Nissan calls back its cars. Will it affect stock markets?

Market Leader informed

Nissan has announced a recall of more than 2 million cars with flawed engine system. Micra, Note, Tiida and Titan models will be accepted at Nissan service centers for eliminating the problem.

Those cars that need repairing were made in the USA, Japan, Great Britain, China, Spain and Taiwan. The greatest amount of the cars will be called back in Japan (835.000), Europe (354.000), the US and Canada (762.000). In order to eliminate the defects the owners just need to drive to the nearest service center and spend 25 min waiting for the car to be repaired. And it’s absolutely free.

Nissan is Japan’s 2nd largest automaker. Every year it sells over 4 million cars in 50 countries of the world. The net revenue is more than $100B. Previously there were other mass recalls in the history of Nissan, which speaks in favor of the company’s care about its numerous clients and not about the low quality of its products.

It should be reminded that in March Nissan called back 540.000 cars in Canada, USA, Middle East states and Russia for eliminating the brake and fuel-gauge problems. Among the affected models were the following:
* Infiniti QX56
* Nissan Titan
* Nissan Quest (2008-2009 model years)
* Nissan Armada (2008-2010 model years)

Besides, among the models affected by the fuel gauge problem were Infiniti QX56, Nissan Titan, Nissan Frontier, Armada, Pathfinder and Xterra (2005-2008 model years).

High uncertainty about the Fed and EUR/USD

Market Leader informed

Since the beginning of the week the direction of EUR/USD was changing: firstly the greenback strengthened and the pair lowered from Monday’s maximum at 1.4080 to Wednesday’s minimum at 1.3733. On Thursday US currency slumped and the pair rebounded to 1.3950, while today EUR/USD turned downwards again.

Elizabeth Belugina an analyst of FBS brokerage company notes that such dynamics may be explained by the high uncertainty ahead of the Fed’s meeting as investors seem very unsure about what exactly will be decided about US monetary policy and how the market will react to it. At first the confidence in the US dollar increased due to the speculation that the amount of quantitative easing would be less than expected. On Thursday, however, the market players felt worried about the negative pressure that the decision to expand monetary stimulus will make on dollar’s rate inciting new wave of USD selling.

It’s quite clear that the entire market is focused on the Fed’s decision coming next week.

Georgia’s Accession to EU: Telling Tbilisi’s Propaganda and Current Realities Apart

Market Leader informed

The Ministry of Foreign Affairs of Georgia and the European Union’s Foreign Affairs Council commenced official negotiations on preparation for the issue of Georgia gaining EU associate membership. This effort is made within the Eastern Partnership initiative – a special project intended to bring the European Union and six post-soviet states closer (such as Ukraine, Belarus, Moldova, Armenia, Azerbaijan and Georgia).

What is the EU Eastern Membership program essentially about? The program is intended to help the EU establish special relations with its neighbors, in this particular case – in the east. This policy is not an expression of a certain strategic vector and in no way means any special preferences that Europeans may have to these 6 states, including Georgia, as explained by experts of the Masterforex-V Trading Academy. On the contrary, Eastern Partnership is put in practice together with other, similar projects: the Northern Dimension and the Union for the Mediterranean. The former is to strengthen dialog with Northern countries that are not part of the EU (Iceland, Norway, Russia). The latter is to find common ground with nations of the Mediterranean basin.

There’s one, very pragmatic purpose behind such foreign political initiatives of the EU: evade the debate over the above nations’ potential direct membership in the European Union by sidetracking the discussion of this critical issue to endless negotiations on visa agreements, preparation of free trade agreements, mutual assurances of strategic partnership etc. Ultimately, such communication will invariably involve a promise to consider the possibility of giving a certain country some sort of a special status in relationships with the EU. It is such negotiations that recently started with the Georgian state.

UBS expects positive dynamics

Market Leader informed

According to the data provided by UBS, one of the Switzerland’s major economic indicators - Consumer Demand – fell in September. The September decrease is believed to result from the activity decline in the sectors of business and retail sales. Nevertheless UBS expects the pace of consumption growth to be high within the next few quarters.
In the meantime, the Swiss Franc is forming a wave of the senior timeframe against the US Dollar. A FZR* for this wave will reverse the mid-term downtrend of USDCHF, making the CHF currency rate decline.
At this point there is a probability of continuing the formation of the mentioned wave in the form of either the 5th subwave or wave c (C ) if the MF SC* and MF pivot are not broken through.

