ASX Stock and CFD Report 11-5-08

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The SFE Futures suggested a 44 point rise in the market. BHP and RIO both up in ADR form Friday – 4.79% and 2.64% respectively. (BHP closed at the equivalent of 3523c, up 1c on Friday’s close.) Metals mostly down Friday – Copper down 0.53%, Zinc down 1.89% and Aluminium down 1.47%. Nickel up 0.27%. Oil price up $1.91 to $58.58. Gold down 60c to $914.90. Bonds up with the 10 year yield down to 3.2856%. A$/US$ up to 76.85c.

Financials up 8.3% – The 10 banks needing to raise more capital in-line with the government’s stress testing are choosing a number of avenues to do so – capital raisings involving common stock and preference shares and asset sales seem to be the popular choices. The Bank of America is utilizing all three methods – will raise $17bn in a common stock offering, with the balance of the $34m needed through preferred stock to equity conversions and asset sales. Wells Fargo will issue common stock to the tune of $7.5bn, will retain earnings
(cut dividend) and make operational expense cuts. Citigroup will convert more than previously announced preferred stock to common equity. GMAC will likely issue common stock and increase capital further by issuing mandatory convertible preferred stock or do something with the conversion of existing equity.Energy strong – up 4.2% on the higher oil price.Defensive stocks underperformed – telecom companies down 0.4% – AT&Tdown on reports about a deal to buy $2.5bn in assets from Verizon.

Not the best of starts to the week – down 22 – considering the SFE Futures suggested a 44 point rise in the morning. Financials started off well but have since gone backwards. Macquarie Group has gone ex dividend 40c. Santos has had a $3bn capital raising and Pacific Brands $256m adding to last week’s $5bn call on the market from Macquarie, Bluescope Steel, Alumina and GPT.

Credit Default Swaps Show A Decrease In The Fear Trade

Credit Default Swaps (or default risk) have really come in over the last week, and as shown below, an index of CDS prices for 125 investment grade North American debt broke its uptrend and key support in recent days.  A break of these key technical levels leaves plenty of room to run on the downside, which is a positive for the overall market.

Below we highlight the CDS prices for four big banks and brokers.  Default risk for these companies has also dropped significantly over the last few weeks.  CDS prices for Morgan Stanley and Goldman Sachs have really moved back to more normal trading levels, while Bank of America and Citigroup are down but still have a lot further to fall before anyone can say the coast is clear.

Source: Bespoken Research

Stock,CFD, Fx and Forex Options – Data and Trades

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What’s going on?

• The stress test on US banks was released yesterday and nothing much new information was revealed. BofA need $34 bln., Wells Fargo $13.7 bln and CitiGroup $5.5 bln. The major issue is still whether the assumptions underlying the stress test regarding the worst case scenario is realistic.
• ECB cut interest rates to 1% and announced that it wants to buy debt and bunds were heading lower on this. BoE announced that it will have another go of buying debt despite that the prior attempt did not have any long lasting effect on the curve.
• Watch out for Non-farm payrolls and Unemployment rate from the US today. Definitely today’s most important event and will move markets.
• Toyota was out with a loss at 436.93 bln. Yen vs. a profit of 1.72 TN Yen last year. Cuts dividend by 50% and present a very bleak outlook for 2009.

FX

Equities

Futures

FX Options

ASX Stock and CFD Report 4-5-09

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The SFE Futures suggested a 23 point rise in the market. BHP and RIO both up in ADR form Friday – 2.70% and 5.56% respectively. (BHP closed at the equivalent of 3375c, up 75c on Friday’s close.) Metals up Friday – Copper up 3.81%, Zinc 6.32% and Aluminium 3.01%. Nickel up 1.88%. Oil price up $1.83 to $52.18. Gold down $3.00 to $888.20. Bonds down with the 10 year yield up to 3.1523%. A$/US$ up to 73.04c.

In a move to stimulate the flow of credit to the real economy, The Fed said commercial mortgage backed securities and securities secured by insurance premium finance loans could be used as collateral under the TALF plan. Warren Buffett said not all the banks operate under the same business model as Citigroup and that Citigroup,s losses have distorted investor perception about US banks – he said banks like Wells Fargo as much better positioned to ride out the recession. Energy stocks up 3.1% after being down 2.1% Thursday. The natural gas price was up 5.1% Friday and oil was up 3.6%. Chevron reported earnings down over 50% from the year before – but still finished up 1.2% the session. Industrials up 1.1%. Material stocks up 0.3%. Boeing, Caterpillar, and Alcoa all up on the better consumer confidence figures and better-than-expected manufacturing data. Ford said April sales were down 31.6% on-year. General Motors said April US sales were down 3.4% on-year.

