Wednesday, April 30, 2008
6:03 pm : Bursa Malaysia is closed tomorrow for Labour Day - 1 May 2008
Market opens on May 2, 2008 Friday.
5:45 pm - Rate Cut - Possible 25 basis point to 2 percent ???
Bernanke May Have to Do More to Ease Jump in Bank Funding Costs
By Scott Lanman
April 30 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke may need to step up his effort to unfreeze bank funding markets as a surge in borrowing costs blunts the impact of the cash auctions the central bank introduced in December.
The cost of obtaining funds for three months has risen by 0.33 percentage point since the Federal Open Market Committee's last meeting on March 18. The jump may force homeowners with variable-rate mortgages and some companies to pay more on their loans at a time when economic growth is faltering.
Policy makers may discuss the results of the $100 billion-a- month Term Auction Facility when they gather for the second day of their two-day meeting in Washington to set interest rates. The central bank will probably increase the size and duration of its biweekly auctions, according to economists at Barclays Capital Inc. and other firms.
``There's clearly a need for the Fed to do more,'' said Charles Lieberman, a former New York Fed economist who's now chief investment officer of Advisors Capital Management LLC in Paramus, New Jersey. ``The underlying problem'' is that banks and other investors are ``still nervous'' about lending to each other, he said.
The FOMC may also lower its benchmark rate by a quarter point, to 2 percent, as officials attempt to spur economic growth. Traders anticipate the central bank will then take a breather from its series of rate cuts, futures prices show. Today's statement is scheduled for around 2:15 p.m.
Liquidity Efforts
Investors' focus may instead shift to the Fed's attempt to stem the surge in bank funding costs that began in August, when the subprime-mortgage market's collapse spurred concern about losses at financial firms.
The three-month London Interbank Offered Rate for dollars has climbed to 2.87 percent from 2.54 percent on March 18.
Increases in Libor and other rates are ``a pretty clear indication that liquidity remains an issue or that term liquidity remains scarce,'' said Dean Maki, chief U.S. economist at Barclays in New York and a former Fed researcher. ``The Fed's made pretty clear they're going to continue to attack those problems as needed.''
The TAF is one of several Fed initiatives to unblock credit markets, along with direct loans to investment banks and $29 billion of financing to secure JPMorgan Chase & Co.'s takeover of Bear Stearns Cos. Investors have responded, buying a record $45.3 billion of corporate bonds last week and spurring an 11 percent rally in the Standard & Poor's 500 stock index from the year's low last month.
Aimed at Banks
The Fed auctions 28-day loans through the TAF, helping banks borrow funds that they might not obtain from counterparts. The Fed created the tool because of rising rates on one- to three- month loans among banks, Fed Governor Frederic Mishkin said in a February speech. The auctions may have had ``significant beneficial effects on financial markets,'' he said at the time.
Another gauge of bank funding costs, the premium on Libor over the overnight indexed swap rate, a measure of what traders expect for the Fed's benchmark rate, reached 87 basis points on April 21. That was the highest since the Fed announced the TAF on Dec. 12.
Bigger TAF operations would probably slow or reverse the increase in borrowing costs, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. Originally $40 billion a month, the Fed raised the amount of the auctions to $60 billion in January and to $100 billion in March.
`Substantial' Increase
``Any substantial further increase would start moving the program to a level where'' it is more than ``just psychologically relevant,'' Crandall said.
Fed spokesman David Skidmore declined to comment on the central bank's plans.
In concert with its liquidity efforts, the Fed has lowered its target rate for overnight loans between banks by 3 percentage points since September. Officials this month signaled they may be nearing a pause in reductions, anticipating some recovery in growth later in the year and sensing a renewed danger of inflation.
Fed Governor Kevin Warsh, San Francisco Fed President Janet Yellen and three other district-bank presidents voiced concerns about rising prices this month.
``Federal Reserve officials view themselves as about done with policy easing,'' said Vincent Reinhart, who was the Fed's chief monetary-policy strategist from 2001 until September 2007. ``They probably want to signal that the easing cycle is over, at least for a while.''
Weakest Since 2001
The Commerce Department is forecast to report today that economic growth slowed to a 0.5 percent pace in the first quarter after a 0.6 percent expansion the previous three months, according to the median forecast in a Bloomberg News survey. That would be the weakest six-month performance since the U.S. was last in recession in 2001.
At the same time, inflation is picking up. The personal consumption expenditures price index climbed 3.4 percent in February from a year before, the fourth straight month in excess of 3 percent.
While the Fed's benchmark rate is lower, the increase in Libor is ``constraining'' banks' ability to lend, said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc.
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net
By Scott Lanman
April 30 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke may need to step up his effort to unfreeze bank funding markets as a surge in borrowing costs blunts the impact of the cash auctions the central bank introduced in December.
The cost of obtaining funds for three months has risen by 0.33 percentage point since the Federal Open Market Committee's last meeting on March 18. The jump may force homeowners with variable-rate mortgages and some companies to pay more on their loans at a time when economic growth is faltering.
Policy makers may discuss the results of the $100 billion-a- month Term Auction Facility when they gather for the second day of their two-day meeting in Washington to set interest rates. The central bank will probably increase the size and duration of its biweekly auctions, according to economists at Barclays Capital Inc. and other firms.
``There's clearly a need for the Fed to do more,'' said Charles Lieberman, a former New York Fed economist who's now chief investment officer of Advisors Capital Management LLC in Paramus, New Jersey. ``The underlying problem'' is that banks and other investors are ``still nervous'' about lending to each other, he said.
