If there is no sellers i.e. DJIA does not break below 8,500, we wud see more upside to DJIA
Tuesday, June 09, 2009
Monday, June 08, 2009
10:16 am - Market Outlook by Bill Wermine
Dear Traders,
Martin and I just returned from Singapore this weekend where we held a 1 day investment program for a group of investors/ traders.
Sentiment appears to be improving frrom our last Singapore visit 3 months ago. Customer traffic at the malls is picking up. Financial institutions are hiring again. More tourists are visiting the zoo and other attractions.
Because the culture of Singapore is a culture of thrift and saving rather than debt and spending, it appears that Singapore will emerge from the economic slowdown without much damage. Singaporeans are resilient and self reliant as opposed to the US which has a culture of dependency, welfare, food stamps and entitlement.
Combine this with a socialist such as Obama who appeals to the populist crowd, it will take much longer for the US to recover.
I would manage my exposure to the AUD and switch into Euro/ Canadian dollar. The SGD also is a safe haven.
Support on the AUD is .775 while my profit target is 86. My rational is that interest rates in the US may rise to protect China's USD exposure to China. The Chinese are not happy to see their 3 trillion US dollar holdings erode due to financial mismanagement by the Obama wealth distruction team. In order to stop the Chinese from dumping their USD bonds, treasury secretary Geithner made a trip to Bejing to reassure the Chinese government that their USD were safe.
Do you think the Chinese have confidence in Tim Geithner or Obama ? Remember if a monkey wears an Armani suit, it is still a monkey .
One positve point about Singapore is the emphasis on self improvement. Bookshops are filled with investment books
By luck, I found a book called Investing Against the Tide by Anthony Bolton. Bolton recently retired as a fund manager with Fidelity investments in London. His performance rivals Warren Buffet- over 20 % average annual returns for 25 years in his special situations fund. He appears to be a very low profile humble man and willing to share his knowledge.
Imagine for SGD 49, the price of the book, you can have a fireside chat with a mutimillionaire investor. That is why reading quality books is a great value. Do you think you could ever meet this man in real life ?
Bolton combines fundamentals with technicals and has a team who use quantatative models for timing and risk management.
One of his most profitable investments was a long term holding of Man Group listed on the FTSE . He invested in Man because of the steady rising dividends, solid management and AHL focus on quantatative trading.
His insights as to how he gets an edge with fundamental and technical research can definitely help you increase your performance. His style is concise, informative, and simple and if you have investing/ trading experience you will appreciate the value of his advice.
I highly recommend this book.
Our traders club event in Penang on 20 June is a go. We have decided not to have a cover charge for the event. FOC and It will be held at the Evergreen Laural Hotel from 10 to 1 pm.
Get your questions ready, - Mr Pong head of research for Jupiter Securities will give his market outlook which is supportive the KLSE/ Gold and commodities. Martin will share a powerful gold timing system and show his backtesting results.
I will be very glad to meet you loyal Penang members who attended our courses and we will explore ways to better support you.
Please let me know if you wish to attend. Martin and I will be coming up on Friday afternoon.
CDs/ DVDs/ books for our recent graduates of Master the Markets are ready for pickup. Call me for pickup. I will be in my office at 2 PM today.
Have a profitable week
Bill
012 685 1207
Martin and I just returned from Singapore this weekend where we held a 1 day investment program for a group of investors/ traders.
Sentiment appears to be improving frrom our last Singapore visit 3 months ago. Customer traffic at the malls is picking up. Financial institutions are hiring again. More tourists are visiting the zoo and other attractions.
Because the culture of Singapore is a culture of thrift and saving rather than debt and spending, it appears that Singapore will emerge from the economic slowdown without much damage. Singaporeans are resilient and self reliant as opposed to the US which has a culture of dependency, welfare, food stamps and entitlement.
Combine this with a socialist such as Obama who appeals to the populist crowd, it will take much longer for the US to recover.
