No6's Financial Markets Thread

[No6]

US saving up again.

 

Banks See Margins Widen by Deposits Surging to Most Since 1990s

 

Profit margins at U.S. banks may get a boost from increasing deposits as customers show a preference for immediate access to their money and less appetite for risk with interest rates at a record low and the economy still seeking a bounce from recession.

 

Commercial banks in the U.S. added $88.9 billion of so- called core deposits in the third quarter, bringing the total to $6 trillion, the most since at least 1992, according to the Federal Deposit Insurance Corp. Wells Fargo & Co., the fourth- largest lender by deposits, and fifth-ranked U.S. Bancorp have said they’re competing for such funds, which include checking and savings accounts and time deposits of less than $100,000.

 

Banks are relying more on deposits for funding after a freeze in credit markets sparked the financial crisis and led to the bankruptcy of Lehman Brothers Holdings Inc. in September 2008. The industry must shift from raising funds in debt and securitization markets to increasing core deposits, which pay little or no interest, analysts say. The average rate of 0.80 percent on bank deposits is the lowest since at least 2000, according to Market Rates Insight in San Anselmo, California.

 

=======================

 

The U.S. savings rate has averaged 5.7 percent of disposable income this year, up from 3.1 percent in the prior decade, according to the Commerce Department. U.S. companies are holding $943 billion in cash, Moody’s Investors Service said Oct. 26. Consumers saved $1 trillion in domestic bank accounts in the three years ended October, according to Market Rates Insight.

 

“We’re in this new era of deposit behavior,” said Nancy Bush, an independent bank analyst based in Annandale, New Jersey. “Deposit levels in the banking system will be higher than in the past because consumers will be spending less and saving more, even when the economy picks up.”

 

http://www.bloomberg.com/news/2010-11-30/u...ince-1990s.html

[littledavesab]

great thread No6, wish I had more time to contribute - think it says you were right!

 

http://www.telegraph.co.uk/finance/persona...stors-dear.html

 

 

Investors' habit of following the herd has cost them hundreds of millions of pounds in lost returns as the FTSE 100 continues to climb.

 

The blue chip index has returned more than 50pc over the past 20 months. Yet hundreds of thousands of investors will have missed out on those gains because they were busily withdrawing money from equity funds as the market fell.

 

Go back to the start of 2009 and investor confidence was at an all-time low after the banking crisis. The FTSE 100 had fallen sharply and investors sought sanctuary in bond funds and absolute return funds (which aim to deliver positive returns in falling markets). During the first three months of 2009 net sales of corporate bonds were £4bn, compared with just £200m in equities, official figures reveal.

 

+ more see link

 

[No6]

FTSE moving up again. So far there has been no quick sell off after yesterday.

[No6]

On the FTSE100 daily chart the Parabolic Sar indicator (green dot on chart) has just turned green indicating a potential trend move to the upside. Will need to see it continue over the next 3-4 trading days in a curving upward trend (as can be seen elsewhere on the chart) for confirmation of new uptrend. The lower trendline on my chart also looks like it has been held for now. Looks positive at this stage.

 

[No6]

Dow also looks to be moving to the upside on the Daily chart. FTSE is about a day behind on the move by the Parabolic Sar indicator, which went positive on the Dow yesterday.

 

[Van]

Volumes were quite low yesterday in the US and again very low today in Europe. Fair play to the bulls, but this rally is on shaky grounds.

[No6]

Volumes were quite low yesterday in the US and again very low today in Europe. Fair play to the bulls, but this rally is on shaky grounds.

 

Have we had many bull moves in the last two years on big volume? I thought one of the constant criticisms by the bears in recent times is that the move up has been on low volume? Yet, the market keeps on retracing from the low of a couple of years ago. I tend to concentrate on a few trend/momentum indicators and MA crossovers, the tendency is that once these start moving in one direction they either fail fairly quickly or the move carries on in the new direction until it exhausts itself. The charts I have posted above suggest that there may be some new momentum towards an upside move. It may not last and the early days of a trend direction move are always at the mercy of a market whiplash, but the bears are on shaky ground if they simply ignore that the trend may be about to change again.

