EUR/USD and Gold: Elliot Wave

Euro hit all the targets on its way down yesterday, and even went lower than the previous low of 1.38270. This was most likely commodity driven since there is Oil threaten in the area of $90 per barrel again. News seem really stable for today. No special change on UDS/JPY for yesterday so the buy positions should be watched as long as the market trades in the area below. Today one of the most important releases is expected in the U.S. The Nonfarm payrolls are on the schedule today, so all eyes must stay on the dollar. Changes in the market can be expected in the forecast since the dollar has remained strong all through the week.

EUR/USD

Below the wave is been updated. The market is still trading extremely bearish, and nothing indicate turning point. Prices are dancing around the 1.3830 level, that be signed as a correction wave. Traders should also notice that the priced bounced from the 1.38270 area (last year´s low). This could be positioned as a strong resistance for further lows. If this is the case the newt price could be between 1.3780-1.3870 where there would be some Fibonacci extension levels. With today´s instability it might not be the most appropriate time to trade. Manage care.

Senate voted yes; House´s turn´s up

By Mia Pierson

Out of 99 Senate members that voted, 74 gave a positive vote and 25 against. The project is expected to be voted on the House by Friday. Both presidential candidates voted in favor of the $700 billion bailout plan.

All eyes are on the House now, which will begin session on Thursday, and has schedule another vote by midday on Friday. It´s still uncertain whether the house will do further modifications on the project. If any changes are included and approved, the document will have to be sent back to the Senate for a new voting session. If not, it´ll go straight to President Bush´s office for the presidential approval.

“This is not an ideal plan, but it was necessary. The future of nation was at play”, said Harry Reid democrat leader, after the vote results.

For republican´s leader Mitch McConell, yesterday´s was a “great moment” for the Senate. “Right in the middle of the elections run, we managed to put aside our differences and come out with a joint decision”, said McConell. 

Plan´s changes

The basic plan approved by the Senate was identical to the one rejected by the House on Monday. The document was a modified version of the one presented by President Bush two weeks ago.

The reformed proposal contains a series of new points, mainly to please the republican portion of the House that rebelled against the rescue plan.  Two thirds of the party had voted against.

Opposition is still expected, but the modifications on the document should get the needed 12 votes.

Main modifications have to do with tax reduction, increase of up to $250,000 guarantee to personal and small business deposits, in case the bank goes bankruptcy

Ironically the changes will turn out to be more expensive than the original document. In Reid´s words the Government will end up giving back $60,000 million in taxes to business and individuals. 

The Industrial Down Jones, from Wall Street placed at 10.831.07. Nasdaq went down 1.07 per cent and stayed in 2.069.40. The S&P closed at 1.161.06 units.

Trading Forex

In the middle of a global credit crisis, and after the negative vote provided yesterday by the Congress on the rescue plan, the dollar managed to rise against a bucket of six currencies on Wednesday as general investors awaited for the U.S Senate to vote for the new salvation plan.

After the dollar fell for a session against the yen after a really weak report from the Institute of Management, traders were concern about the overall crisis in the U.S. economy. However the crisis has not been enough to affect the major currencies. General investors were more focused on the efforts to get the Senate to approve the latest version of the $700 billion bailout package.

If the Senate approves the proposal, as expected, it will load a lot more pressure on the House of Representatives when they meet back on Thursday.

The credit market is obviously affecting the overall economy, as confirmed by the ISM report

“So markets are hopeful more than ever that the bailout package would pass and we see investors buying back the dollar.” The ISM said its index of national factory activity fell in September, while inflation pressures tumbled and employment in the sector fell.

With this hurricane going in the world economies, one may ask him/herself, is this really the tame to try on investing money in any market?

Contrary to general believes the Forex market has managed to keep a fairly stable profile and expert traders says there´s not time like today to trade FX.

Unlike the stock and mortgage markets FX works on the difference between a pair of currencies, and while it is always risky, foreign exchange market seems like a good possibility to earn some extra cash.

