re: no paddles monday
Hi Rags, There's something funny about last nights markets. On the one hand the US manuf growth seems to be picking up a bit, and of china and India still barging along, but metals are way off, incl gold and copper on their major supports.
I reckon this market is just discounting the economic slowdown far too much. Sure in the next few years we might do okay (if you believe the official soothsayers), but there is still the slowdown over the next six-twelve months to weather.
Oil is not a good indicator of growth inho because supply is managed by the cartel. But other metals are good indicators, and they are in the doldrums at best. And gold is a good liquidity indicator - when it is up then other markets should also be up. But it is down, and other markets are patchy at best.
And US markets in particular last night were very weak. Despite the best of all news - inflation is shrinking, rates are likely to drop soon, manufacturing is picking up, the consumer is holding up well, and even housing is bottoming it seems and there was some strength in the usd - spx struggled to stay in the green.
On the home front, three states are in or very near recession, including NSW which is the biggest. And interest rates are probably headed higher because of the boom in business credit.
But back to my original point, there was something funny about last nights markets. The markets seemed to behave contrary to the fundamentals - not the first time I know. Either the good news is already priced in - tho you wouldn't believe that if you looked at xjo/spi - or there's something else happening.
I think it may be something else, and perhaps the metal prices are the key. Remember the last time copper was at 30000? XJO sold off heavily. The rumour at the time was that some hedgies in commodities were reducing their risk. Well, copper is again at 30000 and gold is at support as well. Given that current gold price indicates that liquidity is tight, I wonder if we're not back to a liquidity driven sell off, because some hedgies reportedly start to look pretty scarey when copper is at 30000 or lower. If this is the case - and this story is purely my deductions on very shakey premises and information - then look out miners come monday. Then there's the ANZ story on top. It could get very bearish without there being bearish sentiment to give advance warning.
(20min delay)