Bank of America breaks the 5$ Maginot line

There was a wide debate going on whether the Bank of America stock price will drop below the 5$ psychological support level. It was deemed as protected by a vast amount of bids and though as the point of no return signalling a market correction. Now it happened folks: BA dropped to 4.95 and it is currently holding that level, which means we are in store for a correction in the US equities, a correction most probably caused and led by the financial sector. This could actually be the market sell-off that Bernanke is waiting for to allow him to announce QE3 in January.

China opened the flood doors by cutting reserve requirements

When the world screams for liquidity (shown by the increasing inter-banking swap rates), China comes to the rescue by lowering the reserve requirements and therefore unleashing a new wave of cheap money into the system. The markets responded very quick to this Chinese monetary stimulus, with equity and commodities spiking up, in a risk-on trade. Furthermore, in a following move, most of the leading Central Banks are now receiving USD swaps by 50 basis points less. Result: cheaper money.

Gold "beware": Better than expected initial jobless claims at 390.000

The number of US citizen filing for unemployment benefits fell last week  to the lowes figure recorded in 7 months. They printed at 390.000 (in seasonally adjusted data), down 10.000 from last week's figure. There were 398.753 initial claimants under state programs, without any adjustments, in the week ending with November 5, an increase of 29,106 from previous week. According to the Bureau of Labor Statistics the official number of unemployed citizen is still at 13.9 million, adding up to an unemployment rate of 9.0%. There is simply not enough job creation and not in the right sectors.

Nice old algo-trading in USD/HUF

A time will come when human trading will become obsolete, with algorithmic, or robo, or the so-called black box trading tacking its place. Why take the time and analyze the market direction when you can have a high frequency robo-trader which takes advantage of pockets of liquidity and scalps a few pips out of the market ? Some recent examples include the May 2010 Flash crash when the DOW slumped for more than 1000 points as what seems to be the result of high frequency trading and algorithmic trading. What happens if there will be an error in the Matrix again ?

Market Talk: Risk-off day in all major asset classes

A sharp reaction from the financial markets came today after the participants expect further economic turmoil. US Stocks slump as the Goldman Sachs reported its second quarterly loss in almost 12 years and as IBM shows signs of weekness. Commodities drop, precious metals leading with Gold down 2.46%, and silver down 1.86%. Just a Manic Monday.

Smoke and mirrors in finance and investment

This blog is created to provide quality economic, financial and investment analysis. Whilst sometimes focusing on macroeconomics or microeconomics, the clear tendency is to stick to down-to-earth common sense.

In the investment world, as you may know, common sense is not so common.