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Tuesday, February 17, 2009

BetOnMarkets - Today, world stock markets have crumbled under...

Today, world stock markets have crumbled under the relentless barrage of bad news. Investors are flocking to safe havens with the yield on 10 year Treasury bonds sinking to 2.7% and gold pushing up 3% to $370. The Dow Jones Industrial average is just over 0.5% from revisiting the November lows. Despite the dramatic collapse in the banking sector, the FTSE has held up relatively well over the same period, holding around 6% above those lows.

There’s very little for the bulls to hang their hat on at the moment, everywhere you look, the risks seem to outweigh the rewards of investing in the stock market. Banks are again leading the fallers today with Lloyds and HSBC being singled out for punishment. HSBC is down 7% on speculation that it may have to raise more than $15bn to cover write downs and exposure to Eastern Europe. Oil majors, BP and Shell are also under pressure with oil prices touching $35 dollars once again.

In the US, automakers GM and Chryslers still battling to avoid oblivion. The US automaker industry is hanging by a thread. Further support is required to turn the sector round, but this is far from being a dead cert. Legacy costs from benefit support are now crippling the likes of GM. It is ironic that the great US economy is in danger of losing a key industry in part due to lavish benefits negotiated for union workers.

It is also worth noting that like many firms across the world that have gone to the wall, like Woolworths in the UK, US automakers were in trouble before the crisis broke. This global recession, like all recessions is exposing the weak businesses what they really are. It remains to be seen if the remaining companies have enough strength to carry the world economy through the crisis.

Monday, February 16, 2009

BetOnMarkets Morning Report

The FTSE is currently indicating a weaker opening, after the rightmove house index showed a 9.1% drop in year over year in home prices. While Monday is expected to be a quiet day, with North America on holiday, Tuesday promises to be a day full of volatility. Between the CPI and retail sales data, we should get a good picture at how the British economy is doing.

Crude oil is trading near the $38 a barrel on speculation that the recession in the world's largest economies will slash demand for fuel and energy. Reports today showed that Japan??s economy, the world's largest oil consumer after the U.S. and China, shrunk at the fastest pace since 1974. Oil prices are likely to trade below the 40 dollars per barrel level until the inventory report later this week.

Tuesday, February 10, 2009

BetOnMarkets Afternoon Report

Just a short note today -- Effectively markets are on hold pending the
details of US Treasury Secretary Geithner's bank recovery plan an 4PM.
There's also the small issue of the $838 billion stimulus plan which is
going before the senate. Obama last night said that the world's largest
economy faces a 'full blow crisis'. While this may be a statement of
fact, it is hard to know if the intention behind such a stark statement
is partly to facilitate the passing on the new stimulus plan.

In the UK, former RBS chief executive, Sir Tom McKillop wins the award
for understatement of the year with his admission that the purchase of
ABN was a 'bad mistake'. The lion's share of RBS' record losses and
indeed UK the government bailout have been swallowed up by this
disastrous takeover.

Monday, February 9, 2009

BetOnMarkets Afternoon Report

World stock markets are mixed, with the FTSE 100 nudging ahead on a day of tepid trading. The better than expected figures from Barclays has certainly given UK equities on boost, but it is not enough to make the UK’s benchmark index of 100 stocks push through Friday’s trading range.

Barclay’s figures have been well received, but their share price still has a long way to go if it can be deemed to have turned the corner. Last February, Barclay’s shares hit £5.24, even with today’s 12% rise they are still more than £4.00 below this level. The so called independence premium could start to play out in the second half of the year, especially if Barclays start to pay a dividend once again. However, for now, investors are understandably hesitant to take anyone’s word on this.

Wider equities are range bound as the benchmark US indices retreat on the news that the Obama bailout plan won’t be announced until tomorrow. Markets more than anything hate indecision and until a resolution looks likely, or at lease strong rumours of a resolution circulate, equities will trade in a tight range until tomorrow afternoon.

BetOnMarkets - A Better Week for World Stock Markets

A Better Week for World Stock Markets

It was a better week for world stock markets last week, with all the major indices pushing further off the January lows.

Despite Friday’s US payrolls falling by a more than expected 598,000, stock markets powered higher. This was an extremely weak employment report, with 3.5 million fewer Americans employed In January than a year earlier. However, the world’s biggest economy isn’t willing to roll over and die just yet. The rate of decline is accelerating, but US unemployment is still below the peaks of the 1980s and 1970s. Stock markets moved higher on the hope that Friday’s dire figures will act as a catalyst for the massive Obama stimulus package. In the UK, banks pushed higher as speculation mounts that the bad bank plan is back on the cards. RBS is rumoured to be the first test of this model with other banks applying this template if successful. Judging by the rally in financial shares last week, traders are keen on this plan to come to fruition.

Commodities continued to drift lower, with oil falling through support at $40. Oil producers shrugged off the news to finish up on the week. However, lower energy prices cannot be shrugged off by all of those with a stake in the commodity. The Russian government had its credit rating downgraded due to fears over the impact of the collapse in oil prices. The rouble continued its free fall.

