Asia Currencies Head for Best Quarter Since 2004, Led by Rupiah

Asia Currencies Head for Best Quarter Since 2004, Led by Rupiah

June 30 (Bloomberg) -- Asian currencies headed for their biggest quarterly gain since 2004, led by Indonesia’s rupiah and South Korea’s won, as optimism the global economic slump is easing fueled demand for emerging-market assets.

The rupiah extended a quarterly winning streak that started in April 2008 on optimism President Susilo Bambang Yudhoyono will win re-election next month and introduce policies to support growth in Southeast Asia’s largest economy. The won gained as the Kospi Index of equities headed for its best quarter in two years. Crude and palm oil prices rose, boosting the outlook for commodity exporters including Malaysia.

“Most countries are moving along with a refreshing recovery trend that should be good for markets,” said Yeo Chin Tiong, head of treasury at OSK Investmnent Bank Bhd. in Kuala Lumpur. “The economies are chugging along, not fantastic, but stock and currency markets are trading on feel-good sentiment.”

The rupiah strengthened 0.6 percent to 10,210 per dollar as of 9 a.m. in Jakarta, taking its three-month rally to 14.6 percent, according to data compiled by Bloomberg. The won rose 0.5 percent 1,279.60 for an 8.1 percent gain since March 31. The ringgit added 3.5 percent in the quarter to 3.5220, and Taiwan’s dollar climbed 3.3 percent to NT$32.857.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active regional currencies, rose almost 2.8 percent this quarter, the most since 2004. Investors ploughed a net $17.8 billion this year into eight Asian stock markets outside Japan, according Bloomberg data. The MSCI Asia Pacific index of regional stocks rallied 29 percent since the end of March.

Korean Confidence

The dollar weakened 0.2 percent to 95.89 yen and fell for a fourth day against the euro to $1.4115 as investors sought higher-yielding assets. The ICE’s Dollar Index, which tracks the currency against its six major rivals, declined 6.7 percent this quarter as demand for higher yields erodes the dollar’s safe- haven appeal.

The won was poised for its biggest quarterly gain in four years as local manufacturers turned less bearish in their business outlook.

An index measuring expectations for July advanced to 78 from 76 in June, based on a survey of 1,445 producers. The index reached 44 in January, the lowest since the series began in 1991. A score of less than 100 means pessimists outnumber optimists.

“Confidence numbers have picked up certainly, but they’re not yet being matched by real activity,” said Patrick Bennett, Hong Kong-based currency strategist at Societe Generale SA. “Some of the confidence priced into equities is prone to be unwound.”

Commodity Prices

The ringgit strengthened by the most in almost three weeks as stocks rallied and commodity prices extended gains, brightening the outlook for exports.

Higher prices for palm and crude oil, which together account for 10 percent of Malaysia’s exports, may help bring an end to a seven-month drop in overseas sales. Prime Minister Najib Razak may unveil incentives to attract funds from abroad when he opens a two-day investment conference in Kuala Lumpur today, according to a report from HwangDBS Vickers Research Sdn. yesterday. Read Article... http://www.bloomberg.com/apps/news?pid=20601087&sid=aW.mLODOHEXI

World markets rise strongly as oil prices hit new 2009 high; Hong Kong jumps 4 percent

World markets rise as oil prices hit new 2009 high
World markets rise strongly as oil prices hit new 2009 high; Hong Kong jumps 4 percent

HONG KONG (AP) -- World stock markets shot up Wednesday as oil prices touched a new high for the year above $71 a barrel and fears of inflation eased in China.
Major indexes in Asia and Europe gained nearly 2 percent or more as buyers returned after two days of losing sessions, with strengthening commodity prices boosting resource producers like miner BHP Billiton and energy giant PetroChina.

After a three-month advance, global markets have showed a lack of direction in recent days amid worries that the rally was getting too far ahead of any real economic improvements.
But some investors found more reason for optimism after China reported prices fell in May for a fourth month, moderating the threat of inflation and possibly giving Beijing more room to carry out its giant stimulus plan.
The news also raised expectations other figures about Chinese industrial production and retail sales, due later this week, would be similarly upbeat -- raising hopes that Chinese demand could help lift other Asian economies.

