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Liontrust Dealer's Blog - 28/02/2011

 “The best way to have a good idea is to have lots of ideas” Linus Pauling, American chemist, peace activist and author, February 28th 1901 – August 19th 1994

The end of week rally continued into the close on Wall Street on Friday, but there has been little sign of a let-up in geopolitical tensions over the weekend.Saudi stocks down were down more than 5% on Sunday. The benchmark equity index has been down 10 days in a row and is around its 9-month low as the unrest continues to spread across the region. In Saudi Arabia itself more than 100 political activists are calling for improved political rights and for a move towards a constitutional monarchy (according to Bloomberg news). Across in Oman, Reuters reported that police clashed with pro-democracy protestors who demanded political reforms. There were also reports of protest gathering in Beirut, Lebanon. Interestingly the WSJ overnight reported that China mobilised a SWAT team in central Beijing after anonymous online activists called for people to start a "Jasmine Revolution" for the second Sunday in a row.

Liontrust Dealer's Blog - 25/02/2011

Overnight US markets managed to hold the trend support channel I highlighted yesterday, with the S&P closing a smidgen up from out departure at 1309. This doesn’t quite tell the whole story of the day as at 7pm our time the Index was down just over 1% (1294) so it actually had a pretty strong intra-day rally. The cause of the rally seems to be a rumour emanating from somewhere that Gaddafi had been shot, sending the WTI price below $100, but in the end it wasn’t good enough to cause the Index to finish in positive territory. The Nasdaq did manage that feat however thanks to a decent reboundfromApple (rumours of ipad 2 to be released next week), Microsoft andIntel. Of note in after hours trading,Boeing rallied 3.75% after it beat EADS to a $30-$35bn air refuelling tanker contract.

Liontrust Dealer's Blog - 24/02/2011

"Gaddafi's time is up. He is going to go like Hitler. He is going to commit suicide"-Mustapha Abdeljalil

Despite a relief rally off the lows the S&P once again closed in the red, with the sell signal Tom Demark was looking for firmly made (see yesterday’s blog) as the market closed at 1307.04. The continued risk aversion (VIX +5.6%) and higher oil prices are still to blame with the alarmist note from Nomura ($220 oil, again see yesterday) not particularly helping. It must be said,although contagion fears may be justified,news I’ve seen from both Saudi Arabia andAlgeria doesn’t suggest any immediate uprising.

Liontrust Dealer's Blog - 23/02/2011

“I am in

The US opened after it’s long weekend with market participants wondering what the reaction would be to recent turmoil in the Middle East after a four month rally with barely a correction. On first read, the developments did not look encouraging with the S&P opening down c1.2% before trending down for most the day to close down over 2% near the lows of the session. Looking at the chart of the day, however, post a knee-jerk down on the open, the sell-off appeared to me to be rather more orderly than one would have expected. As one technical team also pointed out this morning, the Index is still above its 20 day moving average and it’s only an 11 day low so it’s pretty hard to say any support levels have been broken.

Liontrust Dealer's Blog - 22/02/2010

“I am in Tripoli and not in Venezuela. Do not believe these channels belonging to stray dogs” – Moammar Gaddafi

With the US markets closed yesterday,the world’s attention overnight continued to focus on developments in the Middle East with the possibility of civil war breaking out in Libya. Reports on the BBC suggested Gaddafi had ordered the Libyan air force to fire on military installations andAl Jazeera suggested that air force fighters have opened fire on crowds of protestors. Due to a media blackout information was sketchy but as global intelligence agency STRATFOR commented below, the possibility of regime change is in the air. Gaddafi appeared on state tv in a bizarre clip (quote above) to scotch rumours he had fled the country, appearing sitting in a car with the door open, holding a large grey umbrella. He was on air for less than one minute.

Liontrust Dealer's Blog - 21/02/2011

“I think the rich will eventually have to cave in too, because the economic situation around the world is not gonna tolerate the United States being on top forever.” Nina Simone, American singer/songwriter/civil rights activist February 21st 1933 – April 21st 2003

Geopolitical issues in the Middle East and North Africa continue to attract the attention of the rest of the world, with Bahrain and Libya still at the forefront. Markets are continuing to take a pretty laid back attitude, but probably worth noting the following regarding the banking sector in Bahrain:

As if geopolitical instability in the Mideast weren't inherently reason enough for investors to worry, here's another angle to consider. Bahrain's banking sector is far and away the biggest (relative to GDP) of any country in the region.

Liontrust Dealer's Blog - 18/02/2011

“If we start counting our chickens before they hatch, they won’t lay any eggs in the basket” – Bobby Robson (18/02/33 – 31/07/09)

US markets made new (recent) highs once again overnight with the S&P closing at just over 1340, taking out all near term resistance levels (the next one being talked about is 1350 FYI) as traders decided to focus on the strong Philly Fed number rather than the still dire unemployment situation. The market continues to grind higher in face of the indications this week inflation is picking up as economists have generally been downplaying the chance of a shift in developed country monetary policy. 

Liontrust Dealer's Blog - 17/02/2011

When everyone is bearish, a market must go up because there are no sellers left; conversely, when everyone is bullish, a market must go down because there are no buyers left – Unknown

The FOMC committee meeting overnight provided a continued tailwind for the market as did the better housing data, more M&A (Trian Group/Family Dollar) andsome decent numbers (Dell closed up 11%). Though the minutes showed some recognition of the strengthening,recovery QE remains firmly on the table until unemployment improves. Inflation was also discussed, though many participants expect measures of core inflation to remain near current levels in coming quarters (i.e. they don’t appear overly worried about it currently).

Liontrust Dealer's Blog - 16/02/2011

Amazingly overnight the US market didn’t rise with the S&P -0.3%, Dow -0.34% and Nasdaq -0.46%. The fall on the Dow was the second biggest since November 26th2010 andthe S&P’s was the worst since 28thJanuary which,given the tiny magnitude of the falls,just goes to show what a great bull run we’re enjoying, though anecdotally it still seems as if people are still not fully invested so ‘enjoying’ is probably the wrong choice of phrase. Trading was described as fairly uneventful with those poor retail sales numbers andrising import costs weighing on people minds’. Pricing pressures were also mentioned within the Empire Manufacturing Survey,though the headline was better if you remember. Big stock news came from Exxon who fell as itslatest reserve report points to a move toward gas from oil (which is less profitable) andafter hours from Dell thatrallied 6% thanks to a doubling of itsprofit. Asian markets closed mixed with Japan rallying as Nomura Financial raised itsgrowth expectations for the Japanese economy andthe country signed a free-trade pact with India under which they plan to scrap tariffs on 94% of goods with a decade. The Korean market fell as the jobless rate rose to a four-month high in January.

Liontrust Dealer's Blog - 15/02/2011

“A committee is a cul-de-sac down which ideas are lured and then quietly strangled” - Barnett Cocks

Overnight the S&P moved to within a whisker of double the low we saw on 6th March 2009 (666.79) to touch a high of 1332.96, trading in a tight range. This is apparently significant andin a funny way given the market is made up of a crowd which can be highly irrational at times it’s pretty easy to see why.  

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