The FOMC may also lower its benchmark rate by a quarter point, to 2 percent, as officials attempt to spur economic growth. Traders anticipate the central bank will then take a breather from its series of rate cuts, futures prices show. Today's statement is scheduled for around 2:15 p.m.
Liquidity Efforts
Investors' focus may instead shift to the Fed's attempt to stem the surge in bank funding costs that began in August, when the subprime-mortgage market's collapse spurred concern about losses at financial firms.
The three-month London Interbank Offered Rate for dollars has climbed to 2.87 percent from 2.54 percent on March 18.
Increases in Libor and other rates are ``a pretty clear indication that liquidity remains an issue or that term liquidity remains scarce,'' said Dean Maki, chief U.S. economist at Barclays in New York and a former Fed researcher. ``The Fed's made pretty clear they're going to continue to attack those problems as needed.''
The TAF is one of several Fed initiatives to unblock credit markets, along with direct loans to investment banks and $29 billion of financing to secure JPMorgan Chase & Co.'s takeover of Bear Stearns Cos. Investors have responded, buying a record $45.3 billion of corporate bonds last week and spurring an 11 percent rally in the Standard & Poor's 500 stock index from the year's low last month.
Aimed at Banks
The Fed auctions 28-day loans through the TAF, helping banks borrow funds that they might not obtain from counterparts. The Fed created the tool because of rising rates on one- to three- month loans among banks, Fed Governor Frederic Mishkin said in a February speech. The auctions may have had ``significant beneficial effects on financial markets,'' he said at the time.
Another gauge of bank funding costs, the premium on Libor over the overnight indexed swap rate, a measure of what traders expect for the Fed's benchmark rate, reached 87 basis points on April 21. That was the highest since the Fed announced the TAF on Dec. 12.
Bigger TAF operations would probably slow or reverse the increase in borrowing costs, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. Originally $40 billion a month, the Fed raised the amount of the auctions to $60 billion in January and to $100 billion in March.
`Substantial' Increase
``Any substantial further increase would start moving the program to a level where'' it is more than ``just psychologically relevant,'' Crandall said.
Fed spokesman David Skidmore declined to comment on the central bank's plans.
In concert with its liquidity efforts, the Fed has lowered its target rate for overnight loans between banks by 3 percentage points since September. Officials this month signaled they may be nearing a pause in reductions, anticipating some recovery in growth later in the year and sensing a renewed danger of inflation.
Fed Governor Kevin Warsh, San Francisco Fed President Janet Yellen and three other district-bank presidents voiced concerns about rising prices this month.
``Federal Reserve officials view themselves as about done with policy easing,'' said Vincent Reinhart, who was the Fed's chief monetary-policy strategist from 2001 until September 2007. ``They probably want to signal that the easing cycle is over, at least for a while.''
Weakest Since 2001
The Commerce Department is forecast to report today that economic growth slowed to a 0.5 percent pace in the first quarter after a 0.6 percent expansion the previous three months, according to the median forecast in a Bloomberg News survey. That would be the weakest six-month performance since the U.S. was last in recession in 2001.
At the same time, inflation is picking up. The personal consumption expenditures price index climbed 3.4 percent in February from a year before, the fourth straight month in excess of 3 percent.
While the Fed's benchmark rate is lower, the increase in Libor is ``constraining'' banks' ability to lend, said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc.
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net
5:19 pm - FKLI closed at 1283.0 for April contract.
It is hard to tell but the sign look bearish from this point onwards or sideway market. The US FOMC will announce if the interest rate cut is happening or not.
2:32 pm - FKLI is very stubborn, it just wud not go down !
The sellers are exhausted now ! Let's see if the buyers can take over in the afternoon.11:41 am - KLCI is breaking below 1277.
If it cannot stay above 1277.0, KLCI is following a downtrend path.
10:58 am - FKLI is moving sideway and forming a saucer shape.
This is a sign of bullish in the short term !10:16 am - DJIA set to look toppish today !
If DJIA cannot break higher tonite, we wud see some selling at DJIA tonite. Also 1 May is a public holiday for M'sia. However, DJIA is a holiday.
9:55 am - FKLI set to break down lower today.
Look at the FKLI-May contract, looking to break 1274.0. Maybe for the 3rd attempt, it will break.
Tuesday, April 29, 2008
5:28 pm - FKLI cannot hold on 1285 and broke down.
let's see if DJIA closing tonite wud spur higher prices i.e.. gap up. If gap up, short !
Monday, April 28, 2008
9:39 am - FKLI gap down. The market looks toppish at this moment.
The institution is rolling over its contract to May from April and this may cause many spikes and upthrust in intraday charts.