Speculation that China's appetite for raw materials will stay robust have helped pulled commodity prices higher of late, a trajectory that continued Wednesday. Oil prices rose, with benchmark crude for July delivery up $1.41 at $71.42 a barrel.

While taken by some as a sign economic activity will pick up, the rise in oil and commodity prices is also being driven by worries about a weaker U.S. dollar and inflation, as well as massive liquidity, analysts said.

"There's an overriding hope that the commodity rally is signaling a recovery," said Kirby Daley, senior strategist at Newedge Group in Hong Kong. "But some of the fundamental decay at the core of the economy is still there, so I think investors may be getting ahead of themselves."

Hong Kong's Hang Seng surged 727.17, or 4 percent, to 18,785.66.
Japan's Nikkei 225 stock average gained 204.67 points, or 2.1 percent, to 9,991.49, as investors shrugged of news that core machinery orders, a closely watched indicator of corporate capital spending, tumbled to a 22-year low in April as uncertainty about an economic recovery kept companies cautious.
In South Korea, the Kospi advanced 3.1 percent to 1,414.88, Australia's benchmark climbed about 2.3 percent, while Shanghai's main index rose 1 percent. India's Sensex was up 2.5 percent in afternoon trading.
Europe followed Asian shares higher, with indexes in Britain, Germany and France up nearly 2 percent.
Wall Street futures gained, suggesting a stronger session in the U.S. Dow futures rose 86, or 1 percent, to 8,823 and S&P futures climbed 10.4, or 1.1 percent, to 949.90.

Brazil has gone into recession after its economy contracted by 0.8% in the first three months of 2009.

Brazil's economy enters recession
Brazil has gone into recession after its economy contracted by 0.8% in the first three months of 2009.

(Source BBC)
The figure from statistics agency IBGE was still better than expected and a big improvement on the 3.8% decline in the last three months of 2008.

Most economists define a recession as being two consecutive quarters of negative growth.
Also on Tuesday, Romania went into recession following a decline of 4.6% in the first three months of the year.
It had contracted 3.4% in the last three months of 2008, according to the statistics agency Ins.
The International Monetary Fund, which has recently approved a 12.9bn euro ($18bn; £11.1bn) loan for Romania, predicts that its economy will contract by 4.1% in the whole of 2009.

'Momentum'

In Brazil, while household spending grew 0.7% and government spending expanded 0.6%, capital spending fell by 12.6% in a sign of companies cutting back on investment.
"The stronger first-quarter number should add some momentum to the view that the second-quarter recovery could be stronger than expected and growth may not be as bad for the whole year," said Paul Biszko from RBC Capital Markets.
"Obviously it's positive for the currency and I think it will lessen the need for the central bank to cut interest rates aggressively, moving forward."
Foreign investors have been putting money into Brazil recently in the hope that its economy will recover more quickly than other countries.
The Ibovespa stock market index has been reaching levels not seen since before the global financial crisis.
http://news.bbc.co.uk/2/hi/business/8091632.stm

George Soros: China a 'positive force'

George Soros: China a 'positive force'
The billionaire financier George Soros says that China's economy will grow faster than people expect and so will its global economic influence.

SHANGHAI (Reuters) -- Financier George Soros said on Sunday that China's global influence is set to grow faster than most people expect, with its isolation from the global financial system and a heavy state role in banking aiding a relatively swift economic recovery.

He reiterated his cautious views regarding the surge in global stock markets, although he said it may have further to go given liquidity in the markets and that many investors are still sitting on the sidelines.
"In many ways, Chinese banking has benefited from being isolated from the rest of the world and is in better shape than the international banking system," he told an audience at Shanghai's Fudan University.

