Stocks, Bonds & Forex Trading

FOREX-Risk rally pummels dollar, yen hits record high

2011-10-23T06:42:00.000-07:00

NEW YORK, Oct 21 (Reuters) - The U.S. dollar fell broadly on Friday and hit a record low against the yen on speculation Europe was closer to solving its debt crisis and talk the Federal Reserve may take new measures to boost growth.

France and Germany said in a joint statement that European leaders would discuss a solution to the crisis on Sunday, but no decisions would be adopted before a second meeting to be held by Wednesday at the latest.

Optimism European leaders will take more measures to contain the crisis after conflicting news reports this week revived investor appetite for stocks and other growth-oriented investments and cut demand for the safe-haven greenback.

Adding to losses in the dollar, Federal Reserve Governor Daniel Tarullo said on Thursday there is need for additional stimulus measures and the Fed should consider buying more mortgage bonds to boost the weak housing sector and economy. Fed easing is seen as negative for the dollar because it lowers U.S. yields.

"It is very much a dollar negative environment. Risk is on," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

Against a basket of major currencies, the dollar last traded down 0.65 percent at 76.473 compared with 76.249 earlier, the lowest since mid-September.

Paresh Upadhyaya, head of Americas G10 FX strategy at Bank of America Merrill Lynch in New York, said the currency market followed equity prices.

The U.S. dollar has shown a strong inverse relationship with stocks in recent trading. The 25-day correlation between the dollar index and the Standard & Poor's 500 Index hit negative 0.927 on Friday.

The dollar index is poised to fall for a second week in a row after last week's 0.66 percent drop, which was the biggest since May 2009.

The euro rose 0.5 percent to $1.3849 , having hit $1.3900 on Reuters data and recovering from a low of $1.3703.

"The market is giving the benefit of the doubt that they are going to come up with some sort of a meaningful stopgap measure in Europe," said Boris Schlossberg, director of currency research at GFT in New York.

But other analysts were less optimistic about a meaningful plan to contain the region's debt crisis, with a chance the euro could revisit $1.30 set by year-end.

"I have modest expectations. This is a political problem which has economic implications. Unfortunately, the markets are held captive," said Stephen Wood, chief market strategist at Russell Investments in New York.

The euro dropped 0.4 percent to 105.42 yen . It also slipped 0.4 percent against sterling and lost 0.6 percent versus the Swiss francs .

RECORD HIGH YEN

The dollar fell as low as 75.78 yen on trading platform EBS , surpassing its previous record low of 75.941 set in August, bringing back into focus the threat of official intervention to weaken the Japanese currency.

Traders reported initial large selling of dollars from a UK clearer and macro funds, and losses accelerated after the pair broke through a series of stops around 76.30 and 75.90.

It last traded down 1 percent at 76.09 yen, coming off lows on reported buying from Japanese banks at the 76.00 level. At current levels, it was on pace for its biggest daily fall since Aug. 26.

Talk that Japanese authorities may follow the footsteps of the Swiss National Bank in putting a floor in dollar/yen had buoyed the currency pair in recent sessions, but investors resumed yen buying after market speculation failed to materialize.

"I do think we are increasingly vulnerable to (Bank of Japan) interference. Irrespective of whether it's going to be effective or not, they're going to come in at 75," said GFT's Schlossberg.stocks, bonds & forex trading
source: www.reuters.com

WORLD FOREX: Nervous Investors Rush Into Dollar

2010-11-10T06:27:00.000-08:00

NEW YORK (Dow Jones)-- The dollar staged an afternoon surge Tuesday as investors heavily pulled back from risk and embraced the safe-harbor greenback.

"This is part of a broad dollar rally, with equities selling off, some nervousness in Treasurys going on, and an overall unsettled feeling ahead of G-20 meetings," said Andrew Busch, global foreign exchange strategist at BMO Capital Markets in Chicago.

In extremely volatile late-afternoon trading in New York, the euro, sterling and yen all hit fresh lows shortly after 3:30 p.m. EST. Commodity currencies, largely tied to global growth, also fell as investors shed risk. For example, the New Zealand dollar fell 1.5%. The Australian dollar also was down by 1%.

The dollar's rise accelerated around 3:25 p.m. EST, when 10-year Treasury note yields hit their daily high following a well-bid $24 billion auction of 10-year Treasury notes, said Sebastien Galy, currency strategist at BNP Paribas in New York.

In addition, the rally was fueled by fears that the dollar may have been driven down too far.

"People stayed in bearish dollar positions as long as they could," but some investors finally bailed on those bets because the risks were becoming too apparent, said Aroop Chatterjee, chief foreign exchange quantitative strategist at Barclays Capital in New York. He added those risks include recent Federal Reserve officials expressing skepticism over the value of a new Federal Reserve stimulus plan and better U.S. data undermining the need for it.

Late Tuesday afternoon, the euro was at $1.3772 from $1.3921 late Monday, according to EBS via CQG. The dollar was at Y81.83 from Y81.20, while the euro was at Y112.72 from Y112.99. The U.K. pound was at $1.5991 from $1.6135. The dollar was at CHF0.9677 from CHF0.9660.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 77.742 from 77.0035.

No major breakthroughs are expected at the two-day Group of 20 summit, which begins Thursday. But uncertainty over those meetings hung over unsettled investors, who pared their most aggressive bets, said analysts.

Meanwhile, U.S. stocks were down, with the Dow Jones Industrial Average off 60.09 points. The Treasury market was also roiled by fears that Wednesday's 30-year bond auction would go poorly, despite the day's successful 10-year auction. The 30-year is largely ignored in the Fed's $600 billion bond-buying program known as quantitative easing.

Investors originally bolted the euro Tuesday based on renewed sovereign-debt concerns and sterling based on fear of new U.K. quantitative easing.

"You look at the overall fundamental story and it's not great," regarding the euro zone, said Julia Coronado, economist at BNP Paribas in New York.

"The U.K.'s inflation report tomorrow [Wednesday] will be more dovish than what people are expecting," increasing fears of Bank of England-led QE there, said Mark McCormick, currency strategist with Brown Brothers Harriman in New York.

With the absence of significant U.S. economic data, investors also took trading cues from overseas, especially from troubled euro-zone economies.

The cost of insuring the bonds of Ireland, Spain and Portugal against default reached new all-time highs overnight.

Such default fears are unlikely to subside and could anchor the euro until the debt woes of the weaker euro-zone nations are resolved, said Raghav Subbarao, currency strategist with J.P. Morgan in London.

Beyond sovereign debt, the euro was hurt by fissures within one of the common currency's strongest nations.

Germany's Federal Statistics Office said Tuesday consumer prices edged up just 0.1% in October from September, part of a recent run of uninspiring domestic data.

-By Andrew J. Johnson, Dow Jones Newswires; 212-416-3092; andrewj.johnson@dowjones.com stocks, bonds & forex trading
source: online.wsj.com

Eurozone woes and China tightening hit stocks

2010-11-10T06:22:00.000-08:00

13:40 GMT. Shares are shrinking from two-year highs and commodities are mostly softer as concerns about Europe’s fiscal condition and further monetary tightening in China weigh on investor sentiment.

The FTSE All World equity index is down 0.5 per cent, but core bond yields are again trundling higher as the long-term impact of the Federal Reserve’s quantitative easing policy stokes inflation fears.

The dollar is a touch softer and S&P 500 equity futures are flat after US weekly jobless claims and the trade deficit for September both fell more than expected.

Without a bid for haven debt, many strategists see the selling of riskier assets as little more than a consolidation phase after the recent QE2, earnings and economic data-inspired run that had pushed the All World up 17 per cent from the start of September. The Reuters-Jefferies CRB commodities basket is up 21 per cent over the same period.

That said, traders are again becoming intermittently concerned about the stresses re-emerging in the eurozone and the “currency war” rhetoric that is bubbling ahead of this week’s G20 meeting in South Korea.

Regarding the former, the spread between Ireland’s benchmark debt and those of Germany hit a euro-era record of nearly 600 basis points as European clearing group LCH.Clearnet raised margin requirements for trading Dublin’s debt.

The move appears to have been interpreted as providing further evidence of the fragile condition of the eurozone “peripheral” sovereign bond complex – as if any reminder were needed

The Market Eye

Dallas Fed president Richard Fisher says the central bank is not looking to use QE2 to spark headline inflation. Corporate America may wish it was. One result of the Fed’s largesse is soaring commodity prices, partly because hot money is chasing real assets. But consumers are in no mood to stump up for higher prices in the shops, and thus some companies’ margins are being crushed. Shares of Dean Foods, the biggest dairy producer in the US, fell 18 per cent on Tuesday following disappointing results that pointed to such a margin squeeze. Equity investors may be wise to start paying more attention to factory gate and consumer price inflation differentials.

Asia Pacific

Asia-Pacific. Stocks reversed early gains on Wednesday morning, with markets in Hong Kong and China at one point falling more than 1 per cent on concerns of inflation and increased speculation of fresh measures to curb property prices on the mainland. The FTSE Asia-Pacific index is weaker by 0.4 per cent.

The Shanghai Composite closed down 0.6 per cent, amid concerns that higher consumer prices and increasing fund inflows could prompt the government to tighten monetary policy further. Bloomberg reported that Beijing has ordered some banks to increase their reserve ratios by 50 basis points. Inflation data for October will be published on Thursday.

In Hong Kong, the Hang Seng was lower by 0.9 per cent as banks and developers slipped. Australia’s S&P/ASX 200 fell 0.9 per cent as traders tracked New York’s losses.

Tokyo and Seoul bucked the regional trend. Japan’s Nikkei 225 rose 1.4 per cent, with banks leading the advance on reports that global regulators are likely to focus their attention on large banks with international businesses, stripping out domestically focused institutions that lack global reach. A weaker yen on Tuesday has also helped exporters.

The Kospi in South Korea advanced by 1.1 per cent to a fresh three-year high as foreign investors were net buyers on hopes the country was well positioned to exploit the global economic recovery.

Europe

Europe. Major exchanges were lower from the off as investors absorbed a big batch of earnings reports and Wall Street’s slide overnight. The FTSE Eurofirst 300 is off 0.1 per cent and London’s FTSE 100 is down 0.4 per cent as resource groups have a bad day. Banks are softer, tracking a heavy fall for US financials and after French investment bank Natixis fell more than 10 per cent on capital requirement concerns. Dublin is down 1.4 per cent.

Forex

Forex. The dollar is struggling to consolidate Tuesday’s advance as traders probably have one eye on the forex-policy rhetoric in the run-up to this week’s G20 meeting.

The US dollar index, which tracks the buck against a basket of its peers, is down 0.1 per cent at 77.74. The euro is flat at $1.3770 and the yen is down 0.9 per cent relative to the greenback at Y82.48.

The Chinese renminbi rose 0.1 per cent versus the dollar to Rmb6.6335, a fresh 17-year record.

Rates

Rates. Core sovereigns are again under pressure after the previous session’s sell-off caught investors off guard. The US 10-year benchmark yield is up 6 basis points to 2.72 per cent, an eight-week high that suggests the Federal Reserve’s second bout of quantitative easing had been well and truly discounted by the market.

The US will auction $24bn of 30-year notes later today. The yield on the “long bond” hit a five-month high on Tuesday as investors were seen fretting about the long-term inflationary effects of the Fed’s ultra-loose monetary policy. Thirty-year yields are today outperforming the broader trend and flattening the curve with a rise of just 1 basis point to 4.26 per cent.

Eurozone peripheral yields are moving higher and credit default swaps are widening as fears over Ireland’s position again bubble to the surface. Portuguese 10-year yields are up 20 basis points to 7.10 per cent after an auction of €1.2bn worth of 6- and 10-year bonds required higher yields.

UK 10-year gilt yields have jumped 12 basis points to 3.16 per cent after the Bank of England’s quarterly inflation report was considered more hawkish than expected.

Commodities. The complex is witnessing some selling as Tuesday’s reversal in precious metals reminds traders that some product prices may have become stretched following the rush to invest in hard assets after the announcement of QE2.

Many raw materials remain close to multi-year or record highs, however. The Reuters-Jefferies CRB index is off 0.2 per cent. Grain prices are a bit softer following Tuesday’s bounce. Oil is up 0.5 per cent at $87.08 a barrel.

Gold is higher following its late drop below $1,400 in the previous session when it retreated from a record of $1,424.1 an ounce. The yellow metal is up 0.7 per cent to $1,402, while silver is up 3.1 per cent to $27.67 an ounce following its sharp slide late Tuesday.

Follow the market comments of Jamie Chisholm in London and Telis Demos in New York on Twitter: @JamieAChisholm and @telisdemos
stocks, bonds & forex trading
source: www.ft.com

Morning Forex Overview

2010-11-10T06:21:00.000-08:00

The euro fell against the dollar Wednesday in Asia as renewed concerns over European debt issues gave investors an excuse to take profits by squaring the currency holdings they had built.

The euro has been falling against the dollar in the past few days, as the market focus has returned to European sovereign debt problems, highlighted by the widening of Irish and Portuguese credit-default swaps.

The euro was at USD1.3761 as of 0450 GMT, from USD1.3772 overnight in New York.

The dollar was a tad weaker against the yen at JPY81.78 from JPY81.83 due to selling by Japanese exporters. But that is clearly higher compared with last week's levels of below the JPY81.00-mark.

The greenback's ascent versus the yen isn't healthy either, dealers noted, saying the rise is based on technical factors.

The U.S. currency's rise above JPY81.00 was largely due to the execution of automated stop-loss buying orders, and dealers don't rule out the risk of the dollar going as high as JPY82.50 if similar automated orders above JPY82.00 are triggered.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 77.768 from 77.742 in New York. The euro was at JPY112.56 from JPY112.72.

Sterling held on to gains against the dollar and reached its highest level in six weeks as British industrial output grew in line with expectations, while manufacturing came in weaker than expected. September's industrial output came in at 0.4 percent, while manufacturing came in at 0.1 percent vs. 0.4 percent.

The Australian dollar slid against the U.S. dollar in Asia on Wednesday as traders were tepid ahead of a slew of crucial Chinese data on Thursday.

Market expectation

Foreign exchange majors are trading in relatively tight ranges after the dollar's surge against the yen and the euro on Tuesday.

For the rest of the global day, investors will pay attention to an auction of U.S. 30-year Treasury bonds.

USD may resume falling if U.S. 30-year Treasury auction later in day turns out weak due to increased expectations of inflation in U.S. on likely rise in USD flows to economy from QE2 measures, say analysts. Higher inflationary expectations (could) mean lower U.S. real interest rates, and that should weigh on the dollar.

European stocks are expected to open lower Wednesday after U.S. stocks lost some of their recent gains Tuesday and as traders considered the implications of the forthcoming G-20 meeting in Seoul.stocks, bonds & forex trading
source: www.actionforex.com

Currency Trading Gets Easier—but Stays Risky

2010-11-06T08:19:00.000-07:00

More investors are jumping into the risky currency markets in a search for higher-yielding alternatives to stocks and bonds—and financial-services firms are making it easier than ever for them to do so.

New rules set by the U.S. Commodity Futures Trading Commission, or CFTC, designed to protect investors go into effect on Monday. Still, there are huge risks involved.

In a foreign-exchange trade, investors trade in pairs, buying one currency and selling another. Investors can borrow large amounts against a relatively small actual investment, potentially magnifying their gains—and losses.

The new CFTC rules will prohibit retail forex dealers from offering more than 50-to-1 leverage for major currencies such as the dollar and the Japanese yen or 20-to-1 leverage for more-exotic currencies. That means an investor putting up $1,000 can trade as much as $50,000. Previously, leverage of 100-to-1 was common.

Investor interest in currency trading is heating up. Brokerage firms such as TD Ameritrade Holding Corp., Interactive Brokers Group Inc. and E*Trade Financial Corp. report seeing strong gains in volume and have ramped up marketing and educational efforts. In August, TD Ameritrade rolled out futures and forex trading systems—previously available only to active traders—to all of its customers. While equity volumes at the brokerage were down in July, trading volumes in futures and forex were up 60% and 34%, respectively, says Steven Quirk, senior vice president of TD Ameritrade's Trader Group.

The CME Group Inc.'s Chicago Mercantile Exchange, which rolled out smaller retail-oriented forex futures contracts last year, saw trading volumes in that product jump 125% in September over year-ago levels, says Derek Sammann, head of FX and interest-rate products at CME.

Many of the popular foreign-exchange trading sites—including FXCM Holding LLC's FXCM.com, Gain Capital Holdings Inc.'s Forex.com, and Oanda Corp.—offer features designed to attract retail investors. At Oanda, which publishes clients' aggregate long and short positions for major currency pairs to give investors an indication of market sentiment, traders can buy and sell currencies for as little as $1. Earlier this year, Forex.com launched a new pricing structure that essentially reduced spreads on trades by as much as 50%.

Wall Street firms have jumped in with their own proprietary forex-trading services in recent years. Deutsche Bank AG's London-based dbFX and Citigroup Inc.'s CitiFX Pro are aimed at active traders and small institutions. As a unit of Citigroup, the Citi platform is eligible for FDIC insurance, which covers cash deposits up to $250,000.

Forex trading can help diversify one's portfolio, since currencies often move independently of stocks, bonds and other traditional investments.

But be warned: Currencies can bounce around sharply on an array of factors ranging from minor changes in interest-rate expectations to swings in economic data. And depending on how much leverage is used, investors could be responsible for losses that far exceed the amounts they invested. Investors also face greater risks in the over-the-counter retail-currency market, which is less regulated than the stock and futures exchanges.

Nasser Bakizada, a full-time trader in Washington who is buying the euro and other foreign currencies and shorting the dollar, manages his risks by making sure he has enough collateral to cover potential losses. Foreign-currency trading "provides a great opportunity but it has to be done very carefully," the 53-year-old Mr. Bakizada says. "The biggest risk is, during volatile times, you can get burned very quickly."

Mutual funds and exchange-traded funds can be an easier and safer way for small investors to get currency exposure. "Some people think of them as a fixed-income substitute that can provide diversification beyond bonds," says Nadia Papagiannis, alternative-investments strategist at investment-research firm Morningstar Inc., which tracks 16 open-end distinct mutual funds and 32 ETFs and exchange-traded notes.

The Oppenheimer Currency Opportunities Fund, launched in June, aims to protect investors' purchasing power mainly by buying the foreign currencies of the U.S.'s major trading partners. John Hancock Funds, which launched the John Hancock Currency Strategies Fund earlier this month, also is adding the fund as an underlying investment in its target-date and target-risk funds. Last month, WisdomTree Investments Inc. launched the WisdomTree Dreyfus Commodity Currency Fund—an actively-managed ETF designed to provide exposure to a basket of currencies of commodity-producing countries.

Investors also can buy foreign-currency certificates of deposit. In July, EverBank Financial Corp. rolled out a CD whose returns are tied to the Deutsche Bank Currency Returns Index, which tracks popular trading strategies. Investors tie up their money for four years, but get principal protection and can earn 100% of the index's returns.

Given the plethora of retail foreign-exchange trading sites, it is important to verify whether a firm or broker is registered with the CFTC and is a member of the National Futures Association. Investors can check on the disciplinary history of an individual firm or broker at www.nfa.futures.org/basicnet.
stocks, bonds & forex trading
source: online.wsj.com

Stock futures mixed ahead of jobs reports

2010-08-05T05:34:00.000-07:00

5 Aug, 2010: NEW YORK — Stock futures were narrowly mixed Thursday as caution remains ahead of two key jobs reports over the next two days.

Analysts say unemployment remains the biggest hurdle to a stronger recovery, and traders avoided any big moves before the Labor Department's two reports. The economy continues to grow, but the pace of the rebound has slowed in recent months. That's because consumers have scaled back spending and started saving more as unemployment remains high and employers continue to avoid significant hiring.

Retailers are reporting monthly sales figures throughout the morning. Signs of spending growth could indicate confidence is starting to creep back in among shoppers.

The Labor Department is expected to report Thursday that initial claims for unemployment benefits fell by just 2,000 last week to 455,000, according to economists polled by Thomson Reuters. It would be the second straight weekly decline, but claims are still too high to indicate broad hiring. Claims have hovered around 450,000 throughout the year, meaning that job cuts aren't prevalent like during the recession, but hiring hasn't picked up either.

The report is due out at 8:30 a.m. EDT.

The weekly claims data has become one of the more important economic readings each week because of how dependent growth is on new jobs. But unless the report is vastly different from expectations, it might have little effect Thursday because of the monthly report on employment is being released Friday.

The monthly report is expected to show private employers hired 90,000 workers in July, a slight increase from the 83,000 hired in June. But because of government layoffs tied to cutting temporary census jobs, the unemployment rate is expected to rise to 9.6 percent from 9.5 percent.

Ahead of the opening bell, Dow Jones industrial average futures rose 8, or 0.1 percent, to 10,643. Standard & Poor's 500 index futures fell 0.10, or less than 0.1 percent, to 1,124.50, while Nasdaq 100 index futures rose 4.75, or 0.3 percent, to 1,910.00.

The weekly and monthly reports over the next two days come after private payroll company ADP said Wednesday that private employers hired 42,000 people last month. The ADP is often used as a gauge ahead of the broader Labor Department report, which also includes government jobs with private sector employment.

Stocks rose Wednesday after the better-than-expected report from ADP and unexpected growth in the services industry. The Dow rose 44 points.

Meanwhile, bond prices traded in a narrow range Thursday as investors avoid big moves. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.95 percent from 2.96 percent late Wednesday. Its yield is often used as a benchmark for interest rates on mortgages and other consumer loans.

Overseas, Britain's FTSE 100 rose 0.3 percent, Germany's DAX index rose 0.6 percent, and France's CAC-40 rose 0.9 percent. Japan's Nikkei stock average rose 1.7 percent.

Copyright © 2010 The Associated Press. All rights reserved.
stocks, bonds & forex trading
source: www.google.com

Japanese Bonds Fall as Toyota's Forecast Boosts Stock Outlook

2010-08-05T05:29:00.000-07:00

Aug. 5 (Bloomberg) -- Japanese bonds fell, lifting 10-year yields from a seven-year low, as stocks advanced after Toyota Motor Corp. raised its full-year profit forecast.

Benchmark 10-year yields, which yesterday fell below 1 percent for the first time since August 2003, gained before a government report that economists say will show business conditions are improving. The Ministry of Finance will sell 300 billion yen ($3.47 billion) in 40-year bonds today.

"Ten-year yields below 1 percent aren't a 'flight to quality' but a 'speculative investment in quality'," Shinji Nomura, chief debt strategist at Nikko Cordial Securities Inc., wrote in a report today. "This may be the last time for 10-year yields to fall below 1 percent in history, and I think this is a great opportunity to sell."

The yield on the benchmark 10-year bond added two basis points to 1.015 percent as of 9:19 a.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The 1.1 percent security due June 2020 fell 0.182 yen to 100.761 yen.

Ten-year bond futures for September delivery lost 0.14 to 142.15 at the Tokyo Stock Exchange.

Shares of Toyota, the world's largest automaker, jumped 2.4 percent in Tokyo after boosting its annual net income projection by 9.7 percent yesterday.

The Nikkei 225 Stock Average climbed 2.1 percent, buoyed by the Institute for Supply Management's report yesterday that showed its index of U.S. service industries gained in July, while economists had estimated the gauge would drop.

'Excessive Pessimism'

"Japan's bond market will likely open lower as excessive pessimism about the U.S. economy eases," Nikko's Nomura wrote before markets opened in Tokyo.

Japan's leading index of business conditions rose to 98.7 in June from 98.6 the previous month, according to economists' estimates before the report tomorrow. That would be the first gain in three months.

The prior sale of Japanese 40-year bonds in May drew bids for 2.57 times the amount on offer, compared with a so-called bid-to-cover ratio of 3.78 in January. Primary dealers, which are required to bid at government debt sales, often reduce holdings of bonds in case prices decline before they can pass on the new securities to investors.
stocks, bonds & forex trading
source: www.sfgate.com

BlackBerry stock loses $2.7billion as Indonesia joins ban demand

2010-08-05T05:21:00.000-07:00

5 Aug 2010 - TORONTO: Problems continued to mount for BlackBerry maker Research In Motion (RIM) on Wednesday as its stock sank more than four per cent further after dropping by a similar margin on Tuesday.

With the new BlackBerry Torch 9800 not getting a great response and Indonesia joining the UAE and Saudi Arabia to seek a ban on BlackBerry, RIM shares were hammered on the markets, losing $2.7 billion in just two days.

With Goldman Sachs making "sell" recommendation on it, RIM stock sank 4.46 per cent Wednesday to close at $54.24. The stock has fallen more than 20 per cent in 2010 as it Apple's iPhone 4 and Google Android have made a major dent into BlackBerry market in North America.

With its current business of worth $15 billion globally, BlackBerry has more than 41 million subscribers in over 150 countries.

Unlike iPhone 4 or other smart phones, BlackBerry emails don't go over the internet. They are first encrypted to be secured on the device and then routed through its own secure servers which cannot be accessed even by RIM. But the foolproof security feature which made BlackBerry the smart phone of choice for corporates, businesses, professionals and governments, has now become its major headache.

Indonesia joined India, the UAE, Saudi Arabia Wednesday to seek access to data on BlackBerry devices which is routed through RIM servers. With about 1.2 million BlackBerry users, it wants RIM to install a local mini server so that the data is routed locally, not through RIM servers abroad.

But amid mounting pressures from foreign governments, RIM repeated on Wednesday that it won't compromise on its security features.

In a statement, the wireless giant said, "The BlackBerry enterprise solution was designed to preclude RIM or any third party, from reading encrypted information under any circumstances, since RIM does not store or have access to the encrypted data.

"Any claims that we provide, or have ever provided, something unique to the government of one country that we have not offered to the governments of all countries are unfounded."

But there was even more worrying news for RIM from the US where Google Android smart phones have outsold BlackBerry in the second quarter of 2010.

The US market research firm NPD Group says Android devices accounted for 33 per cent, BlackBerry 28 per cent and iPhone 22 per cent of all handsets sold in the US in the second quarter of the current year.

stocks, bonds & forex trading source: economictimes.indiatimes.com

For stock market, jobs report looms large

2010-08-01T21:35:00.000-07:00

stocks, bonds & forex trading>
U.S. stocks could do well this week if monthly jobs data, due out Friday, and corporate results paint a more promising picture of the recovery.

The Standard & Poor's 500 index has been stuck in recent days amid recent weak economic data and disappointing outlooks from companies including technology firms Nvidia Corp. and Symantec Corp.

The tech-heavy Nasdaq composite had the poorest performance of the three major indexes last week, and activity in the options market points to more volatility in the tech sector this week.

Among companies expected to report quarterly earnings this week are Procter & Gamble Co. and Clorox Co., whose results could give another glimpse into the strength — or weakness — of consumer spending.

But the Labor Department's nonfarm payrolls report for July, due Friday, looms large. Sluggish job growth is considered the biggest hurdle to advances in the economy and stock market.

Data released last Friday showed that U.S. economic growth slowed in the second quarter, and the June labor report released last month showed a fall in payrolls. Both of those raised concerns about the recovery for the rest of the year.

"We have been reducing our exposure to equities because we are concerned that a weaker economy is going to continue throughout the end of year," said Joseph Battipaglia, a market strategist at Stifel Nicolaus in Yardley, Pa.

Analysts say a significant break above the S&P 500's average for the last 200 days — currently about 1,114 — would be a bullish signal.

"The market has the potential to push higher again if we can get through the 200-day moving average," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Conn.

Chris Burba, a short-term market technician at Standard & Poor's in New York, noted that the 200-day moving average has been nearly flat since late June, which supports the view that investors should be cautious.

The U.S. economy, recovering from the worst recession since the 1930s, has shown weakness in recent months, and corporate results for the second quarter have been mixed.

Earnings growth for S&P 500 companies in the second quarter is expected to be 36%, while revenue growth is estimated at 9.1%, according to Thomson Reuters data.

In other key economic data this week, the Institute for Supply Management's manufacturing report, due out Monday, is expected to show growth for a 12th straight month.

Copyright © 2010, The Los Angeles Times
source: www.latimes.com

History provides a guide to stock market's ups and downs

2010-08-01T21:31:00.000-07:00

Q: What can investors expect to be the worst-case scenario for the Dow this year?

A: If there's one thing you can expect from financial markets it's unpredictability.

While stocks have generated average annual compound growth rates upward of 10% over time, the path has been far from smooth. To earn the market's returns, you need to endure gut-wrenching bear markets and keep yourself in check during euphoric highs.

The key to success in investing is to prevent panicking during market declines, and have the courage to buy beat-up investments on the cheap. Conversely, during times other investors are overly optimistic, you should avoid the urge to load up on overpriced investments and think about selling some of your winners.

It sounds easy, but during a market drop or a rally, it can be difficult to keep your head. A great way to stay grounded is to a have an idea of what kinds of returns, or declines, it's reasonable to expect. And I can answer that.

There are several ways to get a decent idea of what the future might hold for stocks. One way is by examining historical statistics. You've probably heard the boilerplate warning that past performance isn't a predictor of future returns. And that is certainly true in the short term.

But, if you examine market returns for many decades, you can get an idea of what kinds of risk and reward you can expect over the long haul.

Analyzing returns of the IFA U.S. Large Company index, a good measure of how large U.S. stocks have done, gives you a reasonable idea of how stocks have fared. The IFA U.S. Large Company index contains large stocks, as does the Dow.

Specifically, the IFA U.S. Large Company index has returned 9.2% a year, on average, since 1928. And that's a good reason why you can reasonably expect a 9% to 10% annual average return over the long run. Again, don't think you're going to get a 9% to 10% return each year. Nothing could be further from the truth.

The IFA U.S. Large Company index is risky, meaning you can expect giant swings in returns from year to year. To be precise, there's a 68% chance that stocks will have an annual return ranging from a 28.5% gain to a 10.1% loss. You can expect your stock returns to be in that band most years.

However, as investors have learned recently, market volatility can be even more severe. Statistically, there's a 48% change that stocks could fall as much as 29.4% in any given year. And there's a 49.8% chance stocks could fall as much as 48.8% in a year.

As you can see, most of the time stocks' downside risk is less than 10.1% in a year. But by investing, you are accepting the risk that losses could be greater than that. Much greater than that.

If these possible losses scare you, it might be a sign you're not invested properly. By adding other types of investments to your portfolio, like bonds, you can help smooth out the ups and downs.stocks, bonds & forex trading - source: www.usatoday.com

RPT-Wall St Week Ahead: Earnings to decide stocks' fate

2009-07-19T08:05:00.000-07:00

stocks, bonds & forex trading - source:
Sun Jul 19, 2009 10:38am EDT

By Edward Krudy

NEW YORK, July 19 (Reuters) - Earnings are set to take center stage again this week as more marquee U.S. companies line up to report their quarterly scorecards and investors decide whether to keep pushing stocks higher.

Investors will turn their attention to household names such as American Express Co (AXP.N), Apple Inc (AAPL.O), Boeing Co (BA.N), Caterpillar Inc (CAT.N), Coca-Cola Co (KO.N), DuPont Co (DD.N), McDonald's Corp (MCD.N), Microsoft Corp (MSFT.O) and diversified manufacturer 3M Co (MMM.N) to see what the earnings of these dominant corporations say about the U.S. economy's health.

