EU leaders are dithering over what they should do to stem the escalating eurozone crisis, and banks across Europe are praying that they will get their act together before it's too late.
Economic conditions in core eurozone states like Germany have begun to take a hit, and signs that credit conditions are tightening for banks are everywhere. Banks with high exposures to the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) would be the first to feel the heat of a sovereign default or euro exit.
We took a list of the largest European banks by assets and compared their market cap, common equity, and total exposure to PIIGS debt (thank you for the bank statistics, EBA!). Then we calculated exposure to PIIGS debt (sovereign and private) as a percentage of the banks' common equity. (Notice that HSBC, ING, and even Societe Generale are all absent from this list.)
So far our track record is pretty good--we predicted that Dexia was the most vulnerable bank outside of the PIIGS back in July. If the eurozone crisis continues to escalate, we will see more and more banks bow to the pressure of exposure and become unable to borrow money.
The worst 20 cutoff for our test ended up being exposure equal to about 175% of common equity, but it really gets out of control once you get to the PIIGS banks (#1-9). But Dexia's fall suggests that bank vulnerability is already seeping beyond the periphery into the core (#10-20).
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krisluke
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26-Nov-2011 20:32
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China shares end at one-month low in thin volume
SHANGHAI, Nov 25 (Reuters) - China shares ended down 0.7 percent on Friday, weighed down by property and financial shares amid uncertainty over the timing of policy easing measures and volatility in global markets.
The benchmark Shanghai Composite Index closed at 2,380.2 points, after a 0.1 percent rise on Thursday. The index fell 1.5 percent for the week. Turnover on Friday hit a one-month low of 46 billion yuan ($7.22 billion). |
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krisluke
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26-Nov-2011 20:30
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JPMorgan approved for yuan investment fund--report
* US bank to convert $1 bln into Beijing stakes-WSJ
* JPMorgan continues push into China by U.S. managers Nov 25 (Reuters) - JPMorgan Chase & Co, the biggest U.S. bank, has received permission from the Beijing city government to create a fund to make $1 billion of yuan-denominated investments around the city, the Wall Street Journal reported Friday, citing unnamed sources. JPMorgan will run the pool in a joint venture with the Beijing city government and call it JPM China Private Equity Fund, according to the Journal. One of two people familiar with the matter said the fund will invest in sectors including consumer services, health care, technology and media, according to the report. JPMorgan spokesman Doug Morris declined to comment on the report. U.S. firms, including Blackstone Group LP, TPG Capital LP, and Carlyle Group, as well as private equity arms of Goldman Sachs Group Inc and Morgan Stanley, have been pushing to raise local currency funds to make more investments in China. (Reporting by David Henry in New York, editing by Gerald E. McCormick) |
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krisluke
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26-Nov-2011 20:28
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KDB in talks to buy HSBC Korea retail ops - chairman
SEOUL, Nov 25 (Reuters) - South Korea's KDB Financial Group, a holding company of state-run Korea Development Bank (KDB), is in talks to buy HSBC Holdings Plc's retail banking operations in the country, its chairman said.
" Working-level talks are underway ... it's not a stage that I can talk about a specific timeframe for the acquisition," a spokesman quoted KDB Chairman Kang Man-soo as saying. Sources told Reuters earlier that KDB had been looking at a possible takeover, but had not made a final decision on whether to move forward. Local media have reported that HSBC plans to sell 11 retail branches across South Korea as it moves to focus on corporate and investment banking. In order to expand its deposit base, KDB recently agreed to jointly use the financial network of Korea Post, which operates 2,763 branches, compared with 58 counters KDB runs on its own. Acquiring HSBC's retail operations in South Korea will help KDB beef up its own retail business, which is smaller than rivals such as Kookmin Bank and Shinhan Bank. (Reporting by Ju-min Park Editing by Chris Lewis) |
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krisluke
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26-Nov-2011 20:26
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HK shares end down 1.4 pct, HSI below support
view of Hong Kong CBD from the sea with One International Finance Centre clearly visible
