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Friday, November 28, 2008

BetOnMarkets Morning Report

The FTSE is indicating a lower opening, as traders await to see the release of the EU employment data. While its not UK data, with the EU being a huge trading partner, a slowdown there could mean harder times for the UK. The way the FTSE opens today is totally dependant on that report.

Oil is on the weaker side of things again, as concerns that OPEC will not cut enough production to offset lower demand has traders dumping the futures contract. Crude oil is trading down 63% since its all time high reached on July 11th. Oil prices will be fluctuating wildly today as traders position themselves before the OPEC announcement.

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Thursday, November 27, 2008

BetOnMarkets Morning Report

With US markets closed for thanksgiving, European equities are enjoying a relatively quiet session. In fact, the FTSE 100 is currently trading within its tightest range since the end of September. Credit markets are continuing to unfreeze and the VIX Volatility index yesterday closed below its 50 period moving average for the first time since the start of September. Implied volatility levels remain high but at least there are signs of calm creeping into equity markets.

Recent events in India have so far failed to have too much of an impact of equities, with most European stocks moving little after this mornings opening flurry. It is worth noting the muted reaction in gold prices at this time. Gold is traditionally seen as a safe haven in troubled times, yet despite the traumatic events in India Gold has barely moved at all over the last couple of days. With the implied risk of world governments defaulting on their bonds increasing, one would also have expected gold prices to increase as investors seek out safe havens for their assets. There are many factors affecting the price of gold, not least the strength of the dollar, but perhaps today’s lack of reaction is another indicator that volatility is set to decrease further as we approach the last month of a tumultuous year. Just last week, 2008 was set to be the worst year on record for many markets. Although this year will undoubtedly go down in the history books no matter what happens from here, there is a chance that it won’t end as it began.

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BetOnMarkets Morning Report

The FTSE is currently indicating a slightly stronger opening, as traders are finally able to take their eyes off the US markets for the next couple of days and just focus on UK fundamentals. Based on GDP news released yesterday, UK is entering a recession and analysts are looking to the government on hints of a how they plan to get the British economy back on track. There is a very strong chance that the FTSE will experience a low volume day.

Oil falls weaker this morning, as concerns over lower demand intensify. OPEC has yet to react, but is rumored to cut production again at next months meeting. The only question is, will they cut enough to actually make a difference? Most analysts are betting that they will not. With that being said, look for oil to trade in a tight range today due to the American Thanksgiving.

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Wednesday, November 26, 2008

BetOnMarkets Afternoon Report

Despite a raft of dire US economic announcements, global markets have managed to put some distance between the day’s lows and current levels. This in itself is an encouraging sign, as markets could have easily taken today’s US durable goods figures and PMI numbers as a cue to sell off significantly. The FTSE and most other European markets are certainly down on the day, but the falls are nothing compared to the all out capitulation we’ve seen of late. US markets are mixed with the Dow down by roughly the same margin that the tech heavy Nasdaq is up.

UK oil stocks were amongst the heaviest fallers this morning, but have since recovered from the lows as crude oil prices rally slightly from $50. It is hoped that the announced Chinese interest rate cut will restart the Chinese economy, which was the biggest driver of the oil boom in recent years.

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BetOnMarkets Morning Report

The FTSE is currently indicating a slightly weaker opening, while traders wait for the release of the of the UK GDP numbers. After seeing the US economy officially enter a recession, yesterdays traders worry if UK is the next major country to follow. Most analysts are expecting exactly that. Unless there is an upside surprise, the FTSE is most likely to spend the day in the red.

Oil was hurt yesterday as worries about a slowing economy were renewed when data showed that the United States officially entered a recession. Today, around London close, we will receive the weekly inventory data, which will determine the next short term direction for oil.

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Tuesday, November 25, 2008

BetOnMarkets Morning Report

The FTSE currently indicates a flat open, as traders realize that todays trading will be dictated by the US GDP numbers. Everyone will be watching to see if the numbers will show a contraction, which would indicate an official recession. This could result in the FTSE giving back most of their gains earned on Monday.

Oil jumped back to life on Monday gaining more then 9%, however there are concerns that the rally was more of a last gasp rather then a start of a new trend. Should crude add to those gains, we should see oil jump back into the 60 dollars per barrel mark

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Monday, November 24, 2008

BetOnMarkets - Gold, Its a safe bet ?

