Global Market Trends

Citibank and world markets

polymatheux — Tue, 15 Dec 2009 20:32:40 +0000

Is a threat by Citibank to cut up to 30,000 jobs a signal that things are getting worst or better. Is that to save money and be more financially sound or the numbers are not coming in to support such a large work force?

We have not heard or had a huge job cut announcements in months and it seems all but forgotten that we have 15 millions officially unemployed in the country. That however could be reversed by such news right before Christmas. Who will then follow Citi’s job cut? Will the Europeans follow and send consumer stocks fora a bit of a dive. They all have risen considerably since April 2009. Watch out for some adjustment in that sector’s stock prices if Citibank goes through with the numbers.

We have noticed that Wal-Mart (WMT) has been luke warm recently. Is that because analysts see less spending at retailers because of job growth slowing even more.

Citibank and General Electric

polymatheux — Mon, 07 Dec 2009 07:21:52 +0000

Citigroup (C) will be in the headlines this week for sure. The company has 10 days to start repaying some of the TARP money and it is not clear how it is going to raise the capital. That will bring volatility into the stock. Most likely it will bring the price per share below $4.00, and that could trigger some more downward movement. If the stock trades under 4 it will probably go down 5 to 7.5% (20 to 30 cents) to $3.80 to $3.75. At 22 billion shares, every 5 cents will take a $1B dollars of the market cap.

GE may also see a bit of a drop this week. Not much news on the world economies. With the holidays, people are buying smaller and cheaper goods and that may not be in line with durable goods from GE. The Wal-Marts (WMT) of the world may see some increase in sales

Microsoft: Adding bling to bing with Maples

polymatheux — Fri, 04 Dec 2009 18:08:33 +0000

Just make sure your first name is Chris and you have just increased your chances for a rough and tough advertising job. Now that Microsoft (MSFT) has replaced Chris Ward by Chris Maples as its new head of consumer and online advertising, let us hope there will be more bling with substance to the very hopeful Bing engine. Will Wall Street notice or put any kind of faith in what he could deliver and keep MSFT over $30.

Chris Maples - in

Chris Ward - out

Playing around with unemployment figures!

polymatheux — Fri, 04 Dec 2009 17:46:01 +0000

So now the government is down to using different parameters to come up with better or more jovial unemployment figures.

Two things to keep in mind. First why do we need to switch from a survey of companies to a survey of households to obtain the unemployment number? Secondly, we are never really told how much of a factor job seekers that no longer look for employment or qualify for benefits contribute to that %. When hundreds of thousands are no longer eligible to collect and are not counted in the ranks of the unemployed why should they be counted as if they are part of the work force. It seems that the most consistent way and accurate way to read the data is to subtract the number of people that do not have work, minus the number of people in the working age group (or workforce).

10% is a fake number. 10% is a psychological number. The government is trying to play with the numbers to make it go under 10%. A more accurate figure is probably around 13 to 14%. At job fairs, all we see are still very if not longer lines of applicants. That is not a decrease of -0.2% (we are officially at 10% down from 10.2%). Just give us the real data!

To be noted, is the pressure that the job data puts on the Feds. It makes it more difficult for the Feds to try to raise the interest rates to combat over-valuation. At the same time these low rates are encouraging and fueling a new bubble of assets prices, and that could generate the next wave of banking and commercial real estate problems. Though choice for Bernanke.

What is ahead after Dow 10500?

polymatheux — Wed, 02 Dec 2009 05:40:40 +0000

Now that we have touched Dow 10500, we probably will take a little breather in the coming day or days. If not then the markets will be in overheated grounds and there will be an even bigger profit taking on Thursday or Friday. One stock that seems overvalued at this point is Microsoft (MSFT). Considering the lack luster Windows 7 buzz and the fact that it is at $30 (finally!), people should really analyze what the company has to offer for the next quarters in terms of growth.

God forbids Apple (AAPL)comes up with a Christmas surprise!

The markets are very stable at this point, judging by the Bollinger band widths of several indices or stocks.

VArious indicators pointed to a sluggish next quarter. Now that corporations have milked all the possible way of cutting costs, it will be very interesting to see the next earnings.

Dubai is already old news …

polymatheux — Mon, 30 Nov 2009 19:18:31 +0000

Judging by the reaction of the Asian markets and US ones, Dubai seems to have no real effects. It seems that another round of bailout money will come in and markets just move on. Is this the new capitalist model. Amass massive debts, inflate prices (especially of real estate) and than just declare insolvency. Well, this system has worked in developed countries for years, until we reach the point where the borrowers can no longer sustain the debt service.

What seems to be a worrying trend is the scale of this new economic model. The numbers. Now announcements of groups or holding companies having debts that they can not pay or losses of over $B100 is barely making markets move 1 or 2 %. Even as recent as 7 years ago such numbers would have made markets go down by 10 to 12% and stay down for a while the crisis is understood. Remember the Asian Flu meltdown of 1998.

Will we learn after Dubai?

polymatheux — Fri, 27 Nov 2009 23:16:40 +0000

It is a little puzzling as to why so many people are astonished of find the Dubai World debt issue a surprise or problematic. Didn’t we have all the clues of that desert dream laid in front of us. Tens of billions of dollars in loans to build projects that can not possibly pay or be profitable. Have them constructed. Then say “sorry we can not pay the service on the debt”.

Dubai is a prime example that one would think European banks and other greedy investors would have stay away from. The increase in real estate prices are absolutely similar to the boom time of the Florida and Nevada cases. Increases to prices that are no longer logically sustainable, but yet large investments firms and banks poured billions into these schemes (British meaning, or maybe not).

Sheikh Mohammed al Maktoum (the supreme ruler of Dubai, one of the emirates of the UAE) managed to do it again. And I must say, I tip my hat to him for having sold the dream to people who should have know better and are just getting out of the previous debacle.

Once again financial market act surprise and we have big drops in Asia of almost 5% on that news. We knew about these bad deals that can not yield any profits, are that are way too costly. Why are the markets surprise? Or were market makers and interested parties glorifying the Dubai story to the limits so that they could set lofty short positions.

The answer to the posting is. no. We will not and will have RBS, HSBC and others commit to other crazy projects under the pretext that they have to try to invest the many they have on hand. I only thought they would smarter in their placements choices.

Kajima … window into the near future?

polymatheux — Fri, 27 Nov 2009 17:37:39 +0000

Is Kajima Corp.’s value and situation a global indicator of where we are or may be going? The stock is at a 52 week low (¥162). Literally down 50% from its high of January 5th 2009 in Japan (¥323), and the ADR (KAJMY) is trading at $23.50 (high $33.15 on May 5th 2009) . How good a signal is that when all world markets have almost doubled from March to November 2009, and instead Kajima went down 50%?
Kajima (a large Japanese conglomerate), like, General Electric, is a company that is involve in all sort of durable, grand scale construction and projects around the world. So one could argue that they do fairly represent world economic demand and activity. Could it be that the commercial building component of the group is really hurting more. We will find out what the numbers are and see if that malaise is greater than just one or two sectors in the group.