BetOnMarkets

BetOnMarkets Morning Update

by betonmarkets @ 2008-11-21 – 08:18:43

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.

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BetOnMarkets Afternoon Update

by betonmarkets @ 2008-11-20 – 15:54:23

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 Update

by betonmarkets @ 2008-11-20 – 09:07:39

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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BetOnMarkets Afternoon Update

by betonmarkets @ 2008-11-19 – 16:17:22

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 Update

by betonmarkets @ 2008-11-19 – 08:50:15

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.

BetOnMarkets

BetOnMarkets Morning Update

by betonmarkets @ 2008-11-18 – 08:47:52

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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BetOnMarkets Afternoon Update

by betonmarkets @ 2008-11-17 – 16:19:58

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 - Market drama continues with Eurozone admitting recession

by betonmarkets @ 2008-11-17 – 13:49:59

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 Update

by betonmarkets @ 2008-11-06 – 08:26:26

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.

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BetOnMarkets Afternoon Update

by betonmarkets @ 2008-11-05 – 16:40:46

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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