The week's blitz of numbers will include earnings from 143 companies in the Standard & Poor's 500 Index .SPX. Results from big manufacturers will give investors the broadest picture yet of the earnings season. So far, banks and technology companies have set the tone.

The latest insight into corporate America's financial strength will come after last week's sharp gains, when the three major U.S. stock indexes rose 7 percent to wrap up their best week since the middle of March. Last week's rally was driven by much better-than-expected earnings from some major companies, including Intel Corp (INTC.O), International Business Machines Corp (IBM.N) and Goldman Sachs Group (GS.N).

The rally has driven stocks back up to near their highs in early June, when the S&P 500 peaked after climbing 40 percent from a 12-year closing low in early March -- only to lose ground later in the month before earnings season kicked off in early July.

For the past week, the Dow Jones industrial average .DJI gained 7.3 percent, while the S&P 500 climbed 7 percent and the Nasdaq Composite Index .IXIC jumped 7.4 percent.

"The equity market is the biggest leading indicator for the economy, so what we are going to be looking at is what kind of information is coming out of earnings," said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.

If some of those big names disappoint, it could be farewell to the rally. On Friday, a less-than-stellar performance from General Electric (GE.N) gave investors reason to be cautious about the potential strength of an economic recovery.

MESSAGE FROM 3M

John Murphy, fund manager at Murphy Capital Management in Gladstone, New Jersey, said investors will start to "look at some of the bigger manufacturing companies." He said 3M, which makes everything from "Post-it" notes to products for aircraft maintenance and has large international operations, will provide valuable insight.

3M is among 12 Dow components set to report earnings this week.

Data compiled last week by Thomson Reuters forecast a 35.2 percent drop in S&P 500 companies' second-quarter earnings from a year ago, compared with last week's expectation for a decline of 35.7 percent.

Of the 55 S&P 500 companies that have reported results so far, 71 percent beat analysts' expectations, 9 percent were in line with expectations and 20 percent were below estimates.

That is better than the long-term average, which is 61 percent of companies beating estimates in a typical quarter, 19 percent matching estimates and 20 percent missing Wall Street's expectations, according to John Butters, director of the research group at Thomson Reuters.

ALL EARS ON BERNANKE

In a week otherwise dominated by corporate earnings, Federal Reserve Chairman Ben Bernanke will appear on Capitol Hill twice to deliver his semiannual testimony on the U.S. economic outlook and monetary policy.

Investors will be listening to Bernanke for clues about when the Fed may deem the economy has switched to growth mode, as well as for an exit strategy after the central bank purchased billions of dollars in U.S. Treasury securities in a bid to keep interest rates low -- a move known as quantitative easing.

Bernanke will appear on Tuesday before the House Financial Services Committee and then on Wednesday, he is back on the Hill to appear before the Senate Banking Committee. Both sessions are set to start at 10 a.m. EDT. (1400 GMT)

UPTICK SEEN IN HOME SALES

Heading into the end of the week, investors will watch data on June sales of existing homes for any signs of improvement in the ailing housing market.

Existing home sales are expected to edge up for a third straight month, hitting a seasonally adjusted annual rate of 4.84 million units in June, according to economists polled by Reuters. May's seasonally adjusted annual pace was 4.77 million units.

However, some investors have voiced concerns that a "dark pool" of housing inventory may exist as people hold off selling in hope of a better market later. That inventory backlog of unsold homes could pressure prices and slow a recovery if and when it comes to the nation's housing market.

Gary Shilling, president of A. Gary Shilling & Co, an investment research firm in Springfield, New Jersey, said the housing market probably will continue to be weak.

"We're most of the way down on prices," Shilling said. "I think we've probably got another 10 (percent) to 15 percent to go on the downside. I don't think there's going to be a big revival any time soon."

The existing home sales data is due on Thursday at 10 a.m. EDT (1400 GMT); that report will be preceded at 8:30 a.m. (1230 GMT) by the latest weekly initial jobless claims. Although first-time jobless claims have fallen for the last two weeks, economists said seasonal factors may have come into play. Investors will look for that downward trend to continue.

"If we start to see claims rising again, people will begin to conclude it was only seasonality," Praveen said. "But if you actually begin to see numbers that come down further, the implication would be it's not just seasonality -- it's a trend."

The jobless data is expected to show first-time claims for unemployment benefits rose to 550,000 from 522,000 the week before, according to economists polled by Reuters.

The labor market cast a shadow over Wall Street earlier in the month when the U.S. unemployment rate rose to 9.5 percent in June, its highest level in nearly 26 years, leading to a sell-off in stocks earlier in the month.

On Friday, Reuters and the University of Michigan will give a final reading for July on the consumer sentiment index at 9:55 a.m. EDT (1355 GMT). The forecast: 65.0, down from 70.8 in June, the Reuters poll showed. (Wall St Week Ahead runs every week. Questions or comments on this one can be e-mailed to: edward.krudy(at)thomsonreuters.com) (Editing by Jan Paschal)

source: www.reuters.com

Bonds besting stocks now, but just wait

2009-07-19T07:56:00.000-07:00

stocks, bonds & forex trading - source:
12:00 AM CDT on Sunday, July 19, 2009

Scott Burns is a syndicated columnist and a principal of the Plano-based investment firm AssetBuilder Inc. E-mail questions to scott@scottburns.com.

It's official. The stock market has been a terrible place to be. And not just for a few years, but for decades.

New research from the Leuthold Group, a Minneapolis institutional research and mutual fund firm, indicates that stocks have done about as poorly relative to 10-year Treasury obligations as they ever have.

Yes, you read that right. Ever.

I am not telling you this to rub it in. You don't need to be told that stocks have done poorly for more than a decade.

But knowing exactly how terrible the return on stocks has been relative to bonds may also tell us something about the future. Stocks are more likely to provide higher returns than bonds in the future simply because no extreme lasts forever.

Here's what Leuthold Group researcher Eric Bjorgen did. Taking quarterly data from every period since 1926, Bjorgen compared the performance of stocks, as represented by the S&P 500 index, with the performance of 10-year Treasury obligations over the same period.

He did this for investment periods ranging from one year to 50 years.

source'www.dallasnews.com

FOREX-Dollar rises vs yen as global shares rally

2009-02-13T08:14:00.000-08:00

NEW YORK, Feb 13 (Reuters) - The U.S. dollar climbed against the yen on Friday, as investor's appetite for risk returned, bolstered by optimism about a U.S. government program to subsidize mortgages for homeowners.
stocks, bonds & forex trading - source: uk.reuters.com

By Gertrude Chavez-Dreyfuss

The news which came out late on Thursday rekindled the market's appetite for risk, lifting global shares and commodities such as oil. This also fueled a sell-off in the yen and briefly the dollar versus the euro.

"We are still hinging on risk appetite and we are keying off equities. That's why we're seeing some selling in the yen against the dollar and other crosses," said Shaun Osborne, chief currency strategist, at TD Securities in Toronto.

"That story on mortgage subsidy gave equities a lift and there still some carry-over from that."

Markets welcomed the news that the Obama administration may unveil a broad plan to put a floor under the housing market. For the mortgage story, see [ID:nN12553515].

A rising wave of U.S. mortgage delinquencies has saddled the global banking system with big losses that have led banks to recoil from lending, choking economies around the world.

In early New York trading, the dollar rose 0.6 percent to 91.42 yen . The euro was also up against the yen, rising 0.5 percent to 117.37 .

The dollar and yen, which tend to fall with increased appetite for risk-taking, also lost ground to higher-yielding currencies ahead of the G7 meeting in Rome and a long weekend in the United States.

The euro fell 0.2 percent against the dollar to $1.2842, erasing earlier gains, weighed down by data showing the euro zone economy in a deeper recession than expected. That boosted pressure for the European Central Bank to cut interest rates next month.

The euro zone economy contracted by 1.5 percent in the fourth quarter, the deepest on record. For story, click on[ID:nLD803529].

Sterling also rallied as investors squared market positions ahead of the weekend on concerns that Group of Seven finance chiefs may discuss the currency's recent weakness, analysts said. For story on G7 [ID:nLD18359].

But the pound came off its highs pressured by sharp falls in UK banking stocks after Lloyds Banking Group unveiled a hefty loss related to its HBOS subsidiary. Lloyds said HBOS lost about 8.5 billion pounds last year [ID:nLD820935], news which sent shares in Lloyds and other UK banks tumbling and pushed the UK's FTSE share index into the red.

Sterling last traded at $1.4406 , up 1.0 percent.

Attention now turns to the G7 meeting in Rome. Analysts said the bleak euro zone GDP figures had also raised concerns that G7 leaders may discuss the pound's recent weakness against the euro.

"There's a mixture of the poor GDP data and some short-covering ahead of G7 in the sense that the bad set of euro zone data might put the UK authorities under pressure at G7 to do something about the weaker pound," said Investec chief economist Philip Shaw.

(Additional reporting by Kylie Maclellan in London) (Editing by Theodore d'Afflisio)

Siemens, Imperial Tobacco Lead 22 Billion Euros of Bond Sales

2009-02-13T08:07:00.000-08:00

Feb. 13 (Bloomberg) -- Siemens AG, Europe’s largest engineering company, and Imperial Tobacco Group Plc led 22.1 billion euros ($28.5 billion) of corporate bond sales in Europe this week.
stocks, bonds & forex trading - source: www.bloomberg.com

By Shelley Smith and Andrew Reierson

Sales held above the weekly average of 14.8 billion euros for the past year, though issuance was down from last week’s 28 billion euros, according to data compiled by Bloomberg. Munich- based Siemens raised 4 billion euros yesterday in the biggest bond sale by a non-financial company this year, while Imperial Tobacco sold 1.5 billion euros of notes.

Companies are tapping investor demand for corporate debt. Investors are attracted to the bonds because investment-grade yields relative to government securities have tripled in the past 12 months, according to Merrill Lynch & Co. indexes. Borrowers sold 195 billion euros of bonds this year, more than double the amount in the year-earlier period, Bloomberg data show.

“The only buyer in town is the cash buyer, in for simple plain-vanilla product that has a decent rating, offers good returns and extremely low default risk,” Suki Mann, a credit strategist at Societe Generale SA in London, wrote in a note to investors.

The extra yield investors demand to hold high-grade company bonds rather than government debt widened 2 basis points to 4.09 percentage points this week, according to Merrill Lynch’s Investment-Grade Corporate Bond index. The index narrowed 19 basis points this year as demand for company debt increased.

Siemens Oversubscribed

Siemens issued 2 billion euros of 4.125 percent bonds due 2013 at a yield of 158 basis points more than the benchmark mid- swap rate, Bloomberg data show. The engineering company also raised 2 billion euros from eight-year notes priced at a spread of 200 basis points. A basis point is 0.01 percentage point.

Orders for Siemens’s bonds reached 20 billion euros, Chief Financial Officer Joe Kaeser said today on a conference call. The demand allowed Siemens to cut the extra yield it offered buyers from an initial spread of 170 basis points on the four-year debt and 210 basis points on the eight-year notes, people involved in the deal said.

Imperial Tobacco, the maker of West and John Player Special cigarettes, sold 1.5 billion euros of seven-year notes on Feb. 10 at a spread of 510 basis points over the mid-swap rate. The Bristol, England-based company also raised 1 billion pounds ($1.5 billion) from 13-year bonds priced to yield 485 basis points more than similar-maturity U.K. government debt.

Other bond sales this week included companies increasing the size of existing issues.

Vodafone Plc, the world’s largest mobile-phone company, added 325 million pounds to its 4.625 percent bonds due September 2014. The Newbury, England-based company priced the bonds at 200 basis points over U.K. government debt.

Bayerische Motoren Werke AG, the biggest luxury carmaker, added 500 million euros to its sale of 8.875 percent bonds due in 2013. The new notes were priced to yield 390 basis points more than the benchmark mid-swap rate, according to data compiled by Bloomberg.

To contact the reporter on this story: Shelley Smith in London at ssmith118@bloomberg.net

Stocks dip ahead of stimulus vote

2009-02-13T07:57:00.000-08:00

NEW YORK (CNNMoney.com) -- Stocks slipped Friday morning as investors showed caution ahead of House and Senate votes on the $789 billion economic stimulus package
stocks, bonds & forex trading - source: money.cnn.com
By CNNMoney.com staf

The Dow Jones industrial average (INDU) lost 37 points, or 0.7% in the early going. The Standard & Poor's 500 (SPX) index gave up 5 points, or 0.6%. The Nasdaq composite (COMP) fell 6 points, or 0.4%.

Todd Leone, head trader at Cowen & Co., said that investors appear to be "lightening up" and unloading their less desirable stocks before they head into a long weekend. U.S. markets are closed Monday for Presidents Day.

Asian Stocks finished with gains, as Tokyo's Nikkei index rose nearly 1%. European markets advanced in midday trading.

Oil prices rose 86 cents to $34.84 a barrel on the New York Mercantile Exchange. The dollar rose versus the yen and the euro but slipped against the British pound.

U.S. stocks ended virtually flat Thursday, with the Dow recovering from 245 points down, amid reports that the administration had come up with a plan to help prevent foreclosures.

In the plan, the White House is looking at subsidizing the mortgage payments of struggling borrowers before they default, according to sources familiar with the discussions.

Both the House and Senate are scheduled to vote Friday on the $789 billion stimulus compromise. The measure is expected to pass and go on to President Obama for his signature.

The markets still haven't recovered from a brutal Tuesday, when a hazy presentation from Treasury Secretary Tim Geithner contributing to a plunge in the Dow Jones industrial average of 382 points, or 4.6%.

"You don't stand up and tell people you're going to have this major policy announcement, and then postpone all the details," said Robert Brusca, chief economist at Fact and Opinion Economics. "You don't tell someone they're going to have a birthday present and then leave an empty box on the table."

Brusca compared to the stock market's reaction to the Geithner presentation to a "horror film with a zombie with a stake in its heart." As to whether the "zombie" will come back to life, Brusca said that all eyes will be on the stimulus package.

Company news: Toyota (TM) announced some moves aimed at further trimming production and costs at its North American facilities. The moves include reducing work hours, eliminating pay raises and bonuses, and shutting plants on selected days in April.

Nissan Motor (NSANY) and Chrysler LLC said they have halted work on a product collaboration as they consider ways to improve projected financial returns on the 10-month-old deal. To top of page

LATE SESSION SURGE IN STOCK MARKET PARES U.S. DOLLAR GAINS

2009-02-12T19:48:00.000-08:00

For much of the day the greenback was trading firm buoyed by continuous buying backed by the notion that the new U.S. financial stimulus package and the U.S. banking rescue plan would fall short of market expectations.
by Brewer Investment Group
stocks, bonds & forex trading - source: www.forextv.com

Throughout the day rumors had persisted that the government was planning some sort of mortgage bailout plan. Traders for the most part ignored the rumors, having been burned earlier this week by bidding up foreign markets in anticipation of a solid banking rescue plan. Treasury Secretary Geithner burned speculators by presenting a less than stellar performance in his bid to gain global support for his plan to save the banking industry.

Speculators remained comfortable in their long U.S. Dollar positions until it was reported late in the trading session that the U.S. did indeed have a banking rescue plan that was clear and specific. This news brought immediate optimism to the stock market and triggered a magnificent rally into the close. The new plan which reportedly specifically spells out that government money will subsidize mortgages fueled a decline that gave back much of today’s gains in the Dollar and had some currency pairs closing near their high for the day.

There is no doubt that traders will be digging tonight for more information on the U.S. government’s new proposal to help the ailing banking industry and homeowners. My guess is that given the dismal performance and low credibility of Geithner, President Obama will attempt to use his charm and charisma to convince the American people of the viability of the new plan. The question is: when will more details of this proposal become public? It is doubtful that it will be released tomorrow because if it fails again to generate acceptance, the stock market will plummet once again ahead of a long week-end. It probably will not be Monday either because it is a market holiday. My guess is that sometime Tuesday Obama will take the time to present this new banking rescue plan to the world.

In the meantime, there may be some light profit-taking in the Dollar as traders may not want to be exposed to too much bearish activity over the long holiday week-end.

Pressure remained on the Euro for most of the day as the Dollar strengthened on less demand for higher yielding assets. Fear that the global recession is deepening has led traders to buy the safe-haven Dollar for several days.

Tomorrow the Euro Zone and German GDP figures will be released. Both are expected to show severe declines. Germany is expected to show a big decline on a huge loss in exports. As other countries’ economies deteriorate, few German goods are being demanded. News that the Euro Zone GDP will decline will lead to speculation that the European Central Bank may have to cut rates extensively at its next meeting in March.

The pressure may be on the ECB as many investors feel that the ECB has been behind the curve when it comes to economic stimulus plans and aggressive interest rate cuts.

Look for bearish news from the ECB to dominate the market tomorrow, but be aware that any announcement from the U.S. regarding more concrete details of its banking rescue plan may limit losses or even trigger a short-covering rally.

The British Pound remained under pressure throughout the day on Thursday. Traders are still selling the GBP USD in anticipation of aggressive monetary policy action by the Bank of England. Rumors are circulating that the BoE is going to start buying assets in an effort to revive the sinking economy.

Most of the pressure on the Pound this week is because of the forecast of lower growth in 2009. Bank of England Governor Mervyn King even went as far as saying the U.K. was in a “deep recession.” Rumors were circulating at times on Thursday that the BoE is even considering an interest rate cut to below 1%. This hurt the Pound even more as speculators believe this drastic measure would weaken the Cable considerably while at the same time having a minimal effect on the economy.

Traders continued to buy the Japanese Yen overnight and into the New York session as downside pressure mounted in the equity markets. Losses continued to grow in the stock market throughout the day on speculation that the Obama stimulus plan and the new banking rescue plan would fail to live up to expectations. Pessimistic traders bought Yen to pay back loans used to finance investments in higher yielding assets.

Late in the session a massive short-covering rally in the equity markets fueled by speculation of a government backed bailout plan for ailing banks and delinquent mortgage holders helped pare gains in the Japanese Yen.

Traders will be watching tomorrow to see if more details of the banking rescue plan will be released. A continuation of the late session rally in the equity markets overnight and tomorrow will contribute more upside pressure to the USD JPY. Overall it can be said with confidence that the direction of the stock market will dictate the trade in the Yen.

Canadian Dollar traders are beginning to believe that the lack of demand for commodity-linked currencies will continue to push the USD CAD higher. Weakness in exports of raw materials such as industrial metals is a contributing factor to the weakness in the Canadian economy. Most of the downside pressure is coming from the downward spiraling crude oil market. Without another production cut by OPEC some see front-month crude oil under $30 per barrel by the middle of next week.

For several days the USD CAD has been trading mixed out of optimism that Obama’s new financial stimulus plan would generate demand for industrial metals. Once the plan was picked apart by critics, it was revealed that the plan is tremendously back-loaded which means the demand for commodities may not pick up until next year or beyond.

Without demand for raw materials and crude oil in the short-run, lower exports will be a continuous drag on the Canadian economy.

The USD CHF rallied sharply higher on Thursday ending days of speculation that technically this market was poised to decline. Early weakness in the stock market led to a flight to quality rally in the U.S. Dollar as traders sold the Swiss Franc.

Fear that another rise in the Swiss Franc would give the Swiss National Bank a reason to intervene also helped to accelerate the rally in the USD CHF. Talk is circulating that the SNB may try to push down the value of the Swiss Franc through monetary policy actions since interest rates are already at 1%. Negative news is beginning to pile up on the Swiss Franc including possible exposure by Swiss banks to the growing financial crisis in Russia.

The Australian Dollar fell again on Thursday as weaker commodity prices kept pressure on the Aussie and all other commodity backed currencies. The falling stock market also contributed to the decline as traders ran away from higher risk assets. News that the newly proposed stimulus plan has met with opposition also attracted selling pressure. Unless new speculator optimism emerges buoyed by greater appetite for risk, look for more downside pressure on the AUD USD.

Risk aversion is helping to keep downside pressure on the New Zealand Dollar. This is not just speculation as traders truly believe that lower commodity prices will drive the New Zealand economy into a deeper, wider recession. The lack of demand for any higher-risk, higher-yielding asset is also contributing to the weakness in this currency pair.

Speculators are already anticipating more downside pressure as the Reserve Bank of New Zealand ponders another rate cut. Falling stock and commodity prices are likely to help maintain the bearish tone in this market. A short-covering rally in U.S. equities triggered by the proposal of a new U.S banking rescue plan may spur a short-covering rally in the grossly oversold NZD USD.

Please do not hesitate to contact us at 1-800-971-2440, with any questions.

DISCLAIMER: Futures, options and Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures, options and Forex may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The high degree of leverage available in Forex tradings means that small price movements will have a much greater impact on account performance and can result in large losses as well as gains. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication by or from Brewer Investment Group, LLC, or its subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions or technological issues may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Forex exchange trading boost banks’ profits

2009-02-12T19:32:00.000-08:00

PETALING JAYA: Foreign exchange (forex) trading and operations have surfaced as a more substantial source of earnings for banks following volatile currency movements.
Stocks, Bonds & Forex Trading
Source: biz.thestar.com.my Friday February 13, 2009

In the current reporting season, two banks – Public Bank Bhd and Hong Leong Bank Bhd – have announced their latest quarterly earnings, and both showed significant increases in forex gains.

Hong Leong Bank, which unveiled its results on Tuesday, disclosed forex gains of RM68mil for its second quarter ended Dec 31, accounting for 20% of its pre-tax profit during that period. That was an increase in forex gains of RM39mil from the corresponding quarter last year.

Jupiter Securities Sdn Bhd research head Pong Teng Siew said banks tended to “make some money” when currencies were volatile because corporates would take on more hedging to protect their trading positions.

The banks would also take some currency positions themselves with measures in place to limit the trading risks, he told StarBiz.

“I would expect all banks to register some boost from forex profits, especially those with a large treasury desk. Some of the favourite currencies are the US dollar-ringgit combination as well as Singapore dollar and euro,” he said, adding that trades were limited to major currencies.

He said companies, particularly those involved in trading, would now adopt a bigger hedging position to protect their investments. “At least they would know at what level their transactions would be,” Pong said.

Nonetheless, forex gains are unlikely to be sustainable for banks since they are subject to currency volatility. “Once the volatility subsides, the gains will also become lesser,” he added.

A banking analyst at a research house had similar views. “A lot of companies are playing hedging right now and that would add on to the banks’ fees,” she said.

She said the forex gains might last for another quarter but “it also depends on what happens during the book closing.”

A forex trader at a local bank said the market was volatile due to many factors, such as the various economic stimulus packages being implemented currently as well as the easing of monetary policies.

“For exporters and importers, it is important to hedge forward their receipts and payments to mitigate exchange risks,” he said.

FOREX-Dollar, yen rise as shares fall

2009-02-12T04:37:00.000-08:00

LONDON, Feb 12 (Reuters) - The dollar and yen rose on Thursday as investors drew comfort in the perceived safety of those units as stocks fell, fueled on concerns about the potency of government policies to combat recession and ailing banks.
Stocks, Bonds & Forex Trading
Source: uk.reuters.com
Thu Feb 12, 2009 By Tamawa Desai

European shares .FTEU3 were lower in early trade after Asian stock markets fell, as disappointment lingered after the U.S. bank rescue plan on Tuesday fell short on detail. Investors remained wary despite U.S. Congress reaching a compromise deal on the economic stimulus package.

"The market is vaguely risk adverse," said Christian Lawrence, currency strategist at RBC Capital Markets, but added it lacked clear direction.

The dollar index against a basket of currencies was up 0.2 percent at 86.087 .DXY.

By 0845 GMT, the dollar was down 0.5 percent at 89.99 yen while the euro was also down 1.1 percent at 115.27 yen .

The euro was down 0.4 percent at $1.2841 .

Traders will look to economic data including euro zone industrial production and U.S. retail sales data later on Thursday.

Industrial production in the euro zone is seen falling 2.1 pct in December from the previous month, or a fall of 8.9 year-on-year.

Traders will also keep an eye as European Central Bank President Jean-Claude Trichet speaks, as well as a slew of other ECB officials.

ECB officials that commented on Wednesday confirmed market expectations the central bank will cut interest rates next month, but nothing to further such views, analysts said.

Markets hope to get a cue from U.S. retail sales, which probably fell again in January. Total sales are forecast to fall 0.8 percent after tumbling 2.7 percent in December, while sales excluding autos are seen falling by 0.5 percent after a record 3.1 percent plunge in December.

"The weak tone of the data will provide an offset to what little enthusiasm prospective passage of the U.S. fiscal package may foster," Daragh Maher, deputy head of currency strategy at Calyon, said in a note.

"The weakness in Asian equities overnight suggests that disappointing data and the lack of detail so far from (U.S. Treasury Secretary Timothy) Geithner will win out over fiscal optimism, pointing to modest gains for the dollar and yen."

U.S. congressional negotiators reached a deal on Wednesday on $789 billion in emergency spending and tax cuts aimed at pulling the economy out of a deepening recession, and voting on it could take place as early as on Thursday. [ID:nN11379390]

Sterling hit one-week lows against the dollar and euro, keeping its downward trend after the Bank of England said it may need to ease policy further, including steps such as buying gilts to boost the money supply. The pound was down 1.3 percent at $1.4186 . The euro was up 0.9 percent at 90.45 pence.

The Australian dollar was down 1.0 percent to $0.6482, after parliament rejected the government's A$42 billion ($28 billion) economic stimulus plan.

Bonds reverse gains

2009-02-12T04:27:00.000-08:00

South African bonds were having a bumpy ride, reversing earlier strength by midday to trade up to 22.5 basis points weaker as the rand moved back above the 10 rand per dollar level.
Stocks, Bonds & Forex Trading source: www.thetimes.co.za
By Jacqueline Mackenzie, I-Net Bridge Feb 12, 2009

By 12:25 the short-term government R153 bond was bid at 6.820% from its previous close of 6.725%. The medium-term R157 was at 8.020% from a previous 7.820%, while the long-term R186 was at 8.480% from 8.330%.

The rand was last at 10.0230 to the dollar from a previous close of 9.7977.

A local market analyst said that bonds, which had firmed with the stronger rand earlier, had followed the currency weaker as it moved back above 10 per dollar.

Traders were also divided on the impact of the bond issuances announced in Finance Minister Trevor Manuel’s Budget yesterday.

One trader said the amount of issuances which he put at around 70 billion rand would not be too much for the bond market to absorb.

He said given the cover ratios we have seen recently, he did not think it will too much for bond market to absorb it’s an increase of perhaps 15% on average on what is being absorbed right now. "It’s not a train smash and the market has taken it in its stride," he added.

Head of fixed income at Investec Asset Management, Andre Roux, noted that longer ends of the bond market had been weakening prior to the Budget in anticipation of the expected supply that would come via borrowing in the face of lower government revenues and the resultant deficit. This view was borne out by the news that the budget deficit would widen to a whopping 3.8% of GDP next year.

But Roux said the markets were pleasantly surprised when they dug beneath the initial headline debt raising numbers.

"The 95 billion rand was a big figure on the screens, but then we saw that it would be only 60 billion rand they would be coming to the bond market for," he said.

He notes that the government had bought back some of the debt in the past.

But Roux added: "The market is worried about the risks of 10 billion rand in overseas markets."

However, another local trader attributed the weakness morning to supply concerns, as well as the weaker rand.

Foreigners were net sellers of 3.754 billion rand worth of South African bonds yesterday after net purchases of 5.630 billion rand worth of local bonds on Tuesday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was 65.143 billion rand yesterday from 130.138 billion rand on Tuesday.

Asian Stocks Fall on Doubts U.S. Stimulus Will Revive Growth

2009-02-12T04:22:00.000-08:00

Feb. 12 (Bloomberg) -- Asian stocks fell for a fourth day, led by financial and consumer-related companies, on concern U.S. measures to alleviate the financial crisis won’t be enough to revive the world’s largest economy.
Stocks, Bonds & Forex Trading Source: www.bloomberg.com
By Jonathan Burgos and Patrick Rial

Mitsubishi UFJ Financial Group Ltd., Japan’s biggest lender, lost 3.5 percent as U.S. Treasury Secretary Timothy Geithner said he needs time to work out details of a bank-rescue plan unveiled on Feb. 10. Daikin Industries Ltd., the biggest Japanese maker of air conditioners, slumped 5.6 percent after cutting its profit forecast. China State Shipbuilding Co. surged 10 percent in Shanghai on government support for shipyards.

“The U.S. stimulus plans are still lacking in details,” said Hong Kong-based Terrace Chum, who manages Greater China equities at Manulife Asset Management, which has about $240 billion. “It’s still unclear how they are going to bail out the banks. The Chinese appear to be doing a better job.”

The MSCI Asia Pacific Index fell 1.8 percent to 81.51 at 7:22 p.m. in Tokyo, with seven stocks declining for every two that advanced. The gauge has lost 9 percent this year, extending 2008’s record 43 percent, as the credit crisis triggered by the collapse of the U.S. housing market dragged the world’s biggest economies into recession.

The Nikkei 225 Stock Average slumped 3 percent to 7,705.36, resuming trade following a holiday yesterday. Hong Kong’s Hang Seng Index dropped 2.3 percent, while China’s Shanghai Composite Index lost 0.6 percent. Most Asian markets declined.

Australia’s S&P/ASX 200 Index rose 1.2 percent on better- than-expected employment figures. Lawmakers rejected a $28 billion economic stimulus package after markets closed.

‘High Hopes’

James Hardie Industries NV, an Australian building- materials maker, surged 11 percent after saying it’s comfortable with analyst profit forecasts. Leighton Holdings Ltd., Australia’s largest construction company, gained 6.1 percent after beating its earnings target.

Futures on the Standard & Poor’s 500 Index lost 1.3 percent. The index gained 0.8 percent yesterday as Congress debated a $789 billion spending plan. U.S. House and Senate lawmakers agreed on a compromise late yesterday, a smaller bill than those originally approved by both groups.

Geithner announced a financial rescue plan two days ago that included as much as $2 trillion in funding for programs aimed at spurring new lending and addressing banks’ illiquid assets. The U.S. government was going to proceed “carefully” on the proposal, Geithner told Congress yesterday.

“The market had been awaiting the financial bailout plan with high hopes, but what was announced didn’t have much meat on the bone,” Juichi Wako, a strategist at Tokyo-based Nomura Securities Co., said in an interview with Bloomberg Television.

Bank of Korea

Governments around the world are stepping up efforts to revive global growth that the International Monetary Fund predicted two weeks ago will grind almost to a halt this year. The Bank of Korea cut its benchmark interest rate today to a record-low 2 percent to revive an economy headed for the first recession in more than a decade.

Mitsubishi UFJ fell 3.5 percent to 468 yen in Tokyo. Toyota Motor Corp., which makes 37 percent of its sales in North America, dropped 2.9 percent to 3,050 yen.

Declines in the past year as the financial crisis worsened have dragged the average valuation of companies on the MSCI Asia Pacific Index down by 13 percent to 13 times reported profit.

Daikin fell 5.6 percent to 2,105 yen after cutting its profit forecast by 59 percent for the year ending March 31 as the slumping global economy dragged sales lower.

Profit Targets

In Shanghai, China State, a unit of the country’s biggest shipbuilder, surged 10 percent to 58.48 yuan. Guangzhou Shipyard International Co. climbed 10 percent to 20.89 yuan. The government banned construction of new shipyards for three years and said it will urge banks to boost trade financing.

