Investors begin the first full week of 2009 trading on Monday with one question in mind: Is the worst over?
2009 is likely to be another volatile year for stocks. There is, meanwhile, little optimism when it comes to the global economy. The year has already started with gloomy signs of recession, including dismal U.S. manufacturing data.
Manufacturing in the euro zone was also bad, hitting a record low in December, according to data released at the end of last week. Factories in China, India and Russia slashed output and jobs at a record pace in the month.
This week’s big data report will come on Friday, when the United States issues its latest monthly jobs data. Economists are looking for job losses in the region of 475,000, which would be hefty, albeit an improvement on the month before.
The jobs report is crucial because it reflects everything from business activity to likely consumer spending patterns. The more people out of work, the less spending, the less chance of recovery and so on.
considering this, I am still bearish on the broad market,, though for the longer term I would like to own stocks that are bettered, and yet have good porspects going forward. i would compile a list of stock I would like to own for this year, and track the performance of the same through out. (WOrk for the weekend). .
Though 2008 is marked with the bursting of many bubbles, anew bubble is brewing to be burst in this year.. Treasuries.. Lately, the yields on the treasuries are pushed to near all-time lows, as investors rushed to park their money in govt backed debt. As a result, the benchmark 10-year Treasury note yields just 2.40%, down from 3.85% as recently as mid-November. The 30-year T-bond stands at 2.82%, and three-month Treasury bills were sold last week for a yield of just 0.05%. The chief risk for treasuries stems from two reaons. 1. inflationary impact of both the Federal Reserve's super-accommodative monetary policy, which has dropped short rates close to zero, and 2. the enormous looming fiscal stimulus from the federal government. Goldman Sachs Group Inc. puts the amount the U.S. government needs to raise at about $2 trillion, including new issuance and rolled-over securities. To raise this kind of amount, US should attract the investors by increasing the yields on the treasuries.
However, withe the level of fed intervention the yields can continue to be at their current levels for sometime from now. Reason being, Ben and Co would not mind buying the long term treasuries to keep the yields low.. also, China, would be a likely buyer of treasuries to artificially keep the Yuan weak and the Dollar strong..
The market faces its first supply test of the new year this week, with the Treasury expected to auction some $50 billion in three- and 10-year Treasury notes and 10-year Treasury Inflation-Protected Securities, on top of billions of dollars in Treasury bills.
I am short the dollar ( though for the first half of the year Dollar would remain strong, but eventually it should give in), and short the treasuries ( Own TBT and PST - both ultra short treasuries).
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I still could not get my head around the rally that has tsarted in mid Dec and still continuing in this new year, though there are no signs of any recovery or a positive economic data.. Well, the only news that is pushing the equities is the stimulus plan of Obama. He seems to have a touch of the god. He spoke about the Infrastructure and the infra stocks fly, including housing stocks. Spoke about health care spending and the health care stocks fly. mentioned tax rebates, the general market rallied thinking that the consumers would spend the saved tax monies on th economy.. Well, when the consumer is not at all willing to spend $1.60 on a gallon of gas, why would they be willing to buy cars, homes, restaurants.. Obama is a saviour is not an investing idea.. period.. but is the short term this is what would drive the markets.. atleast till the end of Jan. I would not be surprised if S&P touches 1000 and Dow 10000 but the end of Jan.
New year resolution: I intend to post more regularly this year.. hopefully with a market analysis at the end of each day.. build a portfolio and track the daily/monthly performance.
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