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World Stock Markets 2010

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Another upday in the US, but more warnings about IR's going up.

 

U.S. Warns Banks to Guard Against Rate-Rise Risks

 

Jan. 7 (Bloomberg) -- U.S. regulators including the Federal Reserve warned banks to guard against possible losses from an end to low interest rates and reduce exposure or raise capital if needed.

 

“In the current environment of historically low short-term interest rates, it is important for institutions to have robust processes for measuring and, where necessary, mitigating their exposure to potential increases in interest rates,” the Federal Financial Institutions Examination Council, made up of agencies including the Fed and the Federal Deposit Insurance Corp., said in a statement today.

 

http://www.bloomberg.com/apps/news?pid=206...dq93c&pos=4

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January effect playing out?

 

January Effect May Set Markets' Tone for New Year

 

The stock market faces a big test as 2010 trading gets under way: whether its performance will be lifted by the phenomenon known as the January effect, or squelched by uncertainty about the economy.

 

The January effect is the buying blip that often occurs with the start of a new tax year. Investors who sold stock before the end of the old year to claim a tax loss reinvest that money when trading begins again.

 

Market historians and many investors are fascinated by the January effect because it often sets the tone for the rest of the year. In 2009, stocks were up at the start of January; although they were at 12-year lows two months later, they ended the year having had their best performance since 2003.

 

"If the first five trading days of January are up, the end of January will usually be up and the correlated end of the year is usually up," says Ray Harrison, Principal of Harrison Financial Group in Citrus Heights, Calif. "I say, usually, but I believe we're headed that way."

 

http://abcnews.go.com/Business/wireStory?id=9468342

 

Alternatively.

 

The 'January Effect' Is More Market Myth Than Sound Analysis

 

When It's Wrong, It's Very Wrong

 

January of 1929, for example, was off to a brisk start as the Dow Jones Industrial Average climbed to 317 from 307. But investors would be slammed later in the year by a historic stock market crash that heralded the start of the Great Depression. January of 1987, too, began nicely. The Dow climbed to 2160 at the end of the month after starting out at 1927. But Black Monday would hit investors in October of that year, leading to the sharpest historical stock market decline in percentage terms.

 

More recently, January 2001 had a strong showing when the Dow Jones finished the month at 10,887 after starting at 10,646. Those reading it as an auspicious beginning would be hit first by the further fallout from collapse of the dot-com bubble and then the massive decline following the September 11 terrorist attacks.

 

Of course, unexpected shocks led to the losses of 2001 more than the January start. But the same can be said for the lion's share of damage in 2008. While the Dow Jones Industrial Average may have dipped out the gate that year, it was the tanking of Lehman Brothers in the autumn -- an event that few foresaw -- that led to the real carnage.

 

http://www.dailyfinance.com/story/investin...lysis/19302302/

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If the January effect holds true then it could be a good year.

 

U.S. Stocks Advance a Sixth Day on Alcoa, Record China Imports

 

The S&P 500 increased 0.2 percent to 1,146.98 at 4 p.m. in New York. The measure has risen 2.9 percent since Dec. 31, the best start to a year since 2006. The Dow Jones Industrial Average climbed 45.80 points, or 0.4 percent, to 10,663.99.

 

“There’s economic momentum, and there’s earnings momentum,” said James Paulsen, who helps oversee about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “People revised their estimates for real GDP growth during the fourth quarter, which means that profit numbers will turn out to be better as well. If sales start to show some pick-up, then you’ve got the full profit engine back in force again.”

 

http://www.bloomberg.com/apps/news?pid=206...k0P5U&pos=3

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China bubbles.

 

China Raises Banks’ Reserve Ratio to Cool Economy

 

Jan. 12 (Bloomberg) -- China unexpectedly raised the proportion of deposits that banks must set aside as reserves to cool the world’s fastest-growing major economy as a credit boom threatens to stoke inflation and create asset bubbles.

 

Reserve requirements will increase by 50 basis points starting Jan. 18, the central bank said on its Web site this evening. The existing level for big banks is 15.5 percent. The move wasn’t anticipated until at least April, according to the median of 11 forecasts in a Bloomberg News survey four days ago.

