Last Friday, there was a release in the US of the jobs report of November. The results of that report were very bad. Along the US Labor Department employers cut off 553,000 jobs. This is the highest number in 34 years. This large numbers shows us that our economy is in a very bad situation. The release had a negative impact on the global stock markets. Especially the European markets suffered a lot on Friday. The most European markets lost about 4 percent while wall street just lost 1.7 percent. This new situation tempers the enthusiasm that investors had last Tuesday when the European central bank cut the interest rate from 3.25 to 2.5 percent.
On Friday there was another bad announcement. The German Bundesbank predicts a 0.8 shrink of the German economy in the next year. That was a hard hit for European markets because Germany is one of the biggest economies in Europe.In Asia some stock markets lost something of their value while others gained.
I think this report will only put us in a deeper crisis. As you see, every time there is announced something bad, markets react immediately negative. The loss of 553,000 jobs is very bad for the economy. Those people don’t have spending power anymore. And that is what our economy needs.The fact that the German Bundesbank predict a shrink of the German economy could have a negative influence on the other European markets. Germany is always an indicator for other countries. So I expect that other countries will predict a similar shrink like Germany.
source: http://money.cnn.com/news/newsfeeds/articles/apwire/3f77f412878cfb56d21e8c135e5d0c57.htm
zondag 7 december 2008
zaterdag 6 december 2008
People rush for government bonds, but experts fear they will become part of the problem
The earnings on government bonds dropped down this week. The investors are afraid of the recession and that is why they started to buy so many government bonds. They rather prefer safe investments than shares at the moment. Because of the recession, the inflation reduces and that is what makes bonds more attractive.
This is very good news for the governments, they receive a lot of money to help the economies and financial institutions.
But there is also a negative side. George Buckley, economist at Deutsche Bank, said that the amount of bonds sold has almost doubled. He wonders if the government will be able to offer an attractive yield for them, so that the buyers will still be interested. This rising demand causes an increase of the prices which has its effect on the yields. If the price becomes higher, the yield drifts down. This is often a sign of recession.
For instance the British yields are under constant pressure because of the negative results of certain important sectors, such as the construction and manufacturing industry.
A second example are the 10-year Treasury yields of the US. They plummeted to the lowest level in 50 years, the most important reason is the recession.
Experts and economists fear that the yields will continue to slip back as the whole world goes into a recession.
Alistair Darling revealed in a budget report that he wants to lift up taxes and cut the spending growth. He gave the indication to the markets that he won’t allow the government’s largesse to last for a long time.
But analysts doubt the fact that the markets are convinced. Investors worry about the risk the government might take by have so much debt, that they could have problems paying the interest on the bonds.
I can agree with the investors that they choose for a safe investment at the moment. I would also be more cautious and buy more bonds then before the crisis. Although, I think that now is the moment to buy shares of certain companies.
For the governments it is indeed a good situation that the bonds have so many success. They receive a lot of money which can be used to restore the economy.
But I think that they have to be careful and not sell too much bonds. Because if they do that, their debts will become too high and the governments will get into problems themselves. That is the last thing we want to happen right now.
I hope that Mr. Darling is right and that he does what he said. Then the markets can become confident again, which is necessary for them in order to restore and become healthy. Without it, the crisis won’t be solved!
Source: The Guardian - People rush for government bonds, but experts fear they will become part of the problem -
http://www.guardian.co.uk/money/2008/dec/04/government-bonds-investments
This is very good news for the governments, they receive a lot of money to help the economies and financial institutions.
But there is also a negative side. George Buckley, economist at Deutsche Bank, said that the amount of bonds sold has almost doubled. He wonders if the government will be able to offer an attractive yield for them, so that the buyers will still be interested. This rising demand causes an increase of the prices which has its effect on the yields. If the price becomes higher, the yield drifts down. This is often a sign of recession.
For instance the British yields are under constant pressure because of the negative results of certain important sectors, such as the construction and manufacturing industry.
A second example are the 10-year Treasury yields of the US. They plummeted to the lowest level in 50 years, the most important reason is the recession.
Experts and economists fear that the yields will continue to slip back as the whole world goes into a recession.