Saturday, April 26, 2008
1:47 pm - Dow ends up 43 pts as many investors overcome economic worries
NEW YORK (AP) - businessminute Wall Street ended its second straight winning week with a moderate advanceFriday, overcoming concerns about consumer confidence and inflation. After slumping early in the session in response to weak consumer confidenceand a spike in oil prices, investors seemed to turn their attention to broadersigns, including the week's generally satisfactory earnings reports, thatsuggested that government efforts to steady the economy appear to be working.That shift in focus sent stocks up late in the day. Although the Reuters/University of Michigan consumer sentiment index came inwith its lowest reading since the early 1980s, Tom Lydon, president of GlobalTrends Investments in Newport Beach, Calif., said companies' first-quarterreports convinced investors that "overall, things aren't all that bad." "I think a lot of people went into the weekend feeling they didn't want tobe on the short side," Lydon said. The consumer sentiment index fell to 62.6 for April from 69.5 a monthearlier, reflecting Americans' concern about rising energy and food prices. While consumer spending represents about 70 percent of the economy, UBSequities strategist David Bianco said "it's the wrong thing to be looking at togauge the prospects" for the Standard & Poor's 500 companies. "Business activity is strong in the U.S. and especially globally," he said."That's far more important." The Dow Jones industrial average gained 42.91, or 0.33 percent, to12,891.86, after falling more than 100 points earlier in the session. The Dowclosed the week with a gain of less than 1 percent. Broader stock indicators were mixed on the day. The S&P 500 index gained9.02, or 0.65 percent, to 1,397.84, and rose 2.1 percent for the week. The Nasdaq composite index, depressed by disappointment with a MicrosoftCorp. forecast, fell 5.99, or 0.25 percent, to 2,422.93, after dropping as muchas 1.6 percent during the session. But advancers were well ahead of decliners inthe broader Nasdaq Stock Market, and for the week, the Nasdaq gained 1.4percent. Advancing issues outpaced decliners by 2 to 1 on the New York StockExchange. Consolidated volume came to 3.72 billion shares, down from 4.34billion shares on Thursday. Bond prices fell ahead of the Federal Reserve's meeting on interest ratesnext Wednesday. The yield on the benchmark 10-year Treasury note, which movesopposite its price, rose to 3.87 percent from 3.83 percent late Thursday. Oil prices, meanwhile, jumped on a series of troubling events overseas,including word that a ship under contract with the U.S. Navy fired flares andwarning shots at two small boats of unknown origin in the Persian Gulf. Oil wasup earlier following an attack on a pipeline in Nigeria and a looming refinerystrike in Scotland; light, sweet crude shot as high as $119.50 a barrel on theNew York Mercantile Exchange before falling back to settle at $118.52, up $2.46. Craig Hester, chief executive at Hester Capital Management in Austin, Texas,said stocks will likely fluctuate as investors digest corporate results fromthis week and while they await the Fed rate decision. "The big risks I see for stocks right now are earnings," he said, addingthat next week's economic data should also help give investors a better picture,with reports due on the nation's gross domestic product and employment. Investors could also get further insights into the health of the consumernext week with reports due from names like Tyson Foods Ind., Kellogg Co., KraftFoods Inc., Burger King Holdings Inc. and Procter & Gamble Co. But so far, "the earnings have come in on the financial side pretty muchwhere people expected and in terms of the industrial side a little bit betterthan expected," said Charlie Smith, chief investment officer at Fort PittCapital Group in Pittsburgh. "Consumers were a little bit weaker than expected.So you net all those together and the earnings season is turning out as peoplethought it would before it started." Microsoft fell $1.97, or 6.2 percent, to $29.83, after its first-quarterreport. The tech leader said after the closing bell Thursday that worldwidesales next year should offset weakness in the U.S. economy. Goodyear Tire & Rubber Co. rose $1.66, or 6.1 percent, to $28.91 afterposting a first-quarter profit amid increased revenue. The tiremaker, whichreported a loss for the same period a year earlier, said it focused onhigher-priced tires and international markets. American Express Co. rose $2.59, or 5.7 percent, to $47.77 after reportingits first-quarter earnings fell 6 percent as more U.S. cardholders failed tomake their payments. The credit card lender's total provisions for credit lossesjumped 48 percent from a year earlier to $1.27 billion. However, the companysaid cardholders are continuing to spend and that strength abroad has helpedmake up for troubles in the U.S. The Russell 2000 index of smaller companies rose 4.81, or 0.67 percent, to721.88. Overseas, Japan's Nikkei stock average closed up 2.28 percent. Britain'sFTSE 100 rose 0.67 percent, Germany's DAX index advanced 1.10 percent, andFrance's CAC-40 rose 0.99 percent. The Dow Jones industrial average ended the week up 42.50, or 0.33 percent,at 12,891.86. The Standard & Poor's 500 index finished up 7.51, or 0.54 percent,at 1,397.84. The Nasdaq composite index ended the week up 19.96, or 0.83percent, at 2,422.93. The Russell 2000 index finished the week up 0.81, or 0.11 percent, at721.88. The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted indexthat measures 5,000 U.S. based companies -- ended Friday at 14,089.21, up 71.91points, or 0.51 percent, for the week. A year ago, the index was at 15,110.41. Copyright 2008 Associated Press. All rights reserved. This material may not be
1:47 pm - Dow ends up 43 pts as many investors overcome economic worries
