Squawk Box Europe – Bill McLaren

LET’S LOOK AT THE S&P 500 INDEX DAILY CHART

There is a chance, a probability for a high today or Monday. When the July “False Break” low was hit I indicated three probabilities. A new leg up running to a minimum 1247 in 90 to 99 calendar days, a secondary high or fast rally that exhausts before a new high usually 7/8 of the range down in 60 to 65 calendar days. Or a lower double top and this is where the index is now located. So as the index moves into these time window we need to look at the wave structure, volume, price level and the pattern of the trend to confirm the probability. The index is at the “OBVIOUS” resistance of the previous high and now within the time window at 180 days.

There is a 5 wave structure up (5 or 3of 3), volume has been decreasing but not unusual if the trend were up at this stage, but the pattern of trend is not setting up well. Notice how small the daily ranges have become. High points and tops tend to have some volatility. Notice the expansion of ranges during the January top and the April top and in this case the ranges are narrowing. If there is a move down it is possible to see just one to three days down and resumption of the trend due to the resistance being “obvious.”

Running out cycles from the July low has 45 days on the 15th and if a low could indicate a 90 day move up. If this is a counter trend rally in a down trending market the highest probability is to run out 60 to 65 days or out to the first week in September. If there is a high point now it should not exceed 1134. I don’t like the odds for a top due to the small range days and the probability the move down could be a small counter trend down. The small range days leaves a possibility of a large spike up. If today can not advance following yesterday’s reversal up and a daily low is broken I’ll consider a short term move down to trade but I doubt the trend reversal. I hate those small range days as it usually indicates support coming in at high levels and an exhaustion up might be necessary to eliminate the buyers.

GOLD

The two weeks ago I said gold would go to 154 to 157 for a low at 50% of the last leg up. We are now looking for this rally to fail and confirm a downtrend into one of the major support. The move down to 50% of the last leg up to consolidated that leg up. I felt the entire trend since 2008 needed to be consolidated so we are looking for this rally to fail and run down to ¼ of the major range which is the minimum move down to correct or consolidate a major trend or 1122. Once gold establishes a downtrend there is a fast rally as occurred in this uptrend as noted with arrows and this occurs in almost all up trends. So we are looking for evidence this rally will fail at a price above 1212 and possibly on the 12th of August at 1220. If the index runs past 12 trading days there is no high in place and a new high is likely. The pattern of the downtrend was weak so we need solid evidence to conclude a lower high is in place. But that is what we are looking to occur.

Source: McLaren Report

Jeremy Grantham: “I am merely fearful”

Jeremy Grantham has become a familiar and very popular face on this site. For those treasuring his insight, wisdom and prescient calls, the co-founder and chief investment strategist of Boston-based GMO has just published the July edition of his quarterly newsletter entitled “Summer Essays”.

Here are a few excerpts from Grantham’s newsletter.

“I am still committed to my idea of April 2009 that there would be a ‘last hurrah’ of the market, supported psychologically by a substantial economic recovery but then, after a year or so, that this would be followed by a transition into a long, difficult period that I called the ‘seven lean years’. I had, though, supposed that the economic reflex recovery – how could it not bounce with that flood of governmental help to everyone’s top line? – would last longer or at least not slow down as fast as we have seen in the last few weeks. And with unexpectedly strong fiscal conservatism from Europe and perhaps from us, this slowdown looks downright frightening. I recognize that in this I agree with Krugman, but I can live with that once in a while. However, where I am merely fearful, he is talking about another ‘Depression’.

“Despite growing nervousness and despite a slowing economy, I am so impressed by the power of low rates and Greenspanism (for lack of a better or shorter description) that I would still put odds of 45% (down from 50% last quarter) for the market to rise to over 1400 (down from 1500 to 1600 last quarter) by October of next year, accompanied by a speculative spin. On the other hand, I also have to recognize that the 21% I put on a quick and rapid decline to fair value looks even more likely today, perhaps closer to 30%.

“If the market does indeed continue down the current sell-off path, it should result in some unusual movement in the Russell 2000 (small cap index) and possibly even the junky stocks, which might give up their unusual relative strength in a real hurry. I can imagine a situation, for example, where the Russell 2000 gives up a relative 10% in two to three weeks as the aggressive investment world finally has second thoughts on the wisdom of continuing to speculate and changes its mind in its usual rapid way. (Remember, you read it here first.) High quality is perhaps not so promising in this respect, but could still win by several percentage points if the world becomes more circumspect. It would be more typical for quality to outperform over several years.”

Click here for the full report (registration is required).

Source – http://www.investmentpostcards.com/2010/07/20/jeremy-grantham-%e2%80%9ci-am-merely-fearful%e2%80%9d/

Goldman’s Global Leading Inidicator Rolls Over

“Our improved GLI comes at a particularly important time for assessing the cycle. Although our original GLI had not shown a clear peak, we have pointed out for some time that it has been distorted by trending issues in the past few months and that signs ‘under the hood’ have pointed to some slowing in momentum. The improved GLI shows that message more clearly, with a peak now visible there. This suggests that the pace of industrial growth is set to decelerate, although from extremely high levels, an outcome that would be consistent with our GDP forecasts.

