Market Factors to consider this week: Updated daily and as events unfold see Disclaimer at bottom of page
UPDATED May 8, 2011 This page is out of Date and will not be updated until September 11, 2011 due to an unexpected increase in my consulting business. I look forward to once again communicating with subscribers and viewers alike at that time.
Week of May 1, 2011- May is so far living up to its unpleasant reputation, as traders sold their way right through to Friday's not-so-bad-after-all payrolls report. A modest one-day advance for the market just wasn't enough to offset four straight sessions of bleak price action, and the first week of the month left stocks squarely in the red -- though the losses were overshadowed by an across-the-board plunge in commodities prices.
OVERALL OUTLOOK: Stocks broke out of the doldrums Friday, after a surprisingly solid non-farm payrolls report set the bullish wheels in motion. Specifically, the Labor Department said the U.S. economy added 244,000 jobs in April, surpassing economists' expectations, and marking the largest surge in nearly a year. What's more, the government upwardly revised its payrolls figures for January and February, which seemed to help traders take an increase in the unemployment rate with a grain of salt. However, the market lost some steam around midday, as crude oil and silver continued their run into the red, and as traders digested rumours -- eventually denied -- that Greece could exit the euro zone. Nevertheless, stocks successfully put a dent in their week-to-date deficits, with all three major market indexes snapping their losing streaks by the close. Crude oil futures extended their decline as the dollar touched a two-week peak versus the euro Keep an eye on the US dollar in the medium term as the greenback may have a short term recovery as the petro currencies get clobbered with a reduction in commodity prices. The Baltic Exchange's main sea freight index - BDI, which tracks rates to ship dry commodities, gained ground this month mainly due to increased demand. The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertilizer is an important indicator of global economic activity. The overall outlook for the S&P is bullish in the medium and long term with extreme volatility as the Libyan, mid east and al Queda situation causes fluctuations in the price of crude and investor anxiety. Investors need to be cautiously bullish on the equity markets. We still recommend protective puts -- even though low volatility is disappearing that created some option-buying bargains. Expect the implied volatility to continue to increase, maintain asset and risk management rules.
Calendar - May 8, 2011 - The big events for this week will be news from China, Euro and the US economic data, Libya, Yemen & Syria, price of crude oil and a deluge of important earnings reports.
Monday - US - no economic data, EUR - German Trade Balance, Sentix Investor Confidence, CNY - New Loans, M2 Money Supply y/y
Tuesday - US - import and export price data, as well as the Commerce Department's wholesale inventories report for March. CNY - Trade Balance, Fixed Asset Investment ytd/y, Industrial Production y/y, CPI y/y, NBS Press Conference, PPI y/y, Retail Sales y/y
Wednesday - US - Energy Department's regularly scheduled crude inventories update, as well as Uncle Sam's reports on the trade balance and Treasury budget. EUR - German Final CPI m/m, German WPI m/m,
Thursday - US - Labor Department's weekly jobless figures and producer price index (PPI) for April, along with March business inventories and retail sales data for April. EUR - ECB Monthly Bulletin, Industrial Production m/m CNY - Foreign Direct Investment ytd/y
Friday - US - April’s consumer price index (CPI) and the preliminary Reuters/University of Michigan consumer sentiment index for May. EUR - German Prelim GDP q/q, Flash GDP q/q
- CHINA: - Economic calendar and news from China: China is continuing to slow growth to control their real estate bubble and urban inflation. Expect China to grow at a controlled pace. Electric and Natural Gas consumption is up.(archive material)
- May 8, 2011 - Capitalvue Weekly Wrap - May 3 - 7, 2011 - The Shanghai Composite Index fell 1.64 percent this week to close at 2,863.89 points today on average daily transaction value of 108.01 billion yuan, a drop of 7.35 billion yuan from the previous week. The Shenzhen Composite Index fell for the fourth consecutive week. The index fell 1.99 percent to close at 12,067.61 points today on average daily transaction value of 65.71 billion yuan, a decline of 14.71 billion yuan week-on-week.A slew of macroeconomic indicators were released this week. China recorded a 0.5 percentage point month-on-month drop in the Purchasing Managers' Index (PMI) in April to 52.9, according to the China Federation of Logistics and Purchasing (CFLP). The production sub-index fell from 55.7 in March to 55.3 in April while the purchasing price sub-index fell 2.1 percentage points month-on-month to 66.2. Sentiment was more upbeat in the non-manfucturing sector as the CFLP reported that the PMI for the non-manufacturing sector rose 2.3 percentage points month-on-month to 62.5 in April. The new orders sub-index rose 2.8 percentage points month-on-month to 58.3 while the sub-index for new export orders was up by 5.4 percentage points to 55.7. Government measures to curb soaring property prices failed to make much headway in April as home prices continued to rise, with the average price of residential properties in 100 cities in China registering a 0.4 percent month-on-month increase to 8,773 yuan per square meter, according to the China Index Academy, an affiliate of SouFun
Stock prices declined for four out of the five trading days on concern of an imminent benchmark interest rate hike and other measures that the authorities may roll out to battle the inflation scourge afflicting the Chinese economy. In a sign that the government may be letting the yuan rise to help in the battle against inflation, the Chinese yuan breached the 6.5 per dollar mark for the first time today as the central parity rate of the USD/CNY was set at 6.4990.