Alistair Darling revealed in a budget report that he wants to lift up taxes and cut the spending growth. He gave the indication to the markets that he won’t allow the government’s largesse to last for a long time.
But analysts doubt the fact that the markets are convinced. Investors worry about the risk the government might take by have so much debt, that they could have problems paying the interest on the bonds.
I can agree with the investors that they choose for a safe investment at the moment. I would also be more cautious and buy more bonds then before the crisis. Although, I think that now is the moment to buy shares of certain companies.
For the governments it is indeed a good situation that the bonds have so many success. They receive a lot of money which can be used to restore the economy.
But I think that they have to be careful and not sell too much bonds. Because if they do that, their debts will become too high and the governments will get into problems themselves. That is the last thing we want to happen right now.
I hope that Mr. Darling is right and that he does what he said. Then the markets can become confident again, which is necessary for them in order to restore and become healthy. Without it, the crisis won’t be solved!
Source: The Guardian - People rush for government bonds, but experts fear they will become part of the problem -
http://www.guardian.co.uk/money/2008/dec/04/government-bonds-investments
vrijdag 5 december 2008
New breed of trader heads for Europe
During these financial difficulties we are witnessing the upcoming of a whole new breed of traders. I am talking about a small but progressively more important group of electronic trading firms. These firms have built up a great presence in the US equities markets.
It are young firms and are mostly managed by private owners. Although they are young, they already have a global presence. For example, Getco or Global Electronic Trading Company, trades equities, foreign exchange, fixed income and commodities products on about 30 markets all over the globe. These type of firms are already good for 30-40 per cent of all equities trading volume in the US. These firms can also mean big revenues for European exchanges if they can get the firms to trade on their system. The European exchange needs this new breed of traders because the traditional customers is pulling back a lot of his capital.
But there is also competition from new platforms such as Chi-X. Marketmakers are firms that quote both a buy and a sell price in a financial instrument or commodity, hoping to make a profit on the turn or the bid/offer spread. This competition broke the exchange trading monopolies and the exchange is now also very engaged with these marketmaking firms. This attraction is mutual. The European market is very attractive for these firms because they are now able to trade on multiple platforms and arbitrage between price differences. This comes out very handy to their trading strategies.
The firms are very excited about the evolutions on the European markets. They see a change in the market structure, and this will make their processes more efficient, and this will benefit all investors in the long term. But the traditional players will always stay very crucial in the financial system. Euronext is also trying to attract these kind of firms out of the US, and in Chicago they have found a lot of potential. They are very enthusiastic about coming over to Europe. This type of liquidity provider does not trade on a particular stock, they spread their capital to post bids and offers on various exchanges. In this process they use very sophisticated technology and data analysis to trade more efficiently, make more money on the spread between the bid and offer, and they also make price discovery more efficient.
Despite the restrained outlook for the markets, the optimism over these firms has not been affected. Liquidity providers have always been very important for the entire market by improving the quality of the prices on the exchanges by lowering the bid-ask spread. Even when there is a lot of volatility, the market can always count on the firms to execute trades all day long.
This new breed of traders an liquidity providers can give a new boost to the financial sector. These firms bring a lot of advantages with them to the exchange markets. The markets can always count on these firms, because they trade all day long. It is good that there are structural changes happening on the financial markets, because during this financial crisis we need to attract the traditional customer again, because now they are all pulling back their investment. I believe that these firms can also bring more confidence on the markets, because they work on a highly professional basis with a lot of knowhow.
The fact that they are very popular in the US means that they are effective. I hope Europe succeeds in bringing these firms to our European markets. Euronext can certainly use a boost right now and when these firms are interested as well in coming over to Europe this could mean that the damage of the financial crisis could be controlled.
Source: Financial Times: New breed of trader heads for Europe
http://www.ft.com/cms/s/0/c28e8908-c1a4-11dd-831e-000077b07658.html
It are young firms and are mostly managed by private owners. Although they are young, they already have a global presence. For example, Getco or Global Electronic Trading Company, trades equities, foreign exchange, fixed income and commodities products on about 30 markets all over the globe. These type of firms are already good for 30-40 per cent of all equities trading volume in the US. These firms can also mean big revenues for European exchanges if they can get the firms to trade on their system. The European exchange needs this new breed of traders because the traditional customers is pulling back a lot of his capital.
