Whats Happening in the Global Markets

[GPIC]

Guys, can i make a suggestion.

Can we separate the discussions we have in connection with the local GCC markets in "Month Market Watch" threads, and make any observations/comments/opinions to the global markets in this thread.

Its only a suggestion. Here we can post/comment what is being talked/observed in other parts of the world.

As a starter i have posted this...

...why?...have you seen "again" whats happened in the US/Canadian/European markets...!

Learning Markets 01 October 2009:

S&P 500 and DJIA Headed for Weak Q3 Opening; AA, FCFS, PSA Q3 was a great quarter for the U.S. stock market, but it looks like Q4 may not be headed for a bullish open. The futures contracts for the Dow Jones Industrial Average (DJIA), the S&P 500 (SPX) and the Nasdaq 100 Index (NDX) are all down as we head into the market opening. The U.S. market isn't getting any help from other markets around the world either. The Asian and the European markets were also lower today---signaling that we have some bearish momentum heading into the U.S. market opening. The Hang Seng index and the Nikkei were both down today. The Hang Seng closed down 0.28% and the Nikkei closed down 1.53%. The FTSE 100 in London and the DAX 30 in Germany have also both been trading lower during the European trading session. The FTSE 100 was recently down 0.52% and the DAX 30 was down 0.32%. Commodity prices are also dropping a bit before the opening on Wall Street. Gold prices have dropped approximately $3.20 today, and oil prices are down by $0.52. These prices keep gold above $1,000 per ounce---at $1,006.10---and keep crude oil prices above $70 per barrel---at $70.09.

I think October is going to be a very, very, very exciting one!

Cheers.

[GPIC]

I think tomorrow will be an education for us all...!

BSE Sensex 17,134.55 +7.71 (0.05%)....yet to react!

CAC 40 3,649.90 -70.87 (-1.90%)
Dow 9,487.67 -21.61 (-0.23%)
FTSE 100 4,988.70 -59.11 (-1.17%)
FTSE 250 8,899.96 -164.32 (-1.81%)
Hang Seng Index 20,375.49 -579.76 (-2.77%)
Nasdaq 2,048.11 -9.37 (-0.46%)
Nikkei 225 9,731.87 -246.77 (-2.47%)
S&P 500 1,025.21 -4.64 (-0.45%)
S&P TSX 10,958.33 -113.43 (-1.02%)
S&P/ASX 200 4,601.70 -99.40 (-2.11%)
Shanghai 2,779.43 +24.89 (0.90%)
TASI 6265.20 (-0.9%)
TSEC 7,411.88 -133.41 (-1.77%)

With the performance of the western markets at close on Friday, it will be interesting to see how the GCC markets react.

It will either be follow the West, or make our own course.

Though i do think it will be after it has found it's own feet!

The weak $dollar is also having a considerable impact.

I think Sunday/Monday/Tuesday are going to see a lot of nail biting!

Cheers
GIC

[OnlineTrader]

GPIC,
Since our markets closed on Friday and almost other markets had two sessions after us, in order to do any compariosn you have to summarize two sessions not only Friday.(this is true for US and EU markets.)

[GPIC]

[GPIC]

Freddie Mercury.."i want to break free"...!

...DFM breaking through the 2200 level, and singing to the tunes of Freddie Mercury's..."i want to break free"...!

BSE Sensex (1.56%)
Nikkei 225 (-0.59%)
S&P/ASX (-0.62%)
CAC 40 (0.29%)
FTSE 100 (0.09%)
Hang Seng Index (0.26%)

...it will be interesting to see what happens in the US markets, and how they react to their "own news".

Can see a nice rally to 2350 in the forthcoming sessions...!

[fayesloan]

I really hate to be a stickler for absolute correctness and detail in this case, but you mean Queen's "I Want To Break Free"?
Just so you know, it was their bass player who wrote the tune, and not Freddie

[GPIC]

[sharewadi]

[GPIC]

[sharewadi]

[RaNdoMwalk]

[GPIC]

[RaNdoMwalk]

But I think UAE markets may become a bit volatile this week or at least tomorrow. They may go up and down in a range bound - as Sam or OT just noted in another topic. Good opportunities for daily traders!