The Hang Seng Index closed down 1.37 percent on the day and 4.34 percent on the week at 17,689.48. The China Enterprises Index ended down 1.78 percent on the day and 5.64 percent on the week at 9,395.91. The Shanghai Composite Index finished 0.72 percent weaker on the day at 2,380.22 on weakness in the financial and property sectors. The benchmark slumped to its third straight weekly loss, finishing 1.5 percent off on the week. HIGHLIGHTS: * The benchmark struggled all day before finishing marginally below 17,730, about the 61.8 percent retracement of its rise from the Oct. 4 low to Oct. 28 high. Chart support is next seen between 17,179 and 17,437, the high on Oct. 6 and low on Oct. 7, respectively. * HSBC Holdings Plc, Europe's largest bank, lost 1.7 percent to the lowest level since May 2009 and with a 15 percent weighting was a big part of the Hang Seng Index's slide. The gridlock in Europe over the region's debt problems has hit the bank hard. It is down almost 20 percent in November so far, poised for its worst month in more than three years and driving its 12-month forward earnings multiples near historic lows. At 7.3 times, it is just 4.3 percent off its all-time low, according to Thomson Reuters Starmine. * Alibaba.com Ltd, slumped to its worst daily loss since September 2009 after posting the slowest earnings growth in nearly two years. It ended down 10.6 percent at HK$7.94 in volume more than twice its 30-day average, bringing its month-to-date loss to 14 percent. It gained more than 27 percent in October. The stock had spiked to as high as HK$9.25 on Tuesday, before sliding almost 13.8 percent over the last three sessions as short interest increased. Short-selling averaged about 34 percent on Wednesday and Thursday. WEEK AHEAD: * China is scheduled to release its official purchasing managers index (PMI) data for November on Dec. 1. A preliminary PMI survey on Nov. 23 showed factory output in the world's second-largest economy shrank the most in 32 months in November on signs of domestic economic weakness. (Reporting by Clement Tan Editing by Chris Lewis) |
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krisluke
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26-Nov-2011 20:25
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Safra buys Sarasin stake for $1.13 bln
* Deal ends months of speculation
* Rivals including Julius Baer also wanted to buy * Sarasin CEO says bank now has clarity over future By Sara Webb and Katharina Bart AMSTERDAM/ZURICH, Nov 25 (Reuters) - Dutch cooperative Rabobank agreed to sell its majority stake in private Swiss bank Sarasin to Brazilian-Swiss private bank Safra for 1.04 billion Swiss francs ($1.13 billion), scuppering chances of a domestic tie-up sought by rival Julius Baer. The deal ended months of uncertainty as Rabo weighed whether and how to sell its stake in Sarasin. " We now have clarity about our future," Sarasin Chief Executive Joachim Straehle said in a statement e-mailed to Reuters. " In Safra, we will have a new and well capitalized majority shareholder that will reinforce our strong position as an independent Swiss private bank under the Sarasin brand and that will support our business model." The deal ended a bidding war for Sarasin involving its larger Swiss rival Julius Baer, Safra and, according to media reports, at least one other bank. Sarasin had made it clear that it preferred other bidders over deal-hungry Julius Baer. Uncertainty is toxic for private banks, whose clients put a premium on stability, consistency and discretion. As a result, protracted bidding wars are uncommon and hostile takeovers are practically unheard of. Unlisted Rabobank was never a desperate seller and on Friday it left its reasons for selling unclear, although the sale is expected to buttress its AAA credit rating. Experts had suggested the Dutch bank might be eager to avoid association with Swiss private banking, which is under fire from the United States and other countries over undeclared assets held by their citizens in secret accounts. For its part, Sarasin has advocated a clean-asset strategy, pledging to rid its books of untaxed funds, and it has urged rivals to do the same. GOOD MATCH Under the ownership of family-owned Safra, Sarasin hopes to continue to wield considerable influence over its own strategy and expansion. Sarasin will be run independently within the stable of Safra-owned banks including Safra National Bank of New York, Safra Suisse and Banque J. Safra Monaco. At first glance, Sarasin and Safra are a good match. While Sarasin has expanded in Asia and the Middle East, fertile hunting grounds for private banks targeting the newly wealthy, Safra's traditional markets are in the Americas. Both banks operate in Europe, though overlap is limited. Safra owns banks in Luxembourg and Monaco, while Sarasin has concentrated on so-called European onshore growth markets such as Germany. Swiss private banks are expected to begin joining up to offset higher costs and lower revenue as pressure increases on tax havens such as Switzerland. The Sarasin deal is among the larger private bank deals in recent years. Previous deals include Julius Baer's purchase of Ehinger Armand von Ernst, Ferrier Lullin & Cie, BDL Banco di Lugano and asset manager GAM from UBS in 2005, and the 2002 merger of Geneva rivals Lombard Odier and Darier Hentsch. The latest deal leaves Julius Baer, which has about 800 million Swiss francs to spend on deals, out in the cold. As recently as Wednesday the bank, which has embarked on a growth-by-acquisition strategy, was pleading its case to acquire Sarasin. Safra said it will keep Sarasin listed following the deal's closing, which is expected in the spring. Under Swiss securities law, Safra must make a public offer to buy out minority shareholders, though Safra indicated it does not intend to pursue more of Sarasin, and so " allow existing shareholders to continue to participate in the Sarasin growth story." |
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krisluke
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26-Nov-2011 20:23
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Bond market hammers Italy, Spain ponders outside help
* Italy borrowing costs soar
