Tuesday, March 30, 2010

State Debt Woes Grow Too Big to Camouflage

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

US Debt Clock
Source: usdebtclock.org

And states are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis.

New Hampshire was recently ordered by its State Supreme Court to put back $110 million that it took from a medical malpractice insurance pool to balance its budget. Colorado tried, so far unsuccessfully, to grab a $500 million surplus from Pinnacol Assurance, a state workers’ compensation insurer that was privatized in 2002. It wanted the money for its university system and seems likely to get a lesser amount, perhaps $200 million. Read more

Europe In for More Nasty Surprises: Chief Investor

Of all the regions in the world, Bhaskar Laxminarayan, chief investment officer at Pictet Asia, told CNBC he has the least confidence in Europe right now and warned that there could be more negative surprises coming out of the region. Read more

Euro-Dollar Will Weaken Further to $1.25: Charts

The short-term gyrations of Portuguese tinkering, Irish blarney, Italian bluster, Greek debt and the care-free Spanish (PIIGS) have a cumulative impact of the euro-dollar relationship.

The weekly euro-dollar chart gives a better view of the strategic perspective. Against this chart we must also balance the degree to which the greenback's strength, as shown on the U.S. dollar index, is increasing the pressure on the euro as distinct from pressure applied by the Euro zone PIIGS.

A simple analysis of the Euro-Dollar chart has these features.

CLICK ON CHART TO ENLARGE

  • Multiple confirmations that $1.25 is a key support area
  • A double bottom rebound from near $1.25.
  • An overshoot on the double bottom “W” pattern targets. The pattern target is near $1.47 and the rebound high was at $1.50.
  • A strong downtrend line starting from the December 2009 high. Subsequent rallies have retreated from this trend line.
  • Minor support/resistance near 1.37. This is a recent consolidation area. The Euro has been clinging to this level, using it as a resistance level. Lose its grip on this level, and the next support level is down at 1.25.
This analysis is simple and effective. The conclusion is that the downtrend is likely to continue and set a downside target near $1.25. Read more

Friday, March 19, 2010

Forex-Eurousd in oversold


After breaking the trendline, it has dropped significantly as predicted. Now in oversold territory, look for rebound.

Thursday, March 18, 2010

Forex - Break or Rebound


Euro is at or near the support trendline. A break of that trendline will see it heading down the bollinger as shown in the daily chart.

Euro Drops on Greece Concerns; Asia Stocks, Crude Oil Decline

The euro weakened against the dollar and the yen for a second day on concern Greece won’t receive aid from the European Union next week and may need help from the International Monetary Fund. Asia stocks and oil fell. Read more

KUALA LUMPUR, March 18 — Palm oil output in a key growing state in Malaysia, the world’s second largest producer of the commodity, is expected to fall

KUALA LUMPUR, March 18 — Palm oil output in a key growing state in Malaysia, the world’s second largest producer of the commodity, is expected to fall 15 per cent as two major rivers irrigating plantations have sunk to dangerously low levels.

The southern state of Johor in mainland Malaysia, and the top producing state of Sabah on the island of Borneo, have experienced a prolonged dry spell driven by the El Nino weather condition that can axe yields and trigger a supply squeeze.

“The hot weather will go on till April or May and the immediate impact is a 15 percent decline in production this month, in this region,” said one planter in Johor, which accounts for a fifth of the Southeast Asian country’s output.

Two rivers in Johor, Sungai Muar and Sungai Benut, are at “danger” levels, the website of Malaysia’s drainage and irrigation department showed on Thursday. One of the state’s seven rivers was on the “high alert” list. Read more

Monday, March 15, 2010

Economists: China may face massive bank bailouts

BEIJING: China may be forced to bail out banks that made loans for local-government projects under the unprecedented stimulus programme unleashed in 2008, according to Citigroup Inc and Northwestern University's Victor Shih.

In a "worst-case scenario," the non-performing loans of local-government investment vehicles could climb to 2.4 trillion yuan or US$350 billion (US$1 = RM3.30) by 2011, Shen Minggao, Citigroup's Hong Kong-based chief economist for greater China, said yesterday.

