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Liontrust Dealer's Blog - 30/06/2011

"My main objective is to be professional, but to kill him." Mike Tyson, former world heavyweight boxing champion, born June 30th 1966

The US market finished higher for a third straight session. The market initially traded sideways post our departure, had a little wobble mid afternoon but managed to rally going into the close to see the Dow close +0.10% from where we left it last night, the S&P +0.11% and the NASDAQ +0.01%. Volume on the NYSE was slightly better than we have seen it this week but still 4.7% below the 3 month average, while the NASDAQ was 8.1% below. Safe passage of the medium-term austerity package in Greece helped extend a risk-on trade that has prevailed throughout the week.

Liontrust Dealer's Roar - 29/06/2011

“Final vote - 155 yes 140 no 5 abs”  

US markets continued the encouraging price action post our departure with the S&P closing near its high up 0.47% from 16:30 UK time and up 0.92% on the day. Reports that German bankswere backing the French plans on cuts in addition to news that Portugal plus Spain would accelerate implementation of their austerity plans helped sentiment as did a feeling that the austerity vote in Greece would get through. The more cyclical plays, especially commodity equities, led the move higher and decent numbers from Nikewho raised sales forecasts on the back of Chinese/Brazilian demand helped consumer discretionary (stock rallied 10%). Asian markets followed suit for similar reasons, as eyes were also on the latest post-earthquake Japanese industrial production numbers. They rose 5.7% in May (est. up 5.5%) marking the highest move in more than 50 years (worth a graph methinks!). Japanese exporters to the European region rallied (on Greek hope) and the Nikkei actually closed at a seven week high.

Liontrust Dealer's Roar - 28/06/2011

“Patience is bitter, but its fruit is sweet” Jean-Jacques Rousseau, Genevan philosopher and writer, June 28th 1712 – July 2nd 1778

A painfully quiet start to the week in equities in the US following on from the woeful volume in London (see yesterday’s blog), with volumes tracking down about 14% against the 10 day mid-day average.  While there was a broad-based bid to the market  the move was hardly “risk-on.” Far Eastern markets followed the lead, which enabled the European markets to open in fine fettle this morning.  

Liontrust Dealer's Roar - 27/06/2011

“As the eagle was killed by the arrow winged with his own feather, so the hand of the world is wounded by its own skill” – Helen Keller, American author, political activist & lecturer, June 27th 1880 – June 1st 1968

US markets continued the drift started Friday afternoon as we came into the weekend, finally coming to close at the intra-day lows; S&P -0.35% from our departure. Like Europe, sovereign debt worries weighed on the banking sector while techs were dragged lower by Oracle (-4%) who despite a better than expected bottom line suffered after hardware sales declined and Micron (-13%) after the memory chip maker reported weak earnings.  

Liontrust Dealer's Roar - 24/06/2011

“Things are the way they are because they were the way they were” – Sir Fred Hoyle, English astronomer & mathematician, June 21st 1910 – October 3rd 1987

Yesterday felt pretty ugly in the markets so I was amazed to see that the S&P had only closed down 0.28% having been down 1.9% just before my departure from the office. The reason for the huge reversal in risk appetite, it transpired, was the agreement between the Greek government, IMF, ECB & IMF on an austerity package; details below. The funny thing is I don’t actually think this told us anything new andthe hurdle still remains the vote next Tuesday so the >1% rally was a pretty interesting move.  

Liontrust Dealer's Roar - 23/06/2011

“What you get free costs too much” Jean Anouilh, French dramatist, June 21st 1910 – October 3rd 1987

Matt’s suggestion yesterday that the Fed might nudge down growth expectations was spot on. Bernanke highlighted that the recovery was "moderate" and "somewhat slower than expected" however he added "we no longer have a deflation risk." With that in mind, there was no suggestion of adding to stimulus at the present time. He repeated his pledge to keep rates low "for an extended period."  

Liontrust Dealer's Roar - 22/06/2011

“This crisis is the only opportunity to change Greece’ - George Papandreouaddressing parliament prior to last night’s vote

US markets had a strong day yesterday as expectations that the Greek government would survive their no confidence vote rose. They actually did most of their motoring while we were active, with the moves post our departure pretty much negligible.  

Liontrust Dealer's Roar - 21/06/2011

“Only the guy who isn't rowing has time to rock the boat”. Jean-Paul Sartre, French philosopher, playwright and novelist, June 21st 1905 – April 15th 1980

The US market was probably set to decline again yesterday, before some fresh European news flow from the EU's Juncker helped equities and the EUR/USD close off their intraday lows. It should be noted however that volumes on Wall Street yesterday were pitiful.  

Liontrust Dealer's Roar - 20/06/2011

“Plötzlich und erwartet: Nachruf auf eine gemeinsame Währung” – Headline, Der Spiegel, 20/06/11, roughly translated – “Sudden & Expected: Obituary for a common currency”

On Friday the S&P managed to break the recent trend closing at 1271.50 which is 0.04% higher than the Friday night close a week previous, making it the first up week in 7. The size of the gain doesn’t really warrant rolling out the bunting but notably the Eurostoxx did a little better up 1.4% on the week. 

Liontrust Dealer's Roar - 17/06/2011

“If voting changed anything, they'd abolish it” – Ken Livingstone, born 17 June 1945.

With the estimate for the next ISM number falling to sub 50 post yesterday’s weak Philly Fed andWednesday’s weak Empire State numbers, the excellent fixed income team at DB this morning, (who track the relationship between the S&P andthe ISM number) suggest that things could get quite a bit worse...

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