I would manage my exposure to the AUD and switch into Euro/ Canadian dollar. The SGD also is a safe haven.
Support on the AUD is .775 while my profit target is 86. My rational is that interest rates in the US may rise to protect China's USD exposure to China. The Chinese are not happy to see their 3 trillion US dollar holdings erode due to financial mismanagement by the Obama wealth distruction team. In order to stop the Chinese from dumping their USD bonds, treasury secretary Geithner made a trip to Bejing to reassure the Chinese government that their USD were safe.
Do you think the Chinese have confidence in Tim Geithner or Obama ? Remember if a monkey wears an Armani suit, it is still a monkey .
One positve point about Singapore is the emphasis on self improvement. Bookshops are filled with investment books
By luck, I found a book called Investing Against the Tide by Anthony Bolton. Bolton recently retired as a fund manager with Fidelity investments in London. His performance rivals Warren Buffet- over 20 % average annual returns for 25 years in his special situations fund. He appears to be a very low profile humble man and willing to share his knowledge.
Imagine for SGD 49, the price of the book, you can have a fireside chat with a mutimillionaire investor. That is why reading quality books is a great value. Do you think you could ever meet this man in real life ?
Bolton combines fundamentals with technicals and has a team who use quantatative models for timing and risk management.
One of his most profitable investments was a long term holding of Man Group listed on the FTSE . He invested in Man because of the steady rising dividends, solid management and AHL focus on quantatative trading.
His insights as to how he gets an edge with fundamental and technical research can definitely help you increase your performance. His style is concise, informative, and simple and if you have investing/ trading experience you will appreciate the value of his advice.
I highly recommend this book.
Our traders club event in Penang on 20 June is a go. We have decided not to have a cover charge for the event. FOC and It will be held at the Evergreen Laural Hotel from 10 to 1 pm.
Get your questions ready, - Mr Pong head of research for Jupiter Securities will give his market outlook which is supportive the KLSE/ Gold and commodities. Martin will share a powerful gold timing system and show his backtesting results.
I will be very glad to meet you loyal Penang members who attended our courses and we will explore ways to better support you.
Please let me know if you wish to attend. Martin and I will be coming up on Friday afternoon.
CDs/ DVDs/ books for our recent graduates of Master the Markets are ready for pickup. Call me for pickup. I will be in my office at 2 PM today.
Have a profitable week
Bill
012 685 1207
Saturday, June 06, 2009
Friday, June 05, 2009
Thursday, June 04, 2009
Wednesday, June 03, 2009
Tuesday, June 02, 2009
10:08 am - TradeGuider RT for Sales
Dear Traders,
Please assist Jordan to sell his RT TradeGuider by posting on your blog .
He is willing to give a generous discount His phone number is :012 499 6899. I will also post in my weekly report
Rgds,
-martin-
Please assist Jordan to sell his RT TradeGuider by posting on your blog .
He is willing to give a generous discount His phone number is :012 499 6899. I will also post in my weekly report
Rgds,
-martin-
8:50 am - FKLI gap higher due to DJIA !
Profit taking wud take place today unless we see a run on the blue chips today !
Monday, June 01, 2009
9:52 am - Market Outlook by Bill Wermine
Dear Traders,
Many of you who invested in Man are concerned about the Australian Dollar. We should be as the our capital guarantee is in AUD government bonds and the Man funds are denominated in AUD.
Tan Teng Boo, CEO of I Capital who has a solid track record as a fund manager and analyst shared his AUD research in the latest issue of I Capital and it may answer your concerns about the AUD versus the RM.
The foreign exchange rate between the Ringgit and the AUD is determined substantially by 2 key factors.
The first is Malaysia's political and economic future while the second is Australia's economic prospects.
1st quarter GDP in Malaysia was a steep 6.2 % contraction and the 2nd quarter should also show contraction. Positive growth should emerge in the 4th quarter as well as the Australia, China, Japan and most Asian economies.