While the general population awaits the results of the rescue plan presented to the Senate of the U.S, Forex traders are taking advantage of the huge pip movement to really put their strategies out there.

Still senior traders advice testing your abilities on a demo FX platform before entering the real trading world. A person should also consider creating his/her own strategies and carefully considering all factors economical, social and political before choosing to invest. Also, traders should not trade money they can´t afford to lose. 

While the world economies go up and down some traders have taken the opportunity to trade foreign currencies and take advantage of the increasing possibilities.

 

 

 

Bush pressures: countries wait

By Mia Pierson

 

A day after the House rejected the $700billion ´rescue plan´ that the White House had negotiated with leaders of Congress ob both parties, President Bush urged Lawmakers to define a quick bailout plan.

After the failure of the plan, the stock market closed in New York down 6, 71 per cent, while Sao Paulo (the most important market in Latin America) closed with a dropped of 9, 75 per cent. The proposal was rejected 228 votes against 205. Still the Down was up 235 points after 15 minutes of trading this morning.

The actions in the market reflected a general optimism that Congress may still come out with a solution for the crisis.

President Bush expressed his administration will talk with Congress leaders again, so they can begin “moving legislation forward when members begin returning to the Capitol” on Wednesday after the Jewish New Year.

Mr. Bush expressed how the vote may had been hard for some members of the Congress, but the implications of failing to solve this crisis will be higher than any feeling. “Congress must act”, Bush said, as “we are in a critical moment for our economy”.

Just as he did on Monday, this morning President Busch expressed he expects the agreement to be reached.

 “I am disappointed by the outcome, but I assure our citizens and citizens around the world that this is not the end of the legislative process,” Mr. Bush said.

Markets around the world are in expectation of what might happen. Henk Potts, equity strategist at Barclays Wealth in London, said, “The market’s disappointed — shocked even — by what happened in Washington, but there’s still an expectation that a deal will be done.”

Futures on the Standard & Poor’s 500 Index added 2.5 percent on Tuesday, retracing some of the index’s 8 percent loss on Monday.

The Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, shed 0.3 percent, falling to 2,999.75 points in early trading on Tuesday. The CAC-40 was up 0.3 percent in Paris, the German DAX was off 0.9 percent and the FTSE-100 in London gained 0.2 percent.

Asian stocks showed some losses in afternoon trading after plunging at the open. In Tokyo, Asia’s largest market, the Nikkei 225 fell 4.1 percent to close at a three-year low of 11,259.86 points. The benchmark index in Hong Kong closed up by less than 1 percent, while Australia ended down almost 4.4 percent after falling more than 5 percent during the morning.

Among opponents of the rescue plan, some Republicans claimed ideological objections to government intervention. Other critics complained about haste and secrecy in putting the plan together.

As President Bush pressures the Congress to take action, the rest of the world contemplates a general instability in the economies that need to be asses fast.

Bush pressuring for the $700 billion rescue vote

On an early televised announcement President Bush requested an urge vote on the $700 billion rescue plan of the financial industry, as agreed by both democrats and republicans.  

“I understand it will be a hard vote” said Bush.

“Still, this plan will prevent for the financial crisis to expand to all our economy” Bush added.

Busch clarified the billionaire rescue will not solve all financial issues for American, and the crisis will most likely continue for a while.

The ´salvation plan´, that it´s been described and the biggest one since the great Depression of 1929 would be approved today by the Senate the House of Representatives. 

Even thou the proposal shows the original White House document as a foundation, it includes a series of modifications done by the democrats and republican delegates. The new document seems to be more fear than the one originally proposed by President Bush.

According to the presented plan the funds will be given in different stages. The first $250,000 million will be available as soon as the law becomes effective. Another $100,000 million will be given is the president considers it necessary. Finally, the remaining $350,000 million will depend on the Legislative decision.