James Hardie, the biggest seller of home siding in the U.S., surged 11 percent to A$3.64. The company today said it’s comfortable with the middle of the range of analysts’ forecasts for full-year net operating profit excluding asbestos payments and other items of $91 million and $110 million.

Leighton surged 6.1 percent to A$18.56 even after saying first-half profit plunged 56 percent to A$110.1 million amid investment writedowns. The figure beat the company’s Jan. 6 forecast for earnings of about A$100 million.

Australian stocks rose as the January job increase reported by the country’s statistics bureau beat the decline of 18,000 economists in a Bloomberg survey estimated. The jobless rate rose to 4.8 percent from 4.5 percent as more people looked for work.

“It’s only one month’s data so you can’t hang your hat on it, but jobs being created is a very healthy sign,” said Prasad Patkar, who helps manage the equivalent of $800 million at Sydney-based Platypus Asset Management. “You have to hope it becomes a trend rather than being just a flash in a pan.”

After markets closed, a vote to pass a A$48 billion ($28 billion) spending package was tied in the Australian Senate, meaning automatic defeat of the legislation aimed at heading off Australia’s first recession in 18 years.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.
Last Updated: February 12, 2009 05:23 EST

Brazil says forex interventions rise to $61 bln

2009-02-09T07:39:00.000-08:00

BRASILIA, Feb 9 (Reuters) - Brazil has spent $61 billion on foreign exchange intervention since early October as the central bank stepped in because of a slump in overseas credit lines, Central Bank President Henrique Meirelles said on Monday.
Stocks, Bonds & Forex Trading
Source: www.reuters.com

The central bank has sold $14.3 billion of the U.S. currency on the spot foreign exchange through Jan. 29 as demand for the U.S. currency surged during a downturn in global markets.

The bank has also sold some $33.3 billion in foreign exchange swaps, which work like the sale of dollars in the futures market, and $13.4 billion of dollar repurchase agreements in the same period.

Last week the central bank said it stood ready to lend up to 18 percent of its $200 billion of international reserves to help domestic companies roll over foreign obligations.

Still, Meirelles said foreign credit lines to Brazil have gained steam and are near the levels seen before the collapse in global markets in September.

"We are already approaching the pre-crisis levels," Meirelles said at a seminar.
(Reporting by Isabel Versiani; Writing by Elzio Barreto; Editing by James Dalgleish)

Home Business & Finance Markets Quotes Deals Global Industries Currencies Economy Portfolio Funds IFA Research Centre Personal Finance Analyst Resear

2009-02-09T07:34:00.000-08:00

By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 9 (Reuters) - The dollar weakened across the board on Monday, weighed down by growing uncertainty over the timing and details of U.S. plans for a massive fiscal stimulus and a much-anticipated package to help banks.
Stocks, Bonds & Forex Trading

President Barack Obama's administration pushed back the announcement of the bank rescue plan, which had been scheduled for Monday, until Tuesday as the government pressed lawmakers to settle their differences over the economic stimulus plan.

The announcement of the rescue plan, which aims to shore up some of the biggest U.S. banking institutions, was pushed back to enable lawmakers to spend the day focusing on the stimulus package ahead of a vote on Tuesday.

"That delay in the Treasury announcement undermines the enthusiasm that we we have seen in the market late last week," said Omer Esiner, senior market analyst, at Ruesch International in Washington.
"I think it did highlight the troubles the Obama administration faces in finding non-partisan support for the stimulus package. And that has pressured the dollar," he added.

Over the last few months the dollar has gained in the face of bleak U.S. economic news, with investors buying the currency on the view the U.S. government was the most aggressive among industrialized nations in tackling the credit crisis. That should help the U.S. economy emerge from recession quickly, analysts said.

But some cite the view that the stimulus package is U.S.-specific and a negative for the U.S. economy. "The knee-jerk reaction is to sell the U.S. dollar," Ruesch's Esiner said.

In early New York trading, the euro was up 0.8 percent at $1.3033 . The dollar was down 0.4 percent against the yen at 91.62 .

The euro was up 0.4 percent against the yen at 119.43 yen , recovering from an earlier session low of around 117.07 yen.

Analysts, however, said the decline in the dollar is not the start of a downtrend.

Brown Brothers Harriman said in a research note the negative turn in dollar sentiment came as a number of countries, including the United States, moved closer to adopting new measures to address the financial and economic crisis. That should help stem the worsening in the global economy and result in further euro and sterling gains.

"That is not to say that the dollar's long term uptrend has come to an end. We expect the more pro-active approach from the U.S. government and the central bank to begin to bear economic and financial fruit in the coming quarter."

Sterling rose 1.0 percent to $1.4948 , after UK bank Barclays Plc (BARC.L) earlier booked a bigger-than-expected annual profit of over 6 billion pounds and said credit market losses were waning. The pound earlier hit a nearly one-month peak at $1.4977, according to Reuters data.

With little on the economic calendar on Monday, market focus stayed firmly on the U.S. Congress, which remains sharply divided along party lines on an $800 billion-plus economic plan and the bank bailout plan.

The U.S. financial stability plan is due to be outlined by Treasury Secretary Timothy Geithner at 1600 GMT on Tuesday.

(Editing by Chizu Nomiyama)

China's Nine Dragons to buy back $284 mln 201

2009-02-09T07:25:00.000-08:00

HONG KONG, Feb 9 (Reuters) - Nine Dragons Paper (Holdings) Ltd (2689.HK) will buy back $284 million of its 2013 bonds at 53 cents to the dollar, China's biggest paper board producer said in a stock filing on Monday.
Stocks, Bonds & Forex Trading source: uk.reuters.com

Holders of the bonds have until Feb. 23 to sell back their debt. After that deadline, Nine Dragons will pay 48 cents to the dollar for any sellers of the debt until March 9.

Nine Dragons sold $300 million of the 7.875 percent 2013 bonds in April, but the debt has tumbled since then due to concerns about the paper board producer's financial standing.

The bonds <65439eaa1=> were quoted at 30 cents to the dollar as of last week.

Nine Dragons is expected to pay out about $160 million for the buyback, and could book a capital gains profit of $133.4 million should all investors sell their debt, BNP Paribas' analyst Winston Herrera said in an email to clients.

Nine Dragons already bought back about $16 million of the debt in the open market in December, having paid around 35 cents to the dollar then, according to BNP estimates.

Since it sold the bonds in April, Nine Dragons lost its investment-grade ratings from Standard & Poor's and Fitch Ratings, which cited the paper board maker's debt levels at a time of weakening profitability as reasons for their downgrades.

Nine Dragons has been hit hard by declining sales and the rising costs of raw materials.

The company is in the midst of plans to repay debt early, cut capital spending and delay capacity expansion plans.

Merrill Lynch, which underwrote the initial bond sale, will handle the buyback, according to the filing. (Reporting by Rafael Nam)

India corp bond yields rise on borrowing concerns

2009-02-09T07:17:00.000-08:00

MUMBAI, Feb 9 (Reuters) - Indian corporate bond yields rose on Monday as sentiment turned cautious ahead of a meeting of government and central bank officials, expected on Tuesday, to finalise a schedule for extra government borrowing.
Stocks, Bonds & Forex Trading source: in.reuters.com

Economic Affairs Secretary Ashok Chawla said a cash and debt management group would meet to work out the funds for the remainder of the current 2008/09 fiscal year ending in March.

"Investors are waiting and watching as an increase in government borrowing will crowd out corporate issues and push up yields, but the government has not ruled out private placement of its bonds and this could help corporate bonds," said a trader.

The yield on Indian Railway Finance Corp's 8.46 percent 2014 bond rose to 8.72 percent, from 8.70 percent at Friday's close.

The yield on the federal 2018 bond ended at 6.33 percent on Monday, higher than 6.19 percent at Friday's close. [IN/]

The government has completed most of its 700 billion rupee additional borrowing for 2008/09, and Friday's 80-billion-rupee bond auction would be the last under the current indicative calendar.

Tuesday's meeting will decide how much more the government will borrow after this auction. However, the central bank governor on Friday pledged to keep the debt market stable as the government ramps up its borrowing. [ID:nBOM423600]

"There was a need to borrow more due to higher expenditure and lower revenue receipt," said Chawla.

Suresh Tendulkar, the chairman of prime minster's Economic Advisory Council, said the fiscal deficit situation was not comfortable and that it was the right time to end state subsidies on fuel prices.

The central bank estimates the federal government fiscal deficit for 2008/09 at 5.9 percent, way above the budget estimate of 2.5 percent.

In the corporate bond market on Monday, Housing Development Finance Corp's 9.9 percent 2013 bond was the most traded, with a volume of 1.5 billion rupees.

Total volume traded on Monday was 10.82 billion rupees, slightly higher than Friday's 10.05 billion rupees, Thomson Reuters data showed, sourced to trades reported on the Bombay Stock Exchange, National Stock Exchange and Fixed Income Money Market and Derivatives Association of India (FIMMDA), a market body.

Volume in January was 266 billion rupees, according to data on the market regulator Securities & Exchange Board of India's web site.
(Reporting by Jeanette Rodrigues; Editing by Harish Nambiar)

Bailout Delay Crimps Stocks

2009-02-09T07:10:00.000-08:00

A delay in the Obama administration's unveiling of its latest bank-rescue plan left the stockmarket on pause as well on Monday.
Stocks, Bonds & Forex Trading source: online.wsj.com

Major indexes edged lower as investors awaited details of an effort that will likely entail coordinated effort between the Treasury Department and the private sector to remove distressed credit securities from banks' balance sheets.

The Dow Jones Industrial Average was lower by around 29 points in recent trading, sliding to roughly 8251. The S&P 500 was little-changed, while the Nasdaq Composite Index shed 0.4%.

The new bank plan was originally expected to be unveiled on Monday, but officials decided over the weekend to hold off so they could focus on parallel efforts to get a fiscal stimulus bill through Congress including a mix of tax cuts and federal spending aimed at bolstering employment and consumption.

"Certainly, these things won't cure all the economy's ills in 24 hours, but they should begin to restore some confidence," said economist Peter Cardillo, of Avalon Partners.

He said that the market may be on the cusp of a sustained rally, after suffering an early-year slide that factored in expectations of bad economic news to come. But there are still many skeptics of that rosy view throughout Wall Street.

Some investors took cash off the table Monday on the heels of solid market gains last week, snapping a four-week losing streak. Participants looked past a dismal employment report to passage of the economic stimulus plan and the rollout of the bank rescue.

The Senate is expected to vote on ending debate on the stimulus on Monday, with a possible vote on the compromise measure Tuesday. Treasury Secretary Timothy Geithner is also expected to announce Tuesday that the government will become a partner with the private sector to purchase banks' troubled assets. The plan also includes programs designed to jumpstart consumer lending and assist struggling homeowners.

The administration's plans have evolved over the past several weeks as it has considered and discarded a host of ideas, with financial markets anxiously awaiting details.

As investors awaited the plan, the dollar was weaker against major rivals and U.S. Treasury prices declined. The two-year note fell 1/32 to yield 1%. The benchmark 10-year Treasury lost 9/32, sending its yield up to 3.01%.

Financial stocks, which have set the tone for the broader stock market in recent weeks, were mixed. Bank of America climbed 10%, while Morgan Stanley dipped 0.5%. Barclays' U.S. shares were up 13% after it said it wouldn't turn to the British government for more capital.

Elsewhere, General Motors shares rose 1.7% after The Wall Street Journal reported the company is in talks to take back large portions of Delphi Corp. to get more U.S. bailout funds. But Nissan Motor shares lost 3% after it said it was cutting 20,000 jobs after reporting a $904 million quarterly loss.

Asian stock markets finished mixed. Japan's Nikkei shed 1.3% on a stronger yen. Europe stocks were generally flat; the U.K.'s FTSE 100 was up 0.2%.

Stocks slump hits NYSE Euronext

2009-02-09T07:07:00.000-08:00

NYSE Euronext has reported a $1.34bn (£904m) quarterly loss after weakened global share markets forced it to reduce the value of its assets.
Stocks, Bonds & Forex Trading source: news.bbc.co.uk

NYSE Euronext, which was formed by a merger in 2007, said the write-down of its assets totalled $1.59bn.

The loss for the October to December period compares with a profit of $156m for the same period a year earlier.

NYSE Euronext runs the New York, Paris, Lisbon, Brussels and Amsterdam exchanges.

The company's net quarterly revenues were down 2% to $683m. Its annual net loss for 2008 totalled $738m.

It also announced that it was suspending its share buyback programme because of the bad market conditions.

"During this period of unprecedented market dislocation and uncertainty, we continue to focus on executing and delivering against our key strategic initiatives which will drive our long-term growth," said NYSE Euronext cheif executive Duncan Niederauer.

FOREX-Yen reverses gains, but caution before U.S. jobs

2009-02-06T06:56:00.000-08:00

Stocks, Bonds & Forex Trading
Source: uk.reuters.com

By Tamawa Desai

LONDON, Feb 6 (Reuters) - The yen fell versus the dollar and euro on Friday, reversing gains as rises in stocks renewed appetite for riskier assets but caution prevailed before U.S. jobs data which will show another grim sign for the economy.

The dollar recovered against the yen from levels seen in late U.S. trade on Thursday but was still below a nearly one-month high hit as Wall Street rallied.

But traders were wary of chasing prices sharply higher ahead of data that is expected to show more than half a million U.S. jobs likely lost in January.

The U.S. unemployment rate was likely to have climbed to 7.5 percent in January, compared with 7.2 percent a month earlier, with 525,000 jobs forecast to have been shed.

"Payrolls are the big focus for the day," said analysts at Citigroup. "Bad news still means good news for the dollar."

At 1004 GMT, the dollar was up 0.3 percent on the day at 91.46 yen after climbing above 92 yen on Thursday. The euro was at 117.20 yen .

European shares rose 0.4 percent in morning trade .FTEU3.

Data on Friday is expected to show German industrial output fell 2.5 percent in December from the previous month.

The euro was up 0.2 percent against the dollar at $1.2812 after the European Central Bank kept interest rates unchanged on Thursday but indicated more easing next month, as widely expected.

But analysts pointed out the euro will remain under pressure as the Russian rouble's decline has prompted Russian authorities to sell euros for dollars to maintain the balance of their reserves portfolio.

The rouble tested its new trading floor against a euro-dollar basket for the first time on Thursday. It was trading just above the trading floor of 41 on Friday.

The dollar was also supported on expectations for the Obama administration's bank rescue plan to be unveiled on Monday.

"The market already expects a weak jobs report, so the financial plan on Monday will be the main driver," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

Meanwhile, sterling pared some early gains after UK industrial output weakened more than expected. It was up 0.4 percent to $1.4676 , after climbing upward after the Bank of England cut interest rates on Thursday. The euro was down 0.1 percent at 87.25 pence . (Editing by Andy Bruce)

Bond sales yield 4 per cent

2009-02-06T06:49:00.000-08:00

Stocks, Bonds & Forex Trading
Source: business.theage.com.au

Vanessa O'Shaughnessy
February 7, 2009

THE first batch of bonds that will fund Australia's inescapable budget deficit have been sold at a yield of almost 4 per cent.

Yesterday, the Australian Office of Financial Management said bonds worth $601 million had been allotted, with an average yield of just over 3.9 per cent. They had a coupon rate of 6.25 per cent, and will mature on April 15, 2015.

The AOFM manages about $50 billion in government debt, having continued to issue bonds even though the federal budget has been in surplus for several years.

Over the next five months it will issue additional bonds worth between $22 billion and $24 billion. Some commentators expect the supply of Government bonds to rise to $120 billion over the next two years.

The funds will be used to pay for the Federal Government's $42 billion economic stimulus package, which includes hand-outs for parents and some taxpayers and infrastructure initiatives.

The budget is expected to remain in deficit for four years.

The AOFM has also announced its plans for further bonds sales. On Wednesday it will offer $600 million in Treasury bonds that will mature in May 2013. It will allocate on Friday another batch of bonds , to mature in June 2014.

Stocks set for higher open ahead of jobs report

2009-02-06T06:41:00.000-08:00

Stocks, Bonds & Forex Trading
Source: www.google.com

By MADLEN READ

NEW YORK (AP) — Wall Street was set for a moderately higher open Friday as investors hung their hopes on the government's stimulus plan even as they awaited another bleak jobs report.

A day after reporting that initial jobless claims hit a 26-year high, the Labor Department will report on January's payrolls and unemployment rate. The market is predicting a loss of about 524,000 jobs, according to the median estimate of economists surveyed by Thomson Reuters/IFR. It also expects the unemployment rate to have risen to 7.5 percent from December's 7.2 percent.

Jobs are so important to investors because if people are unemployed, they are not likely to boost their spending, buy houses or keep up with their debt repayments. And three of the biggest problems facing the economy are dampened consumer spending, the housing market's ongoing slide, and accelerating loan defaults.

The Obama administration is aiming to turn the economy around with a stimulus package for individuals and businesses, plus another rescue plan for the nation's foundering banks. The Senate is expected to vote on the $937 billion stimulus bill Friday. A new plan for the banks is expected to be announced Monday.

Ahead of the market's open, Dow Jones industrial average futures rose 12, or 0.15 percent, to 8,006. Standard & Poor's 500 index futures rose 2.20, or 0.26 percent, to 842.70, and Nasdaq 100 index futures rose 6.50, or 0.53 percent, to 1,241.00.

On Thursday, the major indexes soared more than 1 percent as Wall Street looked past troubling economic reports and bargain-hunted among battered retail and technology stocks.

In corporate news, Toyota Motor Corp., the world's largest automaker, posted a loss for the fiscal third quarter and said it now expects not only a full-year operating loss, but a full-year net loss — which would be its first since 1950.

Early Friday, bond prices were mostly higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.90 percent from 2.92 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.29 percent from 0.26 percent.

The dollar was mixed against other major currencies. Gold prices fell.

Light, sweet crude fell $1.37 to $39.80 a barrel in premarket trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average rose 1.60 percent. In afternoon trading, Britain's FTSE 100 rose 0.79 percent, Germany's DAX index rose 0.98 percent, and France's CAC-40 rose 0.51 percent.

Market Overview by Forex Yard

2009-01-29T04:23:00.000-08:00

Stocks, Bonds & Forex Trading
Source: www.forexhound.com

FXYard Ltd , FXYard Ltd - Published 01.29.2009 08:30 GMT

Yesterday's trading was highlighted by the Dollar's rally across the board after the release of the Federal Reserve's statement on Wednesday afternoon during the New York trading session. The greenback jumped against the EUR with the pair plunging below a significant support level of 1.3100. The Dollar also reversed most of its downward momentum against the Pound, closing the day at 1.4155. Against the Japanese Yen, the Dollar rose from 89.22 to end the day at 89.68.

The Dollar began the day in the red as traders feared the Fed may take up more unconventional methods of battling the U.S. economy's downturn. It was suspected that the Fed would buy long-term Treasury bonds in order to help lower U.S mortgage rates. There were also rumors in the market that the Fed would undertake efforts to prevent deflation from occurring. Traders have a negative view of these tactics as a rise in inflation would significantly hurt the Dollar's purchasing power.

Other traders have also taken the view that the Fed has been very aggressive in tackling the economic crisis in the U.S. The Federal Reserve was out in front of its European and British counterparts, slashing interest rates and aggressively adding bad banking assets to its balance sheet to support the U.S. banking industry. This has helped to create positive momentum for the Dollar.

Today's trading of the USD will focus on two pieces of fundamental data. Due to be released today is the core durable goods orders and new unemployment claims. Both indicators are expected to show sharp declines. This may hurt the Dollar in the short term, perhaps sending the EUR/USD higher to the 1.3200 mark by day's end.

* EUR
Interest Rate Speculation Provides a Temporary Boost to the EUR
The EUR experienced high volatility in the wake of a speech by European Central Bank (ECB) President Jean-Claude Trichet. During a speech at the World Economic Forum (WEF) in Davos Switzerland, Trichet hinted that the ECB may hold interest rates steady for their upcoming policy meeting scheduled for Feb 5th.

The ECB has repeatedly reduced European interest rates in light of the economic recession in the Euro-Zone economy. Currently the Minimum Bid Rate stands at a record low 2.00%. Market analysts have forecast a rate cut of 0.50% during the ECB's next meeting. ECB board members must now balance the ability to ease monetary policy to fight the economic downturn in the Euro-Zone, while avoiding cutting rates too much too quickly. Policy-makers fear that a sharp drop in interest rates could lead to future inflationary pressures.

A report released today by the International Monetary Fund (IMF) was an updated economic forecast for the Euro-Zone economy. The IMF slashed its growth rate projection from a decline of 0.50% to a much larger contraction of 2.00%.

The Euro-Zone economy appears to be deteriorating faster then previously thought. But policy-makers may be sending mixed signals to the market. The ECB has not kept up with the Bank of England or the Federal Reserve in its mission to stem the tide of the economic downturn. Perhaps more aggressive moves are needed by the ECB. Then we may see some appreciation in the EUR.

* JPY
Strengthening USD Puts Downward Pressure on the Yen
The USD/JPY was driven higher today on the Fed's comments and an increase in risk appetite. Fueling the appreciation of the Dollar was a rise in the Dow Jones Industrial Average. When U.S. equity markets rise, this pair tends to rise as well. Also fueling an increased risk appetite was the passage of Barack Obama's economic bailout plan by the U.S. House of Representatives. These factors helped to rally the USD/JPY to end the day at 89.68. The pair now stands at a one-week high.

The Yen is largely seen as a safe haven currency to be used during times of financial distress. As traders grow more comfortable taking on further risk, they will abandon their positions in the Yen for the USD and higher yielding currencies. Risk sentiment appears to be improving as the Federal Reserve and the Obama administration are teaming up to restore confidence and future prospects for a stable economic recovery. This may boost the USD/JPY in the near term and we may see the pair rise to the 91.00 level.

* Oil
Crude Supplies Drop the Price of Oil
The price of Crude Oil dropped yesterday as U.S. Crude Oil Inventories were reported to be almost 2.5 times higher than forecasted. This helped to lower the price of Oil to end the day down at $41.51, though the drop in price was less significant than yesterday's plunge.

The rising inventories are an example of what is occurring in the market for Crude Oil. There is currently a glut of supply with wavering demand. Oil refineries have not cut production enough to arrive at equilibrium with demand. These market forces will settle once a return of confidence is seen in the global economy. Traders may look for further easing of the price of Crude Oil as the $40 mark could be in sight once again.

Technical News
* EUR/USD
After witnessing a significant drop yesterday, this pair appears to have found a short-term equilibrium. The oscillators on all charts are indicating a lack of direction for this pair with the only useful information being given by the weekly chart's Momentum oscillator which shows that the downward movement may continue. Waiting for a clearer signal might be the right strategy today.

* GBP/USD
It appears that the price is currently floating in the over-sold territory on the hourly chart's RSI indicating an upward correction may occur in the very near future. The price of this pair is also located near the lower border of the hourly chart's Bollinger Bands, which lends support to the notion of an imminent upward correction. Going long with tight stops might be the right choice today.

* USD/JPY
The Slow Stochastic on the 4-hour chart is showing a bearish cross has just occurred and is pushing the pair further down. The weekly chart's Momentum oscillator also indicates a continuation of the downward movement. On the contrary, the hourly chart's Slow Stochastic may be forming a bullish cross in the near future, signaling the downward movement may witness an upward correction within a short time frame. Going long with tight stops might be a good strategy for the short-term today.

* USD/CHF
The price of this pair appears to be floating in the over-bought territory on the 4-hour chart's RSI indicating a downward correction may be imminent. A bearish cross forming on the 4-hour chart's Slow Stochastic supports this notion. Going short might be the right choice today.

The Wild Card
* Gold
The price of this commodity appears to be hovering near the over-sold territory on the hourly and 4-hour charts' RSI, signaling an upward correction may occur soon. The imminent bullish cross on the 4-hour chart's Slow Stochastic adds weight to this notion, while the weekly chart's Momentum oscillator also shows sharp upward pressure. As this commodity continues to surge upwards,
forex traders have the potential to join the upswings by entering early at great prices and capturing their profits.

Bonds: In Search of Higher Yields

2009-01-29T04:16:00.000-08:00

Stocks, Bonds & Forex Trading
Source: www.businessweek.com

January 29, 2009, 12:01AM EST

With returns on Treasuries remaining low, investors are beginning to discover the fat yield spreads to be found in corporate junk bonds

By David Bogoslaw

With yields on longer-dated Treasury securities on the rise since the start of 2009, there's been some debate about how the Federal Reserve should proceed if it wants to keep interest rates capped in order to free up more credit to individuals and small businesses. On Jan. 28, the Federal Open Market Committee, the central bank's policy-making arm, voted to maintain the target range for the Fed funds rate at zero to 0.25% and said it wouldn't purchase Treasuries at this time.

From one perspective, the implications of higher Treasury yields for homeowners seeking to refinance adjustable-rate mortgages at affordable fixed rates and other cash-strapped consumers and business owners shouldn't matter much. After all, it was the Fed's announcement that it would buy up to $500 billion in mortgage-backed securities that pushed mortgage rates substantially lower after they failed to drop in concert with falling Treasury rates.

For investors, on the other hand, Treasury yields can't rise fast enough. The prospect of yields staying relatively tame for the foreseeable future has investors already looking for alternative places to place their cash.

Coming Auctions

Ideas as to what's behind the uptick in Treasury yields—and the drop in prices—vary depending on who you speak with. Some fixed-income managers see it as a simple matter of supply and demand, with $70 billion worth of two- and five-year notes to be auctioned this week and an estimated $66 billion in three-, 10-, and 30-year securities to be offered the second week of February, according to The Wall Street Journal.

Others view the bounce in yields over the past month or so as a correction to an overdone rally in Treasury prices in the final weeks of 2008, when investors, spooked by the apparent freefall across a range of asset classes, fled to the relative safety of government debt. "It shows from a reflationary standpoint you're getting some confidence that the Fed and the rest of the federal government will be able to keep us out of a depression," says Jamie Jackson, portfolio manager for fixed income at Riversource Investments (AMP) in Minneapolis.

To David Glocke, a principal and portfolio manager at the Vanguard Group in Valley Forge, Pa., however, all bets on an economic recovery in 2009 and possibly even 2010 are premature.
Frozen Credit Flows

The global recession is serious and won't easily be fixed, despite the growing size of the stimulus package the Obama Administration is throwing at it, says Glocke. He cites the possibility that the unemployment rate will reach 10% as endemic of recessionary conditions that would imply interest rates will stay low for an extended period of time. Much of the government stimulus money already released through TARP hasn't flowed through to individuals and small businesses. People aren't buying cars, and they're having difficulty refinancing their homes despite the drop in mortgage rates, because lending standards have tightened and the current value of their homes in many cases are less than what they owe, he points out.

"The mechanism to allow individuals to contribute to a recovery by taking advantage of lower interest rates is broken," says Glocke.

Although he believes the Fed still has the ability to manage interest rates through direct purchases of agency debentures, mortgage-backed securities, and/or U.S. Treasury securities, the economic recovery will rest more on a fiscal stimulus coming out of Washington than monetary stimulus at this point, Glocke says.

nvestors are selling some of the Treasuries they previously loaded up on and are taking a chance on higher-risk debt instruments—not because the economy looks any better than it did a month ago, but because they now recognize they're being paid to take the extra risk, says Jackson at Riversource. Some high-yield bonds are paying around 18%, not far below the 20% they paid in the fourth quarter, he adds.

The attraction of other assets, such as short-maturity FDIC-backed corporate debt, is that they're priced more cheaply than comparable Treasury bills and offer yields 0.70% to 0.80% higher than Treasuries. There are also municipal bonds with higher yields, whether investors need the tax advantage that comes with them or not, says James Sarni, managing principal at Payden & Rygel in Los Angeles.

"Treasury yields dropped to such low levels [by the end of 2008] that they just didn't make sense anymore, given the supply expected in 2009 and the yield spreads available in other assets that are either implicitly or explicitly backed by the government," says Sarni.
A Roof on Rates

On Jan. 28, the yield on the 30-year Treasury bond topped 3.40%, after falling to a record low of just over 2.5% in December, while the 10-year note yielded 2.67%, vs. a low near 2.0%. This isn't a secular rise in interest rates, "just a bit of a reversal of the precipitous declines we've seen" as investors diversify out of Treasuries, says Sarni. A very weak global economy will keep a ceiling on rates, while any positive economic news could give another 20-basis-point boost to Treasury yields, he predicts.

Another reason for the substitution of higher-yielding corporate debt for Treasuries is less obvious: demand from nontraditional debt investors, including mutual fund managers who think the risk/reward on bonds of certain companies at this time is better than on the corresponding stock, according to Robert Kowit, senior portfolio manager in the Global Fixed Income Group at Federated Investors (FII).

This is particularly true for mutual funds that track major indexes, such as the S&P 500, and need to maintain some exposure to such key companies as General Electric (GE) or Johnson & Johnson (JNJ) that the indexes hold. "If you have to have exposure to a corporate name at this stage and you're trying to minimize your risk because you think there's going to be a lot of volatility, you might choose to own short- to medium-term bonds instead of equities," he says.
Stocks Can Hardly Compete

The yield spreads of speculative-grade corporate debt over Treasuries have gotten so wide that the absolute yields are well into the double-digit range. If you buy a 10-year bond with a 15% yield to maturity, you're getting a 15% return per year. The stock price of the same company would have to appreciate 15% annually to provide the same return, and very few stocks can do that for 10 years, says Kowit. These fund managers believe the market has already done a pretty good job of pricing the risk of additional corporate bankruptcy filings into the investment-grade and high-yield corporate bond markets, he adds.

And if a massive rally materializes in the stock market, there's nothing preventing portfolio managers from selling the bonds and buying the stock, Kowit says.

The Bloomberg terminals that many money managers and traders use feature a new function called Equity Volatility & Credit Risk, which lists all the companies in whatever global index you select and calculates the relative value of each company's bonds vs. its equity.

"If Bloomberg has taken the time and effort to put together a calculator like that, it's a pretty safe bet that people are viewing things in those terms," says Kowit.
Coupon Yields Are Safer

Companies are more concerned about maintaining their credit ratings and are likely to favor bond investors by cutting dividends to equity investors, he says. Investors also understand that in the event of bankruptcy, they're more likely to lose their equity investment before their debt investment. "It's a very simplistic way of playing the capital structure and investing in a corporate entity," he says.

As for how much the spreads between high-yield corporate bonds and Treasuries are likely to shrink, most of the narrowing will probably be due to declining yields on high-yield debt as investor demand grows, says Riversource's Jackson. He expects the premium on high-yield bonds to pull back to the more normal 5% to 10% range within two to three years. Given the likelihood of a fair number of corporate bankruptcies this year, investors drawn to mutual funds that are focused on high-yield bonds need to be careful when choosing a portfolio manager, he says.

As long as you're comfortable with the risks, corporate bonds could wind up to be a good place to put your money until the economy recovers.

Bogoslaw is a reporter for BusinessWeek's Investing channel.

Stocks rise on reports of Obama plan for bad bank assets

2009-01-29T04:00:00.000-08:00

Stocks, Bonds & Forex Trading
Source: www.latimes.com

The Dow gains 200 points on speculation that the administration may set up a 'bad bank' to acquire soured assets and on the Fed's statement that it expects to keep interest rates low 'for some time.'