Today’s key news releases (GMT):
09:00 EU - CPI, Unemployment rate
09:30 CH - KOF Economic Barometer
12:30 CAD - GDP
12:30 USA - Prelim GDP, GDP Price Index, Employment Cost Index
13:45 USA - Chicago PMI
13:55 USA - Michigan sentiment index

Is Euro growing again?

Market Leader informed

The common European currency is recovering relative to Wednesday’s lows, having reached 1.3950 at the Asian session. Expectations of accommodation policies and rumors about the decline of USD after QE2 make numerous investors get more and more interested in EUR, providing it with mid-term support. The current trading session indicates middle trading volume. The volatility may rise during the macroeconomic data releases on the EU (9.00GMT) and the US (12.30GMT).

For today’s trading sessions the Department of Volume Analysis of Masterforex-V Academy defines:
The mid-term trend of EURUSD is bullish
The short-term dynamics of 6E futures (EURUSD):

At the moment the currency rate is retracing from today’s high, having tested the level of the week’s volume at 1.3864 (10500 lots). A breakout and a settlement below the level will provide a bearish prompt. In general the volumes indicate the downward intraday dynamics of EUR. It means that the trading logic is simple: looking for sales after there is a rebound.

Full article in Market Leader

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Singapore dollar: will Tokyo and Hong Kong have to welcome new rival?

Market Leader informed

The Singapore Exchange (SGX) authorities have preliminary agreed to buy the Australian stock marketplace called Australian Securities Exchange (ASX).
If there is a deal it will lead to a merger with $12.3B capitalization, becoming number 2 on the list of biggest Asian marketplaces and yielding only to the Hong Kong Stock Exchange with $24B of capital.
Meanwhile, as the result of Friday’s morning session, USDSGD is moving within a flat of level H4, inside of which the price has formed a downward H2 wave.
The Department of studying Masterforex-V trading system expects the Singapore dollar currency rate to follow one of these scenarios:
• On forming an upward H4 FZR*and coming out of the MF Sloping Channel the price will terminate wave C of level D1, which may be followed by the formation of wave 4 of the same level (up to 1.3481)
• On forming a downward H2 FZR* the price will start retracing against the bullish H4 wave. If there is a breakout of the 1.2891 low, the price will continue the 5th subwave inside wave C of level D1.

Key news for today, Oct 29th (GMT):
12:30 USA - Prelim GDP, GDP Price Index, Employment Cost Index
13:45 USA - Chicago PMI
13:55 USA - Michigan sentiment index

French strikes are getting exhausted

Market Leader informed

As the French parliament has already adopted the pension reform bill, the nationwide strikes become symbolic.
The strikes are still hitting numerous companies and public institutions, but the amount of the strikers has been considerably reduced. It is likely that over the last few days the campaign has become exhausted. Moreover, there has been a competent survey held in France, indicating that 59% of Frenchmen do not support the strikers.
Meanwhile, EURUSD has grown over 200 pts from the low.
Experts from the Department of studying Masterforex-V trading system report that the given upward movement has stopped close to the MF pivot at the 61.8% retracement level of the H4 wave (1.4079-1.3733), which testifies to the probable formation of wave b(C ) of level H4 on breaking through the low. According to the alternative scenario (implying a retracement for wave B and a breakout of the low), the price will terminate the entire H8 wave started at 1.4165.

News releases expected for today (GMT):
06:00 GER - Retail Sales
09:00 EU - CPI, Unemployment rate
12:30 USA - Prelim GDP, GDP Price Index, Employment Cost Index
13:45 USA - Chicago PMI
13:55 USA - Michigan sentiment index

Britain agrees to pay $83.59 per barrel of Brent oil.

Market Leader informed

Brent oil price keeps growing.

Yesterday trading session at IСE Futures Europe marketplace ended up with a $0.36 increase. As a result the official price reached $83.59 per barrel.
In the meantime, GBPUSD is following the path of Brent oil. It is showing growth.

The Department of studying Masterforex-V trading system reports that at the moment the price is forming either bullish subwave a (C ) or wave C on H4. The elongation of the upward tendency is the most probable scenario. The alternative downtrend scenario will need a breakout of the defensive MF pivots and MF SCs* followed by FZR* of the corresponding wave level (not lower than H4).

Today’s key news (Oct 29th - GMT):
08:30 GBR - M4 Money Supply, Net Consumer Credit
12:30 USA - Prelim GDP, GDP Price Index, Employment Cost Index
13:45 USA - Chicago PMI
13:55 USA - Michigan sentiment index

US dollar won’t be able to rise above 82.5 yen

Market Leader informed

Even though the pair USD/JPY lowered today from the yesterday’s maximum at 81.98 to trade in the 81.30 area, it’s still above 15-year minimum at 80.41 yen hit on Monday.

