International Markets

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China [70]
India [1]
Isreal [12]
Japan [19]
United States [134 + 33]
- Federal Reserve [85]

Italy Enters Recession, But When Will It Leave?- by Edward Hugh : Barcelona

According to preliminary data from national statistics office ISTAT this morning Italy's GDP fell 0.3 percent in the second quarter compared with the first three months of the year and was unchanged year-on-year (ie zero percent annual growth). Final data and a detailed breakdown for the second quarter will be released on Sept. 10. In the first quarter, GDP rose 0.5 percent quarter-on-quarter and increased 0.3 percent year-on-year.
Another Very Quiet Day And Another Very Bullish Day For Our Longs; Fed Meeting Should Produce A One And Done...- It was a very quiet day of trading and until the very last hour appeared to be the lowest volume day the entire year. However, a pickup in action the past hour prevented that from happening. But instead of a rush to buy stocks there was a small little rush to sell. That helped take the indexes off their highs and helped leave them basically flat for the day with most indexes up or down between up .1% and down .2%. The biggest moving index was the SP 600 with a walloping .6% rally.
IG Index Daily Market Update 7/08/08-
IG Index Daily Market Update 7/08/08
Sovereign Wealth Funds Starting To Turn Away From The U.S.- Since 2007, sovereign wealth funds have spent almost $80 billion to buy stakes in U.S. companies, in particular banks that were desperately in need of a capital infusion. Now, the International Herald Tribune is reporting that the lender of last resort may be having second thoughts. Even though most SWF don't have to report mark-to-market losses in public, they still want to make a return, and some high profile investments, such as those in Merrill Lynch (MER), are not turning out as expected. Many SWF are now entering "south-south" trades, or in other words, simply investing in other emerging economies. While the moves are being made to not only look for higher return, south-south trades also prevent emerging economies (many of which got their start-up capital from the West) from simply recycling their funds back into these same economies. Oil-exporting countries for one are looking to hedge against oil price fluctuations by becoming underweight assets correlated with oil prices, i.e., just about everything U.S. based.
Another Very Quiet Day And Another Very Bullish Day For Our Longs; Fed Meeting Should Produce A One And Done...- It was a very quiet day of trading and until the very last hour appeared to be the lowest volume day the entire year. However, a pickup in action the past hour prevented that from happening. But instead of a rush to buy stocks there was a small little rush to sell. That helped take the indexes off their highs and helped leave them basically flat for the day with most indexes up or down between up .1% and down .2%. The biggest moving index was the SP 600 with a walloping .6% rally.
IG Index Daily Market Update 6/08/08-
IG Index Daily Market Update 6/08/08
IG Index Daily Market Update 5/08/08-
IG Index Daily Market Update 5/08/08
McCain: U.S. Needs an Economic 'surge'-
PlusMcCain: U.S. Needs an Economic 'surge'McCain: U.S. Needs an Economic 'surge'The Associated PressJohn McCain says the U.S. needs an economic 'surge' to keep jobs in the country and create new ones. (Aug. 6)This video contains ONLY natural sound. No script is available.
The Sun Will Come Out … Tomorrow …- "The sun will come out … tomorrow … Tomorrow in this case may be a bit far off, but it is out there, and the goal is to make it all the way to tomorrow with your capital intact and hopefully with some gains along the way," says Bennet Sedacca in a guest contribution to Investment Postcards from Cape Town.
Wall St. cheers Fed signal-
Aug 5 - U.S. stocks surged nearly 3 percent across the board in the biggest one-day rally in four months as investors bet the Federal Reserve will not raise rates this year.
Wall Street Extends Rally After Fed Decision-
BusinessWall Street Extends Rally After Fed DecisionWall Street Extends Rally After Fed DecisionThe Associated PressWall Street has barreled higher, lifting the Dow Jones industrials more than 330 points after the Federal Reserve left interest rates unchanged. (Aug. 5)Wall Street has barreled higher, lifting the Dow Jones industrials more than 330 points after the Federal Reserve left interest rates unchanged. The Dow Jones Industrials closed up 331 points at 11,615. The Standard and Poor's 500 index rose 35 to close at 1,284 and the Nasdaq rose 64 to settle at 2,349. The Fed said "economic activity expanded in the second-quarter" due in part to growth in consumer spending. Wall Street's worries about consumers have contributed to some of its big pullbacks in recent weeks. ___ ___, The Associated Press.
Another Very Quiet Day And Another Very Bullish Day For Our Longs; Fed Meeting Should Produce A One And Done...- It was a very quiet day of trading and until the very last hour appeared to be the lowest volume day the entire year. However, a pickup in action the past hour prevented that from happening. But instead of a rush to buy stocks there was a small little rush to sell. That helped take the indexes off their highs and helped leave them basically flat for the day with most indexes up or down between up .1% and down .2%. The biggest moving index was the SP 600 with a walloping .6% rally.
Will China Development Bank buy Dresdner?-
Falling oil prices in the international markets haven’t helped local stock markets as much as they had in the recent past. Oil fell earlier today to below $120 a barrel for the first time in three months, but the SSE Composite nonetheless dropped 51 points, or 1.9%, to close at 2690. As in the recent past, the decline was led by property developers and brokers, which is particularly striking since we received confirmation today of last week’s rumor that the PBoC would relax the lending caps by 5% for national commercial banks and by 10% for local commercial banks (who are presumed to be more likely to lend to the struggling SME sector). This means they can lend up to 105% or 110% of

