While US banking giants reported more quarterly losses ($7.6 billion for Citigroup and $194 billion for Bank of America respectively) President Obama announced a major shake-up of the banking sector on Thursday. Plans included a ban on retail banks using their own money to bet on the stock market, alongside the potential break-up of some of the bigger banks. The impact was felt immediately, with Goldman Sachs, BoA and JPMorgan's share prices falling between 4% and 6%. Friday morning saw repercussions on the FTSE, with falls for Barclays (-3.9%), RBS (-2.2%) and HSBC(-0.2%), while inter-dealer broker ICAP plunged 6% to 400p a share.
Up until then the major story of the week had been the protracted takeover of Cadbury by US food giant Kraft. Cadbury's board has advised shareholders to accept Kraft's revised offer of 840p per share, in a takeover move worth £11.5 billion. It wasn't all good news for Kraft however, as its largest shareholder Warren Buffet expressed doubts over the move. Elsewhere, US technology firms had a mixed week. Google saw Q4 revenues of $6.67 billion, up from $5.7 billion the year before. Google's share price dropped on Thursday though, as the figures came in lower than expected. IBM also saw healthy Q4 results, making a profit of $4.8 billion, up 9% from the previous quarter.
Meanwhile the week's macroeconomic data revealed that UK unemployment dropped for the first time in 18 months. The ONS report showed the total number fell by 7000 between September and November 2009, and now stands at to 2.46 million – the first drop since the recession began. However UK government borrowing figures showed that there is still work to be done, with a new record for the month of December of £15.7 billion, albeit less than expected, an indication of the biting impact of the recession on the government's purse strings.
The week ahead
In a quiet week for economic releases at home, the major standout is GDP data for the fourth quarter on Tuesday, which should confirm that the UK economy has returned to growth. Across the Atlantic, Q4 GDP is released on Friday, while on Wednesday the FOMC will reveal if it is to keep US interest rates at their record low.
It's another busy week on the US reporting roster, with a number of notable companies releasing quarterlies. Among the names to look out for are Apple, who kick-start the week on Monday, internet giant Yahoo on Tuesday, followed by Microsoft and Amazon on Thursday. At home meanwhile it's a quieter week, but BSkyB's half-year numbers will be closely watched on Thursday.
Does this mean it's all over? Hardly! Earnings have been pretty solid. It seems the public has been punishing companies that beat their estimates, but not by enough. Google is a prime example. I guess the owners selling 5 million shares each over the next couple of years doesn't help either.
So what is the next move? That's a very tough one to forecast. Taking profits is our first rule… and several down days are sure to have a reversal day to shake the weak hands out.
Oil was another spot where we expected negative movement. The excess inventory and recent pops in the Oil price did not seem to logically work out for us.
Gold and silver have also taken a beating with the Dollar rally. We know that JPM is profiting nicely from the drop in the Silver markets. The main question will be if they can hold their December lows. Big picture economics tells us that we want to be long Gold, but short term traders are going to wait until they feel it has bottomed.
Volume coming in on support of the Dec. lows may we worth a small gamble… with tight stops to get out if the lows are violated.
We have broken some major trend lines, but the bull forces will most likely come back this week with the earnings schedule.
This long term trend break shows us there will be higher volatility (and more uncertainty) in the markets… especially over the next few weeks with earnings. Volatility has moved up, and if the market rallies back into the consolidation, it should settle down… and may be worth dabbling for the right price.
.It's going to be a crazy week with earnings and more economic news
Economic
Earnings
0 comments:
Post a Comment