NEW YORK (AP) - businessminute Wall Street ended its second straight winning week with a moderate advanceFriday, overcoming concerns about consumer confidence and inflation. After slumping early in the session in response to weak consumer confidenceand a spike in oil prices, investors seemed to turn their attention to broadersigns, including the week's generally satisfactory earnings reports, thatsuggested that government efforts to steady the economy appear to be working.That shift in focus sent stocks up late in the day. Although the Reuters/University of Michigan consumer sentiment index came inwith its lowest reading since the early 1980s, Tom Lydon, president of GlobalTrends Investments in Newport Beach, Calif., said companies' first-quarterreports convinced investors that "overall, things aren't all that bad." "I think a lot of people went into the weekend feeling they didn't want tobe on the short side," Lydon said. The consumer sentiment index fell to 62.6 for April from 69.5 a monthearlier, reflecting Americans' concern about rising energy and food prices. While consumer spending represents about 70 percent of the economy, UBSequities strategist David Bianco said "it's the wrong thing to be looking at togauge the prospects" for the Standard & Poor's 500 companies. "Business activity is strong in the U.S. and especially globally," he said."That's far more important." The Dow Jones industrial average gained 42.91, or 0.33 percent, to12,891.86, after falling more than 100 points earlier in the session. The Dowclosed the week with a gain of less than 1 percent. Broader stock indicators were mixed on the day. The S&P 500 index gained9.02, or 0.65 percent, to 1,397.84, and rose 2.1 percent for the week. The Nasdaq composite index, depressed by disappointment with a MicrosoftCorp. forecast, fell 5.99, or 0.25 percent, to 2,422.93, after dropping as muchas 1.6 percent during the session. But advancers were well ahead of decliners inthe broader Nasdaq Stock Market, and for the week, the Nasdaq gained 1.4percent. Advancing issues outpaced decliners by 2 to 1 on the New York StockExchange. Consolidated volume came to 3.72 billion shares, down from 4.34billion shares on Thursday. Bond prices fell ahead of the Federal Reserve's meeting on interest ratesnext Wednesday. The yield on the benchmark 10-year Treasury note, which movesopposite its price, rose to 3.87 percent from 3.83 percent late Thursday. Oil prices, meanwhile, jumped on a series of troubling events overseas,including word that a ship under contract with the U.S. Navy fired flares andwarning shots at two small boats of unknown origin in the Persian Gulf. Oil wasup earlier following an attack on a pipeline in Nigeria and a looming refinerystrike in Scotland; light, sweet crude shot as high as $119.50 a barrel on theNew York Mercantile Exchange before falling back to settle at $118.52, up $2.46. Craig Hester, chief executive at Hester Capital Management in Austin, Texas,said stocks will likely fluctuate as investors digest corporate results fromthis week and while they await the Fed rate decision. "The big risks I see for stocks right now are earnings," he said, addingthat next week's economic data should also help give investors a better picture,with reports due on the nation's gross domestic product and employment. Investors could also get further insights into the health of the consumernext week with reports due from names like Tyson Foods Ind., Kellogg Co., KraftFoods Inc., Burger King Holdings Inc. and Procter & Gamble Co. But so far, "the earnings have come in on the financial side pretty muchwhere people expected and in terms of the industrial side a little bit betterthan expected," said Charlie Smith, chief investment officer at Fort PittCapital Group in Pittsburgh. "Consumers were a little bit weaker than expected.So you net all those together and the earnings season is turning out as peoplethought it would before it started." Microsoft fell $1.97, or 6.2 percent, to $29.83, after its first-quarterreport. The tech leader said after the closing bell Thursday that worldwidesales next year should offset weakness in the U.S. economy. Goodyear Tire & Rubber Co. rose $1.66, or 6.1 percent, to $28.91 afterposting a first-quarter profit amid increased revenue. The tiremaker, whichreported a loss for the same period a year earlier, said it focused onhigher-priced tires and international markets. American Express Co. rose $2.59, or 5.7 percent, to $47.77 after reportingits first-quarter earnings fell 6 percent as more U.S. cardholders failed tomake their payments. The credit card lender's total provisions for credit lossesjumped 48 percent from a year earlier to $1.27 billion. However, the companysaid cardholders are continuing to spend and that strength abroad has helpedmake up for troubles in the U.S. The Russell 2000 index of smaller companies rose 4.81, or 0.67 percent, to721.88. Overseas, Japan's Nikkei stock average closed up 2.28 percent. Britain'sFTSE 100 rose 0.67 percent, Germany's DAX index advanced 1.10 percent, andFrance's CAC-40 rose 0.99 percent. The Dow Jones industrial average ended the week up 42.50, or 0.33 percent,at 12,891.86. The Standard & Poor's 500 index finished up 7.51, or 0.54 percent,at 1,397.84. The Nasdaq composite index ended the week up 19.96, or 0.83percent, at 2,422.93. The Russell 2000 index finished the week up 0.81, or 0.11 percent, at721.88. The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted indexthat measures 5,000 U.S. based companies -- ended Friday at 14,089.21, up 71.91points, or 0.51 percent, for the week. A year ago, the index was at 15,110.41. Copyright 2008 Associated Press. All rights reserved. This material may not be
Friday, April 25, 2008
10:38 am : DJIA is looking good for an upside from here.
Volume was significantly last nite to warrant an up move.
10:18 am - FKLI gap up due to strong closing by DJIA
However, if FKLI cannot break 1310, FKLI is either moving sideway and downward.
With the institution rollover (short rollover), it becomes increasingly difficult to trade during the last few of days of the month.
With the institution rollover (short rollover), it becomes increasingly difficult to trade during the last few of days of the month.
Thursday, April 24, 2008
5:00 pm - FKLI is a profit taking day !
However, we see if the down trend begin tomorrow before we can take short position.
3:55 pm - FKLI is not looking good at this junction !
Closed all LONG position already ! Think to go SHORT ! Think to go SHORT !
If the FKLI closed with upthrust, FKLI looks bearish !
10:04 - To sustain the FKLI uptrend, FKLI has to close above 1307 tonite.
