Tag Archives: Stock

Get Ready For A Wild Week

Here are some essential analysis and commentaries related to the upcoming week in the financial markets. It might be a wild ride for FX players, stock market investors should be prepared for surprises and in the credit market investors should keep a close eye on what’s going on in Ireland.

“What should be noted is how the market will react to the news that bottom up analysts is now finally starting to revise their earnings forecasts for 2011 down.”

Christian Tegllund


Earnings season is just about to open, so there is not much fuel in the US numbers released today. However they are important and could stir the market short term, according to Saxo Bank’s Wake Up Call.

“We expect European markets to open roughly flat this morning on the back of Friday’s US session closing higher, while the futures over night have been trading lower,” Saxo strategist Christian Tegllund writes.

According to Saxo Bank, the numbers that will move markets today are coming from the US; pending home sales and factory orders.

“We expect in line with consensus a small decline in factory orders and pending home sales to fall on a month-on-month basis. We do not expect much market action on the back of this as such (it should be priced in). What should be noted is how the market will react to the news that bottom up analysts is now finally starting to revise their earnings forecasts for 2011 down. We have been saying that this process should be going on for a while now and finally it starts to take off.”

If the first 2 weeks of earnings comes out disappointingly weak then this will have an accelerating negative effect on equity markets and you should expect an outright sell-off

“However short term it will not have much effect as the earnings season is just around the corner, but if the first 2 weeks of earnings comes out disappointingly weak then this will have an accelerating negative effect on equity markets and you should expect an outright sell-off,” the strategist warns.

The earnings season is kicked off at 7th of October with – as usual – the Alcoa report.

Devil In The Detail

Saxo recommends to look for pending home sales today to give a clue about sales of existing homes.

The pending home sales is a solid indicator of existing home sales, since they record the same thing, but at different stages of the sales process.

Factory orders from the US will also be released today, and they are expected to show a decrease of 0.4% in August due to the 1.3% decline in durable goods orders.

“Nondurable goods orders are, however, expected to increase MoM, which is why we and consensus are only looking for a small decline in orders,” Christian Tegllund says.

The ISM manufacturing index fell to 54.4 in line with expectations, which implies that the manufacturing sector in the US is still growing though at a slower pace.

Christian Tegllund

“However, the devil is in the details and we will classify it as a report. First, the new orders index is down sharply to only 51.1 from 53.1 (it was at 65.7 just four months ago), which does not bode well for production in the coming months. Second, the new orders to inventories differential continues to deteriorate and has now turned negative (-5) for the first time in 19 months indicating that the inventory rebound is all but over and will soon start to become a drag on the economy.”

With the ISM manufacturing report putting in a average-to-weak performance, it was left to the income and spending report to save the report.

And save the day, it did – at first glance.

“Not only did consumption increase 0.4% MoM as expected, but income rose much more than we expected by 0.5% (exp.: 0.1%). This pushed the savings rate a tad higher to 5.8% from 5.7%,” the Saxo strategist points out.

Adding: “However, most of the new-found income came courtesy of Uncle Sam, which contributed 0.3%-points of the 0.5% increase through transfer payments. So the higher savings rate was due to the deficit-spending US government!”

If we strip out inflation, income and spending increased 0.2% each in August. In other words, without transfer payments the change in income would have been negative on an inflation-adjusted basis.

“So, with both the ISM manufacturing and the personal income and spending reports being rather poor, it was left to the weekly ECRI leading indicator to provide the good news of the day. The index rose to 122.5 from 122.1 a week ago and the year-on-year decline is now “only” 7.8%  -the YoY drop was more than 10% just three weeks ago,” Tegllund concludes.

Reality Is Resurfacing

“Earnings expectations for 2011 are now finally being downgraded by bottom up analysts and we have expected this for a while. But for now, contrary to the usual development when these are posted, this will have virtually no effect as we are close to the opening of the earnings season. We expect a strong-to-moderate earnings season and this could short term bring equities higher, before the necessary adjustment to macro economic reality is resurfacing,” Saxo Bank writes to its clients.

“With quarters of slow economic growth it is outright based on hope rather than facts that you can have +15% earnings growth as sales will obviously remain weak and margins are already in the higher end. Expect markets to range trade until the first earnings report hits the street and be cautious on deciding the direction of the equity market until the first week of earnings reports has passed,” the investment bank recommends.

“Then you should have enough data to make an informed decision,” strategist Christian Tegllund says.

The Most Important

The most important macro news this week is Friday’s payrolls numbers from the US. The August numbers represented a turning point in a series of bad US news, with employment falling less than expected.

“Now we expect three months in a row with decline to be replaced by a rise of 50 000 persons in September. Consensus is unchanged employment, but the spread in the estimates is wide,” Norwegian DnB NOR Markets write in their Morning Report.

Kjersti Haugland

“Thursday there are interest rate meetings in the UK and the ECB, where we expect neither interest rate changes nor announcements of new measures. There have been speculations of a new round of quantitative measures also in the UK, after MPC-member Posen recommending this in the minutes from the previous meeting, as well as in a speech last week. However, the minutes also did show members using a more hawkish tone than before,” economist Kjersti Haugland at DnB NOR Markets says.

