The FTSE is currently indicating a flat open, however this does not meant that it will be an uneventful day. On deck there are a few economic releases from UK which will influence the market during the morning session. The Nation Wide Price index will be release before the FTSE opens, and we believe the number will come below the forecast. This will have a negative effect on the market; as a result we believe the market will open on a weak note. The rest of the day we expect traders to be on the sidelines ahead of the FOMC statement due after the close of FTSE. Our expectations is for no move along with relatively unchanged statement from the Fed, although we expect some note of ??upside risks?? to inflation given that crude oil has risen so much since the last meeting.
Gold was weaker during Tuesdays trading session as traders are paring down their holdings ahead of the FOMC announcement. While inflation is positive for gold prices, the risk that the FOMC will actually raise interest rates and make the US dollar a higher yielding investment has been hurting the precious metal. Oil is continuing its attempt to reach the all time high, ignoring the fact that there is a slowdown in US demand and the restoration of output in Nigeria.
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Tuesday, June 24, 2008
BetOnMarkets.com Afternoon Update
The same old market evils are back after a brief respite yesterday. There’s pressure on US financial stocks, oil refusing to budge significantly below $130, dramatic drops in US consumer confidence and the US housing collapse showing signs of accelerating not subsiding. Yesterday was the slowest trading day since May 12th, but market makers are certainly earning their crumb today as traders jostled for positions ahead of tomorrow’s FOMC interest rate announcement. Traders are pricing in a 90% probability of a no change verdict and a 10% probability of a hike. Even though a hike is unlikely, the Fed is expected to take a very tough line on inflation with hints of a tightening bias. Just want the market doesn’t want to hear. Without a significant catalyst we cannot see the recent trend reversing until we revisit the March lows. If the Fed is too forceful in their inflation fighting language, we could see those lows before the week is done.
BetOnMarkets.com Moring Update
The FTSE is currently indicating a higher open, as traders are waiting for the release of the BBA loans number. While not the most important of the economic releases, this number helps us see the risk tolerance that banks in UK are willing to take. With the end interest rate cuts in UK a given, banks will think twice to agree to loan money at a fixed rate, while their cost of borrowing goes up. Financials are going to be the focus of all the attention while waiting for the FOMC decision across the ocean.
The rise in output of oil in Saudi Arabia was wiped out by the attacks in Nigeria, helping the price per barrel rise over the 136 dollar mark. This could weigh heavily on the Consumer Confidence which is due to be released today at 14.00GMT. Consumers have been hit on every possible side, with no relief in sight, while the US consumers were given a stimulus package, not many of them spent it as predicted. Most recipients used the extra 600$ to pay for food or catch up on delinquent bills.
The rise in output of oil in Saudi Arabia was wiped out by the attacks in Nigeria, helping the price per barrel rise over the 136 dollar mark. This could weigh heavily on the Consumer Confidence which is due to be released today at 14.00GMT. Consumers have been hit on every possible side, with no relief in sight, while the US consumers were given a stimulus package, not many of them spent it as predicted. Most recipients used the extra 600$ to pay for food or catch up on delinquent bills.
Monday, June 23, 2008
BetOnMarkets.com Weekly Briefing
Contents This Week:
Economic calendar for week 23rd - 27th June 2008.
Commentary: The week ahead.
Economic Calendar for week 23rd - 27th June 2008
PLEASE NOTE - All times GMT not BST. BST is +1 Hr.
Monday June 23rd:
GE - 07:30 - Manufacturing PMI.
GE - 07:30 - Services PMI.
GE - 08:00 - Ifo Business Climate Index.
GE - 08:00 - Ifo Business Expectations Index.
EU - 08:00 - Manufacturing PMI.
EU - 08:00 - Services PMI.
Tuesday June 24th:
GE - 06:00 - Consumer Confidence.
FR - 06:45 - Consumer Spending M/M.
UK - 08:30 - BBA Mortgage Approvals.
US - 13:00 - National HPI Composite-20 Y/Y.
US - 14:00 - Consumer Confidence.
US - 14:00 - House Price Index M/M.
US - 14:00 - Richmond Fed Index.
US - 12:30 - Current Account.
Wednesday June 25th:
GE - 08:00 (Tentative) - Prelim CPI M/M.
EU - Tentative - ECB President Trichet Speaks.
UK - 10:00 - CBI Distributive Trades Realized.
US - 12:30 - Core Durable Goods Orders M/M.
US - 12:30 - Durable Goods Orders M/M.
US - 14:00 - New Home Sales.
US - 14:30 - Crude Oil Inventories.
US - 18:15 - FOMC Statement.
US - 18:15 - Federal Funds Rate.
Thursday June 26th:
EU - 06:00 - German Import Price Index M/M.
EU - 08:00 - M3 Money Supply Y/Y.
UK - 08:30 - Business Investment Q/Q.
UK - 08:45 - MPC Treasury Committee Hearings.
US - 12:30 - Final GDP Q/Q.