Last week US equities ended a volatile week with big rallies on Friday, but these only came after the benchmark S&P 500 index had plunged to levels not seen for over a decade on Thursday. Despite Friday's 6%+ rallies on the Dow Jones and S&P 500, those markets still finished the week down 5.31% and 8.39% respectively. After months of bailouts, mini rallies, rate cuts, and false dawns, investors threw in the towel. On Thursday, there was a panicked flight to quality, as the yield on the shortest term US treasury bonds sank to near zero. Money is flooding to what is perceived to the safest haven in these troubled times. The panic pushed investors into bonds, breaking records for that market. The yield on four-week Treasury bills fell to 0.045 %, and the three-month bill was yielding just 0.03 %, as investors rushed for safety.
The cost of insuring against investment grade companies defaulting shot up to its highest level since the crisis began. Worse still, Warren Buffet's Berkshire Hathaway fund has seen the cost of its credit default swaps shoot to 5 times the level they traded at in June. At current levels, the CDS prices are implying that Berkshire is more likely to go bust than Morgan Stanley. When the Dow was trading around 13,000, Buffet used derivates to effectively bet that the market would be higher than this level in 15 to 20 years time. While there is still considerable time for this bet to work out, Buffet has already marked down a $6.7 billion loss on that trade. When investment 'Gods' such as Buffet look ready to fall, it is hardly surprising that investors are running to safe havens.

Just two months ago, the US Federal Reserve was still concerned about the "upside risks to inflation". With last week's 1 % decline in US consumer prices and rapid declines in UK inflation figures, we've gone from fears over inflation and stagflation, all the way to deflation in the space of 90 days. As a sign of the times, oil prices hit a new milestone last week. Just four months after making record highs of $147 a barrel, oil touched a low of $48.25 on Friday, a remarkable drop of 67%. The rapid demise in crude prices is having a direct impact on the Russian economy and stock market. Since May the Russian stock market has been leading other so called BRIC nations lower, with a drop of around 70% since the May highs.

Financial shares led the selling. HSBC received a broker down grade on fears of the state of its tier 1 equity ratio. HSBC was formerly at arm's length to the rest of the banking sector with its relatively low exposure to US subprime loans. However, the 'world's local bank' is now feeling the pressure due to its exposure to emerging economies, especially the troubled BRIC economies. In the US Citigroup was hit hard, losing half its value in just three days. Once the biggest US bank by market value, there is speculation that bad loans and writedowns may add up to losses totalling $20 billion for the troubled Citigroup. Some commentators point to Treasury secretary Paulson's change of tack with regard to long directly buying toxic assets under the TARP program for sparking much of last week's sell off.

Next week starts with the German Ifo business climate report which will analysed closely after recent announcements that many parts of the Eurozone are already in recession. US existing home sales are released at 13.00 on Monday and analysts are expecting further declines to 5.02 million from 5.18 million. Tuesday morning brings a raft of UK economic announcements with the MPC treasury committee hearing top of the list. Preliminary US GDP is announced around midday, with the revised UK figures out the next day. Thursday is an extremely busy day with a large number of US announcements. Core durable goods, unemployment claims and new home sales are the notable highlights. The rest of the trading week could be relatively quiet with many traders using Thursday Thanksgiving holiday to make a long weekend.

There is simply no telling what the market or economy might be like as we start 2009. A selloff of this speed hasn't been seen since the 1930s, and although comparisons have often been made of late, it is worth noting that at the low points of this period, rallies, when they came were surprisingly aggressive. Barry Rithholtz last week noted that the AAII individual investor's stock allocation was 15% below its 21 year historical average. Although not marking the exact bottom, readings of this nature were not a million miles from the lows of 1987, 1990 and 2002. With a hoard of cash waiting in the wings, there is always the possibility of this reading again marketing the bottom. However, this market has left many seasoned professionals scratching their heads as the selloff has been unlike anything seen for generations. In recent months, these markets have reached extremes of sentiment that in the past have market key turning points. The trouble is that of late, markets have continued to make new extremes way beyond previous inflection points.

One market that has been away from the headlines is gold. In the first quarter, it ran up to over $1,000, but has since retreated to just under $800. Gold was seen as a hedge against inflation and was used as a hedge against the weak dollar. With inflation on the wane and the dollar on the attack, gold has been on the retreat. However it hasn't collapsed in the same manner than oil has and this is because gold is seen as a safe haven in times of trouble. These opposing cross winds have kept oil in a volatile trading range between $800 and $700 over the last 30 days. With gold rallying $50 alone on Friday, there is a very real chance of a break out of this range in the next 30 days.

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BetOnMarkets Morning Report

The FTSE currently indicates a higher opening, giving traders some optimism after what was a very bad week. Reports state that the FTSE might get hit with some negativity from the nationwide house prices, however it is very likely that we are going to start the week on a positive note. On another note, construction companies are begging the UK government for aid, pointing to the fact that no help will result in layoffs of almost 300,000 people.

Oil treads water above the 50 dollars per barrel level, however this seems to be a short tread. The long term downtrend is poised to continue and oil is poised to find itself trading near the 45 dollar level before December. Today we might be able to get to the 48 dollar per barrel

BetOnMarkets

Friday, November 21, 2008

BetOnMarkets Morning Report

The FTSE is indicating a very weak open, while traders are thankful that this is the last day of the week. Most major indices have taken a beating this week, with the SP500 trading at levels not seen since 1997. Sadly we believe that the sell-off will continue into next week. The FTSE might shed another 15% before this round of sell-offs is over.