[No6]

Encouraging breakout

 

By Colin Twiggs

 

December 1, 2010 8:30 p.m. ET (12:30 p:m AEDT)

 

 

Stocks rallied, with the S&P 500 making an encouraging breakout above 1200. Expect a test of the recent high at 1225. Follow-through above 1225 would flag another primary advance. Rising Twiggs Money Flow (21-day) continues to indicate buying pressure. Reversal below 1180 is unlikely, but would warn of a secondary correction, testing 1130.

 

http://www.incrediblecharts.com/tradingdia..._gold_forex.php

[No6]

Markets are expecting a European Central Bank announcement at some stage today. If they like what they hear then the market moves of the last couple of days may well continue to the upside. Surely Jean-Claude will say the right thing, what with Christmas just being around the corner and the traders'/bankers bonuses soon to be paid?

 

And a reason why the Euro, despite all the press speculation, will survive.

 

The rally in European asset prices was subsequently driven by strong hints from Jean-Claude Trichet, president of the ECB, that its government bond purchase programme was likely to be significantly expanded, with an official annoucement expected as early as Thursday.

 

In a show of solidarity with Europe, US officials told Reuters that the government was ready to commit more funds to the European Stability Facility (ESF) through an expansion of the money it has already pledged through the IMF.

 

"We will certainly support the IMF in these circumstances," an unnamed US official said. "In May, it was Greece. This is Ireland and Portugal. If there is global contagion that's a huge problem for the global economy."

 

The US is the biggest shareholder in the IMF, which has already contributed €250bn (£210bn) towards the ESF.

 

Analysts appeared on Wednesday to be comforted that Europe and the US were moving to decisively deal with the growing crisis.

 

"We are 100pc certain the euro will stay," said Arturo de Frias at Evolution Securities.

 

"The reason for our certainty is simple: many of the German banks [and the French and the UK] would be completely bust if the euro goes. We are even tempted to call it 'the Merkel put'."

 

http://www.telegraph.co.uk/finance/finance...vatisation.html

[No6]

Update re above post, nothing much came out of Europe other than a commitment to more support when necessary. US markets have reacted to some good news for retailers. FTSE currently up around 70, so this rally may well have legs.

 

U.S. stocks rose, adding to the biggest rally in three months, as sales topped estimates at retailers from Abercrombie & Fitch Co. to Limited Brands Inc. and European policy makers extended an emergency loan program.

 

Abercrombie & Fitch surged 9 percent, its biggest gain in two months, and Limited Brands jumped 2 percent. Alcoa Inc., Bank of America Corp. and Home Depot Inc. led gains in 23 of 30 Dow Jones Industrial Average stocks.

 

The Standard & Poor’s 500 Index rose 0.2 percent to 1,208.44 at 9:32 a.m. in New York. The Dow Jones Industrial Average gained 12.18 points, or 0.1 percent, to 11,267.96.

 

“Retail sales numbers in the U.S. are quite strong and that’s a positive for stocks,” said David Abella, a portfolio manager at Rochdale Investment Management LLC in New York, which has $3 billion under management. “The news out of the U.S. seems to be slowly improving, but it’s offset by news out of Europe.”

 

http://www.bloomberg.com/news/2010-12-02/u...xxon-gains.html

[No6]

If a reminder to the bears were needed, let's not forget that in history December is usually very good for the market.

 

S&P 500, last 60 years - 45 up years; 15 down years; ave. return = 1.56%

 

http://www.moneychimp.com/features/monthly_returns.htm

[jerpy]

Interesting you flag up Colin Twigg, been looking at his calls myself the last few weeks, seems to have a good sense of momentum trading.

 

B.t.w totally with you on the bear's keep finding reasons not to be bullish on volume, why fight a trend? Not baiting, i'm happy to go either way.

[No6]

Interesting you flag up Colin Twigg, been looking at his calls myself the last few weeks, seems to have a good sense of momentum trading.

 

B.t.w totally with you on the bear's keep finding reasons not to be bullish on volume, why fight a trend? Not baiting, i'm happy to go either way.

