Released on: September 14, 2008, 3:06 am

Press Release Author: Regent Markets (IOM) Limited

Industry: Financial

Press Release Summary: It was a dire for stock markets, with all major world indices
trading well in the red. Thursday saw the bulk of the selling as US markets moved
quickly to pre-empt Friday’s poor Non Farm payroll figures. There was also the
technical problem of the bulls being unable to push the market higher despite lower
oil prices.

Press Release Body: Initially with commodities getting bludgeoned, global stock
markets took the opportunity to rally at the start of the week. Across the commodity
sector, the notable weakness was in the energy sector with oil and natural gas
prices leading fallers. It is not just Energy prices that were down, other
commodities such as gold, copper, wheat, soya beans, and rice all fell through
previous technical support levels. Recently equities had been on a promising run,
but it was false hope. When markets were going up, the bad news didn't seem to
matter, but when they failed at key levels as the S&P 500 did at 1300 last week,
traders took another look.

Financial stocks were in focus again last week after the former darling of the
credit crunch, Goldman Sachs, had its third quarter and 2008 earnings estimates cut
by Credit Suisse. The firm pointed to weaker trading volumes and severely reduced
investment banking activity. Also hitting financials was the news that commercial
banks are hitting the MPC’s primary credit discount window at much higher rates than
expected. In fact, when you look at a chart of the current levels of commercial
lending at this ‘emergency’ window, usage levels remain very high indeed. Current
usage is way above any level in the last five years and well above levels from last
year. To make matters worse the ECB tightened it’s lending criteria, meaning that
banks depending on the ECB window to survive will find it even hard to keep going.

Perhaps it was coincidence, but a research piece from SocGen title an “Economy and
equity market meltdown imminent” certainly caught the zeitgeist last week. The piece
warned “Typically we have now reached the point in the cycle where companies reach
the end of the road on earnings manipulation, and have to admit to their
shareholders how bad things really are, sending reported profits diving.” The piece
implied that analysts currently see no prospect of a non-financial profits slow down
because companies have not yet owned up to the real mess they are in. It continued
.“We are at a very similar point to the end of 2000, just before corporate
capitulation sent reported profits and the economy diving and the equity market
collapsed.”

As the fears over Hurricane Gustav died down at the start of last week, it was UK
PLC that appeared to be facing ‘the mother of all storms’. Last week the Pound fell
to record levels against the Euro, and to its lowest levels against the Dollar since
April 2006. Traders rapidly priced in Alistair Darling’s bleak comments and the 70%
drop in mortgage approvals, which is hardly a catalyst for a buoyant housing market.

There was no good news from the two central banking announcements on Thursday last
week, but then none was expected. Both the MPC and ECB have their hands tied by
roaring inflation and slowing economies, the worst of both worlds. Trichet did
provide an unwelcome surprise though by indicating that the Eurozone economy is
weaker than it was previously thought. Adding to the dramatic fall last week was the
resurgent Dollar, which has been displaying an inverse relationship with oil. The
Greenback is also now trading at levels not seen against the Euro since late 2007.
Some analysts believe that the Dollar has bottomed out due to the ongoing slump in
the US trade deficit, rather than relative growth disappointments outside the US.
SocGen state that this could see the Dollar continue to rally even as US growth data
disappoints.

BetOnMarkets traders forsees that next week will be impacted by the three day OPEC
meeting which may dictate the future direction of oil prices. Monday top tier
announcement is the UK PPI data in the morning with similar inflationary data on
Tuesday with UK Manufacturing production. In the afternoon we get an update of the
ongoing US housing saga with month on month pending home sales. On Wednesday,
Trichet’s speech gets top billing as does the MPC treasury committee hearing on
Thursday. Friday sees a raft of US data with retail sales, PPI and University of
Michigan Consumer sentiment data. A one touch trade predicting that the USD/ EUR
exchange rate will hit 1.40 in at any time during the next 90 days could return 21%.


Web Site: http://www.BetOnMarkets.com

Contact Details: Mike Wright

Address:
Regent Markets (IOM) Limited
3rd Floor, 1-5 Church Street,
Douglas, Isle of Man IM1 2AG,
British Isles.

Phone: 448003762737

Email: editor@regentmarkets.com

URL: http://www.betonmarkets.com & http://www.betonmarkets.co.uk