Oil continues its downtrend and the big question is not when, rather how many barrels of oil will OPEC cut from its daily output at its next meeting. With plunging demand and the crumbling economy, the price for oil is destined to keep falling. We might see oil close below the 45 dollar mark this week.

BetOnMarkets

Thursday, November 20, 2008

BetOnMarkets Afternoon Report

Any remaining confidence in global markets has been well and truly trampled on today as investors throw in the towel. After months of bailouts, mini rallies, more bailouts and false dawns, investors have had enough. There has been a panicked flight to quality today as the yield on the shortest term US treasury bonds sink to near zero. Money is flooding to what is perceived to the safest haven in these troubled times. People would rather get next to no interest rather than risk losing their capital.

The cost of insuring against investment grade companies defaulting has shot up to its highest level since the crisis began. Worse still, Warren Buffet’s Berkshire Hathaway fund has seen the cost of its credit default swaps shoot to 5 times the level they traded at in June. At currently levels, the CDS prices are implying that Berkshire is more likely to go bust than Morgan Stanley. When investment titans such as Buffet look ready to fall, it is no wonder than investors are running to safe havens.

It has already been a remarkable year and at current levels it stands to be one of the worst on record. However, there are small positives to be found if you look hard enough. Today the UK banking sector is performing relatively well as Lloyds shareholders look as though they will approve the HBOS merger and RBS shareholders look set to approve and new fundraising plan. In the last few minutes there has been a wicked bounce off the lows of the day, but this recovery must hold if there is to be any chance of avoiding a revisit of the 2002 lows. Today’s sell off took the S&P 500 futures within just 10 points of this level.

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BetOnMarkets Morning Report

The FTSE is currently indicating a very weak opening, as the global equity sell off continues. Traders are pinning their hopes on the UK retail sales numbers, while analysts are expecting a year over year growth of 1.4%; the numbers could come out higher. While this could be good news for the retail stores, we don't believe that it will have enough affect to get the FTSE back into the green.

Oil prices continue to crumble with no end in sight, as world wide demand for oil and its by products evaporates. Analysts are now expecting oil to fall another 25%, even after taking into account that OPEC will cut an additional 2.5 million barrels a day before the year end. Oil is currently trading around the 53 dollars per barrel mark and will probably reach the 50 dollars mark by Friday.

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Wednesday, November 19, 2008

BetOnMarkets Afternoon Report

Just two months ago, the US Federal Reserve was still concerned about the “upside risks to inflation”. With today’s record 1% decline in US consumer prices, we’ve gone from fears over inflation and stagflation all the way to deflation in the space of 90 days. Traders have shrunk their investment outlook from years to days as they attempt to keep track of the violent changes in the stock market and economic outlook.
Today, most financials stocks are under pressure, led by HSBC who received a broker down grade on fears of the state of its tier 1 equity ratio. HSBC was formerly at arms length to the rest of the banking sector with its relatively low exposure to US subprime loans. However, the world’s local bank is now feeling the pressure due to its exposure to emerging economies, especially the so called BRIC nations. Brazil and India have seen their stock markets drop around 50% from their highs, while the Chinese stock market has nearly dropped a staggering 70%.

In general, hope remains while the benchmark S&P 500 continues to hold above the key 850 level. However, any breakdown below there could bring a fresh wave of selling.

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BetOnMarkets Morning Report

The FTSE is currently indicating a flat open, as traders stay out of the market until the release of Bank of England's minutes from their last meeting. Traders are hoping that the BOE has left the door open to another rate cut, as the crumbling economy needs even more help from the government. The tone of the day depends on how favorable the minutes are.

After spiking on the news of the hijacked vessel, oil is back to trading below the 55 dollars per barrel mark. Analysts anticipate another week of inventory growing in the US. This could send oil prices tumbling even more, possibly touching the 50 dollars per barrel mark. The inventory data will be released at 10.35am EST.

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Tuesday, November 18, 2008

BetOnMarkets Afternoon Report

US stock markets are pushing higher and holding ground above crucial support levels. The S&P 500 has far managed to find a floor above the 850 handle and the Dow Jones has found some breathing space above 8000. It is hardly grounds for popping the champagne corks, but at least US equities are holding for now. Stock markets seem to like the biggest ever month on month drop in the US producer price index. The drop was 2.8% which exceeds the previous extreme of -1.6%. With inflation also dropping in the UK, markets are hoping that there is now more wriggle room for further rate cuts. What is most amazing about the current crisis is the speed at which things are moving. Just three months ago, the FTSE was 36% higher with the bank of England hesitant to cut rates because of the dangers of rising inflation. Fast forward to the present day and it’s a very different picture. There is simply no telling what the market or economy might be like as we start 2009. A sell off of this speed hasn’t been seen since the 1930s and although this comparison has often been made of late, it is worth noting that at the low points of this period, rallies, when they came were surprisingly aggressive. With a flood of cash waiting in the wings, there is always the possibility of this happening again. Finding the low point might be the problem.