Last week, the Bank of England cut rates to 1% as widely expected, and at the same time, the ECB signalled that it may cut rates in March. Despite the cut, it was a good week for Sterling, especially against the euro, as traders adjust their positions in light of the strong rate cut hint from Trichet.

There was some positive news from the Halifax housing report which showed that UK house prices rose last month. However, it is hard to read too much into this rise as the data conflicts with the previously released Nationwide report, and month to month figures are often subject to wide variance. Next week’s highlights include a number of speeches from prominent central bankers including Treasury secretary Geithner, and FOMC chairman Ben Bernanke on Tuesday. On Wednesday Governor King speaks at the release of the BOE inflation report. ECB president, Trichet is due to speak on Thursday. Aside from this, we also have US retail sales and unemployment claims on Thursday. When stock markets go up on bad news as they did last week, it is often a good sign that investors have re-discovered their appetite for risk taking.

Even BP and Shell were moving higher on Friday, despite oil prices dipping below $40 a barrel. The bears have been handed plenty of opportunities to take control, but so far today, the bulls have won out. That is arguably a very encouraging indication that 2009 won"t end the year as it started.

A Bull bet predicting that the Dow Jones (Wall Street) will be higher than 8500 in 11 days could return 135% at BetOnMarkets.

Thursday, February 5, 2009

BetOnMarkets Afternoon Report

The debate still continues over exactly how to rescue the troubled
banking sector, but today's fall is all about something more old
fashioned, more tangible - Namely the state of the recession. Banking
shares have stabilised over the last couple of weeks as confidence grows
that financial apocalypse has been averted. Now that the battle for the
banks appears to be reaching an impasse, attention is turning once again
to the wreckage of the global economy.

After yesterday's better than expected ADP employment figures there was
some hope that the US economy was seeing the light at the end of the
tunnel. Unfortunately, today's unemployment claims data has extinguished
any such hope. The worst unemployment claims data since 1982 comes amid
company earnings that are worse than already dire analyst expectations.
Recently Kraft foods, Disney and Microsoft all fell well short with
their earnings.

Today the Bank of England cut rates to 1% as widely expected and at the
same time, the ECB signalled that it may cut rates in March. Despite
today's cut, it has been a good day for Sterling, especially against the
euro, as traders adjust their positions in light of the strong rate cut
hint from Trichet.

There was some positive news from the Halifax housing report which
showed that UK house prices rose last month. However, it is hard to read
too much into this as the data conflicts with the previously released
Nationwide report and month to month figures are often subject to wide


Wednesday, February 4, 2009

BetOnMarkets Afternoon Report

Markets are roaring higher this afternoon on better than expected economic data from the US. Today’s better than expected ADP jobs report augurs well for Friday’s all important Non Farm Payroll data. Markets are also encouraged by the noises coming from the Obama administration on the use of tax breaks to stimulate the troubled car market.

In the UK, banks are pushing higher as speculation mounts that the bad bank plan is back on the cards. RBS is rumoured to be the first test of this model with other banks applying this template if successful. Judging by the rally in financial shares today, traders are keen on this plan to come to fruition.

Commodities are firmer, with oil finding support above $40. This is welcome news for oil producers such as BP and Shell which have rallied well from the lows of yesterday. It is even better news for the Russian government which had its credit rating downgraded today due to fears over the impact of the collapse in oil prices.

Tuesday, February 3, 2009

BetOnMarkets - Economic Calendar for week 2nd - 5th February 2009

BetOnMarkets Weekly Briefing


Monday February 2nd:

UK - Tentative - Halifax HPI M/M.
EU - 09:00 - Final Manufacturing PMI.
UK - 09:30 - Manufacturing PMI.
US - 13:30 - Core PCE Price Index M/M.
US - 13:30 - Personal Spending M/M.
US - 13:30 - Personal Income M/M.
US - 15:00 - ISM Manufacturing PMI.
US - 15:00 - ISM Manufacturing Prices.
US - 15:00 - Construction Spending M/M.

Tuesday February 3rd:

UK - 09:30 - Construction PMI.
EU - 10:00 - PPI M/M.
US - 15:00 - Pending Home Sales M/M.

Wednesday February 4th:

UK - 00:01 - Nationwide Consumer Confidence.
EU - 09:00 - Final Services PMI.
UK - 09:30 - Services PMI.
EU - 10:00 - Retail Sales M/M.
UK - 10:30 - BRC Shop Price Index Y/Y.
US - 12:30 - Challenger Job Cuts.
US - 13:15 - ADP Non-Farm Employment Change.
US - 15:00 - ISM Non-Manufacturing PMI.
US - 15:30 - Crude Oil Inventories.

Thursday February 5th:

GE - 11:00 - Factory Orders M/M.
UK - 12:00 - Official Bank Rate.
UK - 12:00 - MPC Rate Statement.
EU - 12:45 - Minimum Bid Rate.
EU - 13:30 - ECB Press Conference.
US - 13:30 - Unemployment Claims.
US - 13:30 - Prelim Nonfarm Productivity Q/Q.
US - 13:30 - Prelim Unit Labor Costs Q/Q.
US - 15:00 - Factory Orders M/M.
US - 15:30 - Natural Gas Storage.

