8/24/2011

TSX – 12,343.81

Dow Jones – 11,320.71

S&P 500 – 1,177.60

Nasdaq – 2,467.69

Gold and Mining

• Gold took a big hit as their prices continue to fall. Despite the market’s rise, investors were cashing in on the metal as they awaited the Jackson Hole summit. Speculation is mixed on whether the Federal Reserve will signal an extra round of U.S monetary easing.

• If the Federal Reserve does approve more quantitative easing then the chances are that gold prices will rise. If they don’t, then gold prices will fall. With the uncertainty many have decided to take no risks as gold already hit a peak in early august.

Cause and Effect

• Direct impacts on gold and silver were caused by the CME Groups’s increase margins. Though many suggest that this won’t hold down gold prices and you should have it in your portfolio.

http://www.cnbc.com/id/44105991

Either way, leaving it till the end of August 25^th may give a clearer picture on where gold stands.

http://www.businessinsider.com/gold-and-silver-daily-outlook-august-25-2011-8

In addition to this, many small investors are being taken in by gold scams. As the prices went up, con artists suggested that several mining companies were turning up gold reserves.

Questions

Do these scams have an effect on the market?

How far can gold rise if it sees a rebound from its low?

Waste Management

• Waste management companies were up.
• The waste management companies released their earnings July 28^th and the stocks tanked around 20%. Since then, companies have seen a small rise in fortune.
• Progressive Waste Solutions continues to be mentioned by experts online.

Questions

• Will this trend in waste management continue?
• Why are these companies looking good?

The Last Hour of Trading

• There was a big rally in the last hour of trading, which is not comforting because this is an indication someone is playing with the market.

Was this the effect of day traders leaving their position?

• If this was the case then the market would surely go down?
• But this might not always be the case. In recent years there has been an increase in ETFs, and if many traders believe that large trading is on the way, they will actively trade levered ETFs later in the day.

Questions

The real question isn’t why the market went up, but what did the traders know about to make it rise?

Federal Reserve

• Day traders aren’t as important to the market.
• A bigger part of the market is sitting idle, as many company owners won’t fight the down market, they’ll let the stock do what it does. As soon as there’s confidence again the stock will rise again because of demand.
• The companies that are family owned will always maintain a better value, if the company is solid. These stocks are controllable.
• In the financial world on the other hand, there’s millions being traded every day and these are uncontrollable.

Unless the Federal Reserve are involved?

• The Federal Reserve has been under a large amount of pressure since the 2008 crash but they still continue to keep their dealings quiet. Reported slush funds are discussed online though many rumors are merely theories and conspiracies. The Federal Reserve still hold a considerable amount of power and will show this Friday when Bernanke makes an announcement on Friday.

Month End Rally

• The climb on the market though could be a month end rally and might fizzle.
• It will be determined by the Obama stimulus package and what exactly Bernanke says.  The rally continues to grow in what some call an ‘oversold’ market. But its continuation will be determined by the Announcement on Friday.

German Index and Eurobonds

• Despite the upturn, confidence is still bad as the German Index was released. It fell more than expected and consumer confidence is on the slide.
• Making matters worse is the tension between the German Government and the ECB. The German Government doesn’t want to approve euro bonds.
• The euro bond would collectively unite 17 countries, then all being liable for the debt.  This would be good for countries such as Greece and Portugal, but would raise the borrowing costs of other countries in a better position.
• Eurobonds will help matters in the short term. But in the long term they will re-appear, and this time with other countries included. But if so many say that euro-bonds aren’t the answer, where is there alternative and what is it?

Questions

If Germany doesn’t agree to the Eurobonds agreement, does it matter?

Can the ECB go ahead without them?

Finland

• There’s a fight in Europe over guarantees in the Greek bail out. Finland is requesting collateral.
• This leads other countries to ask the question, if they receive it, why shouldn’t we.
• The ECB could be buying back the debt, as Greece won’t be able to with 40% interest rates.
• There could also be a big bank failure. The feds are scared and could act, though questions should be raised to why the ECB aren’t reacting?

Questions

Will Finland get what they want?

Brady Bonds

• Some have suggested that the use of Brady bonds could help the current Eurozone.

In the 80’s, Brady bonds were used to convert banks loans to Latin America, and into a mixture of new bonds. The key to this introduction was to give commercial banks the ability to exchange their claims into tradable instruments. Which in turn helped get the debt off their balance sheets.

• A meeting in Rome was recently held to co-ordinate a French led replica of the Brady Bonds, in an attempt to help the Eurozone.
• This may take some time as all countries involved are arguing about what they’re owed. Until the disputes are settled the chances are that Brady Bonds won’t work for the Eurozone.

Questions

Would Brady Bonds work? If so, why isn’t there more about it online?