Short term recovery should not be a problem; what is the problem is long term growth which means sustained productivity gains- this might be difficult as the Malaysian economy needs to urgently implement many reforms to restructure the Malaysian economy. There are many uncertainties here. Australia does not face these problems.
At the same time the economic prospects for Australia look bright. The long term prospects of this huge country are tied to the longer-term prospects of China and the rest of Asia. The key drivers of recovery in the short term are the relatively resilient Australian economy, a credit crunch which is much less severe, the ability to undertake fiscal stimulus, an undersupplied hou sing market and the commodities demand from China and the rest of Asia.
Although China has been expanding rapidly for the last 30 years, she still has a long way to go to catch up with the developed economies. There is huge potential demand for refigerators that remains untapped for the 100s of millions of Chinese and that will take plenty of iron ore and coal. A torrent of demand for commodities will be unleashed. Australia who is physically nearer to China compared to Brazil or Canada will be the competitive supplier of these commodities.
Over the course the AUD should be a net gainer. Since 1983 the RM has traded between 1.60 to 3.10. The trend over the last 25 years is up for the AUD/RM cross. Yes there are gut wrenching corrections as we have just experienced but the up trend is clearly defined. Relative weaking periods are shorter than the strengthening periods. Who said it is easy ?
In the current US Dollar collapse and the rush to commodities including gold and crude oil coupled with China, Russia, Brazil and Japan cutting back their purchases of US Treasury bonds there is a chance the AUD will break out above the 3.10 rate and move into unchartered waters.
If this happens, you who hold Man AUD Diversified will be very happy.
Also for those who hold KLSE plantation, rubber and commodity shares as well as long CPO futures should also benefit.
The rich diversity of natural resources in Malaysia will always support the RM versus most world currencies including the US Dollar/ UK Pound/ Euro and Yen. The AUD and SGD should outperform based on my currnent trends.
I hope this answers the many questions I have been asked about the AUD/ RM exchange rate.
If you should have any others please feel free to ask me.
Have a good week,
Bill
Many of you who invested in Man are concerned about the Australian Dollar. We should be as the our capital guarantee is in AUD government bonds and the Man funds are denominated in AUD.
Tan Teng Boo, CEO of I Capital who has a solid track record as a fund manager and analyst shared his AUD research in the latest issue of I Capital and it may answer your concerns about the AUD versus the RM.
The foreign exchange rate between the Ringgit and the AUD is determined substantially by 2 key factors.
The first is Malaysia's political and economic future while the second is Australia's economic prospects.
1st quarter GDP in Malaysia was a steep 6.2 % contraction and the 2nd quarter should also show contraction. Positive growth should emerge in the 4th quarter as well as the Australia, China, Japan and most Asian economies.
Short term recovery should not be a problem; what is the problem is long term growth which means sustained productivity gains- this might be difficult as the Malaysian economy needs to urgently implement many reforms to restructure the Malaysian economy. There are many uncertainties here. Australia does not face these problems.
At the same time the economic prospects for Australia look bright. The long term prospects of this huge country are tied to the longer-term prospects of China and the rest of Asia. The key drivers of recovery in the short term are the relatively resilient Australian economy, a credit crunch which is much less severe, the ability to undertake fiscal stimulus, an undersupplied hou sing market and the commodities demand from China and the rest of Asia.
Although China has been expanding rapidly for the last 30 years, she still has a long way to go to catch up with the developed economies. There is huge potential demand for refigerators that remains untapped for the 100s of millions of Chinese and that will take plenty of iron ore and coal. A torrent of demand for commodities will be unleashed. Australia who is physically nearer to China compared to Brazil or Canada will be the competitive supplier of these commodities.
Over the course the AUD should be a net gainer. Since 1983 the RM has traded between 1.60 to 3.10. The trend over the last 25 years is up for the AUD/RM cross. Yes there are gut wrenching corrections as we have just experienced but the up trend is clearly defined. Relative weaking periods are shorter than the strengthening periods. Who said it is easy ?
