost its investment-grade rating as costs mount from the worst oil spill in U.S. history. BP’s $3 billion of 5.25 percent notes due in 2013 fell as low as a record 89.94 cents yesterday, pushing the yield to 7.57 percentage points more than Treasuries. The spread compares with an average of 7.26 percentage points for junk bonds, Bank of America Merrill Lynch indexes show. The cost to protect $10 million of BP debt for a year with credit-default swaps almost doubled to $512,000, according to CMA DataVision. It was $29,000 on April 30. “That’s just pure out panic,” said Michael Donelan, who oversees $3.5 billion of bonds at Ryan Labs Inc. in New York. “That’s like, ‘Get me out of here now.’ What the market is pricing in now is increased regulatory oversight and heavy, heavy punitive damages.”
•PetroChina who are vying with Exxon Mobil Corp. as the world’s biggest company by value, would have “persuasive” reasons to seek a takeover of BP Plc, according to Standard Chartered Bank. BP has fallen 40%. The slide has wiped out $74 billion of value, spurring speculation BP could be a takeover target. State-controlled PetroChina is the nation’s biggest oil producer. “We expect a full dose of scepticism on this as a real world proposition, although we argue for the persuasive economics,” analysts at the London-based bank said in a report today. A combined PetroChina-BP would have oil and gas reserves 73 percent larger than Exxon’s and 187 percent more than those of Royal Dutch Shell.
•Chemical giant BASF will acquire additives maker Cognis in a deal that could be valued at more than EUR3 billion, the Reuters news agency reported late Wednesday, citing unnamed sources. The announcement could come as early as next week, the report said. Cognis is controlled by Permira and Goldman Sachs Capital Partners, the report said. BASF and Cognis declined comment, according to Reuters.
•Steel mills in China, the world’s biggest, are resisting efforts by Vale SA, Rio Tinto Group and BHP Billiton Ltd. to raise contract prices after steel dropped and the European debt crisis roiled markets, the China Iron & Steel Association said. “The outlook for the European market is unclear and steel prices may keep falling,” Shan Shanghua, general secretary of the association, said in an interview. “I dare say right now no Chinese steelmakers would accept the third-quarter prices asked.” Vale, BHP and Rio, the biggest iron ore exporters, may demand a 30 percent price increase for the July quarter, China Steel Corp. said last month. Falling steel prices in China may force mills to cut outpt and default on quarterly iron ore contracts, Baosteel Group Corp. said June 8.
•FTSE Group said Wednesday African Barrick Gold PLC and Essar Energy PLC are to join the FTSE 100, and Thomas Cook Group and London Stock Exchange Group will leave the index and join the FTSE 250 Index. MAIN FACTS: The changes are part of FTSE’s U.K. Index Series annual review. Inclusions to the FTSE 250 Index are Thomas Cook Group, London Stock Exchange Group, Centamin Egypt Ltd., BH Macro Ltd., SuperGroup PLC, Fidelity China Special Solutions PLC, CPP Group PLC , JD Sports Fashion PLC, Promethean World PLC. -Exclusions from the FTSE 250 Index are JP Morgan Japanese Investment Trust PLC, Trinity Mirror PLC, HMV Group PLC, F&C Asset Management PLC, Dunedin Income Growth Investment Trust PLC, Ecofin Water and Power Opportunities PLC, Brewin Dolphin Holdings PLC, Melrose Resources PLC All changes from this review will be implemented at the close of business June 18 and will take effect from the start of trading on June 21.
•Allscripts-Misys Healthcare Solutions has agreed to buy Eclipsys Corp. for $1.3 billion in stock, creating a software company that will allow U.S. doctors and hospitals to share patients’ records. The acquisition will value each share of Atlanta-based Eclipsys at 1.2 Allscripts shares meaning a 19 percent premium on the basis of yesterday’s closing prices in Nasdaq composite trading. Misys Plc, the U.K. company that owns 54.6 percent of Chicago based Allscripts, must sell much of its stake to facilitate the transaction, Misys said in a statement today.
•Walt Disney has said its ABC television network sold about $2.4 billion in advertising before the coming television season. Average prices for prime-time shows rose 8 percent to 9 percent, said a person familiar with the matter, who asked not to be identified because the figures aren’t public. ABC sold 75 percent to 80 percent of its inventory, the person said.
•Carlsberg announced this morning that it is paying DKK2.1bn (EUR280m) to increase its stake in the Chongqing brewery by 12.25% to 29.71%. Further diversification to reduce reliance upon Russia is welcome, although I suspect that short term returns on this additional investment will be modest.
•SocGen’s head of the corporate and investment banking unit, Michel Peretie, said yesterday that there will be “no bad surprises” in the Q2 results and that the rumours of derivative losses at the bank were “totally unfounded”. The bank has been “very cautious” and manages its “risk and exposures” very tightly. He also stated that SocGen is pleased with its achievements throughout the market turbulence. Nonetheless, the second quarter has been less active for the banking industry. SocGen will publish its Q2 10 results on 4 August 2010.
•The UK Office of Fair Trading (OFT) plans to undertake a market study into equity underwriting and associated services. The market study, which will commence this summer, will focus at rights issues and other types of equity-raising by the 350 largest UK public companies and will assess whether users’ concerns are justified. Depending on the outcome of the study, this could have a negative impact on the revenue of the large equity underwriters such as JP Morgan, Credit Suisse, Deutsche, Goldman, Bank of America/ML, Citi, UBS, and Unicredit.

And Finally

BP Coffee Spill.


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