Remember the LORD for it is he who gives you the ability to produce wealth and so confirms his covenant... Deut. 8:18

Wednesday, April 22, 2009

Ann Joo wins significant orders

KUALA LUMPUR: Ann Joo Resources Bhd, Malaysia’s biggest steelmaker by stock market value, won its biggest export orders in six months amid signs overseas sales for the industry are recovering, AmResearch said after meeting executives.

The manufacturer, which swung to a loss in the final quarter of 2008, won overseas orders of 40,000 to 50,000 tonnes in the past two weeks, Mak Hoy Ken, an analyst at AmResearch in Kuala Lumpur, wrote in a report yesterday after visiting Ann Joo’s plants. Ann Joo rose as much as 3.3% to RM1.59 after the report, which said the company resumed full production at its plant in April after a two-month shutdown.

Economic data from Japan to the US suggest world trade may have bottomed as countries including China roll out stimulus packages.“After months of declines, there appears to be imminent signs of green shoots sprouting in the steel market,” Mak said by phone. “There appears to be a bit more optimism on demand, especially on the exports side.”

Ann Joo closed three sen higher at RM1.57 yesterday, with 1.8 million shares done. Southern Steel Bhd, Malaysia’s second-biggest steelmaker, rose 10 sen or 6.76% to RM1.58. Lion Industries Corp, the No 3, rose 7.5 sen or 9.26% to 88.5 sen, while Kinsteel Bhd, the fourth-biggest, gained 1.5 sen or 2.7% to 57 sen. The Kuala Lumpur Composite Index closed 1.98 points or 0.2% higher at 968.58.

Monday, April 20, 2009

Trading Australia Dollar

Can’t stomach the violent swings in the equity markets? One analyst recommends switching out to currencies.

“In currencies, there’s no such thing as a bear market. Currencies are always traded in pairs so you’re always long one currency and short in the other, Kathy Lien, director of currency research at GFT said at the Asia Trader and Investor Convention held in Singapore.

Lien cites the U.S. dollar and the yen as an example. traders to make profits in either direction.
Lien’s personal bet though is on the Australian dollar

“I am very bullish on the Australian dollar. The Australian economy has been holding up extremely well in comparison to the rest of the world. They’re benefiting from the rise in copper prices – they supply both the U.S. and China – and, although Chinese growth has pared back significantly, there’s a possibility that China’s near its bottom,” says Lien.
Australia looks set to benefit from a pick up in either country, as the foundation for solid growth has already been set.

Lien expects the Australian dollar to outperform many other currencies, not just the U.S. dollar and says there are many opportunities to profit from different pairings such as Aussie/euro
and Aussie/Kiwi (New Zealand dollar).

“This outperformance in the currency is probably going to last for the remainder of 2009. The call for the Australian dollar trend is something that will last a couple of months. Any opportunity to buy in dips is probably an attractive one. Usually 70 cents is a nice support level that may afford you good opportunity,” Lien says.

Dollar Extends Gain On Elevated Risk Aversion

With the exception of the Yen, the USD continues to extend gains in the New York session, benefitting from the sharp pullback in equity prices and elevated risk aversion. The Australian Dollar continues to be the across the board underperformer on the day now down nearly 3% against the greenback, with the severe drop in oil prices also impacting the higher yielding commodity currency. This despite the relative gains in gold prices which track nearly 2% higher.

All safe haven and lower yielding FX have benefited greatly thus far, with the Yen crosses and Eur/Chf selling off hard in New York as a result of the market uncertainty. Contributing to the risk aversion has been the latest leading indicator data out this morning which has come in weaker than expected.

The Euro has been well offered on the day but is nowhere near the weakest currency, with comments from ECB Nowotny perhaps propping the currency somewhat after the official said that he would only support a small rate cut.

Earlier rumors that the US bank stress tests were completed have been denied with the much anticipated results not to be disclosed until early May. This is a big week on the US earnings calendar and investors will be focused on the corporate results all week to better gauge the health of the US economy. (DailyFX)

Tuesday, April 14, 2009

Austraian Index Shrinks Most Since 1982

An Australian leading economic index fell in February to contract at the fastest annual pace since 1982.
The index, a gauge of future economic growth, dropped 0.3 percent to 248.6 points from 249.4 in January, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. The index shrank at an annualized rate of 5.1 percent.

