Daily Markets - Will The Fed Fall Back On Treasury Purchases To Fuel Economic Growth?

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• Will The Fed Fall Back On Treasury Purchases To Fuel Economic Growth?
• Beware Of Pied Pipers Touting Quick Fixes
• Currency Kabuki Continues Between U.S. And China
• Tuesday Market Analysis: Markets Bracing For FOMC Meeting Today
• Stock Chart Of The Day: American Oil & Gas
• US Stock Market Review: Financials Still Stuck In Trading Range
• Tuesday Stock Market And ETF Outlook: Is The Rally For Real Or Is It A Trap?
• Could China Be Ahead Of The Curve On Basel III?
• Forex Trading: Markets Cautious Ahead Of FOMC Meeting Statements
• Crude Oil Reluctantly Rallies, Gold Records Continue To Fall
• Bear Of The Day: McDermott International (MDR)
• Bull Of The Day: NiSource, Inc. (NI)
• Momentum Stock: Toro Company
• Growth & Income Stock: PriceSmart Inc.
• Aggressive Growth Stock: Zygo, Corp
• Urgent Lessons From Japan
• Cartoon Of The Day
• U.S. Poverty Rate: 1959 To 2009
• PIMCO Introduces Build America Bond ETF
• Why There’s An Enthusiasm Gap: An Illustration
• Singapore Stock Market Update For Tuesday 21 September
• Bears Case Becomes Dire

Will The Fed Fall Back On Treasury Purchases To Fuel Economic Growth? Posted: 21 Sep 2010 03:06 AM PDT Faced with a faltering recovery, the U.S. Federal Reserve today (Tuesday) will again consider ramping up purchases of Treasuries, a policy known as quantitative easing, to promote growth. The Standard & Poor’s 500 Index closed yesterday with a 1.5% gain on speculation that the Fed would at least indicate to investors that it is prepared to take further action to support the economy. The Fed conducted its last major round of Treasury purchases from January 2009 to March 2010, … [visit site to read more]

Beware Of Pied Pipers Touting Quick Fixes Posted: 21 Sep 2010 02:51 AM PDT Although our elected officials in Washington and around our country typically have foresight that lasts no longer than 24 months (every other November that is), the simple fact is our economy runs in much longer cycles and has a much deeper foundation than that. To that end how does America reconcile an economy which is fundamentally broken while simultaneously  electing officials who will not make promises that can't be kept but promise sacrifices which must be borne. If these officials can get elected at all (a big if mind you!!), perhaps they can get America to read and appreciate the sharp mind of an economist such as the Sense on Cents All Star Kenneth Rogoff. I have referenced Rogoff's work periodically (Sense on Cents/Rogoff) and welcome doing so again today. Kenneth Rogoff is Professor of Economics and Public Policy at Harvard University, and was formerly chief economist at the IMF. He recently wrote at Project Syndicate a fabulous piece which addresses the biggest question facing our nation today–employment. Why isn't America working, you ask? Let's ask Kenneth Rogoff who addressed that very question earlier this month in his piece entitled, Why America Isn't Working, As the US economy limps toward the second anniversary of the Lehman Brothers bankruptcy, anemic growth has left unemployment mired near 10%, with little prospect of significant improvement anytime soon. Little wonder that, with mid-term congressional elections coming in November, Americans are angrily asking why the government's hyper-aggressive stimulus policies have not turned things around. What more, if anything, can be done? … [visit site to read more]

Currency Kabuki Continues Between U.S. And China Posted: 21 Sep 2010 02:30 AM PDT In his testimony before the U.S. Congress last Thursday, Treasury Secretary Tim Geithner accused China of “very substantial” currency intervention, and the U.S. will use every available tool to urge China to let the yuan rise more quickly, including taking it up in front of the G20 Summit and WTO.  President Obama quickly followed up with some more tough rhetoric on Monday, while U.S. lawmakers are weighing new legislation against China. In June, China pledged to relax its grip on … [visit site to read more]

Tuesday Market Analysis: Markets Bracing For FOMC Meeting Today Posted: 21 Sep 2010 01:58 AM PDT Equities: After a few days of profit taking on thin volumes, global equity markets have resumed their rally. European markets shot ahead on market chatter that there is virtually zero risk of falling back into a recession. Furthermore there are strong market currents suggesting that U.S Fed will hint at further monetary easing policies in their FOMC meeting later today. The FTSE 100 advanced 1.71% to retake the 5,600 level by 2pts. The Stoxx Europe 50 jumped 1.33% to close at 2,571. With … [visit site to read more]