By Walter Hamilton
January 29, 2009

Reporting from New York -- White-hot worries about the country's banks have cooled noticeably as expectations have grown that the Obama administration will create a "bad bank" to clean all the toxic debt off the financial sector's balance sheets.

Speculation about such a plan, raising hope that financial institutions could eventually emerge from the welter of bad loans that have weighed them down, caused share prices of banking companies to surge, pushing the overall "The message of the markets has been that there may be light at the end of this tunnel," said Hugh Johnson, head of Johnson Illington Advisors in Albany, N.Y.

Shares of Citigroup Inc. gained 19%, while Bank of America Corp. surged 14%, JPMorgan Chase Inc. climbed 10% and money manager State Street Corp. ballooned 31%.

Despite getting capital infusions in the tens of billions of dollars from the federal government since last fall, banks still have been viewed with concern, in large part because of home loans and mortgage-backed securities -- assets that have generated fresh losses each quarter as the housing downturn has accelerated.

Freeing banks of those assets was the idea behind the government's original bailout plan, known as the Troubled Asset Relief Program. But it was abandoned in part because of questions over how much the government would pay. Underpaying could leave banks with insufficient capital, whereas overpaying would reward them at the expense of U.S. taxpayers.

Anticipation of a bad-bank plan also eased fears that the government would move to take more drastic action to nationalize the industry, which has rattled investors all month.

"There's just a little bit more of a level of confidence that the government is doing something without saying, 'We're going to call the shots from here on out,' " said Joe Cusick, senior market analyst at Chicago-based brokerage OptionsXpress.

The rally trumped a continuing string of disappointing bank earnings reports -- the latest coming Wednesday from Wells Fargo & Co.

Wells Fargo shares swelled 31% even though the San Francisco company reported a net loss of $2.6 billion. The bank also wrote down by $37.2 billion a portfolio of risky loans inherited from Wachovia Corp., which Wells bought during the quarter.

Investors, however, were comforted that Wells Fargo maintained its 34-cent quarterly dividend, which some had feared would be cut after similar moves at other companies.

Some experts, citing the troubled state of the economy, expressed skepticism that the bank-stock rally could continue.

"The fact that we have to bring out TARP 2 tells you we have real serious problems with the banks," said Bill King, chief market strategist at M. Ramsey King Securities in Burr Ridge, Ill.

The Dow rose 200.72 points to 8,375.45. The S&P 500 gained 28.38 points to 874.09.

The Nasdaq composite index advanced 53.44 points, or 3.6%, to 1,558.34 as technology stocks rose strongly. Apple climbed 4%, Google increased 5% and Yahoo jumped 8%.

In addition, Sun Microsystems surged 22%, BlackBerry maker Research in Motion gained 5% and Lam Research jumped 6.5%.

Overseas, key stock indexes advanced 2.4% in Britain, 4.5% in Germany, 4.1% in France and 0.6% in Japan.

In the U.S., stock investors took solace in a pledge by the Federal Reserve to keep interest rates low "for some time" and to consider a range of economic remedies.

But yields on Treasury bonds rose sharply after the Fed, at the conclusion of a two-day meeting of its policymaking committee, failed to promise a program to buy longer-term Treasuries, something the central bank has said it was considering.

An index of 24 bank stocks shot up 14%. The broad Standard & Poor's 500 index climbed 3.4%, while the Dow Jones industrial average gained more than 200 points, or 2.5%. Stocks in Europe also rallied on optimism about the financial sector.

"The message of the markets has been that there may be light at the end of this tunnel," said Hugh Johnson, head of Johnson Illington Advisors in Albany, N.Y.

Shares of Citigroup Inc. gained 19%, while Bank of America Corp. surged 14%, JPMorgan Chase Inc. climbed 10% and money manager State Street Corp. ballooned 31%.

Despite getting capital infusions in the tens of billions of dollars from the federal government since last fall, banks still have been viewed with concern, in large part because of home loans and mortgage-backed securities -- assets that have generated fresh losses each quarter as the housing downturn has accelerated.

Freeing banks of those assets was the idea behind the government's original bailout plan, known as the Troubled Asset Relief Program. But it was abandoned in part because of questions over how much the government would pay. Underpaying could leave banks with insufficient capital, whereas overpaying would reward them at the expense of U.S. taxpayers.

Anticipation of a bad-bank plan also eased fears that the government would move to take more drastic action to nationalize the industry, which has rattled investors all month.

"There's just a little bit more of a level of confidence that the government is doing something without saying, 'We're going to call the shots from here on out,' " said Joe Cusick, senior market analyst at Chicago-based brokerage OptionsXpress.

The rally trumped a continuing string of disappointing bank earnings reports -- the latest coming Wednesday from Wells Fargo & Co.

Wells Fargo shares swelled 31% even though the San Francisco company reported a net loss of $2.6 billion. The bank also wrote down by $37.2 billion a portfolio of risky loans inherited from Wachovia Corp., which Wells bought during the quarter.

Investors, however, were comforted that Wells Fargo maintained its 34-cent quarterly dividend, which some had feared would be cut after similar moves at other companies.

Some experts, citing the troubled state of the economy, expressed skepticism that the bank-stock rally could continue.

"The fact that we have to bring out TARP 2 tells you we have real serious problems with the banks," said Bill King, chief market strategist at M. Ramsey King Securities in Burr Ridge, Ill.

The Dow rose 200.72 points to 8,375.45. The S&P 500 gained 28.38 points to 874.09.

The Nasdaq composite index advanced 53.44 points, or 3.6%, to 1,558.34 as technology Stocks rose strongly. Apple climbed 4%, Google increased 5% and Yahoo jumped 8%.

In addition, Sun Microsystems surged 22%, BlackBerry maker Research in Motion gained 5% and Lam Research jumped 6.5%.

Overseas, key stock indexes advanced 2.4% in Britain, 4.5% in Germany, 4.1% in France and 0.6% in Japan.

In the U.S., stock investors took solace in a pledge by the Federal Reserve to keep interest rates low "for some time" and to consider a range of economic remedies.

But yields on Treasury bonds rose sharply after the Fed, at the conclusion of a two-day meeting of its policymaking committee, failed to promise a program to buy longer-term Treasuries, something the central bank has said it was considering.

The yield on the 30-year Treasury bond jumped to 3.42% from 3.24% on Tuesday. The yield on the 10-year T-note climbed to 2.65% from 2.52%.

walter.hamilton@latimes.com

FOREX-Dollar rises vs yen, falls vs euro before Fed

2009-01-28T00:26:00.000-08:00

Stocks, Bonds & Forex Trading
Source: uk.reuters.com

Wed Jan 28, 2009 6:15am GMT

By Rika Otsuka

TOKYO, Jan 28 (Reuters) - The dollar edged up against the yen on Wednesday as an improved appetite for risk prompted investors to dump the safe-haven Japanese currency, while the dollar dipped versus the euro as players awaited the outcome of a Federal Reserve meeting.

The Fed concludes a two-day policy meeting later in the day and could unveil new steps aimed at easing the credit crunch.

With the benchmark interest rate already near zero, the market is looking for any new policy measures, such as purchasing long-dated Treasuries.

"If the Fed makes comments on purchasing Treasuries, it would soothe concerns that overseas investors may start picking up fewer U.S. bonds," said Hideki Hayashi, chief economist at Shinko Securities

Japanese and Chinese investors have been big buyers of U.S. government bonds and any shift in their investment stance on Treasuries could affect the dollar.

The dollar rose 0.3 percent from late U.S. trading on Tuesday to 89.16 yen .

The euro rose 0.6 percent to $1.3256 a day after it climbed on a surprise rise in Germany's Ifo economic research institute's corporate sentiment data.

Against the yen, the single European currency climbed 0.9 percent to 118.18 yen , having rebounded from a seven-year low of 112.08 yen hit on trading platform EBS last week.

There was little currency reaction to the outcome of bilateral telephone talks between Japanese Finance Minister Shoichi Nakagawa and U.S. Treasury Secretary Timothy Geithner.

Nakagawa and Geithner agreed the two nations needed to work closely to overcome troubles in the global economy, a senior Japanese finance ministry official said, adding they did not touch on currency rate issues in their talks. [ID:nT146587]

RISK APPETITE

The yen fell broadly, with higher-yielding currencies supported as the Nikkei share average erased early losses to turn positive in the afternoon .N225, and U.S. S&P 500 stock futures climbed around 2 percent SPc1.

Sterling was up 1.2 percent at 127.30 yen . The pound sank to a record low of 118.80 yen last week.

"Right now, market players are not thinking so much about selling the dollar based on the fact that the United States is not doing well," said a trader for a Japanese brokerage house.

"Instead, people are mulling over whether or not we are in an environment conducive to taking risks."

U.S. stock futures are likely getting a lift from hopes for further economic measures, such as the idea of the U.S. government creating a "bad bank", he said.

Senate Banking Committee Chairman Chris Dodd said on Tuesday he was aware the Obama administration was discussing the idea of setting up a "bad bank" to clean toxic assets from struggling financial companies. [ID:nWBT010501] [ID:nN27468019]

Another potentially positive factor for the dollar was the launch on Wednesday of a new Nomura Asset Management mutual fund investing in high-yielding U.S. corporate bonds. Industry sources said Nomura Asset's "Nomura U.S. High-Yield Bond Investment Trust" fund was likely to draw more than 100 billion yen ($1.12 billion) from Japanese retail investors. [ID:nT108623]

Earlier, the Australian dollar dipped after data showed on Wednesday that Australia's consumer prices fell by the most in a decade in the fourth quarter, justifying talk of another aggressive interest rate cut next week. [ID:nSYD263733]

But the Australian dollar later rebounded and rose 0.9 percent on the day to $0.6675 . (Additional reporting by Masayuki Kitano; Editing by Brent Kininmont)

Bonds boosted by record auction

2009-01-28T00:20:00.000-08:00

Stocks, Bonds & Forex Trading
Source: money.cnn.com

By Catherine Clifford, CNNMoney.com staff writer
Last Updated: January 27, 2009: 3:41 PM ET

NEW YORK (CNNMoney.com) -- Treasurys rallied Tuesday after a record 2-year note auction attracted more bidders than available notes.

Bonds were also boosted by hopes that the Federal Reserve will offer more details Wednesday about the possibility that it may step in and buy its own debt, which would provide a surge of demand.

The central bank began its two-day policy-making meeting Tuesday. With interest rates in a range of 0% to 0.25%, there's not much room to go lower. But investors will be keen to hear what the Fed says.

"They are positioning themselves to keep rates low for a longer period of time," said Ross Junge, senior vice president of portfolio management at Aviva Investors North America. But it's the possibility that the central bank may outline plans for buying debt that was helping prop up Treasury prices, he added.

Stimulus and auctions: As the national economy struggles in recession, the Obama administration is working to push through a $825 billion financial rescue package.

Spending programs and financial rescue packages will require the government to auction off historic amounts of debt in order to fund the programs. The Treasury was scheduled to auction $135 billion worth of debt this week, on top of the $120 billion worth of debt brought to market last week. The federal deficit already exceeds $1 trillion.

On Tuesday the government auctioned a record $40 billion worth of 2-year notes with a bid-to-cover ratio of 2.69, meaning there was over $100 billion worth of bidders for $40 billion of debt.

The government also auctioned $32 billion worth of 28-day bills Tuesday.

On Monday the government auctioned $29 billion worth of 13-week bills, $28 billion worth of 26-week bills, and $8 billion worth of 20-year TIPS (Treasury Inflation-Protected Securities).

And on Thursday the Treasury is scheduled to sell a record $30 billion worth of 5-year notes.

Debt prices: Treasurys reached record highs at the end of 2008 as spooked investors looked for a safe haven. But the influx of supply had pushed prices sharply lower of late. Tuesday's bounce was partly due to investors finding value in those lower levels.

The 10-year Treasury rallied 1-3/32 to 110-19/32, and its yield fell to 2.53% from 2.64% late Monday. Bond prices and yields move in opposite direction.

The 30-year longbond surged 3-4/32 to 123-29/32, and its yield dipped to 3.23% from 3.38%. The 2-year note edged higher 2/32 to 100-4/32, and its yield fell to 0.81% from 0.84%.

The yield on the 3-month note rose to 0.14% from 0.10% Monday. The 3-month bill has been used as a gauge of confidence in the marketplace because investors tend to shuffle funds in and out of the bill as they asses risk in other places.

Lending rates: The 3-month Libor rate held steady at 1.18%, according to Bloomberg.com. The overnight lending rate, meanwhile, ticked lower to 0.22% from 0.23% Monday.

Libor, the London Interbank Offered Rate, is a daily average of rates 16 different banks charge each other to lend money in London, and it is used to calculate adjustable-rate mortgages. More than $350 billion in assets are tied to Libor.

Two credit market gauges were mixed, showing a modest rise in confidence but less cash availability.

The so-called "TED" spread, a measure of banks' willingness to lend, narrowed to 1.04 percentage points from 1.08 percentage point Monday. The bigger the TED spread, the less willing investors are to take risks. The rate surged as the credit crisis gripped the economy, but has since fallen off as central banks around the world have lowered interest rates and pumped the economy with liquidity.

Another market indicator, the Libor-OIS spread, ticked up to 0.95 percentage points from 0.94 percentage point, late Monday. The Libor-OIS spread measures how much cash is available for lending between banks, and is used for determining lending rates. The bigger the spread, the less cash is available for lending.

Japan Five-Year Bonds Fall as Stock Gains Damp Demand for Debt

2009-01-28T00:18:00.000-08:00

Stocks, Bonds & Forex Trading
Source: www.bloomberg.com

By Yasuhiko Seki and Theresa Barraclough

Jan. 28 (Bloomberg) -- Japanese five-year bonds fell for a third day, reversing earlier gains, as stocks rebounded and reduced demand for government debt.

Five-year bond yields also climbed to a one-week high on speculation the U.S. will create an institution to remove toxic assets from banks’ balance sheets, helping ease the global credit crisis. Demand for shorter-dated notes waned on speculation primary dealers tried to push up yields to secure a higher coupon at tomorrow’s 2 trillion yen ($22.4 billion) auction of two-year government notes.

Bonds reversed gains on “rising stocks, which reflected positive expectations about the U.S. bank plan,” said Yoshiaki Hattori, a derivatives manager in Tokyo at Aozora Bank Ltd.

The yield on the 0.7 percent bond due December 2013 rose one basis point to 0.72 percent as of 4:10 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price fell 0.047 yen to 99.905 yen. Yields reached 0.660 percent on Jan. 23, the lowest level since September 2005. A basis point is 0.01 percentage point.

Japan’s bonds often move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.79 with the Nikkei 225 in the past two weeks, according to data compiled by Bloomberg. A value of 1 means the two moved in lockstep.

The yield on the benchmark 10-year bond fell half a basis point to 1.255 percent. Ten-year bond futures for March delivery rose 0.02 to 139.03 at the Tokyo Stock Exchange and the Nikkei 225 Stock Average advanced 0.6 percent.

Toxic Assets

The Federal Deposit Insurance Corp. may manage the so- called “bad bank” that the Obama administration is likely to set up as it tries to end the credit crisis, two people familiar with the matter said yesterday.

Japan’s benchmark bonds have handed investors a loss of 0.3 percent in the past week through yesterday, according to indexes compiled by Merrill Lynch & Co.

The decline in bonds was limited before a government report this week that economists say will show manufacturers slashed production at a record pace last month. Japan’s economy probably shrank 2.85 percent in the three months ended Dec. 31, according to a Bloomberg survey of economists.

Industrial output may have slumped 8.9 percent in December, the sharpest decline in 55 years, economists predict the Trade Ministry will say on Jan. 30. The drop would exceed the record 8.5 percent decline the previous month.

‘Bullish on Bonds’

“The 10-year yield above 1.25 percent is buying-territory for investors,” said Keiko Onogi, a debt strategist in Tokyo at Daiwa Securities SMBC Co., one of the 24 primary dealers that are required to bid at government debt sales. “In the long-run, people will remain bullish on bonds and bearish on the economy. Bonds are still the safest option.”

Two-year yields climbed half a basis point to 0.4 percent today, the highest since Dec. 26. Pre-auction trading suggests the Ministry of Finance will set a 0.4 percent coupon on the new debt, down from 0.5 percent at the previous auction in December.

The Dec. 18 sale drew bids for 2.4 times the amount on offer, compared with a so-called bid-to-cover ratio of 2.80 at the November sale. Last year’s average was 3.04 times.

To contact the reporter on this story: Yasuhiko Seki in Tokyo at Yseki5@bloomberg.net; Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.
Last Updated: January 28, 2009 02:30 EST

FOREX-Yen falls as risk appetite revives

2009-01-26T21:02:00.000-08:00

Stocks, Bonds & Forex Trading
Source: www.reuters.com

* Euro, sterling extends gains vs yen

* Risk appetite improves as shares rise

* Japan govt says to provide public funds to firms

By Masayuki Kitano

TOKYO, Jan 27 (Reuters) - The yen fell against the euro and sterling on Tuesday as Tokyo shares rose and after the Japanese government said it would offer public funds to companies whose capital is seriously hurt by the financial crisis.

The yen had fallen on Monday after British bank Barclays said it would report a 2008 pretax profit and U.S. data showed a rise in home sales, giving a boost to investors' risk appetite.

The yen extended its losses against the euro and sterling on Tuesday after the Japanese government said it would provide public funds to firms facing difficulty in fund-raising due to market turmoil.

The yen often take its cue from perceived swings in investors' risk appetite, and has tended to fall against higher-yielding currencies when such risk tolerance increases.

But market players said the latest fall in the yen may have been exacerbated by position unwinding and played down the impact of the government's offer of public funds for firms.

"It's hard to say whether market players will start taking risks and sell the yen because of this," said Tohru Sasaki, chief foreign exchange strategist for JPMorgan Chase Bank in Tokyo.

"The yen had already been sold ahead of time and stocks had risen, so it's hard to tell just how much of this move stemmed from the news and how much of it was stop-loss position unwinding," Sasaki said.

The euro was up 0.9 percent at 118.47 yen on trading platform EBS, having climbed to 118.91 yen earlier.

The euro has rebounded against the yen after hitting a seven-year low of 112.08 yen last week.

Sterling climbed 1 percent to 125.68 , having rebounded from last week's record low of 118.80 yen.

Amid the yen's broad weakness on Tuesday, the dollar rose 0.5 percent to 89.53 yen .

Sterling also rose against the dollar, climbing 0.3 percent to $1.4037 and pulling away from a 23-year low of $1.3500 hit late last week after data showed that Britain's economy shrank at its fastest pace since 1980.

The yen could fall further against sterling and the euro in the near term, especially if global stock markets rise and point to further improvement in investors' risk appetite, traders said.

But the euro and sterling were unlikely to see a sustained rally at this point, despite the previous day's rally, they said.

"What took place was probably a temporary unwinding of positions that were tilted toward selling European currencies," said Yuji Matsuura, joint general manager for Aozora Bank's forex & derivatives trading group.

One key for the euro later on Tuesday will be Germany's Ifo monthly business climate index, traders said.

Against the dollar, the euro rose 0.3 percent to $1.3234 .

A Reuters poll of economists shows that German corporate sentiment likely deteriorated in January to the lowest levels since German reunification in 1990, due to weakening demand and production cuts.

The U.S. Senate's decision on Monday to back Timothy Geithner to be Treasury secretary was in line with market expectations and had a limited impact on currencies, said a trader for a major Japanese bank. (Editing by Michael Watson)

Japan’s 30-Year Bonds Decline for Fifth Day as Stocks Advance

2009-01-26T20:57:00.000-08:00

Stocks, Bonds & Forex Trading
Source: www.bloomberg.com

By Yasuhiko Seki

Jan. 27 (Bloomberg) -- Japan’s 30-year bonds declined for a fifth day, driving the yield to a three-week high, as stock gains sapped demand for the relative security of government debt.

“A bull run in the stock market drove the bond market lower,” said Katsutoshi Inadome, a Tokyo-based strategist at Mitsubishi UFJ Securities, the brokerage unit of Japan’s largest banking group, Mitsubishi UFJ Financial Group Inc.

The yield on the 2.4 percent note due in September 2038 climbed 2.5 basis points to 1.95 percent, the highest since Dec. 19, as of 1:33 p.m. in Tokyo, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price fell 0.512 to 108.452 yen.

Ten-year bond futures for March delivery declined 0.61 to 139.08 on the Tokyo Stock Exchange, the most since Jan. 6.

The yield on the benchmark 10-year bond rose 3 basis points to 1.25 percent. A basis point is 0.01 percentage point.

The Nikkei 225 Stock Average added 4.6 percent.

To contact the reporter on this story: Yasuhiko Seki in Tokyo at Yseki5@bloomberg.net.
Last Updated: January 26, 2009 23:36 EST

BOND REPORT: Treasurys Down After $65 Billion In Auctions

2009-01-26T20:52:00.000-08:00

Stocks, Bonds & Forex Trading
Source: money.cnn.com

January 26, 2009: 03:52 PM ET

Treasury prices fell Monday, pushing yields to the highest in weeks, as the government began a slew of debt auctions this week, ranging from short-term bills to $8 billion in 20-year inflation-indexed securities.

Ten-year note yields (UST10Y) rose 4 basis points, or 0.04%, to 2.66%, the highest since Dec. 10. Bond prices move inversely to their yields.

The two-year note (UST2YR) yields were little changed at 0.83%, the highest since Jan. 2.

"We see bond markets under pressure as actual and planned issuances surge," especially as foreign official buyers have less ability to invest in U.S. debt, said analysts at UBS Securities.

The government sold the Treasury Inflation Protected Securities, known as TIPS, to yield 2.500%.

TIPS pay investors a coupon plus the actual rate of inflation as measured by the government's consumer price index.

The most recently issued 20-year TIPS, maturing in April 2028, carry a yield 1.26 percentage points below regular Treasurys maturing around the same time, according to Barclays Capital. That gap implies that investors expect inflation to average around 1.26% over the life of the debt, which Barclays considers too low, making the securities a good buy at these levels.

The TIPS received bids for $1.92 for every dollar available, close to the average in the last four sales of the securities.

Indirect bidders, a class of investors that includes foreign central banks, bought 54% of the sale, also near the average of the last four.

Earlier, the Treasury sold $29 billion in three-month bills at a rate of 0.152% and $28 billion in six-month bills at a rate of 0.350%.

The Treasury Department also will put record amounts of two- and five-year notes up for bid, reducing investors' willingness to buy higher amounts at yields already near the lowest ever.

Home sales, job losses

Treasurys stayed lower after the National Association of Realtors said sales of existing homes rose 6.5% in December to a seasonally adjusted annualized rate of 4.74 million. Economists surveyed by MarketWatch predicted the pace would fall to 4.36 million.

The Conference Board's index of leading indicators rose 0.3% last month, helped by an increase in the supply of money. It fell 0.4% in November.

Treasurys briefly gained support as companies in several industries announced plans to slash jobs.

The widespread job cuts may work against the bond market though, if it leads the government to increase its already mammoth stimulus proposal.

Construction-equipment maker Caterpillar (CAT) said it would cut 20,000 jobs, and Home Depot (HD) said it would cut its workforce by about 7,000 jobs.

Sprint Nextel (US-S) it will eliminate 8,000 jobs in the first three months of 2009.

Longer-term "bonds are off on the continuing realization of stimulus funded by supply" of more debt, said Andrew Brenner, co-head of structured products and emerging markets at MF Global.

Also of concern to bondholders, Timothy Geithner is expected to be confirmed as Treasury Secretary on Monday, opening up the possibility of more details on the Obama Administration's stimulus proposal.

Possibly a threat to bond investors "will be the formal approval of Geithner and his coming forth with more details on the stimulus package, for example homeowners relief, which could add to deficit concerns and, imagine, boost equity market confidence," said David Ader, U.S. government bond strategist at RBS Greenwich Capital.

Also on tap this week is the Federal Reserve's policy meeting. Analysts don't expect any changes to the central banks' target overnight interest rate between banks, already dropped to a range of zero to 0.25% last month.

Policy makers are unlikely to say much different after they meet on Tuesday and Wednesday, having already affirmed they are ready to pull out all the stops to help the economy and stabilize financial markets.

(END) Dow Jones Newswires
01-26-09 1552ET
Copyright (c) 2009 Dow Jones & Company, Inc.

Japan Stocks Surge on U.S. Economy Optimism; Shippers Advance

2009-01-26T20:45:00.000-08:00

Stocks, Bonds & Forex Trading
Source: www.bloomberg.com

By Masaki Kondo

Jan. 27 (Bloomberg) -- Japanese stocks jumped the most in six weeks as U.S. economic data and eased concern a recession in the world’s largest economy will deepen.

Toyota Motor Corp. and Honda Motor Co. leapt more than 6 percent after U.S. home sales unexpectedly gained and an aide to President Barack Obama said bailout funds will be directed to consumers. Kawasaki Kisen Kaisha Ltd. surged 9.9 percent after commodity shipping fees rose for a fifth day. Mizuho Financial Group Inc., Japan’s No. 2 listed bank, soared 6.3 percent after Barclays Plc said it won’t need further capital increases, lifting optimism turmoil in global financial markets is subsiding.

“Thanks to once-in-a-century measures from governments worldwide, the global economy will likely be better next year than this year,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees about $96 billion. “Barclay’s announcement was seen as a positive surprise and eased pessimism in the financial sector.”

The Nikkei 225 Stock Average advanced 316.14, or 4.1 percent, to 7,998.28 as of 12:37 p.m. in Tokyo, its first gain in three days. The broader Topix index rose 30.85, or 4 percent, to 799.13, with all of its industry groups climbing. Both gauges jumped the most since Dec. 15.

The Nikkei dived by a record 42 percent last year as Japan, the U.S. and Europe sank into simultaneous recessions, and the gauge has lost another 10 percent this year. Japanese Prime Minister Taro Aso has pledged to lift his country from its first recession since 2001 by spending 10 trillion yen ($112 billion), while Obama has proposed an $825 billion economic package.

The tumble in shares has driven up the average dividend yield on the Nikkei’s members to 2.79 percent as of yesterday, more than twice the returns on 10-year Japanese government bonds.

Unexpected Gains

Toyota, the world’s biggest automaker, jumped 6.5 percent to 2,935 yen, breaking a four-day losing streak, while Honda, which gets about half its sales in North America, added 7.8 percent to 2,095 yen. Nissan Motor Co. climbed 6.5 percent to 294 yen.

U.S sales of existing homes climbed 6.5 percent last month, the National Association of Realtors said yesterday, while economists had expected a decline. The Conference Board’s index of leading indicators, which points to the direction of the economy over the next three to six months, also rose against economist projections for a drop.

President Obama’s administration will direct more of the second half of a $700 billion financial rescue plan to open up credit for consumers and businesses and stem home foreclosures, press secretary Robert Gibbs said.

Metals Rally

The U.S. economic data boosted commodities prices, lifting a gauge of six metals by 5.5 percent in London yesterday. In New York, copper futures for March delivery soared as much as 11 percent to the highest level since Dec. 2.

Mitsubishi, Japan’s biggest trading company by value, leapt 7.6 percent to 1,255 yen, and Mitsui & Co., the No. 2, added 7 percent to 948 yen. Sumitomo Metal Mining Co., the nation’s second-largest copper smelter, surged 9.5 percent to 908 yen.

Kawasaki Kisen, Japan’s No. 3 shipping line, advanced 9.9 percent to 378 yen, while Mitsui O.S.K. Lines Ltd., the second biggest, jumped 6.7 percent to 588 yen. Market leader Nippon Yusen K.K. added 6.7 percent to 494 yen. The Baltic Dry Index, a measure of shipping costs for commodities, rose 1.5 percent yesterday, bringing its five-day advance to 15 percent.

Mizuho leapt 6.3 percent to 219 yen, and Mitsubishi UFJ Financial Group Inc., Japan’s top lender, climbed 5.5 percent to 483 yen. Banks contributed the most to the Topix’s gain.

Barclays, based in London, yesterday said its capital is sufficient to get through “these difficult markets.” The bank said in an open letter that its North American units acquired from Lehman Brothers Holdings Inc. are generating “record” revenue.

Nikkei futures expiring in March leapt 5.3 percent to 7,990 in Osaka and rose 5.3 percent to 7,990 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
Last Updated: January 26, 2009 22:56 EST

FOREX-Dollar at 23-year high vs pound, 6-week peak vs euro

2009-01-25T05:07:00.000-08:00

source: uk.reuters.com

Fri Jan 23, 2009 4:55pm GMT

* Dollar touches six-week high against the euro

* Pound falls to 23-year trough against dollar at $1.3502

* UK in recession as economy contracts 1.5 pct (Recasts, updates prices)

By Nick Olivari

NEW YORK, Jan 23 (Reuters) - The dollar climbed to a 23-year high against sterling and six-week high against the euro on Friday as weak UK and euro zone data and worries about the global economy kept investors risk averse.

The pound and euro fell to session lows after data showed the UK economy contracted by 1.5 percent in the fourth quarter, far more than analysts had expected and confirming a recession [ID:nONS004024].

Investors took little encouragement from surveys showing the euro-zone manufacturing and services sectors contracted at a slightly slower pace in January, since they remain deep in recessionary territory [ID:nLAG003193].

The yen jumped on the back of its perceived safe-haven status, hitting record highs against the pound and nearing seven-year highs against the euro.

"The U.S. dollar and Japanese yen are higher against the major and most emerging currencies as they continue to benefit from the weak financial and economic environment," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, in a research note to clients.

The euro fell 1.2 percent against the dollar to $1.2828, earlier touching a six-week low of $1.2766. The pound tumbled on the day to hit another 23-year low of $1.3502 before recovering to $1.3699, down 1.1 percent on the day.

Sterling has come under severe pressure recently as worries about a very weak economy have combined with concerns about the UK's troubled banking sector and the parlous state of government finances.

The dollar was also supported by comments from U.S. Treasury Secretary nominee Timothy Geithner, who said a strong dollar is in the interest of the United States.

His remarks came on Thursday when he won the Senate Finance Committee's backing to head the U.S. Treasury. [ID:nN22539780]

The yen was mostly higher with the euro down 0.6 percent at 114.69 yen, still near a seven-year low just above 112 yen. The pound also hit a record low against the yen of 118.87 , according to Reuters data.

The dollar was last up 0.6 percent against the yen at 89.30 yen in a volatile session in which the greenback swung between gains and losses.

"We have these moves overnight (in dollar/yen) and then Europe uses us to square up," said John McCarthy, director of foreign exchange trading at ING Capital Markets. "When the dust settles the Dow is down".

Lower U.S. stocks, exemplified by the Dow Jones industrial average, typically indicate risk aversion and make the yen slightly more preferable to the dollar. The Dow industrials .DJI were down 0.9 percent on Friday.

Traders said the yen remained well-bid as a relatively safe currency due to worries about the deepening global recession.

This weighed on riskier and higher-yielding currencies, with the Australian dollar touching its lowest against the U.S. dollar since early December at $0.6420.

Market players were on the lookout for any comments from Japanese authorities about possible currency intervention to stem the yen's rise.

