World economy talk

[chrismarte]

ya one thing people forget is that when prices rise too high or fall too low powerful interests can intervene

Brent shouldnt be at $100 (coz of weak global demand and no supply problem) but powerful interests are protecting that level

eto uls as of June 11

Crude Oil
Brent US$101.52 down by US$-1.81
Tapis US$107.93 down by US$-1.02
WTI US$95.40 down by US$-0.42

[uls]

why post yesterday's price?

anyway my point is brent should be below $100 if it was based entirely on supply demand fundamentals

[wowiesy]

why post yesterday's price?

anyway my point is brent should be below $100 if it was based entirely on supply demand fundamentals

Ang kainis pumalo 43 ang usd. Paktay na naman costing namin nito... Hope it corrects and swings back in to 41 level....

[Monseratto]

volatile session last night

Good thing it is a holiday today, otherwise the local bourse would've contunued it's downward spiral...

Is PH stock market bull run over?
By Henry Ong
Philippine Daily Inquirer
4:41 am | Wednesday, June 12th, 2013


Question: I have bought some stocks when the market was at 7,000 level. I was hoping the market will go up further but it has been falling sharply since then. I already incurred losses on paper. I plan to buy more but I am afraid that the market may fall further. Can you advise me?—Vira Factolerin by e-mail
Answer: Managing your risk in a volatile market is key to successful trading. In a falling market, it is not pleasant to watch your stocks lose in value every day without you doing anything.

If you hold on to your shares and hope that the share price will recover while the market continues to sink deeper, you may never be able to salvage your investment or it may take some time for you to regain it. For example, if your stock has lost 50 percent in value, you may have to earn double or 100 percent to recover your capital.

If you plan to buy more shares to average down, you may just be increasing your risks unless you have a lot of money to spare and you don’t mind getting your money stuck for a long time without earning anything.

Buying more shares when a stock is plummeting is like catching a falling knife. Yes, there are situations when a stock suddenly reverses and allows you to get out alive but what if the market continues to fall?

Perhaps, it may not be a bad idea to cut your losses now, protect your capital. Buy again when there is a clearer direction of recovery.

Why is the market falling despite all the good news about better-than-expected GDP and investment upgrades? All of these have already been discounted by the market, as reflected in the share prices. The market has anticipated this that it was willing to pay premium for future earnings at 26x P/E, making Philippine stocks the most expensive in Asia.

Now, the market has been falling because of fears that interest rates are rising soon after the US Federal Reserve hinted it might cut purchases of bonds and treasuries in the market under the Quantitative Easing (QE) program.

The QE program is a non-traditional monetary tool used by the US Federal Reserve to stimulate the economy by printing money to buy bonds from banks and provide them available cash for lending. Reduction in bond buying will mean reduction of liquidity in the system, which will increase interest rates.

Why reduce liquidity? The US Federal Reserve noted that the US economy had started to improve following strong employment data results last month. When an economy is recovering and you have a situation where there is too much liquidity in the system, higher demand for goods and services may trigger inflation to rise very fast. This is one reason why the US Federal Reserve plans to taper off the QE Program as soon as further data would later on indicate that the US economy is on its way to recovery.

The reduction in QE has not happened yet but investors are already anticipating this by taking profits. Uncertainties will push investors to unload and raise cash for the meantime. Less liquidity in the system will eventually bring back market P/E to normal levels. The current market P/E of 20x may still be expensive under this scenario hence there may still be room for further decline in the future.

If this kind of sentiment will linger in the next few months, the market may trade sideways on downward bias as investors will prefer to stay on the sidelines. Current market rally should be limited up to 7,000 initially. A breakout is possible but be careful. Watch the volume carefully. Any rally must be supported by strong volume. The recent low of 6,393 will be tested as support should there be another round of massive selling again. Once this is broken, there is a possibility the market may lose another 1,000 points to 5,400.

If you have some stocks that you want to get rid of, you can take advantage of any rally as a selling opportunity. Sell at the best price possible to minimize your losses. Raise as much cash as possible for your next trade.

In a volatile market like this, there are many opportunities for profitable trade. You can trade the market by buying oversold stocks, that is, when a stock is heavily beaten and sell them when they recover on the way up. You may need to use chart as a guide to identify your support and resistance.

For those who are more conservative, this is the best time to employ the peso cost averaging strategy. This strategy works best when the share price is falling. Under this strategy, you can allocate fixed amount of investment regularly to buy a certain stock.