Markets are increasingly focused on what this kind of slowing in momentum will mean. As usual at this point in the cycle, the key issue is the extent of deceleration. The acceleration phase in recovery inevitably ends and that point was always likely to come in 2010H1. But, as we show once again, while that shift means a more moderate picture for risk assets, the deceleration is generally only a clear negative event if the slowdown is severe. Although our US forecast is still firmly below consensus, our global forecast does not envisage a sharp slowdown. That said, we will continue to pay close attention to the incoming data on this front, starting with the new release of the GLI tomorrow.”

What does it all mean for the various asset classes?  Not surprisingly, when the GLI is in decline equities tend to under perform, bonds outperform, volatility spikes and credit spreads widen:

“Within equities, the performance differentials between periods when the GLI is rising and falling are on average very large, although of course heavily influenced by the impact of serious downturns and recessions. The differences are strongest in emerging markets (EM) and in cyclical equities (our Wavefront growth basket shows that cyclicals tend to outperform strongly in ‘up’ phases and underperform strongly in ‘down’ phases).

Commodities show a similar pattern. But the relationship is strongest for industrial metals including copper (this is true even if they are excluded from the GLI), and least strong for gold and other precious metals. Interestingly, at least over the sample period here, oil has behaved with a strong cyclical bias too.

Bonds display the opposite behaviour, with a strong tendency for yields to fall when the GLI is falling and significant rises when the GLI is rising. That tendency is largest in the US market (front and back) but visible in other majors. There is also some tendency for the yield curve to steepen more when the GLI is falling.

Unsurprisingly, given the other results, credit spreads and equity volatility (as measured by the VIX) also tend to move significantly higher on average during phases when the GLI is falling and narrow when it is rising. These differences have been extremely pronounced in the recent downturn and—as we have described elsewhere—tend to be most dramatic at the ends and beginnings of cycles.

Experience in FX is more mixed. In general EM FX tend to perform better when the GLI is rising than falling and, within the G10, the commodity currencies are by far the most reliably related on the positive side to phases of the GLI. That said, the GBP, SEK and NOK are all confirmed to be more ‘cyclical’ in this simple analysis than the EUR. On the other side, the CHF is the least cyclical of the G10. Within the G3, the message is more mixed—and more varied over time—but there is a modest tendency over the long term for the USD to do better when the GLI is deteriorating.”

Source: GS – http://www.scribd.com/doc/33861708/GoldmanSachs-Global-Economics-Weekly-20100630

Stock Market Report 3-2-10

US stocks rose on Tuesday after United Parcel Service (UPS) and DR Horton released encouraging earnings reports.

Gains were broad based on Tuesday, with 28 of 30 Dow stocks rising.

UPS reported a drop in fourth-quarter profit, but forecast a sharp increase in 2010 earnings. Its stock rose over 1%.

The National Association of Realtors’ pending home sales index rose 1%, in line with expectations. The index fell 16.4% in the previous month. DR Horton, one of the top five US home builders, reported its first-quarterly profit in almost three years and its stock jumped 11%. Pulte Homes and Lennar Corp rose over 7%.

Amazon.com slid for a second straight day, falling 2%, and limited the Nasdaq’s advance.

The S&P 500 industrial sector rose over 1%. Cummins and Emerson Electric rose between 7% and 8%. Cummins is a US manufacturer of diesel engines and other power generation equipment. Emerson is an industrial conglomerate that produces technology used by the oil and natural gas industries.

Major automakers, including Ford Motor, General Motors and Nissan all reported improved January sales. Toyota, however, saw a bigger-than-expected decline in January sales, impacted by a major recall.

Credit card companies rose after analysts upgraded companies within the industry. American Express, Discover Financial Services and Capital One Financial rose between 2% and 3%.

So far, 48% of the S&P 500 companies have reported results. Analysts expect earnings to have tripled from the prior year, although the improvement is mostly due to cost cutting and easy comparisons to the fourth quarter of 2008. The financial sector is expected to lead the advance.

In other news, Moody’s Investors Service said the outlook for the US’ AAA credit rating remains stable even with the effects of the credit crisis and recession on government debt and fiscal flexibility.

Commodities

Stock Market Report 21-1-10

Wall Street suffered its worst slide of 2010 on Wednesday as investors worried that lending restrictions in China could hurt the global economic recovery.

Market breadth was negative. On the NYSE, losers beat winners by more than three to one. On the NASDAQ, decliners topped advancers three to one.

Commodity-related shares were hurt by concerns that China may curb its economic expansion. A stronger dollar also put pressure on commodity prices and commodity-related stocks.

Technology shares were among the biggest decliners after IBM gave a conservative outlook, despite reporting better-than-forecast quarterly sales and earnings. IBM shares fell 3.8%.

Healthcare stocks were down on Wednesday. An index of pharmaceuticals companies fell 1.1%. Healthcare stocks had risen the prior day on speculation that the healthcare system would face new obstacles following a surprise Republican election to the Massachusetts Senate seat.

Several banks reported earnings. Wells Fargo & Co and US Bancorp reported better-than-expected quarterly earnings, helped by recent acquisitions. The Bank of America reported a wider-than-expected loss, but said its credit problems were beginning to stabilise. The Bank of America said losses widened to US$5.2B in the fourth quarter of last year, partly due to the bank paying back government bailout funds. The company said the repayments shaved off $US4B from its bottom line. US Bancorp shares added 2.3% while the Bank of America gained 0.6%. Morgan Stanley reported its second-straight quarterly profit, one year after posting a significant loss. The financial firm said it earned US$617M for the quarter versus a loss of $11B a year ago. The result missed expectations, and shares in the company fell around 1%.

