My Diary 531 --- A Surprise Flight

Trading Diary (March 13, 2009) --- A Surprise Flight

US equities rallied after a flurry of early eco data (retail sales beat, jobless claims missed, business inventories missed) and GE credit rating cut to AA+ by S&P (was AAA). Financials continued to led the charge (+10%) as Citi Chairman Richard Parsons and BOA CEO Kenneth Lewis said their banks won't need more capital, while GM rose +15% after it said it can survive March without new US aid.…Honestly, I can only guess if they says so, it must be so... just like when John Thain and Dick Fuld insisted that Merrill and Lehman were well capitalized…Now the surprised many technical strategist call for S&P500 @768.

But the surprise result had a mixed impact on the asset markets, witnessed by a bid equity market, a weak USD, a higher Oil, but a lower yield in UST long end ( along with $11bn new supply)…I think this is consistent with the big picture as this global great recession remains despite the extraordinary actions…O/N Headlines persist about the trouble ahead – BOE Barker warns on the economy, US jobless claims (+654K, WTE) continue to build up and Germany IP for Jan dropped -19.30% yoy…All have led to the pledges from Obama & Yang for more global stimulus and IMF for more money…That said, it is difficult for me to get beyond the charts and actually believe in something different, in particularly after the SNB intervention as it could lead to another set of devaluations elsewhere.

Back to home, China's Feb loan growth was impressive (+24.2%) and RMB deposits grew at 23% yoy in Feb. Feb retail sales +15.2% yoy (vs +21.6% in Jan) is nto too bad adjusted for inflation, with M1 picked up to 10.9%, there are early sign of demand recovery under this command economy…HK today is a catch-up day as participation ytd's was only 28.5bn, the lowest of the year so far. With HSBC ADR +7.8% and others +2.-4%, a breaking 12K will encourage momentum traders … Oh, do not forget HKEX announced the 10-minute closing auction will be suspended from March 23 on concern of volatility…Guess Hengseng goes up 400ppts

Overseas Market Reviews

Global equities moved up +7.3 over the 3-day period, followed a 4-week stretch in which equities plunged 18%. US stocks led the rally this week, +11% over the last 3 days compared to + 6% in EU, +4% in EM, and +2% in Japan. Elsewhere, UST yield curve was mostly flat with 2yr risen 6bp to 1.00% while 10yr down to 2.86%. 1MWTI oil jumped $4.70 to $47.03/bbl. USD closed at EUR1.291 (-2.0% this week) and YEN97.7 (down 0.6%).