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BetOnMarkets Morning Report

The FTSE currently indicates a flat opening as traders stay on the fence until the UK CPI numbers are released. While some analysts believe that the CPI will show a smaller increase then before, after further research we believe that the CPI will come out much hotter then expected. This could put the next interest rate cut in jeopardy. If the CPI numbers come out worse then expected watch for the stocks to tumble especially the financials.

Oil fell almost 3 percent yesterday, as continued concern over the global slowdown continues. Analysts are no longer wondering if we are in a recession, the question now is how long and how painful will this economic contraction be. With the slew of economic news this week, we might see oil finally break the 50 dollars per barrel mark.

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Monday, November 17, 2008

BetOnMarkets Afternoon Report

All eyes are on the major US markets to see if they can hold above the recent lows. 850 in particular seems to be a very important level for the S&P500 to hold if it is to stand any chance of rallying from here. In many ways, UK financials are in a similar situation. With the exception of HSBC, all major UK financials including Lloyds, HBOS, RBS and Barclays are revisiting their lows of the year so far. After all the bailouts and improvements in the credit markets, investors are asking themselves one simple question; “Exactly how will this company make money?”. Perhaps, its an obvious question to ask, but it is one that was oft forgotten during the previous bull market as share prices went through the roof. Now with punitive financial loans, curbs on dividend payments and uncertainty over exposure to toxic assets, investors are understandably sceptical of where any future growth might come from. Friday’s wild swings on the Dow Jones have been attributed to hedge funds having to sell assets in order to meet redemption requests. This again may be bad news for banks who extend multi billion pound credit lines to hedge funds, many of whom have now lost well over 20% for the year to date.

[B]BetOnMarkets[/B]

BetOnMarkets - We are in a Recession! What next

Contents This Week:
Economic calendar for week 17th - 21st November 2008.
Commentary: The week ahead.
Economic Calendar for week 17th - 21st November 2008

PLEASE NOTE - All times GMT

Monday November 17th:

UK - 00:01 - Rightmove M/M.
EU - 10:00 - Trade Balance.
US - 13:30 - Empire State Manufacturing Index.
US - 14:00 - FOMC Member Duke Speaks.
US - 14:15 - Capacity Utilization Rate.
US - 14:15 - Industrial Production M/M.

Tuesday November 18th:

UK - 09:30 - CPI Y/Y.
UK - 09:30 - Core CPI Y/Y.
UK - 09:30 - RPI Y/Y.
US - 13:30 - PPI M/M.
US - 13:30 - Core PPI M/M.
US - 14:00 - Core PPI M/M.
UK - 15:30 - MPC Member Besley Speaks.
US - 18:00 - NAHB Housing Market Index.
EU - 18:30 - ECB President Trichet Speaks.

Wednesday November 19th:

UK - 09:30 - MPC Meeting Minutes.
UK - 11:00 - CBI Industrial Order Expectations.
US - 13:30 - Building Permits.
US - 13:30 - CPI M/M.
US - 13:30 - Core CPI M/M.
US - 13:30 - Housing Starts.
US - 14:00 - FOMC Member Kohn Speaks.
US - 15:35 - Crude Oil Inventories.
US - 16:00 - FOMC Meeting Minutes.

Thursday November 20th:

GE - 07:00 - PPI M/M.
UK - 09:30 - Retail Sales M/M.
UK - 09:30 - Prelim M4 Money Supply M/M.
UK - 09:30 - Public Sector Net Borrowing.
US - 13:30 - Unemployment Claims.
US - 15:00 - Philly Fed Manufacturing Index.
US - 15:00 - CB Leading Index M/M.
US - 15:35 - Natural Gas Storage.

Friday November 21st:

FR - 07:45 - Consumer Spending M/M.
FR - 08:00 - Flash Manufacturing PMI.
FR - 08:00 - Flash Services PMI.
GE - 08:30 - Flash Manufacturing PMI.
GE - 08:30 - Flash Services PMI.
EU - 09:00 - Flash Manufacturing PMI.
EU - 09:00 - Flash Services PMI.
EU - 13:00 - ECB President Trichet Speaks.

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany


The week ahead.

World stock markets took another tumble last week with the major US indices penetrating the October lows intraday. The FTSE finished the week down around 4%, but it was UK plc that took a battering. The Pound fell to record lows against the European single currency, even breaking through the synthetic Euro/ Deutsche Mark lows from 1996.The weeks action was all the more damning considering the Eurozones admission that it too is in a recession. The Euro managed to end the slightly down against the dollar, but the pound plunged through the 1.5000 level for the first time since 2002. However there is still some way to go before the low of 1.3685 from 2001 is breached.

