Monday June 29th:

UK – 08:30 – Net Lending To Individuals M/M.
UK – 08:30 – Mortgage Approvals.
EU – 09:00 – GFK Consumer Confidence.

Tuesday June 30th:

GE -07:55 – German Unemployment Change.
EU – 08:00 – M3 Money Supply Y/Y.
EU – 08:00 – Private Loans Y/Y.
UK – 08:30 – Current Account.
UK – 08:30 – Final GDP Q/Q.
UK – 08:30 – Revised Business Investment Q/Q.
EU – 09:00 – CPI Flash Estimate Y/Y.
US – 13:00 – S&P/CS Composite 20 HPI Y/Y.
US – 13:45 – Chicago PMI.
US – 14:00 – CB Consumer Confidence.

Wednesday July 1st:

EU – 08:00 – Final Manufacturing PMI.
UK – 08:30 – Manufacturing PMI.
UK – 08:30 – Index Of Services 3M/3M.
US – 11:30 – Challenger Job Cuts Y/Y.
US – 12:15 – ADP Non Farm Employment Change.
US – 14:00 – ISM Manufacturing PMI.
US – 14:00 – Pending Home Sales M/M.
US – 14:00 – Construction Spending M/M.
US – 14:30 – ISM Manufacturing Prices.
US – 14:30 – Crude Oil Inventories.

Thursday July 2nd:

UK – 08:30 – BOE Credit Conditions Survey.
UK – 08:30 – Construction PMI.
EU – 09:00 – PMI M/M.
EU – 09:00 – Unemployment Rate.
EU – 11:45 – Minimum Bid Rate.
EU – 12:30 – ECB Press Conference.
US – 12:30 – Non Farm Unemployment Change.
US – 12:30 – Unemployment Rate.
US – 12:30 – Average Hourly Earnings M/M.
US – 12:30 – Unemployment Claims.
US – 14:00 – Factory Orders M/M.
US – 14:30 – Natural Gas Storage.

Friday July 3rd:
US Bank Holiday.

Monday April 13th:

Bank Holiday EU/ FR/ GE/ UK

Tuesday April 14th

US – 12:30 – Retail Sales M/M.
US – 12:30 – Core Retail Sales M/M.
US – 12:30 – PPI M/M.
US – 12:30 – Core PPI M/M.
US – 14:00 – Business Inventories M/M.
US – 14:30 – FOMC Member Evans Speaks.
US – 16:00 – Fed Chairman Bernanke Speaks.
UK – 23:01 – RICS House Price Balance.

Wednesday April 15th

UK – 08:30 – DCLG HPI Y/Y.
US – 12:30 – CPI M/M.
US – 12:30 – Core CPI M/M.
US – 12:30 – Empire State Manufacturing Index.
US – 13:00 – TIC Long-Term Purchases.
US – 13:15 – Capacity Utilization Rate.
US – 13:15 – Industrial Production M/M.
US – 14:30 – Crude Oil Inventories.
US – 17:00 – NAHB Housing Market Index.
US – 18:00 – Beige Book.
UK – 23:01 – BRC Retail Sales Monitor Y/Y.

Thursday April 16th

EU – 09:00 – CPI Y/Y.
EU – 09:00 – Core CPI Y/Y.
EU – 09:00 – Industrial Production M/M.
US – 12:30 – Building Permits
US – 12:30 – Unemployment Claims.
US – 12:30 – Housing Starts.
US – 14:00 – Philly Fed Manufacturing Index.
US – 14:30 – Natural Gas Storage.
US – 17:00 – FOMC Member Lockhart Speaks.

Friday April 17th

US – 00:00 – FOMC Member Yellen Speaks.
EU – 03:00 – ECB President Trichet Speaks.
EU – 09:00 – Trade Balance.
US – 13:55 – Prelim UoM Consumer Sentiment.
US – 13:55 – Prelim UoM Consumer Expectations.
US – 16:00 – Fed Chairman Bernanke Speaks

Newsletter for w/c 13th October 2008:  “Derivatives are financial weapons of mass destruction” is a famous Buffett aphorism and one with which many are familiar.  What may not be so familiar is that he first coined the phrase back in 2003 in his annual letter to shareholders.   He went on to argue that these highly complex financial instruments were time bombs which could harm not only their buyers and sellers, but the whole economic system.   Having experienced the most frightening and hectic week since the second world war we can say that these bombs have now well and truly exploded. Exchanges as far apart as Brazil and Russia simply closed down, s governments attempted to stem the panic and fear.   Interest rate cuts, bank bailout plans, the rush to safe haven assets all continued while the markets raged.  As mentioned before economic data is irrelevant (for those of you would like this week’s economic calendar) as the markets will continue their hysteria until at least the end of this month as governments and regulators try to prevent a complete meltdown of the global economy..

Despite the financial firestorm it is important to understand that derivatives such as futures, options and credit default swaps were originally developed to hedge risks in financial markets – that is – to buy insurance against market movements.   Most traders and investors are familiar with futures and options but maybe less familiar with credit default swaps or CDSs.  These were pioneered by J P Morgan back in the mid 1990s as insurance on debt, guaranteeing the holder his money in the event of a company going under.  Typically they are bought to protect default on bonds, corporate debt and mortgage securities.   The cost is priced as a percentage of the debt, and is measured in basis points (one-hundredth of a percentage point).  Just like any other insurance product the riskier the debt the more expensive to insure that debt.  By the middle of 2007 the market had grown to$45 trillion.

