Sunday Night Futures
5 hours ago
Wednesday, June 17, 2009
Wednesday, June 3, 2009
Mortgage Applications Down as Rates Surge Higher
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended May 29 decreased 16.2 percent to 658.7.
Tom Marano, chief executive of mortgage operations at GMAC, in an exclusive interview with Reuters on Tuesday, said home loan volume at GMAC is about 75 percent lower now than when mortgage rates hit record lows several months ago.
Tom Marano, chief executive of mortgage operations at GMAC, in an exclusive interview with Reuters on Tuesday, said home loan volume at GMAC is about 75 percent lower now than when mortgage rates hit record lows several months ago.
"Up until the past week and a half, the Federal Reserve had been successful at bringing interest rates on mortgages down," he said.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.25 percent, up 0.44 percentage point from the previous week, its highest level since the week ended Jan. 30.
It was also significantly higher than the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.
Source: CNBCThursday, May 21, 2009
U.K. May Lose AAA Rating at S&P as Finances Weaken
May 21 (Bloomberg) -- Britain may lose its AAA credit rating for the first time as government finances deteriorate in the worst recession since World War II.
Standard & Poor’s lowered its outlook on Britain to “negative” from “stable” and said the nation faces a one in three chance of a ratings cut as debt approaches 100 percent of gross domestic product. The pound fell the most in four weeks versus the dollar before rebounding, the FTSE 100 Index slid 2.8 percent and the cost of insuring U.K. debt against default rose.
Britain needs to sell a record 220 billion pounds ($349 billion) of bonds in the fiscal year through March 2010 as the economy contracts and Chancellor of the Exchequer Alistair Darling predicts that the budget deficit will reach 175 billion pounds, or 12.4 percent of GDP. The U.K.’s worsening finances parallel the public perception of Prime Minister Gordon Brown, whose Labour government has trailed the Conservative opposition for more than a year in polls.
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Saturday, May 16, 2009
Chart of Gold
Long term view of the Gold chart. See how it is right at the resistance. Stochastics are oversold and looks prime for a nice BO. If the trendline stops its here; we will pullback.
Chart of US Dollar
Long Term view of US dollar. See how RSI moved above the purple dotted line for the first time in 10 years. Now it is finding support at the purple RSI line.
Wednesday, March 11, 2009
Will we have Inflation or hyperinflation later ?
Mike Shedlock from Global Economic Analysis makes a compelling case on what needs to happen for Inflation to occur eventhough we have massive amounts of money being printed by governments worldwide. What really matters is whether the money is lent by banks or not. What really matters is whether the banks feel safe to lend and have the money float into the economy when they feel the risk to acquire bad assets is very high.
Full Article at Mike Shedlock's blog
Full Article at Mike Shedlock's blog
Friday, March 6, 2009
Depreciating rupee and its effect on India
Excellent article at Economic Times:
Is steep rupee depreciation worrisome?
Exporters will benefit in the short
term: Biswajit Dhar,Professor, Centre for WTO Studies, IIFT*
The depreciation of the rupee during the past few days, which has seen the currency reach new depths, has come at a time when the markets are giving mixed signals. One the one hand, the trade data for January 2009 released earlier this week shows that the trade balance has narrowed for the fifth straight month, even as the decline in exports remains a cause for concern.
The negative cue comes from yet another episode of withdrawal of FIIs. While analysts would argue that the latter phenomenon represents nothing more than a cyclical pattern of FIIs’ involvement in the Indian economy , there needs to be a careful monitoring of the assessment made by the fund managers about the Indian economy in the days ahead.
At a broader level, however, the depreciation of the currency brings to the fore several issues. Purists would argue that the currency depreciation should not be a major cause for concern in the short run for it provides an opportunity to the exporters to become more price-competitive.
Such a situation would auger well for the Indian industry as it seeks to step up its exports in the global markets that are in the midst of a slump. At the same time, the weakening of the currency would provide an added dose of protection to the domestic enterprises, especially at a time when these enterprises are smarting under the growing threat of imports from some of India’s major trading partners.