Stock Chart Of The Day: American Oil & Gas Posted: 21 Sep 2010 01:54 AM PDT It was hard to come up with Chart of the Day today as most of the nice set ups have already run up big and I am not an advocate of chasing stocks. But I think I did manage to find a nice setup that one doesn’t have to chase much here. Today’s Chart of the Day is American Oil & Gas (AEZ). It managed to close above an important resistance level Monday on its third attempt. Things get really interesting if one has a look at the weekly chart and one has to go back to 2005 to fully … [visit site to read more]

US Stock Market Review: Financials Still Stuck In Trading Range Posted: 21 Sep 2010 01:51 AM PDT It was one way traffic at the markets Monday as the bulls really manhandled the bears. Early in the trading session, the market broke through the multi-month trading range, taking control of 1130 in S&P and 2325 at Nasdaq. These important resistance levels will become support now. Let’s have a look at the index charts. S&P – The next resistance should be 1150 with 1130 as support. Some consolidation would count as healthy over here. Nasdaq – Took out the 2325 level, whose … [visit site to read more]

Tuesday Stock Market And ETF Outlook: Is The Rally For Real Or Is It A Trap? Posted: 21 Sep 2010 01:46 AM PDT Instratrader Indicators: Yellow Flag: Choppy Prices Ahead Daily Technical Sentiment Indicators: Optimistic (Bearish) Short Term Market Condition:  Overbought (short term bearish) Short Term Trend: Up Medium Term Trend: Up Long Term Trend: Down Commentary: Monday was a huge short covering rally on very little news, other than the "recession ended" more than a year ago. The NAHB homebuilders' index remained mired at recent lows and bond spreads in Ireland and … [visit site to read more]

Could China Be Ahead Of The Curve On Basel III? Posted: 21 Sep 2010 12:03 AM PDT In the wake of the announcement of the Basel III standards, there have been numerous calls that the standards are too relaxed (see comments here, here, here and here). Last Friday, the following statement appeared on the PBoC website on the topic of banking in China: Bank lending is concentrated on local government financing vehicles, the infrastructure sector and big corporations. With the speeding up of structural economic adjustments, there is clearly a rising possibility of loan … [visit site to read more]

Forex Trading: Markets Cautious Ahead Of FOMC Meeting Statements Posted: 20 Sep 2010 11:59 PM PDT Markets Cautious Ahead of FOMC Meeting Statements The Dollar is under pressure ahead of the Federal Reserve meeting statements later today, as the possibility of further quantitative easing measures by the Fed weigh on the greenback. Economic News USD – Markets Await the FOMC Meeting Statements The U.S Dollar fell against most counterparts Monday over concerns ahead of today’s Federal Reserve meeting. Speculations regarding another round of economic stimulus put investors in a cautious mood. … [visit site to read more]

Crude Oil Reluctantly Rallies, Gold Records Continue To Fall Posted: 20 Sep 2010 11:51 PM PDT Commodities – Energy Crude Oil Reluctantly Rallies Crude Oil (WTI) – $74.25 // $0.61 // 0.81% Commentary: Crude oil arrested a four-day slide on Monday, rising $1.20, or 1.63%, due in large part to the rally and breakout in U.S. equity markets. The S&P 500 stock index soared 1.52% on the day, reaching its highest level since May. Traders have become more optimistic about the global economic outlook in recent weeks, thus it is no surprise that oil would catch a bid given how depressed it … [visit site to read more]

Bear Of The Day: McDermott International (MDR) Posted: 20 Sep 2010 11:05 PM PDT We are downgrading McDermott International (NYSE:MDR) shares to Underperform from Neutral due to the tentative commodity price scenario and the company’s clouded post-split outlook. Near-term bookings remain lumpy at McDermott, as the current uncertain environment has adversely affected the economics of building new oil and gas infrastructure. Additionally, the transfer of the power generation and government operations has left McDermott with a less diversified business, thereby heightening its … [visit site to read more]

Bull Of The Day: NiSource, Inc. (NI) Posted: 20 Sep 2010 11:05 PM PDT We have upgraded our recommendation for NiSource (NYSE:NI) to Outperform, as we believe the recent equity issue removes a key apprehension on the stock. The issue makes way for the company to reach its $1 billion investment target while comfortably meeting its long-term 3%-5% EPS growth target. NiSource’s strategy of divesting its non-core businesses and transforming into a pure-play regulated company bodes well in our view. The company has improved its balance sheet and maintained its investment … [visit site to read more]

Momentum Stock: Toro Company Posted: 20 Sep 2010 11:05 PM PDT Toro Company (TCC) recently broke a short-term down trend to move back within striking distance of the multi-year high at $58.50. With an average earnings surprise of 55% over the last four quarters, TTC has some nice upward momentum. Company Description The Toro Company designs, manufactures and sells turf maintenance equipment and irrigation systems worldwide. The company was founded in 1914 and has a market cap of $1.75 billion. Toro has seen its share price rip higher with the market over … [visit site to read more]

