No6's Financial Markets Thread

[No6]

Looks like the mood is turning. Positive vote from Greece tonight and confirmation in a couple of weeks could put the markets back on track. The Dow, S&P look like they may have turned already and FTSE was following today.

 

“Greece is not another Lehman,” said Nick Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, which oversees more than $38 billion. “The market is saying that the worst is less likely for Greece. Assuming that the confidence vote goes through, then reaction is going to be that we dodged the bullet.”

 

’Severe Damage’

 

“The whole market is oversold and hence the bounce on a hint that one of the issues weighing on the market may be close to a resolution,” said Prasad Patkar, a money manager who helps oversee about $1.7 billion at Platypus Asset Management Ltd. in Sydney. “Greece is arguably the biggest of these issues because of its ability to cause severe damage to markets.”

 

Spanish 10-year bonds rose, driving the extra yield investors demand to hold the securities instead of benchmark German bunds 10 basis points lower, after Spain sold about 3 billion euros of three- and six-month bills even as yields rose.

 

http://www.bloomberg.com/news/2011-06-21/asia-stocks-snap-four-day-drop-euro-gains-as-juncker-eases-greek-concerns.html

 

[No6]

Hmmm...Now here's a surprise, don't think so.

 

A newly-joined member of the Bank of England's rate-setting committee has voted to keep rates on hold at 0.5%.

 

Minutes of its June meeting showed that former Goldman Sachs economist Ben Broadbent voted with the majority of the Monetary Policy Committee (MPC).

 

It means he has broken with the voting record of his more hawkish predecessor, Andrew Sentance, who had been backing a half-point rate rise since February.

 

Other members' votes were unchanged, giving a seven-to-two majority.

 

Rates have remained at a record low for 27 months.

 

http://www.bbc.co.uk/news/business-13871449

[No6]

Is this the reason, despite all the talk of the likes of Boris Johnson, why the UK will not desert Greece.

 

UK Greek bill 'may hit £14,640 per family'

 

Britain could be hit with losses of up to £366bn from the collapse of the Greek economy, it emerged last night.

 

The potential devastation of banks and other City institutions would be equal to 24% of our annual national output, or £14,640 for every family in the UK.

 

Ministers had claimed that British banks have 'only' £2.5bn of exposure to Greek government debt, while the Bank of England says the potential losses would be just £8bn.

 

But experts last night said that UK financial institutions are in far more danger than previously thought, because banks are tied up in complicated derivatives and insurance deals.

 

They warned that if Greece defaults on its debts the crisis could cause a series of dominoes to fall, with Portugal, Spain and Ireland heading to the wall in turn.

 

===================

 

In a slap-down to Boris Johnson and other Tories calling for the end of the single currency in its current form, he said: 'Britain suffers when the eurozone struggles. Forty per cent of our exports go to eurozone countries. Turbulence in the eurozone is not good for Britain.'

 

Experts accused ministers of underestimating the true scale of the risk to the UK, as Channel 4 News revealed that estimates of potential exposure range as high as £366bn.

 

Danny Gabay, of Fathom Financial Consulting, which calculated the figure using data from the Department of Business, said: 'It's not the direct loan that's the problem, it's the derivatives of those loans which can go on to be multiples of the actual original size of the loan.

 

'London made a vast amount of money in the ten years before this crisis selling those loans. Those chickens may now be coming home to roost.'

 

http://www.thisismoney.co.uk/news/article.html?in_article_id=538015&in_page_id=2&expand=true

 

[jerpy]

Is this the reason, despite all the talk of the likes of Boris Johnson, why the UK will not desert Greece.