 

My question would be, if you are relying to a large degree on volume then how many moves will you miss? Someone trading the Dow relying on volume has just missed a 300+ point move up, whereas trending indicators tend to be fairly consistant and simple to follow. Not that they are always right, you get plenty of weak movements, a little market whiplash, but only occasionally does the trend violently reverse. You only have to look at the longer term daily or weekly charts to see how some of these trends are steady in one direction over time. I'm not suggesting that volume should be ignored, but it really surprises me when I hear bears saying that the market is likely to go down, especially if they are quoting volume, when one look at the charts and trending indicators show that the trend is up. I've learnt the hard way to not fight the trend.

[drbubb]

But it is looking increasingly like a counter-rally within a downtrend - look at how the 21dMA has rolled over and is now trending down. BigMO is on the side of the bears now (for FTSE at least).

Yes.

Actually, BigMo (21d MA) was moving sideways, and threatening to get dragged lower / chart-FTSE

 

But BigMo moved sideways until prices JUMPED upwards on Dec.1st, and now it is threatening to get dragged higher.

 

If prices turn down soon (to below the 21d MA), a major top may be in place

[No6]

Major jobs news in the US due today.

 

An increase in November payrolls probably pushed U.S. job gains past the 1 million mark for the year as the world’s largest economy strengthened heading into 2011, economists said before a report today.

 

Employment increased by 150,000 last month, according to the median forecast of 87 economists surveyed by Bloomberg News, bringing the rise so far this year to 1.02 million. The advances haven’t been large enough to bring down unemployment, which held at 9.6 percent, according to the survey median.

 

Another report may show service industries, which account for almost 90 percent of the economy, grew last month at the fastest pace since May as more jobs and rising wages boosted holiday sales at retailers like J.C. Penney Co. and Gap Inc. At the same time, the Federal Reserve is concerned joblessness will be slow to retreat, explaining why policy makers announced a new round of monetary stimulus.

 

http://www.bloomberg.com/news/2010-12-03/p...-into-2011.html

 

Update - news in.

 

Employers added fewer jobs than forecast in November and the unemployment rate unexpectedly increased, vindicating the Federal Reserve’s decision to pump more money into the economy to spur growth.

 

Payrolls increased 39,000, less than the most pessimistic projection of economists surveyed by Bloomberg News, after a revised 172,000 increase the prior month, Labor Department figures showed today in Washington. The jobless rate rose to 9.8 percent, the highest since April, while hours worked and earnings stagnated.

 

http://www.bloomberg.com/news/2010-12-03/u...se-to-9-8-.html

 

Could result in some profit taking after the last two sessions.

[No6]

Begbies disappoints as corporate failures decline

 

LONDON (SHARECAST) - A lack of insolvencies means that first half underlying profit will be £700,000 lower for Begbies Traynor.

 

The number of insolvencies has been declining. Banks appear to be holding off from placing companies in administration or other insolvency measures – they are probably waiting for the economy to get stronger before pulling the plug.

 

http://www.sharecast.com/cgi-bin/sharecast...tory_id=3883049

[No6]

UK manufacturing still powering ahead

 

LONDON (SHARECAST) - Britain's manfuacturers continue to operate at record levels but worryingly for inflation prospects a lot more firms intend to raise prices.

 

Over the last three months, output and new order balances were +33% and +32% respectively, according to the latest survey by the manufacturers' trade body the Engineering Employers' Federation (EEF). Both numbers were broadly unchanged from last quarter's record levels.

 

Export markets (+26%) were again the driver, though the domestic order balance improved slightly to +22%.

 

There was also an improvement in the number of firms looking to recruit, with the figure of +23%, the strongest positive balance in the survey’s history.

 

http://www.sharecast.com/cgi-bin/sharecast...tory_id=3881755

[John Doe]

Wow, more good news!

 

Pity it's only about 15% of the ecconomy now.

 

Still, could be trouble for IR's if things keep going well.

 

What a strange world we live in.

 

 

[No6]

Wow, more good news!

 

Pity it's only about 15% of the ecconomy now.

 

Still, could be trouble for IR's if things keep going well.

 

What a strange world we live in.

 

Don't think that the UK can ever become a great manufacturing nation again. Some people are still living in the past and find it difficult to accept that the UK cannot be the same economy now as it was 50 or 100 years ago. China, India, Brazil, etc, all do it far cheaper especially in labour costs, but many of the companies they do it for are British that have set up overseas, the FTSE100 being full of these.

