The week in the markets (6-13 Nov)

Personal comment.

On Friday the markets seemed to launch a feeling of strength: General Motors touched historic lows and reported that without government help would go into 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 the Dow Jones in the three days of a presidential election, which the lower SP on Wednesday and Thursday together is the biggest in two days since 1987 and that the rebound technician, was lowered after so much with little volume, and could give an explanation and feared it was an exception to the trend weekly. The large package of measures the Chinese government at the weekend ($ 600 billion is the fifth of GDP, "it will be another and a few cartridges) extended this positive feeling in Asia and Europe on Monday morning With the exception of Ibex. There are over the joys until the afternoon of Thursday in USA.

The bank Santander on Oct. 28, at the mouth of its CEO Alfredo Saez, refused to 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, the assets in ABN shares, Cepsa, which manages the funds and insurance, at the price demanded. In short, you have bought unsold before and now has been found with a liquidity problem ... (safe somewhere caught in a mortgage-bridge that sounds something) and the expansion is costing him all shareholders in market capitalization million euros. And serve to illustrate what is happening with the economy and that makes this crisis unique: no matter how much lower interest rates, including the 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 tries to tap new. Santander can do that but, how many companies can do the same, how much they will get lower financing rates?

I attached two charts USA, with shaded on the cycles of recession, one is the unemployment rate in the U.S. and its forecast to reach 8%

This is another of the ISM manufacturing index:

In Spain the situation is similar, we have known in the past economic data and much worse if we do if the figures do not even bank bad debt is still worrisome (http://www.economistas.tv/la-morosidad-oficial-no- is-so /) As can be seen in other economic cycles figures have been more hopeless, it could be a cyclical crisis and give more reason for the optimists who think they can get out of it in months. But it is necessary to recover the credit market, without that status data will continue to deteriorate and, as we have seen this week, the suspensions of payments that began in financial, went to banks and then to insurance companies, will reach shops and industrial companies.

And that perception is reversing in the economy and stock markets, the beneficial impact of lower interest rates. If we add to this the fact that I commented on the need to sell assets as they lose value to dispose of cash, accounts for the balance of the week. The best quality of the bag-your-liquidity is now one of the biggest obstacles to the upward trend because it is one of the few markets to resort to if you need cash, even at the level of citizens is easier to sell shares even though much is lost to try to sell some other property. As positive aspects of this bad stock market week, two factors: the low volume on downhill (although it can mean that we are still far from the capitulation of course also of the soil) and the finding by the Telecoms sector as a refuge-of-date valid. Now we have to have faith in the famous meeting this weekend but particularly in the aspect stock market got more faith in the possible manipulation of the bullish effect by next Friday 21 to the expiration of some futures (which is the Ibex) and options almost all indices. In fact, statistically the next week is a pretty favorable to the stock exchanges.

Finally, it is very remarkable, despite a rebound from yesterday evening, the lower crude (although the effect of the weakness of € and other causes less understandable its effect on the price of a liter of fuel is less noticeable) of gas natural and generally of all raw materials. This is no longer seen as something positive on the stock exchanges because it's getting a lot of problems in economies where there are a lot of money invested ... the prime example is Russia. You may see manipulative maneuvers to prevent the oil-icon of all raw materials-stop-down and personally I hope to make a speculative-operation in a possible rebound in oil prices and gold. (More ...)

Droblo written by the November 14, 2008 with 337 reviews
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What inherits Obama

The other day I read that the American figure that the state is being spent on trying to resolve the financial crisis is already 2.7 billion dollars, and that in a country that already, even before all this and much needed money. He also knew the number of jobs: 524 thousand new unemployed in two months. And I began to search for information on the actual state of U.S. finances. Let a couple of numbers and put all the zeros, that more than a trillion translates as billions and trillions when we lees and I had to document only on American websites:

• A day on November 11 at 09.14, the debt is U.S. $ 10.635.794.969.002, an amount that is increasing 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 billion to 10 had to fix it. Currently 500.000.000.000 is increasing each month since October, a figure of growth that is expected to be sharply reduced because it is what they grew on average annually since 2003. In September the U.S. government expanded, very appropriately, the limit of indebtedness from 10.6 trillion to 11.3 but everything points that will run short in 2009

• The estimated GDP-American 2007 is 13,800,000,000,000, then the current debt is around 75% of GDP and it seems to get worse closer to 90% only by increasing the debt if we have to account that GDP may actually be reduced if there is recession, this could be even worse. They are not the all-time highs as can be seen in figure but let's remember that it was exceeded 100% due to World War II:

However, many countries are worse off and for years (from among the "big" Japan is close to 200%, in Europe and Italy, Belgium and Greece around 100%) the big problem is that this is only the debt State that is a fraction of the total debt of banks, families and American companies estimate is about 50,000,000,000,000, almost 5 times more than the public and more than 3 times the entire GDP. In Spain, where we have this sense of indebtedness total private debt is double the GDP. (More ...)