China's extensive capital controls have helped to shield its financial institutions from the worst of the global financial crisis.
http://money.cnn.com/2009/06/07/news/international/soros_china.reut/index.htm?postversion=2009060712

Barron's Big Money Managers are bullish for next year

Big Money Managers---Short Term Skittish
4/25/2009
With stock market indexes down almost half the levels they were a year ago, Barron's Big Money Managers are bullish for next year. But they're pretty pessimistic about the rest of 2009. They look for things to improve next year.

RGE - Reflections on the latest dead cat bounce or bear market sucker's rally

RGE - Reflections on the latest dead cat bounce or bear market sucker's rally

(Source RGE Monitor, Nouriel Roubini)
It is déjà vu all over again. We have already seen this Groundhog Day movie at least six times over and over again in the last year or so: the market starts to rally – this time around about 8% in a week - and the chorus of optimists starts to say that this is the bottom of the economic and financial crisis and that we are at the beginning of a sustained stock market rally that signals the true end of this bear market.

Even before the latest bear market rally started last week I wrote the following on March 2nd:
Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months.

Uptick Rule. What Does It Mean?

Uptick Rule
What Does It Mean? (Source Investopedia)
What Does Uptick Rule Mean?
A former rule established by the SEC that requires that every short sale transaction be entered at a price that is higher than the price of the previous trade. This rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1. The uptick rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp declines. The SEC eliminated the rule on July 6, 2007.

The uptick rule was also be known as the "plus tick rule".
Investopedia Says
Investopedia explains Uptick Rule
By entering a short sale order with a price above the current bid, a short seller ensures that his or her order is filled on an uptick. The uptick rule is disregarded when trading some types of financial instruments such as futures, single stock futures, currencies or market ETFs such as the QQQQ or SPDRs. These instruments can be shorted on a downtick because they are highly liquid and have enough buyers willing to enter into a long position, ensuring that the price will rarely be driven to unjustifiably low levels.

S&P jumps 5 percent after uptick rule talk

NEW YORK (Reuters) - Stocks jumped on Tuesday, extending strong gains after Rep. Barney Frank said he expects the SEC's uptick rule to be restored in about a month.The uptick rule, which only allowed a stock to be sold short when the last sale price was higher than the previous price, was repealed by the SEC in 2007 because the agency found that changes in trading strategies made it ineffective.
Frank added that mark-to-market accounting rule must be improved and made more flexible. A congressional panel is set to conduct a hearing on Thursday.
The Dow Jones industrial average (DJI:^DJI - News) jumped 326.72 points, or 4.99 percent, to 6,873.77. The Standard & Poor's 500 Index (^SPX - News) rallied 38.42 points, or 5.68 percent, to 714.95. The Nasdaq Composite Index (Nasdaq:^IXIC - News) shot up 77.19 points, or 6.08 percent, to 1,345.83.

Investors fret over GE Capital, as GE shares slide

Investors fret over GE Capital, as GE shares slide

BOSTON/NEW YORK (Reuters) - General Electric Co investors have one big worry these days: Is its hefty GE Capital finance arm -- the main reason for a 2008 profit drop -- poised to handle the worst economic downturn in decades?
Analysts and investors have pounded the U.S. conglomerate's shares to their lowest level since the early 1990s this week as they wrestle with the question of whether the finance operation -- which a few years ago represented half of GE's profits -- is adequately prepared for a surge in defaults by increasingly unemployed consumers and tottering mid-sized businesses.
The fear is that GE's planning for the unit, which anticipates a 42 percent fall in profit and rising defaults, may not be sufficiently bearish.
"It's not as if the world has confidence in any security, but this team has managed to just shatter investor confidence by continually being more upbeat than they deserve to be," said Charles Ortel, managing director of securities research firm Newport Value Partners in New York, which does not hold a position in GE shares.
Investors fear GE Capital's reserves for losses are too low in comparison with the top U.S. banks. Read more...

http://www.reuters.com/article/ousiv/idUSTRE5235NJ20090304

Stock Market is Bottoming, Equities VS Gold Bullion

Stock Market is Bottoming, Equities VS Gold Bullion
(Courtesy: Chris Vermeulen, www.TheGoldAndOilGuy.com)

Stock market looks like it has bottomed forming a similar pattern as it did in 2003. What is the better investment during an opportunity like this if this is the bottom: Stocks, Gold Bullion or Mining Stocks?
I recommend investors start thinking about putting some long term money to work giving it at least 4 years to mature. Today I started investing some long term money with some great looking Canadian ETFs for dividends, Growth and commodities. There are tones of ETFs in the USA for picking what you think will perform nicely during the next bull market.