* Spain may seek international aid, sources say * Belgium downgraded amid political impasse * Euro zone officials hope for ECB rescue mission By Barry Moody and Elisabeth O'Leary ROME/MADRID, Nov 25 (Reuters) - Italy's borrowing costs soared to their highest levels since Rome joined the euro on Friday, piling pressure on the newly installed government of Mario Monti at the end of a week in which the euro zone crisis tainted even safe haven Germany. A punishing bond sale, in which Italy was forced to pay a record 6.5 percent for six months paper, came after a disastrous German bond auction earlier in the week and the leaders of France, Germany and Italy failed to make headway in tackling the growing debt crisis. Amid signs that the euro zone contagion is spreading, indications emerged in Madrid that the People's Party, getting ready to form a government in the coming weeks, may apply for international aid to shore up its finances. After winning an election this month, the PP under Mariano Rajoy inherits an economy on the verge of recession, a tough 2012 public deficit target, financing costs driven to near unsustainable levels by nervous debt markets and a battered bank sector with billions of euros of troubled assets on its books. Tuesday's launch by the International Monetary Fund of a credit facility for fiscally responsible countries at risk from the euro zone debt crisis gives it a potential lifeline it may wish to exploit. " I don't believe the decision has been made ... but it is one of the options on the table, because I've been asked about it. But we need more time and more information on the current state of things," a source close to the PP told Reuters. Italy's auction on Friday, described by one analyst as " awful" , spooked investors further and pushed two-year yields on the secondary market to an eye-watering euro lifetime high of more than 8 percent. Longer term debt is above a " red line" of 7 percent which forced Portugal, Greece and Ireland into bailouts that Europe could not afford for the much bigger Italian economy. Spiralling borrowing costs have added to pressure on Monti's government of technocrats, hastily sworn in this month after Prime Minister Silvio Berlusconi was bundled out of office as economic pressures grew. European Economic and Monetary Affairs Commissioner Olli Rehn threw his his backing behind Monti but warned that swift action was needed to contain the escalating euro zone debt crisis. He dismissed fears that the euro's survival was in question but said the crisis had reached the heart of the single currency. " This contagion effect has been touching the proximity of the core and even touching the core itself," he told a news conference after meeting Monti in Rome. " It shows that this is an increasingly systemic phenomenon, which calls for strong financial firewalls in order to contain this contagion and have a counterforce to this market turbulence." EYES ON ECB With the European Central Bank coming under increasing pressure to take more effective action, something it and Germany continue to oppose in public, officials suggested one possible scenario that could break the impasse. A push by euro zone countries towards very close fiscal integration could give the ECB the necessary room for manoeuvre to dramatically scale up euro zone bond purchases and stabilise markets. The ECB, which cannot directly finance governments, has been buying Italian and Spanish bonds intermittently on the secondary market since August to try to keep their borrowing costs and contain Europe's sovereign debt problem. But Italian and Spanish yields have nonetheless reached levels that economists see as unsustainable, raising the possibility that Rome and Madrid will be forced to seek emergency international funding. " We are not far from a point when the disruption in the markets is so big that monetary policy transmission does not work at all," said one euro zone official involved in shaping the euro zone's policy response to the crisis. " If the ECB has the assurance that we are moving towards a fiscal union, they could be ready to go all out," he said Belgium, which had prided itself on being able to stabilise its debt position despite having had no government for the past 18 months, saw its credit rating downgraded. Political deadlock in Brussels prompted Standard & Poor's to cut Belgium's credit rating to double-A from double-A-plus, citing concerns about funding and market pressures, as the euro zone debt crisis continues to worsen. " We need a reply that is clear and credible if we are to avoid the worst," Belgium's caretaker prime minister, Yves Leterme, told Belgian television. The downgrade followed difficulties this week in Belgium's drawn-out attempt to form a government. Elio Di Rupo, leader of the French-speaking Socialists, had been trying to form a government based on a six-party coalition. But he tendered his resignation on Monday after talks for a 2012 budget - agreement on which is a condition for forming a government - ground to a halt. Greek, the source of the euro zone's debt crisis, provided another source of dispute. Investors' worries intensified after reports that Greece was demanding harsh conditions from creditors on a proposed bond swap -- critical to reduce its debt and avoid default. Banks represented by the Institute of International Finance agreed last month to write off the notional value of their Greek bondholdings by 50 percent to reduce Greece's debt ratio to 120 percent of its gross domestic product by 2020. But Greece was demanding that its new bonds' net present value -- a measure of the current worth of future cash flows -- be cut to 25 percent, a far harsher measure than the banks had in mind, according to people briefed on the matter. |
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krisluke
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26-Nov-2011 20:21
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UK to plough 600 mln stg into new schools
LONDON, Nov 26 (Reuters) - Britain plans to spend an extra 600 million pounds on so-called " free schools" outside municipal control over the next three years, the country's Finance Ministry said on Saturday.