 

All this bravado of U.K tories is quite interesting to watch, i'm left wondering how big the bruises will be from the behind closed doors handbag fight with fraulein Merkel

[No6]

All this bravado of U.K tories is quite interesting to watch, i'm left wondering how big the bruises will be from the behind closed doors handbag fight with fraulein Merkel

 

I think what is interesting is how politicians have used the financial crisis to forward their own agenda on issues that have been magnified by the events of the last 3-4 years, but in themselves are a by-product of bigger issues not being discussed. So, the problems in Greece, Ireland, Portugal, Spain, etc have been used, especially by the UK press, as a chance to have a go at the EU as if that is the problem. Every day there are will the Euro survive news stories? Will the EU project survive, etc? The average British Sun or Daily Mail/Express reader laps this up without thinking that things would be just as bad or worse without the EU. For instance, the banking financial crisis would still have happened and countries would have defaulted, probably very quickly, a domino effect going on that would have sent economic shock waves around the world. The British banking system would have totally collapsed given their participation in the partying of the previous 10-20 years or so. Economically and financially, Britain would have gone under. Bailouts are not a great answer, but in our credit debt inflationary money system, the alternative is chaos. It's the system that needs changing, but I'm not sure how you can do it in an orderly way in an increasingly interconnected and interdependant financial and economic world. The politicians still love to play the nationalistic card, with a small n, because it is very popular with voters while ignoring the fact that our lifestyles are dependant on what happens across the whole financial and economic world. This is why none of them can be trusted.

[jerpy]

The politicians still love to play the nationalistic card, with a small n, because it is very popular with voters while ignoring the fact that our lifestyles are dependant on what happens across the whole financial and economic world. This is why none of them can be trusted.

 

Absolutely. Nobody seems to be looking at long term energy at the minute, the nearest we seem to get on the beeb is the likes of high speed rail link(some form of oxymoron that), the olympics legacy and the odd feature on farmers having an hard time due to the weather.

 

Incidentally do you know any good books/research on hyper inflating economies and the effects on country of origin stock markets?

[jerpy]

Found this interesting on the Argentinian stock market compared against inflation.

 

While it's clear that the Argentine Stock Market rose with peso inflation from 2001 to 2007, the BEV Chart below makes clear that there was a post inflationary BEV -60% Bear Market from 2007 to 2008. Ouch! If monetary inflation is good for financial asset valuations, how did that happen? Simple, anytime inflation inflates a bubble, there is always a following period of deflation that "policy makers," and inflationary Bulls, have never been able to avoid.

 

 

http://www.gold-eagle.com/editorials_08/lundeen070509.html

[No6]

Found this interesting on the Argentinian stock market compared against inflation.

 

While it's clear that the Argentine Stock Market rose with peso inflation from 2001 to 2007, the BEV Chart below makes clear that there was a post inflationary BEV -60% Bear Market from 2007 to 2008. Ouch! If monetary inflation is good for financial asset valuations, how did that happen? Simple, anytime inflation inflates a bubble, there is always a following period of deflation that "policy makers," and inflationary Bulls, have never been able to avoid.

 

http://www.gold-eagle.com/editorials_08/lundeen070509.html

 

This may be more to do with the fact that the initial shock is one of pessimism and therefore markets have a tendency to fall on such news. Once a realisation that inflation, especially hyper-inflation, is baked in then markets respond as they are seen as a store of value and one of the few games in town where you can invest money and keep up, or at least attempt to. Zimbabwe had many years of this recently.

[No6]

 

Incidentally do you know any good books/research on hyper inflating economies and the effects on country of origin stock markets?

 

Not relating to stock markets no.

 

Do you remember a while back the Zimbabwe thread that I set up? There was some mention in that of the Zim stock market.

 

Zimbabwe's inflation tops 6.5 Quindecillion Novemdecillion %(thread started at 1000%) When paper money becomes worthless

 

http://www.greenenergyinvestors.com/index.php?showtopic=335&st=60

 

It's almost like Zimbabwe has been forgotton, but here is the latest news that I could find. Remarkable, their inflation rate is now less then the UK.

 

ZIMBABWE INFLATION

 

Zimbabwe's annual inflation rate eased to 2.5 percent year-on-year in May from 2.7 percent in April, the Zimbabwe National Statistical Agency said on Thursday. [iD:nLDE75F145]

 

http://www.reuters.com/article/2011/06/17/africa-factors-idUSLDE75G02M20110617

[No6]

Markets looking to turn? This is the weekly chart looking oversold with the potential for turnaround. With the Greece vote on austerity later this week, markets are in a waiting period. Vote for and they could easily turnaround quickly from here, against and a summer of falls may be ahead. This chart looks like it expects a yes vote.