In economic news, building permits, a measure of builder confidence, rose to a 653,000 unit annual rate in December, from a 589,000 rate in November, the government reported. Permits were expected to rise to a 590,000 rate, according to a consensus of economists. However, housing starts fell to a 557,000 unit annual rate, from a 580,000 unit rate in November.

The Producer Price Index (PPI), a measure of wholesale inflation, rose 0.2% after climbing 1.8% in the previous month. Economists expected it to hold steady. The so-called core PPI, which strips out volatile food and energy prices, was flat versus forecasts for a gain of 0.1%.

Overseas Markets

Dow down 137 pts to 10,588 (10,517 – 10,720)

S&P 500 down 14 pts to 1,136 (1,129 – 1,148)

Nasdaq down 33 pts to 2,287 (2,269 – 2,304)

SPI 200 Futures down 31 pts to 4,806 (4,776 – 4,840)

FTSE down 92 pts to 5,421 (5,404 – 5,513)

Nikkei down 27 pts to 10,738 (10,725 – 10,861)

Shanghai SE Comp down 95 pts to 3,152 (3,148 – 3,255)

Commodities

WTI Oil down 2.0% to US$77.43/bbl

Gold down 2.4% to US$1,113/oz

Sugar (NY) up 0.4% to USc29.11/lb

Corn down 0.3% to US$3.32/bushel

Wheat down 0.6% to US$4.67/bushel

Natural Gas (Henry Hub) up 0.6% to US$5.54/MMbtu

Silver down 4.5% to US$17.91/oz

Platinum down 0.9% to US$1,630/oz

Palladium up 0.6% to US$469.25/oz

Copper (NY) down 2.6% to US$3.35/lb

Currency

A$ / US$ down 1.7USc to US$0.91 /A$

EUR / US$ down 2.8USc to US$1.41 /EUR

GBP / US$ down 0.6USc to US$1.63 /GBP

US$ / Yen up 0.5 Yen to 91.24 Yen/US$

Stock Market Report 20-1-10

US stocks rose in a broad-based rally as investors bought healthcare shares on bets that a potential Republican victory in Massachusetts’ Senate race could stall President Obama’s reforms and remove a threat to profits in the sector.

The S&P Healthcare Index climbed nearly 2%. Drug maker Eli Lilly rose 5%. Health insurers Humana and Aetna gained 3.6% and 4%, respectively.

All 10 S&P 500 industry groups traded in positive territory.

The Dow also received a boost from McDonald’s, which gained 2.3% on an analyst upgrade. 3M was another notable mover, rising 2%.

Kraft Foods was the biggest drag on the Dow, declining 1.1% after it agreed to a revised cash-and-stock deal to buy Cadbury for about US$19.6B.

In other deal news, Tyco International agreed to buy Brink’s Home Security Holdings for US$1.9B. Brink’s shares surged almost 31.6%.

Large-cap technology companies buoyed the NASDAQ. IBM is expected to report its quarterly earnings after market close. Apple was up 4.2% while IBM advanced 1%.

Citigroup reported a fourth-quarter loss that met analysts’ expectations as the third-largest US bank took charges linked to repaying government bailout funds. On the upside, the company said consumer credit losses dropped in the quarter and that it also set aside less money for bad loans during the quarter. Shares gained 3%.

The Bank of America and Morgan Stanley will report on Wednesday. Goldman Sachs and Google will report earnings on Thursday.

S&P 500 earnings are expected to have almost tripled versus those a year ago and revenue is expected to have risen 7%. However, the jump is largely due to a spike in financial sector results versus an easy comparison to the fourth quarter of 2008 amid the height of the financial crisis. Without the financial sector, earnings are expected to be down 8% and revenue is expected to decline 1%.

Overseas Markets

Dow up 116 pts to 10,725 (10,592 – 10,730)

S&P 500 up 14 pts to 1,150 (1,136 – 1,150)

Nasdaq up 31 pts to 2,319 (2,291 – 2,320)

FTSE up 19 pts to 5,513 (5,431 – 5,532)

Nikkei down 90 pts to 10,765 (10,749 – 10,867)

Shanghai SE Comp up 10 pts to 3,247 (3,237 – 3,269)

Commodities

WTI Oil up 0.8% to US$78.66/bbl

Gold up 0.7% to US$1,138/oz

Sugar (NY) up 4.9% to USc28.98/lb

Corn down 2.6% to US$3.33/bushel

Wheat down 1.7% to US$4.70/bushel

Natural Gas (Henry Hub) down 2.7% to US$5.51/MMbtu

Silver up 1.0% to US$18.82/oz

Platinum up 1.7% to US$1,650/oz

Currency

A$ / US$ up 0.1USc to US$0.92 /A$

EUR / US$ down 0.9USc to US$1.43 /EUR

GBP / US$ up 1.1USc to US$1.64 /GBP

US$ / Yen up 0.4 Yen to 91.14 Yen/US$

Stock Market Report 19-1-10

US markets were closed for the Martin Luther King Day.

Major US companies reporting later this week include the Bank of America, Citigroup, Morgan Stanley, Goldman Sachs, IBM, General Electric and Google.