It should, however, be pointed out that the currency depreciation is detrimental to the interests of India’s exporters in the service sector as their export earnings would take a hit. With the economic downturn in the United States showing no signs of abatement, this sector is already under considerable pressure, and therefore, the depreciation of the rupee comes as a double whammy.
But what should worry the policymarkers is the fact that currency depreciation would increase the cost of debt servicing. This dimension needs attention particularly since India’s external debt, which has been creeping up since 2007, has increased by more than a quarter in the first six months of the current fiscal.
It has the potential to trigger FII outflows: Yashika Singh, Dun & Bradstreet India
The rupee has depreciated by as much as 30% against the US dollar since the beginning of the current fiscal. A confluence of factors such as increase in FII outflows from the domestic equity market, a strengthening dollar, waning exports and weakening domestic economy have weighed down the value of the rupee.
Although the rupee value will remain depressed against the dollar, it is likely to stabilise around 49 against the US dollar in the near term as the heightened risk aversion of FIIs subsides and the RBI intervenes to rein in the rupee value.
The depreciating rupee is likely to add to the woes of Indian firms with significant levels of foreign currency-denominated, especially dollar-denominated loans. Increase in interest payment and principal obligations might lead to forex losses for companies with dollar loans. As per latest data, India had an external debt of $221.3 billion at the end of June 2008.
The adverse impact of the recent depreciation in the rupee is likely to be felt more so on the shortterm debt, which accounts for around 20% of India’s total external debt. A steep depreciation in the rupee has the potential to trigger FII outflows and is likely to dissuade NRI as well as FII investors from parking funds in India, as potential returns earned will be adversely affected. In fact, according to the latest available data, NRI deposits declined by as much as $1.1 billion to $42.6 billion as at end-June 2008 as compared to end-March 2008 level.
The RBI’s intervention in the forex market to support the depreciating rupee during the last few months has in part led to a decline in India’s foreign exchange reserves. India’s foreign exchange reserves have declined by $62.35 billion to $249.53 billion as on February 20, 2008 (from $311.88 billion as on April 4, 2008).
Depleting foreign exchange reserves is another cause for concern, as the available import cover is lowered, along with an adverse impact on India’s foreign debt sustainability. The depreciating rupee will do little to increase India’s exports, given similar depreciation in the currencies of India’s competitors and the global slowdown in demand.
Is steep rupee depreciation worrisome?
Exporters will benefit in the short
The depreciation of the rupee during the past few days, which has seen the currency reach new depths, has come at a time when the markets are giving mixed signals. One the one hand, the trade data for January 2009 released earlier this week shows that the trade balance has narrowed for the fifth straight month, even as the decline in exports remains a cause for concern.
The negative cue comes from yet another episode of withdrawal of FIIs. While analysts would argue that the latter phenomenon represents nothing more than a cyclical pattern of FIIs’ involvement in the Indian economy , there needs to be a careful monitoring of the assessment made by the fund managers about the Indian economy in the days ahead.
At a broader level, however, the depreciation of the currency brings to the fore several issues. Purists would argue that the currency depreciation should not be a major cause for concern in the short run for it provides an opportunity to the exporters to become more price-competitive.
Such a situation would auger well for the Indian industry as it seeks to step up its exports in the global markets that are in the midst of a slump. At the same time, the weakening of the currency would provide an added dose of protection to the domestic enterprises, especially at a time when these enterprises are smarting under the growing threat of imports from some of India’s major trading partners.
It should, however, be pointed out that the currency depreciation is detrimental to the interests of India’s exporters in the service sector as their export earnings would take a hit. With the economic downturn in the United States showing no signs of abatement, this sector is already under considerable pressure, and therefore, the depreciation of the rupee comes as a double whammy.
But what should worry the policymarkers is the fact that currency depreciation would increase the cost of debt servicing. This dimension needs attention particularly since India’s external debt, which has been creeping up since 2007, has increased by more than a quarter in the first six months of the current fiscal.