"The most likely case is that the Chinese government will engineer a massive financial bailout of the financial sector," said Shih, a professor who spent months researching borrowing by about 8,000 local government entities. Read more

FBM KLCI futures to consolidate

For this week, some consolidation pressure is likely to prevail. Judging from the fact that there were more negatives signals than affirmative ones when the market ended last week, it would not be surprising for a slight rebound to take place should it hit the support level. Immediate resistance can be located at the 1,330 with support at 1,300. Read more

Bank Negara might hike rates further

KUALA LUMPUR, March 15 — Bank Negara will consider raising interest rates at its next policy meeting after a 25-basis-point hike earlier this month, Governor Zeti Akhtar Aziz told Bloomberg.

“We will review the conditions at our next monetary policy meeting and work towards further normalising if necessary,” Zeti said in an interview that the news agency said was held last week and published on Monday.

Malaysia became the third Asian central bank to hike rates when it raised its policy rate off record lows to 2.25 per cent to prevent asset bubbles forming. — Reuters. Find more

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Traderone: This could cause a chain reaction in the region. When market is driven by liquidity, the higher interest rate might drive funds away from the stock market.

Forex-Eurousd...wave5


Euro has completed wave4 and moving to wave 5? So be careful of wave 5.

Wednesday, March 10, 2010

US Stocks Could Rise Further; Double-Dip Less Likely: Cohen

Stock prices still have room to rise further, and recent economic reports show there is less chance of a double-dip recession in the US, well-known market guru Abby Joseph Cohen told CNBC Tuesday.

"The stock market is almost always a discounting mechanism that almost always moves in advance of the economy, but we don't think it has moved too far at this point," Cohen said in a live interview. Read more

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Traderone : Well there seem to be 2 camps -one saying that there will be a double dip and another no.

Economy 'Far too Close' to Double Dip: Roubini

Poor economic data in the US coupled with Europe's debt crisis are contributing to an increase of the risk of the US economy going through a double-dip recession, Nouriel Roubini, who predicted the 2007 financial crisis, wrote in a research paper.

Nouriel Roubini
Photo: Oliver Quillia for CNBC
Nouriel Roubini

At best, the US economy is headed for a U-shaped recovery this year, Roubini said. That has been his prediction in recent months.

The US faces challenges in the second half, especially as fiscal stimulus measures fade, and "appears far too close to the tipping point of a double-dip recession," he said.

The euro zone is also facing an increased risk of a double-dip fall, because of its ongoing debt crisis, he wrote.

Even if the euro zone does not suffer a double dip, growth in demand will be even more limited and this will hurt the United States' potential for export growth, according to Roubini's paper. Read more

Forex-Eurousd rebounded from Fibo 61.8

As predicted, Euro rebounded from Fibo 61.8%.

Tuesday, March 9, 2010

Forex-Eurousd retraced and broke trend support line.


Euro retraced and broke trend support line. Look out for possible rebound at fibo 61.8%.

Are We Looking At A Double Top?

The bull market may turn 1 on Tuesday, but investors were in no mood to party. Monday was the lowest volume day of the year.

And our traders are closely watching developments, worried that a bearish technical signal may be forming.

What must you know? Read more

Forex-Eurousd Unable to make a higher high.


The 4 hour chart is unable to make a higher high, this indicates its lack of bullishness. Will it make a lower low? I will wait and see. Watch out for the break of the support trend line.

Palm oil narrows price gap with rival soyaoil

Asian palm oil is fast closing the price gap with rival South American soyaoil in a trend set to accelerate in 2010 as supplies of palm are poised to outstrip soyaoil.


Despite expected bumper soya crops in the Americas, palm oil supply this year will exceed soyaoil, as higher biofuel mandates, soya rust disease infecting Brazilian crops and a tussle between Argentine grain farmers and the government give palm the edge.