European shares rose, lifted by a rally in mining and oil shares on the back of firmer commodity prices.

National benchmark indexes gained in all of the 18 western European markets, except Greece, Iceland and Luxembourg. Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 rose between 0.7% and 0.8%.

Trading was subdued, as US markets were closed for the Martin Luther King Day. Volumes on the European index were just 65% of its 90-day daily average volume.

Miners topped the gainers’ list as commodity prices advanced. BHP, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources rose between 1% and 4%.

Cadbury rose 1.8% on media reports that the Kraft Foods will increase its offer to at least 820 pence per share. Kraft Foods must make a revised bid for Cadbury by Tuesday. The Hershey Co., which is reportedly working on a possible bid as well, has until Saturday to make a bid under UK takeover rules.

International Power dropped 3.4% after saying talks with GDF Suez on combining some assets are no longer continuing. The biggest UK-based electricity producer had earlier rallied on speculation that GDF Suez is considering a tie up with International Power that may lead to a partnership.

Greece’s ASE Index slid 2.5%. Finance ministers from the 16 nations using the euro are meeting in Brussels as Greece struggles to cut a 2009 budget deficit that may reach almost 13% of GDP. Among notable movers, Titan Cement, Greece’s largest cement maker, sank 7.9%. Alpha Bank, the country’s third-largest bank, tumbled 7.7%.

L’Oreal, Nokia and Zodiac Aerospace advanced on analyst upgrades. L’Oreal added 2.1%, Nokia was up 1.6% and Zodiac Aerospace gained 5.4%.

Overseas Markets

FTSE up 39 pts to 5,494 (5,454 – 5,504)

Nikkei down 127 pts to 10,855 (10,781 – 10,895)

Shanghai SE Comp up 13 pts to 3,237 (3,202 – 3,238)

Rio Tinto plc up 0.89% to A$63.68 eq.; a 19% discount to prev Aust close A$78.32

BHP plc up 1.47% to A$36.54 eq.; a 16% discount to prev Aust close A$43.44

Commodities

WTI Oil down 1.8% to US$78.00/bbl

Gold up 0.3% to US$1,134/oz

Silver up 1.2% to US$18.64/oz

Platinum up 1.4% to US$1,622/oz

Currency

A$ / US$ down 0.5USc to US$0.93 /A$

EUR / US$ down 1.1USc to US$1.44 /EUR

GBP / US$ down 0.1USc to US$1.63 /GBP

US$ / Yen down 0.5 Yen to 90.74 Yen/US$

Stock Market Report 15-1-10

US stocks traded slightly higher on Thursday, led by the technology sector.

Market breadth was positive. On the NYSE, winners beat losers by four to three. On the NASDAQ advancers topped decliners eight to five.

The technology sector led gains on the back of positive brokerage comments on Oracle and ahead of an expected profit report from Intel. Shares of Oracle, the world’s second largest business software maker, gained 2.5% and led gains on the NASDAQ. Dow component Intel Corp, the world’s largest chipmaker, is expected to report a quarterly profit after market close. Its stock advanced 1.6%. Analysts expect the company to report earnings of 30cps, compared with 4cps in the previous year. IBM and Hewlett-Packard shares also advanced.

The KBW bank index was up 1.4%, led mainly by regional and midsize banks. President Obama proposed a fee to make big banks repay taxpayers for bailouts. Bank shares had declined earlier in the week on concern about the fee, but on Thursday the sector was higher.

On the downside, US economic data appeared to cast doubt on the strength of the economic recovery. Sales at US retailers unexpectedly fell in December and applications for jobless benefits rose last week. A government report showed that retail sales fell 0.3% in December. Economists were expecting sales to have risen 0.5%. Retail sales excluding autos fell 0.2% versus expectations of a 0.3% rise. Helping to soften the blow, the National Retail Federation said holiday sales for the November – December period rose 1.1%, which was better than the retail group’s expectations for a 1% decline.

The number of American’s filing new claims for unemployment rose last week to 444,000 from 433,000 the previous week. Economists expected claims would rise to 437,000. Continuing claims, a measure of Americans who have been receiving benefits for a week ore more, fell to 4.596M from 4.897M in the previous week.

On the positive side, business inventories rose slightly more than expected in November, up 0.4% as businesses re-stock.

Overseas Markets

Dow up 34 pts to 10,715 (10,667 – 10,724)

S&P 500 up 3 pts to 1,149 (1,144 – 1,150)

Nasdaq up 11 pts to 2,319 (2,303 – 2,323)

Russell 2000 up 3 pts to 647 (642 – 648)

SPI 200 Futures up 11 pts to 4,890 (4,874 – 4,899)

FTSE up 25 pts to 5,498 (5,473 – 5,522)

Nikkei up 173 pts to 10,908 (10,774 – 10,910)

Shanghai SE Comp up 43 pts to 3,216 (3,166 – 3,219)

Commodities

WTI Oil down 0.3% to US$79.39/bbl

Gold up 0.4% to US$1,141/oz

Sugar (NY) down 1.0% to USc27.76/lb

Corn down 0.9% to US$3.45/bushel

Wheat down 1.8% to US$4.95/bushel

Natural Gas (Henry Hub) up 2.8% to US$5.77/MMbtu

Silver up 0.4% to US$18.71/oz

Platinum up 2.1% to US$1,612/oz

Palladium up 5.3% to US$447.13/oz

Copper (NY) down 0.3% to US$3.38/lb

Currency

A$ / US$ up 1.1USc to US$0.93 /A$

EUR / US$ up 0.1USc to US$1.45 /EUR

GBP / US$ up 1.6USc to US$1.63 /GBP

US$ / Yen up 0.1 Yen to 91.07 Yen/US$

Stock Market Report 12-1-10

US technology shares fell on Monday as investors took profits after the NASDAQ touched a 16-month high on Friday. Shares of industrials buoyed the broad market following the release of strong Chinese economic data.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers eight to seven. On the NASDAQ, decliners topped advancers seven to six.