Financials were amongst the worst performing companies as Libor broke its 23 day decline. 3 month Libor increased to 2.15% and overnight Libor also pushed higher. The main catalyst was Paulson's announcements of changes to the Troubled Asset Relief Program. As this originally was seen as getting to the heart of the matter in terms of offloading toxic assets, investors are confused as to what this means for future prospects for financial firms in the US. In the US, the insurance giant AIG had its earnings estimates cut, as did Wells Fargo. Much worse are the rumours that Fannie May may have to tap into US government cash to avoid liquidation. Previously unaffected stocks such as HSBC were also down hard after poor results, and there was speculation that it too may need to follow Santander's lead in raising money through a rights issue. Until very recently HSBC and Santander were seen as being at arms length to the current crisis due to their relatively low exposure to the US housing market. However, with news of the UK property crash worsening and Asian markets faltering, HSBC is coming under increasing pressure.

More than anything market participants hate confusion or indecision, with the common reaction being "if in doubt, get out". This is reflected in the performance of financial shares across the globe. Even when the wider market attempted a rally, financials were weighing on sentiment, like a ship trying to sail with its anchor still deployed.

Although last weeks UK unemployment data and sales projections from various companies fell below consensus, European markets didnt revisit the October lows and US markets managed to rally from beneath them . Despite the economic outlook arguably looking bleaker than it did just two weeks ago, markets havent capitulated. The optimistic interpretation of this scenario is that the bad news is starting to be priced in by the stock market. As markets are forward looking by at least 6 months, they could be discounting the slowdown that virtually everyone is predicting, and are looking for what happens after that.

The pessimistic interpretation of the current scenario is that markets are as over optimistic now as they were a couple of months ago. The default reaction to any impending disaster is in most cases denial then panic. The pessimist would argue that investors are still too optimistic about companys future growth prospects, and so further falls are likely. The reality is that markets are flipping from optimism to pessimism almost by the hour and remain entrenched in a choppy mess. After repeated failed rallies over the last few weeks, the bulls would be forgiven for giving up the ghost.
The coming week kicks off with some middle tier US industrial production figures and Treasury secretary speaking late on Monday evening. On Tuesday there is a raft of UK and US inflation numbers followed by Fed chairman Bernanke testifying as US markets open. Wednesday sees the release of the last MPC meeting minutes and with Gordon Brown calling for further rate cuts, these minutes will be poured over closely for hints of future decisions. Later that evening the FOMC release the minutes from their last meeting and although many argue they are done for now, Wall Street is still calling for more cuts.

There have been many comparisons between current market action and the great depression of the 1930s, and in many ways these comparisons are valid. The last time markets were as choppy as they are today was indeed the 1930s. The world is a very different place to how it was 70-80 years ago, but the current extremes were seeing point back to this period as being a strong likeness. According to Rob Hannah of Quantifiable Edges, the stock market only recovered from this decade long malaise, once it switched from chop mode to trending mode. If a long period of chop is the worst we experience over the next few months, even years, although frustrating, there may be worse things that could happen. Ironically, a smooth decline which bottoms out to form a smooth rally may be the real harbinger of a recovery. This may be a moot point as we are still far from seeing smooth rallies or smooth declines.

Potentially more positive signs were pointed out by Jason Goepfert of SentimentTrader, who noted that until this week the S&P 500 has never swung up 5% one day then 4% down the next. This has happened three times on the Dow Jones, all dates between 1929 and 1932. None of them marked a low, but were within a week or so of one. Barry Rithholtz also noted that market bottoms are rarely completed without multiple retests of prior lows. This is arguably what we were seeing last week. While there is considerable risk of further selling, at least with fixed odds trading our risk is limited to our stake. Therefore a Bull bet, which predicts that the market will be higher than a certain level in the future could offer an attractive risk reward. A bull bet predicting that the Dow Jones (Wall Street) will be higher than 9000 in 9 days time could return 187.

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BetOnMarkets Morning Report

The FTSE currently indicates a slightly weaker opening, as Rightmove House prices are worse then expected and again are reminding traders about the weak real estate market. Most investors are awaiting the release of the UK CPI numbers on Tuesday, worrying that the interest rate cut has unleashed a wave of inflation. The FTSE has a good chance to start the week off on a positive note.

Oil is sliding from the 58 dollars per barrel mark, as news that Chinas largest crude oil producer announced that demand has fallen sharply. Oil traders are worried that the lower demand will push prices below 50 dollars a barrel. We should know if they are right within the next few weeks.