Dry weather could curb palm oil output in top producers Indonesia and Malaysia, but traders' projections for combined exports in 2010 stand at 33.82 million tonnes, or more than triple the soyaoil shipment estimates of research group Oilworld. Read more

Palm oil may surge up to 22pc in H1

Palm oil may surge as much as 22 per cent in the first half as drier-than-usual weather curbs output in Malaysia and yields in Indonesia, the world’s two largest producers, according to Prudential Bache Commodities LLC.

The El Nino weather phenomenon may drive prices to as much as RM3,300 (US$988) a metric ton, said Anne Frick, vice president for research at the New York-based commodities and financial derivatives broker. Malaysian output may not meet demand for local use and exports, Frick said in an interview. Read more

Papandreou to Press Obama to Join EU Crackdown on ‘Speculators’

March 9 (Bloomberg) -- Greek Prime Minister George Papandreou will press U.S. President Barack Obama to help Europe combat “unprincipled speculators,” who he said have roiled financial markets and threaten a new global financial crisis.

“Europe and America must say ‘enough is enough’ to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system,” he said in a speech yesterday in Washington.

Papandreou, who is struggling to convince investors his government is serious about taming Europe’s biggest budget deficit, meets Obama and Treasury Secretary Timothy F. Geithner in today in his first U.S. visit since being elected in October. Read more

Monday, March 8, 2010

Premier Investor Barometer Says ‘All is Right With the World’

A widely followed market measure of fear and complacency is signaling to investors that the debt default fears in Europe are contained, our economy is recovering just fine and there’s little reason to protect your investments against a coming collapse.

The Chicago Board Options Exchange Volatility Index [VIX 17.42 -1.30 (-6.94%) ] is at its lowest level since May of 2008 and below its long-term average since 1990. Read more

Sarkozy Says Euro Region Ready to Help Greece If Necessary

By Jonathan Stearns and Maria Petrakis

March 8 (Bloomberg) -- French President Nicolas Sarkozy said the euro region is ready to rescue Greece should the government struggle to fund its budget deficit, arguing that the country is “under attack” from so-called speculators.

“I want to be very clear: if it were necessary, the states of the euro zone would fulfill their commitments,” he said in Paris yesterday after a meeting with Greek Prime Minister George Papandreou. “There can be no doubt in this regard.” While Greece doesn’t need assistance right now, “we have measures, we are ready, we are determined,” he said.

Sarkozy’s comments are among the strongest by an EU leader to signal the bloc would bail out Greece as they try to warn investors off making further bets against the euro and Greek bonds. Papandreou’s government last week passed a further round of austerity measures and sold 5 billion euros ($6.8 billion) in government debt. Europe’s single currency has dropped 8 percent in the past three months. Read more

Default Swaps Fall to Six-Week Low on Greece: Credit Markets

Investors are growing less skittish after Greece sold 5 billion euros ($6.8 billion) of notes last week and passed 4.8 billion euros of spending cuts, reducing the chances of a default. While the nation’s budget gap rattled world markets and caused the euro to weaken 4.5 percent against the dollar this year, German Chancellor Angela Merkel called the latest measures a “courageous step” and French President Nicolas Sarkozy said the euro region is ready to rescue the country.

“The EU and Germany have stepped in and said, ‘We’re going to support Greece,’” said Joel Levington, director of corporate credit for Brookfield Investment Management Inc. in New York, with $24 billion in assets under management. “It seems like that’s being managed prudently.”Read more

Will key interest rate continue to rise?

The first interest rate hike for quite a while announced by Bank Negara Malaysia last week did not dent sentiment both on stocks and as several analysts said, spending in general.

It was expected as given the raise in the overnight policy rate (OPR) was just 0.25 per cent, and from a historic low of 2 per cent, the hike was insignificant. But whether Bank Negara will stop at that is another question altogether.

Banking stocks, as anticipated, responded well as the increase means better interest margins for banks but they were quick to assure customers that the OPR remained low compared with the historic lows in early 2009 when keeping interest rates low was made one of the strategies to face the-then severe economic downturn. Read more

More US banks collapse as failure count hits 26

SAN FRANCISCO: Regulators shut banks in Maryland, Illinois, Florida and Utah, pushing the number of US failures to 26 this year and placing more pressure on the Federal Deposit Insurance Corp (FDIC) to dispose of a growing pile of toxic assets.

