Tuesday, September 30, 2008

Some lightening

Buy on historical bottoms, any such excuse, and sell on anything else, or Graham, Templeton, and Buffet's buy on fact and sell on rumour ? All sounds like a predominantly see-saw ratchet continuing this week profit-taking on the ups or downs (oops) - a game for insider professionals only. The FTSE100 in September has fallen further (-13%)than for any month since October 1987 (other markets similarly - some commentators estimate $18tn in lost equity values globally over the past year?). It is 25% down on the year, 16% down over 2yrs, and roughly 25% up over 5yrs - so technically most probably a good time to buy. Except for the unravelling expected this month of much of the $54tn in CDS outstanding, we may have a White October following a Black September.
A number of Asian equity markets recovered this morning after financial stocks were boosted by hopes of an emergency rate cut from the Federal Reserve after US government efforts to bail out the US financial system were blocked, but will be revived. Irish banks staged a dramatic rally today after Ireland's government said it would guarantee all deposits and bank debt for two years, following the previous session's record losses in which Ireland's stocks slid to their lowest level in 10years (see earlier blog). London equities rose as investors began to bet that indices have reached their nadir turning point after the first attempt failure of the TARP bad bank bail-out. Trade in bank stocks remain uncertain. Wachovia was sold to Citi very cheaply excpet for Citi's $49bn provision against potential losses when it unwinds Wachovia's balance sheet. Lloyds TSB was higher but merger partner HBOS fell again, but their merger remains more on than off. Eurozone inflation is on a downward trend (if oil resumes a long run fall), but not enough to change the view that ECB will keep its main interest rate on hold, with a first cut not expected before December. The dollar advanced against the euro and the yen again as US investors actually repatriated funds following the failure of the US government to pass TARP. US stocks opened higher after a brutal sell-off during the previous session, on hopes that Washington would revive a plan to rescue the financial sector from collapse. This should mean oil price going down, but oil staged a rebound after a sharp fall in the previous session while gold lingered at the $900 level after US equities tumbled yesterday following TARP's rejection by Congress.

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