USD Rallies following FOMC...

Source: Forexnews.com

The dollar rallied sharply following the FOMC’s monetary policy announcement, surging from 1.3280 against the euro to just above the 1.31-figure and jumping to 90.75 versus the yen.

The Fed left monetary policy unchanged at its current range of 0%-0.25%, saying that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time”. The FOMC delivered a somber assessment of the economy; attributing the weakness to steep declines in industrial production, housing, and employment; thus prompting a retrenchment of spending by consumers and businesses. Although the Fed anticipates a rebound in the economy later in the year, it deems the downside risks as significant. Further, given the limited scope the Fed has to shift interest rates lower, it reiterated its stance to expand the quantity of agency debt and mortgaged-backed securities purchases to support the mortgage and housing markets. The FOMC also anticipates inflation pressures to remain subdued over the coming quarters.

US economic data will be the focus for the Thursday session, with the calendar consisting of weekly jobless claims, durable goods orders and new home sales. Weekly jobless claims are seen falling slightly to 580k from a week earlier at 589k, while December durable goods orders are estimated to post a 2.0% decline versus a 1.5% drop in the previous month. New home sales in December are forecasted to ease to 400k units, compared with 407k units a month earlier.

Stocks jump on reports of plan for bad bank assets...

Source: Mail.com

Financial stocks led Wall Street higher Wednesday on investor hopes the Obama administration will create banks to absorb the bad assets weighing down the financial system.

The Standard & Poor's 500 index, a benchmark for the overall stock market, rose for the fourth straight session.

Investors have been worrying that banks won't be able to resume more normal lending without somehow dumping or walling off the bad debt that is corroding their balance sheets. And the economy can't recover from a yearlong recession without improvements in lending and consumer confidence.

Bank shares jumped on the news: Wells Fargo & Co. gained 18 percent, Citigroup Inc. jumped 17 percent and Bank of America added 15 percent.

Investors are also more upbeat as the House nears a vote on an $825 billion stimulus plan that contains a mix of new spending and tax cuts. Wall Street is hopeful that and other measures will help free the economy from its worst recession in decades.

Wall Street's focus on Washington is divided between Capitol Hill and the Federal Reserve, which is all but certain to leave its federal funds rate at a record low Wednesday to try to help the economy by making it cheaper to borrow money.

It's unclear whether the central bank might take any new steps to help the economy, however. In December, the Fed took the unprecedented step of slashing its key rate from 1 percent to a range of zero to 0.25 percent. The Fed's statement announcing any actions, and its assessment of the economy, is due at 2:15 p.m. EST.

In the first hour of trading, the Dow Jones industrial average rose 97.17, or 1.19 percent, to 8,271.90.

Broader stock indicators also rose. The Standard & Poor's 500 index jumped 15.49, or 1.83 percent, to 861.20, and the Nasdaq composite index rose 28.18, or 1.87 percent, to 1,533.88.

Bill Dwyer, chief investment officer at MTB Investment Advisors in Baltimore, said any steps Washington can take to revive the economy could help the market. He said the plan to help neutralize bad bank assets could speed a recovery.

"We aren't really going to see any great economic news anytime soon so if there is any positive movement in Washington toward the problem that would stabilize the decline," he said.

Wells Fargo jumped $2.94, or 18 percent, to $19.13 after the company reported it booked big write-downs to reduce is exposure to the risky assets of Wachovia Corp. and added to its reserves for future losses. Wells Fargo acquired Wachovia on Dec. 31.

Other banks charged higher on the notion that Washington could vacuum up some of their bad debt. Citigroup Inc. rose 62 cents, or 17 percent, to $4.17, while Bank of America Corp. rose 95 cents, or 15 percent, to $7.45. State Street Corp. surged $5.07, or 26 percent, to $24.69.

USD Edges Higher, Awaits FOMC...

Source: ForexNews.com


The major currencies relinquished earlier gains versus the greenback in the New York session as safe haven flows propped up the dollar. The euro slid from 1.3328 to 1.3120 following dismal economic data from the US. The Conference Board’s survey of consumer confidence plunged to its lowest level on record in January, dropping to 37.7 and missing estimates for an improvement to 39 from a revised 38.6 a month earlier.

The Case-Shiller home price index also deteriorated, with the monthly figure in November down by 2.2% and the annualized reading declining by 18.2%. Meanwhile, the January Richmond Fed survey improved, with the composite manufacturing index rising to -49 versus -55 a month earlier and the services revenue index improving to -19 from -30 in December.