[RaNdoMwalk]

Bloomberg explains why:

Bloomberg 05 October 2009:

U.S. Stocks Rise as Goldman Upgrades Banks, ISM Tops Estimates Oct. 5 (Bloomberg) -- U.S. stocks rose, rebounding from the first two-week decline since July, as Goldman Sachs Group Inc. recommended large banks and a report showed service industries returned to growth after 11 months of contraction. The dollar fell versus the euro, crude oil slipped and Treasuries gained.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQNiyQg3nWac

[Prop]

[fayesloan]

Looks like the markets worldwide have faded the jobs report on Friday.
Fade means they go the other way.
I am deeply suspicious of the "inflation" trade right now that the majority is preaching right now in the media. The inflation trade or so-called repricing of risk going on these days is the inflow of money (mainly dollars) into property (ok, maybe not necessary in places like Dubai or RAK,) commodities like resources like base metals and energy, and stocks. Currencies reflect repricing of risk and as an example, Australian Dollar a classic commodity currency is up close to 25 percent from its recent lows against the dollar. Maybe it is high time to be careful and there may be such a thing as too much too soon.
Why the suspicion of the inflation trade? For the simple reason that's it has become a fashionable and very common justification for price rises in financial markets. What do they say? When everyone is thinking the same thing, then... No one is ... (fill in the blank)
There is this ridiculous assumption that the dollar is going the way of Zimbabwe currency, for example.
OK, so what to do obviously depends on what your plan is, but such momentum, and I want to call it an asset bubble, or irrational exhuberance, takes time to settle down. Once it does, another repricing of risk, this time in the opposite direction will likely occur and damage accounts.
Do I want to join the party now? No, because I am clear about my risk profile at this moment. DST member Prop makes frequent mention of assets like copper and silver and oil and others signalling or somehow indicating a recovery, but a global recovery in trade is more than increasing prices. There are a few major assumptions being priced into equities and commodities right now, mainly hyperinflation and a grossly optimistic assumption of general and in particular BRIC-driven global growth. Both assumptions are just that, assumptions unbacked by any scientific historical models. There's a reason for that as well: Predicting what happens to economic systems and how people will behave is as effective as predicting the weather beyong a week. One fact that won't change is people's behaviour: If there is one thing people are known for, is the ability to change their mind very quickly and abruptly.
Copper and oil have doubled in less than one year. I won't even discuss other assets, but we all know what's happening with equities worldwide.
While many members enjoy comparing the prospects of shares of a bank as opposed to those of a shipping company or an airliner or a cement company, what seems true is that worldwide if you bought any combination of 10 stocks, you would be generating some good returns by this point. I'd say 2 out of 10 stocks may be underperforming or underwater if you had bought before March this year.
Member newride plans on holding his shares until February. He has a reasonable amount of money invested, I would say, so that's not bad an idea to try and get something out of the market. Now the problem here is timing. What if things turn ugly before February, by the time Q4 results are in.
A bigger concern here is an important action by the Federal Reserve. The Fed sends signals to the general market and experienced market players can read the better than most of us. What the Fed has been doing is "monetising" debt, and that has been stimulating the markets, some say. They already signalled that monetisation is going to slow down. The markets may not take to that very kindly when that happens possibly in Q1 next year, during current conditions of anemic growth, or jobless growth, or some would say during a period when nothing has been fixed fundamentally in a global economy still addicted to the sugar high of cheap credit.
Remember that the largest credit bubble in history collapsed in 2007. Every collapse is followed by bounces so put two and two together and try and be a little more careful out there...
RaNdoMwalk posted an article about BofA Merrill Lynch guy praising Gulf economies and markets.
What is one to expect from a salesman of a company that is probably going to be a vehicle to sell regional bonds and regionally based investment products?
A basic forgotten rule when dealing in the finance industry is Beware of people "pimping" their products and certain assets, maybe like Emaar shares.
Yassin of SHUAA Cap yesterday gave us a sweet price range for Emaar after an expected merger. Is the upward repricing by the market of the poisoned assets of the companies merging already such a foregone conclusion? Does anyone know how many shares of Emaar Shuaa's funds or prop desks own?
Why won't Yassin suggest to DFM they bring back Amlak and Tamweel on to the market? It seems people want to get their hands on "shares" these days no matter what these shares represent.

