Get Markets Right

Equities – Stock markets reacts natural which is healthy.

Nikkei 225 (8.837)  Topix (855)  Dax (4.756)  FTSE 100 (4.414) Dow Jones (8.599)  S&P 500 (890) Nasdaq Comp (1.572)  

Globally we are through the first rounds of stock buying for fresh money. Natural reactions on fundamentals are taking over, which was particular significant last week after the ADP report and labour market data Friday.

Reality still is bleak and it might not be the most pleasant to either write or read about, but its life right now. It would have been worse if the market neglected the dull facts and just going up every day as it would be unsustainable followed by huge drops.

In the never ending hunt for opportunities and…

China – waiting for the Ox

Hang Seng (13.971)  Shanghai B (120)  USD/CNY (6,8350)

Very interesting with Hang Seng down 10% since last Monday and Shanghai B up with 5% during the same period. So let’s see what market is behaving most realistic.

Last Monday I mentioned the risk that the Chinese government could force Chinese banks to abandon normal risk control and management regarding lending to private households. On Tuesday (6^th Jan) the Peoples Bank of China came with different statements, among these:

“PBOC to guide banks to increase lending” and “PBOC to boost financing channels for small, medium-size customers”.

As you know, do I not recommend to be long any shares at all. Should there by coincidence be any, then I…

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

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: Very quickly taken down to 2,50% so now Mr. Weber needs some time to digest. Further cuts are already priced in and also likely, but slowly towards 1,50% or 1,75% during the spring. The next step to…

Hot Topic – 2009 is the year of financial imbalances

Last autumn when G20 formally met for the first time, the G20 leaders were all smiles. They were probably more aware of growing economic difficulties but didn’t address the issue like today. The leaders agreed not to impose trade barriers but all countries should export more, fully aware of the disastrous impacts of a global trade war.

It didn’t really seem like a forceful plan. The truth was that G7 hoped the new friends in the G20 family would be a market that saved G7 economies, and the new 13 members were happy because the export to the old economies stayed open.

Reality came in a bit harder, and here are a…

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 – Fundamentals will continue to work……
Equities – 2009 will be a limbo dance – how low can you go?………

China – many hope that the year of the Ox will be better.

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

Currency markets – Fundamentals will continue to work……

EUR/USD (1,3580): EUR/USD was trading 1,3650 when I wrote the last market comments on 15^th Dec with a move to 1,4500 in between. When I started on the comments Sunday, EUR/USD was expected to be around 1,4000 and now at 1,3580. It’s easy to conclude that the illiquidity still is dominating and the main reason behind the swings since mid December. It is the case in my view. Some large tickets went through but a lack of risk takers and risk appetite caused the very high volatility.

It reminds me about the FX market for 16 – 20 years back where risk books simply closed down during December and no one were willing to…

Equities – 2009 will be a limbo dance – how low can you go?………

Nikkei 225 (9.043)  Topix (875)  Dax (5.010)  FTSE 100 (4.613) Dow Jones (9.035)  S&P 500 (932) Nasdaq Comp (1.632)  

The good news are that equity markets in 2009 won’t perform as bad as in 2008. I continue to be bearish on the world but the equity markets will not drop another 40 – 50% this year.

Very interesting, it all of a sudden seems extremely bearish just to suggest that 2009 could end with a small minus. The world of analysts is trumpeting the entry of 2009 with a fanfare of bullish forecasts on global equity markets.

I respect that stock markets in general have creped up since…

China – many hope that the year of the Ox will be better.

Hang Seng (15.478)  Shanghai B (114)  USD/CNY (6,8340)

It’s obvious that many are hunting opportunities from the start of this year, so here is one more for hungry investors.

A survey conducted by The Nikkei Veritas and Nikkei Research among 76 market analysts showed that 75% expects a rebound in Chinese stocks (55% pointed at a rebound in Japan as no. 2 opportunity).

As always, I agree that when the world turns around one need to be long Chinese stocks. As an extra upside the domestic demand growth will boost Chinese stocks even further when it comes.

As mentioned under the equity comments that the positive expectations maybe are priced…

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

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% this week. 

European Central Bank: Very quickly taken down to 2,50% so now Mr. Weber needs some time to digest. Further cuts are already priced in and also likely, but slowly towards 1,50% or 1,75% during the spring.

Bank of Japan: 0,10% – that was it.

…