Today’s report adds to signs the economy will slide into its first recession since 1991 as a global slump cuts demand for exports from the world’s biggest shipper of coal and iron ore. Central bank Governor Glenn Stevens cut the benchmark interest rate last week to a 49-year low of 3 percent to spur demand.
“The rate of deterioration of the growth rate of the leading index is truly remarkable,” said Bill Evans, chief economist at Westpac in Sydney.
“For some months, the index has been signaling that the Australian economy will enter a recession,” he added. “The consistent run of negative reads for the growth rate is comparable with Australia’s previous recessions, which began in 1961, 1974, 1982 and 1990.”
The Australian dollar fell to 72 U.S. cents at 10:42 a.m. in Sydney from 72.22 cents just before the report was released. The two-year government bond yield was unchanged at 2.93 percent.
Interest Rates

Westpac’s leading index tracks eight gauges of economic activity, such as company profits and productivity, to give an indication of how the economy will perform over the next three to nine months.
Westpac’s coincident index, a measure of the current state of the economy, fell 1.1 points in February to 240 points. The annualized growth rate of the coincident index was 0.7 percent, compared with its long-term trend of 3.4 percent.
Policy makers have cut borrowing costs by 4.25 percentage points since September.
“Given the importance of rate cuts in boosting confidence, we expect the bank will see the need to have ample capacity to be cutting rates through the second half of 2009,” Evans said.
April 15 (Bloomberg)

Sunday, April 12, 2009

Six US Companies Earnings Report

Here are six companies that will report earnings this week. Each, in its own way, provides a snapshot of the economy.

-- General Electric Co.
-- Why it's important: GE has a stake in almost every major sector of the economy. It builds turbines for power plants and high-tech medical machines. Jetliners use GE engines. When homeowners remodel, GE's stainless steel ovens and refrigerators anchor their kitchens. And many people still screw GE light bulbs into their living room lamps. GE is also a barometer of the health of the financial world through its lending arm GE Capital.
-- When it will report: Friday, April 17.

Intel Corp.
-- Why it's important: Intel is a barometer of spending on personal computers and servers. When computer makers buy more of Intel's chips, it indicates they believe demand from consumers and businesses is strong. Orders have cratered in recent months. Intel's profit has plunged to its lowest levels since 2001.
-- When it will report: Tuesday, April 14.

Johnson & Johnson
-- Why it's important: J&J is the world's most diverse health care products company, making everything from contraceptives to baby formula to advanced drugs harvested from living cells. That broad base means it captures a large slice of consumer spending. People are normally reluctant to cut back on health care spending.
-- When it will report: Tuesday, April 14

Citigroup Inc.
-- Why it's important: The nation's largest bank is involved in everything from residential mortgages to commercial real estate to credit cards. Any recovery in Citigroup would bode well for the broader financial industry, and the market knows it: Stocks began a four-week rally after CEO Vikram Pandit said last month that January and February were profitable.
-- When it will report: Friday, April 17

Sherwin-Williams Co.
-- Why it's important: This paint and wall-covering company gets nearly half its sales from its remodeling and repainting business. Another 10 percent comes from new housing and new building construction. As the economy slowed down -- and housing sales and renovations with it -- Sherwin's business contracted sharply.
-- When it will report: Thursday, April 16.

CSX Corp.
-- Why it's important: The railroad logistic company transports everything from cars and car parts to heating oil. When consumers feel pinched or homes are sitting empty, those things aren't moving.
-- When it reports: Tuesday, April 14

Ashley Heher in Chicago, Jordan Robertson in San Francisco, Stephen Manning in Washington, Tom Murphy in Indianapolis and Samantha Bomkamp in New York contributed to this story-AP.

ECB Considers Further Rate Cuts

European Central Bank Governing Council member Nout Wellink said the bank can make additional cuts to its benchmark rate and is considering other measures to spur lending and boost the economy.
“There is some room for lowering the interest rate,” Wellink, who also heads the Dutch central bank, said in an interview after a lecture in Leiden, The Netherlands, late yesterday. “There is also room for other measures, on which we will decide soon,” he said, declining to specify what action the bank might take.

The ECB this month cut its key interest rate by a quarter point to 1.25 percent, less than economists forecast, and delayed a decision on new tools until May. The Federal Reserve, Bank of England and Bank of Japan are already pumping money into their economies by buying government and corporate debt.
“The financial sector hasn’t calmed yet, and a healthy and stable financial sector is a crucial condition for growth recovery of incomes and employment,” Wellink said in the lecture.

The eurozone economy may shrink 4.1 percent this year, the Organization for Economic Cooperation and Development has forecast. The widening recession increases the pressure on the ECB to use new ways to stimulate the economy as consumers and companies curb spending and halt investments.
The deepening of the global slump and a drop of more than 60 percent in oil prices from a July record have eased inflation pressures across the euro area. “Consumers are less willing to spend, making it harder for companies to raise prices,” said Charles Kalshoven, an economist at ING Groep NV in Amsterdam, yesterday.

“For the euro zone, it can’t be ruled out that in 2009 months of negative price rises will occur,” Wellink said in the lecture. “As long as consumers and producers don’t continuously postpone their expenditures as a result of this, this is not a problem.”

