Ignoring the bad news
October 31st, 2008 by Lou Muddaris
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 9180.69 | 189.73 | 2.1% |
| NASDAQ | 1698.52 | 41.31 | 2.5% |
| S P 500 | 954.09 | 24 | 2.6% |
| FTSE 100 | 4291.65 | 49.11 | 1.2% |
| Nikkei 225 | 9029.76 | 817.86 | 10.0% |
| SPI Futures | 4014 | -4 | -0.1% |
| All Ords | 3,957.30 | 151.5 | 4.0% |
| Oil | 65.82 | -1.66 | -2.5% |
| Gold | 738.5 | -15.5 | -2.1% |
| Silver | 9.785 | -0.02 | -0.2% |
| Aluminium | 2036 | -68.5 | -3.3% |
| Copper | 4497 | 76.5 | 1.7% |
| Lead | 1520.5 | -10.5 | -0.7% |
| Nickel | 12625 | 120 | 1.0% |
| Tin | 14700 | -505 | -3.3% |
| Zinc | 1166 | -20.5 | -1.7% |
Ignoring the bad news
Overnight we saw 3 major negatives yet the market again rallied which is obviously a positive sign. The U.S GDP 3rd Q shrank by 0.3% to its worst level since 2001. The German jobless claims rate rose to a 16 year high at 7.5% which is supporting the belief that Europe is in a recession. The ECB must cut rates on November the 6th. Finally, the 3rd negative was Fed Governor Janet Yellen saying there is a serious threat of major contraction in the U.S.
The only positives, apart from the recent positive price action is that the crucial LIBOR rates keep falling with the 3 month rate dropping to 3.19% from the previous day’s 3.42%.The rate peaked on October 10th at 4.81%. Also helping was the U.S Fed pumping some $200 bln into the emerging market economies such as Brazil, India and Singapore. Yesterday they even pumped $15 bln into the Kiwi money markets. On Tuesday the Fed started buying Commercial paper (loans to companies) directly in the money markets; so far they have lent $145.7 billion.
The other positive is: look for more coordinated world wide rate cuts starting with Japan today, then Australia, U.K and the ECB next week. On Wednesday we saw rate cuts from Hong Kong, China and Taiwan. Indeed, Fed Governor Yellen is saying the Fed could cut rates to zero.
Our Market
Yesterday saw gains in many stocks of 8 to 10% with resources leading the way. The CEO of BHP Maurius Kloeppers was particularly upbeat about future prospects saying China will continue to provide substantial demand for commodities.
Today expect a quiet day with maybe weakness in the resource sector as base metals and oil fell significantly.
Have a great week end.
Quote of the day: "Even a clock that does not work is right twice a day". An old Polish proverb.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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