In the current US Dollar collapse and the rush to commodities including gold and crude oil coupled with China, Russia, Brazil and Japan cutting back their purchases of US Treasury bonds there is a chance the AUD will break out above the 3.10 rate and move into unchartered waters.
If this happens, you who hold Man AUD Diversified will be very happy.
Also for those who hold KLSE plantation, rubber and commodity shares as well as long CPO futures should also benefit.
The rich diversity of natural resources in Malaysia will always support the RM versus most world currencies including the US Dollar/ UK Pound/ Euro and Yen. The AUD and SGD should outperform based on my currnent trends.
I hope this answers the many questions I have been asked about the AUD/ RM exchange rate.
If you should have any others please feel free to ask me.
Have a good week,
Bill
Saturday, May 30, 2009
Friday, May 29, 2009
3:50 pm - Change of tone - FKLI broke thru 1060 and pushing to new high !
I think we wud see higher FKLI next week !
10:50 am - DJIA is congesting at this level - accumulating or distributing.
Notice the highs is getting lower.
Thursday, May 28, 2009
Wednesday, May 27, 2009
Tuesday, May 26, 2009
9:18 am - FKLI looking very bearish now !
50% retracement is almost here already at 1051. The FKLI may selldown now !
Monday, May 25, 2009
11:23 am - Man Fund Talk tonite !
Dear Traders,
I completely forgot: Sam Gibson of Man Investments will be presenting at the Boulevard Hotel at Mid Valley tonight. time for registration is 7 PM. Thank you our new graduate of Master the Markets Teoh for reminding me.
Man is launching a new capital guarantee AUD fund and would be a good time to invest or ask about your existing Man investments especially now when the US Dollar/ US Bonds are under attack.
Come early as seats will fill up fast.
Regards
Bill
I completely forgot: Sam Gibson of Man Investments will be presenting at the Boulevard Hotel at Mid Valley tonight. time for registration is 7 PM. Thank you our new graduate of Master the Markets Teoh for reminding me.
Man is launching a new capital guarantee AUD fund and would be a good time to invest or ask about your existing Man investments especially now when the US Dollar/ US Bonds are under attack.
Come early as seats will fill up fast.
Regards
Bill
9:56 am - Market Report by Bill Wermine
Dear Traders,
We just completed our 3 day Master the Markets Workshop last weekend . We did not advertise this round but had a reasonable turnout. Most guests were referals and I really appreciate your support.
Due to the Star continuing to raise advertising rates in the face of an economic slowdown , it is not cost effective for our team to advertise. I think the Star News is shooting itself in the foot. There were 7 resits. We noticed an overwealming bullishness among the guests and this worries me.
Suggest lightening up on all speculative shares and only keep the high quality dividend payers with risk to below support.
Martin and I plan a holiday/ traders club in Penang on 20 June for our Penang graduates. We will be holding it in the Evergreen Laural Hotel. I will stay for 3 days with Dolly to recharge my batteries, network with our graduates and , enjoy the great Penang fresh seafood. For our Penang friends please let us know if you wish to attend. Small cover charge of RM 20.
"It is really important to take holidays and breaks from our trading routene to come back to the market with a fresh perspective."
Janice Dorn, M.D., Ph.D.
www.thetradingdoctor.com
Consultations/Media: +602.870.0524
FAX: +602.944-0904
Technical/Website Support: +480.325.0230
If you have any emotional issues I suggest you contact her. She is a is a trading psychaitrist and has a solid track record.
Those who subscribed to Am Precious metals are sitting on an 8 % gain in 2 weeks. This is an abnormal return but the trend of gold is up on course to reach 1200 should the 1000 USD level break. This fund is beginning to move and there is still time to get a seat on the train. Call Isma at 2783 0300 at Phillip for s ubscription form. Minimum investment is only RM 1000 and this seems like a better investment than buying a flat screen TV.
Gold is a solid hedge against inflation and stock market turmoil as well as US Dollaer collapse.