If FKLI closed above 1307, we have a good uptrend intact. Our long position is still in place. Stop loss @ 1296.5.
9:25 am - FKLI is heading higher. There will be huge volume due to rollover activities by instiution players.
The FKLI is expected to be very choppy due to rollover activities.
Wednesday, April 23, 2008
4:10 pm - FKLI closed 1300.0 ???
FKLI has a breakout pattern today ! My prediction high for the morning was 1297/1296.0. I am happy if FKLI can close above 1300.0
3:45 pm - FKLI has broken 1300 resistance.
This is the day I was waiting for. Profit taking will set in now.
10:10 am - DJIA fell to last support 12700.
If DJIA does not break support @ 12,700, we wud see higher DJIA and higher FKLI.
9:26 am - FKLI is strong despite DJIA selldown -105 pts.
FKLI touches low @ 1282.5. Projected high today 1296.5
Tuesday, April 22, 2008
4:54 pm - FKLI is pushing new high @ 1290
A lot of short seller were stopped out at 1286-1290.0 Hence FKLI market hits higher.
12:26 noon - What a boring day for FKL ?
I was expecting Tuesday to be a great day ! but it is not the case.
10:06 am - DJIA sold off in the morning but recovered later in the afternoon.
This cud be our FKLI market today i.e. mimic what happened to DJIA ?
Monday, April 21, 2008
5:20 pm - FKLI did close above 1282.0
It's good FKLI closed above 1266.0. DJIA will decide out long position is profitable or not.
LOng position is on !
4:12 pm - FKLI is moving sideway and building base at 1282/1282.5
If FKLI can closed above 1282, we wud seeing higher FKLI tomorrow.
10:19 am - FKLI is slowing moving up with some selling in progress.
If FKLI can close above 1276, this is a good day for FKLI.
9:25 am - FKLI had crossed up. Going LONG soon !
If HSI does not selldown, FKLI will be a good day !
Saturday, April 19, 2008
8:17 am - DJIA up +228 pointing to a strong day for FKLI on Monday !
NEW YORK (AP) - Wall Street topped off a strong week with a big rally Friday, after results from companies such as Citigroup Inc. and Google Inc. helped ease investor anxiety about the health of corporate profits. Investors have been worried that recent data indicate a slowing economy,which would cut into profit growth at some of the nation's biggest companies.But, results so far have shown that earnings, for the most part, are meeting orbeating expectations, and the major indexes all posted gains of more than 4percent for the week. Citigroup, the nation's biggest bank, encouraged investors with results thatdidn't contain any big surprises. The New York-based bank reported a loss of$5.1 billion during the first quarter because of poor bets on mortgages andleveraged loans, but the loss was half the $10 billion recorded for thepreceding quarter. Google helped boost investor sentiment, as well as the tech-heavy Nasdaqcomposite index, by reporting first-quarter earnings and revenue growth thathandily topped analysts' predictions. "This is the first week of earnings reports, and the marquee companies ingeneral have been able to report good earnings, and the banks have been able toraise capital, and the market is responding to that," said Subodh Kumar, globalinvestment strategist at Subodh Kumar & Assoc. in Toronto. The Dow Jones industrial average jumped 228.87, or 1.81 percent, to12,849.36. Broader stock indicators also showed sizable advances. The Standard & Poor's500 index increased 24.77, or 1.81 percent, to 1,390.33, and the Nasdaq rose61.14, or 2.61 percent, to 2,402.97. Advancing issues outnumbered decliners by more than 3 to 1 on the New YorkStock Exchange, where consolidated volume came to 4.12 billion shares comparedwith 3.6 billion shares traded Thursday. The gains come at the end of a big week for stocks. After a quiet start tothe week, the major indexes surged more than 2 percent Wednesday after JPMorganChase & Co., Intel Corp. and Coca-Cola Co. reported better-than-expectedprofits. Stocks then finished mixed Thursday, largely holding their gains. Forthe week, the Dow rose 4.25 percent, the S&P 500 gained 4.31 percent and theNasdaq jumped 4.92 percent. Bond prices rose after initially declining when stocks rallied. The yield onthe benchmark 10-year Treasury note, which moves opposite its price, fell to3.70 percent in late trading from 3.73 percent late Thursday. And investors appeared unfazed by the latest spike in energy prices. Oiljumped to $117 a barrel for the first time when a militant group in Nigeria saidit sabotaged a major oil pipeline. Light, sweet crude for May delivery rose to a new trading record of $117 inafter-hours electronic trading Friday, after settling up $1.83 at a record$116.69 a barrel on the New York Mercantile Exchange. It was the fifth day in arow crude prices set new records. Meanwhile, a survey of gas stations by AAA and the Oil Price InformationService found that the national average price of regular gas rose 2.7 centsovernight to a record $3.445 a gallon. Gold prices fell, while the dollar was mixed against other major currencies. Kumar contends that while investors appear upbeat following thestronger-than-expected quarterly reports, Wall Street will likely still bouncearound for some time as it tries to get a read on the fate of the economy. "The market is trying to find a bottom and that's why you're seeing thesevolatile days," he said. "I think before one can say that the markets are readyto make a sustained move upward, you have to look at the negative side," hesaid, pointing to high prices for oil and food. He also emphasized that it was still early in the earnings-reporting period. Doug Roberts, chief investment strategist at Channel Capital Research, alsobelieves the market is engaged in the sometimes messy process of establishing abase. "My sense is, at least short term, we've reached some kind of a bottom," hesaid. "There was just so much pessimism