Worries also are growing about the possibility that the Swiss National Bank could intervene to weaken the Swiss currency, which, like the yen, has gained as investors seek safer assets.

Dollar/Swiss franc was up 1.1 percent at 1.1670 francs. (Additional reporting by Jessica Mortimer in London; Editing by Tom Hals)

The battle over bond funds: active or index?

2009-01-25T04:48:00.000-08:00

source: seattletimes.nwsource.com

By Gail MarksJarvis

Chicago Tribune

What's a better conservative investment, a bond index fund or an actively managed one?

Generally, I believe strongly in bond index funds. The best ones charge little in fees, so they have an advantage over most mutual funds because your money isn't drained away.

Historically, low-cost index funds such as the Vanguard Total Bond Market Index or the Vanguard Total Stock Market Index have left most funds in the dust even though many others hire smart managers to try to do better than indexes.

Still, some investors have reservations about relying exclusively on a bond index fund now because we are in an unusual period.

By definition, index funds don't make day-to-day decisions. The index bond funds simply mimic the full bond market, or a slice of it. They don't try to steer clear of bonds that might weaken and default. They don't look for bonds that might be safer. They simply acquire an array of bonds and stick with them.

In the case of the Vanguard Total Bond Market Index, the riskiest bonds in the market — "high-yield" or "junk" bonds — are not included because they are not part of the Barclays Aggregate Bond Market Index, which the Vanguard fund is mimicking.

The bond fund was in the right place at the right time last year, advancing 5.1 percent, because the index was stuffed with U.S. Treasury bonds and what are essentially government-guaranteed bonds issued by entities such as Freddie Mac and Fannie Mae.

Just 26 percent of the portfolio was in corporate bonds, or the type of bonds investors feared.

As a result, the Vanguard fund topped 89 percent of other bond funds last year. Many active managers did poorly as they tried to buy corporate bonds they thought were cheap. For example, highly respected Loomis Sayles lost 22 percent. The average bond fund fell about 7.4 percent.

Yet Morningstar bond-fund analyst Miriam Sjoblom said that investors going into the future with their focus on 2008 could be sorely disappointed.

Treasurys soared in 2008 and government-guaranteed bonds were popular because investors were scared. But investors have poured so much money into the safe bonds, Sjoblom said, they are considered expensive.

With time, the government may have to pay higher interest rates on bonds. When that happens, the value of the old Treasurys will fall because investors will want to earn higher interest.

At that point — no one can predict when — bond funds holding a lot of Treasurys could lose value.

Sjoblom isn't predicting index funds will become losers. Rather, she suggests the high Treasury exposure could hold the funds back compared with funds with the leeway to pick and choose bonds that they think have better prospects.

She notes that many bond-fund managers are buying corporate bonds.

Among the funds shopping in that area is the FPA New Income Fund, whose managers, Robert Rodriguez and Thomas Atteberry, were named fixed-income managers of the year by Morningstar.

The FPA fund, which gained 4.3 percent last year, is attractive now because Rodriguez and Atteberry shop for bonds with potential but are conservative about their choices.

Copyright © 2009 The Seattle Times Company

Wall Street News Alert Reports Friday's Stocks to Watch: WLGC! January 23, 2009

2009-01-25T04:39:00.000-08:00

source: www.wallstreetnewsalert.com

NOTE TO EDITORS: The Following Is an Investment Opinion Being Issued by Wall Street Capital Funding.

updated 9:33 a.m. ET Jan. 23, 2009

WESTON, FL - Wall Street News Alert's "stocks to watch" this morning are: WordLogic Corporation (OTCBB: WLGC), Lockheed Martin (NYSE: LMT), Knight Capital Group, Inc. (NASDAQ: NITE) and ITT Educational Services, Inc. (NYSE: ESI).

To receive FREE Mobile Stock Alerts formatted especially for your cell phone, text the word "press" in the subject line to 68494.

WordLogic Corporation (OTCBB: WLGC) should have the attention of investors. Yesterday after the markets closed the company issued a press release announcing that it was recently contacted by analyst David Stewart, who subsequently published The Stewart Report about WordLogic Corporation.

Interested parties can view the report by going to this link: http://www.wallstreetnewsalert.com/HotStocks/WLGC012509/default.aspx.

The stock closed yesterday at Eighty cents a share.

In case you are not familiar with the company: WordLogic Corporation is a technology company that delivers predictive interface solutions for computing devices ranging from small hand-held devices such as PDAs to laptops and tablet PCs to conventional desktop computers. Incorporated in the United States, the company's research, testing and marketing facilities are located in Canada.

Lockheed Martin (NYSE: LMT) up 6.3% on 6.1 million shares traded.

Lockheed Martin is a global security company that employs about 146,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

Knight Capital Group, Inc. (NASDAQ: NITE) up 10.6% on 8.3 million shares traded.

Knight Capital Group, Inc. is a leading financial services firm that provides electronic and voice access to the capital markets across multiple asset classes for buy-side, sell-side and corporate clients.

ITT Educational Services, Inc. (NYSE: ESI) up 10.1% on 5.2 million shares traded.

ITT Technical Institutes offer career-focused, technology-oriented programs of study that have been designed to teach knowledge and skills used in industry.

Market Commentary:

"Prices at the pump fell 1.6 cents overnight to $1.773 nationally, according to AAA, the Oil Price Information Service and Wright Express," stated Sonja Rudd in Wall Street News Alert's daily commentary continued at: http://www.WallStreetNewsAlert.com.

The views expressed in "The Stewart Report" may not necessarily reflect the views of Wall Street Capital Funding or any of its affiliates. Furthermore, Wall Street Capital Funding takes no responsibility for the completeness or accuracy of the report.

The Stewart Reports states, "Information contained herein has been obtained from sources believed to be reliable, but there is no guarantee as to completeness or accuracy. Any opinions expressed herein are statements of our judgment on this date and are subject to change without notice. Acting as an investor, and also as a consultant to Wall Street News Alert, a division of Wall Street Capital Funding LLC (WSCF), J. David Stewart purchased 10,000 shares of WLGC in the open market, and will receive $3,000 for his independent research analysis of WordLogic Corp. Affiliates of The Stewart Report may also have additional long positions in these and other securities discussed herein, including warrants and/or options, and may buy or sell same at their own discretion. This Report contains or may contain forward-looking statements within the meaning of the "safe-harbor" provisions of the US Private Securities Litigation Reform Act of 1995. This Report is intended for informational purposes only and does not have regard for or take into consideration the reader's investment objectives, financial situation or suitability for securities mentioned herein. Consult with your financial advisor and perform your own due diligence. Copyright © The Stewart Report 2009."

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FOREX-U.S. dollar drops to six-week lows vs euro

2008-12-12T04:56:00.000-08:00

source: www.reuters.com

Fri Dec 12, 2008 4:21am ES

WARSAW, Dec 12 (Reuters) - Polish companies have so far owned up to 500 million zlotys ($166 million) in losses from currency hedging after being wrong-footed by the zloty's drop since September, the economy ministry said on Friday.

The ministry launched a phone line earlier this week for companies to seek help related to their problems with currency options and has so far received feedback from 85 companies.

"That's the information we've received since the line was set up four days ago," an economy ministry representative who operates the helpline and declined to be named told Reuters.

"It is difficult to assess the scale for the time being because we don't know how many more calls we will get. Some companies will probably never get in touch with us."

A spokesman for the ministry declined to comment further, saying a statement would be released by Monday.

Economy Minister Waldemar Pawlak warned last week that losses on currency hedging could total tens of billions of euros as Polish exporters were forced to settle options contracts with banks.

But in a television interview on Thursday, the head of Poland's financial and markets watchdog said the scale of the problem was insignificant relative to the size of the economy, which stood at around $480 billion at the end of last year.

The financial regulator has asked banks and companies to provide information on their exposure to hedging contracts and planned its own report on the issue.

Many Polish exporters took out hedging contracts to protect their earnings as the Polish currency soared to a record high against the euro in July.

Those bets turned sour after the zloty then shed around a fifth of its value, hurting several listed companies, including Poland's top chemical producer Ciech CECH.WA and fire-proof material maker Ropczyce ROPC.WA.

Some analysts said those contracts could weigh on company results for years to come, potentially as far out as 2011. Concerns about the scale of the problem have contributed to a further decline in the zloty over the last several days. (Reporting by Piotr Skolimowski; Edited by Chris Borowski/Will Waterman)

The case for bonds

2008-12-12T04:46:00.000-08:00

source: money.cnn.com

Investor Daily: Solid corporate issues are offering juicy yields.
By Shawn Tully and Mina Kimes
December 12, 2008: 5:21 AM ET

(Fortune Magazine) -- Boring is beautiful - or so it feels in this time of wild and crazy stock market swings. In this case we're talking about investment-grade corporate bonds, which are dirt-cheap right now for the same reason that stocks are: The market turmoil has pounded down their prices. The result is historic opportunities in bonds issued by blue-chip companies.

Right now investment-grade bonds maturing in ten years or longer are yielding an average 8.4%, according to Barclays, a remarkable 5.7 percentage points more than ten-year Treasuries. "Today's spreads are the highest we've seen since 1931," says economist Michael Darda of MKM Partners, a trading and research firm. Or as bond guru and PIMCO chief Bill Gross keeps saying, stocks are pricing in a recession, and bonds are priced for a depression. A depression isn't likely, so it's time to pounce.

In general, buying individual bonds isn't ideal. You'll need to go through a broker, and the commissions can be high. If you choose that route, you should buy at least four or five issues to diversify and stick with pummeled but steady performers like Verizon Wireless, Comcast, Xerox, and Altria, all of which offer yields of more than 8% on their ten-year bonds.

The best way to buy corporate bonds is through mutual funds. Since they own big baskets of bonds, you won't see your gains evaporate if a few holdings get downgraded or default, a major danger when you own individual issues.

Your choices fall into two broad categories. The first is for the cautious. It consists mostly of what amount to index funds; the securities are highly rated, and the expenses minimal, but the yields are relatively low. Here are two excellent choices: Vanguard Intermediate-Term Investment-Grade (VFICX). More than two-thirds of the holdings - including the likes of McDonald's and Medtronic - are rated A and above by S&P. Expenses are a tiny 0.2% and the 30-day yield stands at 7.5% (as of Dec 4). iShares iBoxx $ Investment Grade Corporate (LQD) tracks a fixed-income index for 100 household names. The portfolio is even more blue-chip than Vanguard's, and the yield is 7.3%.

The second category is for the more adventurous. The managers of these funds select lower-rated bonds that yield far more and even offer an extra kicker in capital gains. T. Rowe Price's Corporate Income Fund (PRPIX) concentrates on the lowest end of investment grade and favors high-yielding bank bonds - including J.P. Morgan's and Bank of America's - reckoning that government aid substantially reduces their risk. Its yield is 8.2%. For investors seeking bigger yields, there is Loomis Sayles Bond Fund (LSBRX). It focuses on beaten-down bonds in solid, noncyclical companies such as Kraft and Verizon. The current yield is a rich 11.2%.

For all the opportunities in corporate bonds, it's worth noting that both Treasury Inflation Protected Securities (TIPS) and municipal bonds are unusually good deals right now. In the case of TIPS, the principal is adjusted in line with the consumer price index, guaranteeing that you won't lose ground to inflation. The yield on ten-year TIPS issued in July is now 1.9%, or just 0.6 point lower than that of a ten-year Treasury, which doesn't offer inflation protection. You can buy TIPS through brokers like Schwab or at www.treasurydirect.gov. Fund investors have lots of attractive, low-expense choices, including Vanguard Inflation Protected Securities Fund (VIPSX) and T. Rowe Price Inflation Protected Bond (PRIPX).

Tax-free municipal bonds also offer extra wallop right now. Munis usually deliver lower yields than Treasuries, but the recent exodus to T-bills and bonds - and growing concerns about state credit ratings (hello, California) - has driven prices south and yields north. A triple-A-rated ten-year muni now yields 4.2%, compared with 2.5% for a Treasury. Add the tax savings, and the effective yield for someone in the highest federal bracket (35%) would be 6.5%. While defaults remain unlikely, we recommend eschewing individual bonds and single-state funds and going with funds that hold munis from across the country, such as Fidelity Tax-Free Bond (FTABX), which has an average annual return of 2.4% over the past five years, or Vanguard Long-Term Tax-Exempt (VWLTX) , which has an average five-year return of 1.8%. Like the TIPS and corporates, the munis are a tad drab; they're not the sort of glitzy investment you brag about at parties. But with their strong yields, that won't matter. To top of page

Japan’s Five-Year Notes Gain Most in Six Weeks as Stocks Slide

2008-12-12T04:40:00.000-08:00

source: www.bloomberg.com

By Theresa Barraclough

Dec. 12 (Bloomberg) -- Japan’s five-year notes rose the most in six weeks as stocks tumbled after the U.S. Senate rejected a $14 billion bailout plan for the nation’s automakers.

The securities completed a weekly gain as Toyota Motor Corp., which gets more than half its profit in North America, led losses in the Nikkei 225 Stock Average, driving demand for the safety of government debt. The dollar slumped below 90 yen for the first time in 13 years. Bonds also advanced after the Nikkei newspaper said the Bank of Japan may next week provide its worst assessment of the economy since May 2002.

“With the anxiety of the Big Three and the appreciation of yen to these levels, there is no alternative to buying bonds,” said Jun Fukashiro, senior fund manager at Toyota Asset Management Co. in Tokyo.

The yield on the 0.9 percent bond due December 2013 fell five basis points to 0.85 percent as of 3:20 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price rose 0.239 yen to 100.239 yen. Yields declined three basis points this week.

Ten-year yields declined two basis points, or 0.02 percentage point, today to 1.39 percent. Ten-year bond futures for March delivery jumped 0.77 to 139.42 at the afternoon close at the Tokyo Stock Exchange.

The dollar fell as low as 88.53 yen, the weakest since August 1995, and the Nikkei 225 Stock Average slid 5.6 percent.

Japan’s bonds typically move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.78 with the Nikkei 225 in the past two weeks, according to Bloomberg data. A value of 1 would mean the two moved in lockstep.

‘Over With’

“It’s over with,” Majority Leader Harry Reid said late Dec. 11 on the Senate floor in Washington, referring to the automaker bailout. “I dread looking at Wall Street tomorrow.” The Senate thwarted the bailout plan when a bid to cut off debate on the bill fell short of the required 60 votes.

“The U.S. bailout plan is affecting the stock market” boosting bonds, said Takashi Nishimura, an analyst at Mitsubishi UFJ Securities Co., a unit of Japan’s largest bank by assets, in Tokyo. “The downgrading of the economic assessment is a step forward toward another rate cut.”

The Bank of Japan may change its assessment of economic activity to “worsening,” from “increasingly sluggish,” at its two-day policy meeting ending Dec. 19, the Nikkei newspaper said, without citing anyone. BOJ Deputy Governor Hirohide Yamaguchi said yesterday policy makers need to be aware that downside risks are increasing and the bank needs to consider various options when setting policy.

Tankan Index

The Tankan index of confidence among large makers of cars and electronics will slide to minus 23 in December from minus 3, according to the median estimate of economists surveyed by Bloomberg before the Dec. 15 report. The decline would be the biggest since 1975, when it fell 21 points in the wake of the first oil shock. A negative number means pessimists outnumber optimists.

“Next week’s Tankan is bond-buying material,” said Akihiko Inoue, an analyst in Tokyo at Mizuho Investors Securities Co., one of the 24 primary dealers that are required to bid at government debt sales.

There is a 36 percent chance the BOJ will cut borrowing costs by the end of March, according to calculations by JPMorgan Chase & Co. using overnight interest-rate swaps. The key overnight lending rate is 0.3 percent.

Demand for bonds was limited on concern the government will sell additional debt to cover a shortfall in tax revenue. Issuance for the year ending March 31 will rise from the originally planned 105.1 trillion yen ($1.15 trillion), two finance ministry officials said Dec. 10.

Lower Rates

The finance ministry will also boost debt sales to investors including banks and life-insurance companies in the year starting April 1, according to a Bloomberg survey of primary dealers. Bond offerings to private investors will rise to 112.8 trillion yen next fiscal year, the survey showed. The finance ministry will announce its issuance plan on Dec. 19.

The Asahi newspaper reported today that the government plans to provide 3 trillion yen to large and midsize businesses by buying their commercial paper and lending money at low rates.

The plan may alleviate pressure on bank lending and lead to lower money-market rates, allowing investors to borrow more money to invest in bonds, said Hitomi Kimura, a bond strategist at JPMorgan Securities Japan Co., another primary dealer.

“It’s positive for the money-market for now,” Tokyo-based Kimura said. “Two- and five-year notes will have room to rally if rates come down.”

One-month commercial paper with the second-strongest credit rating yielded 1.9 percent today, more than double the Tokyo interbank offered rate for yen loans, according to Tokyo Tanshi Co. Three-month Tibor rose to 0.915 percent today, the 25th day of gains, Bloomberg data show.

To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.

FOREX-Yen gains; shrinking output raises investor caution

2008-12-01T06:57:00.000-08:00

source: www.reuters.com

Mon Dec 1, 2008 7:17am EST
By Veronica Brown

LONDON, Dec 1 (Reuters) - The Japanese yen strengthened broadly on Monday as slumping Chinese and European manufacturing activity kept investors on edge and dragged world share prices down.

Yen strength also weighed heavily on currencies of countries where central banks are expected to slash interest rates later this week including the euro, sterling and Australian dollar.

The Bank of Japan, meanwhile, whose key interest rates are a mere 0.3 percent, said it will hold an emergency meeting on Tuesday to discuss changes in the use of corporate debt for collateral banks put up to access central bank funds. With economies already slowing sharply around the world sensitivity to output figures was high.

Manufacturing activity in the euro area, which has already entered recession, hit a record low in November. [ID:nLR485231]. Economic powerhouse China also saw its manufacturing industry slump in November as new orders, especially from abroad, tumbled [ID:nPEK123652]

Resulting risk aversion took global share prices, as measured by MSCI's all country index, down 1 percent on the day [.MIWD00000PUS], while yen gains against major rival currencies accelerated sharply.

"The data is just so terribly poor that it's going to be difficult for any kind of period of sustained uptrend in confidence," said Derek Halpenny, European Head of Global Currency Research at BTM UFJ in London.

"Until we're through the deterioration in the data then the likelihood is that risk aversion will remain elevated and we'll see renewed interest in lower yielding currencies," he added.

By 1150 GMT, the dollar was down 1.7 percent against the yen at 93.88 yen and the euro was down 1.9 percent versus the Japanese unit at 118.93 yen .

The euro fell 0.2 percent against the dollar to $1.2667 , while sterling was off 2.2 percent against the greenback at $1.5045 .

Sterling's losses were exacerbated after British figures showing manufacturing activity had shrunk at a record pace.

RATES FOCUS

The Bank of England, the European Central Bank, the Reserve Bank of Australia and the Reserve Bank of New Zealand are all expected to cut rates by at least half a percentage point, diminishing the yield advantage of their currencies over the ultra-low yielding yen.

Analysts expect those four major central banks to cut rates aggressively to counter the threat of deflation and prevent the global financial market crisis from spilling over into further economic weakness.

Yen crosses reflected those expectations, with sterling/yen , Australian dollar/yen and New Zealand dollar/yen all down more than 3 percent on the day.

Analysts expect the RBA to cut its benchmark cash rate by 75 basis points to 4.50 percent on Tuesday. But data on Monday showing Australian inflation slowing much faster than earlier thought and manufacturing activity at record lows in November bolstered the case for a steeper cut in rates. [ID:nSYD363959]

The RBNZ is expected to lop a full 1.5 percentage points off its key rate to 5 percent, which would match the magnitude of the Bank of England's surprise cut last month.

Economists polled by Reuters expect the BoE to follow that up with a more modest 50 basis point cut to 2.5 percent on Thursday, but futures traders are pricing in a more aggressive 100 basis point reduction.

The ECB is expected to cut by half a percentage point on Thursday to 2.75 percent but the weakness of recent economic and inflation indicators is building the pressure for a deeper cut.

The euro zone manufacturing sector, for example, contracted sharply in November, data showed on Monday. [ECON]

"Polls show economists are expecting the ECB to cut by 50 basis points but marketwise, there would be disappointment if the ECB did 50 basis points," said Steve Barrow, head of currency strategy at Standard Bank in London.

Financial markets in the United States should return to normal liquidity and trading conditions on Monday following last week's Thanksgiving holiday.

Investors will be keeping an eye on the November jobs report on Friday. Later on Monday the Institute for Supply Management releases its November manufacturing index. [ECONUS] (Reporting by Veronica Brown and Swaha Pattanaik; editing by Toby Chopra)

GM's bonds fall ahead of expected restructuring plan

2008-12-01T06:54:00.000-08:00

Mon Dec 1, 2008 8:54am EST

source: www.reuters.com

NEW YORK, Dec 1 (Reuters) - General Motors Corp's (GM.N: Quote, Profile, Research, Stock Buzz) bonds fell nearly 12 percent early on Monday as investors awaited a new turnaround plan from the automaker aimed at winning support for emergency government funding.

GM's 7.125 percent notes due in 2013 fell to 23 cents on the dollar, down from 26 cents on Friday, according to MarketAxess. GM is due to submit a restructuring plan by Tuesday, the same day that November sales from major automakers are expected to show only a limited bounce from 25-year lows. For details click on [ID:nN30477996]. (Reporting by Dena Aubin; Editing by Theodore d'Afflisio) (dena.aubin@thomsonreuters.com; +1-646-223-6325; Reuters Messaging: dena.aubin.reuters.com@reuters.net))

Financials push Taiwan stocks to 2-wk closing high

2008-12-01T06:45:00.000-08:00

Thomson Financial News
12.01.08, 01:40 AM EST

By Kelvin Soh

TAIPEI, Dec 1 (Reuters) - Taiwan stocks rose 1.3 percent to a fresh two-week closing high on Monday, as financial shares such as Taishin Financial surged on expectations of the signing of a cross-strait financial services agreement.

The main TAIEX share index closed 57.94 points higher at 4,518.43, its highest close since Nov. 12, as tourism shares also gained on hopes of higher Chinese tourist numbers.

The banking and insurance sub-index jumped 4.02 percent, while Taishin rose by its 7 percent daily limit.

Turnover was thin at T$66.9 billion ($2 billion), but higher than Friday's T$57.7 billion, and was the highest level in about three weeks.

'We expect the cross-strait financial services agreement to be signed in the first half of next year, so that is pushing financial stocks up," said Andy Wu, an analyst at Reliance Securities.

'Sean Chen (the newly appointed chairman of the Financial Supervisory Commission) is also more interventionist than his predecessor, so I think the market expects more support if there is trouble.'

Tourism shares got a boost from local media reports that Taiwanese companies were sending their Chinese employees to Taiwan for junkets.

The island's two major airlines, China Airlines and Eva Airways, both went limit up as an increase in Chinese tourists would be good for their load factors.

Hotel operators also benefited, with Ambassador Hotel climbing limit up. The tourism and transport sub-indexes both closed more than 3 percent higher.

'Airline share prices have been falling for a while now,' said Theresa Chueh, an analyst at Taiwan International Securities.

'They were first hit by surging oil prices when the economy was doing well, then they were hit by fears of falling demand when the economy was doing badly, so there is some correction today.'

The tech sector also managed to fight off a slew of bad news, with the electronics sub-index closing 0.46 percent higher.

Hon Hai was 1.4 percent higher at the session's close, after its subsidiary Foxconn announced on Friday it would lay off 1,500 workers in Hungary, more than half of its total workforce in the country, as orders waned.

Top contract chipmaker TSMC also managed to shake off the morning's losses to close unchanged after it told department heads to cut costs by 20 percent.

Stocks, Bonds & Forex Trading: Breaking News from Bloomberg

2008-12-01T06:34:00.000-08:00

U.S. Stock-Index Futures Drop; GE, Caterpillar, Anadarko Fall
U.S. stock-index futures declined, indicating the Standard & Poor’s 500 Index may snap a five-day stretch of gains, on concern the global economic slump is deepening.

Yen Strengthens as Manufacturing Slump Weakens Yuan, Ruble
The yen rose against the euro and the dollar as falling stocks and shrinking manufacturing in China and Russia encouraged investors to buy back the Japanese currency at the expense of higher-yielding assets.

Obama's A-Team Economists Can Start With ABCs: Caroline Baum
President-elect Barack Obama introduced the nation to his economic team at a series of no- frills press conferences last week. The choices spell experience.

Stocks Finish Mixed

2008-11-26T09:34:00.000-08:00

source: www.msnbc.msn.com

By Will Andrews

updated 11:00 p.m. ET Nov. 25, 2008

U.S. stocks closed mixed Tuesday as profit taking pressured the market following two strong sessions. Technology issues underperformed the broader market. But bonds surged after the Federal Reserve announced a $600 billion program to buy mortgage-related debt and a $200 billion facility to support consumer debt securities.

Wall Street also digested a better than expected read on U.S. consumer confidence in November, a record year-over-year decline in a key gauge of U.S. home prices in September, and an about as-expected report on U.S. third-quarter gross domestic product.

On Tuesday, the Dow Jones industrial average finished higher by 36.08 points at 8,479.47. The broad S&P 500 index added 5.58 points to 857.39. The tech-heavy Nasdaq composite index shed 7.29 points to 1,464.73.

On the New York Stock Exchange, 21 stocks were higher in price for every 10 that advanced. The ratio on the Nasdaq was 15-12 positive.

The U.S. dollar index slid after an earlier rise. Gold futures edged higher. Oil futures fell.

Stock markets in Europe closed higher, with major indexes rising 0.44% in London, 1.18% in Paris, and 0.13% in Frankfurt. Markets in Asia finished mixed, with Tokyo stocks rising 5.22%, while Hong Kong fell 3.38% and Shanghai was lower by fell 0.44%.

The Federal Reserve stepped up its efforts to support strained credit markets through new programs aimed at boosting consumer credit and the market for mortgage-backed securities, according to a Dow Jones report. Under the Term Asset-Backed Securities Loan Facility, or TALF, the Fed will extend up to $200 billion in non-recourse loans to holders of asset-backed securities backed by consumer and small business loans. The Treasury Department will extend $20 billion in funds under the Troubled Asset Relief Program to support the initiative. "The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads," the Fed said. The Fed also said it will purchase up to $100 billion in GSE debt through a series of competitive auctions starting next week. It will also purchase up to $500 billion in mortgage-backed securities backed by GSEs, with the goal of starting that program by the end of the year.

JPMorgan Chase (JPM) said it planned to sell three-year debt under a U.S. Federal Deposit Insurance Corp. guarantee program, denominated in euros and in sterling and both in benchmark size. The notes will come under the FDIC's new Temporary Liquidity Guarantee Program. JPMorgan is managing the triple-A rated deal itself, an official at the bank said. Goldman Sachs (GS) on Monday became the first bank to take advantage of the program, and Morgan Stanley (MS) also announced a guaranteed debt issue on Tuesday.

In economic news Tuesday, preliminary U.S. third-quarter gross domestic product GDP was revised lower to a -0.5% growth rate, from -0.3% previously, as expected. Real consumption spending was knocked down to a -3.7% pace, from -3.1%, with a downward revision to durable goods spending. Fixed investment was unrevised at a -5.6% pace, though residential construction spending was revised up to -17.6% from -19.1%; both equipment and software, and spending on structures were revised down.

Real net exports contributed positively to GDP growth but at a slower 1.07% pace [revised from 1.13% previously], though inventories contributed more at a 0.89% rate from 0.56% previously. Government spending also added less to Q3 growth than initially reported, posting a 5.4% pace from 5.8% previously. The GDP chain price index was steady at 4.2%, while the core rate slowed to 2.6% from 2.9%.

The U.S. S&P/Case-Shiller home price index fell 1.85% in September to 161.56 from a revised 164.60 in August [164.57 previously] for the 20-city composite. All 20 cities in the index posted declines, paced by San Francisco, Phoenix, Las Vegas, and Miami. On a year-over-year basis, home prices are down 17.44% from -16.6% previously reported.

U.S. consumer confidence improved to 44.9 in November, above the record low of 38.8 in October and the 39 expected by markets. However, it is well below the 95.2 reading seen a year ago. Expectations rose to 46.7 from 35.7. However, present situations slipped to 42.2 from 43.5 on continued job fears, with those saying jobs are "hard to get" is 37.2, up from 36.6% in the prior month. The 12-month inflation index fell to 5.9% from 6.8%.

"The data are a bit better than expected, [but] job concerns still weigh on household moods to reflect soft spending ahead," says S&P senior economist Beth Ann Bovino.

The International Council of Shopping Centers and Goldman Sachs weekly sales index fell 0.9% in the week ended Nov. 22 after rising 0.3% the week before. Sales declined 0.8% on a year on year basis after falling 0.1% the week before.

Reuters reports the World Bank forecast the Chinese economy will grow next year at 7.2%, the slowest pace since 1990, as the impact of global financial turmoil intensifies and the real estate sector remains in the doldrums. The World Bank in June had forecast 2009 gross domestic product growth of 9.2%. It already expects growth this year to moderate to 9.4%, the first single-digit pace of expansion since 2002, from a breakneck 11.9% in 2007. Louis Kuijs, the senior economist in the bank's Beijing office, said one silver lining was that inflation had disappeared from the radar as demand softened and raw material prices tumbled. The bank expects consumer prices to rise just 2.0% next year after a 6.5% increase in 2008.

The bank is much gloomier than its sister organization, the International Monetary Fund, which on Monday forecast 8.5% growth for China next year.

In other U.S. markets Tuesday, the 10-year Treasury note was up 1-31/32 to 105-17/32 for a yield of 3.106% and the 30-year bond was up

2-10/32 to 115-04/32 for a yield of 3.657% after the Fed announced plans to purchase as much as $600 billion in mortgage securities. The Fed move prompted investors to hedge against losses in their portfolios, according to Bloomberg dispatch.

Th U.S. dollar index was lower at 85.06.

January West Texas Intermediate crude oil futures were off $3.66 to $50.84 per barrel Tuesday on profit taking from a two-day rally. There is some speculation tomorrow's Dept. of Energy report will show increases in inventories due to a demand slowdown. The American Petroleum Institute reported last week that U.S. fuel demand dropped 5.2% in the first 10 months of the year, the biggest drop since 1981.

December gold futures were lower at $818.10 per ounce Tuesday on profit taking from a two-day rally. The market could see some volatility as traders and funds adjust portfolios at the end of the month, says S&P MarketScope.

Among Tuesday's stocks in the news, Hewlett-Packard (HPQ) posted fourth-quarter non-GAAP EPS of $1.03, vs. 86 cents one year earlier, on a 19% revenue rise. EPS was in line with HP's preannouncement. Based on current exchange rates, the copmpany now expects an unfavorable year-over-year currency impact on revenue of about 5 percentage points in the fiorst quarter and roughly 6-7 percentage points for fiscal 2009. It sees first-quarter revenue of about $32 billion-$32.5 billion, with non-GAAP EPS of 93 cents-95 cents, and fiscal 2009 revenue of $127.5 billion-$130.0 billion, with non-GAAP EPS of $3.88-$4.03.

The board of mining giant BHP Billiton (BHP) said it no longer believes that completion of the company's unsolicited all-stock offer to acquire Rio Tinto (RTP) would be in the best interests of BHP shareholders.