Corrupt politicians in Washington and their chronies , the banking elites, greedy CEOs of Citibank/ Bank America/ GM and AIG not repeal the law of supply and demand just as they .can not repeal the law of gravity .
Evidence is in the US Dollar collapse
On Friday the US Dollar plunged and 10 year treasury bonds values dropped as the US government is having a difficult time selling its bonds. See attached chart of the DX. The US governement prints bonds and sells them to create more cash out of thin air to satisfy the ruling financial elites.
These favored interests and many more coming to the feeding trough need ever more bailouts and massive CEO bonuses. Even the state of California is broke needing a mutimillion dollar bailout. Combine this with the AIG bailout, the GM and Chrysler bailout and now bailout of foreign banks by US taxpayer money- ( foreign banks bought Fannie May and toxic subprime mortages.)
These foreign banks in Germany, UK are part of the world wide banking elite and must be rescued at the expense of the homeless, medically uninsured and unemployed workers in the US who do not have a voice. I read in an undergroud report on Alpha alerts that many US hospitals are turning away emergency cases for those who are uninsured or can not pay. Many US hospitals are going bankrupt. They are the ones who morally and financially need assistance- not the multimilliaire Wall St fat cats. The Lehman CEO Feldt comes to mind- who earned 100s of millions of dollars while his company sunk like the Titanic.
This will never happen in Malaysia and I thank God I am in Malaysia.
Unfortunately the law of supply and demand will force the US treasury to raise interest rates and this will result in more US Dollar collapse and more hardship for those with no savings, gold and high debts
I advise to avoid credit cards, expensive consumer goods, buying on time payment. If you can not pay cash do not buy.
Buy hign quality dividend shares to weather the storm and get more than the fixed deposit rate. Consider using your EPF account 1 to directly buy these quality shares- contact me or Martin if interested.
I also advise selling any shares/ bonds you hold in the US Market. Look for short positions. Continue to hold GDX/ GLD and FXA= add DBA (Fund invested on corn wheat and soybeans futures) The US government can not print corn/gold or borrow it from another planet.
Here is part of a letter from my brother who is a successful businessman in Maryland/ USA. This is from a man on the ground who can see the truth and not the propaganda and hype from the media and politicians. Ignore this at your peril.
Philosphically our views are the same but I do not know the correct way to invest in this market. There will be higher and higher unemployment despite what the media "experts" predict. High inflation seems to be on the horizon. Historically and presently our governments make things worse while promising rosy outlooks. It is apparent to me and anybody that has opened their eyes that things are getting much worse but are not reported. More and more "For Lease" signs at shopping centers. New housing starts hit new lows. No reservations required at most restaurants. As you mentioned tens of thousands of jobs to be lost in the automotive business. So--fewer people working-- fewer people buying. The whole world will eventually notice that this is not just a temporary recession--- this is an economic meltdown.
Our Man investments are a bright spot - they stabilized in the last 2 weeks after 3 straight months of small losses. Should the world stock markets and US Dollar collapse, gold and grains soar, Man will be well positioned to exploit these trends for a handsome 2009 return. The AUD is getting stonger and that will add to our returns.
In any case, be on guard and be thrifty-
Bill
We just completed our 3 day Master the Markets Workshop last weekend . We did not advertise this round but had a reasonable turnout. Most guests were referals and I really appreciate your support.
Due to the Star continuing to raise advertising rates in the face of an economic slowdown , it is not cost effective for our team to advertise. I think the Star News is shooting itself in the foot. There were 7 resits. We noticed an overwealming bullishness among the guests and this worries me.
Suggest lightening up on all speculative shares and only keep the high quality dividend payers with risk to below support.
Martin and I plan a holiday/ traders club in Penang on 20 June for our Penang graduates. We will be holding it in the Evergreen Laural Hotel. I will stay for 3 days with Dolly to recharge my batteries, network with our graduates and , enjoy the great Penang fresh seafood. For our Penang friends please let us know if you wish to attend. Small cover charge of RM 20.