Free schools are the flagship education policy of the Conservative-Liberal Democrat coalition that came to power in May 2010, and can set their own curriculum and staff employment conditions, unlike most other state-funded schools. Twenty-four of the schools -- based on models in Sweden and the United States -- opened in September. The Treasury said the new money would fund an extra 100 schools before the next national election in May 2012. Teaching unions opposed to the plans say the schools are too few in number, and too geared toward middle-class families, to tackle the low attainment widespread among children from poor backgrounds. [ID:nL5E7K9106] Some of the money will go to a new type of free school aimed at teaching high-level mathematics to 16- to 18-year-olds. A Treasury spokeswoman said that Finance Minister George Osborne would explain where the funding for the schools will come from in his autumn budget statement on Tuesday. Osborne faces an uphill struggle to convince Britons that he has clear plans to boost the economy at a time when growth is rapidly slowing and the government has committed to hefty cuts in overall public spending. [ID:nL5E7MO4D8] In the past week, the government has announced a 1-billion- pound package to aid young unemployed people, and a 400-million-pound scheme to promote house building. (Reporting by David Milliken Editing by Jan Paschal) |
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krisluke
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26-Nov-2011 20:19
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Ireland should look at public sector wages - OECD
Pedestrians stop to look at papers at a news stand on O'Connell Street in Dublin
DUBLIN (Reuters) - Ireland should consider cutting public sector wages to reflect falling private sector incomes even if it means breaking a key deal with unions, a senior official at the Organisation for Economic Co-operation and Development (OECD) said on Friday. The government has pledged not to cut public sector pay further and avoid forced job cuts as long as unions agree to voluntary redundancies and longer working hours under the " Croke Park" deal, an agreement that has helped avoid social unrest. But stringent austerity targets and cuts to sensitive areas such as free health care for the poor are increasing pressure on the government to reconsider its decision not to touch the public sector pay bill. " I think our advice would be that at a time when private sector wages are adjusting rapidly it would be prudent to also put into the hopper public sector wages and working conditions," John Martin, Director of Employment, Labour and Social Affairs at the OECD told journalists in Dublin. " If the agreement constrains the ability of the government to make some changes in that regard, I think our view would be there should be a bit more flexibility," he said. The Croke Park deal has been widely cited as a reason that Ireland has not experienced the kind of social unrest seen in Greece since it accepted an EU-IMF bailout. Public sector unions signalled they may strike if the deal is breached. Ireland expects to post its first GDP growth this year since 2007 and has received praise from European Union and International Monetary Fund for its implementation of an austerity drive to cut its budget deficit. But its domestic economy remains stagnant and unemployment has trebled since a property bubble started to unravel in 2007 and has remained at a stubbornly high level of around 14 percent for the past 12 months. Ireland faces an " enormous challenge" in bringing down unemployment, and cutting the proportion of people who have been jobless for a year or more -- which has increased from 25 to 50 percent since the country's property boom collapsed, Martin said. It would take at least 6-8 years to cut unemployment by half -- to the level in Northern Ireland -- even if Ireland's export markets recover quickly from the current market turmoil he said. " There's a very long hard road ahead." Ireland is spending enough money on labour programmes -- around 4 percent of GDP -- but it needs to increase incentives for unemployed Martin said. He said the government was on the right track in its decision to merge integrate the provision of employment services and benefit payment services " " What they are doing is absolutely in the right direction. But the real question is how is it going to be implemented," he said. |
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krisluke
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26-Nov-2011 20:18
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China's Wen tells Obama exchange rate reforms successful
NUSA DUA, Indonesia, Nov 19 (Reuters) - Chinese Premier Wen Jiabao told U.S. President Barack Obama on Saturday that China will strengthen the flexibility of the yuan's exchange rate, and that it had already achieved notable success in exchange rate reform, state media reported.
Wen said China was closely observing changes in the yuan's exchange rate and will continue steady reforms, Xinhua news agency cited him as telling Obama on the Indonesian resort island of Bali. Wen said that from late September to early November, offshore forwards markets showed " expectations of a depreciation in the renminbi exchange rate." He said: " This has not been determined by people but is a response of the market to the renminbi exchange rate." (Reporting by Ben Blanchard editing by Neil Fullick Additional reporting by Chris Buckley in Beijing) |
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krisluke
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26-Nov-2011 20:15
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Pakistan stops NATO supplies after raid kills 28
Paramilitary forces patrol the streets of Peshawar, in northwest Pakistan