But there is also competition from new platforms such as Chi-X. Marketmakers are firms that quote both a buy and a sell price in a financial instrument or commodity, hoping to make a profit on the turn or the bid/offer spread. This competition broke the exchange trading monopolies and the exchange is now also very engaged with these marketmaking firms. This attraction is mutual. The European market is very attractive for these firms because they are now able to trade on multiple platforms and arbitrage between price differences. This comes out very handy to their trading strategies.
The firms are very excited about the evolutions on the European markets. They see a change in the market structure, and this will make their processes more efficient, and this will benefit all investors in the long term. But the traditional players will always stay very crucial in the financial system. Euronext is also trying to attract these kind of firms out of the US, and in Chicago they have found a lot of potential. They are very enthusiastic about coming over to Europe. This type of liquidity provider does not trade on a particular stock, they spread their capital to post bids and offers on various exchanges. In this process they use very sophisticated technology and data analysis to trade more efficiently, make more money on the spread between the bid and offer, and they also make price discovery more efficient.
Despite the restrained outlook for the markets, the optimism over these firms has not been affected. Liquidity providers have always been very important for the entire market by improving the quality of the prices on the exchanges by lowering the bid-ask spread. Even when there is a lot of volatility, the market can always count on the firms to execute trades all day long.
This new breed of traders an liquidity providers can give a new boost to the financial sector. These firms bring a lot of advantages with them to the exchange markets. The markets can always count on these firms, because they trade all day long. It is good that there are structural changes happening on the financial markets, because during this financial crisis we need to attract the traditional customer again, because now they are all pulling back their investment. I believe that these firms can also bring more confidence on the markets, because they work on a highly professional basis with a lot of knowhow.
The fact that they are very popular in the US means that they are effective. I hope Europe succeeds in bringing these firms to our European markets. Euronext can certainly use a boost right now and when these firms are interested as well in coming over to Europe this could mean that the damage of the financial crisis could be controlled.
Source: Financial Times: New breed of trader heads for Europe
http://www.ft.com/cms/s/0/c28e8908-c1a4-11dd-831e-000077b07658.html
donderdag 4 december 2008
UAW agrees to help automakers
The United Auto Workers said that they will help 3 important automakers: General Motors, Ford and Chrysler.
They agreed to work together with the embattled U.S. automakers about changing their labor contract so they win 34 billion dollars with this action.
This news was made Wednesday by the president of the United Auto Workers after he had a conference with the presidents of Ford, Chrysler and General Motors.
General Motors was the first one to say that they are in bad papers, they said that they need some financial help otherwise the bankruptcy wasn’t far away. They needed 4 billion dollars by the end of the year. Also Chrysler warned their investors and asked for help, they said that they would run out of cash in the first quarter of next year so they really needed some help because bankruptcy wasn’t far away.
The companies were asked to go to the Congress on Tuesday to talk about their problems and to say how they will use the federal loans and to return them profitable.
The Union came with a “jobs bank” this means that the jobs are saved in General Motors and that they will pay them. This action isn’t only for General Moters. Ford and Chrysler would get the same if they need this. But the president of UAW is not convinced, according to him their need to be more actions to save the automotive sector in these crisis.
He also said that there need to be investments in the retiree health but because of this crisis and the help of the Union this would be difficult.
According to me this is a positive news item. The automotive sector is in problems and they will be the first victims of the global recession and financial crisis. The Union needs to invest money but it’s impossible to give money all the time. We need to learn about this crisis, we need to learn that we have to control much better about the companies and that the governments and other institutions will not always be paying when they are in difficulties.
These are hard times but we have to look forward and when they save these 3 big companies a lot of jobs are saved and the economy can recover again. But we have to learn, stronger regulations are necessary.
Source: http://money.cnn.com/2008/12/03/news/companies/uaw/index.htm?cnn=yes
They agreed to work together with the embattled U.S. automakers about changing their labor contract so they win 34 billion dollars with this action.
This news was made Wednesday by the president of the United Auto Workers after he had a conference with the presidents of Ford, Chrysler and General Motors.
