Personal comment.
On Friday, the markets appeared to throw a sense of strength: General Motors touched lows and reported that no government assistance would go to the bankruptcy and unemployment in the U.S. grew in two months in more than half a million people and yet the stock market rose. However, if one takes into account that since 1896 he had never lost in both the Dow Jones three days after a presidential election, the SP down together on Wednesday and Thursday is the highest in two days since 1987 and the rebound technical after he was so down-low volume, and could give an explanation and it was feared an exception to the weekly trend. The large package of measures the Chinese government of the weekend (from $ 600 billion is the fifth of GDP, which would be another and a few cartridges) extended this feeling positive in Asia and Europe on Monday morning with the exception of Ibex. There's no joy until the afternoon of Thursday in USA.
The bank Santander on October 28, at the mouth of its CEO Alfredo Sáez, denied need more capital. On November 10 announced an expansion. In these few days has been convinced of the impossibility of selling the Bank of Venezuela, shared ABN assets, Cepsa, the fund management and insurance, the price demanded. In short, he has bought unsold before and now has met with a liquidity problem ... (safe somewhere caught in a mortgage-bridge that sounds something) and expanding it is costing all shareholders million in market capitalization euros. And serve to illustrate what is happening with the economy and that makes this crisis only: no matter how much lower interest rates, including EURIBOR, if that cheaper finance is not paid and if there is interest in using this possible liquidity to invest. Until Santander wants to sell assets and unable to do so raises the liquidity of its shareholders or attempts to capture new ones. Santander can do that, but how many companies can do the same, how much funding will get lower rates?
I attached two charts USA, with shading on the cycles of recession, one is the unemployment rate in the U.S. and its forecast to reach 8%
The other is the ISM manufacturing index:
In Spain the situation is similar at other times we have seen much worse economic data and if the figures do not even the bank bad debt is still worrying (http://www.economistas.tv/la-morosidad-oficial-no- is-so /) As shown in the figures economic cycles have been more desperate, it might be a cyclical crisis and give more reason to feel optimistic that you can leave it in months. But it is necessary to recover the credit market, without this condition will worsen and data, as we have seen this week, the suspension of payments that began in financial, banking and then went on to insurance companies, will reach shops and industrial companies.
And that perception is destroying the economy and stock markets, the beneficial effect of lower interest rates. If we add to that the fact that I said the need to sell assets in order to have lost value of cash, accounts for the balance of the week. The best quality of the bag-your-liquidity now is one of the greatest obstacles to the upward trend since it is one of the few markets to draw cash if needed, even at the level of citizens is even easier to sell shares to lose a lot to try to sell another property. As positive aspects of this bad stock weeks, two factors: the low volume decreases (although it can also mean that we remain far from the capitulation later also from the ground) and the finding of the telecoms sector as a safe-to-date available. Now we have to have faith in the famous reunion this weekend but particularly in the aspect I have more faith in market potential manipulation bullish next Friday 21 expiration of the effect of some future (which is the Ibex) and options almost all indices. In fact, statistically the next weeks is a very friendly bags.
Finally, it is very important, despite the rebound yesterday afternoon, falling crude oil (although the effect of the weak € and other causes less understandable its effect on the price of a liter of fuel is less noticeable), gas natural and, in general, all the raw materials. This is no longer seen as something positive because it's getting the bags in many economies where there is much money ... the most important example is Russia. You may see manipulative maneuvers to prevent the oil-icon of all raw materials and lower-stop-confident person to make a speculation in a possible rebound in oil prices and gold. (More ...)
Written by Droblo on November 14, 2008 with 337 comments
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The Springfield Nuclear Power Plant where Homer works, shows us an excellent opportunity to discuss the monopolies and competition.
In this monopoly, it has been primarily by two factors. First by the high barriers to entry (not exactly cheap to build a nuclear plant and will need several decades to be paid off) and second because there are no substitutes (for Springfield have total dependence on electricity produced by the plant).
In one of the best episodes of the Simpsons (who shot Mr. Burns, Part 1). Montgomery Burns, the owner of the nuclear learns that one of the substitutes for the electric light was threatening its dominant position by buying and solves the competition:
Smithers: Well, sir, certainly has defeated all his enemies: the school, tavern, residence for the elderly ... should be very proud.
Burns: [looking at the money from his wallet] No, not while my great nemesis continue offering our customers free light, heat and energy. I call this enemy ... The Sun since the beginning of time man has yearned to destroy the sun. Siguiete ... And I will block it.