The FDIC was unable to find buyers for two banks - Centennial Bank in Ogden, Utah, and Waterfield Bank of Germantown, Maryland, - according to statements posted on the agency's website. In the largest of Friday's failures by assets, Boca Raton, Florida-based Sun American Bank was purchased by First-Citizens Bank & Trust Co.

"South Florida is a great market for our company, especially with our focus on individuals, small- to mid-sized businesses and the medical community," Frank B. Holding Jr, chief executive officer of First-Citizens, said in a statement.

Lenders are collapsing at the fastest pace in 17 years amid losses on residential and commercial real estate loans made at the height of the market. US "problem" banks climbed to the highest level since 1992 in the fourth quarter and FDIC chairman Sheila Bair warned on February 23 that the pace of failures will "pick up" and exceed last year's total of 140. Read more

Sunday, March 7, 2010

FBM KLCI may challenge 1,300-point level

he FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) is likely to challenge the 1,300-point level next week with investors looking for new catalysts to propel the market indices, dealers said.

The benchmark index had posted the first high of this year at 1,308.36 on Jan 21.

TA Securities' senior technical analyst Stephen Soo said the market currently lacked foreign participation.

Soo said the soon-to-be-unveiled new economic model may provide a strong catalyst for the local stock market.

Read more

CPO futures expected to be firmer

Crude palm oil (CPO) futures on Bursa Malaysia Derivatives are expected to be firmer on expectation of upbeat forecasts at an industry conference next week, dealers said.

Bursa Malaysia will host the annual Palm and Lauric Oils Conference and Exhibition: Price Outlook 2010/2011 on March 9 and 10 in Kuala Lumpur.

"All prominent market experts will assemble next week to share views on the development and challenges of the palm oil industry, including the price outlook for this year," said one of the dealers.

Read more

Friday, March 5, 2010

Traders Seek Out the Next Greece in an Ailing Europe

s Spain the next Greece? Or Italy? Or Portugal?

Even as Greece pledged anew on Wednesday to rein in its runaway budget deficit, briefly easing the anxiety over its perilous finances, traders on both sides of the Atlantic weighed the risks — and potential rewards — posed by the groaning debts of other European governments.

While investors welcomed news that Athens would raise taxes and cut spending by $6.5 billion this year, analysts warned the moves might not be enough to avert a bailout for Greece or to contain the crisis shaking Europe and its common currency, the euro.

Riot police line up outside a closed branch of the National Bank of Greece during a 24-hour general strike.
Getty Images
Riot police line up outside a closed branch of the National Bank of Greece during a 24-hour general strike.

Indeed, some banks and hedge funds have already begun to turn their attention to other indebted nations, particularly Portugal, Spain, Italy and, to a lesser degree, Ireland.

The role of such traders has become increasingly controversial in Europe and the United States. The Justice Department’s antitrust division is examining whether at least four hedge funds colluded on a bet against the euro last month. Read more

Government Debt Issuers Most Likely to Default

Gov't Debt Issuers In Trouble

With the recent news surrounding the troubled economies of Greece and Dubai, many have questioned the stability and safety of government debt issued by these countries.

But whose debt is really in the worst shape?

Read more

Wednesday, March 3, 2010

Forex-Eurousd. Look out for break of rising wedge


Notice the rising wedge. Look out for the break of the rising wedge. See how far Euro has gone up.

Tuesday, March 2, 2010

Forex-Eurousd Moved up.


Euro moved up from low.

Forex-Eurousd Positive divergence


Again I see a positive divergence on the 4 hour chart. With Greece selling her bonds on Wednesday, if it turns out well, it is a high possibility that Euro will rebound. Otherwise, too bad.

Monday, March 1, 2010

Forex-Eurousd Retraced as projected


Euro retraced as projected.