If you would like to receive my free weekly market updates please visit my website:
Chris Vermeulen, www.TheGoldAndOilGuy.com

Download and Read the PDF with charts and analysis

High-End Housing Market hit by Market Crash

High-End Housing Market Ravaged by Stock Selloff

For wealthier Americans, the free-fall in stocks is not only ravaging their portfolios-it's taking a huge bite out of the value of their homes.
"The high-end market relies on equities," says Walter Molony, spokesman for the National Association of Realtors. "If stocks are doing well, so too does high-end housing."
Though only 2 percent of the overall housing market, high-end home sales have seen a dramatic drop, according to Molony. Homes valued at $750,000 or more plunged a whopping 47 percent in the year ended in November. By comparison, homes valued at $400,000 or less fell by only 3 percent during the same period.
A look at the markets during the same time period shows the Dow Jones fell 33.1 percent, while the S&P shows a 37.5 percent drop in value.
Real estate professionals agree that sliding markets and a ravaged economy are hurting prospective high-end buyers and sellers. And that means prices will likely decline even more before there is any recovery. Read article... http://finance.yahoo.com/news/HighEnd-Housing-Market-cnbc-14235694.html

Goede tijden, slechte tijden op de Beurs

Meredith Whitney, the 'Runner'

"Goede tijden, slechte tijden"

De Tulpenbollen crisis van eind 16de- begin 17de eeuw was een van de eerste grote speculatieve crises.
Deze huidige crisis is eigenlijk gewoon een geldmarkt crisis, het onderlinge vertrouwen is weg. In oktober 2007 schreef de toen tamelijk onbekende Meredith Whitney (Oppenheimer & Co) een rapport over Citigroup Inc. In het - inmiddels legendarische rapport - constateerde zij dat de dividenden van Citigroup de verdiensten ver overtroffen en dat er dus iets mis was. Zij stelde dat de grootste bank van Amerika in feite gerund werd op weg naar de ondergang, Citi zou het eigen kapitaal moeten verhogen, bezittingen verkopen of het dividend moeten verlagen, bij voorkeur alle drie.
Toentertijd werd er door collega analisten en de pers niet veel aandacht aan geschonken. De Markt (de Beurs) gaf gewoon geen barst om wat experts dachten. Maar het verliep anders, "the market is not always right". In november 2007 begon het afboeken van 'securities' (waarborgen), $100 miljard om te beginnen. In februari van dit jaar volgde de tweede golf, $370 miljard en daarna ging de ene na de andere Amerikaanse Bank kopje onder of moest gered worden. Deze zomer begon de crisis zich razendsnel internationaal te verspreiden, Engeland, de EU en het Verre Oosten waren vanaf september aan de beurt.
Ondertussen bleek er van alles mis met het internationale financiële systeem en ontstond er min of meer een paniek situatie, de krediet crisis begon, de reddings plannen rezen de pan uit, de economische neergang deed zijn intrede, en de vergelijkingen met 1929 staken de kop op.

En Meredith Whitney? Zij is inmiddels een wereldnaam en loopt nog steeds haar trainingsrondjes in Central Park.

(Commentaar van de straat (main street): Een hoeraatje voor Meredith Whitney. Maar geen medelijden met banken, beleggers, effectenmakelaars, overheden, etcetera. Ze zijn vrijwel allemaal ziende blind geweest, "wie zijn billen brandt, moet op de blaren zitten!")