Since 2008 it's really changed. To get around the government and media focus on bonuses, investment banks have pretty much trebled a trader's basic salary from around one hundred thousand pounds a year to three hundred thousand a year. Bonus rates have been slashed massively and traders now get paid a significantly higher proportion of their bonus in shares.http://www.trade2win.com/knowledge/articles/general_articles/anton-kreil-interview/Read more…
By Nicholas Santiago on October 15th, 2010 3:12pm Eastern Time
We all know that this recent stock market rally that began on August 25th, 2010 has been manufactured by the Federal Reserve Bank and the prospect of QE2 (quantitative easing). Since that time the stock market has rallied higher by nearly 13 percent. However, the U.S. Dollar Index has declined by nearly 13.0 percent since its June 7th, 2010 high. This tell us that quantitative easing has already been going on. If the U.S. Dollar has lost 13 percent and the stock indexes have rallied 13.0 percent what have investors really gained as stocks are denominated in dollar terms? It has really been a zero sum game and many people are hopefully realizing that.
There are several negatives to the 'kill the dollar' policy that the Fed has adopted. The first is that all goods and products that people need will become more expensive. Just look at the price of gasoline, or food? These prices have increased and will continue to increase. Most commodities besides gold and silver are now at all time highs. How can this be a positive for society? What about the retirees or those that are living on fixed incomes? What happens to these people as they see their purchasing power evaporate before their eyes?
Most investors are under the impression that quantitative easing is coming soon. They believe that it has not occurred yet. Are you kidding me? How many bubbles can the United States handle? The last time we saw quantitative easing of this magnitude was in 2001-2007 which caused the greatest credit bubble since the great depression. What is this more powerful artificial prop job going to cause this time? The Fed funds rate (overnight lending rate to the large major banks) has been at zero percent since 2008 and the banks still can't get out of their own way. Bank of America (NYSE:BAC) just hit a new 52 week low today for crying out loud.
Don't people see the damage that is going on? Where did all of the toxic assets go that the banks had on their books? The phony accounting can only work so long before the real problems emerge. Lets not even talk about the government debt and spending that is going on. Who is going to lend a nickel to this country at this rate. America talks about the European debt, meanwhile, we have fifty Greek states of our own. This Fed better come to their senses soon.
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By Gareth Soloway on October 15th, 2010 12:05pm Eastern Time
The stocks of JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC) and Wells Fargo & Company (NYSE:WFC) were all crushed for the second straight day today as fear over the continuing foreclosure crisis swelled. Further regulation has not helped either as new rules are taking hold. The foreclosures in the United States are not even close to being over and many of these companies have halted foreclosures to look into allegations over methods used. Foreclosures must be cleared off the books. Any delay will just prolong the problems and cause more losses. In this Chief Market Strategists opinion, housing prices will drop another 20% before all is said and done. This may come as a shock to many, but with over 100,000 foreclosures last month alone, there is far too much inventory out there to not drive prices lower. Any delays in this process, will only prolong the bottom and the following move higher.
JPMorgan Chase reported earnings just a few days ago. Initially the markets cheered the numbers with a small gap higher. After looking closer, the market saw the truth behind the numbers and the selling began. One Wednesday, JPM opened after earnings higher at $40.66. Today, the stock hit a low of $36.54, a ten percent drop in just three trading days. Bank of America and Wells Fargo took the same hits.
In the very short term, these stocks look like they are due for a bounce. However, it is very possible they have much more downside to go before this issue is resolved. To get more analysis, guidance, swing trades and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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By Nicholas Santiago on October 14th, 2010 3:54pm Eastern Time
Most of the leading steel stocks topped out in April 2010 with the stock market. However, since late August the stock market has surged higher as the U.S. Dollar Index has declined. Most commodities such as gold, silver, copper, and oil have made new highs for the year. Unfortunately, the steel stocks have lagged the market and remain near the low end of the range since the July 2010 lows.
U.S. Steel Corp.(NYSE:X) is considered the leading steel stock in the sector. Today this stock is trading lower today by $1.09 to 43.79. In early July, U.S. Steel Corp. was trading down around the $37.00 level. The stock did rally with the major indexes from that market low, however, the stock peaked on August 19th, 2010 around $51.00. Therefore, the stock has now fallen back into the middle of the trading range from early July. This lazy sideways action comes in the middle of a major inflation rally spurred on by the Federal Reserve Bank. The markets have gone bananas since the so called quantitative easing part 2 was announced. This stock must be watched closely should these markets begin to decline or sell off. U.S. Steel Corp. would be a good candidate to lead the decline due to it's weak relative strength. U.S. Steel Corp. will have daily support around the $40.50 level.
