A New World? or Is it the Same Old Thing?
Published on April 23, 2009
Published on April 23, 2009
As of this writing, U.S. stock-index futures and Asian shares rose after Apple Inc (AAPL). and EBay (EBAY) Inc. reported profits that beat analysts’ estimates, fueling expectations the slowdown in consumer spending may be easing but let’s wait for UPS and others to tell us more.
Bloomberg tells – Short sellers are increasing bets against developing-nation stocks by the most since March 2007, a signal the biggest rally in 16 years may fizzle as profits plunge from Brazil to Taiwan. Short interest in the iShares MSCI Emerging Markets Index fund, which tracks equities in 23 developing nations, climbed 51 percent in March, the biggest jump in two years, according to New York Stock Exchange data compiled by Bloomberg. Wagers against Rio de Janeiro-based oil company Petroleo Brasileiro SA’s U.S.-traded shares (PBR) were the highest since August 2005. Short interest in all stocks traded on the NYSE rose 11 percent last month to 4.23 percent of shares outstanding. The NYSE releases short interest data to mid-April at the end of this week.
UK Bailout equals the UK GDP, Wow. According to bloomberg- U.K. government support for the banking system has risen to 1.4 trillion pounds ($2 trillion) and may climb higher as the financial crisis spreads to building societies and economists warn lenders may need more aid. The amount invested in, loaned to or pledged to back bank assets now equals Britain’s gross domestic product, or 22,800 pounds for every person in the U.K. Unprecedented! oh by the way, Is it still enough?
And guess what? Britain’s Labour government on Wednesday unveiled plans to ramp up taxes on the rich and rein in public spending as its chancellor of the exchequer Alistair Darling confirmed a huge increase in borrowing to restore the public finances, which are in their worst state since the second world war. Announcing plans to raise the top rate of income tax from 40 per cent to 50 per cent next year for those earning more than £150,000, Mr Darling said the move was part of a “fairness” agenda which would see the wealthy help support the poor.
Uncle told me to keep mum. According to Wall Street Journal, Federal Reserve Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America Corp. to not discuss its increasingly troubled plan to buy Merrill Lynch & Co. — a deal that later triggered a government bailout of BofA — according to testimony by Kenneth Lewis, the bank’s chief executive.
Is Slowing rate of contract equals turn around? What do you think? Is the slowing rate of contraction equals to economy turning around? 100>60->50->47, is that equal to things turning around? Here is what Bloomberg thinks- Europe’s manufacturing and service industries contracted at the slowest pace in six months in April, signaling the worst of the recession may be over. And market surely thinks that way. Too many people think that markets turn around 6months before the actual turn; are we really only 6months away from the recovery?
If IMF has any credibility to it’s existence- The IMF said that world output would contract by 1.3 per cent this year and grow by just 1.9 per cent the year after in what it described as a “substantial downward revision” of its January forecasts, when it said that the global economy would grow by 0.5 per cent this year and spring back to 3 per cent growth in 2010
Oh Btw, IMF is gloomy when politicians are marching the “Hope Campaign”. According to FT, The fund expects US output to contract by a whopping 2.8 per cent this year. Unlike most economists predicting a recovery in the second half, the IMF sees no improvement until mid-2010. Even then it reckons growth will only be an anaemic 1.5 per cent. The Congressional Budget Office, by contrast, forecasts 4 per cent growth in 2010; eurozone output will plunge 4.2 per cent; Germany down 5.6 per cent; Long-suffering Japan is forecast to slow even more. In all, the IMF reckons aggregate gross domestic product across the advanced world will fall 3.8 per cent in 2009, with no growth next year.
So who do you trust or would like to believe?
Read “Stress Test Scores ‘C’ If Name Ends in ‘itigroup’ by Mark Gilbert for some lighthearted examples of the kinds of searching, penetrating questions the Treasury Department should ask.
Prepare for another roller coaster, Profitable Trading, OP