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Friday, January 29, 2010

J.P. Morgan is going more global

Today the Financial Times reported the J.P. Morgan Chase & Co. (JPM) plans to launch a global corporate banking unit in order to sell loans and commercial banking services to multinational corporations. The unit is expected to have 300 bankers and to be focused on fast-developing markets like India, Brazil and China. Germany, Switzerland and the U.K. will also be targeted.
As Financial Times was told by Greg Guyett (the head of J.P. Morgan for Japan) who is expected to lead the unit from London "We are doing this now for a couple of reasons ... to balance our growth and increase the portion of our revenues that comes from outside the U.S. and from emerging markets in particular; and because, after the crisis, a number of our competitors are challenged".

Now some commentaries...

A notion that emerges from this news is that they see the end of the crisis coming. As this crisis was caused mostly by a financial distress and vanishing financing sources, an intention to build such a vehicle might mean at least two things:
  • They expect the need for financing to rise so they prepare the supply.
  • They don't expect any more great tremors of similar kind to the previous ones in their industry.

Surely it will take time for the unit to be built and become fully functional but their intention speaks there are no more severe shaking expected in the banking and financing industry. If that proves to be true what could happen in form of hard times for one company or another would be out of pure competition and not because of a excessive systematic risk level.

Another notion from this news is they have the resources to build such a global vehicle and now is the best time to start doing it in order to be ready when the big multinational corporations decide it's time to borrow again.

This will definitely make things harder for Citigroup or HSBC which are two of the other major global financing institutions. We'll see what the future holds but whatever happens it's always a good thing for the competitions and clients to have another big player in the field.

Wednesday, January 27, 2010

FOMC rate unchanged

The Federal Open Market Committee left the interest rate unchanged - at 0.25%. That was more than expected. What was slightly more unexpected from the broad market was the more upbeat expectations of the FOMC. Part of the real words used in the statement were

"Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. Firms have brought inventory stocks into better alignment with sales. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability."

These words are much more upbeat than anything in the last several years. Still there is a caution expressed and the committee clearly prefers to leave the target rate unchanged while the US economy becomes more stable.

With so much unemployment and lesser material costs it is not surprisingly they don't see a high inflation in the near future - "with longer-term inflation expectations stable, inflation is likely to be subdued for some time".

With that in mind the FOMC states the economic conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period". An interesting thing to notice is that there was one voter against the policy - "Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted". This in fact in sync with the positive tune of the statement and could be pointing that the change in the FED target rate is getting closer.

Still the FOMC main purpose seem to be to ensure the overall recovery from the recession and lifting the target rate will be done after they are sure the improvement won't be damaged by the higher rate.

As the current crisis is caused mostly by excessive lending and risky operations the statement that "...While bank lending continues to contract, financial market conditions remain supportive of economic growth." is maybe one of the most important.

What could be expected in the next several months?

An optimistic view is that the lower rates will continue to be present and as the trust between financial institutions is regained they will start lending more easily to each other. After that such a low target rate won't be needed anymore. In the mean time the unemployment could gravitate around the current levels but the business could start to produce again. Supported not on the last place by the stabilized banks. Only after the companies start to gain some power the unemployment will start to fall as there will be more workers needed again.

The expanding long Eurodollars positions of the Non-commercial players on the futures market support the view about more easy and cheap access to dollars in the next 3 months. These players basicaly happen to be the ones that lend the dollars.

The whole FOMC statement as presented on Marketwatch.

Saturday, January 23, 2010

Downloading Financial Data

This is a bit more technical post but I hope it will be helpful to someone.

Downloading raw financial and market data for the stocks you follow to your own computer gives you ability to manipulate it in any way you'd like and to create your own unique trading systems. It could give you a chance to test systems and trading methods with historical data and choose the one that best suits your style and vision toward the financial market.
The data could be downloaded from the web as a comma separated file (.csv) and then imported in your application, be it excel or any other of similar kind. The usual problem with the download link the websites offer is that the file you download will contain only the types of data the website decided to put in. As with the data you could download from the Quotes section of - the download link gives you a file with the company stock symbol, the price of the last deal, the time of the last deal, the change (in percent), open price, high,low and volume. These data types are determined by the values sent to the server through the link which in this case are "sl1d1t1c1ohgv". The result would be a row similar to the following one:


The Yahoo interface however has a much wider capabilities and it could be useful to know them. Below is a table with variables which could be sent to the website and each of them will result in different type of data to be returned to you or your application.