China’s strong trade data lifted US companies with large international operations. Constructions machinery maker and Dow component Caterpillar jumped 6%, its largest daily advance in nearly three months. Aluminium producer Alcoa rose 1.2% ahead of its fourth-quarter earnings announcement expected after market close. Analysts, on average, expect Alcoa to show a profit of 6cps compared to a loss in the previous quarter.

Dow components Intel and JPMorgan report results later this week. S&P 500 earnings are expected to have more than tripled in the fourth quarter of 2009, thanks to easy comparisons to the fourth quarter of 2008. A substantial improvement in financial sector results is expected to fuel gains.

McMoRan and Energy XXI shares jumped after the energy companies announced a key discovery at one of their oil exploration wells in the Gulf of Mexico.

Technology shares, however, weighed on the market. Shares in Apple, Dell and Hewlett-Packard all declined.

UPS and Fedex advanced 4.8% and 2.9%, respectively, on speculation that cold weather affecting parts of the US will drive consumers away from stores and into online shopping, increasing shipment volumes.

Among decliners, Dow component Procter & Gamble shares fell 0.4% on concern that Friday’s currency devaluation in Venezuela could hurt sales and revenue as products will be more expensive.

Overseas Markets

Dow up 48 pts to 10,666 (10,592 – 10,676)

S&P 500 up 2 pts to 1,147 (1,142 – 1,150)

Nasdaq down 5 pts to 2,312 (2,302 – 2,326)

SPI 200 Futures up 6 pts to 4,939 (4,916 – 4,958)

FTSE up 4 pts to 5,538 (5,528 – 5,600)

Nikkei up 117 pts to 10,798 (10,678 – 10,816)

Shanghai SE Comp up 17 pts to 3,213 (3,197 – 3,307)

Commodities

WTI Oil down 0.3% to US$82.52/bbl

Gold up 1.2% to US$1,152/oz

Sugar (NY) down 2.8% to USc26.75/lb

Corn up 1.6% to US$3.82/bushel

Wheat up 1.7% to US$5.38/bushel

Natural Gas (Henry Hub) down 12.0% to US$5.77/MMbtu

Silver up 0.8% to US$18.62/oz

Platinum up 1.1% to US$1,596/oz

Palladium up 1.3% to US$433.75/oz

Copper (NY) up 1.2% to US$3.43/lb

Currency

A$ / US$ up 1.4USc to US$0.93 /A$

EUR / US$ up 2.2USc to US$1.45 /EUR

GBP / US$ up 1.7USc to US$1.61 /GBP

US$ / Yen down 1.3 Yen to 92.07 Yen/US$

ASX200 Stock and CFD Report 29-09-09

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The SFE Futures up 56 points overnight. BHP and RIO in ADR form overnight, BHP up 2.37% and RIO up 2.09%. BHP was up 2.30% and RIO up 2.15% in the UK. BHP closed at the equivalent of 3764c, up 54c on last night’s close. Metals mixed on LME Copper up 0.35%, Nickel down 0.90%, Zinc down 0.11%, Aluminium up 0.95%, Lead up 1.02% Oil price up $0.79 to $66.84 Gold up $2.50 to $994 Bonds up 10 year yield at 3.302% down from 3.329% A$ up 87.27c versus 86.62c yesterday morning. CRB Commodities index up 0.57% VIX Volatility Index down 2.85%

Market bounces back from three days of falls. Trading volumes were light with the Jewish Yom Kippur holiday - just 0.979 shares were exchanged on the day, down 21% on the three-month average. M&A activity in Healthcare and Technology sectors boosts market. All 10 sectors of the S&P500 were up. Index now up 57% from March lows. Financials posted best gains up 3.4%. Sectors best gains in two months. Morgan Stanley forecast declining credit losses for banks over next 12-18 months; Citigroup was up 4.3%; Insurers also up. Hartford Financial up 11%. On the takeovers front, Affiliated Computer Services was up 14% after Xerox acquired the company for US$6.4B. American Securities announced it will acquire GenTek for $38.00 per share, which represents nearly a 40% premium over the last closing price. Bloomberg data, M&A activity involving US companies in the month of September to date has totaled US$49.1B, well up on the figures for the preceding two months (August: US$26.6B; July: US$36.8B). 

The market is up 83. The SFE Futures were up 56 this morning.