[GPIC]

Reuters article.

http://www.reuters.com/article/marketsNews/idUSL673314220091006

4th paragraph...

[RaNdoMwalk]

Bloomberg 06 October 2009:

U.S. Stocks Rise to Extend Global Rally as Gold Jumps to Record U.S. stocks rose, extending a global rally, as investors speculated third-quarter earnings will top estimates and Australia’s central bank raised interest rates on signs of economic strength. The dollar weakened, boosting oil prices and sending gold to a record.

DOW is currently up 1.5%.

[GPIC]

Come on Faye, explain this in simple terms...

You said buy Gold, how true is this prediction?

http://news.bbc.co.uk/2/hi/business/8292736.stm

BBC 06 October 2009:

Dollar influence Analysts said concern about the possibility of higher inflation in the US as its economy recovers was another factor in lowering the price of the dollar, further boosting the appeal of gold. Now a lot of investors are buying gold because they are concerned about the impact of higher inflation. The last time the spot price of gold hit a new high was in March 2008, when it reached $1,032.80 an ounce. Analysts said the price of gold could rise still further towards the end of the year if the dollar remained weak. The price of gold is also typically strong in the October to December period because of the higher demand for jewellery in the run-up to Christmas and the Indian festival of Diwali.

Will be interested in your views, especially on Gold as an asset class.

[fayesloan]

I do not recall recommending buying gold here. I remember writing that I used about 30% of my UAE stock gains to buy gold in 2006 and 7. The things written in the BBC item are written all the time, gold seasonality, useless information. I don't know many people who actually trade this gold seasonality and have not tested it. Gold is far too volatile for people to ride out the volatility and hold it for 4-5 months and make some money. I have no idea why gold has been doing very well the past several years. I am not too worried about the price. If one day I wake up and I am making 500% to 1000% on my investment I will sell most of it. Will gold hit 9000 or 4000 or 15000 a troy ounce? I have no idea, but will buy more around 800 if it makes it down that far.
I don't trust the thing about gold being a hedge against inflation. There are charts of gold out on the net and anyone can study its price changes against the economic background since the 1800's that will clear up a lot of misconceptions about gold and inflation. Today gold was up, but there was nothing special about the move other than gold hitting a new all time high. It has moved up like everything else almost so I don't see any gold specific action recently. When Euro and oil are down 10% and gold is up 25% then, yes, something is going on with gold.
Why did I buy gold? Because it has kept going up since 2002 and stayed very strong (above major longterm moving averages) even during market crashes in 2006. Also more and more institutions have become interested in it the past few years.

[GPIC]

Where is the $dollar heading?

From mid September the $dollar has headed south over a basket of currencies.

$ - Euro -1.8%

$ - Yen -1.4%

$ - AUD$ -5.9%

$ - Swiss franc -1.58%

$ - Rupee -5.6%

... $ - UK£ +3.6%...!

...the weakening of $ is obviously have a huge impact on the emerging markets, and their ability to climb out of the recession quicker...but how long will it last!

Oil is climbing up and heading heading north above $75. It wont be long before it reaches $80...!

This is great for the GCCs economy. But is it all too fast to soon?

Surely a steady growth would be a better prospect, rather than a sudden bolt to the finish line...!

I am still very bullish for the short, medium and long term GCC markets, but i think there will be some major swings on a regular basis while investors get used to the rapid climb...!

Cheers!

[fayesloan]