Words from the (investment) wise for the week that was (July 28 – August 3, 2008)- As oil prices seesawed through the past week, fresh uncertainty about the outlook for the beleaguered financial sector triggered another wave of volatility in financial markets. Economic data were mixed, whereas earnings were mostly better than feared. After all the action, the S&P 500 Index closed the week virtually unchanged, posting a small gain of 0.2%. Read all about this in my weekly review, highlighting some thought-provoking news items and quotes from market commentators during the past week.

Where Now for CEE and Baltic Currencies?-

Ever since the illusive credit turmoil began sentiment in the market place has been fickle and essentially, like the assets of which it consists, volatile. We started off with an adamant focus on downside risks to growth which then turned into a focus and fear of inflation. Now, as the cyclical data has turned for the worse in Europe and many places in Asia the focus seems to be reverting to growth. Now, I won't go into the whole decoupling v recoupling discussion at this point since I think that this dichotomy is a false one. It never was about de-coupling à la traditionelle but moreso about two interrelated points. The first would be the extent to which the world already has decoupled from the US in the sense that a key group of emerging economies are now set to ascend in economic prowess. The second would be the extent to which the de-coupling thesis always built on a fallacy.

BCSC revises 51-509 Rule for U.S. OTC issuers – Part 1- This entry is part 1 of 1 in the series BCSC revises 51-509 Rule for U.S. OTC issuersThe British Columbia Securities Commission (BCSC) is proposing new rule changes along with the related companion policy’s and forms for issuers quoted in the U.S. over-the-counter markets (OTCBB) and pink sheets. These changes can be located [...]

Market call 04/04/2008-

CFD, mercati finanziari, analisi, USA, crisi,

IG Index Daily Market Update 4/08/08-

IG Index Daily Market Update 4/08/08

Stock Market Performance Round-up: We All Fall Down- In spite of a “teaser” of a rally and stock markets holding their July 15 lows, equity markets were still in the red for the month of July. I have put together a table of global stock markets’ performances over various measurement periods for ease of comparison, but it is not a pleasant message.

IG Index Daily Market Update 01/08/08-

IG Index Daily Market Update 01/08/08

IG Index Daily Market Update 31/07/08-

IG Index Daily Market Update 31/07/08

Another Very Quiet Day And Another Very Bullish Day For Our Longs; Fed Meeting Should Produce A One And Done...- It was a very quiet day of trading and until the very last hour appeared to be the lowest volume day the entire year. However, a pickup in action the past hour prevented that from happening. But instead of a rush to buy stocks there was a small little rush to sell. That helped take the indexes off their highs and helped leave them basically flat for the day with most indexes up or down between up .1% and down .2%. The biggest moving index was the SP 600 with a walloping .6% rally.

Study: biogas from manure could generate energy for millions in the U.S.-

Converting livestock manure into a domestic renewable fuel source could generate enough electricity to meet up to three per cent of North America's entire consumption needs and lead to a significant reduction in greenhouse gas emissions (GHGs), according to a paper published today by researchers from the University of Texas at Austin, in the Institute of Physics' Environmental Research Letters.

The open access paper, 'Cow Power: The Energy and Emissions Benefits of Converting Manure to Biogas', has implications for all countries with livestock as it is one the few attempts to outline a procedure for quantifying the national amount of renewable energy that herds of cattle and other livestock can generate and the concomitant GHG emission reductions.