*

DnB NOR Markets have Monday published the following buy recommendation of shares, listed at the Oslo Stock Exchange:

• Algeta
• Statoil
• BW Offshore
• BWG Homes
• Fred. Olsen Energy
• REC
• Norsk Hydro
• Questerre

Here’ the full analysis (Norwegian only)

Here’s a copy of the Morning Report – in English.

FX Market – Ben’d Over?

According to market pros, we might be in for another great week in the forex market. The closing prices in NY Friday were on the edge of some critical levels, with the euro picking op against almost all currencies.

Bruce Krasting

“I have to believe that the folks at the ECB are not happy with this. The EURJPY cross is very important to the EU. The dollar rate must make them sick (and angry). The back up in the EUR/CHF is interesting. In an environment where the dollar was weak and gold was strong this move ran counter to recent trends. I see this as evidence that the “short Euro trade” was getting unwound. That hit the dollar and the Swiss cross,” forex expert Bruce Krasting writes.

*

Market volume for all crosses was heavy all week.

*

Krasting goes on writing:

There is a slow motion “run on the dollar” taking place. It is popping up in the big money centers and the small.

The markets are all orderly so there is no sense of panic. But there is a non-stop movement out of dollars.

One week it is into the CHF, the next to the Pound the Euro or the Yen. Some of it is going to gold and other PMs.

But when I see that that Brazil, Russia and S. Korea are intervening to offset a supply of unwanted dollars I get worried.

The money is moving. Once the process starts it can get messy. October is often a time for messy things to happen.

The move against the dollar is about Ben Bernanke and his non-stop hints of QE2.

The FX market is just going through the process of adjusting to the reality that will be with us as of 11/3.

More QE is coming. Bernanke has been leaking bits and pieces of his plan to the press in order to give the market a heads up on what is coming. He wants the markets to adjust to reality before it is a reality.

That way he can say that the post market reaction to QE2 was muted.

One area to keep an eye on this week is the JPY. It is possible that the Yen becomes a flash point for a jump in FX volatility and an increase in the money flow.

I have been looking for signs that would give us some hints on the tactics to be used by the BoJ in its intervention policy. I want to know if the BoJ is on offense or is it playing defense.

Japan's Finance Minister, Yoshihiko Noda.

If it is defense the door is open for some action that could spill some milk. There are few tea leaves to look at. Some information from the Japanese Ministry of Finance got me to thinking.

MITI has reported that the magnitude of currency intervention since September 15th was Yen 2.125T. This amount is a bit larger than the Y2T that was being discussed. MITI did not confirm it, but this number makes me believe that the BoJ did a very splashy job of publicly disclosed intervention on 9/15 and they did small amounts (that were not disclosed) on at least one other occasion.

Most likely the second intervention took place on 9/24.

Consider the amount. 2.125 T. A curious number. Why such an odd amount? It could be random, the sum of the concerted intervention just happened to total to this amount.

But that does not line up with Japanese precision. So I am left wondering.

It just so happens that if you take Yen 2.125T and divide it by 85.00 you get exactly $25,000,000.

That is a nice round number that makes me happy.

My take is that the BoJ made an internal decision to intervene for a fixed dollar amount. It was not an open-ended approach.

I think someone (Shirakawa) said, Lets buy $25b if the dollar slips below 83. After that we will just see what happens.”

That strategy would be defense. It means the dollar will have to grind lower.

I expect the next BoJ intervention to occur in a range of 81.80 and 82. After that round is digested the BoJ will drop its intervention to yet another lower level. Probably closer to 81.

Should that prove to be the case it will result in some big moves in all the Yen crosses. The dollar may catch a short term bid against the Europeans if we see money flow out of EURJPY.

But that will be a head fake and an opportunity to sell more dollars. If the BoJ signals that it is in an orderly retreat the net affect will be a broad move out of the dollar.

I am expecting a big volume week

If next Friday the Buck is lower across the board and the BoJ is a bit bloodied Ben Bernanke will light a cigar.

That would be the script that he wants the market to follow. What Ben would like to see is an orderly retreat for the dollar of about 10%.

We would be able to export some deflation to our trading partners if that were achieved.

The big risk is that orderly becomes Disorderly and some of those “partners” retaliates in some subtle way.

One or the other of them might say, If you’re going to treat us like this we are not buying your bonds. You’ve proved they are not money good”.

What are the odds of a significant blowup in the FX market? Pretty low. Maybe 1 in 5.

However, if the dollar trades to 82 this week and the BoJ is a no show, the odds of a blowup go to 2 in 5.

The NY close for USDJPY was 83.20. About 40 bips from where the rubber meets the intervention road.

An Octoberfxest.

Could be a wild party…

Note:
I am going to ignore the evidence that BoJ intervened sub rosa on the 24th. I think this may have been just a “clean up” to bring the total to the agreed 2.125T. The amounts involved were small and had only a very short impact. Future intervention will be at lower levels and it will be immediately confirmed by the BoJ (attempt at Shock and Awe). This is a critical assumption of mine. It is a big gain/big loss kind of assumption.