Other leading steel stocks that have showed weak relative strength are AK Steel holdings Corp.(NYSE:AKS), Nucor Corp.(NYSE:NUE), and Steel Dynamics Inc.(NASDAQ:STLD). This sector must be followed closely as it could lead the stock market lower should this current inflationary rally come to an end.
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By Nicholas Santiago on October 13th, 2010 3:17pm Eastern Time
Well, it happened again today, the U.S. Dollar Index is trading lower. Since this rally began the U.S. Dollar Index has declined nearly everyday and this has been the fuel for the market rally. Today was the first time that I heard the media mention that senior citizens and anyone else on a fixed income is starting to complain. When you consider that 76 million baby boomers are scheduled to retire over the next three years, there will be a lot more moaning and groaning over the weakening U.S. Dollar.
Just realize when the U.S. Dollar Index declines and loses its purchasing power everything that people need for survival is more expensive. Gasoline, heating fuel, bread, milk, meat, produce, and any other necessity will be more expensive. However, the stock market will be higher and the cheerleaders on the cable financial channel can get out their pom-poms in glee. This is madness and this country may have gone crazy. In any case, this artificial propping will not leave us with a happy ending.
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By Gareth Soloway on October 13th, 2010 12:40pm Eastern Time
The markets jumped higher again today as the U.S. Dollar continued its rapid decent. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $118.13, +1.12 (+0.96%). Like a plane in a nose dive, the Dollar is showing no signs of stabilizing. In all fairness, the Federal Reserve has the Dollar doing exactly what it wants. A weaker Dollar creates a fake wealth effect as equities and commodities move higher to compensate. In theory, if the Dollar drops 10%, stocks should go up 10% to maintain their balance and real value. The general trusting public will see this as an increase in wealth, spending more, buying more, but in real terms they have gained nothing. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $22.36, -0.06 (-0.27%). The Dollar is not far off the 2009 November lows and may have its sights set on that double bottom. Long term, expect it to be far lower.
As any educated investor must realize, the U.S. Dollars drop is not going unnoticed by other countries. Many leading powers are racing to devalue their currency faster than the U.S. The idea behind this is the cheaper the currency of any country, relative to its neighbors, the cheaper that countries goods will be for export. If exports rise, jobs increase. This is known as a currency war. We have seen Japan intervene and rhetoric with China explode. This path of racing to devalue one's currency is treacherous. One wrong move and currencies all over the world could collapse, much like Lehman did and other financial companies almost did in the snow ball effect. The major difference would be, the government was able to intervene with the financial firms. In a currency collapse, no government will be able to stop it. In the short term the U.S is playing a game of chicken as it relies on China and other countries to buy its debt thus infusing money into the system. However, as the Federal Reserve drops the Dollar day after day, countries like China are threatening to cease their hungry nature for U.S debt. This is exactly why the Federal Reserve is now forced to buy treasuries. They must make up for the lost demand from other countries as they piss them off by killing the Dollar. Bottom line is this, should other countries stop buying the U.S debt totally, the Federal Reserve would never be able to handle the impact. This is a game of chicken. Who will swerve first?
Also, this QE2 (quantitative easing two) is a total joke. This is the ponzi scheme of all ponzi schemes. The Federal Reserve is buying their own debt. Granted, technically they are not part of the government but let's be realistic here, they work together and it all comes out of the same pot in the end. The Federal Reserve is giving the American public fake statements much like Bernie Madoff did to his poor investors. They are paying one credit card off with another and paying that one off with an other as well. In addition, in their basement they are running printing presses 24 hours a day, diluting each hard working Americans savings and earnings. Mark this article folks, history will show this to be the biggest ponzi scheme ever. It will cause a melt down in the global system that makes the financial collapse look like a rain drop in the lake.
Even if the printing of trillions of Dollars by the Federal Reserve does somehow restart the jobs market which is unlikely, the greater fear must be the next bubble forming. Treasuries and currencies. If the economy does recover, inflation will spike massively, commodities will soar and the buying power of the U.S. consumer will shrink in a huge way. The Federal Reserve is hoping the public is trusting enough to believe they will then handle the inflation correctly. However, not once in history has the Federal Reserve been ahead of the curve in handling any major issue. Just think of all those baby boomers on fixed incomes when the Dollar is worth half of what it was. The Federal Reserve is playing a game here that is probably the most dangerous ever played. Unfortunately, we, the people will pay the price. To get market guidance, swing trades and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
#1 Rated
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