 

DOW

 

FTSE100

 

 

European Banks Near 70% Greek Rollover Deal

 

Greek creditors may be headed toward an agreement to roll over 70 percent of their bonds into longer maturity debt to prevent a default and meet politicians’ calls that they contribute to Greece’s second rescue in as many years.

 

“We’ve been working on this,” and hope other countries will join the proposal, French President Nicolas Sarkozy said today at a press conference in Paris. Germany’s biggest banks and insurers are weighing the French proposal, a person familiar with the matter said today.

 

German and French lenders are the biggest European holders of Greek debt and their participation in the plan is key to achieving a European Union goal to get banks to roll over at least 30 billion euros ($43 billion) of bonds. The rollover is part of a broader aid package that EU leaders have pledged to pass next month to prevent the euro-region’s first default a year after the 110 billion-euro Greek bailout that failed to stop the debt crisis.

 

http://www.bloomberg.com/news/2011-06-27/bank-group-meets-on-greek-rollover-with-eu-official-in-rome.html

 

[No6]

S&P

 

[No6]

Fed May Buy $300 Billion in Treasuries After QE2

 

The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends this week, as the central bank uses its $2.86 trillion balance sheet to keep interest rates low.

 

While the $600 billion purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as $300 billion of government debt over the next 12 months without adding money to the financial system.

 

The central bank, which injected $2.3 trillion into the financial system after the collapse of Lehman Brothers Holdings Inc. in September 2008, will continue buying Treasuries to keep market rates down as the economy slows. The purchases are supporting demand at bond auctions while President Barack Obama and Republicans in Congress struggle to close the gap between federal spending and income by between $2 trillion and $4 trillion.

 

“I don’t think the Fed wants to remove accommodation in any way, shape or form,” said Matt Toms, the head of U.S. public fixed-income investments at Atlanta-based ING Investment Management, which oversees more than $500 billion. “It’s quite natural for them to reinvest cash,” he said. “That effectively maintains the accommodative stance.”

 

http://www.bloomberg.com/news/2011-06-27/fed-seen-buying-25-billion-a-month-in-treasuries-after-qe2-comes-to-end.html

 

[No6]

Greece seems to have one new, very big friend.

 

 

Debt-ridden Greece gets vote of confidence from China

 

• Chinese sign multibillion euro contracts with Greece

• News come hours after Greek debt downgrade

 

As investors moved in the other direction, the world's pre-eminent emerging economy embraced Greece. Signing the agreements, China's vice premier Zhang Dejiang not only lauded Athens' efforts to resolve its worst debt crisis in years but gave the eurozone's weakest link a public vote of confidence, declaring it would soon come out of the woods.

 

"I am convinced that Greece can overcome its current economic difficulties," said the politician who arrived in Athens with 30 of the economic power's leading businessmen. "The Chinese government will encourage Chinese businesses to come to Greece to seek investment opportunities."

 

Greek officials said the fourteen deals amounted to the biggest single investment by China in Europe. China views Greece as a "perfect gateway" to the continent and Balkan peninsular where Chinese exports have proliferated in recent years.

 

http://www.guardian.co.uk/business/2010/jun/15/greece-china-contracts-signed

[jerpy]

Not relating to stock markets no.

 

Do you remember a while back the Zimbabwe thread that I set up? There was some mention in that of the Zim stock market.

 

 

Yes I do, read your recent post amazing inflation now almost normal

 

Still follow Zim plays flagged up on Conrad's thread, but the miners have very much been hit by Mugabes attempted "theft" of corporate profit and lack of investor appetite that followed. All very normal in Zim politiking!

 

Was asking for other reasons t.b.h though.

[No6]

FTSE on the turn? Could be. Greece vote could seal it one way or the other.