YAKKAGHUND, Pakistan (Reuters) - NATO helicopters attacked a military checkpoint in northwest Pakistan on Saturday, killing up to 28 troops and prompting Pakistan to shut vital supply routes for NATO troops fighting in Afghanistan, Pakistani officials said. The attack is the worst single incident of its kind since Pakistan uneasily allied itself with Washington in the days immediately following the Sept 11, 2001 attacks on U.S. targets. It comes as relations between the United States and Pakistan, its ally in the war on militancy, are already badly strained following the killing of al Qaeda leader Osama bin Laden by U.S. special forces in a secret raid on the Pakistani garrison town of Abbottabad in May. Pakistan called that raid a flagrant violation of its sovereignty. The Foreign Office equally condemned Saturday's attack. " Prime Minister Yusuf Raza Gilani has condemned in the strongest terms the NATO/ISAF attack on the Pakistani post," ministry spokeswoman Tehmina Janjua said in a statement. " On his direction, the matter is being taken (up) by the foreign ministry in the strongest terms with NATO and the U.S." The commander of NATO-led forces in Afghanistan, General John R. Allen, said he had offered his condolences to the family of any Pakistani soldiers who " may have been killed or injured" during an " incident" on the border. A spokesman for the force declined further comment on the nature of the " incident" and said an investigation was proceeding. It was not yet clear, he said, whether there had been deaths or injuries. Two military officials said that up to 28 troops had been killed and 11 wounded in the attack on the Salala checkpoint, about 2.5 km (1.5 miles) from the Afghan border. The attack took place around 2 a.m. (2100 GMT) in the Baizai area of Mohmand, where Pakistani troops are fighting Taliban militants. A senior Pakistani military officer said efforts were under way to bring the bodies of the slain soldiers to Ghalanai, the headquarters of Mohmand tribal region. " The latest attack by NATO forces on our post will have serious repercussions as they without any reasons attacked on our post and killed soldiers asleep," he said, requesting anonymity because he was not authorised to talk to the media. About 40 Pakistani army troops were stationed at the outpost, military sources said. Two officers were reported among the dead. NATO supply trucks and fuel tankers bound for Afghanistan were stopped at Jamrud town in the Khyber tribal region near the city of Peshawar hours after the raid, officials said. " We have halted the supplies and some 40 tankers and trucks have been returned from the check post in Jamrud," Mutahir Zeb, a senior government official, told Reuters. Another official said the supplies had been stopped for security reasons. " There is possibility of attacks on NATO supplies passing through the volatile Khyber tribal region, therefore we sent them back towards Peshawar to remain safe," he said. The border crossing at Chaman in Baluchistan was also closed, Frontier Corps officials said. Pakistan is a vital land route for 49 percent of NATO's supplies to its troops in Afghanistan, a NATO spokesman said. Reflecting the confusion of war in an ill-defined border area, an Afghan border police official, Edrees Momand, said joint Afghan-NATO troops near the outpost Saturday morning had detained several militants. " I am not aware of the casualties on the other side of the border but those we have detained aren't Afghan Taliban," he said, implying they were Pakistani Taliban operating in Afghanistan. The Afghanistan-Pakistan border is often poorly marked, and differs between maps by up to five miles in some places. The incident occurred a day after U.S. General John Allen met Pakistani Army Chief of Army Staff General Ashfaq Pervez Kayani to discuss border control and enhanced cooperation. A similar incident on Sept 30, 2009, which killed two Pakistani troops, led to the closure of one of NATO's supply routes through Pakistan for 10 days. NATO apologised for that incident, which it said happened when NATO gunships mistook warning shots by the Pakistani forces for a militant attack. The attack is expected to further worsen U.S.-Pakistan relations, already at one of their lowest points in history, following a tumultuous year that saw the bin Laden raid, the jailing of a CIA contractor, and U.S. accusations that Pakistan backed a militant attack on the U.S. Embassy in Kabul. The United States has long suspected Pakistan of continuing to secretly support Taliban militant groups in a bid to secure influence in Afghanistan after most NATO troops leave in 2014. Saturday's incident will give Pakistan the argument that NATO is now attacking it directly. " I think we should go to the United Nations Security Council against this," said retired Brigadier Mahmood Shah, former chief of security in the tribal areas. " So far, Pakistan is being blamed for all that is happening in Afghanistan, and Pakistan's point of view has not been shown in the international media." He called the attack unprovoked and said Pakistan should respond by shooting down NATO aircraft and keeping the supply lines closed. " Those who say that Pakistan cannot afford a war with the U.S. and NATO, I think we should realise that U.S. and NATO also cannot afford a war with Pakistan." Other analysts, including Rustam Shah Mohmand, a former ambassador to Afghanistan, said Pakistan would protest and close the supply lines for some time, but that ultimately " things will get back to normal." (Additional reporting by Saud Mehsud, Jibran Ahmad and Saeed Achakzai in Pakistan, and Hamid Shalizi in Afghanistan Writing by Augustine Anthony and Chris Allbritton Editing by Ron Popeski) |
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krisluke
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26-Nov-2011 20:12
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Commodities Sold as Liquidity RulesThe financial stress in global markets continues unchecked and the longer it takes before a resolution to the European debt crisis is found the higher the risk of a global recession re-emerging. This has resulted in the near-term demand outlook for commodities being lowered and prices have suffered as a consequence. Many traders have begun to scale back early due to year-end considerations and investment funds have been deleveraging speculative positions, as a result of banks reducing credit lines. On this basis further headwinds cannot be ruled out during the coming weeks, also considering the continued dollar rally which erodes support for commodities traded in dollars. The global Purchasing Managers Index on manufacturing which is a good forward-looking gauge for economic activity is also pointing towards near-term weakness with softer data from China this week adding to the uncertainties about the outlook. The two major commodity funds, the S& P GSCI and DJ UBS are both trading into negative territory for the year, more so for the latter as it has a much bigger exposure to agriculture and metals (the two sectors which have suffered the most during the last few months).