Droblo written by the November 11, 2008 with 243 comments
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The week in the markets (31 Oct - 6Nov)

Personal comment.

After the miracle that was expected (and confirmed) this week, which is called a black and Hussein Obama becomes president of the USA (another miracle is that she does), I received news of aid from our government the mortgage and I thought if there were any other one this week and the government would have done if we are from here when called for direct aid to the people. But I am afraid that has not happened: the government first decided to deny the crisis and support the banking industry after a series of measures hardly justifiable to the alleged strength of our financial sector. Now they have submitted results boxes and banks and profits have continued to be astronomical (if they are not means that aid has not been a change of transparency, still missing that no entity in Spain this loss when there are solutions in other countries more solid than ours) decide to "help" directly to individual mortgaged helping them go through this slump. But once again become a more aid for banks to the public. I think in the forum has already been felt all the opinions on this subject and I must also say that very acutely so I just want to emphasize again that the prevailing idea is something like: "We are in the worst of the crisis, guaranteed deposits until 2010 and helped the mortgaged two years and then with the revival that will fix everything is "What will happen if those unemployed after a two-year moratorium can not find work? For this reason there is no response.

Of course it is desirable that all this is a bad streak but most cyclical of time this seems far removed from reality. The numbers continue to decline week to week and what is valued as improvement may simply be adjustments after a very sharp. Fixed in this original graphic where we can see how it appears the trend for banks to borrow from the Federal Reserve is changing, but if we compare with other periods in which there is not even needed to resort to the EDF, it is easy to appreciate the level of banking crisis of the USA and alejadísimo that this is settled:

I do not see any signal that enables believe that this crisis will last only a few months. E insist not to confuse the bag (which may well bounce for a few weeks as he was bouncing a few days) with the real economy. The macro data are disastrous, unreservedly and hope that the lowering of rates might change, whether justified or not-only be realized within several months, and that if this drives the rebate credit. If not, only reduce the benefits of saving without encouraging the activity to the investor. And the worst thing is that the states are running out of room for maneuver as 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 pothole, a historic opportunity to buy, but months back in the upward path" is being installed. And yet this week (except in Europe, from Thursday to Thursday-closed flat, with some better rates and other worse) has come to a negative balance. And that if we look at the percentage rise since we have been minimal, is notable because the descent was very sharp. And was the upward trend in November and the maximum rise (Tuesday) after a day of low volatility (Monday). But neither with the help of central banks has been with the resistance led by commenting two weeks ago and is still stuck in a dangerous area. The Dax rose well above 5000 but has been unable to keep them in the SP and the arrival in 1000 has been the perfect excuse to very aggressive sales. The Dow and the Ibex nor have approached the 10 mil ...

The fear is still there as we saw on Wednesday because although statistically markets operate best on the day following the victory of a Republican than a Democrat the truth is that it should have been positive that the forecasts were met and there were no surprises, however these As of last week to buy the rumor and sell the news is becoming a habit and this caused a deep bearish movement. As I commented last week, while there are rises in quiet but there are a lot of threat falls 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 to envy to keep clear at these levels because I keep seeing danger to both sides. Today it is known the figure of unemployed last month and is feared to be disastrous, most of -200 thousand. As a curious statistic you remember that it was not a bad figure since March 2003, just the month in which he died the previous bearish trend and started the bull that ended in the fall of 2007.

And with regard to 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. It seems to me that an abnormality was corrected when 2009 arrives and there is much need for liquidity in the face of squaring balance at the end of the year. The Euribor rate comparing to a year with the intervention to 14 days of the ECB should better compare the returns offered by your bank for a year and what you pay for mortgages at that same 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 a liability is so great that the differential between what it receives a customer with money and what they should pay that money for a mortgage is minimal. One consolation: yesterday in U.S. rates were at 1% and libor to 12 months to 2.84 (a 184% more), here had to 3.25 and the Euribor to 12 months to 4.70 (a 44.62% increase). But much remains could be even worse ...

