Wednesday, June 2, 2010
Technical Indicator: Following the U.S. markets' worst May since 1940, the Standard & Poor's 500 Index is trying to rally to start June.
The S&P 500's (SPX 1,071, -18.70, -1.72%) hourly chart details the past three weeks.
As illustrated, the S&P stalled just under its 200-day moving average last week before pulling in from resistance.
Looking ahead, the 1,090 area marks a near-term inflection point, while significant resistance holds at the 200-day, currently 1,105. (more)
“The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the U.S. and U.K." before the financial crisis, says Li Daokui, a professor at Tsinghua University and a member of the Chinese central bank’s monetary policy committee.
“It is more than [just] a bubble problem,” Li says. “When prices go up, many people, especially young people, become very anxious. It is a social problem,” Li told the Financial Times. (more)
The Journal of Commerce Industrial Price Commodity Smoothed Price Index that tracks the growth rate of steel, cattle hides, tallow and burlap plunged 57 percent in May, two years after a decline that foreshadowed the worst recession in half a century. The index of 18 industrial materials declined the most since October 2008 as Europe’s debt crisis widened and China took steps to curb growth.
Commodities extended their slump today, led by declines in industrial metals and energy prices, as separate reports showed manufacturing slowdowns last month in China, Europe and the U.S. (more)
The biggest monthly drop in the Standard & Poor’s 500 Index since February 2009 is ratifying Mohamed El-Erian’s prediction for a new normal of below-average returns. Analysts say not so fast.
Combined price estimates from more than 2,000 forecasters tracked by Bloomberg show the S&P 500 will rise 27 percent in the next year, the fastest projected rate since February 2009, data compiled by Bloomberg show. The rally above 1,350 will be led by industries most tied to the economy, according to analysts who boosted individual share projections by an average of 0.9 percent in May, the 14th straight monthly increase. (more)
Hedge funds lost an average of 2.7 percent through May 27, according to the HFRX Global Hedge Fund Index, as the sovereign debt crisis in Europe triggered declines in stocks, the euro and commodities, and the gap in yields between U.S. short-term and long-term debt narrowed. It was the biggest decline since November 2008, when hedge funds lost 3 percent in the wake of Lehman Brothers Holdings Inc.’s bankruptcy two months earlier.
Almost every strategy lost money in May, according to Hedge Fund Research Inc. in Chicago, as the Dow index of 30 big stocks sank 7.6 percent including dividends amid speculation that Greece’s debt problems would spread to nations such as Spain and Portugal. Some of the best-known funds saw their gains for this year erased. (more)
Europe’s financial crisis will continue to drive the common European currency down — below $1.20, says the publisher of The Gartman Letter.
The euro recently traded at $1.2240.
"It’s having a rough month; it's having a rough year. It's probably going to continue to have rough times ahead. Are we going under $1.20? Almost certainly," he told CNBC. (more)
Commercial real estate values went on a 91 percent tear from 2001 to 2008: (more)