Vimpel Communications (VIP) posted third-quarter earnings per American Depositary Share of 27 cents, vs. 45 cents one year earlier, despite a 45% revenue rise. The company notes net income was negatively affected by currency exchange rate fluctuations, resulting in a $341 million net forex loss as 82% of its debt was denominated in US dollars. Vimpel said that while its operations have not yet been affected by the financial turmoil, it clearly understands it will not be immune to it going forward.

Analog Devices (ADI) reported fourth-quarter EPS from continuing operations of 49 cetns, vs. 30 cents one year earlier, on a 6% revenue rise. However, the company said order rates slowed in late September, and backlog declined significantly from the prior quarter, which limits ADI's short-term visibility. The company currently expects first-quarter revenue to decline sequentially by about 20%; it sees EPS from continuing operations of 22 cents-23 cents, excluding charges.

Inter Parfums (IPAR) cut its 87 cents 2008 EPS view to about 81 cents on revenue of about $445 million [down from its previous view of $460 million], citing the recent sustained strength of the U.S. dollar against the euro. The company believes 2009 will continue to be challenging with the likelihood of a prolonged global recession. It says its initial guidance for 2009 in absolute dollars calls for net sales of about $405 million and EPS of 85 cents.
Copyright © 2008 The McGraw-Hill Companies Inc. All rights reserved.

Shares fall in Europe and yen rallies broadly

2008-11-25T05:37:00.000-08:00

source: www.reuters.com

Tue Nov 25, 2008 5:16am EST

By Natsuko Waki

LONDON (Reuters) - European stocks fell more than 1 percent on Tuesday and the low-yielding yen rose broadly as euphoria surrounding the U.S. rescue of Citigroup gave way to concerns about sharply deteriorating major economies. Washington's announcement late on Sunday to shoulder most losses on about $306 billion of Citi's risky assets and inject new capital boosted world stocks by 6.6 percent on Monday.

However, investors were quick to take profits on stocks as well as oil, worrying that more banks might be forced to seek government help and that the rescue plan was unlikely to change the fact that the world economy is slowing fast.

News that top global miner BHP Billiton walked away from its hostile offer for rival Rio Tinto and major insurer AXA cut its 2008 underlying profit outlook reminded investors of a tough environment facing corporates.

Furthermore, the World Bank said China's growth -- once seen as the engine of the world economy -- could slow to 7.5 percent in 2009, its slowest pace of expansion since 1990, due to the intensifying impact of global financial turmoil.

"Given the scale of the rally in risk assets (on Monday) investors are reassessing the situation and are less willing to chase the rally higher," BTM-UFJ currency economist Lee Hardman said.

"The underlying conditions are not conducive for further gains...in risk assets, with below-trend growth across the globe and financial markets in a severe state of distress."

The FTSEurofirst 300 index of leading European shares fell 1.6 percent, after rallying nearly 9 percent on Monday -- its second biggest one-day percentage rise on record.

Shares in Rio Tinto fell 38 percent, with the basic resource shares falling nearly 9 percent. AXA shares fell 13.5 percent.

A 3 percent rise in Asian stocks helped MSCI world equity index post a 0.4 percent gain. Emerging stocks rose 2.2 percent.

U.S. crude oil fell 3.5 percent to $52.46 a barrel after rising more than 9 percent on Monday.

The December bund futures rose 25 ticks as European shares slipped. The low-yielding yen rose more than 1 percent to 95.81 per dollar while the dollar rose 0.5 percent against a basket of major currencies.

U.S. data due later includes a preliminary reading for third-quarter growth. The U.S. economy is expected to have contracted 0.5 percent in the three months ending September.

Interest rate futures are fully pricing in the Federal Reserve to cut interest rates by half a point to 0.5 percent in December.

"Although we expect the Fed to lower its Fed fund target rate to zero in January next year, the market has not fully priced in the Fed's zero interest rate policy," JP Morgan said in a note to clients. "Therefore, any negative surprises from the U.S. releases should heighten speculation for more aggressive Fed cuts."

(Additional reporting by Jessica Mortimer; Editing by Victoria Main)

Canada’s Dollar Appreciates for Second Day as Stocks, Oil Climb

2008-11-25T05:34:00.000-08:00

source: www.bloomberg.com

By Chris Fournier

Nov. 24 (Bloomberg) -- Canada’s currency strengthened for a second day after global stocks gained, buoyed by a bailout of Citigroup Inc. and speculation that governments will move to stimulate faltering economies.

“The stock market obviously likes the Citibank bailout,” said Aaron Fennell, a Toronto-based futures and currency broker at MF Global Canada Co., a unit of MF Global Ltd., the world’s largest broker of exchange-traded futures and options. “The stock market is up, which gives the impression that the U.S. economy is a bit stronger and boosts the Canadian dollar.”

The Canadian dollar appreciated as much as 3.5 percent to C$1.2244 per U.S. dollar, from C$1.2668 on Nov. 21 when it gained 2.3 percent. It traded at C$1.2344 at 4:05 p.m. in Toronto. One Canadian dollar buys 81 U.S. cents.

The loonie, as Canada’s dollar is known because of the aquatic bird on the one-dollar coin, will strengthen to around C$1.15 in the coming weeks, Fennell said.

“Short-term trends have turned abruptly against the U.S. dollar and in favor of the Canadian dollar,” Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto, wrote in a note to clients. Osborne predicts “ongoing corrective pressure” will drive the Canadian dollar back to the C$1.20 to C$1.22 “corrective retracement targets.”

Europe’s Dow Jones Stoxx 600 Index climbed 8.4 percent. London’s FTSE 100 Index added 9.8 percent, the most on record. The Standard & Poor’s 500 Index gained 6 percent. Crude oil for January delivery rose $4.68, or 9.4 percent, to $54.61 a barrel. Crude accounts for about a tenth of Canada’s exports.

Citigroup, which has $2 trillion of assets and operations in more than 100 countries, received $306 billion of U.S. government guarantees.

‘Positive Developments’

“Positive developments at Citibank were the main catalyst for stocks to rally today,” said Adam Cole, global head of foreign-exchange strategy at the Royal Bank of Canada in London. Speculation “remains rife” that an economic stimulus plan will be in place by the time President-elect Barack Obama takes office on Jan. 20, Cole added.

Senator Charles Schumer, Democrat from New York, said yesterday on ABC’s “This Week” program that the stimulus package will be between $500 billion and $700 billion.

Stimulate the Economy

Canadian Prime Minister Stephen Harper said yesterday that if necessary the country would run a “short-term” deficit to stimulate the economy. Finance Minister Jim Flaherty said he will cut taxes to boost economic growth as the world’s eighth-largest economy heads for a possible recession.

Statistics Canada will release retail sales data tomorrow at 8:30 a.m. in Ottawa.

The yield on the two-year government bond rose as much as five basis points, or 0.05 percentage point, to 1.86 percent. It last traded at 1.83 percent. The price of the 2.75 percent security due in December 2010 fell 3 cents to C$101.84.

The 10-year note’s yield increased 3 basis points to 3.50 percent. The price of the 4.25 percent security maturing in June 2018 declined 23 cents to C$106.07.

The decline in bond prices “is occurring globally,” said Derek Holt, an economist at Scotia Capital Inc. in Toronto. “Weekend chatter about fiscal stimulus is at the heart of it.”

The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers, according to data tabulated by Bloomberg News.

The 10-year bond yielded 167 basis points more than the two- year security. The so-called yield curve reached 184 basis points on Nov. 6, the steepest since May 2004.

The yield advantage of Canadian government bonds compared with similar-maturity 10-year U.S. Treasury notes was 15 basis points. The U.S. security yielded 39 basis points more than its Canadian counterpart on June 25, the most this year.

Canadian government bonds have returned 6.3 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries have returned 9.1 percent this year.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
Last Updated: November 24, 2008 16:07 EST

Government bonds predictable, safe and liquid

2008-11-23T06:54:00.000-08:00

source: www.coloradoan.com

James L. Watt, CPA/PFS, • November 23, 2008

With stock prices volatile and in retreat, many investors are turning to U.S. government securities for safety, predictability and liquidity.

Treasuries have tax advantages, are in demand by investors worldwide and are the most liquid of all capital investments. Trading in U.S. Treasury securities is a 24/7 activity.

Individuals but not companies can buy Treasury securities directly from the government at auction using Treasury Direct or in the secondary market through a broker. If buying at Treasury Direct, the buyer receives the average price at which big investors purchased the security.

U.S. Treasury securities are obligations of and are guaranteed for both principal and interest by the U.S. government.

Bills, notes and bonds are the principal government securities. Treasury bills, or T-bills, are issued in 4-, 13-, 26-, and 52-week maturities and are bought/sold at a discount from face value.

The difference between the face value and the purchase price is the discount. T-bill discounts are expressed at an annualized rate or yield. The yield is the bond equivalent yield an investor would use to compare treasuries with other securities of comparable maturities.

As this column is written, the T-bill maturing Oct. 22 is quoted at 1.16 bid and 1.15 ask. The seller is willing to sell at a 1.15 percent annual yield and the buyer is willing to buy at a 1.16 percent annual yield. The yield on the ask price is 1.176 percent. You might think the small difference is not meaningful. It isn't to you and me, but it is if the investment is $100 million or more.

Treasury notes are issued with maturities of more than one year but less than 10 years. Notes are commonly issued with maturities of 2, 3, 5 and 10 years. Treasury bonds have maturities of 10 years to 30 years. Note and bond interest is paid at six-month intervals. The 30-year bond, or long bond, is a favorite of retirement plans and insurance companies.

Long bonds (also bills and notes) can be purchased at issue or in the secondary market, and maturities can be matched with expected obligations of the purchaser.

Parents might purchase bonds with maturities coinciding with the enrollment of their children in college. A retiree might ladder a series of treasury issues with one maturing each year during an expected retirement life.

Treasury notes and bonds are actively traded. Bid and ask prices are quoted per $100 of the security's face value. The number following the decimal is 32nd of a dollar. The bid is the price the buyer is willing to buy at, and the ask is the price the seller is willing to sell at. As this column is written, the 3 1/8 percent T-note maturing in November 2009 is bid at 101.31, or $101.96875. The asked price is 102, or $102. The annual yield on the ask price is 1.20 percent.

Other common Treasury securities include inflation-indexed securities, or TIPS; stripes; and U.S. savings bonds.

U.S. Stocks Fall for 3rd Week on Recession, Citigroup Concerns

2008-11-23T06:50:00.000-08:00

source: www.bloomberg.com

By Elizabeth Stanton

Nov. 22 (Bloomberg) -- U.S. stocks dropped for a third week on signs of a deepening recession and growing concern about the fate of Citigroup Inc. and the nation's automakers.

The Standard & Poor's 500 Index rallied from an 11-year low yesterday after President-elect Barack Obama picked New York Federal Reserve Bank chief Timothy Geithner as Treasury secretary. Citigroup, the largest U.S. bank by assets, plunged 60 percent this week on concern more customers will default as the economy worsens. General Motors Corp., the biggest U.S. automaker, touched the lowest since the 1930s as Congress delayed action on a bailout for the industry. Treasuries gained, pushing yields to record lows, as investors sought safer assets.

``When you see the annihilation of Wall Street, when you see the auto industry on the verge of bankruptcy, and when you see Citigroup that supposedly was a sound company driven to its knees with the price of its stock, it strikes a chord of fear in people's hearts,'' said Bruce McCain, the Cleveland-based chief investment strategist at Key Private Bank, which manages about $30 billion.

The S&P 500 fell 8.4 percent to 800.03. Its close at 752.44 on Nov. 20 was the lowest since April 1997. The Dow Jones Industrial Average slid 450.89 points, or 5.3 percent, to 8,046.42. The Russell 2000 Index of small-company stocks retreated 11 percent to 406.54.

`Very Deep Recession'

The S&P 500 extended its 2008 retreat to 46 percent, which would be the worst annual drop since 1931. Concern the recession is worsening was spurred after jobless claims approached the highest level since 1982, prices paid to U.S. producers plunged by the most on record and the Federal Reserve said manufacturing in the Philadelphia area shrank at the fastest pace in 18 years.

``The stock market is coming around to start agreeing with the bond market, and basically saying we're headed for a very, very deep recession, possibly a depression,'' said Robert Arnott, the founder of Pasadena, California-based Research Affiliates LLC, which manages $30 billion.

Financial companies in the S&P 500 plunged 24 percent as a group for the biggest drop in at least 19 years. Citigroup lost half its value in three days, ending the week at $3.77, after it said it will wind down seven off-the-books investment funds after failing to salvage them. The so-called structured investment vehicles, which Citigroup invented in 1988, emerged 15 months ago as one of the first casualties of rising default rates on subprime mortgages.

Insurers Plunge

The stock extended its declines yesterday after Chief Executive Officer Vikram Pandit told employees he doesn't plan to break up the company. Once the biggest U.S. bank by market value, Citigroup has now slipped to No. 5 behind Minneapolis- based U.S. Bancorp.

Hartford Financial Services Group Inc. and Lincoln National Corp. led insurers in the S&P 500 to a 19 percent drop on concern falling stock and corporate bond prices are producing investment losses that will force them to raise capital. Hartford sank 61 percent to $4.95. Lincoln National tumbled 56 percent to 6.36.

GM fell to as low as $1.70, a price it hasn't close below since before 1940, according to Global Financial Data in Los Angeles. The shares rallied yesterday to end the week higher by 1.6 percent to $3.06.

The chief executive officers of GM, Ford Motor Co. and Chrysler LLC met with Congress to seek $25 billion in aid they said is necessary to keep them in business. Democratic leaders blocked immediate action on loans and ordered the companies to make a case for the aid next month.

Oil Below $50

A gauge of energy shares in the S&P 500 slumped 4.3 percent, the most in six weeks. Crude oil plunged to $48.25 a barrel yesterday, the lowest since May 2005, before settling at $49.93, down 12 percent for the week.

Hess Corp., the fifth-biggest U.S. oil producer, lost 19 percent to $44.87. Chevron Corp., the second-largest, fell 3 percent to $70.49. Schlumberger Ltd., the world's biggest oilfield-services provider, declined 7.7 percent to $45.

Hewlett-Packard Co. rose the most in the Dow average, gaining 14 percent to $34.64. The biggest maker of personal computers reported fourth-quarter profit that beat analysts' estimates and forecast growth in 2009.

Dell Inc., the second-biggest PC maker, retreated 15 percent to $9.30. The company's third-quarter sales trailed analysts' projections by more than $1 billion, while earnings fell 5.1 percent.

Profit Declines

In aggregate, earnings fell 19 percent for the 475 companies in the S&P 500 that reported third-quarter results through Nov. 19, according to data compiled by Bloomberg. Companies scheduled to report next week include Campbell Soup Co., Deere & Co. and Tiffany & Co.

As Treasuries rose, the dividend yield on the S&P 500 exceeded the benchmark 10-year note's yield for the first time since 1958. The 10-year yield declined to 3.20 percent from 3.74 percent, and touched 2.99 percent, the lowest since the government began regular issuance of the securities.

A measure of the cost of using options to insure against declines in the S&P 500 gained 9.6 percent this week and rose to a record 80.86 on Nov. 20. The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell yesterday to 72.67 as stocks climbed on Obama's pick of Geithner as head of the Treasury.

Geithner helped lead U.S. efforts to combat the deepest financial crisis in seven decades, helping oversee the decisions to take over American International Group Inc., rescue Bear Stearns Cos. and allow Lehman Brothers Holdings Inc. to fail. The S&P 500 rallied in the last hour of trading yesterday after reports of his appointment, closing higher by 6.3 percent.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

Foreign currency deposits rise as forex rates fall

2008-11-23T06:40:00.000-08:00

SOURCE http://biz.thestar.com.my

PETALING JAYA, MALAYSIA: Foreign currency deposits or accounts in the country have increased after the exchange rates of several currencies dropped about 30% or more against the ringgit over the last few months, according to senior banking officials.

More liberal forex regulations had also boosted foreign currency deposits, they said.

“First, foreign currencies offer a way to protect their (local customers) cash holdings against fluctuations.

“This is especially when they have frequent or upcoming needs for foreign currencies,” Standard Chartered Bank Malaysia Bhd head of wealth management, Choong Wai Hong, told StarBiz.

Some of the needs include travelling, personal or children’s education, remittances, overseas investments or large purchases.

According to HSBC Bank Malaysia Bhd personal financial services general manager, Lim Eng Seong, the currencies that were sought after included the US dollar, pound sterling, Australian dollar and the euro.

“One of the main reasons that these currencies are in demand is for education purposes as these countries are favourite destinations for overseas studies,” Lim added.

According to production manager Kesavan Keecha, the declining value of the Australian dollar has been encouraging as he has to pay for his son’s education fees in Australia.

“The Australian dollar has fallen a lot since a year ago when my son started his studies there,” he said, adding that the exchange rate of the ringgit against the Australian dollar was 3.1 a year ago compared with 2.3 currently.

Another pull factor was the higher interest rates offered by some banks for foreign currency deposits, Choong said.

“Standard Chartered offers 4.5% to 6% in interest yields for currency deposits in pound sterling, Australian and New Zealand dollar, depending on the tenure and currency selected,” he said.

Currency speculation was another factor.

“The flip side is, of course, it also exposes depositors to currency depreciation,” he added.

Lim said the liberalisation of foreign exchange administration rules by Bank Negara in April last year had opened up the market to Malaysians.

“This has led to customers’ interest and boosted foreign currency deposit sign-ups,” Lim said.

For Bank Negara reports click here

Argentine stocks, bonds fall as Wall Street dives

2008-11-20T16:14:00.001-08:00

source: www.reuters.com

Wed Nov 19, 2008 4:16pm EST

BUENOS AIRES, Nov 19 (Reuters) - Argentine stocks fell on Wednesday, dragged down by a sell-off on Wall Street and persistent investor worries about a global recession, which also pushed bonds and the peso currency lower.

The MerVal benchmark index slid 2.06 percent to close at 925.35 points, extending losses over the last three sessions to more than 9 percent.

"The ups and downs of the Dow Jones continue to weigh on the MerVal," said Dionisio Corneille, director of Corneille brokerage. "Nobody wants to do anything risky with the markets so volatile."

Stocks in the United States tumbled as uncertainty over a possible rescue plan for the U.S. auto industry fueled concerns a slump in the world's biggest economy is deepening.

In Buenos Aires, Banco Frances (FRA.BA: Quote, Profile, Research, Stock Buzz) fell 6.69 percent to 2.65 pesos. Heavyweights Petrobras (APBR.BA: Quote, Profile, Research, Stock Buzz), Brazil's state-run energy company, slid 5.7 percent to 33 pesos, and Tenaris (TENA.BA: Quote, Profile, Research, Stock Buzz), the world's leading producer of seamless steel tubes for the energy industry, lost 4.55 percent to close at 36.7 pesos.

On the broad market, volume was a muted $19.9 million. Of active issues, 12 advanced, 39 declined and 12 were unchanged.

Argentine bond prices slipped as investors also eyed a Thursday vote in the Argentine Senate over a government plan to take over the country's private pension funds.

The move sent Argentine financial markets tumbling when it was announced last month.

Locally traded government bonds shed 0.7 percent on average, with the dollar-denominated Bonar 2014 falling 2.4 percent.

The peso weakened 0.15 percent to 3.325/3.3275 per dollar in formal interbank trade, and fell by the same amount to 3.37/3.375 per dollar in informal trade between foreign exchange houses, as measured by Reuters. (Reporting by Walter Bianchi; Writing by Kevin Gray; Editing by Leslie Adler)

Verizon Wireless to sell bonds-IFR

2008-11-18T07:22:00.000-08:00

source: www.reuters.com

Nov 18, 2008 9:38am

NEW YORK, Nov 18 (Reuters) - Verizon Wireless is expected to sell bonds Tuesday via Banc of America Securities, Barclays, Citigroup and Morgan Stanley, according to IFR, a Thomson Reuters publication.

The two-part deal will be benchmark size, which is typically at least $1 billion. Pricing is expected Tuesday.

Verizon Wireless is rated "A2" by Moody's Investors Service and "A" by Standard & Poor's, or sixth-highest investment grade in the agencies' different scales.

he company, a joint venture between Verizon Communications (VZ.N: Quote, Profile, Research, Stock Buzz) and Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz), has said it planned to issue debt to help finance its planned $28.1 billion acquisition of privately held Alltel Corp. (Reporting by Ciara Linnane; Editing by James Dalgleish)

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2008-11-18T07:03:00.000-08:00

source: www.prweb.com

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Risk aversion batters Turkish stocks to 3-year lows

2008-11-18T06:35:00.000-08:00

source: www.reuters.com

Tue Nov 18, 2008 6:09am EST

ISTANBUL, Nov 18 (Reuters) - Turkish stocks slumped to their lowest levels in more than three years on Tuesday and the lira continued its decline versus the dollar, as the prospects of a deep global recession intensified, battering markets worldwide.

Turkish stocks .XU100 closed morning trading down 3.2 percent at 23,279 points, their lowest level since early 2005, accentuating Monday's losses when the index closed down 5.42 percent.

Stocks traded in-line however with the MSCI emerging stocks index .MSCIEF, which weakened 3.3 percent.

"Nothing seems to stop the bearish outlook in the near term," said Deniz Can Yucel, head of equity research at Yatirim Finansman Securities.

"The delay of the agreement with the IMF and downgrades by S&P for Turkish banks after the country's outlook was downgraded have put further pressure on the market," he said, adding hedge fund redemptions were also playing a big role in the sell-off.

On Monday Standard & Poor's Ratings Service downgraded its outlooks on seven Turkish banks including Is Bank (ISCTR.IS: Quote, Profile, Research, Stock Buzz) and Garanti Bank (GARAN.IS: Quote, Profile, Research, Stock Buzz) to "negative" from "stable" due to more difficult financing conditions, and likely weaker loan growth and financial performance.

Major Turkish lender Akbank (AKBNK.IS: Quote, Profile, Research, Stock Buzz), whose shares traded down 2.5 percent at 3.9 lira, said on Tuesday it had not made any changes in its growth targets, brushing aside media reports that it had cut staff levels by around 1,000.

Turkish business leaders have been lobbying the government to strike a new deal with the International Monetary Fund to restore investor confidence in the emerging market country after the previous stand-by loan agreement expired in May.

Analysts at Is Bank wrote in a research note equities might find some support as the index neared the 23,500 level.

The lira slipped to 1.6595 against the dollar on the interbank market from Monday's close of 1.6330.

Turkish stocks have now lost 58 percent of their value since the start of 2008 -- and third quarter earnings from Turkish companies have provided little comfort. The lira has lost approximately a third of its value against the dollar this year, and is now trading at levels from early 2006.

The yield on the benchmark June 23, 2010 bond <0#trtsysum=is> rose to 22.59 from 22.08 percent on Monday.

(Reporting by Alexandra Hudson; editing by Stephen Nisbet)

FOREX-Euro pares gains on weak data, stg down on BoE

2008-11-12T06:36:00.000-08:00

Wed Nov 12, 2008 7:44am EST
source: reuters

* Euro/dollar pares early gains, pressured by weak data
* Shaky stocks keep risk aversion high, supporting dlr, yen
* Sterling hits 6-yr low vs dollar after grim BoE forecast
* Pound hits record low vs euro at 82.37 pence
(Adds quotes, updates prices, changes byline)

By Naomi Tajitsu

LONDON, Nov 12 (Reuters) - The euro pared gains against the dollar on Wednesday after data underlined economic weakness, while sterling tumbled after a grim Bank of England forecast fuelled expectations for more UK interest rate cuts.

Sterling hit a six-year low against the dollar and a record trough against the euro after the BoE's quarterly Inflation Report predicted the UK economy will shrink sharply next year and inflation may fall to just below 1 percent [ID:nBOE001620].

A tentative improvement in European share prices offered some support to the euro, but the currency stayed on the back foot after data showed euro zone industrial production fell more than expected by 1.6 percent on month in September [ID:nLC724790].

This bolstered the view that a further fall in European Central Bank rates, now at 3.25 percent, was inevitable [ECB/INT] to counter the effects of a worldwide downturn.

"The production data confirms that the euro zone is in a technical recession. It confirms that more rate cuts are coming from the ECB," said Lena Komileva, G7 market economist at Tullet Prebon in London.

Eonia interest rate futures indicate that markets are pricing in another big rate cut, with ECB rates seen around 2.5 percent by next month.

By 1204 GMT, the euro rose 0.4 percent to $1.2570, but hovered well below a session high of $1.2632. It hit a two-week low of $1.2481 earlier in the day, according to Reuters data.

European stocks traded 0.6 percent higher, paring gains made earlier in the day.

The euro rose 0.3 percent to 122.66 yen but stayed in range after hitting 121.23 yen, its weakest level since late October, on electronic trading platform EBS earlier in the day.

The dollar fell slightly to 97.60 yen .

Analysts said risk aversion would keep higher-yielding currencies like the euro under selling pressure, supporting lower-yielding currencies like the dollar and the yen.

"Given risks to the global economy, investors are holding cash and holding safe-haven which means heading back into Treasuries and the U.S. dollar," said Geoffrey Yu, currency strategist at UBS in London.

STERLING STUNG

Sterling dropped roughly one percent against the dollar to $1.5204 according to Reuters data, its weakest level since 2002, after BoE Governor Mervyn King told reporters that the central bank was prepared to ease monetary policy even more after a stunning 150 basis point cut to 3.25 percent last week.

The UK currency also fell around one percent against the euro, hitting an all-time low of 82.37 pence according to Reuters data, after the BoE's gloomiest forecast in more than a decade.

Against a basket of currencies, sterling <=GBP> hit a 12-year low.

"The overall message of this report is that the UK economy is in recession and likely to stay there for the time being, and that, without further monetary easing, inflation is likely to undershoot the BoE's target," said Daragh Maher, deputy head of currency strategy at Calyon in London.

Sonia interest rate futures indicate that markets have fully priced in another 50 basis point cut by next month.

(Additional reporting by Tamawa Kadoya; Editing by Ruth Pitchford)

Nationwide to raise 1.5 bln pounds via bond -lead

2008-11-12T06:32:00.000-08:00

Wed Nov 12, 2008 6:03am EST
source: reuters

LONDON, Nov 12 (Reuters) - Building society Nationwide plans to raise 1.5 billion pounds ($2.3 billion) via a three-year government-backed bond, an official at one of the banks managing the sale said on Wednesday.

Guidance on the bond has been tightened to mid-swaps plus 18 basis points from initial guidance of mid-swaps plus around 20 basis points, the official said.

Nationwide is the fifth UK lender to make use of a government guarantee. Guidance on its deal was the same as a 1.4 billion sterling bond sold by Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) on Monday.

Lloyds also raised 2.0 billion euros via a three-year bond at the same spread over mid-swaps.

Order books for the Nationwide deal have reached over 4 billion pounds, said IFR, a Thomson Reuters publication.

Barclays, HSBC, RBS and UBS are joint lead managers on the deal.

(Reporting by Natalie Harrison)

Gloom overpowers markets overseas

2008-11-12T06:24:00.000-08:00

Jeremy Gaunt, Reuters
Published: Tuesday, November 11, 2008

LONDON - Economic gloom overpowered financial markets again on Tuesday, sending stock and commodity prices sharply lower as ebullience about China's US$600 billion stimulus plan fizzled out.

Wall Street looked set for losses at the open.

Bad news from corporate America - General Motors shares at a 62-year low, Goldman Sachs seen posting a first-ever quarterly loss, and No. 2 U.S. electronics retailer Circuit City's bankruptcy protection filing - overwhelmed any optimism.

The dollar turned slightly higher despite a short-lived bounce for the euro from an improvement in German economic sentiment.

"The support we saw in the early part of yesterday's session off the back of the Chinese economic stimulus plan is looking to have been rather short lived," Matt Buckland, dealer at CMC Markets, wrote in a note.

"Worrying corporate news from the U.S. plus suggestions that the recession will be longer and deeper than previously thought are adding to the downside."

The pan-European FTSEurofirst 300 stock index was down 3%, following a similar loss on Japan's Nikkei average.

Emerging market stocks as measured by MSCI lost around 3.8%, taking that index into negative territory in what would be the sixth month in a row for losses.

The emerging market index has lost nearly 55% of its value so far this year while its developed market counterpart has lost around 42%.

The worries about economic and corporate growth also spread to commodities, which had rallied strongly on Monday because of the Chinese stimulus package.

Oil lost 4.5% to about US$59.50 a barrel. Gold pared 1% to around US$738 an ounce and London copper tumbled 4%.

Demand for commodities - and hence their prices - generally falls when economies slow.

DOLLAR RECOVERS

The dollar and yen were broadly supported on the weak tone in equity prices.

The euro was down 0.2% against the dollar at US$1.2707 erased as the single currency was weighed down by weakness in European share prices.

"There is still the risk aversion factor which is supporting the dollar and yen but it is not quite as much as before, as currencies are settling into ranges," said Daragh Maher, currency strategist at Calyon in London.

The ZEW Institute's index of German economic sentiment came in at -53.5 in November, improving from -63.0 in October. It also beat market expectations for a reading of -62.0.

The euro hit a record high against sterling of 82.14 pence, according to Reuters data while the pound fell 0.5% against the dollar at US$1.5527.

The Japanese currency was down 0.1% against the dollar at 97.88 yen.

Euro zone government debt was mixed.

Two-year bond yields were flat at 2.396%, with 10-year yields 2 basis points higher at 3.694%.

© Thomson Reuters 2008

US STOCKS-Flat open seen as credit thaw offsets caution

2008-11-03T06:38:00.000-08:00

source: Reuters

By Ellis Mnyandu

NEW YORK, Nov 3 (Reuters) - U.S. stocks headed for a flat open on Monday as caution ahead of key economic data offset signs of more thawing in credit markets.

Trading was likely to be light as Americans prepare to head to the polls on Tuesday to choose the next U.S. president, with investors sidelined ahead of the outcome of the elections.

Wal-Mart Stores (WMT.N: Quote, Profile, Research, Stock Buzz), up nearly 2 percent before the bell, is among stocks to watch after a brokerage raised its rating on the retailer.

Shares of Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) slipped 0.5 percent to $92 before the bell after Merrill Lynch forecast the U.S. bank to post a fourth-quarter loss instead of the profit that Merrill had previously forecast.

The costs for bank to borrow dollars from each other again fell, sending three-month rates down for a 17th straight day and boosting hopes that steps to restore confidence in credit markets are paying off.

Free-flowing credit is seen as crucial in helping avert an acute downturn as investors fret about a global recession.

"The fact that interbank rates are really coming down is an indication that we should begin to see the credit markets respond and that's going to be the key," said Peter Cardillo, chief market economist at Avalon Partners in New York.

He added that the market has probably discounted an election victory of Democrat Barack Obama, heading into Tuesday's U.S. presidential election.

"It looks like we will have a Democratic president, so the election and the anticipation of the economic data is probably going to keep the market in a very tight range for most of the session today and tomorrow as we go to the polls."

S&P 500 futures SPc1 shed 2.40 points and were about even with fair value, a formula to evaluate pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 dipped 22 points and Nasdaq 100 NDc1 futures shed 2.00 points.

Monday's economic diary includes the Institute for Supply Management October manufacturing index at 10 a.m. (1400 GMT). Economists in a Reuters survey expect a reading of 41.5 versus 43.5 in September. But the highlight of the week will be Friday's report on October U.S. nonfarm payrolls.