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Written by Droblo on November 7, 2008 with 297 comments
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The Economics of Homer (II)

Some economists argue that bureaucracy and the public sector has a very strong tendency to increase their budgets beyond what is considered efficient.

I do not know your work, but mine have cut costs wherever they can, in travel, meals, recruitment, office supplies, telephone, Christmas (yes, it is already here!), And so on. Should we not demand the same from those who are managing our taxes?. Ojo, I do not speak at the official, speaking on a strategic level and move toward smart spending, leaving the studies of the degree of hybridization between the common quail and the Japanese quail for better times.

So after this pataleta by the waste of government to step in the press briefing a day that passes the American elections, touching look at the economy of truth.

• Trichet would lower rates today by 0.5% (at 3.25%) and place them at 2% in 2009
• Ordonez estimates that banks can absorb up to 9% of delinquencies
• Bankinter contemplates returning to some customers for losses by Lehman
• Wall Street slows dry after the End of the Obama effect rebound?
• Industrial production suffers the second largest drop in 15 years
• The boxes prefer to pay exorbitant rates before they go to the bottom of the Government

Written by Carlos Lopez on Nov. 6, 2008 with 282 reviews
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Miscalculations

An ancient legend has it Sheram, the Indian prince, was so astonished when they learned the game of chess, who wanted to reward generously Sessa, the inventor of that entertainment. He said: "Ask me anything you want." Sessa replied: "Sovereign, which sends me a grain of wheat delivered by the first section of the board, two for second, four for third, eight in the fourth, and so on until the box 64".

The prince could not please, because the result of that operation S = 1 + 2 + 4 + + 2 ... ^{63 is} about 18 trillion grains. To get that would sow the entire Earth 65 times.

Sometimes I think that some banks have been passed as the prince's story, which first promised the money and then we have estimated and that is not what they had or had human form that he had.

In February 2006 there was a political controversy in the United States following the purchase of the management of six major ports by a Dubai state-owned. The President Bush hailed the operation but the Congress, arguing national security, managed to go delaying the agreement until finally a U.S. company took over the contract. Many Americans were afraid that Dubai-ally regarded by the government but in Muslim-majority manage something as important as the safety of the major seaports of the country.

However, in the financial world, the main U.S. lead months and months looking for money regardless of their origin. The liquidity crisis of confidence and has given back to the tortilla and not know what Americans think of walking but no executives do not disclose financial problems to the savings (and therefore also the management of pensions in a country where they are mostly private), the decision to grant credits and direction of investment by major banks in the world (in the list of those who have received money from Asia are also the Swiss UBS and Britain's Barclays) are largely mediated by governments that are dictatorships (such as UAE and Kuwait or China where there are elections but women could not vote), representing a population largely anti-Western and whose geostrategic interests (such as Chinese) are conflicting with the USA interests.

To top the liquidity available in the U.S. for equities (in the fixed income process is not well) according to official figures has been largely designed by fund managers to buy outside the country:

In the first eight months investors Americans took 68 bn. $ Of equity funds, of which 51.8 bn. were funds that invested in U.S. stock market. A year ago was much worse: entries from 81 bn. $ In equity funds with sales of 16.4 bn. funds that invested in U.S. stock market.

That is, in 2007 bought a large amount of money outside the U.S. and made money out of the bag USA. It could have been by $ distrust toward a thought (that was correct until very recently) of higher returns on assets in yen and € but it is symptomatic: USA managers draw money from the American equities even uptrend and now begging for money Arabic and Chinese.

Should not because the U.S. authorities in their efforts to monitor these flows interventionist? And investors should not arise in Asia that might not be best to buy where there sell? And the big question: Will there be enough money in the world to address this or as the story will have to wait 65 crops?

PS: And since today is a day in which as noted is consummated a change in the chairmanship USA and we're talking about miscalculations might be interesting to recall the cost of the Iraq intervention that the Nobel JOSEPH E. STIGLITZ estimated in March this year and $ 3 trillion according to some voices that should already be in the 4 billion. Money which, remember, has been thrown sunk by as many taxes they pay to state that some companies have won contracts in Iraq, will not arrive or 10% of that figure. Who says that the reason for all the depth of this crisis can not be in this cost themselves when U.S. authorities argue that less than 1 trillion will fix the financial crisis?