"It is really important to take holidays and breaks from our trading routene to come back to the market with a fresh perspective."
Janice Dorn, M.D., Ph.D.
www.thetradingdoctor.com
Consultations/Media: +602.870.0524
FAX: +602.944-0904
Technical/Website Support: +480.325.0230
If you have any emotional issues I suggest you contact her. She is a is a trading psychaitrist and has a solid track record.
Those who subscribed to Am Precious metals are sitting on an 8 % gain in 2 weeks. This is an abnormal return but the trend of gold is up on course to reach 1200 should the 1000 USD level break. This fund is beginning to move and there is still time to get a seat on the train. Call Isma at 2783 0300 at Phillip for s ubscription form. Minimum investment is only RM 1000 and this seems like a better investment than buying a flat screen TV.
Gold is a solid hedge against inflation and stock market turmoil as well as US Dollaer collapse.
Corrupt politicians in Washington and their chronies , the banking elites, greedy CEOs of Citibank/ Bank America/ GM and AIG not repeal the law of supply and demand just as they .can not repeal the law of gravity .
Evidence is in the US Dollar collapse
On Friday the US Dollar plunged and 10 year treasury bonds values dropped as the US government is having a difficult time selling its bonds. See attached chart of the DX. The US governement prints bonds and sells them to create more cash out of thin air to satisfy the ruling financial elites.
These favored interests and many more coming to the feeding trough need ever more bailouts and massive CEO bonuses. Even the state of California is broke needing a mutimillion dollar bailout. Combine this with the AIG bailout, the GM and Chrysler bailout and now bailout of foreign banks by US taxpayer money- ( foreign banks bought Fannie May and toxic subprime mortages.)
These foreign banks in Germany, UK are part of the world wide banking elite and must be rescued at the expense of the homeless, medically uninsured and unemployed workers in the US who do not have a voice. I read in an undergroud report on Alpha alerts that many US hospitals are turning away emergency cases for those who are uninsured or can not pay. Many US hospitals are going bankrupt. They are the ones who morally and financially need assistance- not the multimilliaire Wall St fat cats. The Lehman CEO Feldt comes to mind- who earned 100s of millions of dollars while his company sunk like the Titanic.
This will never happen in Malaysia and I thank God I am in Malaysia.
Unfortunately the law of supply and demand will force the US treasury to raise interest rates and this will result in more US Dollar collapse and more hardship for those with no savings, gold and high debts
I advise to avoid credit cards, expensive consumer goods, buying on time payment. If you can not pay cash do not buy.
Buy hign quality dividend shares to weather the storm and get more than the fixed deposit rate. Consider using your EPF account 1 to directly buy these quality shares- contact me or Martin if interested.
I also advise selling any shares/ bonds you hold in the US Market. Look for short positions. Continue to hold GDX/ GLD and FXA= add DBA (Fund invested on corn wheat and soybeans futures) The US government can not print corn/gold or borrow it from another planet.
Here is part of a letter from my brother who is a successful businessman in Maryland/ USA. This is from a man on the ground who can see the truth and not the propaganda and hype from the media and politicians. Ignore this at your peril.
Philosphically our views are the same but I do not know the correct way to invest in this market. There will be higher and higher unemployment despite what the media "experts" predict. High inflation seems to be on the horizon. Historically and presently our governments make things worse while promising rosy outlooks. It is apparent to me and anybody that has opened their eyes that things are getting much worse but are not reported. More and more "For Lease" signs at shopping centers. New housing starts hit new lows. No reservations required at most restaurants. As you mentioned tens of thousands of jobs to be lost in the automotive business. So--fewer people working-- fewer people buying. The whole world will eventually notice that this is not just a temporary recession--- this is an economic meltdown.
Our Man investments are a bright spot - they stabilized in the last 2 weeks after 3 straight months of small losses. Should the world stock markets and US Dollar collapse, gold and grains soar, Man will be well positioned to exploit these trends for a handsome 2009 return. The AUD is getting stonger and that will add to our returns.