Smithers: Very good!
Bums: Imagine, Smithers: Electricity and heating power running all day
Smithers: But sir! All plants and trees will die, we no longer deaf owls ... and the sundial of the people will be useless. I do not want to be part of this project is inconceivably evil.
Monopolies are not always as excessive, dangerous and unfair. Sometimes it is more of a company with the creation of a "cartel". One of the best known is made up of the major OPEC oil-exporting countries (75% control of oil reserves) which will cut production enough to cause a price increase. That is the basis of a monopoly, its ability to influence the price of goods.
Sometimes monopolies are simply make good business, as was the case of the agreement between Google and Yahoo! finally broke last week because of the pressures that were legal. Another good example was the aggressive distribution strategy from Microsoft that led to the European courts for more than 10 years.
In the interbank, there is no monopoly, but sometimes I feel that act as a cartel What is not explained whether the Euribor is marking a difference with respect to such a high official price of money?. Remember that the official price money in Europe is at 3.25%, we are talking about a differential of more than 1.25%. The number of operations recently in the interbank cross is so low that if a few banks are able to agree the value of the top Euribor above its natural value. (more ...)
Written by Carlos Lopez on November 12, 2008 with 291 comments
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The other day I read that the figure that the U.S. state is being spent on trying to resolve the financial crisis is already 2.7 billion dollars, and that in a country that even before all this and much needed money. He also knew the number of jobs: 524 thousand new unemployed in two months. And I looked for information on the actual situation of finance USA. Let a couple of numbers and put all the zeros, that more than one trillion translates as billions and trillions when we lees and I had to document only American websites:
- On November 11 days to 09.14, the debt is U.S. $ 10.635.794.969.002 amount that increases second to second, and in fact there is a ticking clock that will (http://en.wikipedia.org/wiki / National_Debt_Clock) and discussed here not long ago that going from 9 to 10 billion had to fix it. Currently increases 500.000.000.000 month since October, a figure that is expected to increase sharply reduced because it is what they grew on average annually since 2003. In September, the U.S. government extended, very appropriately, the limit of debt from 10.6 trillion to 11.3 but it seems that it fell short in 2009
- The estimated GDP for 2007 is U.S. 13,800,000,000,000, then the current debt is around 75% of GDP and it seems to get worse closer to 90% just by increasing the debt, if we also take into that GDP may actually be reduced if there is recession, this could be even worse. The highs are not as shown in the chart but we must remember that only exceeded 100% due to World War:
However, many countries are worse off and for years (from the "big" Japan is close to 200%, and in Italy, Belgium and Greece around 100%) the big problem is that this is only the debt State which is a fraction of the total debt of banks, families and American businesses is estimated that approximately 50,000,000,000,000, nearly 5 times more than the public and more than 3 times the entire GDP. In Spain, where we have this feeling of total debt private debt is double the GDP. (More ...)
Written by Droblo on November 11, 2008 with 243 comments
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Personal comment.
After the miracle that was expected (and confirmed) this week, which is called a black Hussein Obama and get to the president of USA (another miracle will do so well), I received news of the aid of our government the mortgage and I thought if there were any other one this week and the government have gone from here when called for direct aid to the people. But I fear not the case: the government decided to deny the crisis first and then support the bank with a series of measures hardly justifiable to the alleged strength of our financial sector. Now that results have boxes and banks and profits have continued to be astronomical (if they are not imply that aid has not been a change in transparency, any entity which is still missing in Spain this loss when it is stronger in other countries that we) decided to "help" directly to certain mortgage helping them go through this downturn. But once again become a more aid for banks to citizens. I think the forum has already been felt all of opinion on this issue and I must say that very sharply so I just want to emphasize again that the prevailing idea is something like: "We are in the worst of the crisis, the guarantee deposits until 2010 and help the mortgage and two years later with the revival that will all be fine, "What will happen if those unemployed after a moratorium of two years can not find work? For that there is no answer.