 

[No6]

Greece vote today, markets rebounding in anticipation of a yes vote. Will the French get German support for Sarkozy's plan? As usual with the inflationary money system, it hopes that time works its magic.

 

ADVFN Market report

 

French president Nicolas Sarkozy announced an agreement with French banks to refinance holdings of Greek sovereign debt. "We concluded that by stretching out the loans over 30 years, putting (interest rates) at the level of European loans, plus a premium indexed to future Greek growth, that would be a system that each country could find attractive," stated Sarkozy.

 

=================

 

France's Sarkozy strikes deal with banks to restructure Greek debt

 

French president Nicolas Sarkozy has struck a deal with his country's banks to restructure their holdings of Greek debt.

 

The agreement, which has yet to be accepted by either Greece or the bail-out's donors, has been greeted as a crucial step forward in resolving the crisis and was drafted at a summit of creditors in Rome ahead of the Greek parliament's crucial vote on its austerity package tomorrow.

 

However, Mr Sarkozy's proposal is likely to set him on a collision course with Germany because it involves using Brussels-backed funds to reduce potential losses of private bondholders.

 

Although he said banks had agreed to "roll over" 70pc of the debt that matures before 2014 into new 30-year bonds, under the terms of the deal 20pc would go into AAA-rated assets fully protected against a Greek default and likely to be guaranteed by the European Financial Stability Fund (EFSF).

 

As a result, private creditors would effectively be cashing in half their exposure without loss.

 

Over the weekend Chancellor Angela Merkel rejected similar calls from German banks for state guarantees as a condition of participation in a second Greek rescue.

 

http://www.telegraph.co.uk/finance/economics/8601973/Frances-Sarkozy-strikes-deal-with-banks-to-restructure-Greek-debt.html

 

[No6]

Greece vote, markets bounce, can it keep it up?

 

The Greek parliament has voted in favour of a drastic package of austerity measures intended to save the country from defaulting on its debts.

 

The proposed tax hikes and spending cuts have been deeply unpopular with the Greek public.

 

A nationwide 48-hour strike is under way and violent clashes are continuing in the streets of the capital, Athens.

 

Greece is heavily in debt and the package is needed to win the latest tranche of a 110bn-euro (£98bn) loan.

 

MPs passed the measures by 155 votes to 138.

 

They will hold a second vote on Thursday aimed at law reforms that would allow the package to be implemented.

 

http://www.bbc.co.uk/news/world-europe-13960947

[No6]

Looks like a turn.

 

[No6]

Robbie Burns, the Naked Trader, or should that be the man with the golden touch seems to have done it again. I'm sure he must have some losers, perhaps he doesn't publicise everything, but even outside of the share game it seems he can't go wrong.

 

Some great games at Wimbledon this year, been enjoying it a lot.

 

Well the bet I told you about last week on Petra Kvitova is going really well and she is now through to the semis, already guaranteed a profit on my bet with Sporting Index, if she wins it will be a big payout.

 

Also had 12-1 on Betfair, she is now 3-1 so I could lay some of that off and take some profit there too!

 

http://www.nakedtrader.co.uk/

 

Of course, against the odds Kvitova won.

[jerpy]

Robbie Burns, the Naked Trader, or should that be the man with the golden touch seems to have done it again. I'm sure he must have some losers, perhaps he doesn't publicise everything, but even outside of the share game it seems he can't go wrong.

 

 

 

Of course, against the odds Kvitova won.

 

Betting on the Tennis can be quite lucrative, had Venus Williams had 12-1 in one match, few points later the odds tumbled to 9-4 just on breaking a serve. Can quickly cover betting an opponent. You really need to pick the matches and be able to trade the games. Noticed Ladbrookes have a reasonable delay before the odds compiler kicks in with revised price, in some cases the next point could have been won. Might watch this more closely future Wimbledon or slam events.