Bush About-Face: U.S. to Talk to Iran-

China’s Environmental Degradation: Socio-Economic Grounds for Concern-

China is the world’s most populous country and ranks fourth largest in terms of area. The economy, which is already huge, is also growing at a blistering rate. According to the International Monetary Fund, China’s economy is the second largest in the world in terms of Purchasing Power Parity, fourth largest in the world in terms of GDP, and the fastest growing economy with growth rates hovering around 10%. Unfortunately, all this prosperity comes at an immense price. China’s environmental problems are among the worst in the world, and are likely to only get worse. These environmental issues are a big problem for China because they have real socio-economic implications for the Chinese people and China’s economy. The goal of this article is to bring light to these environmental problems, display their socio-economic ramifications, and provide suggestions that will help China cope with these problems so that its economy can continue to prosper throughout this next century.

Lopping off zeros in Zimbabwe- Two sure signs that a currency is in trouble are when it comes with an expiration date and then the government starts lopping off zeros - lots of zeros.

Earlier today, the BBC reported another bold step in the Zimbabwe government's ongoing fight against hyperinflation - striking ten zeros from the currency.

This immediately transforms a Z$10 billion bill into a Z$1 bill.

Central bank governor Gideon Gono announced the new currency will begin circulating on Friday following what is now regarded as an unsuccessful launch of a Z$100 billion note just last week.

IG Index Daily Market Update 30/07/08-

IG Index Daily Market Update 30/07/08

IG Index Daily Market Update 29/07/08-

IG Index Daily Market Update 29/07/08

German Consumer Confidence Slides Raising Eurozone Recession Fears- by Edward Hugh: Barcelona

German consumer confidence dropped to the lowest in more than five years entering August as the sharp rise in energy and food prices continued to weaken purchasing power and the economic outlook continued to deteriorate. The GfK forward looking consumer confidence index for August declined to 2.1, its lowest level since June 2003 (and down from a revised 3.6 in July).

The sub-index measuring income expectations decreased to minus 20 from minus 7.2, while the consumers' propensity to spend component fell to minus 26.2 from minus 23.7. Economic expectations dropped to minus 8 from 7.5.

Spanish Mortgage Lending Down Sharply In May, Bank Credit Ratings Increasingly Under Review- by Edward Hugh: Barcelona

Spanish house sales dropped sharply again in May for the fourth month running, official figures showed on Monday, and talk of price declines is now becoming much more general. House sales fell by 34 percent year-on-year in May and mortgage borrowing was down by 40.4 percent from a year earlier, according to the latest data from Spain's National Statistics Institute. The result is rather a shocker since many had obviously been clutching at straws following April's better-than-expected year on year decline in new mortgages of only 7.8%. Reality is, unfortunately, now starting to sink in.

The Baltics, Lithuania, and Eastern Europe ... redux-

THE weather deities are extraordinarily generous at the moment here in Copenhagen and being cooped up in a 17m2 studio does not exactly inspire to being a good protestant. However, financial markets and news streams are serving up a nice batch of data points and being the wonk I am, I am keeping tap; even if the beaches of Zealand have (and will be) frequented more than a couple of times.

IG Index Daily Market Update 28/07/08-

IG Index Daily Market Update 28/07/08

Words from the (investment) wise for the week that was (July 21 – 27, 2008)- Financial markets witnessed another roller-coaster week as renewed concerns about the global economy and the health of the financial sector surfaced, resulting in a mixed week for world stock and bond markets, an improved US dollar and continued weakness in oil and commodities. Read all about this in my weekly review, highlighting some thought-provoking news items and quotes from market commentators during the past week.

World Business: Cottoning On 18/07/08-

Egypt's textile and ready made garment, or RMG, industry is the country's oldest industrial sector and still one of the biggest. Over the past few years RMG exports have more than doubled but can that trend continue in the face of industrial unrest, and a sharp rise in inflation?

World Business: Tilting at Windmills 18/07/08-

The German coastal city of Bremerhaven is taking on a new lease of life as one of Europe's leading centres for wind technology. Companies are lining up to set up shop in the port, in the process transforming this once economically depressed city.

World Business: Imagine the Future 18/07/08-

Every year "The Imagine Cup" brings together some of the world's brightest young people in a competition to find the technogical innovations of the future. This year the aim was to get the young tech experts interested in environmental issues, and develop some software solutions that could help save the planet.