The idea is for those funds to be use on buying the debt of the major financial institutions, that has clogged the economic system and prevent future home purchases and investments.

Beyond the crisis, the agreement was set to guarantee that the companies that delivered it will not come out unpunished.

Once the crisis is passed the government will try to the acquire debt to recover initial investment. The agreement would estipulate for the Banks involved to buy off the debt within five years, if the government can´t find another way to solve it.

Companies would have to give a stock package to the government to guarantee that contributors will benefit from them, if they do recover.

The plan also contemplates limitations, stipulated by the government, as to the income of the companies’ directors.

The government would also raise taxes for those companies that pay their heads more than $500,000 at year, and would implement a plan to avoid contributors to assume all the debt, while the Banks recover.  This was requested by the republicans, who refused to give Wall Street all benefits with no risks.

It´d also be required for the government to re negotiate mortgages and lower interests rates so people won´t continue losing their homes.

A committee would be created to supervise the plan, with seats for the Secretary of the Treasure, the Federal Reserve among others.

Both presidential candidates reacted positively towards the plan. Still the markets in Europe are starting to feel the repercussions of the Wall Street crisis, and many analysts appear skeptical.

Market´s euphoria after government promises

By Mia Pierson

Although still unsteady in many aspects, the general feeling in the market is euphoria. The government is taking various actions and has promised to solve the crisis, to prevent a general fall down of the economy.

The Department of Treasury announced it will guaranty temporary solutions for the market´s crisis of up to $50,000 million dollars. The government will access to saving held from the times of the Great Depression to try on solving the financial crisis.

The government´s promise is being supported by the measures announced by the Central Banks on Thursday. Still the general market has genuine doubts about the future of some financial institutions. So is the case of Morgan Stanley, which numbers show it as the next victim.

Despise the government efforts to fix the problems in the market; the Future of Wall Street´s Icon Morgan Stanley is still uncertain.  The British publication, the Financial Times, pointed out the possibility of a forced union between the Bank and China Investment Corporation.

None the less stock markets around the world registered strong earnings towards the end of the week, and the dollar keep on rising after the government´s announcement.

The Dow Jones industrial average was up more than 400 points only moments after the opening. The broader Standard & Poor’s 500 was up 4 percent. Markets in Europe and Asia also traded higher.

The stocks in London went up a 6,04% and Paris and Frankfort were not far behind. Tokyo closed the market yesterday with a 3,76% earning rate, and Shanghai raised 9,5%.

In another effort to maintain the weak markets, British and New Yorker authorities, temporarily suspended the “short-selling” practice.

Press releases point towards Paulson´s consideration to rescue all the pending debts from all the contributors to main Financial Corporations, just as it was done to end the load crisis in the 80´s and 90´s.

Back then the government created the Resolution Trust Corporation, that bough all the actives from nearly bankruptcy banks, and eventually sold them back.

“A plan like this could potentially provide with a long –term solution for the credit crisis,” said John Kiriakopoulos of the National Australia Bank Capital.

However he also stated that so far the actions taken by the government, a log with its promises “just prevented the market´s crisis from getting worse, but are not solving it.”

 

 

AIG rescued by Federal Reserve: $85 billion in play

By Mia Pierson

Predicting that the collapse of American International Group (AIG) will cause further damage in the already fragile economy, the Federal Reserve agreed to an $85 billion bailout so control the troubles the huge insurance is facing.

Just two weeks after the Treasury took over Fannie Mae and Freddie Mac, the Federal Reserve takes the most radical intervention in private business in its history.

In exchange for the $85 billion, the government will receive 79.9% participation and the right to fire the directive board, said the Federal Reserve.

Time was running out after AIG failed to get a bank load to prevent bankruptcy, Henry M. Paulson Jr., Treasury Secretary and the Federal Reserve Chairman, Ben S. Bernake, sat up a meeting with the House and Senate representatives on Capitol Hill to explain the rescue plan.

