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Week ended 12/10/2010 -- Markets this week

America tax payers made a huge profit by selling  CITY’s share, now they may going to make such profits in future by selling other stakes  i.e.  GM’s share e.t.c.  But important events was Fed’s buying of $600 billion treasuries, later I want to cover this issue in a separate writing. Other events  are extension of bush era tax cut, AIG’s loan repayments, U.S. trade deficit narrowed in October due to increase export level, fall in jobless claim e.t.c. These all are some indications of good for  U.S. economy.
Markets were  mix type this week .


Index
Week ended Dec10
       (%)

Week ended Dec3





OIL  (jan)
87.79
-1.56%

6.50%





GOLD (jan)
1384
-1.56%

3.15%





DOW
11410
0.24%

2.61%





LONDON
5812
1.16%

1.36%





BRAZIL
68341
2.04%

2.26%





JAPAN
10211
0.32%

1.38%





INDONESIA
3747
1.37%

1.48%





CHINA
2841
0.03%

-1.01%





INDIA
19508
2.29%

4.34%




In Europe there was a talk going on  E- bonds better to say common govt bond to protect from speculation and attract new capital flows  but countries like Germany may have some different opinions. Indeed some thinks that current system is better that impose fiscal discipline for countries and  punish them for any wrong doings.
Now comes some down grades Moody’s downgraded Hungary by two notches reason being fiscal- sustainability, on the other hand  Fitch downgraded  Ireland to BBB+  and the outlook is stable.  Sometime I think what these credit rating agencies were doing when that huge sub-prime mortgage problems generate, probably at that time they were in vacation and forget to downgrade those loans  !
German economy is going very faster than other Euro zone members but this time their trade surplus shrank in October due to fall in export but good news is their business confidence in November was at highest level since in reunification.
Uk keeps it’s interest on hold.
German finance minister was telling that they will do whatever it takes to defend EURO. Now I think they need to do activities rather than lectures.
One matter that I feel need to say is that  some banks (like HSBC i.e.) in Europe issued  dollar denominated bonds. Now the question is, are they smelling some things before ?
Now the  US- Korean free trade agreement may double the US export but the deal is very unpopular in Korea especially  among the opposition. This week bank of Korea left it’s interest rate unchanged and that brings some cheers for Seoul stock market.


China’s holding of south Korean’s bond has tripled to $5.4 billion as on November 30, when they bought more bonds from Korea. China also bought  $3.1 billion Japanese bonds in October, one thing we need to look that  Japanese yen is appreciating lot in this year, China may be  looking for currency gain.
During the last few days of the trading week, I  was fearing lot that any moment china is going to increase it’s  rate  and then we may see again some negative effect on stock market but this time they just increase their reserve requirements though this is 3rd time in a month but how much it can control it’s inflation is a matter that needed to be looked because reserve increase generally has a delayed effect than rate. Now Chinese official data says that inflation rate is 5.1% which is 28 month high.

Japanese  economy is growing faster than  estimated  at annual rate of 4.5% but its machinery orders fell in October & is last month they have to pass a $61 billion stimulus package. Their auto industry is slump because of situation in develop economies and in China, the situation is becoming more problematic because of  YEN appreciation & deflation that it is suffering from a long time. It’s benchmark 10-year  bond yield is increasing because economy is growing faster  and this may be good for stock market.
Some good job data boosting Australian stock market. We have to look into  AUS/USD relation.



Indian govt expecting a lower trade deficit because of increase in goods shipment and decrease in imports. Local car sale roses to 21% from year earlier. Govt has raised it’s economic growth forecast to  8.75% from 8.5% for year ending march 31,2011. India’s food inflation is increasing again as it is up by 8.69% this week. One  important news is that India may going to loose it’s foreign investment restriction on retail sector.
Gold is still making it’s pattern. If something bad not happen oil can break 90 level in coming days.


Coming week
This week Dow never closes above it’s previous high 11451 , it is facing some resistance there, same thing for FTSE  & NIKKEI also but NIKKEI went to higher  but couldn’t able to close there. In coming week Japanese market can break either way. Chinese market is facing some side based movement but it can test it’s recent low. T-SEC cannot able to close below 8800 some correction is needed their for market to go and break crucial 9000 level.
Some housing, unemployment, industrial production, cpi, business inventory i.e. data are due in coming week in U.S.  I don’t  know whether Chinese authority is satisfied with increase in reserve ratio because if not then there will be still a chance of rate increase. In my last writing I was talking about the copper stock in LME and we now know what was the name of the organization, now we have to wait what they are going to do with this so much copper !  Chinese & India govts still cannot control their inflation. So we may see another rate increase, especially the Chinese one.
Some Chinese official was saying something like data is man made or something like bogus official data, probably he may be trying to say about Chinese data but I like to include data of all the countries in the planet.
This week when I was trading sometimes I find market is very slow, I don’t know why but I don’t like to trade in slow market. In coming week I will take more precaution.  But we can’t forget the old rule ----   no risk, no gain.


NOTE :  Please see the disclaimer of this blog .

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