In any case, be on guard and be thrifty-
Bill
9:51 am - Flash Alert by Bill Wermine.
Dear Traders,
"When the most respected voice in bond markets, Bill Gross of PIMCO, says that the US Treasury is going to lose its AAA status "eventually", we have a bombshell, which may have been too enormous to be readily absorbed by the markets. This is the world's risk-free investment. "
John Percival, Currency Bulletin London
Reduce all US Dollar positions. For cash accounts switch to SGD/ RM and AUD and gold.
This has not been discounted fully in my opinion. There are still many US Dollar bulls in denial.
I have been subscribing to Currency Bulletin for the last 15 years. His service is a contrarian service that is highly profitable and right a high percentage of the time.
Most of his subscribers are hedge funds and banks.
Do not think too much or hesitate,
Bill
"When the most respected voice in bond markets, Bill Gross of PIMCO, says that the US Treasury is going to lose its AAA status "eventually", we have a bombshell, which may have been too enormous to be readily absorbed by the markets. This is the world's risk-free investment. "
John Percival, Currency Bulletin London
Reduce all US Dollar positions. For cash accounts switch to SGD/ RM and AUD and gold.
This has not been discounted fully in my opinion. There are still many US Dollar bulls in denial.
I have been subscribing to Currency Bulletin for the last 15 years. His service is a contrarian service that is highly profitable and right a high percentage of the time.
Most of his subscribers are hedge funds and banks.
Do not think too much or hesitate,
Bill
Saturday, May 23, 2009
Friday, May 22, 2009
11:15 pm - US Dollar & Inflation Rules Now.
By David Roman
A Dow Jones Newswires Column
SINGAPORE (Dow Jones)--It used to be the casethat if the U.S. stock market was rising, the dollar was probably falling, and vice versa. Not any more.
Rather than being a somewhat predictable risk aversion play, the U.S. dollar is starting to moveon other cues, notably inflation expectations. And that's not good news for dollar bulls.
Investorsand economists are growing concerned that if ultra-easy money policies in the U.S. manage to squeezesome growth out of the economy, they could also fuel a quick uptick in inflation. Such a scenario wouldeat into the dollar's value and diminish its safe-haven status.
This changed correlation withstocks has been obvious since Wednesday. For the last two days, the Dow Jones Industrial Average is down2.1%, while the broad DXY dollar index is down 2.7%.
Not that long ago, though, the 'stocks down/dollarup' thesis had clearly been in play: Since September, when global markets crashed on the back of LehmanBrothers' collapse, the Dow Jones Industrial Average has fallen 25%, while the DXY is up 5%.
Risingoil prices - never a good friend of the dollar - and bond yields indicate inflation concerns are realand growing. The U.S. administration is also pumping liquidity into the economy at a great rate, withthe budget deficit expected to come in around 13% this year.
'And the two biggest factors thatmight contribute to higher inflation - stimulus spending and economic recovery - have yet to impact theinflation rate,' notes Darrell Jobman, a senior analyst with TraderPlanet.com.
The Federal Reserveis focused on preventing deflation right now, with the U.S. consumer price index falling in March andApril, but its policy of quantitative easing may overshoot the mark.
And a falling dollar willadd to price pressure, as it threatens to import inflation via resurgent commodity costs.
Oneadded danger as the Democratic administration, in control of Congress, looks to spend its way out ofthe economic malaise, is that Republican-leaning economists are cheering on and asking for high inflationto erode the U.S. debt problem - as inflation boosts the prices of goods and diminishes the value ofdebt.
Gregory Mankiw, a former White House economic adviser, and Kenneth Rogoff, a former topeconomist at the International Monetary Fund, told Bloomberg earlier this week that inflation as highas 6% would be a good thing for the U.S.
They didn't say though it would be a good thing forthe dollar.