It has the potential to trigger FII outflows: Yashika Singh, Dun & Bradstreet India
The rupee has depreciated by as much as 30% against the US dollar since the beginning of the current fiscal. A confluence of factors such as increase in FII outflows from the domestic equity market, a strengthening dollar, waning exports and weakening domestic economy have weighed down the value of the rupee.
Although the rupee value will remain depressed against the dollar, it is likely to stabilise around 49 against the US dollar in the near term as the heightened risk aversion of FIIs subsides and the RBI intervenes to rein in the rupee value.
The depreciating rupee is likely to add to the woes of Indian firms with significant levels of foreign currency-denominated, especially dollar-denominated loans. Increase in interest payment and principal obligations might lead to forex losses for companies with dollar loans. As per latest data, India had an external debt of $221.3 billion at the end of June 2008.
The adverse impact of the recent depreciation in the rupee is likely to be felt more so on the shortterm debt, which accounts for around 20% of India’s total external debt. A steep depreciation in the rupee has the potential to trigger FII outflows and is likely to dissuade NRI as well as FII investors from parking funds in India, as potential returns earned will be adversely affected. In fact, according to the latest available data, NRI deposits declined by as much as $1.1 billion to $42.6 billion as at end-June 2008 as compared to end-March 2008 level.
The RBI’s intervention in the forex market to support the depreciating rupee during the last few months has in part led to a decline in India’s foreign exchange reserves. India’s foreign exchange reserves have declined by $62.35 billion to $249.53 billion as on February 20, 2008 (from $311.88 billion as on April 4, 2008).
Depleting foreign exchange reserves is another cause for concern, as the available import cover is lowered, along with an adverse impact on India’s foreign debt sustainability. The depreciating rupee will do little to increase India’s exports, given similar depreciation in the currencies of India’s competitors and the global slowdown in demand.
World stocks mixed as China stimulus hopes fade
HONG KONG (AP) — Asian stock markets were mixed Thursday after China promised to support growth and create jobs — but stopped short of major new stimulus measures to bolster the world's third-largest economy. European markets opened down.
Chinese Premier Wen Jiabao said the government's 4 trillion yuan ($586 billion) stimulus plan, announced in November, would help the country achieve 8 percent growth this year. That rate is seen as critical to creating jobs and staving off social unrest as the worst global economic crisis in generations hits Chinese exports.
As the government boosts money for infrastructure, social programs and tax cuts, the country's budget deficit will surge to its highest level in six decades, Wen said at China's annual legislative session in Beijing.
----------------
SOURCE: Associated press/Google news
Chinese Premier Wen Jiabao said the government's 4 trillion yuan ($586 billion) stimulus plan, announced in November, would help the country achieve 8 percent growth this year. That rate is seen as critical to creating jobs and staving off social unrest as the worst global economic crisis in generations hits Chinese exports.
As the government boosts money for infrastructure, social programs and tax cuts, the country's budget deficit will surge to its highest level in six decades, Wen said at China's annual legislative session in Beijing.
----------------
SOURCE: Associated press/Google news
Monday, March 2, 2009
Indian rupee to drop to 56/dlr in 3 mths-Barclays
MUMBAI, March 2 (Reuters) - The Indian rupee could drop to a record 56 against the dollar in the next three months, weighed by a slowdown in the economy and a balance of payments deficit, Barclays Capital said in a note on Monday.
* The Indian economy will expand at 4 percent in the next financial year, which will weaken the real effective exchange rate (REER) of the rupee, or its value compared with a basket of currencies of its key trading partners.
* Indian economy has been growing at 9 percent or higher in the last three years and the government expects it to expand at 7.1 percent in the current fiscal year, with many private economists, predicting it to be much lower.
* India's economic growth slowed much more than expected in the December quarter, slumping to its weakest pace in almost six years and raising expectations the central bank would cut rates soon. See [ID:nDEL140392].
