Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bailout Or Bankruptcy For The Big Three Automakers?

Stock-Markets / Financial Markets Dec 15, 2008 - 10:39 AM GMT

By: PaddyPowerTrader

Stock-Markets Best Financial Markets Analysis ArticleEquities recovered late Friday evening with the prospect of the cure all TARP cavalry coming to the rescue of the automakers . But with Bush getting shoes thrown at him in Iraq, the spotlight once again will fall on the troubled banking sector with Goldman Sachs, reporting Tuesday and Morgan Stanley, Wednesday. For all of the economic and corporate releases this week, check out the Weekly Wrap .


Today's Market Moving Stories

    Bailout Money Is A Trap
  • The Obama stimulus package may reach $1 trillion or twice the amount previously touted.
  • The Fed has closed two more banks and the giant Citadel hedge fund has halted withdrawals from two funds after a 50% fall. Could be worse. They could have had their money with Bernie Madoff. The inside track on the world's latest Ponzi scheme .
  • The big ease continues with the focal point for the week being tomorrows FoMC meeting. The market has yet to decide whether it will cut by 50bp or 75bp, but quite frankly it makes little difference when rates are at an ultra low level. It is the accompanying statement which could make very interesting reading now that conventional monetary policy has nearly run its course to ZIRP . I think it would disappoint the market if the Fed did not enlighten us more on the next stage in monetary policy i.e. quantitative easing including possible monetizing of the debt. That said any announcement would likely be vague in terms of targeting particular assets and their yield levels ahead of the Xmas break.
  • The key Japnaese Tankan survey of business sentiment weakened sharply for the Q3 read, coming in at –24 (the largest fall in 30 years). Q1 forecast is that it could drop further to –36. But the equity market doesn't seem to care .
  • Former Vice Minister at the Japanese MoF, Sakakibara, predicted USD/JPY dropping to 80 and EUR/JPY plunging to 100.
  • The German press over the weekend predicted that Teutonic economic growth may fall by as much as 2% in 2009 with unemployment set to top 4 million.
  • While not to outdone back in Britain, Barclays head Varley did a bit of crystal ball gazing and foresaw house prices slumping ANOTHER 15% before bottoming out. Meanwhile the Rightmove house price index evidenced this with a further 2.3% decline in December. Citing a report by the Construction Products Association and Ernst &Young, the Guardian reports that UK housing starts have dropped to their lowest level since 1924.
  • The ECB is considering setting up a clearing house to guarantee inter bank deposits. It had been muted last week that the Bundesbank was studying doing something similar but solely for German banks.
  • Electroleux is to cut 3,000 jobs as demand collapses.
  • Oil is on the rise ahead of Wednesday's OPEC meeting in anticipation of a production cut. Iran and Russia (though not a member of the cartel) in particular are desperate for a cut given the dire state of their domestic economies. Russia has very high extraction costs and Iran produces sulphur rich crude which no one really wants. Note Russia has again had to widen the rubles trading band this morning to stem outflows. Reserves are being eroded at an alarming rate as they try in vain to intervene.

The Greenback Is Losing Its Lustre
The USD has come under broad selling pressure over recent days with the USD index dropping by around 5.5% since its November 21st high. I believe that a lot of this has been related to sovereign buying interest of various currencies against the USD especially the EUR. Central banks are taking advantage of a relatively calmer currency market to undertake diversification orientated transactions. Other factors pushing the USD lower are a less dovishness tone from some ECB council members, the possible bankruptcy of a large US automaker which could hurt US growth and some, albeit limited, improvement in risk appetite.

I think more of the same this week, with the USD set to come under further pressure. The potential for a large 1.5mn barrels per day output cut by OPEC on Wednesday could also play against the USD if it leads to another leg higher in oil prices. The worsening in USD sentiment was apparent in the latest IMM commitment of traders' report which revealed a sharp pull back in net long USD positions (37.6k from 56.2k) to their lowest since the beginning of August. Comments from Japan's finance minister that they are not considering intervention may see USD/JPY attempt another push below 90 whilst EUR/USD will set its sight on a break of 1.35 in the short term.

Against this is the potential that the Madoff loses hit taken by European institutions will have to be covered. The first court case is Dec 19th. Not a great time of the year to be a forced buyer of billions of Dollars.

And Finally… Trust Us We're Economists
Trust Us We're Economists Cartoon
Trust Us We're Economists Cartoon
Trust Us We're Economists Cartoon

Disclosures = None

By The Mole
PaddyPowerTrader.com

The Mole is a man in the know. I don’t trade for a living, but instead work for a well-known Irish institution, heading a desk that regularly trades over €100 million a day. I aim to provide top quality, up-to-date and relevant market news and data, so that traders can make more informed decisions”.

© 2008 Copyright PaddyPowerTrader - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PaddyPowerTrader Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in