[John Doe]

Don't think that the UK can ever become a great manufacturing nation again. Some people are still living in the past and find it difficult to accept that the UK cannot be the same economy now as it was 50 or 100 years ago. China, India, Brazil, etc, all do it far cheaper especially in labour costs, but many of the companies they do it for are British that have set up overseas, the FTSE100 being full of these.

Not in the same way it was.

 

But it could go hi-tech given the right support (in education and industrial start ups).

 

In many of the high tech companies products, the wage cost is a small percentage of the unit cost. UK could far better than it does at the moment in this area, esp with a devalued pound.

 

Trouble is, there is a huge funding gap where it is most required - between the proof of concept and the SME stage - at present.

[jerpy]

LONDON, Sept 30 (Reuters) - An 18 percent fall in UK insolvencies held back activity at Begbies Traynor in the first four months of 2010/11, the British restructuring specialist said, sending its shares down more than 7 percent.

 

Begbies, which performed well as Britain's deep recession saw thousands of companies close, said low interest rates, government support such as quantitative easing and lenient creditors had reduced the number of firms going out of business.

 

Begbies, which relies on insolvency services for 80 percent its revenues, predicted, however, that insolvencies would rise in the short to medium term as the government withdraws support.

 

It said in a trading statement on Thursday its outlook for the year was unchanged and in line with market expectations.

 

Compared with

 

Dec 6 (Reuters) - British restructuring specialist Begbies Traynor (BEG.L) forecast first-half adjusted pretax profit to decline by 16 percent from last year, hurt by reduced margins in insolvency, sending its shares down 5 percent.

 

However, the company said it expected an improved second-half performance as the withdrawal of government support initiatives and the impact of public sector cutbacks result in "some incremental flow in new insolvency engagements through the remainder of the financial year."

 

Begbies Traynor, which relies on insolvency services for 80 percent its revenue, said insolvency revenue for the first half was about 9 percent lower from the previous year.

 

However, group revenue is expected to be broadly in line with the prior year.

 

 

Interesting admission they got it slightly wrong

 

[No6]

FTSE slowly edging towards 6000.

 

Noticed that Tesco produced some reasonably good results this morning as well.

 

Tesco has reported a rise in third-quarter sales, saying it is "continuing to see evidence of a steady consumer recovery" in the UK.

 

Its like-for-like UK sales excluding petrol - which pulls out the impact of new store openings - rose 1.5% in the three months to 27 November.

 

Tesco's overseas sales growth was stronger, increasing by 4.1% on the same measurement.

 

The supermarket giant said it was being helped by an improving global economy.

 

http://www.bbc.co.uk/news/business-11934053

[John Doe]

FTSE slowly edging towards 6000.

 

Noticed that Tesco produced some reasonably good results this morning as well.

See BDEV and the house builders are up massively, perhaps people are reading our "not so bearish" property threads

 

Just shorted S&P (1234.5). I know there will prob be a santa/Bernanke rally, but thought if ever was a typical time for a (small/medium) pull back, now would be it.

 

 

[No6]

See BDEV and the house builders are up massively, perhaps people are reading our "not so bearish" property threads

 

Just shorted S&P (1234.5). I know there will prob be a santa/Bernanke rally, but thought if ever was a typical time for a (small/medium) pull back, now would be it.

 

Wouldn't like to call it, trend up looking fairly strong at the moment although I suppose some profit taking will hit soon. With good and bad news more or less fairly equally balanced at the moment, it's difficult to see a big pullback. Technical pullbacks yes, but I think more and more the bears will have to pin their hopes on a double dip or default in the new year. Mind you, it is still a little early for a Santa rally.

[jerpy]

Wouldn't like to call it, trend up looking fairly strong at the moment although I suppose some profit taking will hit soon. With good and bad news more or less fairly equally balanced at the moment, it's difficult to see a big pullback. Technical pullbacks yes, but I think more and more the bears will have to pin their hopes on a double dip or default in the new year. Mind you, it is still a little early for a Santa rally.

 

Think the santa effect is starting early, seeing a good few small caps frothing up today. What's fueling them in many cases is nothing more than herd behaviour or hype. Markets acting irrational again?