Good start to the week – our market is up 72 – more than triple the 23 point gain the SFE Futures predicted this morning. Macquarie is out of its trading halt and down 4%. Resources and Banks doing well. Economists expect the RBA to leave rates at 3% when it meets tomorrow.

ASX Market Report 20-4-09

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Dow up 5. Up 65 at best. Down 39 at worst. A major bank make positive comments about the housing market and we saw some encouraging results including both Google and GE who both topped earnings expectations. Financials led the way as Citigroup.s result wasn.t as bad as expected. A bit of interest around as volumes were the highest in a month.

• The SFE Futures suggested a 33 point rise in the market.
• BHP and RIO both down in ADR form Friday . down 1.1% and 3.37% respectively. (BHP closed at the equivalent of 3308c, down 33c on Friday.s close.)
• Metals all up Friday . Copper up 1.61%, Zinc 4.01% and Aluminium 0.27%. Nickel up 3.01%.
• Oil price up 39c to $50.36.
• Gold down $11.90 to $867.90.
• Bonds down with the 10 year yield up to 2.9470%.
• A$/US$ down 0.18% to 72.34c.
• Citigroup down 9% Friday (still up 21% for the week) . the negative quarterly EPS figure was not as bad as expected, but they predicted that losses will increase in the 2Q and said they don.t anticipate credit costs to decrease from prior forecasts. The market obviously realized that it was a change in accounting rules which assisted in the bank.s better-than-expected numbers.
• General Electric up 1% - posted quarterly earnings above expectations restoring some confidence after recent concerns regarding the financial viability of GE Capital and their dividend and rating cut.
• The White House said it will support Congressional efforts to clamp down of credit card fraud.
• Google up nearly a 1% after quarterly results topped expectations . it reported record high adjusted earnings.
• Housing stocks up on the positive comments from BB&T.
• Exxon Mobil displaced Wal-Mart to no. 2 on the 2009 Fortune 500 list . a closed watched list that ranks companies by their revenues.

The market is down 41. The SFE Futures suggested a 33 point rise in the market this morning. Resources doing the damage . down 2.1% – BHP and RIO down 2.3% and 4.1%. Financials down 0.7% despite the solid performance in the US Friday. Australian 1Q Producer Prices fell more than expected . down 0.4% – market was expecting a 0.6% rise in the 1Q.

Tricom Today Australian Stock Report 2-4-09

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The SFE Futures suggested a 58 point rise in the market. BHP and RIO both up in ADR form overnight – 1.93% and 3.04% respectively. (BHP closed at the equivalent of 3254c, up 44c on yesterday’s close.) Metals mixed overnight – Copper up 0.50%, Zinc down 0.61% and Aluminium down 0.50%. Nickel up 2.54%. Oil price down 2.4% to $48.46. Gold up $2.70 to $927.70. Bonds up with the 10 year yield down to 2.6575%. A$/US$ up 1.02% to 69.85c.

Financials up – Treasury’s Geithner made positive comments about the strengthening of US financials. Citigroup and JP Morgan up on the comments. Only 3 times in the history of the Dow Jones has the index swung over 20% in both
positive and negative directions in the same quarter. Homebuilders up on the better-than-expected pending homes sales data.

March was pitiful for the car manufacturers – General Motors down posting monthly sales down 45% on-year. Obama said a swift bankruptcy would be the best way for the car manufacturer to restructure and become a profitable producer again. Ford posted monthly sales down 41%. Toyota’s and Chrysler’s down 39%. Honda’s down 36%
saying the will partly cut production in North America. Healthcare stocks down- Biotec Celgene issued a profit warning.

The SFE Futures suggested a 58 point rise in the market this morning. 3706 on the ASX 200 is seen as resistance (the recent high), a break of that will target 3817. Now 3677. All sectors up. The banks are doing well on the back of a strong night in US financials on comments about “signs of financial recovery” from the US Treasury’s Geithner.

Financial Institutions, Market Cap, 1999-2009

Fascinating infographic via the FT on the top twenty financial institutions, according to market cap.