Saturday, April 11, 2009

Allegation of Steel Dumping

China’s government is “highly concerned” about the U.S. steel industry’s petition to the State Department and the International Trade Commission to investigate whether Chinese products were dumped in that country.
The application will have a “significant impact” on exports of Chinese steel products to the U.S., Yao Jian, a spokesman for China’s Ministry of Commerce, said in a statement posted on its Web site.
“Blindly accusing importers of dumping or giving countervailing duties without proof and seeking trade protectionism won’t solve the real problems confronting the U.S. industry,” Yao said in the statement, dated yesterday.

The U.S.’s application follows the European Union’s decision to levy anti-dumping tariffs on Chinese steel products, after anti-protectionism pledges were made at the G20 meeting earlier this year. Mills in China, the world’s biggest producer of steel, benefit from subsidies for so-called oil-country tubular goods which are sold in the U.S.
The EU announced tariffs as high as 24.2 percent on steel pipes and tubes from China on April 8 to help producers including ArcelorMittal fend off cheaper imports.
Steel is used widely in the construction, energy and engineering industries. Allegations of dumping typically rise when demand is weak, analyst Luo Wei said.

Falling Steel Demand
“Global demand for steel is very poor because of the economic downturn, so there will be more protectionism,” Luo, a Shanghai-based analyst at China International Capital Corp., said by phone today. “China is a big steel exporter, but its shipments have already fallen a lot.”
Chinese steel exports dropped 52 percent to 1.56 million tons in the first two months of the year, the Customs General Administration said in March.
The global recession may lead China to export 80 percent less steel products this year, the country’s Iron and Steel Association said March 18.

Posco, the world’s second-biggest steelmaker by market value, yesterday posted its largest profit drop in eight years after the global recession cut demand. The Pohang, South Korea- based company said net income fell 68 percent from a year earlier in the first three months of 2009.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at

Wednesday, April 8, 2009

10 Golden Rules of Trading

AUDUSD Monthly Technical Forecast

The longer term downtrend is expected to resume soon. What is unclear is whether or not weakness resumes before a push above .7275. A push there .7275 could complete a complex correction from .60. If the AUDUSD does exceed .7275, then there is potential resistance at .7566; the 100% extension of the rally from .6005-.7275.

Euro/US Dollar Monthly Technical Forecast

Weekly bars: After a 3 week advance, the EURUSD should resume its long term decline. To review; since 1.60, price has declined in a series of 1st and 2nd waves. Most recently, the rally from 1.2475 is wave ii of 3. As long as price is below 1.3740, anticipate a break below 1.2327 and much lower in wave iii of 3.

Daily bars: The fractal nature of the market has been on full display in the EURUSD since the top last year at 1.60. There are 5 waves down and 3 waves up at 2 degrees of trend. The ‘1-2’ down from 1.4723 is waves 1 and 2 of the next 5 wave decline. At this point, price should remain below 1.3586. Former support at 1.3320 is potential resistance.

Ringgit may fall 4.6 %

THE Malaysian ringgit may fall as much as 4.6 per cent after the opposition coalition won two out of three regional elections, according to ING Groep NV. Declining foreign-exchange reserves and a likely drop in the Singapore dollar will further pressure the ringgit to weaken, ING said.

The ringgit sank 1 per cent to 3.6295 against the dollar as of 12:20 pm in Kuala Lumpur, according to data compiled by Bloomberg. It has lost 4.2 per cent so far this year.
The currency may tumble to 3.80, a level at which it was pegged to the dollar until July 2005, before Bank Negara Malaysia steps in to stem losses. Central banks influence exchange rates by arranging sales or purchases of currencies. A central bank report yesterday showed gold and foreign- exchange reserves fell 3.1 per cent in the two weeks ended March 31, the biggest drop this year. The nation’s total foreign- exchange reserves slid to US$88 billion on March 31, from as high as US$125 billion on June 30.

The Monetary Authority of Singapore may devalue the city’s currency and allow it to drop 4 per cent against the US dollar by June 30 to lift the economy out of its worst recession since independence in 1965, a Bloomberg survey showed on March 30.“If now is not the time for Singapore to adopt a clearly accommodative monetary policy, then we don’t know when is,” wrote Sean Callow, a Sydney-based currency strategist at Westpac Banking Corp, Australia’s largest lender by market value. Singapore’s dollar may fall to S$1.54 against the greenback “in the days following the review” on April 14, Callow said in the note. - Bloomberg

Wednesday, April 1, 2009

Euro, Yen and Aud

The Euro may come under fire as the Euro Zone Unemployment Rate rises to the highest in over 2 years, adding to evidence of deepening recession and bolstering expectations of a 0.50% interest rate cut later in the week.

Overnight data showed Japan’s business confidence fell to a record low in the first quarter while Australian retail sales plunged the most in 8 years.