Jan 13, 2010

Daily Markets - Financial News & Opinions

Daily Markets - Financial News & Opinions

Obama’s New Bank Tax No Reason To Flee Financial Stocks

Posted: 13 Jan 2010 03:45 AM PST

U.S. President Barack Obama plans to implement a tax on financial institutions to offset taxpayer losses stemming from the Troubled Asset Relief Program (TARP) and help reduce the deficit. But Obama’s new bank tax is no reason to turn bearish on financials, which staged an impressive comeback last year.

At a time when many financial companies are gearing up to announce fourth-quarter and full-year earnings, as well as details regarding employee compensation and bonus payments for 2009, the … [visit site to read more]


Forex Trading: China’s Hike In Reserve Requirement Ratio Hurts Commodity Currencies

Posted: 13 Jan 2010 03:41 AM PST

The USD was mildly weaker against the majors, with the commodity currency seeing the largest appreciation after yesterday’s fall. While not a complete surprise, China’s 50bp hike in banks reserve ratio put risk on a back footing, highlighting how sensitive market participants are to any tightening. The move is expected to freeze roughly CNY270bn at Chinese banks. Given China’s massive demand for commodities, it was logical that a selling in the commodity currencies (AUD hardest hit) would be … [visit site to read more]

Indian Stock Market: India Shakes Off Asia Blues

Posted: 13 Jan 2010 03:31 AM PST

India was the only Asian market to close in the positive today. Gains here were led by stocks from the IT, telecom and metal sectors. While the BSE Sensex closed higher by around 85 points (0.5%), the NSE Nifty managed gains of around 25 points (0.5%).

Mid and small-cap stocks also followed the Sensex’s lead. The BSE Midcap and BSE Smallcap indices closed with gains of 0.6% and 0.9% respectively. The rupee was seen trading at Rs 45.59 to the US dollar at the time of writing.

Among other … [visit site to read more]

Setting Target Prices For Stocks

Posted: 13 Jan 2010 03:01 AM PST

Several readers and clients have recently asked questions about target prices for stocks.  I have an approach that has proven very effective.  Let me start with a review of some abuses and some best practices.

Target Price Abuses

It is easy to name a target price.  It is specific and seems compelling to the average investor.  An impressive target often confuses what can happen with what is likely.  Here are some problems:

The method for determining the target price may be … [visit site to read more]

Forex Trading Review For 13 January

Posted: 13 Jan 2010 02:31 AM PST

USD Dollar (USD)

The Dollar posted mix results across the board. US Markets finished lower, stocks declined by the end of today’s trading session after the worst than expected fundamentals released from the U.S. economy. Trade balance deficit came out at -36.4B in the month of November, worst than expected -34.5B. The Dow Jones fell by 0.34% and NASDAQ lost 1.30%. Commodities also fell. The Crude oil tumbled but managed to close above 80$ a barrel. Gold (XAU) collapsed and closed at 1127$ an … [visit site to read more]

In Terms Of Market Psychology, Silver Is Very Overpriced

Posted: 13 Jan 2010 02:01 AM PST

Don’t get me wrong: I love silver - I have for as long as I can remember.  There is just something about the oft-mystically-mentioned white metal that attracts me.  Maybe I hate vampires (that new Twilight craze certainly hasn’t added any vampire merit points), or maybe I just like high electrical conductivity and a pure looking luster.

There isn’t really one single thing about silver that I like the most - but there is one thing about it that I don’t like very much of late.

Silver is … [visit site to read more]

How Forex Trading On Margin Works

Posted: 13 Jan 2010 01:01 AM PST

One of the key benefits of trading forex for retail investors is the ability to trade on margin (also known as 'leveraging’ or 'gearing’). This means that, for a relatively small initial investment, you have the ability to increase your forex trading position by paying a percentage of the nominal value of the contract. However, margin trading also carries a high degree of risk, as a small market movement can result in a substantial loss of funds.
Given the potentially significant size of … [visit site to read more]

Video: Fed Earns Record Profit In 2009

Posted: 13 Jan 2010 01:00 AM PST

The Federal Reserve earned a record profit of $52.1 billion, in 2009. The central bank paid $46.1 billion in earnings to the U.S. Treasury. … [visit site to read more]

Does The Rally In Metal ETFs Have Legs?

Posted: 13 Jan 2010 12:01 AM PST

Last year was one long party for metals exchange traded funds (ETFs). In the wake of China’s monetary tightening announcement, however, you can’t help but wonder if the rally has the legs it needs to keep going.

Hopes for a global economic recovery and inflationary precautions have helped metal shares and ETFs stay in peak performance. Carolyn Cui for The Wall Street Journal reports that while commodity prices rebounded sharply from lows early in 2009, most closed well below records set … [visit site to read more]

Preview Of ECB Monetary Policy Meeting

Posted: 12 Jan 2010 11:01 PM PST

At the December monetary policy meeting, the ECB began to apply its exit strategy from non-conventional lending measures, indicating that the December LTRO would have been the last one and that the last 6m LTRO shall be in March.

However, ECB President Trichet underlined that the decision on non-conventional lending measures does not imply anything with respect to the Refi rate perspective. Thursday’s ECB monetary policy meeting promises nothing particularly newsworthy: the ECB is … [visit site to read more]

Why Obama Must Take On Wall Street

Posted: 12 Jan 2010 10:04 PM PST

It has been more than a year since all hell broke loose on Wall Street and, remarkably, almost nothing has been done to prevent all hell from breaking loose again.
In fact, close your eyes and you could be back in the wilds of 2007. Bankers are still making wild bets, still devising new derivatives, still piling on debt. The big banks have access to money almost as cheaply as in 2007, courtesy of the Fed, so bank profits are up and bonuses as generous as at the height of the boom.
The only … [visit site to read more]

Two Ways To Profit From Wall Street’s “Soft Commodity” - Cotton

Posted: 12 Jan 2010 10:01 PM PST

Some of the best investment opportunities can happen simply by ignoring the Wall Street herd and venturing onto the road less traveled.

Take such traditional “breakfast club” commodities as sugar, cocoa, coffee and orange juice. They all enjoyed a great year, despite bearish forecasts of doom and gloom. Sugar and cocoa even traded at multi-decade highs.

Similarly, cotton got a bad rap going into 2009, though it motored into the end of the year with a tidy profit, rising on the standard … [visit site to read more]

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