The FOMC kicked off its two-day monetary policy meeting today and is scheduled to announce the results on Wednesday at 2:15pm. With interest rates hovering near zero, markets will focus more closely on the accompanying statement for the Fed’s assessment on the economy and projections for growth and inflation.

Another issue to be closely scrutinized will be whether Fed Chairman Bernanke addressed the topic of inflation targeting. The minutes from the previous meeting hinted at that possibility, when it suggested providing greater clarity on the Fed’s goals for inflation.

Euro Outlook ...

Source: DailyFX.com

Into the North American return and should EUR/USD manage to cement a drop back into the 1.28s then the intraday lows will come back into sight. However, option dealers are quick to note the presence of intraday 1.2850 expiries, that could help support the pair into the 15:00 GMT NY cut.

FX OPTIONS: 1 Year Cable Risk Reversal Paid...

Source: DailyFX.com

The 1 Year Cable 25 delta risk reversal was recently offered and Paid at 3.0 for the GBP puts. This follows in the wake of the well hyped French name demand for back dated vols, which saw the 1 year atmf lifted 19.75 and 20.0 today. Closer in - the 1 month atmf tenor has traded highs last seen in early Dec" at 25.0.

EUR/USD: Toying With Notion Of Another 1.28 Test...

Source: DailyFX.com

EUR/USD has ducked marginally lower since the North American return but the pair is yet to significantly retest the 1.28s. Only a push below the 1.2860 European lows, the 1.2850 option expiry level and the 1.2845 intraday lows will elicit fresh follow-through to the outlook.

FX OPTIONS: 1 Month USD/JPY Vol paid 20.5 as Spot Losses Eyed...

Source: DailyFX.com

Despite spot USD/JPY being confined to a range above 90.00 this week, implied vols in the front end of the curve have gained ground. The benchmark 1 month atmf contract is up around 1.5 since Monday"s open to trade 20.5 in early New York today. JPY strength in the crosses - especially against GBP (which has been hit hard across the board this week) and subsequent vol gains there, have lent support to prices in the headline. Also of note are the well hyped 90.00 option expiries due to roll off in USD 7bln tomorrow. These have been keeping spot tied to rates above the strike of late, but their passing could well trigger a slump below.

USD/CAD: Little Reaction To BoC Cut

Source: DailyFX.com

With the BoC cutting just 50bp as discounted by FX traders, USD/CAD has tried to break north, but run into heavy resistance ahead of 1.2700. The high was 1.2695, and traders note corporate sell orders scattered between 1.2685/25 retarding topside progress. Spot has oscillated between 1.2650//75 since topping out, with traders somewhat ambivalent. The 24-hr M/A is at 1.2575, and traders are in buy dips mode between there and the top of the normal distribution channel on the hourlies at 1.2620. Overbought hourly Bollingers at 1.2715/65 give the topside some room to breath if spec types want to try and push it; oversold way down at 1.2385/1.2430 look way out of reach for now. Option expires this morning at 1.2500 and 1.2600 were expected to drag prices lower, but the BoC news though expected, is overshadowing them.

Euro Retreats on ECB Cut...

Source: Forexnews.com

The ECB, as largely expected, cut its benchmark lending rate by 50-basis points to 2.0%, its lowest level in 3-years. The euro was initially higher following the decision, rallying past the 1.32-handle, but subsequently relinquishing the 1.31-level to fall toward 1.3060.

Bank President Trichet raised the prospects for additional ECB rate cuts over the coming months in his press conference today. Trichet tempered expectations for a move in February but left the door open for another rate cut in March. He offered a downbeat assessment on the Eurozone economy, expecting weakness to persist in the coming quarters, with risks to growth on the downside.

EURUSD will encounter support at 1.3030, followed by 1.30 and 1.2950. Additional floors are seen at 1.29, backed by 1.2860 and 1.2830. On the upside, gains will target resistance at 1.3080, 1.3120 and 1.3170. Subsequent ceilings are seen at 1.32, backed by 1.3240 and 1.3270.

EUR Slumps on ECB Rate Cut...

Source: Forexnews.com

The greenback was higher against the euro in the Thursday session on a combination of mixed US economic reports and a 50-basis point rate cut by the ECB. Weekly jobless claims were higher than expected, jumping past the 500k figure to 524k and up from a week earlier at 467k.

