Weekly US markets Update and Outlook Stocks face financial fears and a wall of earnings
IndyMac latest victim of crisis; On tap: Bernanke testimony, Merrill earnings
Marketwatch: Stocks will likely start the coming week full of growing uncertainty after news late Friday that retail bank IndyMac was shut down by regulators, becoming the latest victim of the subprime mortgage crisis.The Federal Deposit Insurance Corp., which regulates U.S. banks, said it will take over IndyMac's operations after questions arose about its capitalization levels. When the news came late Friday, traders had already left the New York Stock Exchange worried about the fate of government-backed mortgage buyers Fannie Mae and Freddie Mac, tensions between Iran and Israel, and surging crude oil prices. "The market is telling us that something is not fine there," said Paul Mendelsohn, director of investments at Hinsdale Associates, referring to market fear about additional problems that might be facing the two giant mortgage firms. Reports that the Treasury Department and the Federal Reserve may be planning to rescue Fannie Mae and Freddie Mac were flying around in the media and in the markets late in the week, although most were officially denied or never completely clarified. By the close on Friday, the Dow Jones Industrial Average had lost 128 points, or 1.1%, at 11,100, tallying a loss of 1.6% for the week. The S&P 500 dropped 13 points to 1,239.50 on Friday, giving it a weekly loss of 1.8%. The Nasdaq Composite fell 18 points, or 0.8%, to 2,239.08, giving the technology-laden index a 0.3% weekly loss. Recurring jolts related to the credit crisis are also likely to cast a shadow on the first heavy week of second-quarter earnings, which brings reports from the likes of investment firms Merrill Lynch & Co. and JP Morgan Chase & Co. on Thursday, as well as banking giant Citigroup Inc. on Friday.
Another shot of Bear Stearns?
The fears palpable in markets at the end of the week was reminiscent to many of the near-collapse and subsequent rescue of Bear Stearns, one of Wall Street's oldest investment firms, which fell apart in March because of its investments in bad home loans. Investors have become hopeful that a bail-out plan for Fannie Mae and Freddie Mac could lift the market out of its current funk as worries about ailing financial firms have come back in full-force in recent weeks. "The government can't let these two fail before they are too central to the mortgage lending process," said Ken Tower, chief market strategist at Covered Bridge Tactical.
Federal Reserve Chairman Ben Bernanke, who delivers his semi-annual testimony to Congress on Tuesday, will likely "get grilled" on the current financial mess, according to Hinsdale's Mendelsohn. "Now the main question is going to be, what's going to be the end game," he said. "Where is this going to end?" On Monday, investors will parse through key data on June retail sales and producer prices, along with a manufacturing survey from New York state, for signs that inflation is taking hold, and/or of further economic weakness. Besides Bernanke's testimony, Tuesday will bring the consumer price index for June, while Wednesday will bring data on industrial production and capacity and the minutes of the Fed's last meeting on interest rates.
Weekly KLCI Technical Update and Outlook
ICap on Daily KLCI. When the market was in a slump, the technical glitch at Bursa last Thursday further worsened the situation and the KLCI has subsequently breached its support level of 1,150. Though the MACD and DMI are still bearish, the RSI has reversed its oversold position to cross above the 30 level that may be indicating a buy signal. However, the mounting political uncertainties and soaring domestic inflation are still dampening the sentiment. One must wonder when would we get out of this hazy environment while we keep waiting for it to happen.
* Will the Non-confidence motion againt Badawi be thrown out in Parliamnent tomorrow? You bet. City folks however will have to face a big traffic jam tomorrow as the police will block and monitor all main access points into the city and several other key spots in anticipation of an opposition rally at Parliament. I am disgusted, how effective is your "block and monitor"? Hey fren, think of the wasted valuable time and fuel while you managed the situation. You are getting the public more and more angry with you!
* The Jakarta Post: Did you know Brazil has begun developing alternative energy through ethanol from sugar cane more than 30 years ago? The cost of production by the Brazilians is USD0.22 per litre. According to The US Renewable Fuels Association, Brazil is the 2nd largest global ethanol producer after the US contributing 33% of world's production. At least 16 car makers in Brazil have adopted their engines to make them compatible with ethanol fuel.
No comments:
Post a Comment