BetOnMarkets Market Reports

The FTSE is currently indicating a higher opening, as traders are signaling their approval over the nationalization of Bradford and Bingley. Over the weekend the government and the biggest landlord tried to arrange a sale, however when no bidder came up, the government was forced to step in to protect the deposit holders. This should give the FTSE the boost it needs to start the week of on the positive foot.

Commodities are in for a volatile day, as details of the bailout package get finalized in congress and are due to be passed at any moment. Since the bill will have a negative effect on the US dollar, oil and gold will be the biggest beneficiaries from the bailout.

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Another dramatic weekend saw not one, but four banks receive government bail outs hit the newswires this morning. Monday is quickly becoming a dangerous day for traders as news breaks over the weekend and governments choose to act while markets are closed. Although Bradford and Bingley is grabbing headlines in the UK, governments in Belgium, the Netherlands and Luxemburg had to throw billions at Fortis, while German has guaranteed loans to Hypo Real Estate. In the US, investors waved goodbye to Wachovio as a takeover by Citigroup gets assistance from the FDIC.

All of this comes on top of the disappointment over the terms of the agreed $700bn US bail out package. It appears that Wall Street will not get all of what they wanted quickly enough. The biggest disappointment to be the fact that not all of the money is to be released immediately, with a large chunk to be made available “should it be needed”. To make matters worse, the oil heavy FTSE is having to contend with oil prices coming off the boil by around $6 a barrel.
Although markets are understandably jittery today, none of the weekend’s banking failures could be seen as black swans. Bradford and Bingley, Fortis and Wachovia have all be on the “red” list for some time. Although there are other banks still on red alert, the remaining high risk banks are smaller and in many ways this purge could signal a turning point along with the passing of the US bail out plan, even if it disappoints.

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BetOnMarkets Morning Report

The bloodbath that started yesterday in the United States is set to continue, as the FTSE futures indicate an opening down 5% from yesterdays closing. The SP500 suffered the worst one day loss since October 26th 1987, wiping out almost 800 billion dollars in market cap. While no stock was spared from the sell off as the Advance/Decline ratio on the NASDAQ was at -80. The financials led the way with most companies recording losses in the double digits. The sell off has continued in Asia with the major indices currently down more then 5%. Unless there is a miracle we expect for the FTSE to spend the whole day in the red.

As traders were selling their equity holdings, gold was a huge winner, climbing above the 900 dollars per ounce level. Historically whenever traders felt uncertain in the equities market they would invest in precious metals. We can see that trend to continue as uncertainty and chaos should rule the day. The possibility of a different version of a bailout is not dead and it could possibly slow down the sale off today.

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Apart from Monday’s opening salvo, it was quieter week for global equities. After Monday’s dramatic reversal, daily movements between high and low, were mostly restricted to sub 2% range days. Between Monday the 15th and Monday the 22nd of September, the level of volatility was unprecedented. The US S&P moved 3.5% between the high and low of the day, something not seen since 1982, according to Jason Goepfert’s Sentimentrader.

With US financial stocks falling nearly 12% on Monday despite the short selling ban, it is clear that last the week before last’s euphoria was mostly a bailout rally, not a simply a short squeeze as many would like to believe. Much of last week’s movements were dependent on the relative progress of the US Government bailout package. A large part of the ‘freaky’ Friday’s optimism subsided, as investors sat back and examined the proposals and the impact of last week’s frenzy with a clearer head. As expected, Bernanke, Paulson, and Bush are not having an easy ride in their bid for congress to approve the $700 billion bailout plan. Despite Bush’s dramatic claims of an impending financial collapse if the bill isn’t ratified, politicians will not find it an easy sell it to their voters, especially in an election year with 55% of the US public opposed to the plan. It is not hard to see why, with extraordinary clauses such as a request for no judicial or administrative reviews of the spending in this bailout. In the end the key issue may not be whether the US government can afford it, but whether it can afford not to do it.

It wasn’t all bad news for financials, with traders buoyed by the news of Warren Buffet’s investment in Goldman Sachs. However, traders were cautious as to what this deal signified. Some believe it to be a vote of confidence in Goldman’s by Buffet, while other see it as a Buffet picking up a great return at bargain basement prices. In the UK financial stocks underperformed as Libor spiked to the highest levels since January. Despite the dramatic interventions over the past two weeks, traders have remained firmly sceptical about general exposure to toxic subprime debt.

Many are expecting a ‘bailout rally’ when the Bush/ Paulson plan is finally passed similar to day when the idea was first mooted. While this may happen, the effect may be short lived. Once the subprime problem has been largely addressed, there is still the issue of banks being underfunded, and the even greater problem of a weakening global economy. The latter in particular seems to have been playing second fiddle to the problems specific to the credit markets.

More US regional banks are in trouble despite the planned bailout package. Regions Financial (Alabama’s biggest bank) and Marshall & Ilsley Corp (Wisconsin’s largest bank) all were well down on the week. Although at present not on the cards, a collapse of small US or international bank wouldn’t spark the collapse of the financial system as we know it, but it does lead to two gloomy thoughts. Firstly, the blanket ban on short selling financial stocks is not a panacea. In fact the last time short selling was banned in 1932, the Dow Jones made a small rally then rolled over by over 40%. Secondly, despite the bailouts and liquidity injections, we may not have seen the last financial institution across the world to fail. While it may not be another major firm, the result is still not going to be positive for market sentiment.