Friday February 6th:

UK -09:30 - Manufacturing Production M/M.
UK - 09:30 - Industrial Production M/M.
UK - 09:30 - PPI Input M/M.
UK - 09:30 - PPI Output M/M.
GE - 10:00 - Industrial Production M/M.
US - 13:30 - Non-Farm Employment Change.
US - 13:30 - Unemployment Rate.
US - 13:30 - Average Hourly Earnings M/M.
US - 20:00 - Consumer Credit M/M
US - 22:45 - FOMC Member Yellen Speaks.

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

The week ahead.

It was a case of two steps forward and two steps back last week for world equity markets.
Global equities were served a reminder of just how difficult bear markets can be. Traders are quick to grab whatever short term profits they have made, making it difficult for rallies to build momentum.

Equities shot out of the starting gate in the early part of the week, largely due to a relief rally in the banking sector. The clear catalyst was the announcement from Barclays that it wont be going to the market or government for more cash. This, more than anything strengthened investors confidence in Barclays and across the sector as a whole. However, as impressive as todays performance is, the rally needs to be put in context. Shares in Barclays are still around 50% lower than they were just two months ago.

It wasnt plain sailing though, with severe selling towards the end of the week. This time, the worry wasnt specifically related to complex financial deficits. Fears were more in relation to general analysis that banks are not the place to be in during a recession. With house prices continuing to plunge on both sides of the Atlantic, rising unemployment and an increased risk of default on loans, the recession itself is enough to put pressure on banks. This is before you take into account their dire capital adequacy positions.
US house prices are continuing to plumb new depths. The 10 and 20 city indices are down over 25% from their peak and over 18% on last year. House prices are now back to 2004 levels with further to go if the current trend line is anything to go by. Near record US jobless claims and record lows in levels of housing starts go hand in hand as job security fears cause home owners to make do with what they have and stay put. The inability to get mortgage on reasonable terms is of course a significant factor.

Adding to the considerable volatility was the number of US companies announcing earnings that fell below analysts expectations. Make do and mend is a view that many shunned during the boom years, but slowly but surely, western consumers are coming round to the idea of keeping their affairs on a tight budget. Microsofts business model largely depends on individuals and businesses buying new computers with upgraded versions of their software installed. With the economic slump starting to bite, consumers are making do with their existing machines or sourcing machines from the very bottom of the range. Last week, Microsofts share price skirted with the November lows, which in turn is the lowest point since 2000. On the other hand, buoyant sales numbers from Apple indicate that like holidays, the iphone & ipod are luxuries that shoppers arent prepared to let go of just yet.

The coming week is full of top tier economic announcements with Fridays Non Farm Payroll numbers top of the pile. Wednesdays ADP employment change will provide a good steer for Fridays numbers. Aside from this we have the rate statement from the MPC on Thursday, with analysts expecting a cut down to 1%. Speculation is also rife that the ECB will follow suit with a cut just 45 minutes later. The Euro was down hard against the pound last on speculation that the European Central Bank now has now choice but to follow other the US and UK and cut towards 1%.

The Euro/ US dollar exchange rate has been relatively range bound over the last three months after a sharp fall starting in August. With the Eurozone potentially having further to go in terms of cutting rates, we could see the euro fall further against the dollar. No world economy is in particularly brilliant shape at the moment, but arguably, the Eurozone may come under further pressure over the next year as its member stats contract at wildly different rates of acceleration. Credit Default Swaps are used as a measure of a particular countrys risk of defaulting on its loans. The score is the cost of insuring $10,000 worth of debt over 5 years. Last week the US was at 75, while France and Germany were at 68 and 59. This might theoretically imply that the Eurozone was in better shape. Unfortunately the risk of other Eurozone nations defaulting is much higher. Irelands risk level was 285, Greece 283, Italy 184 and Portugal 145.

A one touch trade predicting that the Euro/US dollar exchange rate will hit 1.100 in the next 6 months could return 245% at BetOnMarkets.

BetOnMarkets Morning Report

The FTSE is currently indicating a higher opening, as traders wait for the release of the construction purchasing managers index. Analysts are hoping that there will be a rebound in the number which would signal that a rebound in construction. The FTSE might have a chance to open up more then 2 percent if the number comes out better then expected.

Oil is trading back above the 40 dollars per barrel level on speculation that OPEC, led by Saudi Arabia, cut its output in January to avoid a supply glut and bolster prices. Saudi Arabia, OPEC's biggest producer and the world's top oil exporter, reduced output by 375,000 barrels a day last month to an average 8.025 million barrels a day, the lowest since December 2002. Look for oil to test the 42 dollars per barrel level before Wednesday.

Predicted opens as of 06:00 GMT
FTSE: 4120.1 (+42.6)
CAC40 2981.20 (+52.40)
DAX30 4313.8 (+47.3)
DOW: 7995 (+65)
SP500 831.73 (+7.25)
Gold: 898.75 (-7.70)
Oil: 40.58 (+0.56)