The week in the markets.

URGENT: U.S. HAS ADOPTED IN THE RESCUE PLAN FOR FINANCIAL

Personal comment.

According to a study by Bespoke if we take the lower S & P 500 from maximum to minimum Monday, we have 29.31% drop in 356 days. But since 1940, the average fall in a bearish market was 30.59% in 380 days. Does this mean that we can think of the soil in the bags? I reply to other questions: How would the bags without the ban on selling overdrawn, how would the economy without the massive injections of liquidity by central banks? Some extraordinary measures are becoming common and it seems that will last a long time and that is not good. The bags can have big rebounds but the economy is paralyzed because of the credit crisis and that is something that is felt at every level feeds such as paralysis because no one wants to invest: neither people nor companies. We can only state that in the end we are all, and that every day are entering less ... that is, the picture remains discouraging, this is not a crisis between "on average". Plan with and without Plan. A rumor that says the SEC (and in the EU seems to be studying something similar) will reassess the "toxic assets" in a more permissive may be more positive for the market than the plan itself, which strangely plan and despite the huge deficit that will cause, has strengthened to $ ...

Changing the subject. I have noticed that some journalists and TV Tertullian defended the words of our president on the strength of our financial system using the Santander as an example. That is like defending the viability of Jazztel from the number of Telefonica, Santander is a large multinational very well run and not as dependent on the economic cycle as most Spanish banks and savings. But neither can be ruled out errors in its purchasing policy: in fact both the Abbey National as part of its ABN bought almost maximum stock and its bid for mortgage banks in England is the least dangerous. In any case, I repeat, Santander is one thing and the Spanish financial system quite another.

A real test of that things are not so well in Spain is in the risk premium for debt issued by the Kingdom of Spain, which this week reached its highest respect to the German since 1997. In numerical terms, Spain must pay to buy their debt to him 10 years to more than 60 pipos Germany, bearing the same currency as that country and the same rating. The Spanish economy goes from penalty: the weight of the construction, real estate business and the dependence of the financial system, banks and middle-savings from the bonanza of these sectors shows a bleak picture. To make matters worse, evidence suggests that far from the worst we have seen so we can hardly atisbar a way out of this crisis. Yet our stock market has an index that purports to be representative: the IBEX, 35 securities with a very unequal weight and most importantly

• TEF (multinational phone that can give very good results despite the crisis has interests in Spanish because many countries, some with growth rates still very high)
• SAN and BBVA (two banks with high profits, unlike most banks in the world without any need for capital-quite the contrary are considered "predators" - and whose results are also linked with the international business)
• Repsol, a company that is in a sector of fashion, nor should be seriously harmed by the national crisis, and
• Companies in the electricity sector, which itself should remain unaffected by the crisis, especially for its high level of debt, but that seems curiously immune to any turbulence desirable because they are halfway across the world.
• In the index there are also builders, companies linked to consumption, an airline sectors ... very very bad bass players and profit forecasts given the current crisis in Spain ... but its weight in the index is minimal compared to those already mentioned. And it has the enormous advantage of not having weight of an industrial nature that have caused so much harm to other global indices such as General Motors to Dow Jones or the CAC40 Alstom.

¿Conclusion? The IBEX could be among the best performing index in the medium to long-term September and October so we have been proof-despite the fact that Spain has the worst economic numbers in Europe. But we must not fooled by this.

And in the face of the bag next week, with the permission of the U.S. unemployment data and assuming that Congress would vote the same as the Senate regarding the Plan:

• Although economic data is negative, the extreme pessimism in the market and the expectation accountants on possible changes, state aid to banks and even a global agreement in the G-7 meeting in a few days in Washington caused so much fear in the bassists that The stock market rebound appears possible some day ... but, again, more for lack of wanting to sell it for meaning and want to buy a marketing opportunity. And the trend is that background remains bearish, very bearish ...

Some views.