built into everything." Unease did appear to dissipate. Wall Street's "fear index" -- the ChicagoBoard Options Exchange's volatility index -- declined 1.2 percent Friday. On a day with little economic news, corporate reports peeled away some ofWall Street's worries. Citigroup closed up $1.08, or 4.5 percent, to $25.11, while Google surged$89.87, or 20 percent, to $539.41 after the companies issued their reports. Heavy equipment maker Caterpillar Inc. rose $6.69, or 8.5 percent, to $85.28after reporting that demand for its global mining and energy products drovefirst-quarter earnings up a better-than-expected 13 percent. The company alsoaffirmed its 2008 forecast. The Russell 2000 index of smaller companies rose 13.07, or 1.9 percent, to721.07. Overseas, Japan's Nikkei stock average rose 0.58 percent. Britain's FTSE 100finished up 1.27 percent, Germany's DAX index rose 2.41 percent, and France'sCAC-40 rose 2.05 percent. The Dow Jones industrial average ended the week up 523.94, or 4.25 percent,at 12,849.36. The Standard & Poor's 500 index finished up 57.50, or 4.31percent, at 1,390.33. The Nasdaq composite index ended the week up 112.73, or4.92 percent, at 2,402.97. The Russell 2000 index finished the week up 32.91, or 4.78 percent, at721.07. The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted indexthat measures 5,000 U.S. based companies -- ended Friday at 14,017.30, up 562.06points, or 4.18 percent, for the week. A year ago, the index was at 14,909.05. Copyright 2008 Associated Press. All rights reserved. This material may not be
Friday, April 18, 2008
4:08 pm - FKLI has broken above 1258 and many short seller had to cut loss.
High at 1263.5. This is maximum point.
9:33 am - DJIA is rangebound around 12,150-12,700
Just like our KLCI market. Despite bad news from Merril Lynch (see news below), DJIA is holding up with a doji.
Merrill Posts Loss on Mortgage Writedowns, Cuts Jobs (Update8)
By Bradley Keoun
April 17 (Bloomberg) -- Merrill Lynch & Co. posted its third straight quarterly loss and said it will cut about 3,000 more jobs after the credit-market seizure forced the investment bank to write down about $6.5 billion of debt.
The smaller-than-estimated charge helped push Merrill shares up as much as 4.7 percent. Analysts including Roger Freeman of Lehman Brothers Holdings Inc. had predicted markdowns of as much as $8 billion. The first-quarter net loss of $1.96 billion, or $2.19 a share, compared with earnings of $2.16 billion, or $2.26, a year earlier, Merrill said.
It's ``not really a disappointment even though they missed on the earnings line,'' said Jeffrey Kleintop, chief market strategist at LPL Financial Group in Boston. ``This is well within the range of expectations.''
Chief Executive Officer John Thain, who joined in December, said today he's ``optimistic'' about the firm's prospects for the year, following a ``more difficult next couple of months.'' His comments echo remarks by Jamie Dimon, his counterpart at JPMorgan Chase & Co., who said yesterday that the credit crisis is more than half over. Richard Fuld, CEO of Lehman Brothers, Goldman Sachs Group Inc. head Lloyd Blankfein and Morgan Stanley chief John Mack have offered similar assessments.
``We are probably not done with the writedowns and there's still concern about the overall economy, but most of the financials are giving an indication that they are getting a handle on it, and things seem to be easing up,'' Peter Dunay, chief investment strategist at Meridian Equity Partners in New York, said in a Bloomberg radio interview.
More Capital
Merrill, the third-biggest U.S. securities firm, gained $1.82, or 4.1 percent, to $46.71 in New York Stock Exchange composite trading.
Thain, 52, has sold more than $12 billion of equity to bolster capital and has overhauled risk-management since the company booked more than $20 billion of credit-market losses racked up by his predecessor, Stan O'Neal. Merrill's stock has fallen almost 50 percent in the past 12 months, trailing larger New York-based rivals Goldman Sachs and Morgan Stanley.
After repeatedly saying that Merrill didn't need to sell more equity to raise capital, Thain said on a conference call today with reporters that he's ``open'' to raising additional capital through a sale of preferred shares. He cited a $6 billion offering that JPMorgan completed yesterday.
Bond Insurance
The comments pleased investors who've been concerned that Thain and other financial-services executives underestimated their capital needs, said James Ellman, president of Seacliff Capital in San Francisco, California, which oversees about $150 million, including an undisclosed number of Merrill shares.
``You cannot have too much capital in the current environment,'' Ellman said. ``If he's saying they might consider, it means they have considered it.''
Merrill's first-quarter writedowns included $2.6 billion to account for the plummeting value of mortgage-related bonds including collateralized debt obligations. The firm also reduced the value of bond insurance contracts by $3 billion, and lowered the value of leveraged loans by $925 million.
The markdowns reflected in Merrill's net loss exclude a $3.1 billion drop in the value of securities held in the firm's U.S. banks. Those declines were classified as ``other comprehensive income,'' an accounting category for securities that Merrill expects to keep until they pay off at maturity.
Revenue Declines
Moody's Investors Service today said it may cut Merrill's credit rating for the second time in six months, citing ``deteriorating conditions in the mortgage market'' and the potential for $6 billion of writedowns in addition to those announced in the past three quarters. Last October, Merrill's rating was lowered one level to A1, the fifth-highest of 10 investment-grade ratings.