The controversy is out there: $85 billion taxpayer money is been put at risk while the Federal Reserve protects bad investments made by AIG and other related business.

House Speaker Nancy Pelosi criticized the rescue, calling the $85 billion a “staggering sum.” Ms. Pelosi said the bailout was “just too enormous for the American people to guarantee.” Her comments suggested that the Bush administration and the Federal Reserve would face intense questioning in Congressional hearings.

Fed´s intervention “is consider as the first step towards financial market´s stability, and that leads to stocks buying,” explained Masatoshi Sato, from Mizuho Investors Securities.

On Wednesday, European stocks were slightly stronger in mixed afternoon trading, but an early rally in Asia lost steam on concerns about the American financial system and China’s economy. And shares were down sharply on Wall Street.

Still, the rescue will likely start an intense political debate during the presidential election campaign over who is to blame for the financial crisis that prompted the rescue.

 

Wall Street Collapsing: 17,000 people unemployed

By Mia Pierson

 

The crisis of Wall Street has left 17,000 unemployed in the NYC area alone.

Wall Street was shaken yesterday by two dramatic events; Lehman Brothers file for bankruptcy and Bank of America´s purchase of Merrill Lynch for $50bn. As a result 17,000 former employees had to pack up their belongings and go home jobless, just in the NYC area. 

Lehman Brothers, a Wall Street Titan, ran out of options on Sunday, after failing to find a buyer. The 158-year-old bank that had even survived the Big Depression went off the market leaving $600bn owed to creditors in US, Europe and Asia. Thousand of staff members at the fourth largest bank in Wall Street went unemployed.

The procession started towards the head office just above Time Square yesterday, many had cardboard boxes and large sport bags to carry out their belongings. A total of 17,000 former employees face now uncertainty.

Along with the journalists, residents and tourist showed up to photographed the scene. The now large unemployed group marched along Wall Street with worried faces.

It took just 48 hours of negotiations for Merrill to bargain away its 94-year history as an independent Wall Street brokerage by agreeing to the all-share deal. As for Lehman, it´s close will not only impact the jobs in NYC, but those in London as well.

The crisis in the US financial markets, which began 13 months ago, appears to be raising. Bear Stearns, another large investment bank, came close to failure and was bought at a knock-down price in March, and a little over a week ago Washington was forced to bail out Fannie Mae and Freddie Mac, which are behind half the mortgages in the US.

The failure of Lehman Brothers is the end of one of the oldest firms on Wall Street, its roots going back to 1850. It is a devastating blow for the chief executive, Richard Fuld, who has been with Lehman his entire career and run the business since 1994. The bank employs more than 25,000 people, including 4,500 in the UK. So far 17,000 of those former employees have lost their jobs.

 

General drop: stock market in crisis

By Mia Pierson

As the week progresses the Wall Street crisis shows its effect on the world stock market

Towards the beginning of the session on Tuesday, the Down Jones Industrial Average (DJIA) stepped back 131,08 to 10.786, 43 points, and the Nasdaq lowered to 2.154, 29 units.

On Monday Wall Street had its biggest fall down after 9/11, following Lehman Borthers bankruptcy, the purchased of Merrill Lynch by Bank of America and the collapsed of AIG Insurance Company. The Down Jones lost 4,42% and Nasdaq 3,60%. The crisis is evident to all experts.

The future of AIG

Just as it happened with Lehman Brothers, AIG may be forced to declare bankruptcy, as it faces the financial hurricane. The group seems not to be able to escape the crisis in Wall Street.

The American international Group (AIG) is one of the biggest insurance companies in the world. On Monday it lost a 6, 8%, after a 31% drop on Friday. In a year, it´s gone back a 93% on its profits and could easily become the next victim in the credit crisis. The Wall Street Journal assured AIG will have to declare bankruptcy, unless it can achieve enough funds by Wednesday.

The European stock market opened again with huge lows and in Asia –where the main markets were closed on Monday- reported a deep fall down. Meanwhile, the central banks are trying to put as much many as possible in the market, to try to balance the crisis in Wall Street.