* The economy in the December quarter
* "With further risks of depreciation of emerging market currencies and a resilient dollar environment in the next few months, we believe global factors are negative for the outlook of rupee," Shailesh Jha, senior regional economist, said. (Reporting by Swati Bhat; Editing by Ramya Venugopal)
-------------------Source: Reuters
Saturday, February 28, 2009
Is India's IT industry affected by the economic crisis?
Indian IT: Trouble Today, but Optimism for the Long Term-India Knowledge at Wharton
A closer look at the customer profile of the Indian IT sector shows why the industry is hurting. The U.S. accounts for 60% of the market and the UK another 18.5%. This is not too different from the respective values of 68.2% and 14.5% in financial year 2003-04. The current global financial problems began in the U.S., and it has been among the hardest hit countries so far. Analyzing the numbers along another parameter -- the verticals -- shows that the banking, financial services and insurance (BFSI) industry accounts for 41% of the business. The percentage has actually gone up marginally since 2003-04. And this sector is at the epicenter of the crisis.
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60% of all Indian IT revenue comes from US. And 41% of all Indian IT revenue is from the financial sector. This information shows how close the Indian IT sector is to the financial crisis. Less the number of fancy financial instruments; less the need for IT development to support them amd more the Indian IT sector is affected.
A closer look at the customer profile of the Indian IT sector shows why the industry is hurting. The U.S. accounts for 60% of the market and the UK another 18.5%. This is not too different from the respective values of 68.2% and 14.5% in financial year 2003-04. The current global financial problems began in the U.S., and it has been among the hardest hit countries so far. Analyzing the numbers along another parameter -- the verticals -- shows that the banking, financial services and insurance (BFSI) industry accounts for 41% of the business. The percentage has actually gone up marginally since 2003-04. And this sector is at the epicenter of the crisis.
--------------------------------------------------------------------------------------
60% of all Indian IT revenue comes from US. And 41% of all Indian IT revenue is from the financial sector. This information shows how close the Indian IT sector is to the financial crisis. Less the number of fancy financial instruments; less the need for IT development to support them amd more the Indian IT sector is affected.
Friday, February 27, 2009
The Economic Outlook: 2012 and beyond
The Economic Outlook: 2012 and beyond
A great analysis by Abbas Bakhtiar
Excerpts:
The current economic situation
Let me tell you in no uncertain terms that we are facing a synchronised global economic depression and I am not the only one that is saying this. In early February, the International Monetary Fund’s chief Dominique Strauss-Kahn said the world's advanced economies -- the U.S., Western Europe and Japan -- are "already in depression”. Gordon Brown, the UK’s Prime Minister also used the word "depression" to describe the global economy, although his aides quickly said it was a slip of the tongue.
The missing engine of growth
In contrast to the China, the United States has relied on consumers and the government for its growth. According to Peter G. Gosselin citing Roach of Morgan Stanley Asia, U.S. consumers constitute only about 4.5% of the global population, yet they bought more than $10 trillion worth of goods and services last year. In contrast the Chinese and Indian consumers combined which account for 40% of the global population bought only $3 trillion worth.
If we just look at the differences in consumption levels between US and China-India, we’ll see that these countries are not in a position or have the financial resources to pick-up the slack left by the US consumers
So who is going to take the position left vacant by the US and act as the world’s economic locomotive and pull the world out of the depression? The answer is no-one and everyone. US is clearly not able to do that much. As a matter of fact the US consumers have to get used to lower spending levels for at least a decade, if not for good.
The coming inflation
So far, all governments are reducing their interest rates to historic lows and at the same time spending a lot of money that they don’t have. It will take at least two more years for the economy to stabilise. Here we should note that by stabilise I mean an arrest in decline rather than outright growth. Once that point is reached we will begin to see the effects of the loose monetary policy: a tremendous rise in inflation which can be accompanied by low economic growth or in other words stagflation.
The fear of stagflation arises from the fact that from all indication, growth will not strengthen anytime soon. It is quite clear now that the US and to a large extent the European consumers have been hit hard by the current crisis. There is also the possibility that another banking crisis may still ensue such as the commercial real-estate mortgage defaults and above all the repetition of currency crisis (1997 Asian Financial Crisis). Already we see that China Japan, Korea and others are setting-up $120 billion currency defence fund to protect Asian currencies against speculative attacks.
