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Those of us who have been in this game for a while always breathe a sigh of relief when the month of October draws to a close. Equity markets have seen a fair amount of turmoil in a fair few past Octobers, but not this year. The early part of November could be quite lively, with a raft of macro data due in the US, as well as the crucial FOMC meeting and the long awaited result of the QE2, will they/won’t they and, if so, how much conundrum! Insofar as one can glean a consensus view on QE2, it would seem that $500bn of QE is priced in and that anything less will leave risk assets looking vulnerable. 

Liontrust Dealer's Blog - 28/10/2010

The US markets were on their lows around 18:30 UK time but staged a near 1% rally in the last three hours of trading last night. The move was all the more impressive as it came in the face of a strong $ and weaker Treasuries. Explaining the move is a little more tricky, but one trader I respect sighted continuing bid chatter (Avon Prods, Macy’s, Immcor, Monsanto) as rather putting off new shorts.  

Liontrust Dealer's Blog - 27/10/2010

RIP : Paul the Octopus : January 2008 – October 2010. A farewell to arms………

Renowned British strategist at Societe Generale James Montier was once quoted as saying:  “The evidence on the folly of forecasting is overwhelming”, whether you are talking about economists or stock broking analysts. “Frankly,the three blind mice have more credibility than any macro-forecaster at seeing what is coming” is his verdict on economists. And,as the apocryphal line goes, economists have predicted nine of the last five recessions!

The reason for mentioning the above is that the finest forecaster of modern times, Paul the Octopus,is no longer. For those of you who do not have a football bent, Paul correctly predicted (by way of selecting a mussel to consume from one of two boxes, each marked with national flags) the outcome of all seven of Germany’s matches in this year’s World Cup. He passed away yesterday, when all three of his hearts ceased to beat at once.

Liontrust Dealer's Blog

The S&P trod water before falling in the last 30 minutes of trading to see it close -0.44% from 16:30 UK time. Without any obvious catalyst I could uncover, I’ll have to fall back on the hackneyed stock-market axiom “more sellers than buyers”. The main thing that caught my eye came from the bond markets as the Treasury sold $10bn worth of TIPS (inflation protected securities) at a negative yield of 0.55% for the first time ever. Rather confusing at first glance, but it seems investors are now so worried about inflation they are willing to pay for protection against it.

Liontrust Dealer's Blog

Post our departure on Friday, the US markets closed in-line to small up, though volumes were pitifully small pre the G20 meeting, one trader commenting it felt like a holiday. The main take away from the meeting was a loosening of tensions as leaders “aim to avoid competitive devaluation of currencies” and the immediate effect was a resumption of USD weakness. This paved the way for a stronger overnight session in Asia which also saw the Singapore Exchange bid for the dominant Australian exchange, ASX (on a rather foxy multiple).

Liontrust Dealer's Blog - 22/10/2010

The US initially sold off post the UK close last night but by the finish had recovered to close up small on the day. Commentary pointed to concerns over a stronger dollar but it didn’t really move that much given recent volatility.Amazon shares fell in after-hours trading as profits didn’t meet expectations; it has been investing a lot in marketing (new Kindle) and a new warehouse recently. 

Liontrust Dealer's Blog

Post our close the US markets didn’t move much, hanging onto their gains and wiping out all the China-rate-hike induced losses from Tuesday. There didn’t appear to be any specific catalyst for the pick-up in risk sentiment but QE2 expectations received a boost as an advisory report from  prominent consulting firm Medley Global Advisors suggested the Fed’s wallet is bulging with another$500bn to be spent in the next 3-6 months.

Liontrust Dealer's Blog - 20/10/2010

Yesterday ended with the S&P looking decidedly queasy. In recent weeks equity investors have looked as comfortable as David Gower on a flat track at the Oval in mid August, but yesterday cloud cover rolled in and the ball started to spit off a length!

Liontrust Dealer's Blog

US markets managed to push on higher last night, closing near the intra-day highs thanks to reduced fears over the mortgage foreclosure situation, a small rise in NAHB sentiment and a positive take on Citigroup earnings. Post the close Apple & IBM both released numbers & both rather clumsily missed estimates. The former especially weighing on sentiment in the Asian markets, which closed mixed (fins better, techs weaker).

Liontrust Dealer's Blog - 18/10/2010

Bernanke's speech on Friday left us with no further insights around the execution details of 'QE2' but the comment "Given the Committee's objectives, there would appear - all else being equal - to be a case for further action" left the market pretty certain that QE2 is coming in just over two weeks.

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