In Francfort the Dax Index went down 1,75% in the morning. At the same time in London, the Footsie-100 went back 1,63%, while in Paris the CAC-40 Index dropped 0,70%.

Europe faced a general declined in the stock market opening, where Madrid lost 1,00%, Amsterdam 1,91%, Athens 3,78%, Milan 1,50%, Moscow 7,08% and  Oslo 4,27%.

Indonesia, Singapore, Malaysia and Thailand also showed a deep drop in their stock markets

In the US the Federal Reserve announced on Tuesday the deposit of 50,000 millions of dollars in the market, in the search of stability. Following the example the European Central Bank will put out 70,000 millions of Euros. None the less analysts expect the increase on the crisis.

Wall Street Crisis: World Markets Fall

By Mia Pierson

Lehman Brothers and Bank of America go off the market; the Wall Street stocks feel the crisis.

Lehman Brothers, the 158 year-old investment bank was put in liquidation, little after Bank of America took over Merrill Lynch in a financial earth quick that trashed the World Stocks.

The Dow Jones industrial average dropped more than 300 points in just under 10 minutes of trading, and the major European stock exchanges sank more than 4 percent, in the first wave of investor reaction to some of the most dramatic developments in the history of high finance. Shortly before 10 a.m., the Dow was down 268 points, or 2.3 percent.

The Federal Reserve, the Central European Bank and the Bank of England distributed thousands of millions of dollars into the monetary markets after the fall of the two Titans banks.   This as a consequence of the heavy weight of massive bad loads.

“We´ve probably seen more of the financial history in one day, than what we´d seen since the big crisis of 1992”, said Marcus Droga, Associate Director of Macquarie Private Wealth. The Wall Street is really facing a deep crisis.

“I´m not at all suggesting the American Financial Market is going to crack tonight, but in terms of key events, it is a historical day,” added Dow Jones.

The broader Standard & Poor’s 500-stock index was down 2.2 percent. Lehman shares lost 95 percent of their value in the first trading session after the firm declared bankruptcy. Benchmark indexes in London, Berlin, and Paris were off about 4 percent.

Yields on Treasury notes plummeted as investors hurried to hide their cash in safe government notes. The dollar also weakened against several foreign currencies.

In another surprise development of the crisis, the price of crude oil dropped more than $7 a barrel in electronic trading, nearing the $94 mark, as investors appeared to bet that a global downturn would cause a sharp drop in demand for energy. Oil was trading around $96 a barrel as the futures pits opened in New York.

In Asia, the main stock-exchange in Japan, Hong Kong and South Chorea were not working due to a holiday on Monday, but those who did saw huge lost in the market due to the crisis.

“Investors are wandering around in a daze,” Stephen Lewis, head of research at Monument Securities in London, said. “It’s not a panic by any means, but there is a sense that we’ll see a few more weekends like the last two and then we’re looking at a long, long convalescence.”

Lehman Bothers´ Bankruptcy

Lehman announced bankruptcy after a weekend of heavy negotiations that failed to provide a solution. The Treasure Department scared all possible buyers, after refusing to offer any kind of help to solve the market´s crisis, just as it had done six months before with  Bear Stears Investments, or at the beginning of the year when it rescued Fannie Mae and Freddie Mac.

The bank lost an estimate of 3,900 million dollars the third quarter of the year, after new actives depressions related to real state.

Lehman Bothers´ employees left the building with sobbing eyes, while they carried boxes, bags and umbrellas with the corporate logo. Couple of them shouted “Do you think this is funny?” and “Are you enjoying this?” to the press that waited for an interview. The imaged portrait the market´s crisis.

Merrill´s sold                                                    

Bank of America acquired Merrill Lynch for 500,000 Million dollars, on the ending to the both bank´s history. Wall Street is contemplating the developing of the crisis, before moving forward.