Rally – really?
*Markets are still buzzing. Positive sentiment is holding firm despite North Korea’s best (failed) effort at launching a test-rocket over Japan and towards the US. This latest move in their “space programme” over-shadowed events at the NATO summit where Obama continued to pledge full support for those pledging their own support back. The IMF has urged eastern Europe to adopt the single currency – at the same time as GCC leaders meet to discuss the future of the (surely never to arrive any time soon) single currency across their constituent economies. As the US administration gets to grips with the situation, they are finally getting tougher as well. It seems they have realised that the tax-payer is not too happy when billions of US$s are funnelled into an institution and top management all remain – board members at US banks may now be ousted if “exceptional” assistance is sought.
*As markets push on in what has been a strong 4-wk rally (much of it short squeezing of course, the rest some good opportunistic trading, maybe even some repositioning of longer-term portfolios) investors are now stating to wonder how long exactly this new turn will last? The worrying thing is that just 4-wks in and everyone is already questioning the longevity – if there was a real sense of comfort and a genuine appetite for equities with no concern of the macro-environment still stumbling and providing nasty surprises, there would be no questions.
*Asia has done well today with the catalyst of HSBC’s successful rights issue - investors subscribing for almost 97% of the record $18.7bn rights issue – Hong Kong trading saw the shares jump 4% to a 5-wk high. Asia has performed remarkably well since hitting its depressing lows in early March. In fact, Hong Kong’s Hang Seng has now hit a +4.2% YTD performance, Taiwan +21% and Korea +15%. Even Vietnam is now only -1.7% YTD – seems investor demand across Asia equities has certainly returned in the short-term – undoubtedly a lot of this must be related to the excessive sell-off that was forced upon portfolio managers to finance their calls across Europe and the US back in 2008.
*With Japan’s new found currency weakness (essential to the exporters) we can now couple a new stimulus package. They are contemplating another $100bn in spending. The ravaging of Japan’s economy and especially its export industry has still left it with a flat return for the year on the Nikkei. Any further weakening of the Yen and good news on exports will certainly push us higher quicker – worth watching.
*Europe has started the week in a good mood, with the majors all there +1% and with US futures keeping up its own (DJIA +29pts, S&P +2.6pts) we look set for a decent couple of days of trading – in the absence of any spectacular busts etc..
*In another positive sign related to sentiment for now though, Gold has come way-off and is trading back below $880/oz (-5% in 5 days). Oil still steady in its $51-53/brl range and currencies continue their delicate return vs US$. Yen in particular has continued the decline and has now cemented itself above $101.
*Whilst commodities and those commodity producing nations are once again in focus, the BDIY (favourite leading indicator) is still falling in a contrarian move – it has now fallen for 18 days in a row and may be a sign that inventory depletion has not totally bottomed out yet. The world needs to start demanding more goods to get things moving.
*An article today explains that scientists have discovered the reason why scratching can stop an itch (apparently it blocks activity in some spinal nerve cells that transmit the sensation to the brain) – could this be the explanation for the sudden disappearance of the US consumer and market investors? Are they all sitting around scratching themselves preventing that itching sensation to spend money from taking hold?? Please stop scratching people!
Football vs Finance
*Few things in life can be as poetic and dramatic as a great sporting moment. Whether you are a follower of English Premier League soccer or not, there was no denying the sheer thrill of watching the league’s recent leading force, Manchester United come back from behind to seal an important victory. It was not so much that it was completed in the 5 minutes of extra-time tagged onto the end-of-the-game, or that defeat would see their dreaded-rivals Liverpool overtake the leading position in the league, but the fairy-tale like sequence of events that closed out the game. With but a few precious minutes, a substituted 17-yr old who had never played in the senior team strode onto the pitch to the delight of his family-members watching in the crowd (their faces beaming with smiles captured by the cameras in an wonderfully premonition-like moment). After returning to level the game, there was a buzz in the air from the Man U supporters that could be felt through the television thousands of miles away. Even if there was nothing more you wanted to see than their defeat, there was no denying Man U’s grit and desire. With one last push of their attacking force, the brash 17-yr old Macheda danced his way in front of the goal mouth in an aggressively youthful advance, only to be thwarted – temporarily.
He immediately regained his composure to produce a delightful back-kick which he pivoted upon and in one swift movement hooked with this right foot in a sweeping, arching and achingly pre-destined path right past the fingertips of the diving keeper to nestle in the net. With it he broke the split-second silence that had fallen upon the stadium as 50,000 hearts stopped pumping simultaneously and watched on in slow-motion as the ripples at the back-of-the-net applauded the absolute beauty of the moment – rarely has a goal seemed so incredibly special – rarely will such a story be repeated. A losing position, a substitute, an untested 17yr old, a last minute thing of beauty – a memorable win. It truly took the breath away.
*I wish I could somehow find a way to take-heart from this deeply romantic display of sporting brilliance, and tie-it into the financial crisis. However, unless Geithner and Obama have any super-subs waiting in the shadows to tackle the remaining issues head-on with a vitality that will extinguish lingering concerns and negative market sentiment, we will have to hope that the fast-becoming-a-veteran-Obama can prove co-ordinated enough to curl the ball in himself.
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