World Business: Running a Rocky Road 18/07/08-

The 8th day of the 8th month of the 8th year is fast approaching, when the eyes of the world will turn to China for the opening ceremony of the Olympics. But the road to the Beijing Games has been far from smooth. Could this be one of the most controversial Games in Olympic history?

Stock Market Returns – The Wonder of Compounding- Albert Einstein described compound growth as the eighth wonder of the world. Although he may have passed away in 1955, the concept of compounding remains the single most important principle governing investment. This post provides the empirical evidence.

Anyone for a 100 billion dollars?- Full marks for eBay entrepreneurs for stepping in where forex traders have lost count of the zeros being added to the Zim dollar every few days. How about paying US$83 for the new Z$100 billion bank note! Although the novelty value of the Zim note is surging, the sad truth is that the note is not worth enough to buy a loaf of bread.

The Eurozone - That Sinking Feeling?-

One need not be well versed in the art of reading entrails or posses any other kind of unworldly powers to see that the Eurozone economy may be about to head off over the cliff. Now, just as the Q1 GDP figure was something of a technical glitch due to the forward pushing of investment which made Germany ride an impressive 1.5% reading q-o-q, so is the corresponding Q2 figure likely to be a similar (negative) glitch. The only important question is the extent of the slowdown since without that we really cannot build any sound forecasts for an annual growth rate of the Eurozone not to speak of Germany itself.

The Eurozone - That Sinking Feeling?-

One need not be well versed in the art of reading enthrails or posses any other kind of unworldly powers to see that the Eurozone economy may be about to head off over the cliff. Now, just as the Q1 GDP figure was something of a technical glitch due to the forward pushing of investment which made Germany ride an impressive 1.5% reading q-o-q, so is the corresponding Q2 figure likely to be a similar (negative) glitch. The only important question is the extent of the slowdown since without that we really cannot build any sound forecasts for an annual growth rate of the Eurozone not to speak of Germany itself.

Video Interview: Roubini – More pain, but not Armageddon- Nouriel Roubini, professor at New York University and chairman of RGE Monitor, is renowned for his bearish stance on the US economy and stock markets. Henry Blodget and Aaron Task have just conducted a three-part video interview on behalf of Yahoo Finance with Roubini on a variety of topical issues. This is the subject of this blog post.

IG Index Daily Market Update 24/07/08-

IG Index Daily Market Update 24/07/08

Louise Yamada: Bearing Up- This post features an interview by Kate Welling with Louise Yamada, top-ranked "Institutional Investor" technical analyst. Louise's track record is just too good to be ignored, especially when she concludes the interview by saying: "I'd rather be out of the market wishing I were in, than in the market wishing I were out."

IG Index Daily Market Update 23/07/08-

IG Index Daily Market Update 23/07/08

Alternative Energy & Conventional Energy: Is An Image Worth A Thousand Words?- It wasn't long ago that people still believed the price of energy commodities - and crude oil in particular - had a greater impact on alt energy stocks than did general movements in equity markets or even fundamental factors. The...

For Fed Work, Big Biz Trumps Small Firms-

PlusFor Fed Work, Big Biz Trumps Small FirmsFor Fed Work, Big Biz Trumps Small FirmsThe Associated PressAn Associated Press investigation finds companies near Washington get the bulk of federal contracts awarded to small businesses. But as the AP's Lee Powell reports, many of these firms are not so small.

IG Index Daily Market Update 22/07/08-

IG Index Daily Market Update 22/07/08

A Year (Week) on the Wild Side?-

market.post%20header.gif

[Update: Brad Setser clarifies, in the comment section, his view on Sender's FT piece referenced below]

THE last week (or was that year?) has certainly been something of a ride hasn't? In fact, I thought it would be apt to reproduce this picture by the brilliant KAL who normally spices up the Economist with his imagery that lay serious claim to the adage that a picture tells more than a thousand words. This particular specimen and the ensuing headline were on the front cover in October 1997 when markets also took investors and observers for a roller-coaster ride. I think it is quite fitting in describing the feeling many a trader and market participant must have at the moment.

Investment Externalities and Investors' Search for Yield-

Many people have rules upon which they lead their lives and conduct their behavior; in fact, one could argue that most people would subscribe to this some way or the other. My readers should immediately be assured that I am not in the process of morphing Alpha.Sources into some kind of quasi philosophical column; nor would I dare embark on an account of the specific rules I live by myself. However, one very simple rule which I have found quite useful is what I have chosen to dub the "one paper a week" rule.

