Get Markets Right

Currency markets – Capital flows decides once again……

EUR/USD (1,3140): Like last week it’s more about risk aversion and swings in equity markets than anything else. EUR/JPY plays a good role in this game, where the large sell off did sent EUR/USD below the expected 1,3000 – 1,3500 range last week. I keep the same range as I expect stocks to trade more in the positive territory (please read the equity part).

Like for equities, this coming Friday’s US GDP number (exp. -5,0%).will decide if EUR/USD closes the week up or down.

The moves in EUR/GBP and EUR/JPY will also mean a great deal this week. EUR/GBP has rebounded but the trend is higher, and with slightly upwards moving stocks EUR/JPY should trade…

Equities – Testing, testing the downside

Nikkei 225 (7.682)  Topix (768)  Dax (4.237)  FTSE 100 (4.118) Dow Jones (8.078)  S&P 500 (832) Nasdaq Comp (1.477)  

Equities continue to be the most interesting asset class with significant importance for the other classes as well. As suggested last week is the corporate earnings season the hurricane season for the stock markets. The combination of quarterly results, renewed volatility in the banking sector and swings in energy stocks gave a pretty wild result, overall negative.

The US stock remains extremely interesting for the rest of this month. Two times the US stock market tested the downside very seriously but it rebounded. I now watch 7.950 in Dow Jones and 800 in S&P 500 as…

China – The Ox has arrived…….

Hang Seng (12.579)  Shanghai B (124)  USD/CNY (6,84)

Again very interesting with China mainland ending last week higher and Hang Seng dropping further. Hang Seng is a fair picture of the global movements. The domestic investors might have bought stocks at the Chinese year end with the expectation that the year of the Ox will be better than the year of the Rat.

With the Chinese Lunar New Year celebrations going on for some days, the financial markets will be closed. The days are normally good for retail sales, though it should be priced in the market.

Some statistical data from last week is worth to use in the big picture.

The sales of condominiums to private individuals…

Below you will find my weekly view on the very challenging financial markets.

Read more about all the interesting happenings in the financial markets in the 4 entries here below. I hope you find it interesting to read my private view about the consequences for the stock markets, currencies, China and what to expect from the central banks.

The 4 entries from today are:

Currency markets – Capital flows are gaining in importance again……

Equities – Is the earning season also a hurricane season ?

China – the credit growth in December a true credit growth ?

Central bank rates – Still pointing lower……….

Currency markets – Capital flows are gaining in importance again……

EUR/USD (1,3140): With the currency market being dominated by capital flows, and in particular swings in stock markets, then my fundamental USD bearish view suffers again.

When I am right on the stock markets (down) then EUR/JPY and EUR/CHF also follows lower and the greenback is bid (I am watching the hedge funds again, it all feels like September to November last year).

With only a few fundamental data out this week its better to read the stock market comments to get a clue. They are as usual bearish so it forces me to lower the 1,3250 / 1,3750 trading range for EUR/USD down to 1,3000 / 1,3500. Due to the very steep…

Equities – Is the earning season also a hurricane season ?

Nikkei 225 (8.257)  Topix (818)  Dax (4.438)  FTSE 100 (4.228) Dow Jones (8.281)  S&P 500 (850) Nasdaq Comp (1.529)  

We are of course already looking forward, but in the assessment of the markets we need to remember a couple of numbers from last week.

The US retails sales number was even a surprise for the most bearish followed by a natural sell off in the equity markets. But other official forecasts came out. A new, not yet confirmed, official German forecast for the GDP in 2009 is now at -2,25%, Spain changed their GDP forecast for 2009 to -1,6%, down from +1,0%. The forecast for 2010 is now +1,2%, but how on earth…

China – Was the credit growth in December a true credit growth ?

Hang Seng (13.256)  Shanghai B (121)  USD/CNY (6,83)

Hang Seng lost a couple of percent last week which was fine compared to the swings in global equity markets. More remarkable are the China mainland stocks where A shares are underlying supported (actually A shares are up 7,34% this year so far) and Shanghai B ended the week unchanged.

Friday Chinese stocks went up due to speculation about state support to the shipbuilding and machinery manufacturing sectors. It happens after tax cuts and other support initiatives for the automobile industry were announced earlier last week.

It shows that the current sentiment for China mainland stocks is positive and investors…

Central bank rates – Still pointing lower……….

US Federal Reserve Bank: Now Fed is at 0,50% and it’s difficult to go much lower. They claim to have other methods to help the market (or you could read force the market) to get moving. Though it is not very healthy – creating a new credit bubble.

Bank of England: They will drive it as low as possible – another 50 basis points to 1,50% last week. The 315 year low….. 

European Central Bank: As expected we got the 50 basis points rate cut from ECB. Priced in the market is a 2 step move down to 1,50%. Right know it feels like the way. From Mr. Trichets comments it is important to note that ECB…

Below you will find my weekly view on the very challenging financial markets.

Read more about all the interesting happenings in the financial markets in the 4 entries here below. I hope you find it interesting to read my private view about the consequences for the stock markets, currencies, China and what to expect from the central banks.

The 4 entries from today are:

Currency markets – different currencies different factors to watch……

Equities – Stock markets reacts natural which is healthy.

China – waiting for the Ox.

Central bank rates – Cutting as much as possible, and then what?

Hot Topic – 2009 The year of imbalances

Currency markets – different currencies, different factors to watch…..

EUR/USD (1,3350): The greenback is still fundamental weak, but EUR got hammered with the sudden sentiment change regarding ECB on Thursday. A 50 basis point cut is now fully priced in EUR/USD. If ECB don’t cut or choose something else than 50 basis points I think it will be negative for EUR, regardless what ECB will choose instead of 50 basis points.

I continue to argue that the market mainly reacts to fundamentals making the Dec. US retail sales on Wednesday as very important this week (exp. -1,4% ex. autos). The Dollar will correlate positive with the number.

With the FX market following fundamentals the US Beige Book Wednesday evening is a market mover…