J.P. Morgan Securities raised Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz), a Dow component, to "overweight" from "neutral." Goldman Sachs added Boeing (BA.N: Quote, Profile, Research, Stock Buzz) to a "conviction sell" list, according to theflyonthewall.com.

Obama heads into Tuesday's voting in a comfortable position, with Republican opponent John McCain struggling to overtake his lead in every national opinion poll and to hold off his challenge in about a dozen states won by President George W. Bush in 2004.

Obama leads McCain in six of eight key battleground states, including the big prizes of Florida and Ohio, according to a series of Reuters/Zogby polls released on Monday.

Obama holds a 7-point edge over McCain among likely U.S. voters in a separate Reuters/C-SPAN/Zogby national tracking poll, up 1 percentage point from Sunday. The telephone poll has a margin of error of 2.9 percentage points. [ID:nN03354084].

U.S. stocks ended one of their worst months on record on Friday but signs of further thawing in credit markets sparked a search for bargains. (Editing by James Dalgleish)

FOREX-Easing risk aversion cools dollar, yen rally

2008-11-03T06:12:00.000-08:00

* Dollar, yen ease after stunning Oct as risk aversion cools

* World stocks in positive territory

* Global recession fears persist, further deleveraging seen

* U.S. election eyed

source: Reuters

By Veronica Brown

LONDON, Nov 3 (Reuters) - The euro and high-yielding currencies rose against the dollar on Monday, while the yen retreated broadly as abating risk aversion lifted stocks.

The scale of investors' deleveraging was highlighted in October, when the dollar index .DXY posted its biggest monthly percentage gain in 17 years and the euro suffered its largest monthly fall against the dollar and yen since its 1999 launch.

Concern about the prospect of a global recession was expected to limit gains in riskier assets and offer support to the low-yielding dollar and yen.

"The problem for the market is that all the trades that worked well for the past 5 years went badly very quickly," said Michael Rosborough, senior global FX strategist at Citigroup in London.

"On bounces like this you would expect to see people still liquidating and using them as an opportunity to lighten up on positions," he added.

By 1200 GMT, the euro was up 0.9 percent on the day at $1.2845 and rose 1.6 percent to 127.34 yen .

Sterling rose around 0.7 percent against the dollar to $1.6190 , while the dollar gained 0.7 percent to 99.14 yen . The high-yielding Australian and New Zealand dollars also rose around 1.4 percent versus the U.S. currency.

World stocks, as measured by MSCI's all-country index, rose 0.9 percent on the day .MIWD00000PUS.
Major events this week include the U.S. presidential election on Tuesday [ID:nN02470309], with a win by Democrat Barack Obama generally seen as more favourable for financial markets.

Also, the European Central Bank, the Bank of England and the Reserve Bank of Australia are all expected to lower interest rates to protect their struggling economies from the threat of a looming global recession.

Each of them is expected to cut rates by at least half a percentage point. The U.S. Federal Reserve last week cut its key rate by half a point to 1.0 percent and the Bank of Japan (BoJ) cut its rate to 0.30 percent from 0.50 percent.

Analysts said Britain's central bank could cut rates by more than the half percentage point that is expected.

"The risks are tilted toward an even larger move, as the upside risks to inflation have diminished significantly, according to resident BoE hawk (Tim) Besley," RBC strategists said in a note to clients.

Emerging giants China and India also cut rates last week.

Economic weakness was underscored by a report on euro zone manufacturing activity, which sank in October below record low levels initially estimated.

The Markit Eurozone Purchasing Managers Index for the manufacturing sector fell to 41.1 -- the lowest in the survey's 11-year history -- from September's 45.0. That was below the flash estimate and economists' forecasts of 41.3.

The release marks the fifth consecutive month the PMI index has been below the 50 mark that divides growth from contraction.

The U.S. Institute of Supply Management's factory activity index, due out at 1500 GMT, is also expected to show further weakness. Economists expect a reading of 41.5 versus 43.5 in September. (Reporting by Veronica Brown; editing by Swaha Pattanaik

India to auction $2 bln bonds on Nov 7 - govt

2008-11-02T06:30:00.000-08:00

source: Reuters

NEW DELHI, Nov 3 (Reuters) - India will auction government bonds totalling 100 billion rupees ($2.05 billion) on Nov. 7, the finance ministry said on Monday.

It will sell the 8.24 percent 2018 government bond for 60 billion rupees, and another 8.28 percent 2032 bond worth 40 billion rupees.

Both will be sold through a price-based auction using the multiple price method, it said.

The government also plans to buy back 6.65 percent 2009 government bonds worth 50 billion rupees and another 5.48 percent 2009 government bond worth 50 billion rupees on Nov. 6. Both were issued earlier under the market intervention scheme.

($1=48.7 rupees)

(Reporting by Rajkumar Ray) Keywords: INDIA BOND/AUCTION XX:ams951135..4.0.-1.t.fip.XX.0.SZ.ukbp-xxnfip01a,ukbp-xxnfip01b#XP:ukbp-xxnfip01b ~

(rajkumar.ray@thomsonreuters.com; +91-11-4178-1006; Reuters Messaging: rajkumar.ray.reuters.com@reuters.net)

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Forex stock down to $2.7B in September

2008-11-01T05:35:00.000-07:00

BSP used $10B to prop up peso, pay debt

source; business.inquirer.net

The foreign exchange stock of the central bank, Bangko Sentral ng Pilipinas (BSP), stock outside of its official foreign reserves dwindled by $870 million in September following severe global shocks that emanated from Wall Street.

The central bank’s latest report shows foreign exchange locked in foreign currency swaps and not yet booked as part of the country’s gross international reserves (GIR) had fallen to $2.69 billion at end-September—the lowest so far this year—from $3.56 billion a month earlier.

The BSP has been selling US dollars heavily to temper the peso’s sharp depreciation since March. It has been intervening on the foreign exchange market while conserving its GIR. As a result, the foreign exchange swaps have decreased from an all-time high of about $13 billion in January and February.

According to the latest report, the central bank has unlocked about $10 billion from the foreign currency swaps so far this year, to flush US dollars onto the currency spot market or to service some debts.

Currency dealers said that in recent months the central bank provided liquidity to the foreign exchange market whenever the peso fell sharply during intraday trading.

In the past two years, the BSP used foreign exchange swaps as a tool to mop up excess foreign exchange in the financial system. It bought dollars on the open market and swapped them for pesos to prevent excess foreign exchange from pushing inflation up.

In September, about $312 million worth of foreign portfolio investments in Philippine stocks, bonds and bank products flowed out of the country—the worst such outflow so far this year.

It was in mid-September when Wall Street woke up to find two of its venerable investment banks gone—Lehman Brothers filed for bankruptcy and Merrill Lynch was sold to Bank of America. At the same time, the world’s biggest insurance firm, American International Group, teetered on the brink. AIG received an $85-billion lifeline from the Reserve Bank of New York. The turmoil on Wall Street brought global risk aversion to new heights, exerting pressure on local currency, stock and bond markets.

At end-September, the GIR was $36.69 billion, enough for 5.8 months’ worth of imports of goods and payments of services and income. With editing by INQUIRER.net

India cuts key rate

2008-11-01T05:29:00.000-07:00

Sat, Nov 01, 2008
AFP

NEW DELHI, INDIA - INDIA'S central bank cut its key short-term lending rate on Saturday and took other monetary steps to spur lending and economic growth to counter the impact of the global financial crisis.

The Reserve Bank of India, citing 'unsettled' financial conditions, reduced its key short-term lending rate, the repo, by 50 basis points to ease a credit crunch. The repo is the rate at which it lends funds to commercial banks.

'The central bank is sending the message that it will provide stimulus for India's economy to grow by at least 7.0 to 7.5 per cent' in this financial year to March 20009, said Mr Rupa Rege Nitsure, economist at state-run Bank of Baroda.

As part of a triple-prong move, the bank also cut the amount commercial banks must keep in reserve, easing the cash reserve ratio to 6.5 per cent from 5.5 per cent - pumping billions of dollars into the financial system.

And in another stimulus step, it cut the statutory reserve ratio - the amount banks must hold in government securities - to 24 per cent from 25 per cent to boost liquidity. Banks around the world have been lowering rates to spur growth, with the US Federal Reserve on Wednesday slashing its main policy rate to one percent and neighbouring China also lowering key interest rates.

Expectations swept the stock market Friday that the bank would move soon to boost liquidity after corporate complaints that credit was extremely tight and data showed lower inflation than had been expected. But the timing was uncertain.

The bank said it took the steps 'in view of the ebbing of upside inflation risks and also to address concerns relating to the moderation in the growth momentum' and promised 'swift' further action as appropriate.

The move, announced on a Saturday when financial markets were closed, were the latest in a slew of easing steps by the bank to stabilise domestic markets which have been feeling the heat from the global crisis.

India's stock market has tumbled by 53 per cent from January highs as risk-averse foreign investors have pulled out their funds while the rupee has tumbled by nearly 20 per cent against the dollar this year to record lows.

'Global financial conditions continue to remain uncertain and unsettled, and early signs of a global recession are becoming evident,' the bank said on its web site.

'These developments are being reflected in sharp declines in stock markets across the world and heightened volatility in currency movements.'

The steps came after India's inflation rate earlier in the week fell below 11 per cent for the first time since May to hit to 10.68 per cent. Analysts forecast it will fall to single digits by Nov or Dec as a result of falling global commodity prices and slowing economic growth.

Industry bodies have been clamouring for rate cuts to ease the impact of the financial crunch on companies while the government has become concerned about the slowing of India's previously red-hot growth.

The moves reflected that the bank is 'terribly worried about growth and worried about the disruption' in lending activity and 'lack of access to credit,' said Mr Abheek Barua, chief economist at HDFC Bank.

The central bank has forecast economic growth slowing to between 7.5 and eight per cent while private economists see expansion slipping as low as seven per cent after the economy grew by nine percent last year.

While still strong, seven per cent growth is not enough to pull India's hundreds of millions of poor out deep poverty, economists say.

Emerging Markets-Stocks, bonds, FX surge on Fed, IMF moves

2008-10-30T05:54:00.000-07:00

Source: www.forbes.com

LONDON, Oct 30 (Reuters) - Emerging equities soared by 9 percent, sovereign debt spreads snapped in and currencies rallied on Thursday as investors took heart from a U.S. rate cut and currency swap lines for emerging market economies.

The Federal Reserve delivered on Wednesday an expected 50 basis point rate cut and launched $120 billion in new currency swap lines with South Korea, Mexico, Brazil and Singapore.

China, Hong Kong, Norway and Taiwan have also cut rates and Japan, the euro zone and Britain are expected to follow soon.

In addition, the International Monetary Fund on Wednesday approved a short-term financing facility for emerging market economies that have a good track record but are having difficulties accessing credit.

Emerging market assets have been crushed in recent weeks by the ongoing global financial crisis, as hedge funds pulled out of riskier assets to cover redemption payments, and several emerging economies appeared on the verge of collapse.

Benchmark emerging equities rose over 9 percent and were trading at 554.37 at 1030 GMT, bringing their gains to 24 percent from four-year lows set on Tuesday. Stocks have still fallen 30 percent this month and 55 percent this year.

'We have had energetic action worldwide from central bank governors and international institutions,' said Elisabeth Gruie, emerging markets strategist at BNP Paribas (other-otc: BNPQY.PK - news - people ).

'There is a sense of a step up in the measures and the market is benefiting from this.'

Russia's MICEX exchange suspended trading for an hour after its index rose more than 14 percent.

Emerging sovereign debt spreads tightened by 50 basis points to 682 bps over U.S. Treasuries, after narrowing by 50 bps in the previous session. Spreads topped 900 bps, their widest levels in six years, less than a week ago.

Russia's five-year credit default swaps, which hit distressed levels above 1,000 bps last week, tightened by 100 bps from the close to 700-850 bps, traders said.

Turkey also tightened by 100 bps, to 500-600 bps.

CURRENCIES UP

Dollar weakness following the U.S. rate cut to 1.0 percent and hints of more to come led to demand for higher-yielding currencies.

The Turkish lira hit two-week highs against the dollar and was trading nearly 2 percent higher from the U.S. close, bringing gains to 17 percent from 27-month lows set last week. The rand also hit two-week highs.

Turkey's economy minister Mehmet Simsek said Turkey had a positive approach to an IMF precautionary deal and a programme could be agreed if differences could be overcome.

Investors are eyeing the next emerging economies to agree IMF help. Ukraine, Hungary and Iceland have already clinched deals, and Turkey, Pakistan, Serbia and Belarus are in talks.

Ukraine's hryvnia spiked up 14 percent against the dollar , recouping the previous day's losses to record lows, in volatile trade after the central bank this week removed the currency's trading band.

The Ukraine president's office said on Thursday the central bank had sold nearly $5 billion in three weeks and criticised its failure to stabilise the currency.

The Icelandic crown continued to show barely any trade in international markets. Only two euro/crown trades have been recorded on Reuters matching dealing system since the central bank raised rates by 6 percentage points on Tuesday, with both trades at 240 per euro.

(Editing by Mike Peacock) Keywords: MARKETS EMERGING

tf.TFN-Europe_newsdesk@thomson.com

vjt

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved.

FOREX: Ringgit Closes Flat Against U.S. Dollar

2008-10-29T06:03:00.000-07:00

KUALA LUMPUR, Oct 28 (Bernama) -- The ringgit was traded flat against the US dollar at close on Tuesday amid losses capped by the selling of the greenback holdings by exporters, dealers said.

At 5pm, the ringgit was little changed at 3.5790/5830 against the greenback from last Friday's closing of 3.5790/5840.

However, a dealer said the ringgit is likely to further weaken to the 3.60 level this week amid the uncertainty on the global front, triggered by investors seeking to liquidate their position.

Against the other major currencies, the ringgit was mixed, depreciating against the Singapore dollar at 2.3735/3780 from last Friday's 2.3713/3765 as well as against the British pound at 5.5706/5786 from 5.5503/5599.

However, compared with the yen, the ringgit appreciated at 3.7814/7873 from 3.8422/8500 and also rose against the euro at 4.4664/4721 from 4.4927/5004 previously.

-- BERNAMA

Brazil Perdigao's Q3 turns negative on forex losses

2008-10-28T06:07:00.000-07:00

Wed Oct 29, 2008 7:14am EDT - reuters

SAO PAULO, Oct 29 (Reuters) - Perdigao (PRGA3.SA: Quote, Profile, Research, Stock Buzz)(PDA.N: Quote, Profile, Research, Stock Buzz), one of Brazil's top meat processors, posted net losses of 25.4 million reais ($11.6 million) in the third quarter, compared with a net profit of 90.2 million reais in the same three months of 2007.

"The impact of the exchange rate on financial expenditures, with the depreciation of the real against the dollar - at a cost of 200.9 million reais without an effect on cash flow - turned the quarterly results negative," the company said late on Tuesday in a statement.

Earnings before interest, taxes, depreciation and amortization, a key measure of cash flow known as EBITDA, rose 20.7 percent from July through September to 274.9 million reais from the same period a year ago, the company said.

Perdigao is the most recent of several Brazilian companies in the export sector to post large losses due to hedging and speculative positions held on the currency markets. The Brazilian real BRBY has weakened from around 1.57 to the dollar in May-June to 2.183 on Tuesday. (Reporting by Roberto Samora; writing by Reese Ewing; Editing by Derek Caney)

IOC, BPCL, HPCL to get oil bonds worth Rs65,942 cr

2008-10-27T06:14:00.000-07:00

Source: www.livemint.com

The three firms would get Rs14,956.17 crore worth of oil bonds for selling petrol, diesel, domestic LPG and kerosene below cost in January-March quarter.

New Delhi: Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) are likely to get oil bonds worth Rs65,942 crore this week to make up for half of their revenue loss on fuel sale during the first nine months of 2008.
“Parliament has already approved (issue of oil bonds). We expect Finance Ministry to intimate of the bonds anytime now,” Petroleum Ministry Additional Secretary S Sundareshan said.
BPCL is to announce tomorrow its earnings in July-September quarter, while HPCL and IOC are to do so on Friday. Without the oil bonds, the three would post huge losses.
“Even with oil bonds, things are not going to be any better,” he said.

The three firms would get Rs14,956.17 crore worth of oil bonds for selling petrol, diesel, domestic LPG and kerosene below cost in January-March quarter. They will get an additional Rs24,408 crore compensation for April-June quarter and the remaining will be for July-September quarter.
Government compensates half of the losses resulting from its dictate to oil companies to not to raise fuel prices in line with cost, through issue of oil bonds.
For 2007-08, the oil companies reported a total revenue loss of Rs70,579 crore of which Rs35,289.50 crore is to be compensated through oil bonds. The government has already issued, oil bonds worth Rs20,333.33 crore for April-December 2007 period.
IOC, BPCL and HPCL in April-September lost Rs92,853 crore on fuel sales (audited figures) and are projected to lose Rs1,47,486 crore in the full fiscal. Half of the projected revenue loss is to be compensated through oil bonds.

Japan's 5-Year Bonds Surge on Speculation Central Bank to Cut

2008-10-26T06:19:00.000-07:00

Source; www.bloomberg.com

By Ron Harui

Oct. 29 (Bloomberg) -- Japan's five-year government bonds surged, posting their biggest gain since 1999, after the Nikkei newspaper said the central bank is ``leaning toward'' cutting interest rates by a quarter-percentage point.

Yields fell to a three-week low after the Nikkei said the Bank of Japan may lower its overnight rate to 0.25 percent from 0.5 percent at a scheduled policy meeting on Oct. 31, without citing anyone. The odds of a rate reduction this week jumped to 46 percent from 8 percent yesterday, according to calculations by JPMorgan Chase & Co. using overnight swaps.

``This news is bond-positive,'' said Alessio Caldarera, a debt strategist in Tokyo at BNP Paribas Securities Japan Ltd., a unit of France's biggest bank. ``You can expect monetary policy expectations to affect the curve further out,'' especially the five-year sector, he said.

The yield on the five-year note slid 13.5 basis points, the most since February 1999, to 0.92 percent at 4:10 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price gained 0.633 yen to 101.306 yen. The yield touched 0.88 percent, the lowest level since April 16.

The 10-year bond yield dropped 5.5 basis points to 1.485 percent and 10-year bond futures for December delivery advanced 0.65 to 137.90 at the close of the Tokyo Stock Exchange.

Yoshihiro Sugimoto, chief press officer at the Bank of Japan, declined to comment on the Nikkei report.

Japan's central bank is likely to cut its benchmark interest rate by a quarter point to 0.25 percent on Oct. 31, Tomoko Fujii, head of economics and strategy at Bank of America Corp. in Tokyo, wrote in a research note yesterday.

``Lower JGB yields are expected,'' said Fujii in an e-mail today to Bloomberg News, confirming the note.

The five-year yield may fall to 0.73 percent and the 10- year yield may drop to 1.30 percent by year-end, Fujii forecast.

Stock Rally

The gain in bonds was tempered after the Nikkei 225 Stock Average climbed 7.7 percent, damping demand for the relative safety of government debt.

Some investors sold Japanese bonds after Treasuries slumped yesterday on speculation the U.S. will increase debt issuance. A senior Treasury official said the U.S. faces ``unprecedented'' financing needs and may sell more long-term bonds to meet them.

The Nikkei 225 gained for a second day after the Standard & Poor's 500 Index yesterday climbed 10.8 percent and the Dow Jones Industrial Average surged 10.9 percent.

Japanese bonds typically move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.83 with the Nikkei 225 last week, according to data compiled by Bloomberg. A value of 1 would mean the two moved in lockstep.

Production Outlook

Ten-year notes also gained after a government report today showed Japanese companies plan to cut production this month and next as the global financial crisis increases the likelihood of a worldwide recession.

``Definitely it's economic fundamentals,'' said Guthrie Williamson, a portfolio manager in Sydney at Principal Global Investors, which manages $228 billion in assets globally. ``I've been bullish on JGBs since May. There have been dips at times that have presented buying opportunities in recent weeks.''

The 10-year bond yield may decline to 1.2 percent by year- end, Williamson said.

Industrial production will fall 2.3 percent in October and 2.2 percent the following month, according to the Trade Ministry report. Output climbed 1.2 percent in September from August, when it declined 3.5 percent, the steepest decline in five years, the report also showed. The government downgraded its assessment of production.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.

European stocks up after Dow surge

2008-10-25T06:22:00.000-07:00

Source:

By PAN PYLAS

LONDON (AP) — Europe's stock markets opened mostly higher Wednesday after a stunning rally on Wall Street and further gains in Asia overnight as investors awaited possible interest rate cuts from central banks in the U.S. and Japan.

The FTSE 100 index of leading British shares was 149.47 points, or 3.8 percent, higher at 4,075.85 and France's CAC-40 was up 184.53 points, or 5.9 percent, at 3,299.45.

Germany's DAX index though was sharply lower as shares in Volkswagen AG, which have risen fivefold since Friday, dropped back by over 40 percent after the car maker's biggest shareholder Porsche AG said it will offer some stock to ease liquidity constraints.

Earlier, Japan's Nikkei index closed 589.98 points, or 7.7 percent, higher at 8,211.90 in the wake of the Dow Jones' 889 point, or 11 percent, rally Tuesday. The Dow's percentage rise Tuesday was its second biggest ever.

The renewed buying has been stoked by expectations that both the U.S. Federal Reserve and the Bank of Japan will cut interest rates this week and provide a further stimulus to the world economy which should foster some renewed risk appetite in markets.

The Fed is expected to cut its target fed funds rate by half a percentage point to 1 percent later Wednesday. Markets are also holding out the hope the Bank of Japan would trim its interest rate a quarter percentage point from the already low 0.5 percent.

The European Central Bank and Bank of England are also expected to follow suit and cut borrowing costs at their next scheduled rate-setting meetings next Thursday.

Despite signs that investors are looking for bargains after the turmoil of the last month, a sense of unease still prevails with the world economy and financial system fragile, evidenced overnight by the $25 billion package to help Hungary.

"This is still a volatile world as the bizarre 11 percent rose in the Dow overnight demonstrates," said Daragh Maher, an analyst at Calyon.

"Given that this was reportedly on the back of bargain hunting, one has to query why the market did not see similar value on Monday when the Dow continued to languish," he added.

Wall Street is expected to give up some of those gains when it opens later with futures markets predicting signaling a weaker opening for the two main U.S. indices in Wednesday trade. Dow and Standard & Poor's index futures were both down about 2 percent.

"After such huge gains yesterday a degree of profit taking at the open on Wall Street would pose few surprises," said Matt Buckland, a dealer at CMC Markets.

Elsewhere in Asia, the regional rally fizzled by the afternoon as traders cashed in profits amid fresh worries about company earnings.

Hong Kong's Hang Seng Index, up nearly 5 percent in early trading, trimmed its gain to just under 0.9 percent in volatile trade after a spectacular 14.4 percent rise the day before. Australia's S&P/ASX200 climbed 1.3 percent, helped by higher commodity prices.

South Korea's index pared its morning gains and dropped 3 percent as bank stocks pulled back on fears they may cut dividends after the government guaranteed their foreign currency loans.

Japan's stocks were helped by another fall in the value of the yen, which prompted investors to buy exporters like Toyota Motor Corp., which shot up 10.4 percent. Honda Motor Co. jumped 18 percent even though on Tuesday it reported a 41 percent drop in quarterly profit and lowered its forecast for the full year.

The yen has softened since jumping to about 91 to the dollar Friday. On Wednesday, the dollar was trading at about 97 yen after surging above 98 yen Tuesday, but up sharply from 94 yen late Monday.

Oil prices have also risen on the back of the rebound in global stock markets. Light, sweet crude for December delivery advanced $1.70 to $64.43 a barrel in London trade on the New York Mercantile Exchange. The contract slid 49 cents overnight to settle at $62.73, the lowest closing price since May 15, 2007.

On the currency front, the euro was 0.1 percent higher at $1.2744, while the pound was up 0.5 percent at $1.60.

AP Business Writers Jeremiah Marquez in Hong Kong and Kelly Olsen in Soeul contributed to this report.

Japanese Bought Foreign Stocks and Bonds In Third Week of October

2008-10-24T06:09:00.000-07:00

Asian Economy | Written by CEP News | Oct 23 08 00:30 GMT |

(CEP News) - Foreigners sold Â¥792.2 billon worth of Japanese bonds and sold Â¥300.1 billion worth of stocks in the week ending Oct. 17,

according to the Japanese Ministry of Finance's international transactions in securities report on Thursday morning (Wednesday night EDT).

Foreigners sold ¥861.0 billion worth of bonds the week prior, and bought ¥34.7 billion in Japanese stocks.

The Japanese bought ¥348.4 billion worth of foreign stocks and bought ¥113.6 billion worth of foreign bonds for the week ending Oct. 17.

The Japanese bought ¥172.8 billion in foreign stocks the week before, and sold a downwardly revised ¥794.6 billion in bonds.

By Megan Ainscow, mainscow@economicnews.ca mainscow@economicnews.ca mainscow@economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

Forex Trading: Finding A US Dollar Bear Will Be Hard Work

2008-10-23T05:58:00.000-07:00

By Jason Alan Jankovsky on October 23, 2008
Source: dailymarkets.com

Today’s US Dollar Trading

Traders note volumes and conditions at almost zero
Stops drive a lot of the majors lower
USD/JPY into the 97.00 area

Overnight Preview

Look for consolidation and a quiet night
USD likely to be sideways ahead of data

Looking Ahead to Thursday
All times EASTERN (-4 GMT)

8:30am USD Unemployment Claims
10:00am USD HPI m/m
10:35am USD Natural Gas Storage

Summary

The USD continued to advance against most majors but lost ground against Yen to end the day mixed and at new highs for the year.

Stops were triggered in thin trade traders report suggesting that some bottom-picking has been done recently but the relentless one-way USD advance Wednesday made quick work of the USD bears today. Traders report that conditions were horrible and volumes almost non-existent suggesting that a potential bottom is once again forming. With most traders focusing almost exclusively on liquidity, bank lending and the financial crisis, it appears evident that finding a USD bear will be hard work. In my view, the charge higher by the USD is suspect because it can’t last due to the underlying fundamentals being what they are. Lately traders have ignored US economic data preferring to trade on rumor and conjecture; Thursday is regular unemployment and Friday is Existing home sales; both expected to be negative for the Greenback.

On the day, Cable sank like a stone for a low print at 1.6138 after the London fix as more dovish rhetoric from the BOE filtered through the markets. Traders note that order boards are blank after the 500 point move overnight and the 1200 point move the past 48 hours; most are looking for a bounce to at least hang a hat on. EURO likely fell in sympathy although some suggest the EURO led the decline; either way the EURO dropped through the 1.3000 handle for a low print at 1.2737 before a bounce was seen. Traders report model accounts selling the rate under the 1.2900 area. USD/CHF rallied also for a high print at 1.1714 in NY before falling back on profit-taking; mist expect a test for stops again over the 1.1720 area near-term and that may finally be the sell for a potential top.

USD/JPY fell in line with equities weakness; the DJIA losing 460 points on the day heading into the close. Low prints in USD/JPY at 97.29; aggressive traders can sell more on the close at the 97.50 area. In my view, the USD rally has got to be nearing the end of this move; fundamentals don’t support it and the financial crisis is showing signs of mitigating as some banks are returning to normal operations. Once USD bulls figure out they are holding expensive USD, I think at least a small correction will force a top in the rate. Look for quiet overnight action as volumes are light and a steady open in NY Thursday ahead of US data.
GBP/USD Daily

Resistance 3: 1.6800
Resistance 2: 1.6730
Resistance 1: 1.6500
Latest New York: 1.6234
Support 1: 1.6130
Support 2: ?
Support 3: ?

Comments

Follow-on selling surprises to the downside; stops cleared and orders thin. Traders note solid bids but offers remain. Rate at new support level but ranges appears wider. Drop under the 1.6500 handle finds light stops. Monthly lows give way as sentiment won’t rally. Traders note quality bids on the dip suggesting a bottom is in here somewhere. Aggressive traders can buy anytime but expect more whippy action. Follow-on selling likely from technicals but spillover strength from EURO likely to be better to end the week. Look for a recovery back to the 1.8000 handle near term; two-way action likely to continue. Confirmed sovereign interest on the dip last night as semi-officials seen on dips in both EURO and GBP recently. Traders report cross-spreading for Sterling crosses likely driving the rate near-term. Model accounts seen selling GBP and EURO overnight.
Data due Thursday: All times EASTERN (-4 GMT)
4:30am GBP Retail Sales m/m
4:30am GBP BBA Mortgage Approvals
Tentative GBP MPC Member Gieve Speaks

EURO/USD Daily

Resistance 3: 1.3300
Resistance 2: 1.3120/30
Resistance 1: 1.3060
Latest New York: 1.2832
Support 1: 1.2735
Support 2: 1.2660
Support 3: ?

Comments

More lows overnight; stops drive trade into next technical support. After all is done today the rate is unchanged from US opens. Option barriers reported on the dip but those are cleared. Model accounts seen selling the rate under the 1.2800 area. Official interest noted traders say but rate continued to sell-off. OK to look to the buy side now; rotation off the lows will likely signal a near-term bottom. Rate is an absolute screaming buy in my view-I can’t see further weakness being ignored by the buyers. Oil two-way spills over into pricing and if oil rallies it might take EURO with it. Traders note stops building above the market along with offers. Expect more two-way action with upside bias; traders note the rate is finding profit-taking bids on dips so far despite the uncertainty in the market. Traders suggesting that the rate is continuing to trade technically. Traders note official names overnight this time.
Data due Thursday: All times EASTERN (-4 GMT)
2:45am EUR French Consumer Spending m/m
4:00am EUR Current Account
5:00am EUR Industrial New Orders m/m
9:00am EUR Belgium NBB Business Climate

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Turkish assets tumble, lira hits 28-month low against the U.S. dollar

2008-10-22T06:06:00.000-07:00

Source: Hurriyet.com

The Turkish lira fell to a 28-month low, while bond yields rose to a four-year high on Thursday, as worries over the economic outlook and growing global risk aversion undermined market confidence. (UPDATED)

Turkish assets tumble, lira hits 28-month low against the U.S. dollar

The lira eased more than 6 percent in afternoon trade to above1.73 levels against the dollar from its Wednesday interbank bank close of 1.63.

The currency has lost around a quarter of its value against the U.S. dollar this month as investors and hedge funds have been selling their assets and demanding U.S. dollar while leaving the emerging market.

The yield on the benchmark June 23, 2010, rose almost 3 percent jumped above 24.00 percent to hit its highest level in four years.

Turkish stocks which lost 2.64 percent at the close of the morning session, also extended their losses and fell nearly 5 percent in afternoon trade. It has lost more than half of its value this year amid the mounting global risk aversion.

Markets were eyeing the possibility of additional steps from the government and central bank to stabilize markets and prop up investor sentiment.

"Every kind of measure that the government announces in connection with the economy will have a positive impact (on the markets)," Reuters reported citing a forex trader.

Finance Minister Kemal Unakitan said Turkey would introduce ceilings on the budget deficit and the public debt stock to protect the country from the financial crisis.