Predicted opens as of 06:00 GMT
FTSE: 4188 (-44.97)
CAC40 3239.30 (-46)
DAX30 4650 (-67)
DOW: 8396 (-79)
SP500 8864.03 (+2.50)
Gold: 742.10 (-11.20)
Oil: 55.92 (-1.08)

BetOnMarkets

Friday, November 14, 2008

BetOnMarkets Morning Report

The FTSE currently indicates a very strong opening, as traders look for value amongst the rubble of the recent sell off. While there is no economic data from UK this morning, analysts will be paying close attention to the US retail sales for indication if consumers are still spending money. Retail stocks are going to be the most sensitive today, as they are entering the most important two months of the year.

Oil continues to be the victim of the sinking economy, as retail and manufacturing indicators show that the economy has gone into a full fledged recession. Yesterdays 3 dollar per barrel bounce seems to be just an oversold bounce and it seems like it will be short lived. We expect oil to end the week below the 60 dollars per barrel level.


Predicted opens as of 06:00 GMT
FTSE: 4328 (+158.79)
CAC40 3400 (+136.00)
DAX30 4851 (+198.2)
DOW: 8757 (-120)
SP500 898.78 (-10.50)
Gold: 725.85 (+0.70)
Oil: 57.89 (-0.32)

BetOnMarkets

Thursday, November 13, 2008

BetOnMarkets Afternoon Report

Having traded within a whisker of their October lows, US markets are
helping to push markets over the break even mark for the day. The
notable exception is the FTSE which is being dragged down by continuing
weakness in the financial and energy sector. Crude has made a minor
recovery today, but this comes after 22 month low was made yesterday in
late US trading. Consequently, BP and Shell are still down heavily on
day as a hangover from overnight sentiment. Financials are amongst the
worst performing companies today as Libor broke its 23 day decline. 3
month Libor increased to 2.15% and overnight Libor also pushed higher.
The main catalyst has been Paulson's announcements of changes to the
Troubled Asset Relief Program. As this originally was seen as getting to
the heart of the matter in terms of offloading toxic assets, investors
are confused as to what this means for the future prospects for
financial firms in the US. More than anything market participants hate
confusion or indecision, with the common reaction being "if in doubt,
get out". This is reflected in the performance of financial shares
across the globe today. As the wider market attempts a rally, financials
are weighing on sentiment like a ship trying to sail with its anchor
still deployed.

BetOnMarkets

BetOnMarkets Morning Report

The FTSE currently indicates a very weak opening, as traders worry that the UK economy has simply fallen of a cliff. Due to recent news that the UK chancellor is hoping that the recession will be over by 2010, has sent the British Pound to its lowest level since 2002. With the unemployment rate continuing to creep up, the BOE has announced that they are ready to cut interest rates again to help prop up the sluggish economy. The FTSE will most likely spend all of Thursday in the red.

Oil is trading at a 21 month low, as fear of a prolonged slowdown is putting downward pressure on oil prices. Traders are waiting for the release of the inventory report, which was delayed due to Veterans day being a holiday. Oil is currently trading at 55 dollars per barrel and is likely to hit the 50 dollar mark by the end of the month.

Predicted opens as of 06:00 GMT
FTSE: 4089 (-93.02)
CAC40 3169.60 (-61.70)
DAX30 4557.5 (-58.5)
DOW: 8220 (-66)
SP500 845.25 (-9.25)
Gold: 714.55 (-2.10)
Oil: 55.30 (-0.63)

BetOnMarkets

Wednesday, November 12, 2008

BetOnMarkets Afternoon Report

With markets selling off again in the face of dire economic data, it is
worth stepping back and putting things in perspective. Although today's
UK unemployment data was dire and sales projections from Best Buy below
consensus, markets haven't capitulated. Despite the economic outlook
arguably looking bleaker than it did just two weeks ago, markets are
holding above the October lows. The optimistic interpretation of this
scenario is that the bad news is starting to be priced in by the stock
market. As markets are forward looking by at least 6 months, markets
could be discounting the slowdown that virtually everyone is predicting
and are looking for what happens after that.

The pessimistic interpretation of the current scenario is that markets
are as over optimistic now as they were a couple of months ago. The
default reaction to any impending disaster is in most cases denial then
panic. The pessimist would argue that investors are still too optimistic
about companies future growth prospects and so further falls are likely.

The reality is that markets are flipping from optimism to pessimism
almost by the hour and markets remain entrenched in a choppy mess. After
repeated failed rallies over the last few weeks, the bulls would be
forgiven for giving up the ghost.

There have been many comparisons between current market action and the
great depression of the 1930s and in many ways these comparisons are
valid. The last time markets were as choppy as they are today was indeed
the 1930s. The world is a very different place to how it was 70-80 years
ago, but the current extremes were seeing point back to this period as
being a strong likeness. It is interesting to note that the stock market
only recovered from is decade long malaise once it switched from chop
mode to trending mode. If a long period of chop is the worst we
experience over the next few months, even years, although frustrating,
there may be worse things that could happen. Ironically, a smooth
decline which bottoms out to form a smooth rally may be the real
harbinger of a recovery.

