*MENA markets have traded relatively well today so far with Abu Dhabi following on from yesterday’s gains (+0.34%) and Dubai lower now (-1.4%) despite trading up in the morning in a slight bounce-back – DPWorld here the biggest piece of news as it cuts ancillary charges at Jebel Ali port. GCC also announcing plans to invest close to $205bn in oil projects for the rest of ’09 (an increase of 10% from $188bn in ’08). Qatar down again on no news (-1.4%) but Saudi up (+1.6%) – again no news though. Volumes and flows across the region have been steady throughout the day. Following US’s rally overnight (more below) Asia had a good opening and has maintained the momentum throughout the day to close up across the board, with Japan notably coming off 26-yr lows (+2.7%) and HK rising (1.6%) on heavy volume – most of Asia returns from brink of 5-yr lows. Europe also playing ball and currently trading +1.7% avg. across majors, Germany in particular doing well as hopes for manufacturers creeps in, but RBS and general UK nationalisation saga preserving a gloomy mood and preventing a stronger rally. US futures suggesting an indecisive open for now.
*Is it time to celebrate? Markets all rallied (or dead-cat bounced) following President Obama’s strong speech to Congress and Bernanke’s testament to the Senate. US ended up 3.3% on DJIA and 4% S&P500. Obama’s first speech to Congress as he rallied the US public to continue the fight “we’ll be back, and we’ll be better” was naturally eloquent and well delivered, but more importantly he was delivering on his promise to focus first and foremost on home-grown economic problems and ensured this was clearly portrayed throughout the speech. He promised – and markets listened and reacted. And what’s in store for us bankers? Our man Obama was quite clear there;”...executives flying around in private jets..THOSE DAYS ARE OVER!” (cue raucous applause from Congress) –grrrrrrreat.
*As for Bernanke, well, he believes we could be out of the current recession by the end of 2009 and a recovery will be underway by 2010 – that would be nice now wouldn’t it? Bernanke certainly did his best to alleviate concern when he spoke in front of the Senate for what now seems like a weekly meeting. I guess there is only so much one can take in terms of watching the markets tank as you talk longer and longer - can’t be very good for his ego at all and I’m sure Bernanke enjoyed watching the DJIA indicator actually tick-up as he professed his beliefs to his eagerly attentive panel of interrogators. He cited the need to purchase more convertible stock in the financials rather than ordinary shares and only converting if losses continued to pose a systemic threat to the system by the collapse of any one institution. The word “nationalization” is clearly something almost anemic to the US public and so out of keeping with the belief in capitalism in its purest form (take a look at Atlas Shrugged again) that it is a direct threat to their belief and way-of-life – no matter how much the politicians may feel it is the necessary and correct step to take, it would be an exceedingly painful one for the idealist – we’ll examine this in more detail on Friday.
*Currencies: the Yen has weakened vs the US$ from the high of 87.79 (reached December 17th) and is now trading 10.7% lower at 97.14 (a couple of strong moves by the USD vs Yen last week and this week in particular bringing us back to a level we have not seen since early November (when de-leveraging and a total aversion to risk seemed to take hold and severe drops across global markets sent us spinning downwards). Could this currency shift be just in time as Japan posts its worst trade deficit ever? – Y952bn vs Y320bn but better than consensus at Y1,200? Let’s hope it does something to help the world’s second largest economy resuscitate its strangled manufacturing and export industries (exports down 45% YoY in Jan). For the more conspiratorial out there it is a slight coincidence we see the Yen weakening purposefully just as Hilary Clinton returns from her first official visit out of the US across Asia (Japan was her first stop) and Obama yesterday accepted his first foreign visitor (Japan’s PM Taro Aso) –concerted effort to weaken the Yen by Bank of Japan and implicit agreement by the US? – would they really? Nah….well maybe;)
*Keeping with the Japan theme, they successfully launched an environment-tracking satellite last week in an important move to help monitor global environmental changes. I was hence saddened to see yesterday a total failure of NASA’s attempt to launch a satellite of its own – costing $280m - into space to chart the ozone layer and track other effects of C02 contamination levels – not only did the satellite never make it outside the earth’s atmosphere to its orbiting height (was the Ozone layer too strong in that area?) but it crash-landed into Antarctica – one of the very places mankind is trying to save through its efforts to stem climate changes through over-pollution and expansion. Apart from the worrying fact that the US failed at a time where public perception of its capabilities is at an all-time low (but Japan quietly succeeded with quality craftsmanship and effective deployment – as always) is also concern I have and hope that the crashing satellite did not take-out a couple of those Penguins we all love when it smashed into it’s icy resting place.
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