Ifo World Economic Climate brightens

Ifo: Ifo World Economic Climate brightens “The Ifo World Economic Climate Indicator rose in the second quarter of 2009 for the first time since autumn 2007. The rise in the indicator was the result of more favourable expectations for the coming six months; the assessment of the current economic situation, however, worsened again, falling to a new record low.

“The economic expectations improved in all major regions, especially in North America and Asia. But also in Western Europe, Central and Eastern Europe, Russia and Latin America the expectations for the coming six months have been clearly corrected upwards. In contrast, the current economic situation in all major regions is still assessed as markedly unfavourable, with the worst appraisals coming from North America and Western Europe.”

Source: Ifo.

Nouriel Roubini (Forbes): Don’t believe the optimists “Recent data suggest that the rate of economic contraction in the global economy is slowing down, and that we are closer than we were six months ago to the trough of the recent severe global recession.

“But while the rate of economic contraction is now lower than the free-fall and near-depression experienced by many economies in the fourth quarter of 2008 and the first of 2009, the recent optimism that ‘green shoots’ of recovery will lead to the recession to bottom out by the middle of this year – and that recovery to potential growth will rapidly occur in 2010 – appears grossly misplaced, for three noteworthy reasons.

“First, the current deep and protracted U-shaped recession in the US and other advanced economies will continue through all of 2009, rather than reach a trough in the middle of this year as expected by the optimists.

“Second, rather than a rapid V-shaped recovery, growth will remain sluggish and sub-par for at least two years into all of 2010 and 2011. A couple of quarters of more rapid growth cannot be ruled out as we get out of this recession toward the end of the year or early next year as firms rebuild inventories and the effects of the monetary and fiscal stimulus reach a delayed peak. But structural weaknesses of the US and the global economy will cause both a below-trend growth and even the risk of a reduction of potential growth itself.

“Third, we cannot rule out a double-dip W-shaped recession, with the wings of a tentative recovery of growth in 2010 at risk of being clipped toward the end of that year or in 2011. This will result from a perfect storm of rising oil prices, rising taxes and rising nominal and real interest rates on the public debt of many advanced economies, as concerns rise about medium-term fiscal sustainability and the risk that monetization of fiscal deficits will lead to inflationary pressures after two years of deflationary pressures.”

Source: Nouriel Roubini

ASX Market Movers – 21 May 2009

ASX Market Report 21-4-09

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The SFE Futures suggested a 71 point fall in the market. BHP and RIO both down in ADR form overnight – 7.31% and 9.97% respectively.  (BHP closed at the equivalent of 3176c, down 112c on yesterday’s close.) Metals all down overnight – Copper down 4.47%, Zinc 4.62% and Aluminium 3.10%. Nickel down 5.85%. Oil price down $4.54 or 9% to $45.82. Gold up $19.60 to $887.50. Bonds up with the 10 year yield down to 2.8360%. A$/US$ last traded at 69.67c.

Diversified Financials down 15%. Energy and material stocks down on the lower oil price and a big fall in metals
prices overnight. Sun Microsystems is being taken over by Oracle after IBM said it had no intentions to return to discussions about a deal – Oracle will pay $9.50 per share, a 40% premium to the last close price. SUN up 36% overnight. Oracle down 1.2%. PepsiCo will buy the remaining stake in Pepsi Bottling Group fro $29.50 per share and
Pepsi Americas for $23.27 per share – premiums of about 17% respectively. PepsiCo down 4.35%. IBM reported quarterly results after market – sales were down 11% on-quarter but profit was up more than expected – $1.70 per share verses the $1.66 per share expected. IBM down 1.5% after hours. IBM gave a bullish outlook. In other earnings news, Eli Lily & Co down 2.3% despite a 24% rise in quarterly sales.

The market is having a shocker – down 104- on the back of Wall Street’s horror session overnight. The Dow Jones fell 289. The SFE Futures predicted a 71 point fall this morning. It’s a sea of red with all sectors going backwards.

Revised Minimum Order Values for CFDs and Stocks

• New Minimum Order Values for CFDs and Stocks will apply from March 2009.
• The minimum order value applies to all equities trading, including CFDs, CFD DMA and Stocks, and is in place to prevent traders manipulating the underlying market price.
• You will not be able to open new positions via the platform below the minimum order size for the relevant exchange.
• See the table below for details of the new Minimum Order Values

S&P 500 Breaks Above Recent Highs

The S&P 500 took out its high from last week of 832 today, as the index is currently resting above the 840 mark.  Technicians will be watching to see if the index can close above these prior highs, and if it does, it will be another positive for the uptrend that the market is currently in.

Sector Snapshot

Below we provide our trading range charts of the S&P 500 and its ten sectors.  Moves below the green zone are considered extremely oversold, while moves above the red zone are considered extremely overbought.  While many market participants have mentioned that equities became overbought in the short term following the 4-day rally, the price charts still paint a different picture.  In fact, no sectors have yet to even break solidly above their 50-day moving averages.  At the end of the last rally in early January, most sectors had at least gotten close to overbought levels (red zone).  While we’ve come pretty far pretty fast over the past few days, from a pure chart perspective, the market still has room to run.