Elizabeth Belugina an analyst of FBS brokerage company notes that there’s a strong resistance for the greenback at 82 yen which hasn’t let it to break higher already several times during the recent weeks.

In addition, for the whole time of its slump since June except some short period after Japan’s currency intervention conducted on September 15 dollar was capped by its 21-day MA. As a result, if US currency manages to rise above 82 yen there will be more buybacks in dollars.

At the same time, however, specialists at Mizuho Corporate Bank note that Japanese exporters, a growing number of which have recently been decreasing their target levels for selling dollars, are likely to use of any rebound in the US currency to get rid of it.

French parliament adopts pension reform bill

Market Leader informed

The French parliament has finally adopted the bill, increasing the minimal retirement age.

The draft law is to be signed by the president Nicolas Sarkozy within the next few weeks. In its turn, the opposing Socialist Party of France is going to address the Constitutional Council of France to find out whether the reform is truly legitimate.

In the meantime, according to the Department of studying Masterforex-V trading system ,
EURUSD has terminated the bearish wave a(C )/C. If there is no breakout of the MF Sloping Channel and MF pivot, the price may start forming wave c(C ). Otherwise EURUSD will continue its uptrend in the form of wave a(C )/C.

David Cameron’s policies: what results may Great Britain get?

Market Leader informed

The UK’s economic growth in the 3rd quarter exceeded the analytic forecasts, eventually giving twice as much as expected, mostly due to the service and construction industries.
David Cameron’s government has already started implementing the planned austerity measures, which will result in “killing” almost 500.000 jobs. The Prime Minister believes that considerable budget reduction gives an opportunity to make a new start on the way to prosperity and innovation progress, which favors the creation of new jobs.
After yesterday’s slight decline in price GBPUSD is currently trying to decide on the direction of the forthcoming movement.
Once the price goes up, comes out of the MF Sloping Channel and breaks through the MF pivot, it will indicate the formation of wave c(C )/C.
Otherwise the downtrend will continue in the form of a retracement against the previous bullish wave, or the price will start forming wave a(C )/C of the senior timeframe.

Dubai World finally restructures its debt

Market Leader informed

Dubai World has signed up the last remaining agreement with the lender on the restructuring of $23B debt, BBC reports.

They managed to sign an agreement with Deutsche Bank, which in its turn repurchased the debt with Aurelius Capital Management (US investment company). The Financial Times report that the above-mentioned bank is one of the major lenders of Dubai World.

In should be reminded that in September 2010 the plan to restructure the debt of Dubai World was supported by 99% of all the lenders. According to the plan the company is going to pay off the $4.4B share of the debt within the next 5 years. $10B is going to be paid back within 8 years.

Dubai World’s liabilities to the sum of $8.9B have been converted by the Dubai government into Nakheel bonds (Nakheel is one of the major divisions of Dubai World).

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The greenback is expected to remain weak in the long term

Market Leader informed

Analysts at UBS Global Asset Management believe that the greenback’s rate may remain below its average trade-weighted value during the next two or three years.

According to the specialists, this is likely to happen as the efforts of the Federal reserve to spur economic growth with low interest rates and asset purchases are dulled by the fact that US consumers and producers pay down their debts, reducing demand for credit that has a negative impact on the country’s economy.

Consumer credit in the United States was declining for 18 of the last 19 months – in August it lost 0.1% dropping to $2.4 trillion that is the least since February 2007.

Why are monthly earnings in USA higher and food prices lower than in Russia?

Market Leader informed

After the publication of the article “How much more expensive sugar is going to be in the short run and why?”, stating that the price on sugar in the US is lower than in Russia and Ukraine, Market Leader’s office got thousands of e-mails with the following questions:
• What are the food prices in the US?
• How much do Americans earn per month?
• How does the US succeed in paying one of the world’s biggest salaries while maintaining one of the world’s lowest food prices?
• What else is cheap and expensive in the US?

Of course, these questions are not highlighted by Russian mass media, experts of Masterforex-V Academy explain. Raise a question and the community will get more questions than answers. Yet, having answered them most Russians will understand why the US keeps flourishing while the rest of the world anticipates the collapse of the last superpower, without listening to politicians, political scientists and economists.

How much do Americans earn per month?