Next week’s flow of economic news is dominated by Wednesday’s ADP Non Farm employment change and Fridays Non Farm payroll figures. Other top tier announcements include Wednesday’s US ISM manufacturing PMI and UK Manufacturing PMI. Thursday brings UK Nationwide house price figures while the ECB press conference on Thursday could also move markets.

It is hard to predict what could happen next with so much dependent on the progress of the bail out package through parliament. If or when it is passed the resulting spurt could be short lived, perhaps leading to a more sustained bear market as the economy takes centre stage again. A Double Touch trade predicting the Dow Jones will touch 11500 and 10799 (in either order) at any time during the next 20 days could return 159% at betonmarkets.com.
 
BetOnMarkets Morning Report

The FTSE is currently indicating a higher opening, as rumors intensify that another bailout bill will be introduced in congress today. The rumor was the main reason for the huge recoveries that were enjoyed by equity markets around the world. This recovery was anticipated, as historically meltdowns on Wall Street often attracted bargain hunters. Not all the news yesterday was positive, as the credit market has shown no sign of relief despite the possible bailout rumors being circulated. A key rate that banks charge to lend to one another shot higher, a tightening of the availability of credit that could cascade through the economy. We expect the FTSE to spend most of the morning in positive territory.

Oil traders spent the last few days at the mercy of the rumors, however today it regained most of the 10 dollars per barrel it shed on Monday as rumors of the bailout bill being reintroduced broke out yesterday. Oil has spent the last few weeks in the range between 90 and 110 dollars per barrel and there is little to show that the trend will change anytime soon.

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BetOnMarkets Morning Report

The FTSE is currently indicating a higher opening, as traders are awaiting the release of the nationwide house prices. Also helping the equity markets is the possible rate cut by the ECB today at 11.45 am GMT. An interest rate cut historically helps the equity markets and today should not be any different. The FTSE should spend most of the day in positive territory.

Commodities benefited from the passage of the rescue bill, with oil stabilizing around the 100 dollars per barrel mark. Oil prices are more volatile today than at any other time since the Gulf War in 1991. The last seven days were a perfect example of that as Oil futures plunged 9.8 percent on Sept. 29, the biggest drop in seven years, after Congress voted to reject the bank rescue plan. A week earlier a record 16 percent jump led regulators to say they were on the lookout for price manipulation. We expect for prices to stabilize before the employment report on Friday.

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BetOnMarkets Morning Report

The FTSE is currently indicating a higher opening, as traders look through yesterdays wreckage for possible investment opportunities. The equities market might get another boost before the opening, as analysts expect that the UK industrial production numbers will come out better then expected. We are looking for a big pop at the open.

Commodities have been taken and beaten up, yet again, as traders keep buying the US dollar. Oil found itself trading below the 90 dollar per barrel level yesterday and it seems like the trend will continue lower until OPEC cuts output. The only winner yesterday was gold, which finds itself the investment of choice, while the equity markets flirts with disaster.

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BetOnMarkets Morning Report

The FTSE currently indicates a really weak opening, which is being caused by the continuation of a sell-off, which started in US last night. Mr. Bernanke warned on Tuesday, that the financial crisis could prolong the difficulties the economy is facing. Wall Street appeared little comforted and focused on his downbeat assessment taking the SP500 to its lowest close in 5 years. Look for the FTSE to spend the whole day in negative territory.

Crude oil fell in New York, trading below $90 a barrel, as consumption weakens in the U.S. and other developed nations amid a worsening credit crisis that's restraining economic growth. We expect oil prices to trade in a range before the inventory numbers are released towards the end of the UK trading day. The price direction for the next few days will be determined by the inventory numbers.

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Although the sub prime mess originated in the US, this has always been a global credit crunch. European banks were some of the biggest buyers of sub prime securities so when the crisis developed, any one of the world’s major banks could have been holding toxic assets. This in turn led us to the historical coordinated action by the world’s central banks today. Each government has attempted to deal with the crisis with specific interventions in their area but only a coordinated act like the rate cuts we have seen to day could truly hope to have any real impact.

Markets still do not know what to make of today’s dramatic intervention. UK banks such as Lloyds and Barclays are off their lows of the day, but traders are not exactly piling in like no tomorrow. This might possibly be a function of fears about the UK ‘part nationalisation’ bail out severely crimping any hope of significant shareholder return over the coming years. With an electorate footing the bill and politicians possibly having a say in the running of affairs, juicy dividends for shareholders may be a thing of the past. European markets are still down around 2-3% on the day and the Dow is swinging 50 points in the blink of an eye. Around the quiet period and intermediate high of August, the FTSE had a daily range of around 60 points. Today it is moving that much every 15 minutes. These are extraordinary times and many technical indicators are flashing at levels never seen before. At best central governments are hoping that the coordinated rate bomb has stopped Armageddon, there is now no hope of the UK, US, Irish and Spanish economies avoiding recession. The worse case doesn’t bare thinking about. If today’s coordinated intervention doesn’t at least start breath life into the frozen money markets, one has to wonder what surprise moves the global governments can take next.

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BetOnMarkets Morning Report

The FTSE currently indicates a slightly higher opening, after the Bank of England, the EBC and FOMC all cut their lending interest rates yesterday. Rumors are circulating that because the BOEs next meeting is not scheduled until November, there might be another rate cut soon.
There is a strong chance that the FTSE will end up in the red at some point during todays trading day.

Oil fell for a second day as the global economic crisis curbed demand also hurting the price of oil was the U.S. government report of a bigger-than-expected gain in crude and gasoline inventories. With the strengthening of the US dollar, there is a good chance that oil prices will test the 85 dollars per barrel mark before the end of the week.

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