Crucially CDSs can also be used to measure the financial health of a bank or company.  For example the price of a 5 year CDS in HBOS shot up when rumours began circulating that the bank was in trouble, the price only falling once it was announced that the Bank was to be taken over by Lloyds TSB.   Until their recent collapse the three riskiest banks in Europe were the Icelandic trio of Landsbanki, Glitnir and Kaupthing.  CDSs in Landsbanki were being priced at 3,000 basis points – the market view was that in order to insure £10m of debt investors would have to pay an additional £3m!   It is hardly surprising these banks had to be nationalized by the Icelandic government. Unfortunately, the problem does not end here because the entire CDS industry may be on the point of collapse.  The reasons?  First, unlike the banking sector, options and futures, this industry is unregulated and what started as a quick way to make stupendous amounts of money when economies and markets were booming, has now become a financial liability which will change forever the financial and political landscapes.   As contracts were traded no one was making sure that the original holder actually had the assets to pay up in the event of a default and the fear now is that the insurers themselves may not have enough money to payout anyway.  AIG’s recent write down of $11 billion was the biggest loss in the company’s history.

The impact of this problem will be felt by all of us because if this insurance disappears or becomes too expensive any kind of lending will become even more difficult to obtain for individuals and companies alike.    The banking crisis is therefore far from over.   It explains the frantic attempts of governments to shore up their national banks and the banking system with taxpayer funds.  The restoration of confidence and, more importantly, the banks’ coffers has superseded any criticism of this plan of action.  There is no Plan B.  As individuals our priority must be to protect and preserve – shame this advice was not heeded by the banks, regulators and ultimately the politicians.

Trading Tip:  In the current volatile markets all traders should consider using fixed odds trading to speculate and bet on the markets..  For those of you unfamiliar with this technique details can be found at my fixed odds trading.

Good luck and good trading.

Anna

Despite Friday’s US payrolls falling by a more than expected 598,000, stock markets powered higher. This was an extremely weak employment report, with 3.5 million fewer Americans employed In January than a year earlier. However, the world’s biggest economy isn’t willing to roll over and die just yet. The rate of decline is accelerating, but US unemployment is still below the peaks of the 1980s and 1970s. Stock markets moved higher on the hope that Friday’s dire figures will act as a catalyst for the massive Obama stimulus package.

In the UK, banks pushed higher as speculation mounts that the bad bank plan is back on the cards. RBS is rumoured to be the first test of this model with other banks applying this template if successful. Judging by the rally in financial shares last week, traders are keen on this plan to come to fruition.

Commodities continued to drift lower, with oil prices falling through support at $40. Oil producers shrugged off the news to finish up on the week. However, lower energy prices cannot be shrugged off by all of those with a stake in the commodity. The Russian government had its credit rating downgraded due to fears over the impact of the collapse in oil prices.  The rouble continued its free fall.

Last week, the Bank of England cut rates to 1% as widely expected, and at the same time, the ECB signalled that it may cut rates in March. Despite the cut, it was a good week for Sterling, especially against the euro, as traders adjust their positions in light of the strong rate cut hint from Trichet.

There was some positive news from the Halifax housing report which showed that UK house prices rose last month. However, it is hard to read too much into this rise as the data conflicts with the previously released Nationwide report, and month to month figures are often subject to wide variance. This week’s highlights include a number of speeches from prominent central bankers including Treasury secretary Geithner, and FOMC chairman Ben Bernanke on Tuesday. On Wednesday Governor King speaks at the release of the BOE inflation report. ECB president, Trichet is due to speak on Thursday. Aside from this, we also have US retail sales and unemployment claims on Thursday.

When stock markets go up on bad news as they did last week, it is often a good sign that investors have re-discovered their appetite for risk taking. Even BP and Shell were moving higher on Friday, despite oil prices dipping below $40 a barrel. The bears have been handed plenty of opportunities to take control, but so far today, the bulls have won out. That is arguably a very encouraging indication that 2009 won”t end the year as it started.

Stocks started 2009 on the right foot, with a broad based rally that took the Dow Jones within above the psychologically important 9000 level. The Dow hasn’t managed to successfully hold this level since the first few days of November. Commodities looked to be willing to make good some of the losses generated throughout 2008, with oil continuing to move above the $40 a barrel level.

The coming week is dominated by the UK interest rate decision, which comes on the back of Halifax’s announcement that house prices dropped 16.2% last year. This was the worst annual fall on record, bringing prices back to 2004 levels. The Bank of England also warned that the impact of the credit crunch was likely to intensify in the next few months. The MPC is expected to cut yet again to 1.5%, bringing UK rates closer to near zero US levels, and widening the gap between Sterling and the Euro. Friday also brings the all important US Non Farm Payroll figures which are expected to show another drop in the region of 500,000 jobs.

Jason Goepfert of the SentimenTrader.com, points out that the latest AAII (American Association of Individual Investors) Sentiment Survey puts US investors as having the lowest allocation of stocks in their portfolios since 1991. The level of cash hoarding has reached record levels. According to Goepfert, the only two times when cash allocations and stock allocations reached similar levels (around 40%) was 1991 and 2002. Both occasions were good contrarian indicators.

While it is unlikely to be a smooth ride, there are indications that markets are moving past the bad news to what lies beyond. A Bull trade predicting that the Dow Jones (Wall Street) will be above 9500 in 2 months time could return 103% over the next 60 days.