ASX200 Stock and CFD Report 24-09-09

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The SFE Futures down 28 points overnight. BHP and RIO in ADR form overnight, BHP down 2.00% and RIO down 1.52%. BHP was down 1.02% and RIO up 0.97% in the UK. BHP closed at the equivalent of 3779c, down 56c on last night’s close. Metals mainly weaker on LME Copper down 2.26%, Nickel up 0.73%, Zinc down 2.24%, Aluminium down 0.81%, Lead down 2.21% Oil price down $2.85 to $68.70 Gold down $1.10 to $1014 Bonds up - 10 year yield at 3.418% down from 3.456%. A$ down 86.84c versus 87.36c yesterday morning. CRB Commodities index down 1.01% VIX Volatility Index up 1.78%

• Market finished close to its intra-day low. Interest Rates remain unchanged. Following a two day policy meeting, the FOMC left rates unchanged at 0.00-0.25% and added they would keep short-term interest rates at historically low levels near zero “for an extended period”. FOMC policy statement indicated that economic activity has ‘picked up’ since their last meeting in August but added unemployment is likely to influence consumer spending, to add to lower household wealth and tight credit solutions. FOMC went on to say that it will purchase $1.25 trillion of agency mortgage backed securities and $200 billion agency debt, but it will gradually slow the pace of purchases to promote a smooth transition in markets. Financials - down 2.1% – led the market lower. JP Morgan down 3.0% and Citigroup down 2.8% Moody’s down 8% on reports that US state regulators were reviewing whether to create an organization for grading insurers’ bond holdings, potentially negatively impacting Moody’s Investors Service and Standard & Poor’s revenue streams.Materials down 2.0%

The market is down 11. The SFE Futures suggested a 28 point fall.

ASX200 Stock and CFD Report 23-09-09

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The SFE Futures up 19 points overnight. BHP and RIO in ADR form overnight, BHP up 2.12% and RIO up 2.82%. BHP was up 1% and RIO up 2.4% in the UK. Metals stronger on LME Copper up 1.36%, Nickel up 2.06%, Zinc up 1.43%, Aluminium up 0.27%, Lead up 3.48%. Oil price up $1.84 to $71.55. Gold up $10.60 to $1015. Bonds up - 10 year yield at 3.456% down from 3.487%. A$ up 87.36c versus 86.34c yesterday morning. CRB Commodities index up 1.90%VIX Volatility Index down 4.07% 

Financial best sector up 2.3%. Highest level since November. JPMorgan Chase up 4.3% and was the best performer in the Dow index. Macy’s up 5.5%, Hewlett-Packard up 1.4% and Bank of America up 2.1% boosted by some analyst upgrades Energy sector up 1.4%, Materials sector up 1.2% on higher oil and commodity prices Newmont Mining up 1.8% and Exxon Mobil up 0.4% Caterpillar up 3.6% on speculation demand for commodities will boost sales. Utilities, Health Care and Telecoms down. Oil up for first time in 4 days. Chinese oil imports increased by 18% in August.

 US$ fell to its lowest level against the euro in more than a year. US$43bn Note Auction. Results for 2-year Treasuries strongest support in twoyears (the bid-to-cover ratio was 3.23). News that the Asian Development Bank has upgraded its GDP forecasts for majorAsian economies boosted sentiment on the global economic outlook. Predicted Asia,excluding Japan, will grow 3.9% in 2009. FOMC make their interest rate decision tonight.

The market is down 5. The SFE Futures suggested a 15 point fall.

ASX200 Stock and CFD Report 17-09-09

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The SFE Futures up 53 points overnight. BHP and RIO in ADR form overnight, BHP up 3.05% and RIO up 3.33%. BHP was up 2.67% and RIO up 2.85% in the UK. BHP closed at the equivalent of 3946c, up 46c on last night’s close. Metals stronger again on LME Copper up 3.82%, Nickel up 3.23%, Zinc up 4.25%, Aluminium up 3.95%, Lead up 5.89%  Oil price up $1.41 to $72.34 Gold continues to rally up $13.90 to $1020 Bonds down - 10 year yield at 3.471% up from 3.452%. A$ up 87.29c versus 86.33c yesterday morning. CRB Commodities index up 1.84% VIX Volatility Index up 1.15% to 23.69

Broad based rally continues. Eighth gain in past nine sessions For the month, it is up 3.1%.  Nine of the Ten sectors were up. The telecom sector (-0.77%) was the only sector down. Financials up 3.4%. Led by American Express, up 3.4%. General Electric, up 6.3% and JP Morgan Chase, up 3.4%. Insurers were the hottest sector, Hartford Financial up 11%. Energy sector up 2.3%. Stronger than expected growth in US industrial production boosted sentiment. Consumer price index rose 0.4% in August a touch higher than expected. Core CPI, which excludes food and energy prices, increased 0.1%, as expected. US Current Account Deficit narrowed slightly. Oil prices higher. Boosted by a larger than expected decline in US crude inventories. After the close Oracle down 2.17% following Q1 earnings which were in line with consensus.

Another good day for the market. It is up 48. The SFE Futures were up 53 this morning.

