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.

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

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

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

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

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

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.

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

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.

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

Welcome to my newsletter in which I hope to offer some insight into the financial markets at a time when the future has never appeared so confusing and uncertain. To paraphrase Winston Churchill, is this “the beginning of the end or the end of the beginning?”The FTSE closed the week just 66 points down while the S&P 500 actually managed a small profit. However, the closing figures do not even begin to tell the whole story with the FTSE trading in a 521 point range and posting its best one day rally in history on Friday. In the case of the Dow Jones Industrial Average, it moved over 1000 points from Thursday’s low to Friday’s high, an achievement that represents a “first.”

The catalyst for this bout of turmoil was the bail out of Fannie Mae and Freddie Mac. This raised hopes of a similar bail out of Lehman Brothers. To say that investors were shocked when Lehmans was not only denied a bailout, but filed for insolvency would be an understatement. Lehmans collapse sent shockwaves throughout equity markets sparking a domino effect that knocked over Merrill Lynch, AIG and HBOS .

Even the most seasoned investors had a hard time steadying themselves last week as the newswires continue pump out dark news, and once in a generation headlines. Fear was understandably widespread with the Russian stock market suspended indefinitely after dropping 10% in an hour.Investors saw little choice but to fly to quality. The flood of assets transferring to short term US Government Treasuries, forced the yield on three month Treasury Bonds down to their lowest level since the great depression. Crude Oil and precious metals also exhibited powerful reversals. From a low of 90.51 on Tuesday, Crude Oil soared to close the week at 104.55. The rallies in Gold and Silver were just as spectacular and probably represented record (or near-record) gains in 1-2 days.

However, it was the two emergency announcements on Wednesday and Thursday that had the greatest impact last week. After central banks dropped a coordinated liquidity bomb overnight on Wednesday, global equity and credit markets initially seemed to show a very cautious reaction. The greatest reaction seemed to come from the Feds plan to create a giant bad bank that would absorb many of the toxic subprime assets held by banks. This measure accompanied with a crack down on short sellers, seemed to have hit the nail on the head for the financial institutions, with the root cause of the credit crunch (sub prime assets) being attacked.The rush to blame short selling for this current catastrophe ignores the role played by the regulators who abolished the uptick rule in July 2007.

The week’s headlines were dominated by Ben Bernanke’s testimony before congress starting on Wednesday. However, planned economic announcements are now secondary to surprise headlines or emergency measures.When markets move by whole percentage points in a matter of minutes, anything can happen, and probably will.

Even though equity markets bounced last week, the panic at one stage reached such an extreme level that the yield on 3 month US Treasuries reached 0.02% on Thursday, returning just $2 on a $10,000 investment. Investors weren’t just running to safety, they were blindly staggering to anywhere with no exposure to the credit markets. When investors press the panic button as they undoubtedly have done, there is potential for a counter rally to set in the short term as we saw on Friday. However, looking at large crashes from 1987, 1997, 1998, 2000 and 2001, the follow on reaction is typically a range bound market.

A small footnote to the current situation:A few weeks ago month the MPC’s (Monetary Policy Committee of the Banks of England) pension fund liquidated its portfolio of equities, property and private equity holdings and transferred the whole lot into government gilts. The cynicism took my breath away.You will soon be able to post your thoughts and comments in my soon to be launched forum.

Trading Question Answered:

I’m often asked about COT (Commitment of Traders) Data and how this can help us trade and invest.First the raw numbers for this can be found at: http://www.cftc.gov/marketreports/commitmentsoftraders/index.htm.The data is easy to chart using excel but if you don’t want to do this yourself other readers have recommended: http://www.timingcharts.com/. Second COT data is a sentiment indicator, which when taken with other signals can help us trade and invest across a range of markets. A fuller explanation of the COT report can be found by clicking on the link.

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

Rumours of other strategic Sino deals include China Development Bank’s partnership with Anglo American, who have strategic interests in Africa. The bank is also apparently in talks with Swiss commodities trader Glencore about its 35% stake in mining giant Xstrata. Talks are also in progress with Russia’s mining business Rusal who are the world biggest aluminium producer.

Should we be concerned? Of course, as the strangle hold that China is attempting on the world’s natural resources will impact on all of us and no doubt become a future source of geopolitical tension. This action by China has only been possible because Western banks, financial institutions and governments have been too busy trying to prevent the entire capitalist system from imploding.

Aside from the political ramifications should any of these mega deals to through there will be a massive effect in the currency market and we can expect to see huge moves in the currencies most affected, ie the dollar, aussie dollar, swiss franc and british pound. Of course the Chinese may just decide to pay with the mountains of cash they already have in their own  banks!

This is the Year of the Rat which is highly appropriate given what is currently going on: apparently the Rat likes to know who is on its side and will treat its most loyal friends with an extra measure of protection and generosity. Behind that sweet smile, though, Rats are keen and unapologetic promoters of their own agendas. It could be the sign for China itself!

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

In 1985 the US dollar was at a multi decade high. So much so that Time magazine had a cover that year entitled “The Super Dollar” when the dollar index registered a level over 160. That, of course, was its death knell as since that highpoint the dollar could be said to have been in permanent decline.

In 1985 Ronald Reagan and the Republicans were in power and their idea was to promote US goods and services overseas by making them more competitive. This policy was taken further by George Bush Sr and his Treasury Secretary, James Baker, who were quite open about actively promoting a weaker dollar. And it worked.

It wasn’t until the Clinton Presidency that the dollar managed to regain 50% of its value, peaking again in late 2000 through mid 2001, just as Bush Jr came into power, reaching a level of 120 – as shown in the chart above. January 2002 was the last time the index posted a level above 120 since when it has been in a steep decline – with the exception of 2005 when there was a small rally.

If this recent history repeats itself and another Clinton makes it to the White House we may see a dollar revival. If a Republican were to win the odds shift even further to a continuation of the dollar’s decline.  However, as the decline has been so strong this correlation may be irrelevant.

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

However, weekly and monthly charts for both the euro dollar and pound dollar all point to further dollar weakness. The euro is once again eying 1.50 while the pound is looking again at 2.0 as the market waits for the aforementioned nfp and ism numbers. Even if stellar numbers are reported today I still expect both the euro and pound to mount a serious challenge to these levels and beyond. We will not know if it will be a sustained move until the middle of February.

©2010 Market Analysis. All Rights Reserved By Anna Coulling.

Against this background it is not surprising that forex movements in all the pairs can appear somewhat random as the market waits to decide on the future direction of the major currencies.

©2010 Market Analysis. All Rights Reserved By Anna Coulling.