And to complete the usual summary of the press in which we are all aware of as he lay on the economy Obama's victory:

• Oil soared more than 10% and again surpasses the $ 70 per barrel
• Martins offers some creditors to pay only 50% of its debt in exchange for being the first to recover
• The price of housing down more than 10% after 14 months of fall and placed in a minimum of three years
• The foreclosure moratorium for the unemployed will cost between 100 and 400 million
• Obama's victory opens the way for a new relationship with Spain
• The march green: Gamesa, I. Renewable, EDF, EDP and Acciona raised on the stock exchange before the new 'President'
• Fagor sacrificed pay extra to pay for retirement
• Solbes: Spain has "exhausted" the scope for anti-measures
• The sale of assets to E. ON of Endesa profit shoots a 243.8%
• Caja Madrid announced the postponement of the banks placers Cibeles

Written by Droblo on November 5, 2008 with 259 comments
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The week in the markets (17-23 October)

Personal comment .-

Last Friday, shares of ING in Amsterdam stock market suffered strong selling pressure (at the close lost 27%) and rumoreaba were urgently in need of capital. The bank's management held a press conference to give figures for the financial soundness of the institution. Over the weekend the Dutch state has injected 10 billion € in the bank. This time no one can accuse the situation of the bank to a massive withdrawal of deposits since the Dutch state had guaranteed all loans until 2009 and, in fact, the rumor did not say that ING suspend payments but that it would expand capital and the Netherlands. So, what was said at the press conference on Friday was false. Once again, as he lied with Bear Stearns, Fortis or Northern Rock. In all countries the same process: the trend is more reliable stock of a bank can say that what the authorities. And no one takes responsibility for the lies to shareholders. ¿Conclusion? At the moment there is confidence in the statements that assume the mismanagement of private banking but do Confidence in the financial system? What would be weird having it (the text of the press):

"The measure was taken just ten days after the same ING took control of the assets of the failed bank islándico Kaupthing. At that time, a communique from the bank said it did from a position of strength because it had more than $ 1.8 trillion in assets and 85 million customers around the world. "

And the British Barclays state offered him money after assuming the risk of buying the spoils of Lehman and I am sure if the Santander would like the Spanish state would give money with which to finance their adventures in high-risk British and American ...

Another topic, it appears that Spain wants Arab countries to buy state debt, up there perfect, but coincides in time with the purchase of the Spanish state debt from the banks. Ie Spain with its own guarantee fund picks, with that money buy what they do not sell their banks, trusts that these banks use the money to increase the credit and that those who capture the credit it back to the state via taxes ... I know that but as I said, Why do so many middlemen? If Spain is debt, which is to inject money into society and not to those banks which can not be compelled to increase the credit. Lower taxes or subsidies for mortgages and loans before recapitalize banks would be a lot more social and above all faster to end the crisis. Instead, we still do not return to those who were negative ...

As to bag it is clear that we have entered a range that is below a support at least a year and are now above the 10 thousand of Ibex (and the Dow again be paired), 5000's Dax or 1000 of SP500, breaking that level would accelerate the movement in the short (as we have seen this Thursday when the Ibex lost its previous annual minimum) without necessarily changing the trend in the medium term, which remains bearish aplastantemente. As it is not all bag, I think it is noteworthy that gold, rather than value refuge from the crisis, is another asset that is at minimum a year. And the explanation, apart from the rising and falling $ crude, which usually follows, is that gold has traditionally been the refuge against inflation and recession may now be discounted prices that seem been removed as a problem. This is Scramble to many investors and funds who once were compensated for losses in equities with earnings of metals, oil or food ... and even within the equities exchanges between emerging and non emerging. This year the losses are accumulated in a variety of products.

Finally, it was assumed that the October 29 the FED will cut rates and that the ECB will make the Nov. 6. The bearish trend continues and with it the Euribor. Hopefully crude oil continue to support the lowering of inflation although I must admit last week I was too optimistic about the price of petrol and I am confused by looking at graphics fiarme USA and a poor source of the Internet for transforming a gallon in his corresponding liters. And to top it all, the $ is going against us. And it's really odd that just before the elections the U.S. $, despite the huge deficit and its rates so low, is in the $ maximum of two years.

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Written by Droblo on October 24, 2008 with 438 reviews
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