The NY Fed manufacturing survey improved by more than anticipated to -22.2 in January, versus -25.76 from a month earlier. The Philadelphia Fed business survey improved by more than expected to -24.3 in January versus -36.1 a month earlier.

Economic reports in the coming session include December CPI, industrial production, and net TIC flows.

US TECHS: S&P Outlook; Ringing in Q4 Earnings - Old News...

Source: DailyFX.com

There is no data on Monday but Alcoa kicks off the Q4 earnings parade - announcing after the close and kicking off what is expected to be a very ugly earnings season. The aluminum maker announced plans this week to eliminate 15,000 jobs, close plants, sell assets and cut capital expenditures by 50% to cope with the global economic slump.

In addition S&P placed its credit ratings on review for a possible downgrade based on concerns about the poor operating environment from depressed aluminum prices. Consensus estimates peg EPS at a loss of ($0.05) per share. Later in the week (Thursday) Intel Corp, will post Q4 earnings. Intel added to the weight in equities last week by cutting another $500 mln from its Q4 revenue projections which it expects to drop 20% to $8.2 bln compared with Q3 2008 and to be down 23% from a year ago.

However the upcoming earnings parade is old news and what the equity markets now yearn for is guidance - be it revenue, margin or profit - as no one really has a handle on what the global economic environment will provide. The equity complex on Friday did an about face from the previous trade of shrugging off/rallying on bad news.

SPH did close below the bottom of the triangle and mid Bollinger band, both near 891 and currently rests above another up-sloping trend line at 874. We generally see the 870s as support and wonder aloud if SPH will spend a few days below the flat, meandering mid Bollinger for a few days as it did during the December 22 week, only to pop back above. For upside traction SPH needs to clear 892.

EUR/USD: Still Pivoting 1.3400 Option Expiry & 10-HMA Line...

Source: DailyFX.com

Heading deeper into the North American morning and EUR/USD still sits close to the 10-HMA line at 1.3402. Coincidentally option dealers note the 1.3400 option expires for the impending NY cut at 15:00 GMT, that could gravitate spot prices into the cut-off.

USD/JPY might be extending its sell-off but this is adding pressure to EUR/JPY so for the moment there is little need for the headline pair to snap any higher. Should EUR/JPY again fail to break below 120 then this will add upward potential to EUR/USD into the European closes.

Citigroup director Robert Rubin resigns as adviser...

Source: Mail.com

Citigroup board member Robert Rubin, who has drawn heavy criticism for his role at the embattled bank, has resigned as a senior adviser.

Rubin, 70, will continue to serve as a board director until his term expires at the next annual meeting in the spring, Citigroup said.

As Citigroup's stock plunged over the past year, the veteran of Wall Street and Washington came under fire from critics who believed he should have had a more active role in preventing the bank's recent problems. Citi's predicament drove it in November to seek federal assistance.

A person at Citi close to the situation, who spoke on condition of anonymity because he was not authorized to speak for Rubin, said "there was no inside pressure" for Rubin to leave Citigroup. "It was his feeling that the time was right," the person said. He added that there was no government pressure, either.

Rubin was U.S. Treasury Secretary under President Bill Clinton. For several decades before that, he worked at the Wall Street firm Goldman Sachs Group Inc. But his experience didn't keep Citigroup from taking on a massive amount of risk that relied on the housing market staying afloat.

"Robert Rubin, in my opinion, spent a decade neglecting his duties as a director, just judging by their performance," said Christopher Whalen, managing director of Institutional Risk Analytics. "It's the job of the board to supervise the managers."

"He had embraced a riskier strategy for a bank that was ... already a high-risk bank," Whalen said.

Citigroup was hit particularly hard by the housing market downturn because the bank was heavily invested in mortgages and other loans. The company has reported four straight quarters of losses, and is expected to post yet another loss when it releases fourth-quarter results later this month.

Even before the economy started tanking, many shareholders had complained that Citigroup was too huge, and lagging its peers. Calls for a breakup have been going on for years, and have grown louder now that the government has had to pump so much money into the ailing company.

Citigroup is reportedly in talks with another bank, Morgan Stanley, to merge its own wealth management business -- Smith Barney -- with Morgan Stanley's. According to media reports Friday, Morgan Stanley would have the majority stake in the new entity.

If Morgan Stanley ends up buying Smith Barney, it "sounds like the beginning of a liquidation," Whalen said.