BetOnMarkets

BetOnMarkets Morning Report

The FTSE is currently indicating a higher opening, as traders await the release of the UK employment data for October. While analysts are expecting the unemployment rate to increase, the rate is slowing down so this could be a good sign. The FTSE should stay in the positive unless the employment data comes out worse then expected.

Speculations that the International Energy Agency will cut its demand forecast has plunged oil to a 20-month low. We might see another down day on Wednesday, as there is a possibility that supply inventory has risen for another week. We could actually see oil touch the 55 dollar mark by the end of the day.

Predicted opens as of 06:00 GMT
FTSE: 4319 (+72.13)
CAC40 3386.60 (+51.80)
DAX30 4843.5 (+89)
DOW: 8722 (+44)
SP500 902.90 (+8.37)
Gold: 736.45 (+1.35)
Oil: 59.28 (-0.08)

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Tuesday, November 11, 2008

BetOnMarkets Afternoon Report

Yesterday it took stock markets just half a day to figure out that the
Chinese economic stimulus package isn't anywhere near as good as first
hoped. Once traders got down to the small print of the planned economic
injection, there was the general feeling that much of the announcement
was simply a repackaging of existing commitments. This quickly deflated
the mornings euphoria and the selling has rolled over to today's session
with a wave of dire headlines on the economic front. Energy stocks have
been particularly hit hard today as yesterday's rally in crude prices
reversed hard alongside general sentiment about the Chinese stimulus
package. With crude trading at just under $60 a barrel, oil has now
reversed 60% since its peak in June 2008. Oil producing countries such
as Russia have been hit harder than most with the ruble slumping 1%
against other currencies and the stock market plunge in the stock market.

Financials across the world are under pressure once more. In the US, the
insurance giant AIG had its earnings estimates cut as did Wells Fargo.
Much worse are the rumours that Fannie may have to tap into US
government cash to avoid liquidation. Financials in the UK are fairing
little better with HSBC down hard after yesterdays poor results and
speculation that it too may need to follow Santander's lead in raising
money through a rights issue. Until very recently HSBC and Santander
were seen as being at arms length to the current crisis due to their
relatively low exposure to the US housing market. However, with news of
the UK property crash worsening and Asian markets faltering, HSBC is
coming under increasing pressure.

To top it all, the real economy is showing further cracks with economic
bellwether, Starbucks posting poor earnings figures. When things are
tight, it seems that expensive coffee is a luxury consumers can do without.

Although the dire news flow is starting to get priced in to current
index levels, there is the feeling that investors, like home buyers are
taking a 'wait and see approach'. Just as in the housing market, there
may be some bargains around, but no-one is willing to stick their neck
out in case there are even better bargains tomorrow. That is classic
bear market behaviour, which will only right itself once a rally holds
and momentum investors step in on the belief that someone else will buy
at a higher price than they have. This is otherwise known as the greater
fool principle and right now it appears, no-one is willing to take the
risk that the joke is on them.

BetOnMarkets

BetOnMarkets Morning Report

The FTSE is currently indicating a weak opening after the midnight release of
the RICS house prices. U.K. home sales declined its lowest level in at
least three decades, as the lending freeze pushed down prices for a 15th
month in a row. Although the rate cuts were better then ever, it has not
helped as some banks are not passing on the cut to the customers. The FTSE
should open Tuesday in the red.

Oil yet again finds itself flirting with the 60 dollar mark, as evidence
continues to mount that the major oil consumers are entering what might be a
prolonged recession. Even the stimulus package that was announced in China
had only minimal impact on the price. There is a very strong possibility
that the price of oil could touch the 50 dollars per barrel mark by the end
of the month.



Predicted opens as of 06:00 GMT
FTSE: 4383.3 (-20.62)
CAC40 3460.60 (-41.20)
DAX30 4966.5 (-58)
DOW: 8949 (+73)
SP500 927.03 (+4.50)
Gold: 748.60 (+0.25)
Oil: 60.89 (-1.25)

Monday, November 10, 2008

BetOnMarkets Afternoon Report

Global stock markets certainly got out of the right side of bet this
morning and unlike the volatile days of October have so far managed to
hold on to those gains. The catalyst for today's optimism is the same
catalyst as the pre credit crunch market boom; China. The Chinese
stimulus package has lifted global stock markets with commodities such
as oil and metals the primary gainers. China needed record levels of raw
materials to fuel it's powerful growth spurt over the last 5 years and
fears of a slow down in china specifically have been a significant
reason for the reason falls in commodities since their peak last year.
Energy and natural resource stocks are understandably the biggest
gainers today as traders speculate that a floor might finally have been
found in the oil bear market. Who would have thought that 'oil' and
'bear market' would have been uttered in the same sentence at the start
of the year.