US - 12:30 - Unemployment Claims.
US - 12:30 - Final GDP Price Index Q/Q.
US - 14:00 - Existing Home Sales.
US - 14:30 - Natural Gas Storage.
Friday June 27th:
EU - 08:00 - Current Account.
UK - 08:30 - Current Account.
UK - 08:30 - Final GDP Q/Q.
EU - 09:00 - Consumer Confidence.
US - 12:30 - Core PCE Price Index M/M.
US - 12:30 - Personal Spending M/M.
US - 12:30 - Personal Income M/M.
US - 13:55 - Revised Michigan Sentiment.
EU - 16:30 - ECB President Trichet Speaks.
EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany
The week ahead.
It was yet another tough week for global stock markets, with the Dow Jones & S&P 500 declining 3.78% on the week and the FTSE down 3.37%. With oil rallying $4, renewed trouble in the financial sector, downgrades to monoline insurers and trouble in the Middle East, markets encountered an ugly storm on Friday.
Crude oil prices continued to hold above the $130 handle after competing news flows kept oil prices within a $10 range over the week. Downside pressure came from the Chinese government stating that it would be putting up energy prices. With China behind a large proportion of crudes bull run, there is the potential for demand to drop significantly on the back of this. China is the second largest fuel consumer after the US, pushing sales in SUVs thanks to fuel subsidies. Now, as in the US, prices are starting to bite and demand could soon subside. The biggest factor in the future price of oil will be the outcome of the Saudi conference on oil this weekend.
Elsewhere, US leading economic indicators came in at slightly better than indicated, but the Philadelphia Fed Manufacturing index registered its worst reading for 20 years. On the company front, there were some disappointing earnings from Fedex. The logistics company has been hit hard by the price of oil and is seen as a bellwether for the global economy.
Banks with the highest exposure to the UK property market such as HBOS led the fallers on the FTSE. An RBS note to clients released previously, gained attention for its stark warning about the potential for a crash between now and September. Goldmans added further gloom to the already dark sentiment by warning that a deep recession is very possible. Next weeks news flow is dominated by the US interest rate announcement on Wednesday. A no change verdict is expected to be the more likely outcome, but aside from the small potential for surprise next week, it is the prospects for the rest of the year that will cause the most excitement. Chatter that US rate hike speculation is overdone caused some initial excitement last week, but this alone wasnt enough to push markets higher in the face of some difficult head winds.
Thursday sees the release of US existing home sales. US Housing starts were down 3.3% last month, falling to a 17 year low. It is little surprise US builders are unwilling to add to their housing inventories in light of recent data. According to the S&P/ Case-Shiller Home price index of 10 major US cities, house prices are now down 15.1% compared to the same month a year ago. In addition, nearly 18.8% of subprime mortgages were past their due in the first quarter of 2008.
There are mixed prospects for the week ahead especially with a US interest rates decision coming up. An interesting sentiment study was highlighted by Jason Goepfert of SentimenTrader.com. His Smart Money/ Dumb money indicator tracks the positions of market timers that have proven to be good or poor at predicting the market in the past. The logic is to follow the smart money and avoid the dumb money. Last week the dumb money confidence dipped below 29%. The last 163 times this has happened, the S&P 500 was positive three months later 100% of the time, with an average gain of 12.3%. If history is anything to go by, it clearly pays to do the opposite of whatever the dumb money is doing.
However, the case for a rally is certainly not clear cut and Mark Hulbert, who tracks the performance of stock pick newsletters believes there is still not enough panic out there for a true contrarian buy signal. According to Hulbert, the bearishness that prevails right now almost seems to be a calm and tranquil form of bearishness, as opposed to the gut-wrenching emotions of despair and gloom that typically is seen when the typical adviser throws in the towel, having given up all hope. When the typical advisor has given up hope, the contrarian investor becomes more interested in the opposite trade.
A Bull bet on the S&P 500 to be higher than Fridays opening value of 1333 in three months time could return 107%. Given recent market trends though, it may be better to wait for signs of further capitulation in the form of a 2.5% daily drop or greater.
Economic calendar for week 23rd - 27th June 2008.
Commentary: The week ahead.
Economic Calendar for week 23rd - 27th June 2008
PLEASE NOTE - All times GMT not BST. BST is +1 Hr.
Monday June 23rd:
GE - 07:30 - Manufacturing PMI.
GE - 07:30 - Services PMI.
GE - 08:00 - Ifo Business Climate Index.
GE - 08:00 - Ifo Business Expectations Index.
EU - 08:00 - Manufacturing PMI.
EU - 08:00 - Services PMI.
Tuesday June 24th:
GE - 06:00 - Consumer Confidence.
FR - 06:45 - Consumer Spending M/M.
UK - 08:30 - BBA Mortgage Approvals.
US - 13:00 - National HPI Composite-20 Y/Y.
US - 14:00 - Consumer Confidence.
US - 14:00 - House Price Index M/M.
