A week for weak confessions
Dow Jones down 148 @ 8,000
SPI down 64 @ 3429
Gold up 22.2 @ 927.3
Copper up 1.10 @ 146.85
Oil up 24 @ 41.68
CRB Index up .32 @ 220.3
THE HINDSIGHT
1. GDP 4th Q appeared to be better than expected at down 3.8% against expectations of 5.5% but the build up of unsold inventories wasn’t the reason the market wanted to see!
2.NEC Japan announced 20,000 job cuts worldwide (no that isn’t a typo).The Japanese economy makes the U.S economy look positively healthy.!Procter and Gamble completely missed analyst’s profit expectations along with some 40 % of other U.S companies that have already reported.
3. CNN reported on Saturday that Obama’s financial rescue package will be delayed by another week….markets abhor uncertainty.
4.Chinese Premier Wen Jiaba (sounds Arabic) was in London on Saturday and was very coy when asked whether China will continue to buy U.S Treasury bonds. He replied “that is a very sensitive question and no doubt one which President Obama will ask”. Hardly an endorsement particularly when he added that China will look at the “risk and current needs”. If these guys stop buying then forget everything as the crucial 10 year bond yields will dramatically spike up which will make the U.S consumer default/ cut back even more. Now bareing in mind the consumer represents 70% of the the U.S economy you don’t need a degree in economics to see how catastrophic that would be.To quote the song “You ‘ain’t seen nothing yet”, (BTO). Remember the Chinese already own $2 trillion of U.S debt just ahead of the Japanese and any cessation of buying can be put squarely on Treasury Secretary Geithner’s blooper when saying China is manipulating it’s currency…the same trigger which caused the 1987 crash was Treasury James Baker citing the same thing about Germany.
THE FORESIGHT
1. Forget the economic data as it’s like reading about a constantly increasing death toll. We know it’s a recession;how about be done with it and call it a depression, especially if Obama’s plan doesn’t work. Instead read the company reports and this week sees the heavyweights BHP on Wednesday and Newscorp on Friday.Next week the much awaited CBA figures are published with some analysts believing the sacrosanct dividend will be cut. The market will go lower going into these figures.
2. I have been uncommitted on stocks for awhile as I need to see how the critical 8,000 level holds on the Dow Jones..or doesn’t!Interestingly it closed on Friday at this very level. This Fibonacci level is critical as we have tested it on 4 occasions now and rallied (once to 8,900) so any consistent close under then every technician and chartist will be doing one trade only. Readers have asked me how they can make money in falling markets…it’s simple, trade CFD’s.
3. I am still short the U.S 10 year note, just one futures contract has made over $7,000 and will look to sell again on any rally, targeting a 3% yield soon then eventually 4.75%-5% yield.
4. I will be appearing on CNBC T.V this Friday talking about the markets and where to invest/trade.
Have a great day
QUOTE OF THE DAY: ” When you go through hell keep going” Winston Churchill.