Merrill's credit-default swaps have climbed to 166 basis points from 131 basis points at the end of November, according to prices from Phoenix Partners Group and CMA Datavision. The swaps were trading as if the firm had a Moody's credit ranking of Baa3, the lowest investment-grade rating, according to the ratings firm's credit strategy group.
Credit-default swaps, contracts to protect against or speculate on default, pay the buyer face value if a company fails to adhere to its debt agreements.
Merrill's total revenue fell 69 percent to $2.9 billion in the first three months of 2008 from a year earlier. That included a 40 percent drop in investment-banking fees. The company's brokerage, the world's biggest with a network of 16,660 financial advisers, was the only major division to post a gain. Revenue in the unit increased 7 percent to $3.3 billion.
Investor Demands
Fixed-income trading revenue was negative $3.38 billion and equity-trading revenue was $1.88 billion, down from $2.39 billion a year earlier. Debt underwriting generated $231 million in revenue, down 61 percent, while stock underwriting revenue dropped 45 percent to $199 million.
``Merrill Lynch has to show profitability,'' said Ken Crawford, senior portfolio manager at Argent Capital Management in St. Louis, which owns about 160,000 Merrill shares. ``They can't have negative return-on-equity quarters and expect to make investors happy.''
Merrill's first-quarter loss contrasts with earnings at Goldman, Morgan Stanley and Lehman Brothers Holdings Inc. Even Bear Stearns Cos. eked out a profit of $115 million. A cash shortage forced Bear Stearns to sell itself last month to JPMorgan Chase & Co. for $10 a share. Bear Stearns traded at $158 as recently as last April.
Job Cuts
The investment-banking business is grappling with a plunge in fees from advising companies on mergers and stock and bond sales, as CEOs and corporate treasurers hunker down for a recession. Thain also has had to weather the departures of more than a dozen senior executives and traders.
The job cuts announced today are in addition to about 1,000 previously announced. The company eliminated about 650 positions at its San Jose, California-based subprime mortgage lender, First Franklin, and shed others by selling Merrill Lynch Capital, a lender to medium-size companies.
Merrill will record a $350 million charge in the second quarter related to the reductions, which will save an estimated $800 million a year, the firm said.
Under former CEO O'Neal, Merrill paid $1.3 billion for First Franklin in late 2006, just as the U.S. housing market peaked. First Franklin's workforce has been cut to 80 from 2,300.
The company's stock has fallen 17 percent since Thain became CEO Dec. 1, and yields on its 6.4 percent bonds due in August 2017 have widened to 2.8 percentage points over market benchmarks from 2.2 percentage points.
No Buyers
He's been stymied in his plan to liquidate the firm's inventory of collateralized debt obligations, which are securities formed by pooling mortgage bonds and other forms of debt. In January, he said the firm had marked the CDOs down to prices that ``are either saleable or represent good value.''
Today, he said very few of the CDOs have traded.
``There have been some funds put together to buy distressed-type assets, including these, but really none have traded,'' Thain said on the conference call with reporters. ``The buyers are probably waiting to see when is the right time to buy.''
Merrill's CDO holdings dropped to $26.3 billion at the end of March from $30.4 billion at the end of last year, according to the firm's statement, mostly because of writedowns.
Merrill is a passive, minority investor in Bloomberg LP, the parent of Bloomberg News.
To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net.
By Bradley Keoun
April 17 (Bloomberg) -- Merrill Lynch & Co. posted its third straight quarterly loss and said it will cut about 3,000 more jobs after the credit-market seizure forced the investment bank to write down about $6.5 billion of debt.
The smaller-than-estimated charge helped push Merrill shares up as much as 4.7 percent. Analysts including Roger Freeman of Lehman Brothers Holdings Inc. had predicted markdowns of as much as $8 billion. The first-quarter net loss of $1.96 billion, or $2.19 a share, compared with earnings of $2.16 billion, or $2.26, a year earlier, Merrill said.
It's ``not really a disappointment even though they missed on the earnings line,'' said Jeffrey Kleintop, chief market strategist at LPL Financial Group in Boston. ``This is well within the range of expectations.''
Chief Executive Officer John Thain, who joined in December, said today he's ``optimistic'' about the firm's prospects for the year, following a ``more difficult next couple of months.'' His comments echo remarks by Jamie Dimon, his counterpart at JPMorgan Chase & Co., who said yesterday that the credit crisis is more than half over. Richard Fuld, CEO of Lehman Brothers, Goldman Sachs Group Inc. head Lloyd Blankfein and Morgan Stanley chief John Mack have offered similar assessments.
``We are probably not done with the writedowns and there's still concern about the overall economy, but most of the financials are giving an indication that they are getting a handle on it, and things seem to be easing up,'' Peter Dunay, chief investment strategist at Meridian Equity Partners in New York, said in a Bloomberg radio interview.
More Capital
Merrill, the third-biggest U.S. securities firm, gained $1.82, or 4.1 percent, to $46.71 in New York Stock Exchange composite trading.
Thain, 52, has sold more than $12 billion of equity to bolster capital and has overhauled risk-management since the company booked more than $20 billion of credit-market losses racked up by his predecessor, Stan O'Neal. Merrill's stock has fallen almost 50 percent in the past 12 months, trailing larger New York-based rivals Goldman Sachs and Morgan Stanley.
After repeatedly saying that Merrill didn't need to sell more equity to raise capital, Thain said on a conference call today with reporters that he's ``open'' to raising additional capital through a sale of preferred shares. He cited a $6 billion offering that JPMorgan completed yesterday.
