Category Archives: Stockmarket

Stock Markets Haven’t Begun to Price In the Global Growth Shock

What’s been worrying a few investment strategists is the disconnect between stock markets and reality. Forward earning expectations are still unbelievably positive, considering Europe is being sucked into an economic black hole. And that’s after a number of major bellwethers, like FedEx and Caterpillar, have reported bleak earnings outlooks. When Caterpillar warns its sales are going to slump until 2015, it’s saying that we are about to experience a repeat of the 2009 crash, once the true state of the global economy becomes apparent to even the dimmest analyst. Just that this time it could be even worse.
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Pushing on a String in China Will Not Save its Stock Market

It’s all going to end in tears for China bulls who are putting way too much faith on China’s ability to stimulate the economy. Chinese premiere Wen Jiabao's may be pushing for growth through monetary policies and fiscal incentives, now that the regime has acknowledged the severity of China’s slowdown. Unfortunately, fine tuning measures will neither save the Chinese economy nor its stockmarket, which has yet to truly reflect reality.
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Weakening Metals Prices Presage Weaker Stock Markets

With Austerity in Europe and China’s property bubble deflating, it is not surprisingly that metals prices are weakening. But unless something drastically changes to push fundamental demand of metals higher, or the outlook for equities is not good, says Morgan Stanley.
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Is China Heading for a Hard Landing?

A “soft landing” in China is beginning to look like wishful thinking. To cushion the blow to exporters during the global financial crisis, the Chinese property bubble was inflated recklessly. Built on the foundations of excess investment the Chinese economy had become a house of cards requiring growth to avoid collapse. However, China has had to choke credit to the property sector because absurd property valuations and inflation were beginning to affect social stability. Now the runaway train of development is going off the rails just as the euro-zone crisis is threatening global trade, and the shockwaves will be felt across the world.
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A New Wave of Chinese Accounting Scandals Puts Pressure on Regulators to Act

The Sino Forest scandal last year put the spotlight on dodgy Chinese accounting. Chinese companies listed in the West and, were likely to become uninvestable, the Angry Analyst argued. Such negative publicity was also likely to damage confidence in Hong Kong listed stocks. Since then, a wave of new frauds in has hit Chinese companies in New York and Hong Kong, leading to growing pressure on Western regulators to take action.
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Has Standard & Poor’s Got Its US Numbers Wrong?

The S&P might just have catastrophically damaged its credibility. The US Treasury has just issued this rebuttal of S&P's downgrade of US debt. As if the ratings agencies did not have enough trouble in Europe, they have now given the US government justifiable cause to shake up the present ratings system. This basic error in its calculations appears irresponsibly casual and unprofessional, at the worst possible time. The scapegoating of the ratings agencies in Europe may be ludicrous, but it's a fair bet that EU politicians are going to make capital out of this. If S&P's downgrade was motivated by a desire to make up for its shortcomings during the credit bubble, it has seriously miscalculated.
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The West’s Manufacturing Continues to Pay for Green Gesture Politics

The true economic cost of Western government’s obsession with fighting global warming is becoming increasingly apparent. News that a fifth of the UK’s soaring energy bills now consist of hidden environmental subsidies has brought home the cost of Britain’s economically suicidal commitment to reduce CO2 emissions by 80% within 40 years. It can’t be long before there is a political backlash from consumers and industry against the West's green gesture politics.
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Transparently Time to Sell Chinese B Shares.

The entire Chinese stock market is feeling the weight of fraud fears, as growing concerns about accounting irregularities in US-listed stocks tars every stock with the same brush.
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A Plague of Fraud In Chinese Stocks

Corporate governance in China is known to be so appalling that wise investors steer well clear of the mainland. But the big story right now is the number of fraudulent companies listing on Western stock exchanges. Muddy Waters Research, the agency set up by short seller Carson Block, has been exposing one fraudulent company after another. And an SEC investigation is likely to lead to enforcement against a number of accounting firms.
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The Second Wave of Europe’s Banking Crisis is Crystallizing

As the crisis in the European financial sector deepens, trading patterns are indicating a major sell-off within the next month, if the market breaks out of the flag patterns forming in the MSCI European Financials Index. After all, the ECB’s extension of its liquidity safety net for vulnerable euro zone banks – and the guarantees for troubled banks in Ireland – can only fuel suspicion about skeletons in the closet.
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