The ECB - Walking the Walk?-

As the proverbial end of the road nears for the ECB and the July meeting it is as if the market divinities have been trying their utmost to penetrate the ivory tower in Frankfurt. Of course, I am not sure that my readers have been sticking their heads into their Bloomberg terminals with the same vigour as I have, but I can tell you that the past week's news from the Eurozone has been devastating. Now, if you are confused I can understand. I mean, was this not exactly the point with the ECB's hawkishness in the sense that it would jolt the Eurozone economies to such an extent that inflation would squirm back below the 2% mark? Indeed it was but as I have been warning several times, the asymmetric nature of the current slowdown and ultimately its severity across the entire zone makes this a very dangerous policy choice.

The ECB - Walking the Walk?-

Fundamentals To Drive the Yen?-

Hot in on the heels of my paper on carry trade and risk aversion it seems as if the Yen is now reverting to those famous fundamentals. Consequently, we learned a few days ago how JPMorgan were telling their clients and the rest of us how the Yen is likely to decline to 114 as Japanese investors buy debt which is not denominated in Yen (i.e. depreciation due to outflows).

The yen may weaken to 112 per dollar by March 2009 as Japanese individual investors shift money into foreign-currency bonds from investment trusts, said Tohru Sasaki, chief currency strategist in Tokyo at JPMorgan Chase & Co.

Fundamentals To Drive the Yen?-

India Battles Between Inflation And Growth-- Rating Agencies Steadily Turn The Screw- India's inflation accelerated to the fastest pace in more than 13 years at the start of July, putting pressure on the central bank to continue raising interest rates following the two increases made last month. Wholesale prices rose 11.91 percent in the week to July 5, after gaining 11.89 percent in the previous week, according to the commerce ministry in New Delhi on Friday.

Russia's Consumption-Driven Inflation: Will It All End In Tears?- by Edward Hugh: Barcelona

Russia's inflation rate remained tantalisingly frozen at its highest in more than five years in June as energy and food prices continued to move on upwards. Russian consumer prices were up 15.1 percent from a year ago - matching the rate in May- according to data released earlier this week by the Federal Statistics Service.

Major Spanish Builder Suspends Trading As Consumer Confidence Plummets- by Edward Hugh: Barcelona

What Is The Risk Of A Serious Melt-Down In The Spanish Economy?- by Edward Hugh: Barcelona

Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past, the ocean is flat again
John Maynard Keynes

'As far as I am concerned, this is ... the most complex crisis we've ever seen due to the number of factors in play'
Spanish Economy Minister Pedro Solbes speaking this week to Spanish radi o station Punto Radio

Are Spain's Bank's Facing A Short Term Liquidity Crunch?- by Edward Hugh: Barcelona

Brazil Central Bank Raises Interest Rates to 12.25%- by Edward Hugh: Barcelona

Spain Unemployment May 2008 and the Worsening Real Economy- by Edward Hugh: Barcelona

Unemployment rose in Spain last month for the first time in the month of May since 1979. The Spanish newspaper ABC notes in passing that the Spanish Economy Minister Pedro Solbes has finally managed to describe the situation as ‘serious ’.

The number of people unemployed in Spain increased by 15,058 in May to a total of 2,353,575, according to the Spanish labour office INEM yesterday. The number of registered unemployed at the end of May was thus up by 0.6% from the previous month.

By sector, unemployment in the services sector was down 0.2% and also dropped 0.1% in agriculture. On the other hand, unemployment in construction was up 4.6% and was also up 0.8% in industry.

Polish Central Bank Leaves Interest Rates Unchanged in May- by E

Food Prices, Farmland, Global Rebalancing and Rural Labour Shortages- by Edward Hugh: Barcelona

Ukrainian President Viktor Yushchenko said last week that he had agreed to let Libya grow wheat on 100,000 hectares of land in the Ukraine. In exchange, Libya promised to include the former Soviet republic in construction and gas deals.

With so many interesting debates going on the Demography Matters blog at the present time I find it hard to pull myself away, but I couldn't help getting drawn into the implications of the points raised by this article in the Financial Times about how the global pressure on food supplies and the rapid increase in prices is now leading to an equally rapid increase in the price of farmland in one country after another. And then, thinking about a country like Ukraine - with a declining population, rapidly falling unemployment, and growing labour shortages - I couldn't help scratching my head and asking myself, but just where are they going to get the labour force from to work all this extra land they want to cultivate?