General Motors was the first one to say that they are in bad papers, they said that they need some financial help otherwise the bankruptcy wasn’t far away. They needed 4 billion dollars by the end of the year. Also Chrysler warned their investors and asked for help, they said that they would run out of cash in the first quarter of next year so they really needed some help because bankruptcy wasn’t far away.
The companies were asked to go to the Congress on Tuesday to talk about their problems and to say how they will use the federal loans and to return them profitable.
The Union came with a “jobs bank” this means that the jobs are saved in General Motors and that they will pay them. This action isn’t only for General Moters. Ford and Chrysler would get the same if they need this. But the president of UAW is not convinced, according to him their need to be more actions to save the automotive sector in these crisis.
He also said that there need to be investments in the retiree health but because of this crisis and the help of the Union this would be difficult.
According to me this is a positive news item. The automotive sector is in problems and they will be the first victims of the global recession and financial crisis. The Union needs to invest money but it’s impossible to give money all the time. We need to learn about this crisis, we need to learn that we have to control much better about the companies and that the governments and other institutions will not always be paying when they are in difficulties.
These are hard times but we have to look forward and when they save these 3 big companies a lot of jobs are saved and the economy can recover again. But we have to learn, stronger regulations are necessary.
Source: http://money.cnn.com/2008/12/03/news/companies/uaw/index.htm?cnn=yes
zondag 30 november 2008
Wall Street ends week with more gains
This week shares on Wall Street made strong gains this week. The reason is the rescue of Citigroup by the US government. This action has strengthen the confidence on the market.At the end of the week, shares were growing less because investors want to know how large the financial crisis actually is. The indicator for knowing that is the shopping habits of people at the start of the holiday season.
Thanks to the rescue action of the US government to save Citigroup, all bank shares gained some extra profits. Citigroup itself rose again to 8.36 dollar. The government has taken over the toxic mortgage of Citigroup. That cost was about 300 billion dollar.
The Federal reserve is also responsible for the good results on Wall Street this week. They keep 800 billion dollar available to help people with getting a loan for a house, a company or for consumers.
Another positive signal was the announcement of President Obama that his team of economists will continue searching for new ways to end this financial crisis.
Because of these good results, some negative news in the economic sector was set aside.The orders for durable goods dropped down with 6.2%.Consumers spend this month one percent less than previous month, but the personal income rose with 0.3 percent.
Like I said in my previous blogs, confidence in the market is the most important fact in the financial crises. Without that companies can’t gain some new capital. I think a lot of people will look very carefully over their budget this holidays. That could have an negative impact on the stock markets.The government of the US did a good job with the help they gave to Citibank. But I ask myself the question were they get all that money. Government all over the world are helping their banks, but they should get their money from somewhere. I think that only helping the banks will not be enough to get out of this crises. Other industries are suffering to and they don’t receive any help.
source: http://www.ft.com/cms/s/0/858d7cf0-bd51-11dd-bba1-0000779fd18c.html
Thanks to the rescue action of the US government to save Citigroup, all bank shares gained some extra profits. Citigroup itself rose again to 8.36 dollar. The government has taken over the toxic mortgage of Citigroup. That cost was about 300 billion dollar.
The Federal reserve is also responsible for the good results on Wall Street this week. They keep 800 billion dollar available to help people with getting a loan for a house, a company or for consumers.
Another positive signal was the announcement of President Obama that his team of economists will continue searching for new ways to end this financial crisis.
Because of these good results, some negative news in the economic sector was set aside.The orders for durable goods dropped down with 6.2%.Consumers spend this month one percent less than previous month, but the personal income rose with 0.3 percent.
Like I said in my previous blogs, confidence in the market is the most important fact in the financial crises. Without that companies can’t gain some new capital. I think a lot of people will look very carefully over their budget this holidays. That could have an negative impact on the stock markets.The government of the US did a good job with the help they gave to Citibank. But I ask myself the question were they get all that money. Government all over the world are helping their banks, but they should get their money from somewhere. I think that only helping the banks will not be enough to get out of this crises. Other industries are suffering to and they don’t receive any help.
source: http://www.ft.com/cms/s/0/858d7cf0-bd51-11dd-bba1-0000779fd18c.html
zaterdag 29 november 2008
Panasonic slashes profit forecast by 40% after surprise sales dip
Yesterday, Panasonic revealed that their operating profit forecast dropped down by 40%. Last month, however, they said that it was too soon to say anything about the effects of the economic crisis.