The current economic crises have left many countries’ local banks with foreign currency loans that they find difficult to repay in that currency. This and the possibility of defaults have made these countries a good target for speculators. If such an attack starts, many countries will automatically have to devalue their currencies (even more than they already have) or try to defend their currencies. In either case this may trigger yet another crisis that may actually destroy a good portion of many economies around the world.
----
Source:American Chronicle
A great analysis by Abbas Bakhtiar
Excerpts:
The current economic situation
Let me tell you in no uncertain terms that we are facing a synchronised global economic depression and I am not the only one that is saying this. In early February, the International Monetary Fund’s chief Dominique Strauss-Kahn said the world's advanced economies -- the U.S., Western Europe and Japan -- are "already in depression”. Gordon Brown, the UK’s Prime Minister also used the word "depression" to describe the global economy, although his aides quickly said it was a slip of the tongue.
The missing engine of growth
In contrast to the China, the United States has relied on consumers and the government for its growth. According to Peter G. Gosselin citing Roach of Morgan Stanley Asia, U.S. consumers constitute only about 4.5% of the global population, yet they bought more than $10 trillion worth of goods and services last year. In contrast the Chinese and Indian consumers combined which account for 40% of the global population bought only $3 trillion worth.
If we just look at the differences in consumption levels between US and China-India, we’ll see that these countries are not in a position or have the financial resources to pick-up the slack left by the US consumers
So who is going to take the position left vacant by the US and act as the world’s economic locomotive and pull the world out of the depression? The answer is no-one and everyone. US is clearly not able to do that much. As a matter of fact the US consumers have to get used to lower spending levels for at least a decade, if not for good.
The coming inflation
So far, all governments are reducing their interest rates to historic lows and at the same time spending a lot of money that they don’t have. It will take at least two more years for the economy to stabilise. Here we should note that by stabilise I mean an arrest in decline rather than outright growth. Once that point is reached we will begin to see the effects of the loose monetary policy: a tremendous rise in inflation which can be accompanied by low economic growth or in other words stagflation.
The fear of stagflation arises from the fact that from all indication, growth will not strengthen anytime soon. It is quite clear now that the US and to a large extent the European consumers have been hit hard by the current crisis. There is also the possibility that another banking crisis may still ensue such as the commercial real-estate mortgage defaults and above all the repetition of currency crisis (1997 Asian Financial Crisis). Already we see that China Japan, Korea and others are setting-up $120 billion currency defence fund to protect Asian currencies against speculative attacks.
The current economic crises have left many countries’ local banks with foreign currency loans that they find difficult to repay in that currency. This and the possibility of defaults have made these countries a good target for speculators. If such an attack starts, many countries will automatically have to devalue their currencies (even more than they already have) or try to defend their currencies. In either case this may trigger yet another crisis that may actually destroy a good portion of many economies around the world.
----
Source:American Chronicle
Wednesday, February 25, 2009
Market is ready to rally- Bottomed out ?
Double bottom on the S&P 500 was formed yesterday. Watch STO, RSI and the bullish engulfer candle. We are ready for major rally in the US markets !!!I may be too soon to call this a bottom; but let's watch it over the next few days
Tuesday, February 17, 2009
Gold Chart- Technical Breakout to $1000
Gold does a massive breakout. The chart says Gold is heading to $1000 as investors rush from stock equities into more safe havens like Gold and Treasuries.
Investors continue pull out from India; Asia sees inflows
NEW DELHI: Global investors continued their flight from India-focused equity funds for the fourth week in a row, even as inflows into Asia
tripled to $219 million in the second week of February, a latest report says.
Net cash taken in by offshore Asian funds tripled week on week to $219 million in the second week of this month, according to data complied by international fund tracking firm EPFR Global.
However, India and Taiwan dedicated funds remained alienated and witnessed redemptions for the consecutive fourth week, with the combined amount rising 20 times from the last week of January.
