Archive | August, 2012

ECB Meeting – Plans To Solve Eurozone Countries Borrowing Costs?

2 Aug

Today in Frankfurt the European Central Bank (ECB) will hold its latest meeting. The “word” is the focus will be to bring down Spain’s cost of borrowing.

Mario Draghi-euro

We know ECB president Mario Draghi is ready to do “whatever it takes” to support the Euro and if Spain needs a bailout, it is expected the ECB will take unprecedented steps to help.

It is clear that although past measures have helped, but weren’t fully effective and did not achieve the end goal (at least so far). We would expect that if nothing is done to lower and stabilise the borrowing costs of countries like Spain and Italy then their future within the euro will be in question.

Mr Draghi has confirmed he will hold a news conference later on Thursday.

 

US Federal Reserve Wednesday – 1 August 2012

The US Federal Reserve took no further steps to boost the economy but said that it “will provide additional accommodation as needed to promote a stronger economic recovery”. This is following confirmation that the growth in the US Economy (as measured by GDP) in the first 6 months of 2012 had slowed.

 

ECB Resume Bond-Buying?

At a conference in London last week marking the start of the Olympics, Mr Draghi said: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

 

Is A Market Correction A Foregone Conclusion?

1 Aug

The markets last week did not start optimistically but they sure ended that way. The last two days may actually have been a little too bullish- the jump between Wednesday’s and Friday’s close was enough to convert a weekly decline into a weekly gain. I expect that the big surge may be inviting profit-takers and day-traders to bail out while they can, since stocks didn’t leave themselves any likely room to keep rolling immediately.

Article Title

Economic Calendar

Last week was pretty light in terms of economic data. This week has several key events – economic data.

Last week key data :-

  • New homes sales and pending home sales fell
  • Durable orders overall were up due to increases in autos; otherwise durable orders actually fell
  • US Q2 2012’s GDP growth was weaker than Q1 2012 but above forecast

Information sourced from Forbes 23.07.2012 – 31.07.2012

Economic Calendar This Week

On Tuesday

1.  Personal income and personal spending – majority of analysts are expecting this to be higher for June

2.  Case-Shiller (home price) index: Analysts forecast a 1.8% dip, compared to a 1.9% dip in May.

3.  Home-sales expected to increase

4.  Consumer confidence expected to fall marginally

On Wednesday

1.  US payrolls 

2.  Car sales

Thursday

1.  Factory orders – forecasted to increase

Friday

1.  Update on the jobs/unemployment – US’s official job-growth number,

Stock Markets

The positive volumes in the last two days of last week was the most volume we’ve seen, either good or bad, since the March to June plunge… the plunge that ultimately became a capitulation and the beginning of the current rally.

The fear being this history will repeat again – or even worse the panic similar to August 2011. The similarity is, last week’s rally was irrational and may be the forerunner of a ‘blowoff’ top, or the end of a big rally.

 

So is a pullback is a foregone conclusion?  

No, I’m not saying that. Although a pullback is a likely scenario. There is highly unlikely that would-be profit-takers and possibly short-term traders will pass on the bird-in-the-hand concept.

My ‘guess’ is a healthy short-term retreat – not to worry we have positioned portfolios focused on yield, strong cashflows and diversification. This is expected to and has previously cushioned this market volatility.

The bigger overall trend is still bullish, negative sentiment is high (so the likelihood of market panic is lesser (already priced in to some extent), and eventually the market will hit a technical ceilings and move above them rather than be restricted by them.  

2012 Q2 Earnings Results So far

The picture is still blurry, but with over 50% of the S&P 500’s companies having reported, the picture’s a little clearer than it was.

Currently, the S&P 500’s expected earnings for 2012 Q2 is higher than for 2012 Q1.  

Of the 282 companies who have issued their results – 186 have topped estimates, 61 have missed estimates and 35 came in on target. I am not disappointed with these results