According to Rasul Zhalalov, our expert, who lives in New York, US citizens’ income varies depending on qualification, type of job and other factors. But if to compare them with the earnings of those who live in the ex-USSR countries, the United States would seem a heaven of better-off people.
• High income - top managers, successful attorneys, celebrities and physicians. They earn over $15-20K per month.
• Middle class - teachers, bank clerks, civil servants, mid-scale businessmen and many others. They earn over $3-8K per month.
• Lowe class - odd-job workers. They earn up to $2K per month.

Most Americans get extra income from depositing the money into bank accounts, investing in “blue chips”, bonds and securities as the federal authorities guarantee that all the deposits up to 250K will be paid pack if the bank goes bankrupt.

EUR: mid-term trend reversal or retracement?

Market Leader informed

The common European currency keeps retracing from Friday’s high. It has already reached 1.3800. However, numerous investors stay away from the market while waiting for the Fed Reserve’s speeches, which forces the price movement of EURUSD to be multidirectional. Besides, the accommodation policy sentiments have already been taken into account by the market with the steady growth of early and mid October. The news background is neutral, so a strong price movement is unlikely to take place within the current trading week. The only significant news release that can influence the price today is Durable Goods Orders (US) AT 12.30GMT.

Oct 27th 2010. The Department of Volume Analysis of Masterforex-V Academy defines:
The mid-term trend is bullish
The short-term tendency of EURUSD futures (6E):

GBPUSD: water aspects of crisis

Market Leader informed

Lately Coca-Cola has announced that it is going to stop the production of Malvern Water, which has been enjoyed by royalty for centuries and is the only brand served at the Queen’s castles and palaces. It was enjoyed by Queen Elizabeth I and Queen Victoria as well. Queen Elizabeth II has taken it with her to various trips until recently.
Meanwhile the H2 FZR that was formed by GBPUSD last Tuesday has recently defined the correction against the previous downward wave of level H8. At the moment the bullish correction is more than 50% of the downward wave.

The Department of studying Masterforex-V trading system expects one of the following scenarios:
• Elongation of wave C of level H2 within the scope of the retracement against the H8 wave
• Termination of wave C of level H2 with forming waves 4 and 5 of the given wave level
• Breakout of the mid-term high at 1.6106, i.e. the formation of wave C on D1

Will Obama Manage to Dispossess American Billionaires?

Market Leader informed

Paradoxical but true - the current situation in the US generally looks very much like that in the USSR in late 1920s – early 1930s when the USSR found a way out of the crisis by collectivizing and dispossessing the wealthiest groups of peasants, and in the US during the presidency of Franklin Roosevelt (1933-45) where the same thing was done under a motto of ‘democracy’ and care for ‘simple Americans’. Roosevelt signed Decree No. 6102 of 5 April 1933 to ‘mitigate the critical situation of the US banking industry’ and ordered to seal all bank safe deposit boxes of American individuals and legal entities who, from that day, were not allowed to own gold (including gold coins) seized by the US authorities and exchanged for fiat money.

At whose cost should President Obama take the US out of crisis at this stage? Especially when Obama’s policies are intended to maintain and improve the standard of life of most US citizens (like Roosevelt’s) but the US economy has no money left for this while problems are escalating like a snowball. The crisis aggravated all US problems to an extreme degree:

Europe Regards Neutrality as a Recipe for Success?

Market Leader informed

Over the past couple of weeks the sky above the global economic space has been increasingly covered with storm clouds – it feels as if a huge theater of military operations were deploying worldwide. Some countries are busy strengthening their lines, building defensive fortifications, others maintain neutrality, while the third group is already engaged in local combat. The last category includes Japan whose Central Bank already launched a few attacks by way of intervention to reign in the yen price in the foreign currency market. On the other hand, Brazil has opted for guerilla techniques by silently doubling taxes on capital inflow in the hope that this step will make their national currency stronger. However, the open confrontation between the US and China lies in the epicenter. Americans treat the undervalued Chinese yuan as the source of all trouble and a reason for an imbalance in global economy. Beijing adequately responds that the US itself is responsible for its own problems and that America shouldn’t, so to say, shoulder the blame on China.

Australian Stock Exchange Becoming the Takeover Target

Market Leader informed

Singapore Exchange has plans to take over Australian Securities Exchange (ASX Ltd) and made a bid of 8.26 bn. dollars. The merger project has to be approved by regulatory agencies of both countries. Some analysts believe that there is a risk of resistance on the part of Australian regulators.