Average Daily Volume
Ask Size
Ask (Real-time)
Bid (Real-time)
Book Value
Bid Size
Change & Percent Change
Change (Real-time)
After Hours Change (Real-time)
Last Trade Date
Trade Date
Error Indication (returned for symbol changed / invalid)
EPS Estimate Current Year
EPS Estimate Next Year
EPS Estimate Next Quarter
Float Shares
Day’s Low
Day’s High
52-week Low
52-week High
Holdings Gain Percent
Annualized Gain
Holdings Gain
Holdings Gain Percent (Real-time)
Holdings Gain (Real-time)
More Info
Order Book (Real-time)
Market Capitalization
Market Cap (Real-time)
Change From 52-week Low
Percent Change From 52-week Low
Last Trade (Real-time) With Time
Change Percent (Real-time)
Last Trade Size
Change From 52-week High
Percebt Change From 52-week High
Last Trade (With Time)
Last Trade (Price Only)
High Limit
Low Limit
Day’s Range
Day’s Range (Real-time)
50-day Moving Average
200-day Moving Average
Change From 200-day Moving Average
Percent Change From 200-day Moving Average
Change From 50-day Moving Average
Percent Change From 50-day Moving Average
Previous Close
Price Paid
Change in Percent
Ex-Dividend Date
P/E Ratio
Dividend Pay Date
P/E Ratio (Real-time)
PEG Ratio
Price/EPS Estimate Current Year
Price/EPS Estimate Next Year
Shares Owned
Short Ratio
Last Trade Time
Trade Links
Ticker Trend
1 yr Target Price
Holdings Value
Holdings Value (Real-time)
52-week Range
Day’s Value Change
Day’s Value Change (Real-time)
Stock Exchange
Dividend Yield

So a request to an url like will give you a .csv file with the following content:


Notice how the particular companies whose stock you would like to get the data for are written with a plus sign between them. That way you can get data for almost any stock you want. You can also download data for all companies in indexes such as S&P500 - the symbol for that would be "@%5EGSPC" which is to be put instead of the companies symbols in the URL. Yahoo has some limitations to the number of companies you can download data at once so you should respect that number.

The data could be downloaded directly to your favorite application. On the net there are some already prepared .xls files like those on gummy-stuff site. If you know how to make your own macros in .xls or similar files you can perfectly organize your own system and track the data you want.

Saturday, January 9, 2010

Several ways to extend your exposure to the market

In bear markets no one wants to have much exposure to the markets. That is if you don't feel comfortable in taking short positions. If you like them, it's better to be as much exposed as you could. But even in that case you  usually don't need extra cash but just enough shares from which you could borrow.

In a bull market the more money you put in it, the more you could gain. The problem is that sometimes you don't have enough free cash to input. In times like this one option you may choose is to extend your leverage. A good thing about today's economic world is you don't have always to use your own money to get more share of the market.

N.B. An important notice about leverage is that along with the ability to extend your long positions without adding your own extra cash, leveraging increases the risk of losing all your money. So it should be used carefully and only by persons who know what they are doing.

Leveraging basically means to extend your buying power by some additional cash. A leverage level of 2 to 1 would mean that you operate with twice the money you own and half of that money is yours while the other one is borrowed. For that borrowed part you usually pay interest rate but it gives you the ability to own twice as more quantity of the shares or other type equity as you would own without the additional money. Respectively a leverage level of zero or 1 would mean that you operate only with your own money.

The simplest way to increase your leverage is to use borrowed money. Apart from the any obvious ways to borrow money you could find any of your local banks offering a special deal called "repo deal". You can check some definition of repo deals but basically these deals present a contract on the basis of which you get money that is secured by the shares you own. That way in any case you fail to make your payments the bank could sell your shares in order to return the money it gave you. So in a bear market this could present a very significant risk to your holdings. This could not be the case in a bull market though. Repo deals could be used for short term financing as well as for a long term one. They are a common tool for many corporations, banks or investment vehicles but in some countries and markets could be offered also to individuals.