Click either of the graphics to reach the interactive charts, and then use the slider to see the changes take place.

1999: Top 20 Financials by Market Cap

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2009: Top 20 Financials by Market Cap

Source: The decade for global banks

Tricom Today ASX Stock Market Report 25-3-09

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The SFE Futures suggested a 25 point fall in the market. BHP and RIO both down in ADR form overnight – 5.37% and 2.10% respectively.(BHP closed at the equivalent of 3273c, down 109c on yesterday’s close.) Metals all down overnight Copper down 2.09%, Zinc down 1.39% and Aluminium down 2.28%. Nickel down 1.02%. Oil price up 0.6% to $53.36. Gold down $29.00 to $923.50. Bonds down slightly with the 10 year yield up to 2.7073%. A$/US$ flat overnight at 69.55c. Financials down 6.5% – Citigroup down 3.5%, Bank of America down 7.2%. JP Morgan down 8.6%. The economy still has problems with excessive debt – The unemployment rate sits at 8.1% – the highest level since the early 1980’s, House prices continue to fall. consumers refuse to spend and credit markets remain tight.

Treasury’s Geithner asked Congress to provide him with the power to safely dismantle large financial companies that pose a major risk to the economy. The SEC are still considering the modification to the “uptick rule” with regard to shortselling stock, with pressure from exchanges like the NYSE and the NASDAQ for changes to be made. Energy stocks down 2.2% despite a rebound in crude oil futures.Tech stocks down 1.6%. Some of the large names fell harder – Microsoft and Intel both down over 2.5%. The market is up 29 outperforming the 25 point fall predicted by the SFE Futures this morning. BHP and RIO down 1.9% and 0.5%. Financials and property both up – banks all up despite US financials down 6.5% – NAB outperforming – up 4.4%. Macquarie Group down 1.8% today – A couple of brokers suggest it has done its dash – Both Royal Bank of Scotland and Citi cut their recommendation to Hold from Buy due to its recent outperformance. The stock is up 47% so far this month.

Tricom Today ASX Stock Market Report 24-3-09

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The SFE Futures suggested an 88 point rise in the market.BHP and RIO both up in ADR form overnight – 8.07% and 16.38% respectively. (BHP closed at the equivalent of 3409c, up 76c on yesterday’s close.) Metals mixed overnight – Copper up 2.65%, Zinc up 2.62% and Aluminium down 0.96%. Nickel down 1.25%. Oil price up 2.9% to $53.05.
Gold down $3.70 to $952.50. Bonds down with the 10 year yield up to %2.6595. A$/US$ up 2.24% to 70.54. Citigroup up 19.5%. JP Morgan up 25% and the Bank of America up 26%. Bill Gross from Pimco said that the world’s largest bond fund will take part in the program. Diversified Financials up 24.5%. Diversified banks up 22.3%. Energy sector up 7.8%- May crude oil futures were up 3.5%. Defensive sectors up less on a relative basis. Homebuilders up strong on the positive home sales report – Toll Brothers up 10.8% and KBR Inc up 5.7%. The market is up 52 after being up 96 earlier in line the 88 point rise predicted by the SFE Futures this morning. Financials and property leading the way as the US government unveil their US$1 trillion public-private partnership bank plan. All the banks up but coming off morning highs – CBA outperforming.

A Real Rally or a Mirage?

By Dave Kansas
Three days of gains, a sharp move above 7000 and the question starts to arise: Is this move for real? Of course, just asking the question is one of those things that could queer the rally. The stock market is benefiting from an enormous amount of negative sentiment right now. When everyone hates stocks, that’s usually when stocks start to rebound. Why? Because the pervasiveness of disgust means most people down on stocks have already sold.

Outside of sentiment, here’s a quick breakdown of “real” vs. “not real” indicators:

The rally is real:

1. Oil prices shot higher, despite burgeoning inventories and a reasonably steady dollar. Oil prices are likely to move higher as global growth bottoms and begins to grow. OPEC ‘cuts’ are seldom a good explanation for rising oil prices. Recall that OPEC had the spigots wide open as prices went to $147 a barrel last year.

2. Retail sales showed surprising strength, outside of autos. Some economists expressed disbelief at the retail sales figures, which included an upward revision in January. Consumer getting happier? At least one analyst pointed out that other retail sales measures were not as robust.