"Citi is under enormous pressure to downsize right now," said Bert Ely, a banking industry consultant in Alexandria, Va. After Citigroup received an extra dose of government funding in November, he said, "my sense is that the pressure has been increasing to accelerate the process."

So far, Citigroup has gotten $45 billion in cash investment by the Treasury Department, and a government backstop for up to $306 billion in loans and securities backed by mortgages.

Over the past six months, Rubin has slowly pared back his role at Citigroup, after serving as chairman for about a month following the ouster of former chairman and CEO Charles Prince in November 2007. Win Bischoff became Citi's chairman in December 2007, and investment banking head Vikram Pandit became CEO.

In August 2008, Rubin gave up his title as head of the board's executive committee, and became a "senior counselor" instead.

Leaving Citigroup, where he has worked for nearly 10 years, "is not a decision that I have come to lightly," Rubin said in a letter released by the bank. "But as I enter my 70s and with all that is now in place at Citi, I believe the time has come for me to make these changes."

He also wrote: "My great regret is that I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today."

Citigroup shares fell 41 cents, or 5.7 percent, to $6.75. Morgan Stanley shares were up 24 cents to $19.06.

U.S. Stocks Drop on Retail Forecasts; Wal-Mart, Macy’s Slump...

Source: Bloomberg.com

U.S. stocks slid for a second day after retailers from Wal-Mart Stores Inc. to Macy’s Inc. said profit will trail forecasts as the recession limited holiday spending and sent jobless claims to a 26-year high.

Wal-Mart Stores Inc., the world’s biggest retailer, tumbled 8.6 percent, while Macy’s, the second-largest U.S. department- store chain, lost as much as 4.1 percent. Clothing retailers Limited Brands Inc. and Gap Inc. retreated after reducing their profit outlooks. Sun Microsystems Inc. fell 7.9 percent as Goldman Sachs Group Inc. recommended selling the shares on “deteriorating fundamentals.”

The Standard & Poor’s 500 Index fell 0.6 percent to 900.94 at 9:40 a.m. in New York and is down 0.3 percent in 2009. The Dow Jones Industrial Average declined 0.9 percent to 8,694.12. The VIX, which measures the cost of using options as insurance against declines in the S&P 500, climbed for a second day after retreating for five straight sessions.

“Things look really, really bleak right now,” said Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $1.4 billion. “We knew the fourth quarter was absolutely horrid and now we’re getting confirmation of that. Between now and mid-spring, I think we’re going to see the market in flux and not making much progress.”

Stocks fell on three of four days this week as the recession forced the biggest U.S. companies to acknowledge that forecasts made last year were too optimistic. The five-quarter slump in profits at S&P 500 companies is projected to last two full years before a rebound in the second half of 2009, according to analyst estimates compiled by Bloomberg.

Jobless Claims

The total number of people receiving unemployment benefits rose to 4.6 million, the most since 1982, the Labor Department said, even as initial jobless claims unexpectedly fell by 24,000 to 467,000 in the week that ended Jan. 3. A report tomorrow will show the U.S. lost jobs for a 12th straight month in December, economists forecast.

The jobless-claims report comes hours before President-elect Barack Obama delivers a speech on the economic outlook in a bid to build support for his stimulus plan. In excerpts of the speech he’s scheduled to give today at 11 a.m. New York time in Fairfax, Virginia, Obama says that while the cost of his economic recovery plan will add to a deficit already projected to exceed $1 trillion, he “won’t just throw money at our problems.”

Obama warned that without immediate steps by the government to revive the economy, family incomes will drop, the unemployment rate could reach “double digits” and the U.S. risks losing a “generation of potential and promise.”

The S&P 500 has slumped 39 percent since the start of 2008 amid more than $1 trillion in credit losses and writedowns at financial firms worldwide and the first simultaneous recessions in the U.S., Europe and Japan since World War II.

Important Announcement...

Hello everyone,

I have to make a public announcement to clear my name. Yes, I admit that I was a student from an organisation called Momentum Asia. On top of that, I was one of their trading mentor from May 2007 till March 2008. I have left the organisation on my own personal note.

As to date, I am no longer a student of theirs and I am not affiliated to them in any way. I was surprised when a fellow friend of mine came up to me and said that my name is on their website. They have been using my name on their website for their marketing purposes and do take note, they have kicked me out of their forum for no reason provided to me. They can't even spell my name right.

