Over the last two days the euphoria of a new president and a hope for 'change' are over written by a fresh batch of disappointing data in manufacturing, job, sevices, CDS, weak earnings data. Not many companies have posted a significant upside earnings surprise and markets started to sink in the reality that we are no where near to knowing the length or depth of the downturn.
I safely sold most of my investments and waiting for the market to turn!! Today I was forwarded a list of 3x ETFs.
BGU - R1000
TNA - R2000
ERX - R1000 Energy
FAS - R1000 Financials
BGZ - short R1000
TZA - short R2000
ERY - short R1000 Energy
FAZ - short R1000 Financials.
A better investment strategy would be to own shorts for a couple of weeks and to buy the longs after a couple of weeks. JPM CEO today addressing Korean banks did say that the down turn would come to an end in the next four months but US would struggle with the economic problems for another year. However, the stock market front runs the recovery in the economy.
The first Xmas card has arrived!! Courtesy - FT..
BofEngland lately has been facing a lot of criticism for it bystander stance when Fed has been agressively cutting teh intrest rates to stimulate teh economy. Today BofE has responed with a surprise slash in the interest rates of 1.5%, when the estimated cut was 0.5% -1%. Bank rate is now at 3%, lowest in more than half a century. The rationale behind such an agressive cut is pretty clear - global recession is inevitable and the world is coming to an end :) .. Followed by BofE rate cut, there was wide spread speculation that ECB would follow the suit, however, ECB resorted a more conservative stance and cut the rate by a mere 0.5%.
Oil.. its good to see oil trading at 60 dollar level today, however, todays IEA report predicts that the 60-70 dollar oil would be short lived. In its flaagship report that is going to be out tomorrow, IEA predicts that oil would trade at 200 dolls a barrell by 2030 and 100 by 2015 for teh fact that the companies would not be able to pump NEW oil to offset the deciling production levels from older levels. Yet, the market seems to be paying no heed to IEA report, and for now market is subscribed to the global slowdown theory.
Its time to go short dollar, I guess. One source of dollars strengthening is the lack of dollars among G7 countries and emerging nations. With the currency swap provision with non G7 nations, such as South Korea, Brazil , Mexico and SIngapore, dollars are pumped into the system and would ease the dollar-buying pressure for these nations. Another argument in favor is that the repatriation of funds to US is subsiding, with global equity markets stabilizing. It would not be a bad idea to start buying GLD.
Tomorrow is going to be yet another i nteresting day with more unemployment and non-farm payroll data coming out. Today new jobless calims data and continuing jobless claim data sort of gave a glimpse of what to expect. New Job less calims stand at 481000, versus expectations of 479000. The consolation is that the revised previous weeks figure was 485000, indiacting a 4000 decline. Continuing jobless claims grew again and now sits at 3.84 million from a revised 3.72 million. Unemployment is expected to stand at about 6.3% tomorrow, last month it being 6.1%. Non-Farm Payrolls are also expected to come in -200,000. Fingers crossed, for the index to reach 8000 mark!!
A scary picture on what would happen should the Detriot three should go belly up.. Gist: If they cease to exist, the first year total employment impact would be a loss of 3 M jobs.. in economic terms, it would reduce US personal income by 150Bn in first year and about 400 Bn in three years, and a total governement income tax loss of 150 Bn in three years. The second scenario in whihc the automakers recover 50% each in second and third year is slightly less scary. I dont think governement would be willing to let any of the auto maker go under. Last week Treasury has rejected GM's appeal to lend 10Bn. Today evening the auto makers had a meeting with Pelosi to discuss a possible bail out. Analysts forecast that GM lost $3.51 a share in the quarter, or about $1.9 billion. Ford is expected to report a loss of 93 cents a share, or $2.2 billion. Is it worth buying F or GMC... With the bailout almost possible, it should not sound like a bad idea though. F now is trading at $1.97 and GM at 4.99..
A must read article ..
Nouriel Roubini foresees a hard landing for chinese economy.. This eternal bear was pinpointedly right on the current crisis.
Tomw I am flying to San Diego..
Song : Butthole Surfers - "pepper"
Mood: lazy
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