Jitters In The Eurozone?- by Edward Hugh: Barcelona

Economic confidence across the eurozone has now started eroding steadily, with increasing signs that the growth slowdown is hitting the region’s manufacturing output and labour market, according to a number of indicators we have been seeing in recent days.

The European Commission’s eurozone “economic sentiment” index fell notably last month, dropping from 99.6 in March to 97.1 in April – the lowest level since August 2005. With the indicator regarded as good guide to growth trends, the reasonably steep decline pointed to a marked deceleration in economic activity, a deterioration which we are also seeing on other fronts like retail sales. If we look at the overall confidence indicator chart we can see that things have now been deteriorating steadily since last summer.

Serbia, Must What Goes Up Really Come Down?- by Edward Hugh: Barcelona

This post, which is to accompany Manuel's election coverage coming later t oday, may be considered an update on a previous extensive analysis of Serbia's economic and demographic dilemmas which I carried out at the time of the Presidential election in February (see the post itself for a more details on some of the issues raised here).

The "up" I in the title of this post is, of course, a reference to the recent sudden and dramatic rise in the annual rate of Serbian inflation - which after some years of steady reductions suddenly took off in June 2007, and has been climing sharply since, reaching a high of 15.8% in April 2008.

Monetary Chaos Breaks Out at the Ukraine Central Bank- by Edward Hugh: Barcelona

Does anyone happen to know offhand the "official" dollar rate of the Ukra inian currency, the Hryvnia? I am asking this question since clearly over at the central bank they are having difficulty deciding at the moment, since - like the legendary character Hydra - they seem to be speaking with two "heads" at the same time, and the only question I can ask is: would the real representative of the Ukraine central bank please stand up!

IG Index Daily Market Update 21/07/08-

IG Index Daily Market Update 21/07/08

World Business: New King Coal 11/07/08-

Since the 1980's, coal mining in the UK has been regarded by many as a dead industry. Today the UK imports about 70% of its coal. But recently, import costs along with global demand for coal have been rising, as has the price of oil and gas. So the economic viability of British coal has increased, and today, the industry is undergoing something of a renaissance.

All’s not well with the U.S. economy-

Here is an article from the NYT that everyone in business, venture capital, and the stock market should read.

The “Highlights”

“I was a relative optimist, but I’ve certainly become more pessimistic,” said Alan S. Blinder, an economist at Princeton, and a former vice chairman of the board of governors at the Federal Reserve. “The financial system looks substantially worse now than it did a month ago. If the Freddie and Fannie bailout were to fail, it could get a hell of a lot worse. If we get more bank failures, we have the possibility of seeing more of these pictures of people standing in line to pull their money out. That could really scare consumers.”

In one respect, Mr. Blinder added, this is like the Great Depression. “We haven’t seen this kind of travail in the financial markets since the 1930s,” he said.

Understanding Why EUR/JPY Hit a Record High-

Although it has been relatively quiet in the foreign exchange market today, the Euro hit a record high against the Japanese Yen. The primary reason why EUR/JPY has rallied 11 percent over the past 3.5 months is because of US growth - not many people realize that the price action of EUR/JPY is directly correlated with how the US economy is doing.

According to the following chart, there is a strong correlation between manufacturing ISM and EUR/JPY. The arrows on the chart point to the times when manufacturing ISM had a meaningful dip below the 50 boom / bust level. This has happened more than 7 times over the past 20 years. Each time the US manufacturing sector contracted, EUR/JPY rallied. On average, from the month that ISM contracted to the month that ISM moved back above 50, EUR/JPY rallied 314 pips.

eurjpy072108

The Danish Economy under the Loop-

There is certainly a lot of commotion at the moment not least surrounding ww.marginalrevolution.com/marginalrevolution/2008/07/parsing-paulson.html">the rescue plan to shore up the two biggest US mortgage lenders Fannie and Freddie Mae, but also, and if we stay in the US we had the collapse of IndyMac, in Spain Martina-Fadesa is in the ropes and in Denmark we have Roskilde Bank.

A Year (Week) on the Wild Side?-

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[Update: Brad Setser clarifies, in the comment section, his view on Sender's FT piece referenced below]

Stock Market Performance Round-up: Dancing to the Same Tune-

Factoring in last week’s stock market rebound, I have put together a table of global stock markets’ performances over various measurement periods and in both local currency and US dollar terms. The numbers speak for themselves and can best be summarized in a single sentence: Despite the variation in the economic impact of the credit crunch, stock markets have by and large been dancing to the same tune.