A more common way to increase your leverage on a developed market is to arrange some level of margin with your broker. According to the level your broker offers you you could be able to extend your buying power significantly. The level vary and you may see a 10% leverage as well as 100% and more. A 10% margin means that your broker would allow you to buy shares for 10% more than the equity you have in your account with them. Respectively a 100% level would increase your buying power by 100%. Usually you pay a little interest on that borrowed money which is quite normal but you should keep it in mind when you calculate your results.

A relatively new way to get an extended exposure to the markets is by trading CFDs. The name comes from "contract for difference" and when you trade them you don't actually buy the underlying stock. A good explanation on what are CFDs will inform you about their nature, what risks and abilities they present and how they could be used. Usually the companies that offer CFD trading will give you access to not only the stock markets but also to Foreign Exchange market (FOREX). With CFDs you could normally get a leverage of 5 to 100 times your initial capital. This means that you could have a buying power of 100 times your own cash, i.e. if you put $1000 in a CFD account you could buy for $100000. This could increase your profits but increases your risk accordingly.

With every type of leverage one should be aware of the higher risk level they all present. The bank credit and the repo deals could present a lower risk than the margin account or CDF trading but there is still a risk. Simply put the risk in leveraging is that you could lose more than you have! On the other hand is the possibility to significantly speed up your profits.

Citi (C) price-volume relation, 2nd edition

At the previous post on Citi stock price volume relation the price of $3.66 was mentioned as possible. The next day (Jan 06, '10) that price was achieved as you may seen on the graph on the left. Comparing the close prices that makes 3.39% gain for a day. That $3.66 price was on the EMA 30 and not surprisingly the next day the price didn't advance more. It made only $0.01 advance on the close price but still the volume was the same as the previous days. During that day (Jan 07, '10) there were prices as high as $3.70 so that was a good time to sell if aiming at a very short time trades. For the two days the gain would be 5.11% which is not bad for the short period of 2 days.
Price Change
Traded Volume
+ $0.10
+ $0.13
+ $0.12
+ $0.1
- $0.07

What could be expected next? Yesterday the price fell in accordance with the gloomy mood of the market. Still after touching the $3.50 level it managed to cover most of the loses and closed only 7 cents below the previous close. The volume was slightly lower. With that said there is a chance to see a recovery of the price soon.

Tuesday, January 5, 2010

Citi (C) price-volume relation

The first two trading days for 2010 presented an interesting picture of Citi trading. After lingering between $3.20 - $3.40 for several weeks, the stock seem to making an attempt to head on north. Still on the daily graph the Moving Averages are not positively crossed so the upward movement is not confirmed. But...

Consider the following data:

Date Price Change Traded Volume
04.01.2010 + $0.10
+ $0.13

The simple rule is:

When there is an increase in the price supported by an increase in the traded volume, the price will continue to go higher.

Having this in mind it wouldn't be a surprise to see another increase of Citi stock price tomorrow. At least to the Moving Average which is at $3.66. The traded volume could give an idea if that increase will continue.

10 Biggest Surprises for 2010 According to Byron R. Wien

Yesterday the chief advisor and Vice Chairman of Blackstone Advisory Services Byron Wien posted his list of best surprises for 2010. Nothing wrong with that. The person has done it for about quarter of century and is expected to have grown widely in his ability to See - a feature more important than anything in this field of economic activity.
Some of the insights look more striking and bold than others. Some seem to be more of expectations than surprises. The good thing is most of the ideas are not reality now. If they will ever become one is about to be seen.
Many of the "surprises" are in line with our own expectations but time will tell.

Below is the full list Byron Wien's surprises:

Byron R. Wien, Vice Chairman, Blackstone Advisory Services, today issued his list of the Ten Surprises for 2010. This is the 25th year Byron has given his predictions of a number of economic, financial market and political surprises for the coming year. He started the tradition in 1986 when he was the Chief U.S. Investment Strategist at Morgan Stanley. Byron joined The Blackstone Group in September 2009 as a senior advisor to both the Firm and its clients in analyzing economic, political, market and social trends.
  • The United States economy grows at a stronger than expected 5% real rate during the year and the unemployment level drops below 9%. Exports, inventory building and technology spending lead the way. Standard and Poor’s 500 operating earnings come in above $80
  • The Federal Reserve decides the economy is strong enough for them to move away from zero interest rate policy. In a series of successive hikes beginning in the second quarter the Federal funds rate reaches 2% by year-end
  • Heavy borrowing by the U.S. Treasury and some reluctance by foreign central banks to keep buying notes and bonds drives the yield on the 10-year Treasury above 5.5%. Banks loan more to corporations and individuals and pull away from the carry trade, thereby reducing demand for Treasuries. Obama says, “The suits are finally listening”
  • In a roller coaster year the Standard and Poor’s 500 rallies to 1300 in the first half and then runs out of steam and declines to 1000, ending where it started at 1115.10. Even though the economy is strong and earnings exceed expectations, rising interest rates and full valuations present a problem. Concern about longer term growth and obligations to reduce leverage at both the public and private level unsettle investors
  • Because it is significantly undervalued on a purchasing power parity basis, the dollar rallies against the yen and the euro. It exceeds 100 on the yen and the euro drops below $1.30 as the long slide of the greenback is interrupted. Longer term prospects remain uncertain
  • Japan stands out as the best performing major industrialized market in the world as its currency weakens and its exports improve. Investors focus on the attractive valuations of dozens of medium sized companies in a market selling at one quarter of its 1989 high. The Nikkei 225 rises above 12,000
  • Believing he must be a leader in climate control initiatives, President Obama endorses legislation favorable for nuclear power development. Arguing that going nuclear is essential for the environment, will create jobs and reduce costs, Congress passes bills providing loans and subsidies for new plants, the first since 1979. Coal accounts for about 50% of electrical power generation, and Obama wants to reduce that to 25% by 2020
  • The improvement in the U.S. economy energizes the Obama administration. The White House undergoes some reorganization and regains its momentum. In the November Congressional election the Democrats only lose 20 seats, much less than expected
  • When it finally passes, financial service legislation, like the health care bill, proves to be softer on the industry than originally feared. There is greater consumer protection, more transparency, tighter restriction of leverage and increased scrutiny of derivatives, but the regulatory changes for investment bankers and hedge funds are not onerous. Trading volume and merger activity increases; financial service stocks become exceptional performers in the U.S. market
  • Civil unrest in Iran reaches a crescendo. Ayatollah Khameini pushes out Mahmoud Ahmadinejad in favor of a more public relations adept leader. Economic improvement becomes the key issue and anti-Israel rhetoric subsides. Talks with the U.S. and Europe begin but the country remains a nuclear threat. Pakistan becomes the hotspot in the region because of the weak government there, anti-American sentiment, active terrorist groups and concerns about the security of the country’s nuclear arsenal 

Daily Economic Calendar

This is an Economic calendar. Here you can follow the main economy and stock or forex market news for the current day - see the actual data and compare it with the analysts consensus and the actual data released for the previous period. The table is updated daily and on every data release! If you refresh the page after the release time of the data, the table will show the newly released data. Generously provided by Enjoy! :)

A Strong Start For the US Stock Markets?

Sure enough. But could this mark something deeper than just a regular New Year's fever? It might be...

On the first trading day of 2010 the main US indices finished as follows:
  • S&P 500 - 1133, Change +17.89, +1.60% 
  • Dow Jones Industrial Average - 10584, Change +155.83, +1.49%
  • Nasdaq 100 - 1887, Change +26.39, +1.42%

About 2-3 months ago there was a post named "Bullish markets climb a wall of worry" which presented some technical insight on the market movement and all the talks about the "needed" correction. Then the SPX went around the noted level of 1040 and started going up again. So today we are still hearing all the correction talks while the markets continue to climb. This is an interesting fact alone.

Another interesting point to note is the last December movement of the stock markets. Till that month whenever the US Dollar traded lower to the Euro, the higher the US stock markets went. And the more important - whenever the Dollar traded higher, the crude oil AND the US markets went lower. The last December broke that correlation. The Dollar made one of its strongest movements against the Euro and the US markets didn't fall! Interesting enough... Add to this the fact that the Crude oil got priced higher even as the US Dollar became more expensive.

This could mark the beginning of a breakage of more than two years of strong negative correlation between the US Dollar and the US stock markets. If that happen to be the case, there could be no such deep correction of the stock prices in the near future that most people seem to expect.

In the mean time the economy could continue to improve. This in turn will bring higher results in the company reports which to justify the higher prices and calm the mass investors. Still the things don't seem calm enough. But if they were, there wouldn't be any wall of worry to climb. If there is no such wall, will this be called a bull market?.. :)

There will be corrections, of course. But the December movement showed the stock markets could have the strength to hold on.