Read also: European Weekly Credit Wrap; Counting on QE 2

Visit The Swapper

*

Select Your Language:

Arabic * Chinese * Danish * English * French * German * Hebrew * Italian * Japanese * Norwegian * Portuguese * Russian * Spanish * Swedish * Turkish

2 Comments

Filed under International Econnomic Politics, National Economic Politics

3 Stocks That Rose More Than 4000% In One Day

The daily updates of trades made in the MFT, OTC and Dark Pool market is quite amusing reading. Here you’ll find the complete list of stocks you should have bought – yesterdaystock that rose several thousand per cent in one single trading session.

“Read it and weep…”

econotwist

For example: If you had bought shares in the consumer service company Punch Taverns yesterday, you could have enjoyed at profit of 9482 per cent today.

Enterprise Inns would not have been a bad bet, also. The shares jumped 5397 per cent yesterday.

Or, Debenhams – with a gain of 4581 per cent – could just have made your day, today.

However, you’ll find the full list of movers and shakers in the European markets over at The Swapper.

Read it and weep….

Comments Off on 3 Stocks That Rose More Than 4000% In One Day

Filed under International Econnomic Politics

Unique Market Activity

Here’s the latest update from Markit Financial Information Service on trades not known to the general public before now. Today’s “Unique Market Activity” list disclose important trades made yesterday.

“Markit BOAT is a trade reporting platform which consolidates pan-European cash equity trade data from MTFs, Dark Pools and OTC transactions.”

Markit BOAT


Markit BOAT is a trade reporting platform which consolidates pan-European cash equity trade data from MTFs, Dark Pools and OTC transactions. The trading activity in this report took place on 27th September 2010 and was published by Markit BOAT on the same day.

Trading activity reported with the “Market Condition” flag is excluded from this report.

Such trading activity is not relevant because the trade price and/or trading process does not reference or correlate with the then current market price.

The “Unique Market Activity” section lists stocks which were not active on Markit BOAT on the previous trading day.

Unique Market Activity:

Name Sector Volume Turnover €
ANGLOGOLD ASHANTI Basic Materials 822,355 27,752,792
IMPALA PLATINUM HOLDINGS Basic Materials 188,399 3,581,217
SPICE Industrials 3,495,482 2,876,157
STRATEC BIOMEDICAL SYSTEMS Health Care 68,872 2,039,467
BARLOWORLD Industrials 244,800 1,194,223
ANTENA3TV Consumer Services 155,588 988,728
TOM TAILOR HOLDING Consumer Goods 66,850 774,819
COMPUGROUP MEDICAL Technology 82,411 758,181
SIGNET JEWELERS Consumer Services 29,412 680,941
BREMBO Consumer Goods 72,814 519,349

Top 10 ETF

Name Volume Turnover €
DJ STOXX 600 OPTIMISED BASIC RESOURCES SOURCE ETF 158,100 50,612,206
DJ STOXX 600 OPTIMISED BANKS SOURCE ETF 343,824 25,242,898
DB X TRACKERS – MSCI EM ASIA TRN INDEX ETF 600,242 16,279,740
ETFS PHYSICAL GOLD 122,336 11,639,110
DB X TRACKERS – MSCI WORLD TRN INDEX ETF 536,924 11,446,481
DJ STOXX 600 OPTIMISED TELECOMMUNICATIONS SOURCE ETF 86,000 6,912,904
DB X-TRACKERS – MSCI KOREA TRN INDEX ETF 135,992 5,184,015
ETFS FORWARD NATURAL GAS 900,583 4,979,119
ETFS NATURAL GAS 15,967,943 3,951,507
DB X-TRACKERS – DJ STOXX 600 BANKS SHORT ETF 126,871 3,722,507

Top 10 Trades

Name Sector Volume Turnover €
ING Financials 22,000,000 173,115,796
ARCELORMITTAL Basic Materials 5,000,000 124,799,995
ENI Oil & Gas 7,500,000 118,501,425
GALP ENERGIA Oil & Gas 5,000,000 62,300,000
BBVA Financials 5,000,000 51,550,598
IBERDROLA Utilities 8,000,000 45,679,199
TESCO Consumer Services 8,300,000 42,647,976
DIAGEO Consumer Goods 2,600,000 33,962,761
XSTRATA Basic Materials 2,300,000 33,382,201
SABMILLER Consumer Goods 1,200,000 28,751,881

Major Movers

Name Sector Volume Volume (T-1) % Change
PUNCH TAVERNS Consumer Services 17,862,965 186,422 9482%
ENTERPRISE INNS Consumer Services 13,244,855 240,931 5397%
DEBENHAMS Consumer Services 6,928,872 148,030 4581%
ING Financials 23,231,560 5,268,551 341%
BAE SYSTEMS Industrials 6,823,523 2,034,065 235%
BBVA Financials 8,414,029 2,770,831 204%
ENI Oil & Gas 75,813,183 27,391,805 177%
RBS Financials 18,960,039 7,721,357 146%
IBERDROLA Utilities 10,402,031 4,308,591 141%
CENTRICA Utilities 6,902,407 3,465,526 99%

1 Comment

Filed under Uncategorized