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krisluke
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26-Nov-2011 20:11
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As this week comes to an end, gold is biased to the downside and is expected to continue the downside movement today before closing this week with huge losses, where pessimism is still dominating the market, especially with the lack of fundamentals from major economies in addition to the disagreement of European leaders over the role of the European Central Bank in fighting the debt crisis and the issuance of European joint bonds. Over weekly basis, gold opened this week in Asia at $1723.25 per ounce, and recorded the highest at $1726.32 and the lowest at $1666.54. Over daily basis, gold opened today at $1694.34 per ounce, and reached a high of $1696.55 and a low of $1680.03, and is trading at the moment around $1681.80 per ounce. Pessimism spread in the market yesterday, after the German Chancellor, Angela Merkel disappointed markets as usual and reassured that Germany is still against the intervention of the European Central Bank in fighting back the debt crisis. Merkel also confirmed that Germany is against the issuance of European joint bonds, where the chancellor said that the issuance of joint bonds would remove any incentives for European nations to improve their budgets and fiscal consolidation. After the lack of results from the European leaders meeting yesterday, pessimism spread more, while the sentiment deteriorated further as markets were looking forward to the meeting and hoped that Germany while allow the European Central bank to support markets to restore confidence and intervene to calm rising jitters and debt woes, especially after the debt crisis threatened Germany on Wednesday, when the nation failed to sell as much bonds as targeted, which led the German Central Bank (Bundesbank) to buy almost half of the amount offered. On the other hand, the U.S. dollar gained the most this week and is currently trading near the highest level recorded in eleven months, which added more pressures on the metal to trade lower, where investors liquidate their positions on gold in order to cover the losses spread across the board. The U.S. dollar gained as pessimism dominated the market this week, which attracted investors to hold the low yielding currency to avert as much risk as possible, as their risk for appetite eased. The U.S. dollar index (USDIX) opened this week at 78.04, and recorded the highest at 79.30 and the lowest at 77.96, and is currently hovering around 79.30, and is expected to close the session today with gains. Volatility is highly expected today, while fluctuations could remain evident in the market, especially with the lack of fundamentals from major economies and the U.S. early closing. Silver also declined today after starting the Asian session at $31.76 per ounce, to currently trade around $31.39 after setting the highest at $31.82 and the lowest at $31.35 per ounce. Platinum also lost strength after the opening of $1544.50 per ounce, and recorded the highest at $1548.75 and the lowest at $1535.25, and trades now around $1536.00 per ounce. |
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krisluke
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26-Nov-2011 20:10
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Crude Oil surrenders Thursday's gains amid choppy and volatile trades Crude oil surrendered the gains recorded on Thursday and returned to the downside choppy trading on Friday amid lingering debt woes and fears over the outlook for the global economy which countered fears of supply disruption from the oil rich Middle East. Crude oil futures for January settlement are currently trading around $96.27 down from the opening of $97.01 where it recorded the high so far and slumped to the low of $96.04 per barrel. Oil is heading for its second consecutive week of losses on worsening state of the economy and rising fears over the fragile status in Europe and the deepening debt crisis. Conditions in debt-laden euro nations only took a beating to the worse this week with the contagion pressures starting to appear on France with rising borrowing costs and risks of losing its top credit rating, inability of Germany to lure investors in its bond auction, record yields on Italian and Spanish debt, and last but not least a new wave of downgrades for Portugal and Hungary to junk status! It was indeed another chapter of downbeat news for the global economy this week and that all took its toll on the growth sensitive crude. With eyes locked on the developments in the euro area and the lack of action from policy makers investors continue to discount the worst and the flow of weak macroeconomic data this week from China all the way across to the United States added to the worries. Crude oil rose yesterday in a slight relief gain with the absence of floor trading in the U.S. for Thanksgiving as reports of clashes in the biggest oil supplier Saudi Arabia renewed fears of oil disruptions amid ongoing unrest across the region with Syria and Egypt still a matter of concern. This also coupled with the new sanctions imposed on Iran's oil industry by the United States which might offer interim pressure on crude markets. Broad downside pressures on crude oil are evident and all on the demand side, printing a weaker outlook for the commodity which outweighs the upside pressures on the supply side! Growth is weakening with Chinese manufacturing contracting unexpectedly this week and US growth revised lower in the third quarter alongside abysmal European data that shows the euro area might be already in recession. High volatility is evident and likely to continue over the coming period with the dollar still enjoying the upper hand. The dollar is heading to its fourth consecutive weekly gain and extended the rally strongly this week to the highest in almost seven weeks to trade now around 79.27 from the weekly opening at 78.04. Today we still see the mixed trading and the fears to extend with the U.S. market back but on minimum capacity after yesterday's holiday, where floor trading will return to settle electronic trading that was seen yesterday that might affect trading ahead of the weekend. The lack of data from major economies today will be more reason for volatility as the focus remains on Europe and investors are again pessimistic after the meeting looked at for hope between Merkel, Sarkozy and Monti failed to produce anything new to the market. |
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krisluke
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26-Nov-2011 20:07
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Crude Oil Weekly Technical OutlookNymex Crude Oil (CL)Crude oil rose to as high as 103.37 last week but failed to sustain above 100 psychological level and retreated. A short term top should be formed and initial bias is mildly on the downside for deeper pull back towards 94.65 support. Nevertheless, downside is expected to be contained by 89.16/17 cluster support (50% retracement of 74.95 to 103.37) and bring rebound. On the upside, above 100.15 minor resistance will turn bias neutral and bring consolidations. But break of 103.37 resistance is needed to confirm rally resumption. Otherwise, we'll stay near term neutral and expect more sideway trading first. In the bigger picture, current development indicates the fall from 114.83 has finished at 74.95. The structure suggests it's merely a correction or part of a consolidation pattern. Hence, rise from 33.2 is not finished yet. As long as 89.16/7 support holds, we'd now favor a break of 114.83 resistance to resume the rally from 33.2. Meanwhile, break of 64.23 support is needed to confirm completion of the whole rise from 33.2. Otherwise, we'll continue to stay bullish in crude oil. In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern. Nymex Crude Oil Continuous Contract 4 Hours Chart