A Chinese manufacturing index declined in April from March, indicating that growth may moderate in the world’s second-biggest economy after the government raised interest rates and allowed faster gains in the yuan.The Purchasing Managers’ Index fell to 52.9 from 53.4, China’s logistics federation and the statistics bureau said in an e-mail yesterday. That was below a median forecast of 53.9 in a Bloomberg News survey of 20 economists.
April 24, 2011 - Capitalvue Weekly Wrap - April 18 - 22, 2011 - The Shanghai Composite Index fell 1.31 percent this week to close at 3,010.52 points today on average daily transaction value of 151.11 billion yuan, a decline of 7.5 billion yuan from the previous week. The Shenzhen Composite Index fell for a second week. The index fell 1.98 percent to close at 12,708.42 points today on average daily transaction value of 109.20 billion yuan, an increase of 3.43 billion yuan week-on-week. The trading week kicked off with news that the The People’s Bank of China (PBOC) had on April 17 raised the required reserve ratio for commercial banks by 0.5 percentage point, effective April 21. This marked the fourth hike in the required reserve ratio in 2011 and was the 10th hike since the beginning of 2010.
April 14, 2010 - China Power Consumption Up 12.7% In Q1 - China recorded a 12.72 percent year-on-year increase in national power consumption to 1,091tWh in the first quarter, reports yicai.com, citing the National Energy Administration. Power consumption in March increased 13.41 percent year-on-year to 388.8tWh. Power generation units across China recorded average utilization hours of 1,135 hours during the first quarter, an increase of 11 hours year-on-year.
EURO: The Euro fx has found strength. (archive material)
May 8, 2011 - Stocks in Europe Drop for First Week in Three as Commodities Lead Retreat - European stocks retreated for the first week in three as energy and mining companies tumbled with commodities, overshadowing a bigger-than-forecast increase in U.S. payrolls.
May 8, 2011 - Euro Tumbles Most Against Dollar Since January on Rate Signal; Yen Climbs - The euro fell the most in four months against the dollar after European Central Bank President Jean- Claude Trichet signaled he may not raise interest rates next month and concern grew that Greece’s debt crisis is worsening.
May 1, 2011 - European Stocks Climb for Second Week as Ericsson, VW Rise After Earnings - European stocks posted a second weekly gain, with the Stoxx Europe 600 Index completing the biggest monthly increase this year, as companies from Ericsson AB to Volkswagen AG reported better-than-estimated earnings.
US UNEMPLOYMENT & ECONOMY: The US economy showed some strength again this week. Expect sideways to up action.(archive material
May 8, 2011 - U.S. Stocks Retreat Most Since March After Global Commodity Prices Slump - U.S. stocks fell this week, sending the Standard & Poor’s 500 Index to the biggest drop since March, as the largest commodities slump in two years drove down energy and raw-materials producers as well as Caterpillar Inc. (CAT)
May 1, 2011 - U.S. Stocks Rise For Second Week on Earnings, Fed’s Low Rates - U.S. stocks rallied this week, sending the Standard & Poor’s 500 Index to the highest level since June 2008, as earnings grew more than forecast and the Federal Reserve renewed its pledge to stimulate the economy.
INDIA: India has joined China as an engine of growth for the Global economy. Expect to read more articles relating to India as a significant driver of global trade. Over 50% of India’s population is under 26 years old. Inflation is India’s current albatross.(archive material)
May 8, 2011 - India’s Sensex Rebounds From Biggest Losing Streak in a Decade; Banks Lead - Indian shares rallied, paring a weekly decline and snapping the benchmark index’s longest stretch of losses in a decade, as a drop in oil prices eased inflation concerns and some investors judged the stock slump as excessive.
May 1, 2011 - India’s Sensex Completes Monthly Drop on Borrowing Costs Outlook - Indian stocks dropped, with the benchmark index completing a monthly decline, amid concern the central’s bank move to raise interest rates next week may hurt economic expansion and company earnings.
BRAZIL: Brazil has joined India as another engine for Global growth
May 8, 2011 - Bovespa Stock Index Rallies on Slowing Inflation, Gain in U.S. Payrolls - Brazilian stocks rallied after four days of losses, rising the most since February, as monthly inflation unexpectedly slowed and U.S. employment data exceeded estimates.
May 1, 2011 - Bovespa Index Gains, Trimming Monthly Decline, on Budget Cuts - The Bovespa stock index gained, paring a monthly decline, after the Brazilian government’s spending cuts eased concern that accelerating inflation will limit earnings growth.
THE REST OF THE WORLD - Inflation is something to watch in the rest of the world as imbalances are brought into line with the world economy.(archive material)
February 20, 2011 - Dubai Shares Drop as Mideast Unrest Sparks Risk Aversion; Emaar, Zain Fall - Middle East shares slumped, sending Dubai’s benchmark stock index down the most this month, on concern political unrest in the region may spread.