Recent dollar weakness may give way to some consolidation in coming days, as marketstake a deep breath and realise that other currencies are not much more attractive. This view has somemerit, especially as energy prices remain well below year-ago levels.
Still, investors may bewell advised to broaden their watch from a purely stocks/dollar correlation to an environment that includescommodities and is less predictable when it comes to where the dollar is heading.
A Dow Jones Newswires Column
SINGAPORE (Dow Jones)--It used to be the casethat if the U.S. stock market was rising, the dollar was probably falling, and vice versa. Not any more.
Rather than being a somewhat predictable risk aversion play, the U.S. dollar is starting to moveon other cues, notably inflation expectations. And that's not good news for dollar bulls.
Investorsand economists are growing concerned that if ultra-easy money policies in the U.S. manage to squeezesome growth out of the economy, they could also fuel a quick uptick in inflation. Such a scenario wouldeat into the dollar's value and diminish its safe-haven status.
This changed correlation withstocks has been obvious since Wednesday. For the last two days, the Dow Jones Industrial Average is down2.1%, while the broad DXY dollar index is down 2.7%.
Not that long ago, though, the 'stocks down/dollarup' thesis had clearly been in play: Since September, when global markets crashed on the back of LehmanBrothers' collapse, the Dow Jones Industrial Average has fallen 25%, while the DXY is up 5%.
Risingoil prices - never a good friend of the dollar - and bond yields indicate inflation concerns are realand growing. The U.S. administration is also pumping liquidity into the economy at a great rate, withthe budget deficit expected to come in around 13% this year.
'And the two biggest factors thatmight contribute to higher inflation - stimulus spending and economic recovery - have yet to impact theinflation rate,' notes Darrell Jobman, a senior analyst with TraderPlanet.com.
The Federal Reserveis focused on preventing deflation right now, with the U.S. consumer price index falling in March andApril, but its policy of quantitative easing may overshoot the mark.
And a falling dollar willadd to price pressure, as it threatens to import inflation via resurgent commodity costs.
Oneadded danger as the Democratic administration, in control of Congress, looks to spend its way out ofthe economic malaise, is that Republican-leaning economists are cheering on and asking for high inflationto erode the U.S. debt problem - as inflation boosts the prices of goods and diminishes the value ofdebt.
Gregory Mankiw, a former White House economic adviser, and Kenneth Rogoff, a former topeconomist at the International Monetary Fund, told Bloomberg earlier this week that inflation as highas 6% would be a good thing for the U.S.
They didn't say though it would be a good thing forthe dollar.
Recent dollar weakness may give way to some consolidation in coming days, as marketstake a deep breath and realise that other currencies are not much more attractive. This view has somemerit, especially as energy prices remain well below year-ago levels.
Still, investors may bewell advised to broaden their watch from a purely stocks/dollar correlation to an environment that includescommodities and is less predictable when it comes to where the dollar is heading.
10:28 am - There is support at 8250-8200 level for DJIA
If this breaks, this is no good but I think it will test this level tonite !
10:03 am - FKLI has support at 1025 level. A long of ppl have shorted the FKLI !
If the market cannot go down this afternoon, there wud be a lot of short covering today and next week, as FKLI is ready to test the 1045/1050 resistance level.
Thursday, May 21, 2009
Wednesday, May 20, 2009
4:12 pm - A lot of blue chips but second liner like WCT has 18 L/C !
Buy tomorrow if there's a follow thru.
3:41 pm - FKLI had tested 3 times with 1038/1039 resistance level !
It will test many times before breaking upside provided KLCI stay uptrend.
8:53 am - FKLI is facing resistance at 1029/1030 level.
It will congest at 1017 and 1029 for today !
Tuesday, May 19, 2009
12:05 noon - DJIA is going to test resistance 8,600 tonite !
If DJIA can break 8,600, it can go higher !
10:22 am - FKLI gap up and moving sideway !
There were a lot of short covering this morning due to DJIA overnite +2 pct up !
Subscribe to:
Posts (Atom)
Posts
