Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Amazon AMZN Stock PRIMEDAY SALE! Trend Analysis - 20th Apr 21
Stock Market Sentiment Speaks: You May Not Believe My 2021 Targets - 20th Apr 21
Stock Market Phase Two Projection - 20th Apr 21
Are Precious Metals & Miners Starting A New Longer-Term Bullish Trend? - 20th Apr 21
Inflation: First the Gain, Then the Pain… - 20th Apr 21
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

For Stock Markets It Seems the Only Way is UP

Stock-Markets / US Stock Markets Aug 04, 2009 - 05:58 AM GMT

By: PaddyPowerTrader


Best Financial Markets Analysis ArticleThe markets summer of love with stocks continued unabated yesterday as the S&P topped 1,000 and the Nasdaq pushed through the 2,000 barrier for the first time since October. Yesterday’s fresh catalyst was Ford’s bullish sales report (up 2.4% YOY, their 1st monthly rise since Nov 2000) and a better than expected jump in manufacturing ISM (which was no clunker, see below), while renewed gains in commodities and oil (above $71 barrel) cheered producers.

The S&P is now 50% off its March 6th low of the number of the beast 666. The 1,005 level was the previous highs in both October and November and may provide some resistance for any future rallies. Above that there is little or no technical resistance until 1,100. An overshoot seems the more likely scenario now as investors chase the market higher.

Today’s Market Moving Stories

  • Japan’s Nikkei share average rose 1.1% to a 10-month high overnight, driven by technology-related stocks. The MSCI index of Asia Pacific stocks outside Japan also climbed 1.1%, with the materials sector outperforming by a wide margin, up 2.9 %. Since March 9, when the global equity market rally began, the index has risen 77%, leading the world. Valuations have been ticking higher, but so far investors have been comfortable paying what they view as a growth premium. On a 12-month forward basis, the Asia Pacific index is trading at around 14.8 times earnings, below the last bull market peak of 16 times.
  • No wonder crude prices are up. Reuters reports that China’s main ports received 25% more crude oil in July than a year earlier, signalling that total crude oil imports last month may have risen at the fastest pace in nearly two years to challenge record highs. The ports shipped in 16.27 million tonnes, or 3.83 million barrels per day (bpd), of imported crude oil in July, the Ministry of Transport said. The figure, which may vary from official crude import data due for release next week, does not take into account shipments by pipeline or railway from Russia and central Asian countries. China imported a record 4.02 million bpd of crude oil in March 2008 as it was preparing for the Beijing Olympics. The world’s second-largest oil consumer imported just 3.25 million bpd In July 2008. However in today’s FT we have a warning that the world economy cannot sustain any further rise in the oil price as oil prices rose toward a record high for the year.
  • Australia and New Zealand Banking Group has agreed to pay about $550 million to buy some Asian units from British lender Royal Bank of Scotland (whose plans for world domination fell apart with the bridge too far crazy cash takeover of ABN). This follows the pattern of nationalised UK banks having to divest themselves of overseas assets due to government pressure. In other British banking news HSBC, Europe’s biggest bank, is in talks to set up a securities joint venture in China, a senior bank executive said, adding that acquisitions in Asia are currently too expensive and that the bank will focus on organic growth. “We have many networks in Asia so there is no push for us to buy expensive assets in the region,” said Vincent Cheng, HSBC executive director and chairman for Asia-Pacific. Shares of HSBC jumped 6.4% this morning after the bank reported a better-than-expected first-half profit.
  • There are a number of key potential market movers for Irish financials this week. The battle for protection of Liam Carroll property empire continues in the Supreme Court today, the British banking results season gets into full swing and tomorrow we get AIB’s results. Results from AIB will be overshadowed by the potential impact of the NAMA roll out, with speculation centring on the level of AIB assets coming under the transfer category and also the “haircut”/discount to be applied. Having previously targeted bad debt levels of €4.3 billion for the full year, the market will be watching the level taken in the H1 period. The ball park figure for assets potentially under NAMA watch will be sought tomorrow but it is unclear if AIB have the information at this stage to give guidance on this figure.
  • There are those who point to the current market being 10-15% over valued.
  • Clearly sick of using dwarfs, the new Amsterdam craze is to toss Smart cars into the canals.

Data Continues To Point To ‘V’ Shaped Recovery, At Least For Now
Over the past year there has been much discussion about what ’shape’ the eventual economic recovery would take. Analysts and investors have posited a Sesame Street style alphabet soup of “L”, “U”, “W” shaped recoveries (and more besides). Given the troubles in global financial markets few have seen much prospect of a “V” shaped recovery, despite that being the norm.

If the latest round of factory sector indicators across the globe is any guide, the probability of a “V” shaped recovery is going to demand more attention – especially if financial markets continue to repair. So V-shaped for today as a temporary surge in vehicle production (cash for clunkers) is likely to pace a much stronger rebound from recession than was thought likely only a month ago. Of particular note, after a mixed set of regional manufacturing surveys, the US manufacturing ISM – which one ignores at one’s peril – easily beat expectations with a 4.1 point increase to 48.9. And the details were even more positive, suggesting to this writer that it is very likely that the next reading of the index will climb above 50. Importantly, new orders rose 6.1 point to 55.3, the highest level since July 2007. At present this is pointing to about as “V-shaped” a recovery as one could imagine. The production index rose to 57.9, the highest since June 2007. And with one eye on Friday’s non-farm payrolls report we noticed that the employment index rose 4.9 point to 45.6.

Of course, there is little doubt that this recovery has been substantially driven by the massive macroeconomic policy response undertaken by central banks and governments across the globe. And I think it is very likely that the recovery would falter quickly if that stimulus was removed any time soon. Over the coming months markets will need to pay renewed attention to both direct and indirect measures of inflation. Any sign of a rebound in pricing pressures would quickly lead to tighter financial conditions, as markets priced in a higher inflation premium and the likelihood of some monetary policy response. On that score I noted a further 5 point rise in the ISM prices paid index this month. At 55.0, this index has increased by 23 point over the past 3 months, presumably strongly influenced by the rebound in industrial commodity prices. Deflation doesn’t seem particularly likely at this point.

Whatever the medium-term prospects for the global economy, the near-term outlook seems likely to remain favourable for risk assets. Just as I was struck by the synchronicity of the global downturn, I also notice by the synchronicity of the upturn. The UK manufacturing PMI climbed back above 50 in July for the first time in 15 months, with new orders back into the mid 50s, suggesting that stability had returned to the UK factory sector (and casting further doubt on the BoE extending QE when it meets later this week). And Euroland manufacturing PMI is not too far behind (indeed the new orders index rose 5pts this month to fall just short of the crucial 50-mark). With the S&P 500 closing above 1000 overnight for the first time since November, one can imagine that there are plenty of cashed-up money managers being asked some hard questions.

Data Today
The main point of interest in the US today will be the June pending home sales report with markets looking for any signs that recovery was dampened by the rise in mortgage rates that took place from late May. Personal consumption spending for June will also be released.

And Finally… The Pesky Problem Of Falling House Prices

Disclosures = None

By The Mole

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”.

© 2009 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

© 2005-2019 - 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

6 Critical Money Making Rules