Money

Those who occupy the top positions in Britain's boardrooms have had rather a pleasant year. The BBC report that directors of Britain's leading companies saw their pay jump 37% over the past year.

Those in charge of firms listed on London's FTSE 100 index earned, for the first time, more than £1BN in total for the 12 months to the end of June.

The best place to be is, of course, a bank - Barclays Bank.

Now you know why banks need to keep their charges so high!

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Today's Markets

What a difference a day -- and more speculation of a rate cut -- makes.

As the Briefing noted:

Onward and upward remains the driving mantra heading into the final hour of trading. With all eyes on Bernanke this week ahead of his opening remarks at a Fed symposium -- a speech we don't believe will offer as clear-cut a signal about the Fed's next move as some on Wall Street are hoping (i.e. there won't be a Q&A session) -- the Fed Chairman reportedly telling Senator Schumer the Fed is ready to "act as needed" has given stocks an added boost.

Even though the letter was dated on Monday, the Fed also reiterating its commitment to ensure financial markets have adequate liquidity serves as a reminder about the surprise cut in the discount rate on August 17 that reduced the probability that the liquidity crunch would result in a recession.

This is nearly the exact same statement the Fed made about a week ago through Chris Dodd. This has reassured the markets that a Fed cut is in the works.

Here's the 2-day, five minute chart of the SPYs. Notice a few things.

1.) Volume picked-up throughout the afternoon. This simply means the buyers were getting more excited both by the actual market action and the possibility of a rate cut.

2.) The market closed over yesterday's open. Technically, this is pretty important.



Here's a three day chart. I put this up because the market formed a head and shoulders pattern (which you can see outlined by the arrows). However, most of the upward play from this pattern is probably already worked into the current closing price.



Here's the 3-month daily chart. Today's volume wasn't that spectacular. That's usually a big warning sign to me. I like seeing buyers in an upward trending market. But the recent volume figures just aren't cutting it for me.

The good news from today's action is buyers seem to be more than willing to come into the market to buy on dips right now. That helps to prevent multi-day slides. But the lack of volume indicates there aren't that many buyers right now. In other words, I'm not seeing an "all clear" sign from the market in any way.

Yesterday I called for a double-bottom. I'm still holding to that call right now. We've only had about a week or so without negative news from the mortgage market. We need at least another week before we can move higher.

Read More

Today's Markets

What a difference a day -- and more speculation of a rate cut -- makes.

As the Briefing noted:

Onward and upward remains the driving mantra heading into the final hour of trading. With all eyes on Bernanke this week ahead of his opening remarks at a Fed symposium -- a speech we don't believe will offer as clear-cut a signal about the Fed's next move as some on Wall Street are hoping (i.e. there won't be a Q&A session) -- the Fed Chairman reportedly telling Senator Schumer the Fed is ready to "act as needed" has given stocks an added boost.

Even though the letter was dated on Monday, the Fed also reiterating its commitment to ensure financial markets have adequate liquidity serves as a reminder about the surprise cut in the discount rate on August 17 that reduced the probability that the liquidity crunch would result in a recession.

This is nearly the exact same statement the Fed made about a week ago through Chris Dodd. This has reassured the markets that a Fed cut is in the works.

Here's the 2-day, five minute chart of the SPYs. Notice a few things.

1.) Volume picked-up throughout the afternoon. This simply means the buyers were getting more excited both by the actual market action and the possibility of a rate cut.

2.) The market closed over yesterday's open. Technically, this is pretty important.



Here's a three day chart. I put this up because the market formed a head and shoulders pattern (which you can see outlined by the arrows). However, most of the upward play from this pattern is probably already worked into the current closing price.



Here's the 3-month daily chart. Today's volume wasn't that spectacular. That's usually a big warning sign to me. I like seeing buyers in an upward trending market. But the recent volume figures just aren't cutting it for me.

The good news from today's action is buyers seem to be more than willing to come into the market to buy on dips right now. That helps to prevent multi-day slides. But the lack of volume indicates there aren't that many buyers right now. In other words, I'm not seeing an "all clear" sign from the market in any way.

Yesterday I called for a double-bottom. I'm still holding to that call right now. We've only had about a week or so without negative news from the mortgage market. We need at least another week before we can move higher.

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A Really Good Explanation Of What Has Happened

From Business Week:

Making sense of this mess is daunting. One good place to start: the ways various financial players indulged in layer upon layer of leverage, much of it far from transparent.

Mortgage lenders threw out common sense underwriting standards.

Wall Street sliced and diced the loans, creating the illusion that risk somehow disappeared in the process.

Hedge funds then multiplied the leverage by borrowing copiously to buy securities based on the rearranged mortgages.

In their version of the game, private equity firms used loads of debt to launch unprecedented buyouts.

Read More

A Really Good Explanation Of What Has Happened

From Business Week:

Making sense of this mess is daunting. One good place to start: the ways various financial players indulged in layer upon layer of leverage, much of it far from transparent.

Mortgage lenders threw out common sense underwriting standards.

Wall Street sliced and diced the loans, creating the illusion that risk somehow disappeared in the process.

Hedge funds then multiplied the leverage by borrowing copiously to buy securities based on the rearranged mortgages.

In their version of the game, private equity firms used loads of debt to launch unprecedented buyouts.