He said the government will keep a 10 percent withholding tax on local bond investors' earnings but remove it for equities to help the country weather the financial crisis.

Foreign investors are exempt from withholding tax on bonds, bills and equities.

Central Bank Governor Durmus Yilmaz said the bank will double borrowing limits in the forex depo market to $10.8 billion starting from Friday and said that there was no problem with foreign exchange liquidity.

Global stocks also fell on fears of a recession. Asian stocks fell to a 4-year low on Thursday on growing fears that emerging market weakness would prolong a global recession and depress corporate earnings, pushing the yen to a 6-year high against the euro.

Intervene in the stock market

2008-10-21T06:14:00.000-07:00

23 Oct, 2008, 0016 hrs IST,T K Arun, ET Bureau

Unusual times call for unusual measures. The Indian stock market today calls for government-orchestrated investment on a large scale. The primary aim of such a proposal is not to prop up the market but to increase liquidity, stabilise the exchange rate and allow Indian companies to keep funding India’s growth.

There is a view, fairly widespread in India, that stock markets matter only for a tiny minority. After all, household savings invested in shares and debentures are less than 2% of India’s gross output and only about 10% of household financial savings. The percentage of households that own shares, too, is in small single digits.

So, many people, including economists, tend to dismiss stock market gyrations as of little consequence in overall policymaking. This would be a big mistake.

The battering that Indian stocks have received hurts the financial system as a whole and, therefore, the economy. This transmission of pain takes place not just by making it difficult for companies to raise fresh capital by way of equity. A nose-diving stock market dries up domestic liquidity and blocks access to foreign debt as well.

This is how it works. Fear of further losses on Indian stocks — India’s has been the worst performing stock market in Asia of late — forces foreign investors on our bourses to sell out and repatriate their money. When they buy dollars and take their money out, they reduce domestic liquidity and depreciate the currency. The tendency for the rupee to depreciate wildly makes foreign loans unviable.

Thanks to the financial crisis, developed country banks have lost faith in one another and are reluctant to lend amongst themselves. The London Inter-bank Offered Rate (Libor) is now significantly above the yield on treasury bonds, whereas, in the normal course, Libor is marginally above government bond rates.

When Indian companies borrow abroad, their rates are fixed as Libor plus a premium. Libor itself has shot up, and so has the premium. These loans are now expensive, without taking into account rupee depreciation.

If the rupee, which has now depreciated some 25% from its peak vis-à-vis the dollar in the last 12 months, continues to depreciate in an unpredictable fashion, these expensive loans become exorbitant, after taking into account the cost of hedging against wild swings in the exchange rate.

Unwarranted depreciation of the rupee will hurt domestic liquidity in three ways. Few fresh external loans would be contracted. External loans accounted for over Rs 80,000 crore last fiscal.

Indian companies that have to roll over their existing foreign loans would take rupee loans in India, convert the money into dollars and take out this money. This would suck out liquidity and further depreciate the rupee.

And a declining rupee would make the Indian stock and debt markets unattractive for fresh foreign flows. The return in dollars on their investment would be the rupee rate of return less the rate of depreciation of the rupee. All the government’s plans to bump up domestic liquidity by allowing greater FII flows into the domestic market for corporate as well as government debt would come unstuck.

So how do we prevent unwarranted rupee depreciation? The RBI can keep selling dollars from its forex hoard. It can, and should, help the fledgling currency derivatives market mature and do its work. Alongside, directly arranging for investment inflows into the stock market would help a lot.

Investing in Indian blue-chips at current valuations is a no-risk enterprise. Investors stand to make huge gains over a time-frame of three-four years. But retail investors are a scared lot and follow the herd mentality that sells when others sell and buy when others have already pushed up prices to unrealistic levels.

Long-term contractual savings — provident funds, pension funds — are, perversely enough, not present in the stock market at all. This is the time for the government to channel these funds into the market. Whereas the employees’ provident fund struggles to pay out a return of 8%, if they buy Indian blue chips at their current prices, they would generate returns that are many multiples of the original investment.

Since the board of trustees of the Employees’ Provident Fund has never demonstrated the sense that foreign pension funds display by entering the Indian market even today, the government could, as a special, short-term measure, give a guarantee of both capital and a return of 8% on investments, for funds deployed in the stock market now. The special guarantee can be extended to upto say, a fifth of nearly Rs 200,000 crore corpus.

Not only that. The government can guarantee borrowings by, say, the National Investment Fund from the RBI’s forex hoard, to bring in dollars to invest in the Indian stock market. Rather than finance FII exit, this way, the RBI would push its dollars directly into the stock market, improve valuations, discourage exit and put brakes on rupee depreciation. This would augment inflows of foreign capital and ease liquidity to lubricate growth.

NYMEX-Crude up on anticipated OPEC output cut

2008-10-20T07:32:00.000-07:00

Mon, Oct 20 2008, 14:06 GMT
http://www.afxnews.com

NEW YORK, Oct 20 (Reuters) - U.S. crude futures bounced

higher on Monday on expectations that OPEC oil ministers will move to cut output at their Friday meeting and on higher global stock markets which bolstered credit confidence.

"Crude and products futures are higher ... after comments by several OPEC members over the weekend made it apparent that a production cut of at least 1 million (bpd) is the likely result of the extraordinary meeting of cartel members that will take place on Friday in Vienna," Addison Armstrong, analyst at Tradition Energy, wrote in a research note.

"Looks like we may have an 'abstract' bottom for now," said

a NYMEX broker in New York. "Panic selling may be drying up

both in commodities and equities. OPEC may cut, but will it be

enough?"

PRICES

* On the New York Mercantile Exchange at 9:32 a.m. EDT (1332 GMT), November crude was up $1.73, or 2.41 percent, at $73.58 a barrel, trading from $71.81 to $74.28. The November contract expires on Tuesday. Last Thursday's $68.57 intraday bottom was lowest front-month crude price since $67.07 was struck on June 27, 2007. Despite a $2 rise on Friday, for the week the contract fell $5.85 or 7.53 percent.

* In London, December Brent was up $1.74, or 2.5 percent, at $71.34 a barrel, trading from $70.00 to $71.95.

* NYMEX November RBOB rose 4.15 cents, or 2.49 percent, to $1.7076 a gallon, trading from $1.6691 to $1.7203.

* NYMEX November heating oil rose 5.86 cents, or 2.75 percent, to $2.1915 a gallon, trading from $2.1333 to $2.1985.

* The heating oil crack spread was at $18.33 a barrel, and the RBOB crack spread was in negative territory at minus $2.02.

TECHNICALS

NYMEX crude 10-day/20-day moving average: $80.72/$91.94

Technical support/resistance:

NYMEX crude: $68.90/$75.00

NYMEX heating oil: $1.9875 $2.2975

NYMEX RBOB: $1.5820/$1.8615

For a report on oil market technicals click

MARKET NEWS

* OPEC might not need a hefty oil output cut when it meets on Friday, an OPEC source told the Saudi-owned al-Hayata newspaper, as others in OPEC talked of a possible cut of over a million barrels per day, perhaps in stages.

* An OPEC output cut may hurt economic recovery, the International Energy Agency's head said.

* Russia will not discuss oil output cuts with OPEC's visiting secretary general this week, Energy Minister Sergei Shmatko said.

* World stocks put in strong gains as investors took comfort in global efforts to prop up the banking system.

* China's GDP rate slipped into single digits in the third quarter for the first time in at least four years.

* Crude oil speculators on the NYMEX shifted to a net short

position in the week to Oct. 14, the U.S. Commodity Futures Trading Commission reported on Friday.

* FACTBOX-OPEC comments ahead of Friday's meeting

* For a list of top energy news stories, click

(Reporting by Robert Gibbons; editing by Jim Marshall)

Keywords: MARKETS ENERGY NYMEX

tf.TFN-Europe_newsdesk@thomsonreuters.com

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FOREX-Dollar extends gains vs yen on Bernanke testimony

2008-10-20T07:29:00.000-07:00

Mon, Oct 20 2008, 14:27 GMT
http://www.afxnews.com

NEW YORK, Oct 20 (Reuters) - The U.S. dollar extended gains versus the yen on Monday after Federal Reserve Chairman Ben Bernanke told Congress that another stimulus plan may be needed to boost the sluggish economy.

The dollar was last up 0.2 percent at 101.83 yen, versus 101.69 yen before Bernanke's testimony. The euro last traded down 0.5 percent at $1.3346, compared to $1.3360 before Bernanke's speech.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke said in prepared remarks for delivery to a congressional panel.

US stocks set to extend Monday's huge rally

2008-10-20T07:03:00.000-07:00

NEW YORK (AP) — Wall Street is gearing up for another surge following the Dow Jones industrial average's historic 936-point jump, with investors encouraged by the U.S. government's plans to buy stock in private banks. The Dow Jones industrial average futures are up 221, or 2.32 percent, to 9,729.

Standard & Poor's 500 index futures are up 27.60, or 2.71 percent, to 1,044.30, and Nasdaq 100 index futures are up 28.50, or 1.95 percent, to 1,487.00.

President Bush said Tuesday the government will use a chunk of the $700 billion bailout to inject capital into the nation's banks, which have been slammed by souring mortgage investments. The move follows a similar one announced Monday by European governments to invest about $2 trillion in their own troubled banks.

Stocks Open Higher on Wall Street

2008-10-19T07:05:00.000-07:00

Source: www.nytimes.com
By DAVID JOLLY and BETTINA WASSENER
Published: October 20, 2008

Stocks in New York followed shares in Europe and Asia higher on Monday, after a new round of government actions to backstop financial institutions and as investors watched for more signs that credit markets are loosening up.

European stocks rallied after the Dutch government announced late Sunday that it would inject about $13.4 billion of new capital into ING, one of the country’s largest financial institutions.

Asian financial markets gained after the South Korean government said over the weekend that it would guarantee as much as $100 billion in foreign debt held by its banks and would pump an additional $30 billion into the banking sector. The South Korean currency, the won, and the stock market had come under increasing strain last week because of the exposure of Seoul’s big banks to foreign-currency loans.

In New York, the Dow Jones industrial average opened slightly higher, up about 65 points in early trading. The broader Standard & Poor’s 500-stock index was up about about 1.3 percent. One crucial indicator, overnight lending of banks, also eased somewhat overnight.

Crude oil futures for November delivery in New York trading rose $1.82 to $73.67 a barrel.

In early afternoon European trading, the Amsterdam benchmark AEX index rose 2.3 percent, as shares of ING gained 23 percent. The DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 1.75 percent. The FTSE 100 index in London was up 2.1 percent, the CAC-40 in Paris rose 1.3 percent, and the DAX in Frankfurt added 0.38 percent.

In Tokyo, the benchmark Nikkei 225 stock average rose 3.6 percent. The S&P/ASX 200 index in Sydney gained 4.3 percent, and the Straits Times index in Singapore rose 3.1 percent.

Late in Hong Kong trading, the Hang Seng index was up 4.3 percent. Stocks in Bombay rose 4.4 percent after the Indian central bank took the market by surprise with a full one-percentage point cut in its main rate, to 8 percent.

Nonetheless, the gains Monday were modest compared to the massive global selloffs of the past two weeks, and a sense of caution prevailed in the market. While measures of credit market liquidity have shown improvement since coordinated actions by the major industrialized countries last week, they remain uncomfortably high.

The so-called Ted spread, the gap between yields on three-month government securities and the rate that banks charge each other for loans of the same duration, was unchanged at 3.63 percentage points early Monday. That is down from the peak last week of more than 4.6 percentage points, but still far above the pre-crisis average of between 0.5 and 1.0.

And the London interbank offered rate, or Libor, the rate banks charge each other for three-month loans in dollars fell, by the most in almost nine months.

Meanwhile, economic data Monday from China provided new evidence that the global economy is in for a period of slower or declining growth. Growth in China’s gross domestic product country slowed to 9 percent in the third quarter because of weak exports, a slumping real estate market and temporary restrictions imposed during the Olympics, marking the slowest expansion in five years.

Separately, the Bank of Japan cut its economic outlook for all of the country’s nine regions for the first time, citing slowing exports and weak household spending.

The dollar was mixed against other major currencies. The euro rose to $1.3497 from $1.3409 , while the British pound rose to $1.7500 from $1.7281. The dollar rose to 102.19 yen from 101.68 and to 1.1356 Swiss francs from 1.1372 francs.

David Jolly reported from Paris and Bettina Wassener reported from Hong Kong.

What is Online FOREX All About

2008-05-19T05:25:00.000-07:00

By: caterpiller23

I am experienced in utilizing all available online charts, forex trading tools, signals, news, education, systems and training software. However, this is easier said than done as the skills of the Currency Trading Signal takes a long time to master. The reality is that not many people are ready to be entirely devoted to the perilous process of online forex trading.But, online currency trading is like life where you're got to learn from your wrong moves and keep moving on.This article will look at fundamental analysis and how it used in FOREX trading.

FOREX Signals, One of the disadvantages of FOREX trading is the time investment needed to monitor the markets for advantageous entry and exit points. There are lots of great Forex trading strategies and Forex trading systems but to say there's only one, would not be a true statement.Mainly major banks, international organizations and some other are doing well in currency trading.Basically, currency trading involves four main variables: currencies, exchange rate, time, and interest rate.You can start playing the currency trading market with real market conditions immediately.utilising quality and reputable forex trading software and forex trading systems ...24hr commission-free currency trading w/ real time execution and guaranteed fills.

Nevertheless, if you want to learn forex trading finding a good trading strategy is vital to becoming a pro in the forex market.Included are links to forex trading, margin brokers, forex analysis, forex charts, quotes, etc.thus if you up till now desire to get into this trading game, you better study Forex trading prior to you create trading Forex. There are many different market sectors that are involved with Forex trading.At its simplest, Forex trading is currency being traded for another currency.
There are no guarantees in Forex trading, and you don't want to get wiped out. Review online forex trading courses to start achieving your own financial goals with currency trading. Without these online tools and forex trading platforms, this format of investing would not be possible. Learning to read charts, trading tools, news and compile and use all of this information makes it much easier to develop a powerful forex trading strategy. Our will help you to understand forex trading including tutorials and tips on how to make money trading forex.

Our forex trading system is the ultimate in forex trading platform. This low cost forex trading system comes complete with free charts and free email support. So you must learn them and understand them if you'd like to become a forex trading ninja master! You can sign up for one of the demo accounts and practice your forex trading today. Prior to the initiation of your forex trading, you need to know how to read these charts and analyze them. This way you may acquire skills and a basic forex trading education, without any fees.

Conclusion:
There are a large number of forex trading software programs available to get you started in playing the field in Forex trading. Software programs that are either desktop based or web based can be used in your Forex trading. It is wise to learn your own patterns If you are in penny stocks, forex currency trading, or stock markets. Forex trading is intended for sophisticated investors and is not suitable for everyone.

Source: http://www.articlesnatch.com

G7 Forex System: The Most Effective Forex Trading System Tool

2008-05-18T05:29:00.000-07:00

By: James de Wet

Making money through forex trading in the forex market is certainly a very difficult process. Usually, it takes some time to master the skills of statement and complete the preferred results in the forex trading system. Achieving this ability, by and large, depends largely on the personal ability and the power of feeling of an individual. However, there are some factors that play a vital role in deciding the future of your investments in forex trading such as:

Education: Usually, the successful and practical traders approach the forex trading market with a great deal of carefulness and they learn the basics of Forex trading every single day.

Forex trading system: Usually every expert trader has their own forex trading system which acts as a guiding tool. A well-designed and sophisticated Forex trading system can signal you the market sentiments to precision.

Price behavior: The successful traders have the price behavior incorporated in their forex trading system. They rigorously follow the price behavior and play safe.

Money management: The thriving traders know best how to manage their money. Since, there is a great deal of risk in the forex trading in the forex market; they trade wisely so that they can minimize the loss factor.

Trading psychology: The proficient traders have a knack of understanding the psychological factors that influence the decision making process of every trader. They have that so-called gut feeling and intuition to make a successful speculation in the forex trading.

Although the above factors are extremely vital to the forex trading, the forex trading system devised by the www.forex618.net has created a rage among the traders. This tool which is known as G7 forex system has worked as magically for many traders in the forex trading market so far. The efficiency of this fool-proof forex trading system can be attributed to the resources it is devised on. This G7 forex system is the result of an widespread and extensive technical research, rigorous testing, and years of live trading.

It has been traded for major banks, tested with huge trading orders, evaluated against rigorous statistical testing and followed by uncountable traders across the globe. The G7 system produces profits almost every trading week with the lowest possible loss. If this forex trading system has worked for so many people, it will also work for you. The best part of this most sought-after is its 100 % money back guarantee. Incase, it does not work for you, you are entitled to get all your money back.

For more information about this unique and invaluable forex trading system, please, visit: http://www.forex618.net

Source: http://www.articlesnatch.com

The Hidden Dangers of Forex Trading

2008-05-17T05:31:00.000-07:00

If you decide to try making some quick money, that too fast, forex trading may be the one you should try. This will be an ideal arena for you to enter to try an alternative arrangement for earning some extra income other than your regular job. You can make it your primary job once you master the trading skills.
The forex market is so huge that it may not be possible for an individual to be aware of the crucial changes that occur all over such as exchange rate fluctuations, political influences, and economic factors. Even the experienced bankers and traders can not predict how these changes can affect your trade.

But this step has to be taken very cautiously as the forex trading is highly volatile, it is very, very large that it is easy for you to miss a turn that affect your investment, it is unpredictable, and has high risk involved.

Forex trading involves dealing with the currencies of different countries. It is buying or selling of one currency for another at a rate both parties have decided. This trading involves different parties from different countries all over the world. So the area is very vast and to keep track of every move takes a lot of time, alertness, and a realistic approach to the different strategies. You have to have access to the latest issues and trends that keep changing at very high speed. Your success lies in how fast you can act upon an information to your benefit.

The fact that forex trading is all about making a fast buck, it posed the danger of you getting addicted to this just like in gambling and it is open to whoever is willing throughout the day, throughout the year.

Only large banks were dealing with foreign currencies previously. Globalization and relaxation of foreign exchange rules make it possible for anyone to enter the forex trade. With this the market achieved more liquidity and more active as the trade is happening all over the world with no time limit.

The dark side of it is that the market became so huge, and the changes are so unpredictable that it is very hard to keep a watch on every move that is happening. Those who are smart enough to understand the market better, do well and the others who can not lose money. So the time management is very crucial here.

Source: http://www.articlesnatch.com

Forex Trading Can Be Rather Intimidating for Beginners!

2008-05-16T05:34:00.000-07:00

Learning to master Forex trading online for someone who has no background in the financial markets can be rather intimidating. When it comes to Forex trading, understanding the terminology and the Forex trading strategies before you begin is vital - especially if you want to see some measure of success.

But with all the simplicity and promises of wealth, the fact is that the Forex trading is a very risky business. It is a fact that people who didn't have the right knowledge and skills trading in the Forex marketplace suffered large financial losses and some even went into debt. Many people who did well in the Forex marketplace however first of all gained the knowledge and skills necessary to do successful trading in this very liquid and very large economic marketplace.

Beginner Forex traders must invest in their knowledge base first. If you are serious about investing in Forex market, building up your trading skills and knowledge is the very first step that you must take. Forex traders must secondly get the right trading system and strategies in place. It is wise to research very well and consider all the various brokers' system available to you before making your choice. Although learning as you go will probably work for most people, it might also be a good idea to invest in an e-book on trading the Forex or check out some of the more general sites that offer free training tools and online how-to articles and guides about Forex trading for beginners.

As a Forex trading beginner you may not be accustomed yet to the hustle and bustle of forex trading. You may have heard that getting started in Forex trading is easy and instant. But finding a proven system that fits with your trading personality and style may take some time. Be sure to stick with it until you make it work for you.

Detecting Forex trading trends and trendlines are key to forecasting the Forex marketplace. Reducing the risks of losing money and some basic charting knowledge as well is recommended before you start. This is key to limiting any losses and maximizing your upside potential.

One of the best ways of learning to transact on the forex is by creating a virtual account. You will experience the thrill of trading and not experience any of the risks.

And finally choose your broker wisely. The broker you choose combined with your forex trading education can be critical in determining your success when trading these currencies online.

Source: http://www.articlesnatch.com

The Philosophy Of Winning In Trading the Forex Market -The Sure Way To Become A Successful Trader

2008-05-15T05:38:00.000-07:00

By: Peter Lim

Everyone who enters into the forex market to trade always starts off with good intentions. They will invariably aim to win. They are there to make gigantic profits in the market. After all, it is a keen interest in trading that has led to their involvement in trading the forex market.

In all my years of trading, I have yet to meet a complete newbie who is in the forex market to trade without spending at least some time to learn how to trade. At worst, the newbie to forex trading has at least learned the technical terms to trading, and has at least entered his trading account to look at the trading platform and the trading interface provided by his broker.

In the quest to become a better trader, most forex traders I know would have learnt the use of many tools, usually technical tools. To them, the tools are their weapons of war. Many use technical trading systems to help them get a more accurate analysis of price movements, and to study price trends. Some use simple trend trading methods such as trendlines, others use price patterns of congestion and outbreaks, some use the more sophisticated Elliot wave counting and WD Gann squaring of price and time, and some even neural networks forecasting and astronomy. Yet, with the help of many trading tools, a big majority of traders are still unprofitable.

Herein lies the problem with many traders.

In forex trading, like in all forms of market trading, the amount of tools you use, whether singly or in synergy, will not guarantee your success. Having a battery of technical indicators to provide you a technical reading will not ensure your success in trading.At best, these technical indicators will help you understand the market trend more, or might even serve to confuse you especially if they generate conflicting signals.

Forex trading, is just like fighting a battle, and the following principle holds true:

"It's not the sword that wins the battle.

It's the Warrior whoâ€™s wielding it.â€

It's the warrior who's wielding the sword that will determine the outcome of the battle. In other words, if you are a forex trader, it is your trading discipline, and the proper use of the trading tool or method that will ensure your success.It is you, the trading warrior, who wields the trading tool correctly that can ensure the battle is won.

Therefore to become a successful trader, you will need to master your self - to follow a set trading method and to execute the trades based on a trading plan, where you will follow stringently to the best trading setups and exit at pre-determined stop losses. Without trading discipline, you will not be able to master your trades, and you will find profits hard to come by.

It is only when you master yourself to conduct discipline trading and also master your trades by following a proven trading methodology with a timely and suitable entry and exit strategy that you can become a profitable trader.

Source: http://www.articlesnatch.com

Option Trading Tip - Are You A Jack Of All Trades & A Master Of None?

2008-05-14T05:40:00.000-07:00

I make a living out of trading options...and a pretty good one at that!

For a long time I couldn't say those words as I struggled just to hold on to my capital, let alone make it grow.

Though there were several reasons why I struggled (including being grossly undercapitalized and at the same time placing too much of my trading bank on individual trades) the main reason for my struggle I believe was a lack of focus.

By 'lack of focus' I mean that I was constantly jumping around trying to implement too many different option trading strategies from basic call and put buying, to putting on multi leg spread tades, believing that the more complex the strategy, the greater my chance of success.

I had become a 'Jack Of All Trades & A Master Of None' and the only people that were making money from my option trading were my brokers.

One day a friend of mine (a very successful futures trader) said to me, "You don't need to know everything about trading the markets to make money and be a success. You just need to 'focus' and become an expert in one or at most a few different trading strategies and know exactly when and how to use them. The rest is just practice!"

Those words rang loudly in my ears and from that point onwards I narrowed my focus.

I decided that I would go back to the very basics of option trading and only buy calls and puts with the intention of becoming very good at picking the short-term direction of stocks.

Today, almost 2 years later and after going through a steep and often expensive learning curve, buying calls and/or puts is what brings in the largest portion of my current monthly income.

I also use a couple different spread trading strategies when the market moves sideways, but my main 'focus' is on picking the short-term direction of a small number of stocks that I have gotten to know VERY well (through backtesting), and then buying the appropriate option based on risk vs reward and my short-term outlook.

The success I'm enjoying today (19 profitable months out of the last 24) is due to becoming proficient at reading stock charts and developing an option trading system that I am comfortable with and performs well and by applying my trading rules consistently.

Ultimately you only need to know a few different strategies to be able to trade any stock up, down, or sideways.

The options themselves are simply the 'tools' to make money from your 'opinions' and in my experience the tools that are the easiest to use, have also been the most profitable.

Source: http://www.articlesnatch.com

Online Stock Trading and Realistic Assumptions

2008-05-13T05:42:00.000-07:00

By: Emanuele Allenti

Many people begin online stock trading with the false belief that they will get rich fast. They believe that they will find some little-known secret and exploit it to generate piles of money while everyone else laments their losses. And this is actually the primary reason why 70% of day traders lose money-they simply do not have realistic expectations.

If you want to master online stock trading, you must set realistic goals that you can actually achieve. If you set your standards far beyond what you can hope to earn, you will get frustrated easily and give up, when you should actually be looking for a better way to nuance your strategy.

Excessive penny stock trading is one example of the pervasiveness of this unrealistic mindset. Many first-time traders will immediately jump into highly-speculative and highly-volatile markets with the false beliefs that they can earn a massive profit fast. This may happen, but they may also lose a lot of money instead.

If you have a lot of money to risk and you are a risk-neutral trader, then you may want to start trading penny stocks; however, you should always proceed with caution by getting the best information you can before you ever enter a market.

Again, even if you are risk-neutral, you should still spend time working with an online stock trading simulator before you actually start to buy and sell stock. You may think you have found a profitable trend, but if you haven't had the chance to prove it through testing (which you can do completely for free), then you really have no reasonable way of assuming that your strategy will work in reality.

This is why you must ground your thoughts. You must understand that most professional brokerages with workers who have traded for years can't bring in much more than 7% each year without making significant risks, which means you will have a hard time doing better, even if you find a profitable strategy.

If you plan to go into stock trading, you should either expect to make around 7% by creating a diversified portfolio of companies that have a long history of steady growth; or you should trade highly-volatile stocks with the assumption that you will lose every penny you trade until you master online stock trading.

Source: http://www.articlesnatch.com

Stock Splits And How You Can Profit From Them

2008-05-12T05:46:00.000-07:00

By: Mark Crisp

Stock splitting is something that investors like. When stocks split, it means you have twice the amount of shares you did before. The value of each one does go down but the amount increases. This gives you greater leverage and the stocks have a chance of going up in value in the future.

Companies sometimes like to split their stocks down the middle. If you have 100 stocks worth $2 each and the company splits its stocks, you will then have 200 stocks worth $1 each. The total value is the same but you feel like you have more stocks. It is like changing money â€“ you have two notes instead of one although your pair of $10 notes are the same in value as the $20 you had a moment ago.

Smaller investors can get into the market more easily because of stock splitting. Someone is more likely to buy cheaper stock if they do not have a lot of money to invest. If a company is selling stock for $300, an investor might think that is above their budget, but if the stock is split and ends up at $150, the investor might consider that a reasonable price. Splitting stocks is a game where the value does not go up or down but people prefer stocks which seem to be cheaper and think they are getting a better deal.

There are various ways that a company might decide to split their stocks. Nearly all companies will stick to the two stocks for one rule, but some might offer three for one. Another company might reverse split their stock, meaning you had ten stocks worth $200 before. Now you have only five stocks but they are worth $400 each. If a company feels that its stock price is too low, it will consider doing a reverse split. It might want to make sure the company does not get de-listed or another reason for a reverse stock split is when you want fewer stockholders, perhaps wanting to make your company private.

If a company has lower stock prices, they have more liquidity. More people find the stocks affordable and there is therefore more interest in them.

Sometimes, however, stock splitting might provide false hope for investors because an investor will expect certain returns on his investment when the stock price changes. If the company does not deliver what people expect, they might lose the marketâ€™s confidence which means falling stock prices.

Stock splitting is not always good or always bad. It depends on the company and the reasons for the split. The company will split its stocks to alter the perception of its investors. If this works out the way they want it to, the stocks might raise. If not, there will be no change.

Source: http://www.articlesnatch.com

Is it Wise to Buy Penny Stocks?

2008-05-12T05:44:00.000-07:00

By: Carlie Evie

That's a good question... should you buy penny stocks? Why don't we weigh some of the pros and cons?

A penny stock in the United States is a stock in any market that you can trade for less than $5 per share. On the other hand, the term can also apply to any lower priced and easily manipulated stock. It will often refer to a stock sold outside NYSE, NASDAQ, and MEX, the three major stock exchanges.

It's very tempting to get into the stock market by buying penny stocks, seeing as how they're so cheap. Another reason they're attractive is because they could dramatically increase in value in short order. However, for the exact same reason, they have a huge potential for quick loss.

If you buy penny stocks, you just might have a tough time selling them them off. Because these stocks don't have as many investors, they are usually not traded as often as the more popular and pricy stocks.

On top of that, if the stocks you're looking into are listed on an exchange that isn't well known, they are probably not subject to all the minimum standards and listing requirements that other stocks are held to. This makes them less stable.

Another thing: Penny stocks are a great source of income for fraudulent individuals. This is due to the stock's less known status. Many investors have been misled by these people through spam emails and internet message boards.

What they do is they encourage investors to dump huge amounts of cash into a stock that has no growth potential, then bailing out and selling their own shares as soon as the prices rise. "Pump and Dump" is the name of this infamous scheme. It has emptied the pockets of many a naive investor and lined the wallets of the fraudulent.

The cheap prices might make you inclined to buy penny stocks. But before you invest any kind of money, be aware of all the potential pitfalls.

Source: http://www.articlesnatch.com

Finding Hot Stocks In The World Of Investment

2008-05-11T05:48:00.000-07:00

By: Michelle Bery

The term hot stocks can be wildly misleading; for those who are just beginning their foray into the world of investment, looking for hot stocks could mean trying to find those stocks that will pay off in dividends in the short term. But what uneducated investors donâ€™t realize is that hot stocks mean much more than instant gratification.

Instead hot stocks could be defined as those stocks that may require patience to realize their full potential. Be wary of those stocks that rise in value dramatically. The fall could be just as dramatic. Hot stocks may be considered hot because of their significant earnings but volatility could be an indication of an unstable product.

First and foremost when it comes to hot stocks â€“ do your research. Learn as much as you possibly can about the stock market and its bevy of indicators. Research the particular hot stock in which you are interested and leave no stone unturned. A lack of comprehensive research could spell disaster further down the road.

The informational resources for hot stocks can be found online. The Internet has become a viable environment for trading; research hot stocks to learn their current worth and future predictions.

Take advantage of online forums where traders share their experiences. You may find many a helpful hint on how to go about trading hot stocks. Youâ€™ll often find a number of online traders willing to offer advice about online trading.

Additionally, in an effort to understand the complexities of hot stocks, take some professional courses to help you navigate this new world. Youâ€™ll be best served by getting the advice of professionals. Take what you need to learn the most you can about this complicated arena.

Most importantly, donâ€™t get in over your head. If you are a novice at trading then keep your activity simple and conservative. Hot stocks in an industry about which you know very little will only serve to frustrate and confuse you in the future. Instead, choose those hot stocks that are available within industries in which you have a comfortable level of familiarity.

Trading hot stocks can be exciting but it can also be unnerving. Take the time to conduct thorough research on any hot stocks and in trading in general. Some effort now will serve you well for years to come as you continue to navigate the stock market.

Source: http://www.articlesnatch.com