 

The decision indicates increasing concern in Premier Wen Jiabao’s government that a continuation of the record 9.21 trillion yuan ($1.3 trillion) of loans in the first 11 months of 2009 will create a bubble in property and stock prices. It also follows two bill auctions by the central bank in the past week where officials guided yields higher, auguring higher borrowing costs.

 

http://www.bloomberg.com/apps/news?pid=206...0BqD0&pos=2

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Are we seeing an ending move here? the dollar tanker seems to be turning?

 

That's what I'm thinking...

 

However, it did the same a few weeks ago and the stock markets took it as a buy signal.

 

Still, maybe that was just a practice run for the real thing.

 

I'm not yet ready to bet on it, though.

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Are we seeing an ending move here? the dollar tanker seems to be turning?

I just doubt it, that is if you are expecting a big move down. I think they will buy on any small corrections and there is a chance the markets will go higher. If and when qe ends around the world will probably determine whether we get another big move down. The US isn't going to withdraw the stimulus for some time and when they do they hope it will be in a controlled and managed way.

 

Why stock markets are still undervalued

 

Little more than nine months ago, share prices were staring into the abyss. The prevailing mood among fund managers had rarely been more bearish. We stood, it seemed, on the edge of a second Great Depression. Thankfully, this economic nemesis appears to have been avoided, thus far at least. Stock markets around the world have as a consequence staged one of the most remarkable rallies ever. Somewhat worryingly, given how bearish professional investors were when the market was down in the dumps, surveys show the predominant mood now to be overwhelmingly bullish.

 

Some might reasonably think this as good a sell signal as any, and indeed outside the narrow confines of City and Wall Street punditry, it is hard to find a single bullish voice. In the financial press and among independent economists, the rally is seen as little more than a mirage driven by cheap money.

 

Once this stimulus is removed, it is said, a more realistic appraisal of the outlook for the economy, corporate earnings and dividends will prevail. So convinced of the soundness of their judgment are these bearish voices, there is almost visible anger at the market's self evident failure to do as they say.

 

Many of them were equally bearish when markets were at their March lows, and that makes them angrier still, having missed out on one of the most sensational bull runs ever recorded by stock markets. Are not investors behaving like Pollyanna in chasing valuations so high?

 

http://www.telegraph.co.uk/finance/comment...ndervalued.html

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US markets moving down today.

 

Bloomberg news headlines

 

•Bank of America Posts Loss on Repayment of Bailout, Consumer Loan Defaults

 

•Yen, Dollar Rise as China Curbs Bank Lending; Greek Bonds, Stocks Decline

 

•Housing Starts in U.S. Fall More Than Forecast; Permits Unexpectedly Climb

 

•Morgan Stanley Profit Misses Analysts' Estimates on Lower Trading Revenue

 

•China Stocks Drop Most in a Week on Speculation of Interest Rate Increase

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Need to keep an eye on the Bollinger Band as there is a slightly upward tunnel that has formed on the Dow over the last few weeks. It's going to open up and expand moving one way or the other soon I would have thought? On the downside 10500 looks an interesting test for support.

 

DOW

ScreenShot052.gif

 

S&P

ScreenShot053.gif

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POSSIBLE CRASH ALERT WARNING

 

Investors are at their most bullish about stock markets since before the credit crisis, according to this month's Bank of America Merrill Lynch fund manager survey.

 

"This survey is one of the more bullish we have seen and suggests that investors buy into the idea that this recovery has legs,"

 

Michael Hartnett, global equities strategist at Merrill, said: "We are, however, seeing early signs that might alert contrarians looking for a selling opportunity - namely low cash allocations and possible complacency against a sell- off in stocks."

 

http://www.ft.com/cms/s/0/25dd2dc0-0574-11...?nclick_check=1

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POSSIBLE CRASH ALERT WARNING

 

Investors are at their most bullish about stock markets since before the credit crisis, according to this month's Bank of America Merrill Lynch fund manager survey.

 

"This survey is one of the more bullish we have seen and suggests that investors buy into the idea that this recovery has legs,"

 

Michael Hartnett, global equities strategist at Merrill, said: "We are, however, seeing early signs that might alert contrarians looking for a selling opportunity - namely low cash allocations and possible complacency against a sell- off in stocks."

