Markets are on a big move!!

Most main markets are very highly correlated (correlation is a statistical measure, it indicates strength of relationship between data). Specifically, the big falls and rises tend to happen in tandem. DAX and CAC, or FTSE and DowJones on a daily basis on average might move by differing magnitude and direction. However, what correltion tells us is that there are some moves that tend to co-occur. A simple analysis of the indices data shows that it is the large moves that tend to co-occur most often.

Today the 6th July (Monday) is one of those days, a large and negative move throughout all main markets has pertruded world markets. Also on a larger granularity, over March, April, May FTSE market has steadily increased in value, and a negative trend is clearly emerging during June and July! Dow Jones, DAX, CAC, NYSE, etc... show all the same pattern, not surprising since mass psychology affects every market participant to a degree.

In my opinion, July will with certainty see some decrease of valuation over all major indices. Reasons??! A number of them: Macroeconomic figures, Company outlooks, political, environmental stability and most Technical Analysis points towards investors' uncertainty surrounding recent price advances.

44th US president and the Markets

Yesterday (20th January 2008) saw the Dow Jones drop by a massive 4%. The fall on the market came on the same day Barack Obama was sworn in as the 44th US president. Notice all these 4, by the way, only joking lets better not look for such patterns :-)!

As explanations and analyses for this drop began to appear in the financial media, I was just thinking to myself, this is just very, very, very bad. The media, brought forward a number of reasons for the drop;

1. the first reason - bad company reports, such as Bank of America, JP Morgan, City Group, Bank of New York Mellon (88% fall in profits) or others - just check out this bbc.finance article.
2. the second reason - apparently the speach that Obama gave at his inauguration, highlighted how bad the challenges for the US economy really are.

It is clear the bad company news are negative and the challenges highlighted by President Barack Obama might have hit a nerve with investors.

Imagine this however;

1. a young, determined president takes office and promises to adress and deal with the economical challenges directly and as swiftly as humanly possible
2. after an avalanche of negative quarterly reports, finally a positive one appears as IBM announces surprisingly good profit forecasts above analysts expectations.

So among all the bad news... especially yesterday had the chance to be a good day, but the markets decided otherwise. This shows that current market mood seems to fuel negative moves and if the mood isn't right, the whole market won't be.

A Happy New Year in the Crisis!

Hmmmm... well, well, what a start to the new year - highest unemployment numbers in the states since god knows how many years, bust businesses (Virgin's Zaavi, Woolworths,...), lowest interest rates and risks of deflationary nature, gas supply problems into significant parts of Central and Eastern Europe from Russia (via Ukraine) and like all this isn't enough we also have a flaming war in GAZA.... mhm, excuse me, I ment a Genocide and a most horrible humanitarian crisis!!

...the last year also wasn't the best one, in fact it was the worst one for the stockmarket, a truly most horrible financial debt crisis since 1929 (I highly recommend for readers to at least check out this link of Dow Jones' historical index).

Given all this, what is the prognosis for 2009, well it looks to be a very gloomy year Economically and Politically... the Middle East, UN, Economic crisis, and Financial regulation will most likely be in the forefront this year.

As every year, there are also a number of bright sides, this year should (whatever everyone says) see the bottom to the falling and battered equity markets and hence certain diversified portfolo investments (with minimised systematic risk) on the long side might be right this year as a turnaround in economic prospects is eventually invevitable.

More on this, and specific investment ideas & brainstorming, in my future posts!

So no approval, hmm...

Rescue package didn't gain congressional backing. There was always the possibility of this happening, the rescue package of $700b announced on 19th September has failed to get approval by lawmakers. The effect was a fall of UK's FTSE 100 index by 3% before recovering to rise to 0.3% by later morning hours. Biggest losers was the banking sector in the UK, with HBOS down 10% and Royal Bank of Scotland 10% lower. Relevant articles can be found on http://news.bbc.co.uk/1/hi/business/7643441.stm and http://biz.yahoo.com/ap/080930/wall_street.html.

• Dow Jones fell on Monday 29th by 6.98% (777.68 points) one of the largest one day drops ever
  
• In the UK, FTSE 100 fell by 3% early morning but recovered quickly. Hopes in Europe are still strong on getting a rescue package approved soon.