Get Markets Right

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 – Event risks are rising

Equities – It feels heavy……

China – So far the Ox turned out to be a bull.

Central bank rates – The next in line is ECB

Currency markets – Event risks are rising

EUR/USD (1,2800): The very serious risks are now getting more clear for market participants. The discussion about the survival of the Euro that I touched briefly last week will grow. But the discussion itself will not lead to the Euro blow up, that will economic realities take care of later on.

2 event-like situations will soon take very much attention, they are working in opposite directions so it’s important to judge the timing. The implications of the Central and Eastern European severe economic downturn, and their totally foreign debt overloaded private sectors becomes reality this year.

The other risk I have mentioned a couple of times, is the appetite for US Treasuries, or more…

Equities – It feels heavy…….

Nikkei 225 (7.750)  Topix (770)  Dax (4.381)  FTSE 100 (4.190) Dow Jones (7.850)  S&P 500 (827) Nasdaq Comp (1.535)  

Also this week US markets will be leading, but with some regional twists.

First a quick comment on the G7 meeting from the weekend. I hope they enjoyed the nice Italian food because that must have been the best outcome. In good times, G7 had very difficult to agree about anything so it’s an illusion to believe they find each other in tough times. The statement confirms that there are no common goals or mutual interest in coordinated economic action. Each country goes back to continue with what they are doing. The statement from the next G20…

China – So far the Ox turned out to be a bull.

Hang Seng (13.437)  Shanghai B (148,50)  USD/CNY (6,8340)

Chinese mainland stock markets continues up with domestic investors (A indices) as the key driver. No doubt that a part of the force is the fact that investors only can invest in real estate, stocks and place money on deposit.

Very understandable that stocks looks as the preferred alternative as long as the stimulus packages are rolled out. An example from last week was the ship builders that got a national protection, sending shares significant up within the same day. The usual question is, if this is sustainable?

It continues to be a matter of faith, where I continue to be skeptical. The…

Central bank rates – The next in line is ECB

US Federal Reserve Bank: Now Fed is at 0 – 0,25%. Next step is intervention in Treasuries. Fuelling money supply……

Bank of England: Now at 1,00% with a good chance that they cut again. 

European Central Bank: Next cut in mid March to 1,50% from the current 2,00%.

Bank of Japan: 0,10% – that was it.

Currency markets – Getting more interesting again.

EUR/USD (1,3040): EUR/USD stayed fine within the range last week and I suggest another week with range trading in EUR/USD, though slightly upwards adjusted. Regardless of range trading this week, then the currency market is getting more interesting.

Capital flows still dominate the swings, but with big fundamental happenings like the US unemployment data last Friday and growing concern about the Euro’s survival new trends will start (when the markets decides which is the biggest risk – mid term it’s still the upside in EUR/USD that I bet on).

The survival of the Euro I will save for a “Hot Topic” comment when time is right. In the meantime, in this weeks edition of The…

Equities – A story about P/E ratios.

Nikkei 225 (7.969)  Topix (779)  Dax (4.635)  FTSE 100 (4.284) Dow Jones (8.281)  S&P 500 (869) Nasdaq Comp (1.592)  

In early October 2007 the S & P 500 was trading at 17,0/17,5. About one month later in mid November the level was at 16,5/17,0, a bit lower after the October high in the stock market. Despite clear signs of a slower US economy, investors also in November 2007 believed in “the sky is the limit”. I surely remember it, as I was bearish on the world already then (what a surprise) and was about to think that I had made a mistake of the century by not owing any stocks.  

Last week the small…

China – China mainland is going from upbeat to real bid……

Hang Seng (13.769)  Shanghai B (141,00)  USD/CNY (6,8325)

Shanghai B is up from 126,50 to 141,00 on the week (11,5%) and up more than 50% since November last year.

This is serious for a bear like myself. It would not be trustworthy just to keep a target on the downside without reacting on the developments. I remain skeptical but raise the target from 90 to 110 for Shanghai B.

The current development is very tricky as we have the Communist Party using all possible methods to create a turnaround feeling, hungry Chinese investors buying A shares sending B shares higher as well, foreign investors jumping on the B wagon. All partly based…

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 – A bagful of mixed sweets this week.

Equities – Which late night show are you watching ?

China – So far China mainland is upbeat.

Central bank rates – Another cut to save the world this week……

Currency markets – A bagful of mixed sweets this week.

EUR/USD (1,2810): Heavy stuff weights on Euro. Some Euro Zone countries fundamentals deteriorate pretty fast now. It apparently leads to speculation among Far East market participants about an ECB rate cut in mid February, though that would be against the guidance from Mr. Trichet, so I doubt that one.

Equities has changed the sentiment again which already sent EUR/JPY somewhat lower, taking EUR/USD down as well. This pressure will continue during the week.

Last week I thought 1,3450 would be the top but it turned out to be 1,3350. This week it feels that the top and range will be even lower trading at 1,2650 – 1,3250. Long term the Greenback will come…