 

http://www.ft.com/cms/s/0/25dd2dc0-0574-11...?nclick_check=1

A sell off to bank profits isn't a crash.

 

I think some of the bullishness is being taken out of the market now. We were due a down phase. Vix will probably turn bearish soon and it will be oversold.

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So what is spooking the market today? Obama's proposals?

 

Obama to Propose New Rules on Banks’ Size, Trading

 

Jan. 21 (Bloomberg) -- President Barack Obama will offer proposals to limit financial institutions’ size and trading activities as a way to reduce risk-taking, an administration official said.

 

Obama will announce the rules today at 11:40 a.m. in Washington after meeting with former Federal Reserve Chairman Paul Volcker at the White House. The proposals will be part of an overhaul of regulations and will specifically address firms’ proprietary trading, the official said yesterday on the condition of anonymity.

 

Obama is renewing his focus on economic issues, tapping into voter anger about the struggling economy, taxpayer bailouts and growing bank profits at a time of 10 percent unemployment and a federal deficit that rose to $1.4 trillion last year.

 

http://www.bloomberg.com/apps/news?pid=206...bNc6o&pos=1

 

China growth estimates?

 

China’s GDP Growth Accelerates to Fastest Since 2007

 

Jan. 21 (Bloomberg) -- China’s growth accelerated to the fastest pace since 2007 in the fourth quarter, capping Premier Wen Jiabao’s success in shielding the nation from the global recession and adding pressure to rein in a surge in credit.

 

Gross domestic product rose 10.7 percent from a year before, more than the median forecast of 10.5 percent in a Bloomberg News survey, a statistics bureau report showed in Beijing today. Asset-price gains, particularly in property, are creating problems for the government to guide the economy, Ma Jiantang, who heads the bureau, told reporters after the release.

 

The report stokes speculation the central bank will start raising its benchmark interest rate and tighten restrictions on the nation’s lenders. The one-year swap rate, an indicator of future changes in borrowing costs, climbed and the People’s Bank of China guided three-month bill yields higher for the second time in two weeks.

 

“Today’s data suggest that tighter policy is just around the corner,” said Brian Jackson, a Hong Kong-based strategist on emerging markets at Royal Bank of Canada. “Policy makers will need to move soon to stop the economy from overheating,” he said, forecasting officials will end an exchange-rate peg and boost interest rates starting this quarter.

 

http://www.bloomberg.com/apps/news?pid=206...id=asqZE.UsivdE

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Jobs data?

 

http://www.marketwatch.com/story/us-stock-...mble-2010-01-21

 

Or, just as a few TA pundits suggested, a correction from DOW 10712.

 

http://www.londonstockexchange.com/private...andy-jadeja.htm

 

The ADVFN Market Report seems to be suggesting that it was mainly Obama.

 

Leading UK shares lurched lower in the afternoon as US shares weakened and investors waited nervously for President Obama's new bank reforms.

 

The US President's proposals prohibit commercial banks from owning or investing in hedge funds or owning, investing or advising private equity funds, while also restricting their proprietary trading activities.

 

The news came too late for London to react, but UK blue chips fell sharply in the last hour ahead of the short speech.

 

Banks and miners were the main drags with the latter still friendless on concerns about demand from China. Pundits are predicting that the Chinese authorities will step up their efforts to prevent the Chinese economy from overheating, after figures today revealed that the economy grew by 8.7% in 2009, and by 10.9% (year on year) in the fourth quarter.

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A sell off to bank profits isn't a crash.

 

I think some of the bullishness is being taken out of the market now. We were due a down phase. Vix will probably turn bearish soon and it will be oversold.

 

Do agree, but you yourself noted a support of 10,500 for the DJ, that got hit today. Noticed a lot of bullish posts on mainstream message boards, remember this time last year everyone was dooming up so I thought buying might be worth a chance with a few bombed out stocks. Of late I just felt the reverse.

 

It's that oversold bit I can't fathom at the minute myself, as I can't sense where the supports are.

 

 

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Do agree, but you yourself noted a support of 10,500 for the DJ, that got hit today. Noticed a lot of bullish posts on mainstream message boards, remember this time last year everyone was dooming up so I thought buying might be worth a chance with a few bombed out stocks. Of late I just felt the reverse.