You will buy stocks regularly regardless of the share price. If the share price falls, you will be able to buy more shares. If the share price increases, you will get less number of shares. During a period of consolidation, you should be able to get good cost average that will beat the market.

[uls]

from the article above:

The QE program is a non-traditional monetary tool used by the US Federal Reserve to stimulate the economy by printing money to buy bonds from banks and provide them available cash for lending. Reduction in bond buying will mean reduction of liquidity in the system, which will increase interest rates

which is why i posted this the other day:

this is making dollars flow back to the US

watch the US 10 yr yield

--

re the Fed buying assets from banks

actually banks aren't lending much

that's why US inflation is low

banks deposited the money at the Fed earning 0.25%

[uls]

from the article above:

The reduction in QE has not happened yet but investors are already anticipating this by taking profits.

that's why foreign funds are getting out of emerging markets

from page 756

tons of money flowing out of emerging markets

money was driven into EM the last few years in search of yield coz of low yields in developed markets (coz of central bank monetary policy)

the US economy is now improving so the Fed can reduce monetary stimulus soon

the US 10 yr is already reacting to that expectation



rising US bond yield will stop the search for yield in EM

the search for yield resulted in massive dollar inflow into EM which strengthened EM currencies

now EM currencies have fallen against the USD

the outflow is taking place

[uls]

i'll repost this (from previous page}

if low yields in the US forced capital to seek higher yield in emerging markets what happens when US yields begin to rise?

[uls]

like i said USDJPY drives everything

earlier tonight US equities opened higher on rising USDJPY then lost gains on falling USDJPY

so how correlated are USDJPY and US equities?

check this out:



the tight correlation started November last year

[Monseratto]

Another massacre for the local bourse later...

NEW YORK (Reuters) - U.S. stocks fell on Wednesday, with the Dow sliding more than 100 points on another volatile day as traders extended a selloff driven by concern about central banks winding down their stimulus measures.

Traders have kept their focus on the possibility that the Federal Reserve will reduce its monthly bond purchases in coming months, removing one of the pillars of the U.S. stock market's rally this year.

These worries have sparked volatility and triggered a pullback in U.S. stock indexes from historic highs.

The Dow on Wednesday swung more than 200 points for the seventh time in the past 15 trading days, going back to Fed Chairman Ben Bernanke's latest congressional testimony on May 22. At the time, he hinted that the Fed may begin to reduce its quantitative easing - consisting of $85 billion a month in bond purchases - in the coming months.

"There are concerns about the path for the Fed and the markets that benefited from QE and how those trades will unwind," said Paul Zemsky, head of asset allocation at ING Investment Management in New York.

"The level of uncertainty has gone up tremendously in the last month."

The CBOE Volatility Index (.VIX), known as the VIX, shot up 8.9 percent to 18.59. The VIX has jumped more than 20 percent so far this week.

Zemsky said the perception of increased risk may be forcing large market players like hedge funds to sell, putting more downward pressure on stocks.

[uls]

good morning

USDJPY a bit above 95 (watch 95 support)

Nikkei -420

[uls]

95 support broken

nikkei down over 700 pts

[Monseratto]

Local bourse now 375pts or 5.54% down....

[Retz]

sadsad din local stock market.....

[c_cube]

Ang pula pula

[uls]

i'll just repost this (from page 754 May 28, 2013)

foreign funds take profits

sell stocks


buy dollars

[Monseratto]

Local bourse now on a free fall...442 points or 6.54 % down.

[uls]

LONDON (Reuters) - World stocks were pummeled and the dollar slumped on Thursday as a sell-off on global financial markets in thrall to central bank stimulus accelerated.

Heavy selling hit the dollar, which slumped 2 percent against the yen as investors spooked by the plummeting Japanese stock market unwound hedges. It fell as low as 93.90 yen, its lowest since April 4 and giving up most of the gains made since the Bank of Japan's aggressive monetary easing announced on that day.

repost (from page 754 May 27, 2013)

the most popular trade in the world is unwinding

[c_cube]

Time to add money to buy more stocks..

But the question is when to buy? When shall be the downward trend stops??

Bahala na si batman!!


Sent from my iPhone using Tapatalk 2

[uls]

good morning

USDJPY 94.66

was above 95 earlier this morning but couldnt sustain

[Monseratto]

Time to add money to buy more stocks..

But the question is when to buy? When shall be the downward trend stops??

Bahala na si batman!!


Sent from my iPhone using Tapatalk 2

Market on a technical rebound due to bargain hunting...