I am not judging them in any manner but it is up to you to do your own judgement. They kicked me out of their forum and yet they are using my name for their marketing purposes. How can I be affiliated with them when I am not involved in their organisation and not even a member of their forum? A question that even I am surprised!

All that I have to say is that, if you are seriously looking for a mentor out there. Just be extra cautious, not all of them are sincere. Even if they do, make sure they stay that way, if not, go away and find another one. I have more than one mentor but sad to say only one of them lost his/her direction as a mentor.

Their website with my name (Which they can't even spell it right) and do take note, most of the testimonials there which some of them I personally know and verified with, are FAKE!:

1) http://www.cosmomentum.com/?View=20

Warmest Regards,
Ash Ariffin

Stocks fall on fresh evidence of economic woes...

Source: Mail.com

Stocks fell sharply Wednesday, as a handful of bleak profit outlooks and more evidence of escalating unemployment served as stark reminders that the economy remains in rough shape. The Dow Jones industrials dropped more than 180 points.

Underscoring investors' growing fears that 2009 is shaping up to be a difficult year for many sectors, Time Warner and Intel on Wednesday issued disappointing guidance.

Time Warner Inc. said it expects to record a fourth-quarter $25 billion impairment charge for its cable, publishing and AOL units that will lead to an operating loss for the period and a loss for the full year. It had expected a profit between $1.04 and $1.07 per share for the year.

Meanwhile, computer chip maker Intel Corp. said it expects fourth-quarter revenue to drop 23 percent, below prior estimates, due to weak demand and inventory reductions by its computer maker customers.

Time Warner shares shed 97 cents, or 8.8 percent, to $10.01. Intel shares plunged nearly 6 percent, or 88 cents to $14.49.

Aluminum producer Alcoa Inc.'s decision to slash jobs further jolted investors.

Alcoa said late Tuesday it is reducing its global work force by about 13,500, or 13 percent, by the end of the year and lowering total output by more than 18 percent annually. Shares of Pittsburgh-based Alcoa tumbled 70 cents, or 5.8 percent, to $11.42.

The announcement comes ahead of the Labor Department's report Friday on the job market -- a closely watched barometer of the economy's health. The market got a disappointing harbinger Wednesday in the form of the ADP National Employment Report, an unofficial gauge that the market has been increasingly monitoring as U.S. job losses mount. The report said private sector employment fell by 693,000 in December, worse than expected.

When people lose their jobs, they tend to spend less and fall behind on their debt payments. Investors fear that further declines in consumer spending will prolong the recession.

"People are concerned with the employment report coming out on Friday," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "The market has shrugged off some bad news recently, and it's starting to get to the point where it can't do that anymore."

The Dow has rallied about 20 percent since its multiyear lows in late November 2008, and the Standard & Poor's 500 index has surged nearly 25 percent.

"We've had a big move," Fullman said. "What we're looking at now is just people getting a little cautious here."

In late morning trading, the Dow dropped 186.46, or 2.07 percent, to 8,828.64. The Standard & Poor's 500 index fell 21.57, or 2.31 percent, to 913.13, while the Nasdaq composite index fell 41.70, or 2.52 percent, to 1,610.68.

The Russell 2000 index of smaller companies was down 14.98, or 2.91 percent, to 499.73.

Declining issues outnumbered advancers by about 6 to 1 on the New York Stock Exchange, where volume came to 297.50 million shares.

On Tuesday, Wall Street overcame gloomy economic readings to finish with a moderate advance. The market's economic worries had been calmed a bit in recent days by President-elect Barack Obama's proposal to slash taxes and help businesses. The stimulus package could cost as much as $775 billion, though, and Obama said Tuesday the nation could face trillion-dollar deficits "for years to come."

Bond prices rose on Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.46 percent from 2.47 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, edged lower to 0.11 percent from 0.14 percent.

The Treasury plans to auction a record $30 billion in three-year notes on Wednesday.

The dollar fell against other major currencies. Gold prices also fell.

Crude oil prices slipped $2.46 to $46.12 a barrel on the New York Mercantile Exchange.

In Asian trading, Japan's Nikkei stock average rose 1.74 percent, and Hong Kong's Hang Seng index fell 3.37 percent. In afternoon trading in Europe, Britain's FTSE 100 fell 2.31 percent, Germany's DAX index fell 1.37 percent, and France's CAC-40 fell 1.14 percent.

My trades for December 2008...

Hello everyone,

These are my trades for December 2008. Click on it for the enlarge image.

Warmest Regards,
Ash Ariffin