Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Profit Taking Pushes Stock Markets Lower

Stock-Markets / Financial Markets 2009 Mar 25, 2009 - 07:54 AM GMT

By: PaddyPowerTrader

Stock-Markets Best Financial Markets Analysis ArticleSome profit taking after the stellar gains (panic buying) on Monday was always on the cards. The surprise to this writer was that the correction wasn't a tad deeper, with the S&P holding well above the key 800 level; mind you, financials were down 6.5% as the misplaced euphoria over Geithner's plan wears off. Energy stocks were also weak, as crude prices retreated and air carriers took a big hit on a trade group report predicting a cumulative $4.7bn loss for the industry in 2009.

Today's Market Moving Stories

  • Chinese energy stocks are up strongly overnight, not because of global influences, but because China announced a rise in retail gasoline and diesel prices. Shares in Taiwan were led by the tech sector, where MediaTek reported that it could see record sales in March on Chinese demand for cell phones. Insiders advise selling into this rally as they have a negative view on the company's Blu-ray and 3G prospects.
  • Japan's exports plunged a record 49.4% in February as deepening recessions in the U.S. and Europe led to huge falls in demand for the country's cars and electronics. Car exports alone fell 70.9%. The collapse in exports may see Japanese GDP fall even lower than the 12.1% annualised drop posted in the previous quarter. The data also shows that shipments to the US declined 58.4% yoy . Japan's retail investor sentiment index fell to -74 in March from -64 in February. The BoJ's Shirakawa said Japan does not face a deflationary spiral.
  • Nobel prize-winning economist Joseph Stiglitz says that the new U.S. bailout plan is very flawed and amounts to robbery of the American people .
  • On the subject of the plan, the FT suggests that the large writedowns that will result will require huge capital increases at major US financial institutions.
  • After they were badly caught off guard by the Bank of England 's bold move, we have further confirmation yesterday of the isolated ECB softening its stance on quantitative easing . Gonzalez-Paramo said that they are not ruling out other easing measures. The good news for hard pressed homeowners in Spain and Ireland is that most of the recent jawboning by ECB governors strongly suggests that the council has already agreed in secret to cut rates at its April 2nd rendezvous. So yet another U turn from Mr “handbreak turn” Trichet . See the one and only Willem Buiter on the topic.
  • Regulation is back in vogue with the idea of broad new government authority to regulate or even take control of financial institutions . Bad news for future bank earnings potential.

Three TARPS And You're Out
While recent moves by the US administration are proving something of a late in the day antidote, they are no panacea. As I have pointed out repeatedly, the bear market rallies we have seen (false dawns) over that last two years plus were official announcement-driven events. The harsh reality remains that the economic and earnings backdrop is not improving one iota. While the majority of the buy side slanted media coverage has focused upon the tailwinds to the consumer of tax cuts and the benefits of lower mortgage rates, the headwinds of the negative wealth effect from collapsing house / stock prices, the huge rise in the savings rate and the 2.5 million job losses far outweigh these.

Geithner's latest Frankenstein plan is not the green light to go long financials as it does not encourage the necessary consolidation in the banking sector which should be the fallout from the pricking of a massive assets bubble. In contrast, this over-complicated compromise prevents such rationalisation by over-paying for toxic assets and letting zombie banks live exactly as we saw in Japan's “lost decade”. Leaving excess banking capacity out there in the vague hope that the economy will grow into it is wishful thinking. History suggests that such bright eyed optimism is doomed to failure. In short, the plan sacrifices the longer-term health of the economy and the financial system for a short-term methadone like-fix for the banks.

We will let the “V” shapers have their day(s) in the sun . By late April, the outlook for global growth will yet again flip and morph into a dreaded “L” shape as it dawns on investors that nothing is actually really working and we really do have to cope with the reality of a multi year recession ahead of us. This will trigger the next capitulation leg of the great bear market. See Adam Posen on turning Japanese .


  • HSBC is planning a thousand layoffs . The stock was down 5% in Hong Kong.
  • Goldman Sach's is showing some interest in Barclays iShares unit .
  • German heavy industrial Siemens is off about 4% early doors after its CEO said that the company was no longer “immune” to the effects of the global crisis stating that things had gotten a lot worse since January.
  • Mining stocks are also weaker with the usual suspects i.e. Anlgo American and BHP Billiton seeing some selling after both were cut to a sell rating from RBS.
  • Sainsbury's like-for-like sales ex-fuel came in at an impressive 6.2%, compared with 4.5% reported in Q3. The results were no doubt boosted by inflation in UK food (as we saw in yesterday's figures), albeit Sainsbury's are still likely to be at the front of the pack along with Morrisons.
  • Tullow Oil have announced mixed drilling results with the offshore Ghana project seemingly going well while the news from their Ugandan operation was a little disappointing.

Date Today
The German IFO for March was released this morning at 09:00 GMT. The business conditions index was expected to fall to a new survey low of 82.2 and came in shade worse than expected at 82.1. All the more reason for the ECB to cut maybe even 50bps on April 2nd.

UK CBI distributive trades survey for March is out at 11:00. Retail conditions remain poor so a fall back to -35 is likely.

February's US durable goods orders will be released at 12:30. Core and headline orders should both show further weakness (expected –2.5%) in investment. US new home sales are out at 14:00. Sales should fall to 300K as new homes find it hard to compete with the big stock of unsold existing homes.

And Finally… Banker's Bailout Ball

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