The dollar has undergone a waterfall decline against everything really since the middle of March this year. This is not normal and signifies a very rapid shift into this thing financial experts like to call "Risk." That means stocks, commodities, and all kinds of bonds. Once again, this is not necessarily a story of hyperinflation coming or a collapse of a currency. I do not think you can really ascribe such price action in markets to a specific fundamental economic story.
There is a deeply misguided idea among a lot of people that stock markets lead economic performance. It is a very widespread belief that can be refuted by calling up a chart of Dow Jones or any other index. There is no reliable pattern there in comparing price to background fundamentals. The same is evident with a chart of the dollar against any major currency. It can not signal or predict anything. But certain people in the financial industry like to pretend they know how to explain price.
Back in the 80's and early 90's talk of Japan was the fashion, like China nowadays. Those days, Japanese property and equities were the hottest things to own for investors. That is something to think about when people justify increases in price of oil, copper, precious metals, and stocks by appealing to sheer numbers out of China, which are likely to be suspect and false anyway.
I have said the following in passing several times on this forum: Just because "they" tell us "things are better" or getting better does not mean anything. You have to decide if what's written anywhere is actually true or not, because it's usually not true. That's something the majority of investors discover the very hard way most of the time, normally after seeing their capital cut in half or 70% or thereabouts. So it is you who has to decide if the worst is actually over, and if it is, is the expected recovery actually going to materialise? Are people being overly optimistic?
The truth about the Dollar is that there is a "story" being spun all over the place about its demise and end as a reserve currency. Everyone nowadays is on the same side of the boat about the dollar. That makes fighting the dollar an especially risky trade.
The story is one of American fiscal profligacy at all levels, from the individual (savings rate) to the institutional and sovereign (Treasury bonds and bills.) Somehow when people want to be negative about the dollar they manage to ignore other major currencies of economic zones and nations with economic and financial problems far more dire than America's. If America is now a consumption-based economy, it is because America has the financial might to be that way. Not so, other nations. I advise people to wonder why China is still chugging along, and compare what their central bank is doing to what happened under Greenspan this past decade.
The Australian Dollar is an economically sounder currency than the Dollar, backed by natural resources, but what is the population of Australia?
The dollar is in a clear downtrend. God knows when it will come to an end, but to ascribe deep and ominous significance to that price action is a little unwarranted. Other currencies have similar problems, and people simply do not want to confront this issue in explaining dollar weakness.
Anything is possible but do not deceive yourselves that the stories are known and true. Predicting economic performance and markets is a dangerous affair.
Any in depth look, I think, at economic and credit data and fundamentals would suggest the only exit from a recession is into a... greater contraction or depression, for the USA at least. Why? Because for every fake or real data point or chart that signals improvement or a "less worsening" of the economic situation you have 3 others that signal worsening conditions ahead.

[GPIC]

A lot has happened since monday 5th Oct...!

[RaNdoMwalk]

Both today and yesterday, US (and Asian and European) markets showed disappointment with some important Q3 results:

On 14 October following better than expected results from JPMorgan Chase and Intel, DJIA crossed 10,000 mark after a year from last year market crash.

However, yesterday (15 Oct) it was in red most of the time after Q3 results from Goldman Sachs and Citigroup. Interestingly, these results (particularly for Goldman Sachs) were better than all analysts' expectations - perhaps some investors were still disappointed. Goldman Sachs showed even better results than its 2008 three/nine-months but fell short of beating its own best! I think investors realised this by the end and let DJIA closed in greens yesterday.

Today, US market is again in reds following disappointing results from General Electric and Bank of America (US$1b loss in Q3) and disappointing consumer confidence data.

Nokia saw the first net loss in its history (since 1996). In Asia, LG and Japanese banks (Mitsubishi and Sumitomo) and airline also disappointed the results.

Goldman Sachs' excellent results and Google's highest ever Q profit, showing recovery signs of US economy, may provide some support going forward. But if we conitnue to see disappointing results from the US, this is going to affect sentiments around the world as well as our DFM and ADX (which may see their own companies' results soon!).

[GPIC]

Where is the DFM and ADX heading?

A year on, global markets have rallied back to where they were a year ago to date, with some exceeding their positions as of that time.

However, this is a different story for DFM and ADX...!

India +73%
Taiwan +56%
China +54%
Hong Kong +51%
UK +34%
Canada +24%
Australia +22%
France +21%
Japan +18%
S&P +14%
US Dow +11%

TASI -1%
ADX -11%
DFM -36%

I believe that the equity markets in the GCC were grossly oversold and are grossly “under-valued", and it is now that their potential is being realised, and see a continued rally in October for DFM to 2800-3000, and ADX to 3400.

With the US dollar showing now signs of strengthening in the foreseeable future, this will only assist in oil to reach $80 (and over) shortly. Trading currently at $78, it will not be long until this becomes achievable.

Where does this leave DFM, for a start, Emaar will be dhs6.00 before you can say "wasn't it dhs5.01 last week!!!!".

Hope you are all having a great weekend.

Cheers GPIC.