3. GE keeps gaining ground. A less brutal downgrade helped GE climb closer toward double-digits. Since hitting $6 a share, GE has steadily bounced higher in the past week. As GE goes…

4. Citigroup and Bank of America keep moving higher. These two firms are at the heart of the heart of the problem for the financial system. Their gains, initially helped by Citi’s internal memo about profitable operations during the first two months of this year, raise the possibility that the financial system is starting to improve, or at least not get worse.

5. GM doesn’t need a $2 billion loan from the government. What are they seeing? Auto sales remain anemic, so it’s hard to tell.

The rally isn’t real:

1. Short interest coming into this week was huge and the debate on Wall Street was between Armageddon and mere hardship. With Armageddon perhaps less likely, shorts start to cover, giving us a nice short-covering rally. Such rallies are often short-lived and not particularly durable. The next few sessions will say much about this possibility.

2. Economic news remains mostly putrid. The weekly jobless claims showed little relief on the job front. No jobs, no buying things, no economic momentum. Hard to square the jobs problems with the retail sales figures.

3. The rest of the world is still a mess. Financial system problems persist around the globe and economic data in places like Eastern Europe and Japan are ugly.

4. The financial system problems remain large and unresolved. Policymakers continue to struggle with what exactly to do and AIG continues to represent a drag on optimistic thoughts.

5. Could be a real “bear market” rally that will play itself out. But, as noted, stocks climb a “wall of worry,” and such worry remains in full supply.

Tricom Today ASX Stock Market Report 2-3-09

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The SFE Futures suggested a 40 point fall in the market. BHP and RIO both down in ADR form overnight BHP down 1.94% and RIO down 2.76%. Metals down overnight – Copper down 0.03%, Zinc down 0.88% and Aluminium down 1.61%. Nickel down 0.55%. Oil price up 2.3% to $0.97. Gold unchanged $942.50. Bonds down with the 10 year yield up to 3.01775%. A$/US$ down 1.75% to 63.64c. 4Q GDP down to an annualized rate of -6.2% from the estimated -3.8%. Exports down, personal consumption down, equipment and software down, and investment in the residential sector was down. Government spending helped to buoy the numbers. Citigroup will swap common stock for preference shares from the government giving them a 36% stake in the bank. Standard & Poor’s moves Citigroup to Negative. Moody’s also lowered their long term rating on the bank. Industrials down 2.7% and down 18% for the month- GE slashes its dividend to $0.10 from $0.31. The cut will protect its AAA credit rating. Merkel and other EU leaders rejected a massive bailout for eastern Europe Germany said eastern European states should be granted cash injections via a case by case scenario not wholesale as many in the EU were pushing for. Earnings reports were dour GAP, Kohl’s and Dell all missed 4Q expectations. Bad start to the week – we are down 84 having been down 111. Worse than the 40 point fall predicted by the futures this morning. Financials and Industrials down 4.3% and 4.8% respectively following Wall Street’s poor session on Friday. BHP knocking 19 points off the index on its own by midday. The RBA decide on interest rates tomorrow – the bond market has factored in a 75% chance of a 50bp cut – if they cut rates it will be the sixth time in a row.

Tricom Today ASX Stock Market Report 23-2-09

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The market is down 46 after being down 90 earlier poor performance today underperforming the 3 point rise predicted by the SFE Futures this morning. Property down 2.3% – all the big names down Westfield Group down 3.6% at midday. They have results this week. Caltex down 6.1% on broker downgrades this morning after results down 95% on Friday. All other energy stocks down on the lower oil price Friday. Gold stocks all up on the gold price breaking through the $1000 barrier Friday. Small miners mostly down on lower metal prices. Industrials down 4.6% – Fairfax down, Virgin Blue down, and Transfield Services down on results. Cochlear down nearly 4.4% at midday having gone ex dividend 80c. Macquarie Infrastructure down 7% and Macquarie Airports down 5.3% on suggestions that the Macquarie stable is being shorted whilst Macquarie Group remains protected by the shorting ban on financials  which comes off on Friday week. MQG still fell 14% last week. Financials down 1.3% following a turbulent session in the sector in the US Friday where financials were down 9% at one stage on concerns over the need for Citigroup and the Bank of America to be nationalised. Our Banks all down 1-2% around midday. ANZ down 2.5%.