The Wall Street “leash effect” remained paramount, and stock market (as opposed to economic) decoupling nothing more than a myth.

As a result of the slide of the US dollar over the different measurement periods, the performance of those stock markets where the local currency strengthened against the greenback (pretty much all markets) obviously look better once expressed in US dollar terms (see bottom table).

T-Bill Versus Fed Funds- This is yet another interesting relationship. For useful forecasting, you may want to compare it to the previous entry concerning S&P versus 10 year yield valuations.

Fed funds rates tend to lag 90 day T-Bill rates in direction, by the appearance of these charts. This relationship is interesting because the markets in flight to safety often guides the fed via demand for 90 day T-Bills. Notice how 1974 is a trough in both the spread ratio: (T-Bill - Fed Funds)/Fed Funds as well as S&P valuation. This coincided with a deep recession coincident with oil shocks.

Words from the (investment) wise for the week that was (July 14 – 20, 2008)- The SEC’s announcement to curb naked short selling, together with a dramatic drop in oil prices and a series of better-than-feared earnings announcements from US banks, triggered a recovery in investors’ risk appetite, resulting in a strong stock market rebound. Although the near-term outlook has improved and the long-awaited technical rally has probably commenced, it is premature to cast caution to the wind. Read all about this in my weekly review, highlighting some thought-provoking news items and quotes from market commentators during the past week.

Bookkeeping: Closing Both Indian Banks- I have been waiting for some sort of financial bounce to close out both the Indian banks - unfortunately we have given a lot of unrealized profits away in this "death to buy and hold" market, but despite these gosh awful charts we have been able to sock away $2500 in gains in ICICI Bank (IBN) and $1100 in HDFC Bank (HDB). Obviously profits were far higher say 60-90 days ago. The former has bounced from $21 to $30 (+42%), and the latter $61 to $76 (+25%) in the past week so it's a better time to sell than in the panic. Why Indian banks are selling off as bad or worse than their US counterparts is beyond me but that's the market logic.

World Business: Bankruptcy and Bargains 11/07/08-

You would have to look hard to find an area of the US that has been harder hit by the subprime crisis than Northern California. The latest victim is an entire city, Vallejo in the San Francisco bay area, where falling property taxes have forced the mayor to declare the city bankrupt.

IG Index Daily Market Update 18/07/08-

IG Index Daily Market Update 18/07/08

World Business: Tiny Technology 11/07/08-

Advances in micro technology have delivered smaller, faster and more powerful computing devices. Now Scientists in Switzerland could be on the cusp of a new technological revolution, moving beyond the micro and developing the tiniest technology ever fashioned by human beings.

US/NOK Impressions-

I happen to spend my summers in Norway. I was quite amazed at the amount of negative response received from European posters on the ECB post. I still believe the ECB is making a mistake. Granted, the ECB is dealing with a host of issues the FED does not have, such as, semi-rigid labor markets. I still believe the ECB’s target and potential slavish adherence with keeping to an inflation target will cause a lot of unnecessary pain to the Euro zone. Yes, I am in the “this inflation is transitory” camp. However, the last few days have see

World Business: Paying the Penalty 11/07/08-

This has been a good summer for the Spanish, the country took the trophy at the Euro Championships, and last week Nadal won Wimbledon at the all England Club. However for England itself it has been a dreary time, most notably during Euro 2008, where they failed to even make it to the tournament. This humiliation hurt not only the national pride, but also the UK's economy.

IG Index Daily Market Update 17/07/08-

IG Index Daily Market Update 17/07/08

The US and China: How Similar Are They?-

That’s a broad title that can lead in so many directions.

The world today looks like we’re heading towards another two super-power situation. Consider economic and political influence, voting on the UN security council, acquisition of oil, the space race, and even the medal count at the coming Olympics … there are a lot of themes that demonstrate the power of China, even relative to the US, and perhaps that’s one of several reasons why China is attracting plenty of foreign investment.

World Business: Cover Story Home Security 4/07/08-

As the bite of the credit crunch persists, house prices in the west continue to fall. The US has already seen price corrections of around 20%, and predictions for other residential-rich societies are similarly bleak, but is it all bad news for investors?