Read More

Yen and T-Bill

Two keys to the current market situation are the Yen and short-term Treasury bonds. The yen is a proxy for the carry trade (borrowing in another currency and lending/investing in the US), and the T-bill is a proxy for the short-term part of the market. If money is still concerned about volatility, then the T-bill yield will drop. The converse is also true.

Yen

Daily Chart



The yen spiked higher then sold-off. The post-spike sell-off is a standard move in the markets.

Here's the weekly chart.



In the circled area note the following.

1.) Prices broke above long-term resistance.

2.) Prices fell back to long-term resistance.

3.) Prices rose from long-term resistance a second time.

Because the carry-trade is so important to finance right now a continued move above the resistance line is very important to watch.

T-Bill



T-Bill yields have retreated from their highs at the start of the credit market problems. While they haven't returned to the previous levels, pressure is easing in this part of the credit market for now.

Read More

Yen and T-Bill

Two keys to the current market situation are the Yen and short-term Treasury bonds. The yen is a proxy for the carry trade (borrowing in another currency and lending/investing in the US), and the T-bill is a proxy for the short-term part of the market. If money is still concerned about volatility, then the T-bill yield will drop. The converse is also true.

Yen

Daily Chart



The yen spiked higher then sold-off. The post-spike sell-off is a standard move in the markets.

Here's the weekly chart.



In the circled area note the following.

1.) Prices broke above long-term resistance.

2.) Prices fell back to long-term resistance.

3.) Prices rose from long-term resistance a second time.

Because the carry-trade is so important to finance right now a continued move above the resistance line is very important to watch.

T-Bill



T-Bill yields have retreated from their highs at the start of the credit market problems. While they haven't returned to the previous levels, pressure is easing in this part of the credit market for now.

Read More

Credit Card Charges

Which? has discovered a game easier than shooting pigs in a barrel, that of criticising the charges made by credit card companies on their hapless customers.

Which? state that since the Office of Fair Trading (OFT) ordered a cut in default fees to £12 last year, "ingenious methods" had been used to recoup the income.

Needless to say the banking industry has denied that is is acting unfairly, and claims that different fees were inevitable after the OFT ruling.

True enough, if they want to maintain their very high levels of profits.

Which? highlighted a number of money making charges levied by the card companies, including:

-Low usage fees
-Raised interest rates for withdrawing cash
-Annual fees for having a card
-Fees for using cards abroad
-Shorter interest free periods

Martyn Hocking, editor of Which? Money, said:

"Credit card providers seem to be resorting to a raft of ingenious methods to recoup lost revenue following the OFT crackdown on penalty fees."

Sandra Quinn, of the UK payments association Apacs, retorted:

"We always said that charges would change as a result of the OFT ruling.

We have been much more upfront about how charges are applied - every statement now has a summary box listing charges and key information about charging."

The latter part about being "more upfront" is particularly amusing, as it implies that credit card companies tried to hide their fees before!

Why would they do that then?

The credit card industry is also in trouble in respect of its many and varied methods for calculating the annual rate of interest (APR). Which? claim that there are at least 12 different methods in use for calculating an APR.

Following a complaint from Which? in April, the OFT said it would investigate the issue.

As I have noted before, banks are not charities. They are in business to make money, when one avenue for making money is closed they will find another. They treat their customers in this way because they know that they can get away with it, and know that many of their customers are so deeply in debt that they think that they need a credit card just to keep their heads above water.

In order to avoid these charges:

1 Pay off your credit card in full each month

2 Dump those cards that have an annual fee or low usage fee

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More Charts For the SPYs

Here is a 1-year chart for the SPYs. I added support lines. We have about 1.2% to 1.9% before we hit the lowest support line on the chart.



Here's the 3-year chart. Notice

1.) The index broke out of a channel in late October 2006. Right now the index is bouncing on top of that channel. I you think of the channel as a mean price channel, than recent action is merely a reversion to the mean. Granted -- it could take awhile to return to mean levels.

2.) The 3-year uptrend is still very much intact. The index would have to drop another 7.69% to approach the lower trend line.




Here's a 3-year weekly chart with the MACD. Notice that according to the MACD we could have a bit longer downturn.



Here are two very important breadth charts from Stockcharts.com. The first is the New York new High/Low and the second is the NASDAQ new high/low. I have been harping on these charts for awhile, but the reason is very sound. When a market is really rallying, stocks are moving to new highs. Over the latest post-Fed rally, the number of new lows and new highs has been equal. That is not a rally.


New York New High/Low



NASDAQ New High/Low

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More Charts For the SPYs

Here is a 1-year chart for the SPYs. I added support lines. We have about 1.2% to 1.9% before we hit the lowest support line on the chart.



Here's the 3-year chart. Notice

1.) The index broke out of a channel in late October 2006. Right now the index is bouncing on top of that channel. I you think of the channel as a mean price channel, than recent action is merely a reversion to the mean. Granted -- it could take awhile to return to mean levels.

2.) The 3-year uptrend is still very much intact. The index would have to drop another 7.69% to approach the lower trend line.




Here's a 3-year weekly chart with the MACD. Notice that according to the MACD we could have a bit longer downturn.



Here are two very important breadth charts from Stockcharts.com. The first is the New York new High/Low and the second is the NASDAQ new high/low. I have been harping on these charts for awhile, but the reason is very sound. When a market is really rallying, stocks are moving to new highs. Over the latest post-Fed rally, the number of new lows and new highs has been equal. That is not a rally.


New York New High/Low



NASDAQ New High/Low

Read More