February 11, 2011 - Egypt's Mubarak Resigns, Hands Power to Military - Hosni Mubarak stepped down as president of Egypt and handed power to the military, bowing to the demands of protesters who have occupied central Cairo for the past 18 days demanding an end to his 30-year rule.
January 8, 2011 - Saudi Shares Climb to Eight-Month High as Investors Buy Ahead of Dividends - Saudi Arabian shares rose on the first day of the week to the highest in almost eight months as investors anticipated year-end dividend payouts.
December 13, 2010 - Canada's Dollar Climbs With Stocks, Oil on View Global Economy Recovering - Canada’s dollar rose for a fourth day as an increase in equities and commodities such as crude oil, gold and copper reduced demand for the greenback, making currencies related to economic growth more attractive.
INFLATION/DEFLATION - Look out for inflation in the grains -historically it is inflations best leading indicator. Currently, Inflation seems to be supply although demand in China is picking up. The strength in crude oil will encourage any short term tendencies toward an overall global inflation. Expect inflation to be increasing with patches of volatility(archive material)
May 8, 2011 - Oil Caps Biggest Weekly Drop Since 2008 on Bin Laden Death, Dollar’s Gain - Crude oil capped its biggest weekly decline in more than two years as the death of Osama bin Laden and a strengthening dollar triggered a five-day rout in commodity prices.
May 1, 2011 - Commodities Beat Financial Assets in Longest Streak Since 1997 - Commodities beat stocks, bonds and the dollar for a fifth straight month, the longest stretch in at least 14 years, as demand for raw materials increases with expanding economies and Federal Reserve promises to boost growth.
February 27, 2011 - Hedge Funds Slashing Food-Price Bets After ‘Harrowing’ Fall - Hedge funds are leading an exodus from agricultural markets, slashing bullish bets in the U.S. from almost the highest levels on record after grain prices slumped, money managers said.
BALTIC DRY INDEX(BDI) & GLOBAL TRADE: -The BDI strengthened. The tendency will favour the upside.(archive material)
May 8, 2011 - Panamaxes lead dry bulk market to higher ground - The Panamax market has kept on leaping forward, helping the dry bulk market inch higher throughout the week. As a result of increased activity, the industry’s benchmark, the Baltic Dry Index rose yesterday by 0.92% to reach 1,314 points. The Panamax segment grew by yet another impressive 4.81%, to reach 1,723 points and quickly surpass the Capesize market, which once again commands lower daily earnings. The Capesize market fell by 1.15% yesterday to 1,542 points.
May 1, 2011 - WeberSeas Weekly Market Report Week 17 - During Easter week the rates lost further ground as the market was struggling to find support.Thus panamax market was hardest hit loosing almost 10% although this week it made half of it back.The BCI has remained practically unchanged over the last 2 weeks,as well as the BSI and the BHSI.
OVERALL OUTLOOK:Stocks broke out of the doldrums Friday, after a surprisingly solid non-farm payrolls report set the bullish wheels in motion. Specifically, the Labor Department said the U.S. economy added 244,000 jobs in April, surpassing economists' expectations, and marking the largest surge in nearly a year. What's more, the government upwardly revised its payrolls figures for January and February, which seemed to help traders take an increase in the unemployment rate with a grain of salt. However, the market lost some steam around midday, as crude oil and silver continued their run into the red, and as traders digested rumours -- eventually denied -- that Greece could exit the euro zone. Nevertheless, stocks successfully put a dent in their week-to-date deficits, with all three major market indexes snapping their losing streaks by the close. Crude oil futures extended their decline as the dollar touched a two-week peak versus the euro Keep an eye on the US dollar in the medium term as the greenback may have a short term recovery as the petro currencies get clobbered with a reduction in commodity prices. The Baltic Exchange's main sea freight index - BDI, which tracks rates to ship dry commodities, gained ground this month mainly due to increased demand. The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertilizer is an important indicator of global economic activity. The overall outlook for the S&P is bullish in the medium and long term with extreme volatility as the Libyan, mid east and al Queda situation causes fluctuations in the price of crude and investor anxiety. Investors need to be cautiously bullish on the equity markets. We still recommend protective puts -- even though low volatility is disappearing that created some option-buying bargains. Expect the implied volatility to continue to increase, maintain asset and risk management rules.
Disclaimer
The contents of this presentation contain statements that may constitute “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements may include financial and other projections, as well as statements regarding future economic events, or the assumptions underlying any of the foregoing. Forward-looking information involves significant risks, assumptions, uncertainties and other factors that may cause actual future results or anticipated events to differ materially from those expressed or implied in any forward-looking statements and accordingly, should not be read as guarantees of future performance or results.
Actual results, performance or achievement could differ materially from those expressed in, or implied by, any forward-looking statements made and, accordingly, viewers should not place undue reliance on any such forward-looking statements. New factors emerge from time to time, and it is not possible for anyone to predict all of such factors and to assess in advance the impact of each such factor on any of the financial or commodity markets.
This is not investment advice and you need to review this information with your tax, legal and financial advisors before acting upon this information.