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krisluke
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26-Nov-2011 20:05
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Gold Weekly Technical OutlookComex Gold (GC)Gold dropped sharply to as low as 1711 last week and the break of 1736.6 support suggests that a short term top is at least formed at 1804.4. Initial bias will remain on the downside this week for 1698.8 resistance turned support first. Break there will argue that whole rebound from 1535 is finished and should bring deeper fall to 1604.7 support for confirmation. On the upside, break of 1804.4 is needed to confirm rally resumption. Otherwise, near term outlook is neutral at best. In the bigger picture, current development argues that correction from 1923.7 is going to extend with another fall. However, there is still no clear sign of long term trend reversal yet and price actions from 1923.7 would still be finally unfolded as correction/consolidation only. Hence, while the fall from 1804.4 might extend further lower, we'll look for reversal signal again inside 1478.3/1577.4 support zone. Above 1804.4, on the other hand, will target a test on 1923.7 high. In the long term picture, with 1478.3 support intact, there is no change in the long term bullish outlook in gold. While some more medium term consolidation cannot be ruled out, we'd anticipate an eventual break of 2000 psychological level in the long run Comex Gold Continuous Contract 4 Hours Chart
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krisluke
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25-Nov-2011 22:51
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krisluke
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25-Nov-2011 22:23
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Euro zone debt worries set to punish stocks, again
Times Square, New York
* " Black Friday" shopping day looks strong * Markets close at 1 p.m., volume set to be light * Futures off: Dow 76 pts, S& P 9.4 pts, Nasdaq 15 pts (Adds analyst quote) By Edward Krudy NEW YORK, Nov 25 (Reuters) - U.S. stock index futures pointed to a seventh straight session of losses on Friday, their longest losing streak in four months, as fears about the euro zone's debt crisis overshadowed what appeared to be a buoyant start to the holiday shopping season. Stocks were facing their worst week in two months and their second consecutive week of losses. The S& P 500 has fallen 4.4 percent this week and has given back almost two-thirds of its gains in October, the market's best month in 20 years. Yields on Italy's debt approached recent highs that sparked a sell-off in world markets. Italy paid a record 6.5 percent to borrow money over six months on Friday, and its longer-term funding costs soared far above levels seen as sustainable for public finances, raising the pressure on Rome's new emergency government. A European Union conference in Strasbourg produced little to ease the markets fears, said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. " What they agreed to was not bickering in public," he said. " The markets are going to continue to pressure the EU until they come up with a solution that is going to ease the crisis." For many investors that means the European Central Bank printing euros to buy larger amounts of European bonds and for Germany to accept the issuance of euro bonds. Germany currently opposes both of those options. S& P 500 futures fell 9.4 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 76 points, and Nasdaq 100 futures sank 15 points. U.S. stock markets were closed for the Thanksgiving holiday on Thursday and will be open on Friday until 1 p.m. The day after Thanksgiving is typically one of the lightest trading volume days of the year. Reinforcing what some see as recent signs of strength in the U.S. economy, shoppers stateside flocked to stores, which opened early to offer a jumpstart to " Black Friday," the traditional beginning to the U.S. holiday shopping season. European stocks fell 0.3 percent on Friday, losing ground for the ninth time in 10 sessions and were set to post their biggest weekly loss in two months, dragged by deepening worries over the euro zone debt crisis and the outlook for the global economy. The euro fell 1 percent against the dollar to a fresh seven-week low. AT& T Inc said it would take a $4 billion charge in case its proposed takeover of T-Mobile USA fails, a tacit recognition of the dwindling chances that the deal will get through U.S. regulators, who say it would destroy jobs and curb competition. AT& T shares fell 0.4 percent in premarket trading to $27.44 U.S. apparel brand Gap Inc said on Friday that it aims to triple its network of stores in China next year, one of the latest foreign brands to target the country's consumer spending growth. (Editing by Padraic Cassidy) |
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krisluke
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25-Nov-2011 22:18
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http://www.learntechnicaltrading.com Buying signals using trend lines Please take trend lines as one of the most important tools to work out the direction of a particular stock. Remember that we do not want you to be trading against the trend. It is important to know how you are willing to stay with a trade. If you are going to be in the market for a period of 3 months then it is best that you identify a medium term trend. If you are going to be in the market for a couple of days that you must identify a short term trend. There a few you need to know about the significance of trend lines: i ) The longer the trend the stronger the significance of trend. When the price penetrates this long established trend the significance is higher than when the price breaks a short term trend. ii ) As previously explained a trend line represent areas of support on the way up, or resistance on the way down. The more times a trend line has been touched by price the greater the significance of the trend. iii ) Some trends also tend to be steeper than others. The angle of the trend also determines the speed which the stock rises. The steeper the angle of ascent or descent, it lowers the chances of the prices running on that direction for a long period of time. It is normally short lived. Let's give you real life example so that your eyes get used to identifying trends. You will be amazed at the number of buying signals you can discover just by using trend lines. We will use bar charts (OHLC) in our examples. We have used a green colour for buying signals and red colour circles for sell signals. Just by viewing the chart below you can actually see how many buying signals you would have if you only use a trend line system. You are probably thinking well that looks so easy why doesn't every one do it? From our experience we can only tell you that it is easier said than done. This is where psychology plays a big role. You will soon find out that because we are all humans our minds changes state every time we read information. This is why it is important that you get into the habit of following your trading plan.