Global investors pulled out over $22 million within a week from India-focused funds taking their total outflows in the past four week to nearly $52 million, the report revealed.
Besides, Taiwan funds saw an outflow of 17.6 million dollar in the reviewed week.
Inflows into Asia (excluding-Japan) equity funds were broadly based, with Korea, China, Greater China and Hong Kong equity funds all taking in between 40-145 million dollar.
Source:Economic Times
Net cash taken in by offshore Asian funds tripled week on week to $219 million in the second week of this month, according to data complied by international fund tracking firm EPFR Global.
However, India and Taiwan dedicated funds remained alienated and witnessed redemptions for the consecutive fourth week, with the combined amount rising 20 times from the last week of January.
Global investors pulled out over $22 million within a week from India-focused funds taking their total outflows in the past four week to nearly $52 million, the report revealed.
Besides, Taiwan funds saw an outflow of 17.6 million dollar in the reviewed week.
Inflows into Asia (excluding-Japan) equity funds were broadly based, with Korea, China, Greater China and Hong Kong equity funds all taking in between 40-145 million dollar.
Source:Economic Times
Russian auto output down 80 pct in January
Russian auto production fell 80 percent in January compared to the same month a year ago, the government statistics agency said Monday. The drop was part of an overall 16 percent drop in industrial output.
The auto industry has been hit by shutdowns at major plants. Automakers AvtoVAZ, GAZ, Ford and Renault were shut down for an extended holiday period up to one month, and AvtoVAZ -- which is now working one shift a day -- also briefly halted production as it had difficulty with suppliers over late payments.
Russia's industry had been posting an annual 50 percent growth in the past five years and was on the way to become Europe's largest car market before the credit crunch made borrowing too expensive or inaccessible.
Industrial output was down even more sharply -- by 20 percent -- compared to December, the Federal Statistics Agency said in a monthly report.
Source: BusinessWeekMonday, February 16, 2009
Nouriel Roubini predictions for 2009
We are in the middle of a very severe recession that's going to continue through all of 2009 - the worst U.S. recession in the past 50 years. It's the bursting of a huge leveraged-up credit bubble. There's no going back, and there is no bottom to it. It was excessive in everything from subprime to prime, from credit cards to student loans, from corporate bonds to muni bonds. You name it. And it's all reversing right now in a very, very massive way. At this point it's not just a U.S. recession. All of the advanced economies are at the beginning of a hard landing. And emerging markets, beginning with China, are in a severe slowdown. So we're having a global recession and it's becoming worse.
Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak - with a growth rate of 1% to 1.5% - that it's going to feel like a recession. I see the unemployment rate peaking at around 9% by 2010. The value of homes has already fallen 25%. In my view, home prices are going to fall by another 15% before bottoming out in 2010.
For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It'll be hard and challenging enough. I wish I could be more cheerful, but I was right a year ago, and I think I'll be right this year too.
Source: CNN Money/Fortune
Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak - with a growth rate of 1% to 1.5% - that it's going to feel like a recession. I see the unemployment rate peaking at around 9% by 2010. The value of homes has already fallen 25%. In my view, home prices are going to fall by another 15% before bottoming out in 2010.
For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It'll be hard and challenging enough. I wish I could be more cheerful, but I was right a year ago, and I think I'll be right this year too.
Source: CNN Money/Fortune
Tuesday, February 10, 2009
Charles Nenner Predictions for 2009
Here are two videos from the Charles Nenner website . Charles Nenner provides some interesting predictions for the year 2009. I won't say he is always right but quite close.
http://charlesnenner.com/inc_files/2009-02-03-cn-cnbc.wmv
http://charlesnenner.com/inc_files/2009-02-03-cn-bloomberg.wmv
http://charlesnenner.com/inc_
http://charlesnenner.com/inc_
Monday, January 26, 2009
Chart of FCX- Bullish setup
Going up on increasing volume. Target=31 Stop at 21. Confirmation would be close above 26----
Followup- Target of $31 was reached !!
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