ASX200 Stock and CFD Report 16-09-09

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The SFE Futures up 21 points overnight.  BHP and RIO in ADR form overnight, BHP up 1.15% and RIO up 1.83%. BHP was up 0.56% and RIO down 0.04% in the UK.  Metals stronger on LME Copper up 0.98%, Nickel up 0.66%, Zinc up 1.55%, Aluminium up 1.17%, Lead up 2.89% Oil price up $2.07 to $70.93 Gold up $5.20 to $1006 Bonds down - 10 year yield at 3.452% up from 3.406%. A$ up 86.33c versus 86.16c yesterday morning. CRB Commodities index unchanged VIX Volatility Index down 1.84% to 23.42 

Up for seventh time in eight days Eight of ten sectors up. Consumer Goods and Healthcare down. Retail sales numbers much better than expected. Strongest growth rate since early 2006. New York manufacturing Index also better than expected. Fastest growth rate in 2 years. August US PPI numbers were higher than expected. Boosted by higher energy prices. Caterpillar rose 6%, General Electric +4.2%, DuPont +2.7%; Alcoa up 8%. Energy and Materials stocks like Exxon Mobil and Freeport-McMoRan Copper & Gold also up in the wake of higher oil and metal prices. Citigroup Inc fell by nearly 9% on reports that the bank and the US Treasury Department had begun discussing how to sell the government’s 34% stake. Sentiment boosted by Warren Buffet saying his company Berkshire Hathaway was buying equities.

The market is up 95. The SFE Futures were up 21 this morning. After falling 14c to 311c yesterday on the government invitation to separate their businesses the Telstra research is

actually not too bad this morning and the price is up 8c to 319c.

ASX200 Stock and CFD Report 15-09-09

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The SFE Futures up 46 points overnight. BHP and RIO in ADR form overnight, BHP down 0.72% and RIO down 0.41%. BHP was down 0.96% and RIO down 1.10% in the UK. BHP closed at the equivalent of 3833c, up 49c on last night’s close. Metals generally weaker on LME Copper down 1.80%, Nickel down 2.04%, Zinc down 1.90%, Aluminium down 0.72%, Lead up 1.76% Oil price down 43c to $68.86 Gold down $5.30 to $1001 Bonds down - 10 year yield at 3.406% up from 3.343%. A$ down a touch 86.16c versus 86.19c yesterday morning. CRB Commodities index up 0.62% VIX Volatility Index down 1.20% to 23.86

 Market recovers from early losses. Sixth gain in seven sessions Worries that a trade war could erupt between the U.S. and China caused early nervousness Nine out of ten sectors up. Telecoms only sector down. Utilities up after lagging in recent sessions. The sector advanced 1.6% after electric utilities (+1.7%) were given positive coverage in a Barron’s article. Utility AES Corp attracted interest (up 4.5%) after The Wall Street Journal reported that China’s investment arm is interested in buying a stake in the company.  Financial stocks up 1.6% after being down as much as 1% early .  Materials up 1.6% higher. General Electric up 4.6% to $15.35. First close above $15 since January. Goldman Sachs reiterated its “buy” rating on the stock.

The market is up 15. The SFE Futures up 46 points overnight.

ASX200 Stock and CFD Report 11-09-09

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The SFE Futures up 42 points overnight. BHP and RIO in ADR form overnight, BHP up 1.78% and RIO up 2.79%. BHP was up 0.09% and RIO up 0.20% in the UK. BHP closed at the equivalent of 3829c, up 29c on last night’s close. Metals much weaker on LME Copper down 1.89%, Nickel down 4.21%, Zinc down 3.07%, Aluminium down 1.94%, Lead down 12.36% Oil price up 63c to $71.94 Gold touch weaker down $0.30 to $997 Bonds well up – 10 year yield at 3.342% down from 3.479%. A$ up 86.33c versus 86.29c yesterday morning. CRB Commodities index up 0.77% VIX Volatility Index down 3.17% to 23.55

Broad based rally with all 10 major sectors up Energy stocks were strong including Chevron Corp and Schlumberger on higher oil prices. News that the International Energy Agency had increased its 2010 estimate for global demand for a second consecutive month (up 0.45M barrels to 85.7M barrels a day); (2) further US$ selling and (3) a larger than expected drop in crude stockpiles in the latest US Energy Department weekly inventories report boosted sentiment Telecom and Airline stocks were also strong Walt Disney up 5% in Media and Entertainment Procter & Gamble up 4.2% after saying it will cut prices and increase promotions across nearly 10% of its portfolio. Initial jobless claims numbers were better than expected. Trade deficit increased 16% to $32.0 billion in July. This was well above expectations. US$ fell – further weakness took it to 2009 lows against the Euro and YEN

The market is finishing the week off strongly and is up 25. The SFE Futures were up 42 this morning

ASX200 Stock and CFD Report 10-09-09

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The SFE Futures up 31 points overnight. BHP and RIO in ADR form overnight, BHP down 0.41% and RIO down 0.01%. BHP was down 0.12% and RIO down 0.47% in the UK. BHP closed at the equivalent of 3763c, down 6c on last night’s close. Metals take a breather on LME Copper down 1.02%, Nickel down 0.11%, Zinc down 0.10%, Aluminium down 0.27%, Lead down 2.13% Oil price up a bit 21c to $71.31 Gold price down $2.70 to $997 Bonds down - 10 year yield at 3.479% up from 3.469%. A$ up 86.29c versus 86.20c yesterday morning. CRB Commodities index up 0.26% VIX Volatility Index down 5.07% to 24.32. Volumes were light.