Bond Insurance
The comments pleased investors who've been concerned that Thain and other financial-services executives underestimated their capital needs, said James Ellman, president of Seacliff Capital in San Francisco, California, which oversees about $150 million, including an undisclosed number of Merrill shares.
``You cannot have too much capital in the current environment,'' Ellman said. ``If he's saying they might consider, it means they have considered it.''
Merrill's first-quarter writedowns included $2.6 billion to account for the plummeting value of mortgage-related bonds including collateralized debt obligations. The firm also reduced the value of bond insurance contracts by $3 billion, and lowered the value of leveraged loans by $925 million.
The markdowns reflected in Merrill's net loss exclude a $3.1 billion drop in the value of securities held in the firm's U.S. banks. Those declines were classified as ``other comprehensive income,'' an accounting category for securities that Merrill expects to keep until they pay off at maturity.
Revenue Declines
Moody's Investors Service today said it may cut Merrill's credit rating for the second time in six months, citing ``deteriorating conditions in the mortgage market'' and the potential for $6 billion of writedowns in addition to those announced in the past three quarters. Last October, Merrill's rating was lowered one level to A1, the fifth-highest of 10 investment-grade ratings.
Merrill's credit-default swaps have climbed to 166 basis points from 131 basis points at the end of November, according to prices from Phoenix Partners Group and CMA Datavision. The swaps were trading as if the firm had a Moody's credit ranking of Baa3, the lowest investment-grade rating, according to the ratings firm's credit strategy group.
Credit-default swaps, contracts to protect against or speculate on default, pay the buyer face value if a company fails to adhere to its debt agreements.
Merrill's total revenue fell 69 percent to $2.9 billion in the first three months of 2008 from a year earlier. That included a 40 percent drop in investment-banking fees. The company's brokerage, the world's biggest with a network of 16,660 financial advisers, was the only major division to post a gain. Revenue in the unit increased 7 percent to $3.3 billion.
Investor Demands
Fixed-income trading revenue was negative $3.38 billion and equity-trading revenue was $1.88 billion, down from $2.39 billion a year earlier. Debt underwriting generated $231 million in revenue, down 61 percent, while stock underwriting revenue dropped 45 percent to $199 million.
``Merrill Lynch has to show profitability,'' said Ken Crawford, senior portfolio manager at Argent Capital Management in St. Louis, which owns about 160,000 Merrill shares. ``They can't have negative return-on-equity quarters and expect to make investors happy.''
Merrill's first-quarter loss contrasts with earnings at Goldman, Morgan Stanley and Lehman Brothers Holdings Inc. Even Bear Stearns Cos. eked out a profit of $115 million. A cash shortage forced Bear Stearns to sell itself last month to JPMorgan Chase & Co. for $10 a share. Bear Stearns traded at $158 as recently as last April.
Job Cuts
The investment-banking business is grappling with a plunge in fees from advising companies on mergers and stock and bond sales, as CEOs and corporate treasurers hunker down for a recession. Thain also has had to weather the departures of more than a dozen senior executives and traders.
The job cuts announced today are in addition to about 1,000 previously announced. The company eliminated about 650 positions at its San Jose, California-based subprime mortgage lender, First Franklin, and shed others by selling Merrill Lynch Capital, a lender to medium-size companies.
Merrill will record a $350 million charge in the second quarter related to the reductions, which will save an estimated $800 million a year, the firm said.
Under former CEO O'Neal, Merrill paid $1.3 billion for First Franklin in late 2006, just as the U.S. housing market peaked. First Franklin's workforce has been cut to 80 from 2,300.
The company's stock has fallen 17 percent since Thain became CEO Dec. 1, and yields on its 6.4 percent bonds due in August 2017 have widened to 2.8 percentage points over market benchmarks from 2.2 percentage points.
No Buyers
He's been stymied in his plan to liquidate the firm's inventory of collateralized debt obligations, which are securities formed by pooling mortgage bonds and other forms of debt. In January, he said the firm had marked the CDOs down to prices that ``are either saleable or represent good value.''
Today, he said very few of the CDOs have traded.
``There have been some funds put together to buy distressed-type assets, including these, but really none have traded,'' Thain said on the conference call with reporters. ``The buyers are probably waiting to see when is the right time to buy.''
Merrill's CDO holdings dropped to $26.3 billion at the end of March from $30.4 billion at the end of last year, according to the firm's statement, mostly because of writedowns.
Merrill is a passive, minority investor in Bloomberg LP, the parent of Bloomberg News.
To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net.
9:14 am - FKLI oversold last nite ! Cannot short yet today !
Short at higher level ! For the time being stay aside. There were no follow thru on the short side.
If wish to short, short around 1262-1265.0. Support at 1252.0
Thursday, April 17, 2008
5:21 pm - FKLI selldown in the last min @ 1251.0
Think to short when DJIA open higher tomorrow ! We are out of our LONG position at 1254-1257.
4:19 am - When FKLI is weak in the morning, it will be strong in the afternoon.
This morning, we had a selldown and the short covering buy back their position around 4 pm.
4:02 pm - FKLI is staging a mild recovery back from low 1255.0
We shud exit all LONG position and think to short at higher level.
9:28 am - DJIA is very strong and closed high last nite + 256.8
If we get momentum tonite, DJIA wud continue to break 12,700/12,800.
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