Of course it is desirable that all this is more a cyclical rough patch but for the moment this seems far removed from reality. The figures continue to worsen every week and what is valued as improvement after adjustments may simply be a very sharp. Look at this original graphic where we can see how it appears the tendency of banks to borrow from the Federal Reserve is changing, but if we compare with other periods in which not even need to resort to EDF, it is easy to appreciate the level of banking crisis the USA and alejadísimo that this is settled:
I do not see any signs to believe that this crisis will last only a few months. E insist not confuse the stock market (which may well bounce for a few weeks as he was bounced a few days) with the real economy. The macro data are disastrous, unreservedly and hope that the discount-rate change can be justified or not, just realized for many months, and that if it lowers the credit drives. If not, only reduce the benefits of saving activity without encouraging investors. The worst thing is that the states are running out of room for maneuver in Spain itself has acknowledged Solbes (http://www.elpais.com/articulo/economia/Solbes/dice/habra/recursos/afrontar/crisis/elpepueco / 20081105elpepieco_6/Tes)
Turning to the bag, the idea of "This is a bump, a historic opportunity to buy, but months back upward path" is being installed. And yet this week (except in Europe, Thursday-closed flat Thursday, with some other better and worse) has to have a negative balance. And what if we look at the percentage increase since we have been minimal, the drop is notable because it was very abrupt. And they met the upward trend in November and rise up to (Tuesday) after a day of low volatility (Monday). But even with the help of central banks has been with the resistance that led commenting two weeks ago and is still stuck in a dangerous area. The Dax rose well above the 5000 but was unable to keep the SP and the arrival in 1000 was the perfect excuse to very aggressive sales. The Dow and the Ibex or have approached the 10 mil ...
The fear is still there and as we saw on Wednesday that although statistically the markets work better on the day following the victory of a Republican than a Democrat is that the truth should have been positive expectations were met and there were no surprises, but these recent weeks about buying the rumor and sell the news is becoming a habit and this caused deep bass movement. As I said last week, while there is calm but rising threat falls in there in a hurry to sell. And he has returned to fulfill. However, I detect many voices that speak of buying in the fall of the year-end rally is possible .... I remain neutral and envy it is clear that at these levels because I keep seeing danger to both sides. Today we know the data of unemployment last month and is feared to be disastrous, more than -200 thousand. As you recall that statistical curiosity was not so bad a figure since March 2003, just months in the death of the previous bearish trend upward and eventually began in fall 2007.
And what about the Euribor, a point: that is truly novel now has one year deposits in financial institutions and which are due before 2010 and thus are guaranteed by the state, giving a return similar to the cost of a mortgage. I think that an abnormality is corrected when the 2009 and not much need for liquidity to match balance at the end of the year. The Euribor rate comparing with a year to 14 days of intervention by the ECB should better compare the profitability offered by your bank to a year and what it pays in the same mortgage bank and verify that the differential is not so much . Not to defend the banks with this, just describe a reality, the battle to capture liability is so great that the difference between what a customer receives money and what they must pay money for a mortgage is minimal. One consolation: yesterday in U.S. rates were at 1% and 12 months at LIBOR 2.84 (a 184% increase), here have andalusia 3.25 and Euribor 12 months to 4.70 (a 44.62% increase). But still could be much worse ...
(more ...)
Written by Droblo on November 7, 2008 with 297 comments
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Personal
Sometimes it seems that markets have entered a dynamic so strange that even acting against what would be logical: OPEC lowers production and instead of rising, oil low, the stock market collapses and gold instead of value refuge also collapses, USA has the largest deficit of the world, which will remain for years, with a central bank is taking the risk that millions of assets that nobody wants and that its currency, the dollar reaches maximum years . I'm beginning to think that towards the end of the year and more than likely out of money from investment funds what is happening is simply that all positions are rolled back in search of liquidity. And of course, as the lower percentage is more active and feeds back the movement. And also to push sales in other non-stock, why not work coverage. But the process also works in reverse as if the market rises there is less interest in selling, it's like he has a debt and has only one floor, as the low price floor is rushing to sell before it is worth less than debt but if you have the floor suddenly rises in price no longer needs to sell because you can get the liquidity it needs to guarantee that floor without the need to get rid of him. This causes a lot of volatility.
But why not just the irrationalities: Now the stock market likes that the crude and depressed when they go down and the same with the €, as opposed to months, Cepsa (much smaller and 7 times lower profit) has reached worth more Repsol stock exchange by the collapse of it, (I remember when Telepizza was worth more than Domino's Pizza or more than Terra BBVA) and according to Bespoke 10% of companies that have submitted results in line with have completed the expected date of publication with an average drop of 1.80% (as if the results were bad). However, the greatest example is in Volkswagen has come to a PER of 90 when the Dax PER this year is less than 8 and Daimler has 3.7 and have even more value for all capitalization companies producing cars world together. Are we actually learning something from all this if we continue to promote these bubbles so dangerous?