Elsewhere, financial stocks are mixed despite 3 month libor falling to
its lowest level since 2004. Confidence in the credit markets is
increasing as the various central bank interventions continue to grease
the wheels of the rusted apparatus. However, financial stocks are still
underperforming today overall. News that AIG's bail out package is now
70% higher at $125 billion has hurt sentiment in other financial
companies. Investors are still holding onto their cash on the fear that
another round of bailouts or fresh cash calls are just around the
corner. Most financial firms are safer than at any time during the last
year with the various government guarantees, but further bailouts or
special loans could further dilute share holder returns.

BetOnMarkets

Friday, November 7, 2008

BetOnMarkets Afternoon Report

Today's US payroll figures were ugly by any measure, with the reported
loss of 240,000 jobs slightly worse than expected. The worse data point
to come out today was actually the downwards revision to Septembers
payroll figures. Today's revision pushed September payrolls down from
-159,000 to -284,000. This means that so far in 2008, around 1 million
jobs have been lost, most of these have been in the financial sector but
the slump is prevalent in virtually every US sector.

On the face of it, it is perhaps surprising to see equity markets
rebound so strongly especially in the face of accelerating unemployment
in the world's biggest economy. However, the reality is that financial
markets are forward looking which means that most of the time the bad
news is already taken into account. Today's payroll figures could have
been even worse than they were and judging by the rebound we're seeing,
a significant part of the falls on Wednesday and Thursday may have been
traders rushing in to sell ahead of today's numbers. The net result is
that the two day sell off appears to have overshot slightly.

On the credit markets, libor and credit default swaps continue to
improve for the worlds largest financial firms. The cost of insuring
against companies defaulting on their debt is still very high by
historical standards, but they have still come down a long way in the
last few weeks. Morgan Stanley and Goldman Sachs still remain a concern
while the UK's HSBC currently has the lowest CDS of the remaining major
independent banks and brokers. In short, things have most certainly
improved since the dark days of October, but there is a long way to go
before we can say safely say that this credit crisis is over.

BetOnMarkets

Thursday, November 6, 2008

BetOnMarkets Afternoon Update

Today, the Bank of England hit the headlines with an unexpected 1.5%
rate cut. The move was largely pre meditated as a shock tactic to boost
the ailing UK economy ahead of the all important Christmas period.
Spreading the cut over a number of months would have had much less of an
impact as it can take many months for the benefits of a rate cut to
filter down to consumers. The MPC have sent out a message that they are
prepared to treat the threat posed by the global slowdown very
seriously. Unfortunately this message is a double edged sword, the
euphoria that immediately met the rate cut was short lived and the FTSE
soon rolled over and headed back towards the lows of the day. Market
participants may be taking the view that for the MPC to slash rates in
such a dramatic manner, things must be /really/ bad.

There is also the possibility that today's rate cut might make it less
likely that the MPC will cut again in the near future. Experts had been
calling for cuts of this magnitude over a number of months, but the MPC
may have bundled all their planned rate cuts in one dramatic roll of the
dice. It may be some time before they cut again, preferring to let the
dust settle on the biggest single cut in a generation.

Although on the face of it, financial stocks are still down hard on the
day, today's rate cut has at least helped the sector to perform
relatively strongly today compared to other sectors. Most UK financials
are above the levels they were trading at before the rate cut was
announced.

BetOnMarkets

BetOnMarkets Morning Report

The FTSE currently indicates a very weak opening, as traders await the announcement from The Bank of England regarding a rate cut. Traders worry that the BOE might not cut aggressively enough to help the economy out of this slowdown. However an over aggressive cut would unleash hyperinflation, which will hurt the consumers as their buying power will evaporate. If we get a 50 basis point cut, it is possible for the FTSE to open the day in positive territory.

A surprising increase in the inventory of gasoline was the cause for the 5 dollar per barrel drop in yesterdays trading. While the demand continues to fall, we expect a few more weeks of growing inventory before the OPEC cuts finally affect the price per barrel. We still expect oil to continue to fall towards the 60 dollar per barrel level.

BetOnMarkets

Wednesday, November 5, 2008

BetOnMarkets Afternoon Report

Global markets opened the day around and two percent have made little headway throughout the day. Some have attributed today’s sell off to the market’s dislike to a having a democrat president, but there is little evidence to suggest this. Statistics show that markets have no significant reaction to either party winning the presidency one month on from election today. Today’s sell off is more a function of the stellar run global equities have been on since the end of last month. The FTSE has managed to finish higher for eight days on the trot, which is a very rare event indeed so it is understandable that traders are taking the opportunity to book profits.

UK banks are for once out performing the wider markets as credit conditions continue to improve and speculation mounts that the Bank of England might be considering a whole percentage point cut tomorrow. Last week, a 0.5% cut was the clear favourite course of action, but as the week progresses there is increasing chatter that the MPC will go the whole hog.

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