We would like to mention that the trends lines drawn above are all short term trend lines. Day traders love to draw trend lines so get used to drawing trend lines. If you have forgotten how to do it go to trend lines in the beginners section of this web site. Point (A) in the chart above illustrates our first buy signal, had you entered this trade your sell signal would have been point (B). Your stop loss if you had entered at point (A) should have also been triggered if the price fell back below the downtrend line. The line the joins (B) and (C). You will note that the short term trend that extends towards point (B) is too steep therefore price was not able to be sustained. These entries however are good for day traders you are here to trade for a couple of days and to minimise your trading exposure inside the market. Sometimes you don't want to be inside trade over the weekend. The trend line that joins point (C) and (D) however has a totally different angle of ascent to the trend line that joins point (A) and (B). The significance of this is that your trade has the potential to last a little longer. Your next entry point should have been taken at point (C) with your exit as soon as the price broke the uptrend at point (D). Remember that trendlines reverse its support/resistance role. Your stop loss should have been triggered if the price fell below the trend line that joins (B) and (C). Entry point (E) is interesting. As you can see above an upward trend line was already evident, however there was short term resistance. We need to wait for the price to break resistance before we can enter a trade. Had you entered at point (E) your exit should have been triggered at point (F). Unfortunately you would had given away a bit of your profits as there was a price gap and the stock closed just below our upward trend line. This should have triggered double bells since it was bearish day. You don't have to wait for the news to come out and then make a decision, remember that you trading plan should be well set before you enter any trade, that way you don't have to make decisions on the spot when the market has presented you with an unforseen situation. We do hope that by now you get the idea. In summary, it is important to know how to draw the trend lines and write down your stop, entry and target price before you get into a trade. We hope that by using real life example you can actually learn from what other technical analyst are doing and most of all we hope that you are becoming more confident with the terminology and trading experience. You can always ask the author if you wish anything explained further. Go to contacts in the main menu. |
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krisluke
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25-Nov-2011 22:16
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Term Glossary Remember that the more you look at charts and apply everything that you are learning on this website, you will start to see price patterns that maybe only a few people can see. We can't stress how important it is to put attention to what the market is doing. Be also aware of what the market has done in past as there are many times where history repeats itself. It is just the way we humans are, it is all psychological. Terms:
Rule of thumb: Once support line has been broken, it becomes resistance. Once the resistance has been broken it becomes support. Remember: Support and Resistance zones are like an imaginary wall. Once the wall has been broken, price is able to move through quickly. |
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krisluke
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25-Nov-2011 22:14
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Trend Analysis using Volume indicator One of the most common indicator is the volume indicator. The volume represents the number of buyers and sellers exchanging shares. Everyone in the market has their own decision for buying and selling. So for everyone person that wins that must be another person that loses. It sounds harsh but that is the way the market goes. No one will feel sorry for you either. The market will do whatever it has to do and you are the only one responsible for your actions. This is why a lot of people feel uncomfortable with the share market, futures or currency markets. The fear to be wrong. There are a lot of sites where you can prepare yourself with information. It is good to read but not too much otherwise you will suffer from " Analysis paralysis" . This term is used by many traders when they read too much information while they are in a trade and can't decide whether to buy or sell when the market is clearly indicating to enter or exit a trade. An educated person who reads is far more likely to perform better and make more profits than an uneducated person. Volume is calculated by the number of shares that have exchanged hands between buyers and sellers. Lots of technical analyst use volume as their main indicator because it reveals the level of interest for a particular stock. We can only warn you that stocks that don't have much volume are a lot harder to get in or out. Just follow this basic rule " If there is not enough consistent volumen, leave that stock alone" . There are over 2000 stocks in the ASX market to look at. The Dow Jones has over 4000 stocks. Volume on lows - you will sometimes notices large volume spikes for no apparent reason. If the price of stock falls, more and more investors may decide to exit their trade. Price may also fall further as mechanical system mainly run by big institutions are triggered. You may sometimes wonder why would investors buy stocks that are going down in price. The answer is quite simple, not everyone is thinks the same way. Some investors are there for long term investment other for short term. Large volume on lows are worth keeping an eye on. There can really be a great opportunity to capitalise on. Let us give you an example of what we mean by large spike volume on lows..
In the picture above, please note that everytime the stock dropped to the $20.50 price there was volume spikes. This simply indicates that investors believe that the stock is probably a good buy at that price. It confirmed the strong support three times before supply run out and demand kicked in. Please review our previous lessons about support and resistance. Later on in intermediary and advance chapters we will show you how to spot a perfect trade. You won't believe how simple it is. The same applies for volume spikes on highs. When you see volume spikes on high and the stock does not advance past the most recent highs, chances are the price may fall. Let's illustrate this by a real life example..
As you can see there were a few volume spikes on high, and immediately after the prices dropped. |
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