Growth & Income Stock: PriceSmart Inc. Posted: 20 Sep 2010 11:05 PM PDT PriceSmart Inc (NASDAQ:PSMT) recently reported earnings per share growth of 38% from the same period in 2009. Same-store sales increased 10.6%. Shares recently reached a 52-week high of $29.08. Company Description PriceSmart is a membership warehouse club operating 27 stores in Central America and the Caribbean. It is based in San Diego, California and has a market cap of $858 million. Earnings Beat by 18% PriceSmart reported earnings per share of $0.40, beating the Zacks Consensus Estimate of $0.34 … [visit site to read more]

Aggressive Growth Stock: Zygo, Corp Posted: 20 Sep 2010 11:05 PM PDT Zygo Corp (NASDAQ:ZIGO) has worked its way back into profitability and estimates are showing fantastic growth. Company Description Zygo Corp makes precision measurement solutions, medical lasers and other electro-optical devices for semiconductor, medical, scientific and industrial applications. Back in the Black On Aug 19 Zygo reported fiscal fourth quarter results that showed a 20% increase in revenues over the same period last year, to $28.5 million. Net earnings came in at $4.1 million. In the … [visit site to read more]

Urgent Lessons From Japan Posted: 20 Sep 2010 10:01 PM PDT Imagine a world where the economy never emerges from recession. Imagine a time and place in which economists talk first of a double-dip recession, then about a triple-dip recession … and ultimately admit the dire reality of a long, multi-decade depression. Imagine chronically high unemployment, overwhelming government indebtedness, shrinking population, spreading poverty — even growing rates of homelessness among college graduates. Think about a 20-year period in which stock … [visit site to read more]

Cartoon Of The Day Posted: 20 Sep 2010 09:54 PM PDT HT: Junkyard … [visit site to read more]

U.S. Poverty Rate: 1959 To 2009 Posted: 20 Sep 2010 09:19 PM PDT According to the recent Census Bureau report (historical data here), the poverty rate in the U.S. increased to 14.3% in 2009 from 13.2% in 2008 and 12.5% in 2007 (see chart above).  A few items of interest: 1. The poverty rate in 2009 (14.3%) was below the poverty rates in 1992 (14.8%), 1993 (15.1%) and 1994 (14.5%) following the 1990-1991 recession.   2. The poverty rate in 2009 was below the rate in 1982 (15%), 1983 (15.2%) and 1984 (14.4%) following the 1980 and … [visit site to read more]

PIMCO Introduces Build America Bond ETF Posted: 20 Sep 2010 08:17 PM PDT Pimco, one of the world's largest bond firms, just launched its latest municipal exchange traded fund (ETF), the Pimco Build America Bond Strategy Fund (BABZ). BABZ will carry an expense ratio of 0.45% and aims to achieve its investment objective in focusing its asset base on taxable municipal debt securities which are publicly issued under the President Obama's Build America Bond program.  Furthermore, the fund generally invests in U.S. dollar denominated fixed income instruments … [visit site to read more]

Why There’s An Enthusiasm Gap: An Illustration Posted: 20 Sep 2010 07:56 PM PDT Why is there an enthusiasm gap? Let me illustrate.  Today (Monday) at a "town hall" sponsored by CNBC in Washington, the President took questions about the economy. When a hedge-fund manager complained that Wall Street executives "feel like we've been whacked with a stick" by the administration, Obama said most of his critics think he's been too soft on the Street. He noted he still hasn't been able to end the practice of taxing some hedge fund and private-equity … [visit site to read more]

Singapore Stock Market Update For Tuesday 21 September Posted: 20 Sep 2010 07:24 PM PDT Morning Highlights There Are No Quick Picks For Today! Singapore shares opened up after Wall Street's overnight gains, spurred by positive corporate news that took major US indexes past key resistance levels. STI up 19.25 points to 3100.23. OCBC ups Noble target to $1.97, keeps ‘buy’ DMG ups United Envirotech target to $0.66 SingTel to set up US$150 million corporate venture capital unit Please note that  China will be shut for the Mid-Autumn Festival from 22 Sep to 24 Sep and … [visit site to read more]

Bears Case Becomes Dire Posted: 20 Sep 2010 04:48 PM PDT What can I say? I’m ecstatic. The Bears are all back in their dens crying over the market’s apparent strength. About the last hope they have rests in the lower than average volume levels. In my opinion, though, price action always trumps volume; even better, price sometimes precedes volume. I relish in today’s move. It gives great comfort to see your expectations being met, so exactly and so precisely. For example, I happened to watch Cramer this evening and he had, Dan Fitzpatrick, his “best … [visit site to read more]

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