Beyond these factors, there is a rational exercise we can do each of us self-respondents. Many securities that are in 2002 prices and tempt us to make some investment but ask: Is the economy better or worse than in those years? And most importantly, confidence in our exit the doldrums, is now more or less than then? I remember that then the biggest economic problem was the fear of terrorism and would start a war in Iraq ... we still have far more that all the problems we have been talking for months: credit crisis, high inflation, housing bubble and so on. and added to in recent weeks: Unemployment worrying emerging markets to collapse, government deficits astronomical errors in assuming the management of banks and so on. Come on, that same stock market rises, that is something unpredictable at least for me, but since then it is clear that the economy is no real cause for optimism. And that should be emphasized that in the USA have left two consecutive home prices data that give a respite to the bearish trend, at least in this sector and in this country ...
The summary of the week can be summarized in a nutshell: Friday marked the annual minimum bags still except China and, curiously, the Dow Jones and SP500. On Monday, China, Europe and Brazil all signed new minimum but not American. Tuesday marked the first bars minimum Japan and China but no longer. However, if we consider the future if both the Dow Jones SP500 marked the minimum 5 years and a half but perhaps had some interests that do not want to schedule regular mark. On Tuesday, thanks to rumors of a sharp drop in rates in Japan, the USA had the second highest increase in history. Europe rose on Wednesday, but not much USA, which rises in minutes apart from the lowering of the FED. And on Thursday, thanks mainly to Japan, continued to climb. Conclusion ¿? After so many vicissitudes week (Thursday to Thursday) has had a very positive (except the Ibex ended flat and low in China these days, a total of 6%, all have had remarkable progress) and many believe it has passed the worse in October and has complied with its reputation for the month of "crash" but also of the soil ... I keep seeing the resistance who spoke last week (sp of 1000, 10 thousand of Ibex and the Dow's 5000 Dax) and still there have only been exceeded, on Thursday for a few minutes, the Dax, which this week has behaved in banana republic rate plan for the subject of Volkswagen.
And just months and despite what has been disastrous and has not observed any statistically negative-except for those who want to invest, we can be confident that it will meet these data show that in November means that it is the best month of the year for the stock exchange since 1980:
However, against my custom, I will "get wet" a little more possible to bet on a bullish rally in November or even early January and be more secure is important to see what makes the bags on the first day of November . If you go up, it means nothing special but if you fall, it is better to keep out of the bag because that means the funds are still undoing positions (the term that is becoming fashionable is "desapalancamiento") and not intended to cash equities. So my advice is to wait until the end of Monday or Tuesday that the opening of comprobéis not dropped, before going to buy, if you decide to buy.
(more ...)
Written by Droblo on October 31, 2008 with 247 comments
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Thus closed.
- Dow 9,067.27 +891.50 +10.90%
- Nasdaq 1,649.47 +143.57 +9.53%
- S & P 500 940.41 +91.49 +10.78%
Now it remains to be seen if the FED cuts rates to 1% which is what the markets and have provided a reason for this rise. Until then, I encourage you to read this article in the soap opera Volkswagen stock madness: Volkswagen is worth as much as all the Ibex and the comment Droblo (quite technical), which tomorrow will tell us an interesting article on the bag and November.
# 200, droblo
October 28, 2008, at 18:02.
To change the subject, an explanation (not mine, is a study of a large Spanish bank) why the surreal VOLSKWAGEN theme:
Porche has announced that it has 42.6% of shares and an additional 31.5% in cash settled options1. Banks that have sold these options should theoretically have covered their position by buying from an equivalent amount in cash (ie it can be assumed that the other 31.5% of these banks do Volks). The local government of Lower Saxony has a 20.08%.
The rest up to 100%, about 6%, is what is left of Free Float considering that passive funds that replicate the indexes where is Volks (DAX, Euro Stoxx, FTSE Europe, MSCI) also should have a percentage of Free Float this. That is, the real Free Float, after accounting for index trackers, is minimal (close to zero).
Ie that the end is only a 6% market shares in the company, but the programs replcian rates every time they have to buy VOLKS arbitrate on the Dax, where values are 30 and it weighs so much that NO PAPER nutshell ...
and we know all that is fucking ...
And to finish a good news for our experienced muldiviseros: The Bank of Japan is studying the first drop in rates since 2001.
Written by Carlos Lopez on October 28, 2008 33 comments
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