They expect to have an operational profit of Y340bn and a net loss of Y98.5bn. According to the company, this is due to “restructuring costs and losses on its securities portfolio”.
The finance director of Panasonic causes the decreased sales to "the rapid economic slowdown and lower prices due to fierce competition", but in September, the company’s president said that they were not having serious problems with the sales.
Because of the negative news, the consumers are afraid that the biggest rivals of the Japanese electronics giant have not been honest about the effects of the crisis. For instance, Sony has announced a cut of almost 60% in operational profits.
Of the total amount of reduction, Y80bn is due to price competition with Korea. The rest is caused by a setback in sales, mostly of electronic parts for cars. The Japanese company is thinking of closing or selling product lines that are not profitable.
The company wants to cut Y500bn of capital expenditure this year, and it thinks that the situation will continue for next year.
The president of Panasonic did not commented the take-over bid for Sanyo, one of its biggest rivals.
We see that the crisis is still having its effects. Even after 2 to 3 months, there are still companies that get into trouble. I think that several companies will follow in the next few months, companies of which we thought that they would not get into problems.
It ‘s bad that companies as big as Panasonic get that negative results. These companies are crucial for the economy. This news must be very hard for the shareholders, because of it, the share value decreased.
But as I said above, I think that many shareholders will lose a lot of their investments in the next months, which is kind of logic with a crisis this big.
For people who want to start invest, this is a good time. Shares are low. The only problem is that the people don’t trust it anymore, but I’m convinced that confidence is what we need in order to restore.
Source: The Financial Times - Panasonic slashes profit forecast by 40% after surprise sales dip -
http://www.ft.com/cms/s/0/ea7cef08-bceb-11dd-af5a-0000779fd18c.html
They expect to have an operational profit of Y340bn and a net loss of Y98.5bn. According to the company, this is due to “restructuring costs and losses on its securities portfolio”.
The finance director of Panasonic causes the decreased sales to "the rapid economic slowdown and lower prices due to fierce competition", but in September, the company’s president said that they were not having serious problems with the sales.
Because of the negative news, the consumers are afraid that the biggest rivals of the Japanese electronics giant have not been honest about the effects of the crisis. For instance, Sony has announced a cut of almost 60% in operational profits.
Of the total amount of reduction, Y80bn is due to price competition with Korea. The rest is caused by a setback in sales, mostly of electronic parts for cars. The Japanese company is thinking of closing or selling product lines that are not profitable.
The company wants to cut Y500bn of capital expenditure this year, and it thinks that the situation will continue for next year.
The president of Panasonic did not commented the take-over bid for Sanyo, one of its biggest rivals.
We see that the crisis is still having its effects. Even after 2 to 3 months, there are still companies that get into trouble. I think that several companies will follow in the next few months, companies of which we thought that they would not get into problems.
It ‘s bad that companies as big as Panasonic get that negative results. These companies are crucial for the economy. This news must be very hard for the shareholders, because of it, the share value decreased.
But as I said above, I think that many shareholders will lose a lot of their investments in the next months, which is kind of logic with a crisis this big.
For people who want to start invest, this is a good time. Shares are low. The only problem is that the people don’t trust it anymore, but I’m convinced that confidence is what we need in order to restore.
Source: The Financial Times - Panasonic slashes profit forecast by 40% after surprise sales dip -
http://www.ft.com/cms/s/0/ea7cef08-bceb-11dd-af5a-0000779fd18c.html
European shares surge on bargain-hunting
Their was a lot of turbulence on the markets this week. There was bad news about the economy and corporate news but the investors began also with bargain-hunting.
We are in interesting economic days now and you can see that on the markets. Rallies of this proportion you usually don’t see but the reason for these rallies are the markets, markets that lost 50 percent in 1 year is something you either don’t see.
For example the FTSE Eurofirst 300, they gained 1.1 per cent profit on Friday and only this week they gained 13.3 per cent. But also the FTSE Eurofirst 300 lost 50 per cent when you compare it with one year ago.