• According to this chart the Dow Jones is quoted below the historic average of its book value and close to the minimum which would mean that we are on the ground or near the ground. I do not share the idea but the picture is clear:

• Becoming bigger for more liquidity. Perhaps the crisis will serve to iron out political differences ...: http://www.abc.es/20080928/economia-banca/acelerada-crisis-liquidez-comienza-20080928.html
• How can the interbank?: Http://www.cincodias.com/articulo/mercados/expertos-esperan-medidas-adicionales-reanimar-mercado-interbancario/20080930cdscdimer_4/cdsmer/
• The banks continue to fall although prohibit traders sell shares overdrawn: http://www.serenitymarkets.com/ficha_comentario.asp?sec=9&id=23475-Ireland it is the first EU country to officially enter into recession (two quarters of negative growth):

• The worst thing about it is that Germany is something similar:

• The reduction in income reduces the economic viability of autonomy: http://www.elpais.com/articulo/economia/S% 26P/advierte/problemas/cuentas/autonomias/elpepueco/20081002elpepieco_13/Tes
• One statistic for those still invested in stock market picked up by JLCárpatos for the last quarter: Bespoke has published a study from 1901 until the date of the "seasonal" in the fourth quarter on Wall Street and leaving some curious details.
  1 - the average for the fourth quarter in more than 100 years is the rise of 2.21% to 66% upside.
  2 - but when the fourth quarter of this election year as the average rises to 3.49% and gives an upside of 73.1%.

  But now comes the better, because Bespoke obviously sees that everything can change a lot in a year like this bearish, and this study divides the markets ups and downs.

  1 - The fourth quarter market bearish in the eye have an average drop of -6.4%, almost nothing, and only 34.4% are upside.
  2 - The fourth quarters in the market upward, rising 5.8% on average with a percentage of the upside of no less than 78.7%.

  And if in addition to being bearish on year as we are in this election?
  It also estimates it Bespoke, and these are the interesting data:

  1 - The fourth quarters of the year as bearish and this election year like this, there is a drop average -5.47% and 40% are just upside.
  2 - The fourth quarters of the year and bullish election, have an average increase of 5.6% and no less than 81% are upside.

Data for reflection.

• Monday marked the new annual minimum in the FTSE, the Dax, the SP500, the Dow Jones, Nasdaq and Brazil on Tuesday and repeated Dax and FTSE and joined Japan and the Stoxx €. On Thursday, Japan, Germany and the Nasdaq marked annual minimum to be the first to the mark in October ... Hard to be the only ...
• The Spanish state increases their debt issues: http://www.abc.es/20080925/economia-economia/estado-emitido-millones-deuda-20080925.html
• Last Friday it had intercepted the largest U.S. savings bank Washington Mutual. He had lost more than half its value on the stock in 2 days despite the ban on the sale of its shares and Friday, and with his consummate bankruptcy, closed down 90% on the previous day's close.
• Both JP Morgan and Morgan Stanley decided last Friday to extend capital. The Citi announced the same on Monday and General Electric on Wednesday. Even the most prestigious companies are deprived of liquidity ...
• During the weekend which were the Fortis (after several reported on Friday, ensuring their solvency) and the eighth bank in UK: Bradford and Bingley, (a part of their business was acquired by Santander). On Tuesday, the Benelux countries also had to assist financially to Dexia.
• On Monday, was consummated at the end of the Wachovia which was acquired by Citigroup with the help of the FED.
• The indicator of growth ECRI (Economic Cycle Research Institute) mark minimum of 28 years.
• On Monday the CRB raw materials index fell 5.9%, the biggest drop in one day in its history. That same day, the VIX volatility index marked historic highs. Deputy graph of the latter:

• Spain ranks as the second country less competitive in the Eurozone, just ahead of Portugal, according to data from a report prepared by the European Central Bank (ECB), which adversely affects the institutional environment and related technological disadvantages.
• A few days ago we saw the greatest increase in history in European stock markets on Monday and saw the largest drop in history points in the Dow and the largest drop since the crash% in 1987. On Monday the S & P recorded the worst drop in one day in 21 years, and Tuesday was the third largest increase in points of history in the Dow Jones ... As we see, a lot of volatility.
• Faced with the prospect of heavy losses on Tuesday Russia did not open his bag. When that was not going to have a crack opened two hours later than usual hours. That's handy ...
• The Morgan Stanley index of world stock markets on Monday, had his worst day in more than 20 years, it gives an idea of the universality of the crisis.
• The government tax rises: http://origin-www.expansion.com/edicion/exp/economia_y_politica/economia/es/desarrollo/1170417.html
• On Tuesday, the price index for urban housing Case Shiller of USA marked a new historic high on-year drop.
• In the USA one month LIBOR on Tuesday recorded the biggest rise in history (from 2.57% to 6.88%), and hopefully something spectacular story in a country where the official rate is 2%.
• This streak of quarterly losses in the Dow Jones was not for 40 years. And the SP500 was the third worst since September 1950.
• The € on Tuesday suffered the biggest drop in one day since its inception in 1999, explained by fears a weak European banking after cases of Fortis and Dexia, although he continued down the rest of the week even as bank shares rebound ... breaking the 1.40 mark and the low annual minimum.
• Spain receives more than the EU: http://www.abc.es/20081001/economia-economia/espana-recibira-millones-doble-20081001.html

The macro data of the week.

A lack of data on job creation USA Today I think that the number of unemployed in Spain in September up 3.7% at 95,367 words (and in our country there are 2,625,368 unemployed) people, is sufficiently important:

Summary of the week .-

Friday
The non-confirmation of the Agreement on the Rescue Plan and the bankruptcy of WaMu sales resulted from the outset of the meeting were to be expanded with the rumors about the lack of creditworthiness of Fortis Bank and the tensions in the credit market (with a maximum in 13 years of the 3-month Euribor). A U.S. GDP lower than expected deteriorated further and the trend is set to exceed the minimum -2% in Europe. Already counted with the USA opened the market has improved since it was less than Europe by closing with losses of around -1.5%, highlighting the minimal loss of Ibex. USA, after several bandazos, got a close-positive more than 1% in the Dow, but negative on the Nasdaq, relied on an agreement on a rescue plan over the weekend and with the help of a last-minute rumor about a possible rescue of Wachovia (which, together with National City, both with falls in excess of 25%, were the leading candidates to follow WaMu)

Monday
After the apparent agreement on the Rescue Plan functioned old saying that the bag that says "buy with the rumor, sell the news" and so the exchanges began on Monday with descents and ascents with the $. Weighed again to accelerate the banking problems falls beyond the 3% within the first hour of meeting and getting to mark the maximum 3-month Euribor. The reduced dividend by Citigroup after the acquisition of Wachovia neither helped a spot that opened USA losing more than 2% and before the half hour and exceeded -3% and before the hour and the Nasdaq was above -4% ( Google fell minimum of 2 years and 16 months for Apple, it lost close to 18%). And is that not only fell financial ones, also the basic materials sector with a crude below $ 100. Several central banks announced further injections of liquidity but could not avoid some very tough European descents between which highlighted the FTSE -5.30% (which together with the Dax set new minimum annually) and 2-digit decreases in the number of banks (and between -74% of them Hypo Real State, a member of Dax). And in USA was not all that against all odds since congressmen rejected the rescue plan which led to the SP500 to exceed 7% on the day and set new annual minimum, which also did the Nasdaq and the Brazilian stock market came to fall more than 13%. At the close the most striking -9.14% of Nasdaq and downs of certain banks: Wachovia -82%, -72% Sovereign, National City -63% (the banking sector fell by 20.8%).