Most sectors finished up. Utilities and consumer staples were slightly weaker. Financials were strong. Financials up 1.4%. Materials sector (resources) and energy sectors up. The Nasdaq Composite (technology driven) did better than the S&P500 and the Dow closing up 1.11%. Highest close since Oct last year. The S&P 500 is now 53% above its March lows Caterpillar up 3.1%. General Electric up 2.6% to January highs, Boeing 2.1%. Google up 1.2%. Ebay up 3.9% after Sanford C. Bernstein upgraded the company, citing the turnaround in its core businesses and in used-auto sales. Oil bit better helped by weaker US$. Most expect OPEC to retain its current production targets at Thursday’s Vienna meeting - a consensus view reinforced by comments by the Kuwaiti oil minister.  Gold failed to drive through the US$1000 mark. The Federal Reserve’s Beige Book survey showed half of Federal Reserve districts saw evidence the U.S. economy had improved by the end of August, but labor markets remained weak and retail sales were flat overall.

The market is up 37, an 11 month high. The SFE Futures were up 31 this morning.

ASX200 Stock and CFD Report 7-09-09

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The SFE Futures up 38 points overnight. BHP and RIO in ADR form overnight, BHP up 0.84% and RIO up 2.25%. BHP was up 1.28% and RIO up 3.01% in the UK. BHP closed at the equivalent of 3669c, up 7c on last night’s close. Metals mixed on the LME following two strong days Copper up 0.32%, Nickel down 3.40%, Zinc up 1.82%, Aluminium down 0.16%, Lead up 1.28% Oil price up 3.3% Gold price touch weaker down $1.00 to $997 Bonds well up - 10 year yield at 3.442% up from 3.328%. A$ up 85.21c versus 83.97c yesterday morning. CRB Commodities index down 0.47% VIX Volatility Index down 6.79% to 25.26

Light volumes leading into the long weekend - There is a Labor Day holiday in the US tonight. S&P 500 fell for the first week in two months. US Non-farm payrolls for August were not as bad as expected. Lowest job loss number in a year. Unemployment rate jumped to 9.7% compared expectations of 9.5%. Highest unemployment rate since 1983. Gold paused after the recent strong run. Financials up 0.3%. US dollar fell 0.3%.

Payrolls: Actual -216K, consensus -230K, prior -276K (revised from -247K) Unemployment rate: Actual 9.7%, consensus 9.5%, prior 9.4%  Hourly earnings: Actual 0.3%, consensus 0.1%, prior 0.3% (revised from 0.2%)  Average workweek: Actual 33.1, consensus 33.1, prior 33.1

The market is up 8. The SFE Futures were up 38 this morning. We were up 32 at one stage.

ASX200 Stock and CFD Report 3-09-09

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The SFE Futures down 17 overnight. BHP and RIO in ADR form overnight, BHP up 0.43% and RIO down 0.93%. BHP was down 1.74% and RIO down 0.82% in the UK. BHP closed at the equivalent of 3648c, down16c on last night’s close. Metals mixed on the LME Copper down 0.45%, Nickel down 0.97%, Zinc down 1.37% and Aluminium up 0.06%, Lead up 1.75% Oil price unchanged at $68.05. Gold price up strongly $22.00 to $979. Largest interday gains in 5 months. Bonds up - 10 year yield at 3.295% down from 3.375%. A$ up 83.39c versus 82.65c yesterday morning. CRB Commodities index up 0.26% VIX Volatility Index down 0.86% to 28.90

August FOMC minutes said the Fed still concerned about pace of economic recovery and continued challenges for the banking sector. Headline July factory orders just under consensus forecasts. Factory orders for July showed their sharpest increase since June 2008 by rising 1.3%, but that was still short of the 2.2% consensus increase that had been expected. The ADP Employment Change Report for August showed that 298,000 private jobs were lost last month. This was disappointing as economists were expecting 250,000 job losses. Unit labor costs for the 2Q were down 5.9%, which was slightly steeper than what had been expected. 2Q productivity spiked 6.6% in its biggest percentage increase since 2003. Market expectations were for an increase in productivity of 6.4%

The market is down 6. The SFE Futures were down 17 this morning. The Trade Balance has come in worse than expected. Now stands at $1.56bn compared to the $850m

expected.

Morning Stock Report – Stocks to Watch 24-7-09

International Markets

• Market:

-          Dow pushes through 9000 for the first time since Jan as results continue to exceed expectations.

-          Sector summary S&P500: Best; Basic Materials +3.1%, Financials +2.9%, Oil & Gas +2.9%. Worst; Cons Services +1.5%, Tech +1.8%, Cons Goods +2.2%

-          Reporting season. 75% of 158 companies reported so far have topped estimates, profits falling on avg 25% from a year ago.

-          Citi raised ’09 & ’10 profit estimates for S&P500 by 9.8% & 11% respectively.

• Commodities:

-          Gold, rose to highest level in 5 weeks on weak USD. Newmont Q2 profit -40% partly on charge to acquire Boddington Project in Aust.

-          Steel, Nucor reported its second-ever loss ($133m) sighting a pullback in demand.

-          Oil, Rose to 3 week high after gain in US home purchases. Copper rises to 9 mth high.

-          Fertilizers, Potash, Mosaic & Bunge all report lower qtrly profits as failing crop prices hit demand.

-          Aluminum, Chinalco say price recovery will lag behind other base metals due to high inventories.

• Eco Data:

-          Existing home sales MoM +3.6% v cons +1.5% (prior +2.4%)

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