The deal will be effected both through exchange of stocks and cash settlement. Singapore Exchange is going to buy stocks of ASX Ltd at 48 dollars each which is at a 30% markup on the closing price. Shareholders of the Singapore Exchange will get 22 dollars per each stock they hold.

Background
Singapore Exchange was established in 1999 following merger of two Singaporean exchanges - currency and stock exchange. In 2000 Singapore Exchange issued its own stocks and

Global Exchanges Demonstrate Food Prices Growth… How Much Will Coffee Cost?

Market Leader informed

Experts of the Masterforex-V International Academy of Trading and Market Leader’s news agency continue following the growth dynamics of food prices and globally traded futures. In our earlier features, Prices for Bread and Other Foods Getting Higher in Russian Regions and Why and to What Levels Will Sugar Prices Grow in the Near Future? we gave a detailed description of the tendency that has recently been indicating an impetuous growth of prices for all everyday foodstuffs. Food giants break growth records of 2010 demonstrating the highest level of underlying sales in the 3rd quarter while practically all people of Russia, Ukraine, Moldova, Kazakhstan, Switzerland, Germany and other nations have personally felt its impact. All global news agencies take turns to report new record highs of food prices. The rapidly evolving market resulted in a higher demand for another product without which many lovers of this noble drink cannot imagine their day – coffee beans.

Market price boom: is it really so simple – buy and maintain?

Market Leader informed

The Department of Market Trading offers you the key volumes and levels of S&P500 for defining the trend of the current trading week (starting from Monday, Oct 25th ).

S&P500 futures spent last week hesitating between the levels we mentioned earlier - 1180 and 1156. Yet since the beginning of this trading week the price has been showing steady growth, which testifies to the fact that the investors and traders are certain about their positions.

Growing Food Prices… Will China Feed All CIS Countries?

Market Leader informed

Market Leader continues its series of features on the current situation in the foods market. Previously we described the situation with rising prices for sugar, bread and diary products, coffee. Now it’s turn for buckwheat prices to draw focus. Early this fall buckwheat nearly disappeared from shelves of many stores in a number of CIS countries. When it appeared, though, it cost three times more.

In late September, Andrey Kashevarov, a member of the antimonopoly agency of the Russian Federation, stated that the sharp rise of prices resulted from collusion of a few wholesalers. The Antimonopoly Agency planned inspections of major suppliers of this product and companies in Altai Krai where the crop was being harvested at that time.

What really caused higher prices for buckwheat in Russia? Andrey Kashevarov confirmed his earlier statement by saying that it’s all about collusion and these people risk getting a serious fine.

The probability of Japanese intervention

Market Leader informed

As Japanese vice Finance Minister Fumihiko Igarashi claimed yesterday, the currency intervention will be more effective if it’s a surprise for the market. As a result, Japan’s monetary authorities aren’t going to provide any hint on whether they will act or not and if yen, then when it will happen. Finance Minister Yoshihiko Noda himself repeated after the G-20 meeting that Japan remains ready to sell yen.

Yen added more than 15% since the beginning of 2010 harming Japanese exporters – the country’s exports growth pace slowed down declining in September to the lowest level in the year.

Specialists at UBS AG estimate the probability of Japan’s intervention as high. In their view, the nation can justify its actions by the necessity of watching out “the risk of disorderly movements in exchange rates”.

6ECONT and EURUSD keep staying flat

Market Leader informed

The common European currency remains uncertain. Yesterday’s only achievement was the new local maximum at 1.4080, which is a couple of points higher than the previous one.
According to some analysts, this week USD may give investors a surprise by rapidly recovering against all major currencies. USD perspectives are quite optimistic as the results of the FOMC meeting are unlikely to give rise to buying risky assets once again.
The impact of today’s macroeconomic data are possible at 8.30GMT (GB), 13.00 and 14.00GMT (US - Consumer Confidence).

Oct 26th 2010. The Department of Volume Analysis of Masterforex-V Academy defines:
The mid-term dynamics is flattish
The short-term dynamics of 6ECONR (EURUSD futures):

Reforms ruin Europe

Market Leader informed

Yesterday France counted the losses from the strikes. The figure came out to be rather considerable. Each day of strike costs 200-400M euro. The chemical industry has already lost 1B euro and continues losing 100M every day.
Having failed to decide on the forthcoming trend EURUSD is currently consolidating within the flat of the senior timeframe with clear reference points.
The bullish scenario will probably imply an H8 wave. There is wave A (1.3684-1.4074). Wave B is in the process of formation.
The downward scenario will need a reference point – wave A of level H1, which is still incomplete.