US - 14:00 - Richmond Fed Index.
US - 12:30 - Current Account.
Wednesday June 25th:
GE - 08:00 (Tentative) - Prelim CPI M/M.
EU - Tentative - ECB President Trichet Speaks.
UK - 10:00 - CBI Distributive Trades Realized.
US - 12:30 - Core Durable Goods Orders M/M.
US - 12:30 - Durable Goods Orders M/M.
US - 14:00 - New Home Sales.
US - 14:30 - Crude Oil Inventories.
US - 18:15 - FOMC Statement.
US - 18:15 - Federal Funds Rate.
Thursday June 26th:
EU - 06:00 - German Import Price Index M/M.
EU - 08:00 - M3 Money Supply Y/Y.
UK - 08:30 - Business Investment Q/Q.
UK - 08:45 - MPC Treasury Committee Hearings.
US - 12:30 - Final GDP Q/Q.
US - 12:30 - Unemployment Claims.
US - 12:30 - Final GDP Price Index Q/Q.
US - 14:00 - Existing Home Sales.
US - 14:30 - Natural Gas Storage.
Friday June 27th:
EU - 08:00 - Current Account.
UK - 08:30 - Current Account.
UK - 08:30 - Final GDP Q/Q.
EU - 09:00 - Consumer Confidence.
US - 12:30 - Core PCE Price Index M/M.
US - 12:30 - Personal Spending M/M.
US - 12:30 - Personal Income M/M.
US - 13:55 - Revised Michigan Sentiment.
EU - 16:30 - ECB President Trichet Speaks.
EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany
The week ahead.
It was yet another tough week for global stock markets, with the Dow Jones & S&P 500 declining 3.78% on the week and the FTSE down 3.37%. With oil rallying $4, renewed trouble in the financial sector, downgrades to monoline insurers and trouble in the Middle East, markets encountered an ugly storm on Friday.
Crude oil prices continued to hold above the $130 handle after competing news flows kept oil prices within a $10 range over the week. Downside pressure came from the Chinese government stating that it would be putting up energy prices. With China behind a large proportion of crudes bull run, there is the potential for demand to drop significantly on the back of this. China is the second largest fuel consumer after the US, pushing sales in SUVs thanks to fuel subsidies. Now, as in the US, prices are starting to bite and demand could soon subside. The biggest factor in the future price of oil will be the outcome of the Saudi conference on oil this weekend.
Elsewhere, US leading economic indicators came in at slightly better than indicated, but the Philadelphia Fed Manufacturing index registered its worst reading for 20 years. On the company front, there were some disappointing earnings from Fedex. The logistics company has been hit hard by the price of oil and is seen as a bellwether for the global economy.
Banks with the highest exposure to the UK property market such as HBOS led the fallers on the FTSE. An RBS note to clients released previously, gained attention for its stark warning about the potential for a crash between now and September. Goldmans added further gloom to the already dark sentiment by warning that a deep recession is very possible. Next weeks news flow is dominated by the US interest rate announcement on Wednesday. A no change verdict is expected to be the more likely outcome, but aside from the small potential for surprise next week, it is the prospects for the rest of the year that will cause the most excitement. Chatter that US rate hike speculation is overdone caused some initial excitement last week, but this alone wasnt enough to push markets higher in the face of some difficult head winds.
Thursday sees the release of US existing home sales. US Housing starts were down 3.3% last month, falling to a 17 year low. It is little surprise US builders are unwilling to add to their housing inventories in light of recent data. According to the S&P/ Case-Shiller Home price index of 10 major US cities, house prices are now down 15.1% compared to the same month a year ago. In addition, nearly 18.8% of subprime mortgages were past their due in the first quarter of 2008.
There are mixed prospects for the week ahead especially with a US interest rates decision coming up. An interesting sentiment study was highlighted by Jason Goepfert of SentimenTrader.com. His Smart Money/ Dumb money indicator tracks the positions of market timers that have proven to be good or poor at predicting the market in the past. The logic is to follow the smart money and avoid the dumb money. Last week the dumb money confidence dipped below 29%. The last 163 times this has happened, the S&P 500 was positive three months later 100% of the time, with an average gain of 12.3%. If history is anything to go by, it clearly pays to do the opposite of whatever the dumb money is doing.
However, the case for a rally is certainly not clear cut and Mark Hulbert, who tracks the performance of stock pick newsletters believes there is still not enough panic out there for a true contrarian buy signal. According to Hulbert, the bearishness that prevails right now almost seems to be a calm and tranquil form of bearishness, as opposed to the gut-wrenching emotions of despair and gloom that typically is seen when the typical adviser throws in the towel, having given up all hope. When the typical advisor has given up hope, the contrarian investor becomes more interested in the opposite trade.
A Bull bet on the S&P 500 to be higher than Fridays opening value of 1333 in three months time could return 107%. Given recent market trends though, it may be better to wait for signs of further capitulation in the form of a 2.5% daily drop or greater.
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