World Business: Intro 4/07/08-

This week on World Business, July 4th 2008 Cover Story: Home Security Safe as Houses Dr Ali al Dabbagh Interview Soy Squeeze Weekend Warriors

World Business: Safe as Houses 4/07/08-

With all the concerns about the financial crisis and falling housing prices in the US and UK you might think this would be a time of caution for real estate investors. But that's far from the case in Southeast Asia; where woes in other parts of the world are to be encouraging foreign investors to move their capital to a region still enjoying strong growth.

IG Index Daily Market Update 16/07/08-

IG Index Daily Market Update 16/07/08

World Business: Dr Ali al Dabbagh Interview 4/07/08-

The last few months have seen drastic improvement in Iraq, violence has subsided, and politics appears to be taking over from conflict. According to a recent opinion poll, 43% of Iraqis think that "things are going well". A poor figure but nearly double the response to the same question last September. So has the country finally turned a corner? We sat down with Iraqi Government spokesman Dr Ali al Dabbagh to find out.

Stock markets – up, down, sideways?-

Since topping out in October 2007, global stock markets have been characterized by two distinct phases: a decline through January/March this year, and then a rebound until mid-May. The predominantly weak undertone of the past few weeks has naturally again raised the question of whether the strength from January/March until three weeks ago has simply been a bear market rally, or whether it in fact was a longer-term upturn in stock markets’ fortunes.

I went on record last year calling a primary bear trend for the US (and most other developed) stock markets, and more recently described the most likely medium-term scenario as a “muddle-through” type of pattern. I briefly want to review a few graphs in this post to ascertain whether this view still makes sense, and then next week investigate whether the fundamental picture (especially valuation levels) conveys the same message.

More Historic Actions (Potentially) by the Fed-

Yawn. This is getting so old. Any problem in America.... Print more money, and hand out corporate welfare. Did anyone not see this coming? Oh well, the market reversed temporarily on the joyous sounds of helicopters in the distance. I haven't brought out this picture in months - I've missed it. I continue to laugh in the face of "strong dollar" proponents. Everything we do is a destruction of those current greenbacks in your pocket.

Soy Squeeze-

The surge in world commodity prices has been evident at both the gas pump and the food hall. Inflating food prices have sparked riots and demonstrations around the world. And now in Japan, they could be pushing a once-familiar institution, the local tofu store into extinction.

Sen. Jim Bunning fixated on Fed messes- Senator Jim Bunning (R-Kentucky) joins Ron Paul (R-Texas) as one of the few elected officials who understand one of the major reasons that financial markets and the economy are in the condition they are in today - the Federal Reserve.

In prepared remarks made earlier today as part the Senate Banking Committee hearing (hat tip hardwinterwheat) , Sen. Bunning made the following comments:

I'm deeply concerned about what the Fed has done in the last year and in the last decade. Chairman Greenspan's easy money in the late 90s and then following the tech bust inflated the housing bubble and created the mess we are in today. Chairman Bernanke's easy money in the last year has undermined the dollar and sent oil to a new high every day and an almost doubling since the rate cuts started.

Hungry in Argentina

Gulf Countries Urged to Switch Currency Peg from the Dollar-

T he possibility that some Gulf states, particularly the United Arab Emirates, might abandon their long-time pegs to the dollar has been getting increasing attention recently (for example, from Feldstein and, especially, Setser). It makes sense. The combination of high oil prices, rapid growth, a tightly fixed exchange rate, and the big depreciation of the dollar against other currencies (especially the euro, important for Gulf imports) was always going to be a recipe for strong money inflows and inflation in these countries.

World Business: Weekend Warriors 4/07/08-

World Business: The wedding industry is a profitable business and one area growing more than most is the stag and hen, or bachelor party sector. While historically this involves no more than a night out, recent trends have seen the stag night become a stag weekend, leading to an explosion of tour operators and activity organizers cashing in on wild times.

IG Index Daily Market Update 15/07/08-

IG Index Daily Market Update 15/07/08

Deteriorating Health of the US Financial Sector-

“Finance is the art of passing money from hand to hand until it finally disappears,” said Robert W. Sarnoff. This is certainly the way it looked last week as the fall-out of the credit crisis deepened.

Markets had investors feeling dazed and confused after another roller-coaster week amid further evidence of the deteriorating health of the US financial sector and a renewed rise in oil prices. Adding to the pain, Barron’s Randall Forsyth said: “Now that the bear market has officially arrived, it may stick around and gnash its teeth for a while – until it’s scared away those who remain.”

IG Index Daily Market Update 14/07/08-

IG Index Daily Market Update 10/07/08

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