[No6]

Betting on the Tennis can be quite lucrative, had Venus Williams had 12-1 in one match, few points later the odds tumbled to 9-4 just on breaking a serve. Can quickly cover betting an opponent. You really need to pick the matches and be able to trade the games. Noticed Ladbrookes have a reasonable delay before the odds compiler kicks in with revised price, in some cases the next point could have been won. Might watch this more closely future Wimbledon or slam events.

 

Think I'll stick to shares for now! Why would Venus WIlliams be 12-1? Has she gone off the boil? She and her sister use to take it turns to win all the tournaments, at least it seemed that way.

[No6]

This forum was originally called Green Energy Investors, but apparently there is little or no market for it.

 

Notice who's leading the way.

 

Green energy investment hits record global high

 

Global investment in renewable energy sources grew by 32% during 2010 to reach a record level of US$211bn (£132bn), a UN study has reported.

 

The main growth drivers were backing for wind farms in China and rooftop solar panels in Europe, it said.

 

It also found that developing nations invested more in green power than rich nations for the first time last year.

 

The Global Trends in Renewable Energy Investment 2011 report was prepared for the UN by Bloomberg New Energy Finance.

 

"The continuing growth in this core segment of the green economy is not happening by chance," said Achim Steiner, executive director of the UN Environment Programme.

 

"The combination of government target-setting, policy support and stimulus funding is underpinning the renewable industry's rise and bringing the much needed transformation of our global energy system within reach."

 

In 2010, developing economies spent more on "financial new investment", pumping $72bn into renewable projects compared with the $70bn outlay by developed economies.

 

China topped the table of investors again, spending $48.9bn - up 28% from 2009. There were also sizeable increases in investment from other developing or emerging economies:

 

* South and Central America: up 39% (from 2009 levels) to $13.1bn

* Middle East and Africa: up 104% to $5bn

* India: up 25% to $3.8bn

 

http://www.bbc.co.uk/news/science-environment-14030849

 

[DontPanic]

Ive recently been having a look at whats happened at Vestas the world largest supplier of windmills. The shares dropped from a peak of ca 700 to ca 130 now.

Competition from china and new entrants is putting the margins under pressure. Big companies like GE, Siemens want to expand into these green sectors.

I am having the feeling that whilst the market for solar panels, windmills and the like will rise there profits will be few and far between due to all the competition.

Everywhere I travel these days the governments want to be seen as supporting local companies in environmental technology..... unfortunately not every country can be a leader in it !!

Good times to be a consumer but not an investor.

[jerpy]

Ive recently been having a look at whats happened at Vestas the world largest supplier of windmills. The shares dropped from a peak of ca 700 to ca 130 now.

Competition from china and new entrants is putting the margins under pressure. Big companies like GE, Siemens want to expand into these green sectors.

I am having the feeling that whilst the market for solar panels, windmills and the like will rise there profits will be few and far between due to all the competition.

Everywhere I travel these days the governments want to be seen as supporting local companies in environmental technology..... unfortunately not every country can be a leader in it !!

Good times to be a consumer but not an investor.

 

Reckon your spot here. Another that has noticed prices falling with increased competition from both manufacturers, retilers and for solar an ever increasing number of contractors wanting in on the act. It all smacks of a profit squeeze.

 

Principal reason why I've so far resisted a green energy installation. The increasing choice seems endless, one day prices will level out, but it seems a way off yet.

[jerpy]

Think I'll stick to shares for now! Why would Venus WIlliams be 12-1? Has she gone off the boil? She and her sister use to take it turns to win all the tournaments, at least it seemed that way.

 

Just happened to pick up a comment somewhere about what odds you could get on a Federer win at one point, so I started looking at the online prices of an odd few games. Don't ask me which ones, i'm not a Tennis nut enough to remember, but know enough to spot seeded players in trouble can bounce back. Personally reckon the odds compilers are not tennis nuts either; a bit like how they used to stuff up on the Cricket in the early games because they didn't know the effect of pitches on scores. For instance I reckon they sometimes underestimate the form on different surfaces players can have.

 

Just an observation i'll try and put better to the test next time round, makes it more interesting to watch too.