 

It's that oversold bit I can't fathom at the minute myself, as I can't sense where the supports are.

 

On the chart, macd and stochastics look like they have further to go on the downside and this downtrend for now looks like it may have some legs, but the last time we had a big down day over 2% was Oct 30, 2.35% and soon after that the market bounced and we had that November run. One difference between then and now is the Bollinger Band looks to be expanding on the downside and that this has only just started. In November BB expanded quickly to the upside. The lower trendline I've drawn on the chart is holding for now, but could go through early next week if this move continues. Support might then be at around 10250 and then 10100 and we start looking for a new trend, I suppose it depends on how the market digests the Obama news over the weekend.

 

ScreenShot057.gif

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Roubini's views were interesting in the bloomberg video below, regarding the global recovery and 2010 outlook.

Some numbers which were a useful reminder for me.....

GDP[ China worth about 4Trillion, US=15T, US+EUR+JAP=40T]

In terms of the policy shift in China from export led growth to a more private consumer led growth story, the 1.3Trillion Chinese would contribute about 1Trillion, compared with the 10Trillion contribution to the US economy by it's 300 Million citizens, or 600Billion from the 1.9 Trillion in India.

So, it'll be a long time before the global economy will be regionally balanced.

 

http://www.bloomberg.com/avp/avp.asxx?clip...49532041&A=

 

MunsterK

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Roubini's views were interesting in the bloomberg video below, regarding the global recovery and 2010 outlook.

Some numbers which were a useful reminder for me.....

GDP[ China worth about 4Trillion, US=15T, US+EUR+JAP=40T]

In terms of the policy shift in China from export led growth to a more private consumer led growth story, the 1.3Trillion Chinese would contribute about 1Trillion, compared with the 10Trillion contribution to the US economy by it's 300 Million citizens, or 600Billion from the 1.9 Trillion in India.

So, it'll be a long time before the global economy will be regionally balanced.

 

http://www.bloomberg.com/avp/avp.asxx?clip...49532041&A=

 

MunsterK

 

Hope you don't mind, but I'm posting your chart from DrBubb's trading diary.

 

here's my novice take on the setup. The main thing for me is that the S&P is in the final stage of a Rising wedge formation, so today's move is interesting and sets the scene.....

 

Anyway, here's my chart - we need to break out of this wedge to the downside to prevent me covering my shorts [or losing them, if you excuse the pun :rolleyes: )

 

SnP_jan20th.jpg

 

Munsterk

 

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European dissent to Obama's plan?

 

But the impact of Mr Obama's proposed reforms would have less impact on European banks than on US banks, analysts say.

 

While proprietary trading covers a wide range of activities within a bank, the part of it which could realistically be targeted by regulations accounts for just 1%-2% of a European bank's overall revenues, says Simon Maughan, co-head of equity research at MF Global.

 

Equally, he argues, European banks have been winding down their private equity functions and trading less in hedge funds.

 

"Such reforms would be a lot less ugly for European banks than for the likes of [uS banks] JP Morgan and Bank of America," he says.

 

European dissent

 

There is, however, the more fundamental question of whether similar rules will actually be introduced in Europe.

 

Indeed, the reaction to the US plans by European governments could be rather more subdued than that of the UK.

 

Although the French Finance Minister Christine Lagarde described the US proposals as "a very, very good step forward", it is unclear whether Europe will follow the US's lead.

 

"The Europeans won't do it," says Mr Maughan.

 

"There is no groundswell of opinion in Europe to break up the banks - there just isn't the same political pressure [as in the UK and the US]. Banks in Europe are national institutions there to support industry."

 

http://news.bbc.co.uk/1/hi/business/8475217.stm

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Morgan Stanley's Roach Says Obama Plan Is `Bank Bashing'

 

http://www.bloomberg.com/avp/avp.htm?N=av&...ekqgE7emrww.asf

Yep, and rightly so.

 

Obama could actually pull this off. He has a democrat majority and the Republicans would probably back him.

 

I hope he does break the stranglehold these banks have on us all. They must never be allowed to blackmail us again into bailing out their reckless behaviour. Split then up, no more too big to fail, reinstate glass stiegel.

 

Yes he can :P (I hope :unsure: ) Prob an even better legacy than healthcare.

 

 

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