Their was a lot of bad news but this didn’t make a difference for the investors. They taught the bad news was already in the price per share. The volumes were also light because Thursday the Thanksgiving holiday started in the United States.
Let’s have an overview about the stocks now.
The solar market that was hit very hard by the crisis made a spectacular rebound. Renewable Energy and Q-Cells won 50 per cent, that is an unexpected rebound.
The technology sector did not so good after STMicroelectronics came with bad news. The investors were surprised and the shares increased. They forecast they will lose some money, the lost would be 13 per cent.
Shares in STM had a bad day Friday but when you compare it with the week results they won. 1 to 2 per cent. Infineon did a good job, they won 8 per cent this week.
Allianz sold Thursday Dresdner Bank division to Commerzbank, this helped to raise the share with 39.8 per cent. The deal was sealed for a long time because they were afraid about the threatens of this transaction. This deal is positive according to Allianz, they were never satisfied about the Dresdner Bank, but this deal is positive for Allianz.
The financial shares did a good job, Commerzbank rose 32.5 per cent this week, Deutsche bank won 48.8 per cent.
The future of the motor industry is dark after Renault halted his productions in Moscow.
I think this week was satisfied for the markets but there is a lot of uncertainty on the markets.
There are a lot of investors who think on short term. They hope the shares that lost a lot one day ago that they will win a lot today. After 1 day they sell their shares.
People with a lot of money influence the markets like this. They buy a lot of shares on Monday for example so the volume gain, and the price also decrease on Tuesday. After Tuesday they just sell their shares, the volume increased and the price per share also.
This is not a good technique for the markets, the markets need investors who think on long term. Not just on 1 day or 2. This will restore the confidence and when the confidence is restored, the markets can recover.
Source: http://www.ft.com/cms/s/0/4ca4fb4a-bd36-11dd-bba1-0000779fd18c.html
We are in interesting economic days now and you can see that on the markets. Rallies of this proportion you usually don’t see but the reason for these rallies are the markets, markets that lost 50 percent in 1 year is something you either don’t see.
For example the FTSE Eurofirst 300, they gained 1.1 per cent profit on Friday and only this week they gained 13.3 per cent. But also the FTSE Eurofirst 300 lost 50 per cent when you compare it with one year ago.
Their was a lot of bad news but this didn’t make a difference for the investors. They taught the bad news was already in the price per share. The volumes were also light because Thursday the Thanksgiving holiday started in the United States.
Let’s have an overview about the stocks now.
The solar market that was hit very hard by the crisis made a spectacular rebound. Renewable Energy and Q-Cells won 50 per cent, that is an unexpected rebound.
The technology sector did not so good after STMicroelectronics came with bad news. The investors were surprised and the shares increased. They forecast they will lose some money, the lost would be 13 per cent.
Shares in STM had a bad day Friday but when you compare it with the week results they won. 1 to 2 per cent. Infineon did a good job, they won 8 per cent this week.
Allianz sold Thursday Dresdner Bank division to Commerzbank, this helped to raise the share with 39.8 per cent. The deal was sealed for a long time because they were afraid about the threatens of this transaction. This deal is positive according to Allianz, they were never satisfied about the Dresdner Bank, but this deal is positive for Allianz.
The financial shares did a good job, Commerzbank rose 32.5 per cent this week, Deutsche bank won 48.8 per cent.
The future of the motor industry is dark after Renault halted his productions in Moscow.
I think this week was satisfied for the markets but there is a lot of uncertainty on the markets.
There are a lot of investors who think on short term. They hope the shares that lost a lot one day ago that they will win a lot today. After 1 day they sell their shares.
People with a lot of money influence the markets like this. They buy a lot of shares on Monday for example so the volume gain, and the price also decrease on Tuesday. After Tuesday they just sell their shares, the volume increased and the price per share also.
This is not a good technique for the markets, the markets need investors who think on long term. Not just on 1 day or 2. This will restore the confidence and when the confidence is restored, the markets can recover.
Source: http://www.ft.com/cms/s/0/4ca4fb4a-bd36-11dd-bba1-0000779fd18c.html
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