Tuesday
The worst predictions Europe was hanging on after the closing down of the U.S. and Japan for more than 4%, however after opening falls were barely above the 2% and even the Ibex escaped set new annual minimum. He left less than confident that despite all the Rescue Plan was finally approved, the FTSE play momentarily when a positive meeting, the German unemployment data was not bad, the CPI for the euro improved a couple tenths of the Ibex was also positive for one minute before noon, Pepsi has performed better than expected ... The selling pressure on banks remained in the red while the spot rates opened USA climbing more than 2%. Only a figure of consumer confidence in U.S. and the pull there of the financial securities confided in a second vote on the plan during the week pushed the index above the Americans +3% and thus the European banking sector turned and Europe ended the day on emphasizing the positive +1.74% of the FTSE. USA continued to expand closing price increases in the environment of +5% (Brazil exceeded +7%) and highlighting the increases of individual banks: Wachovia +90% +69% Sovereign (reached the top +125%), National City + 28% (the banking sector increased by 15.8%). As you can see, a lot of volatility, and intra daily.

Wednesday --
The proper closure USA and the news of the vote on the plan in the Senate not too encouraged to markets as expected and that is, as I commented last week, Europe does not faithfully follow the pattern of high volatility USA, which is thanks. Only the Ibex hikes and the FTSE gained over 1% during the morning. However, the worst thing was to see the crude above $ 100 (fortunately again after losing) and rumors of bankruptcy of the Italian Unicredit. The American opening, about -1%, did not change the situation in Europe and USA increased its losses but with bad data in construction costs (July to review the double negative) and the very poor ISM manufacturing (the largest drop since 1984) and the German stock market went to -1%, the Ibex continued to climb 1%. At the close, and before the minimum recovery from USA again reliant on the approval of the plan, only the Dax closed with losses in Europe and the Ibex almost reached +2%. After the close there was a hitch caused by rumors of creating a plan to rescue the European banking by French initiative but USA endured little positive and just with light losses, more bulky on the Nasdaq. +65% Of highlighting the rise of National City.

Thursday
The Senate approved the plan and there was that Congress will do it again and what happens on Monday: $ bought and sold stock exchange, in a logical move again soon. But sales of bag in the morning only be noticed in the minimum annual Asia-Japan-USA and in the future because Europe had a positive meeting and continued to maintain optimism even after the repetition of ECB rates and a grim data U.S. weekly unemployment (the worst in 7 years). Europe continued winning differential maintain the rate to the U.S. despite the openness of it at -1% and -2.5% due to arrive at another evil factory orders data (without transport the worst since 11-S, as the above) but in the last hour of trading could not endure more, and sank an emphasis on the Dax -2.5% (which marked a new annual minimum) and the return of bassist Ibex happened to win 182 points in his best moment to lose 180 Closing in a very ugly technical movement to stop again at the gates of losing the 11 mil. USA is much closer to its annual minimum-the-mark and the Nasdaq closed around half of the -4% (unless the Dow, the Nasdaq more). Everything indicates that the U.S. has imported bags has been recently renewed the ban on the sale of securities in discovered 800 ...

And finally the usual press summary:

• The fear of recession strip the oil price below 90 U.S. dollars
• The Bank of Spain calls on banks and boxes that do not give loans
• An Investment safe? with a return of 9.5% per annum
• The bank believes that housing is too expensive: that will not end with the oversupply
• Solbes / acepta/elevar/fondo/garantia/mantiene/estructura/elpepueco/20081003elpepieco_6/Tes "> Solbes accepts raising the guarantee fund if it maintains the structure
• Money / 2008/10/02/economia/1222968567.html "> IMF warning of a" deep and lasting 'recession in the U.S.
• The ECB raised a cut in interest rates before the economic slowdown
• And finally, let's see what evil things stand: The plane's soccer team of Marseille had to pay for the fuel in cash in Madrid

(Unrated)

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Written by Droblo on October 3, 2008 with 238 points.