Thread: Market Talk / May 27th - June 2nd

European shares flat, activity hit by market holidays
Mon May 28, 2007 7:21 AM ET



By Blaise Robinson
PARIS, May 28 (Reuters) - European shares were flat at midday on Monday in thin volumes and struggling for direction with many major European markets as well as Wall Street closed for public holidays.
By 1015 GMT the pan-European FTSEurofirst 300 index <FTEU3> was 0.02 percent lower at 1,597.5. Europe's benchmark index, up 7.7 percent so far this year, reached its highest level in 6-1/2 years at 1,611.2 last Thursday.
Markets in Britain, Germany and Switzerland were closed, while French, Spanish, Italian and Swedish bourses were open.
France Telecom <FTE.PA> climbed 0.5 percent after the country's biggest telecoms operator announced a formal review of bids for part or all of its Orange unit in the Netherlands.
French aerospace and telecoms equipment firm Safran <SAF.PA> added 3.3 percent after the company said it plans to split up its Sagem communications unit in a move that could pave the way for an asset sale.
France's CAC 40 index <.FCHI> shed 0.1 percent, while Spain's IBEX 35 <.IBEX> rose 0.1 percent.
The markets were also thin ahead of a busy week on the economic front, with U.S. May jobs data expected on Friday.
"The focus will probably switch back to some macroeconomic data this week, because most of first-quarter results are behind us," said Bert Jansen, European equities strategist at Exane BNP Paribas in Paris.
U.S. April employment figures were relatively weak, and if May data show some improvement, as expected, investors might be encouraged to further invest in stocks.
"But I still think that the market is dominated by M&A activity, and as long as credit remains cheap that will continue," Jansen said.

OMX SURGES
Shares in Nordic markets owner OMX <OMX.ST> surged 6 percent to 211.5 crowns after UK newspaper the Sunday Times said Dubai International Financial Centre, the owner of the Dubai stock exchange, is mulling a rival bid to Nasdaq's <NDAQ.O> agreed $3.7 billion offer for OMX.
The gains in OMX came after the shares surged nearly 26 percent in the past six sessions.
The companies said on Friday that based on Nasdaq's May 23 closing price, the cash and shares offer valued OMX at 208.1 crowns per share.#
Based on Nasdaq's share price on Friday and current exchange rates the offer valued OMX at around 207 crowns per share.

The Kingdom of TSP
Daily Edition
May 29, 2007 Closing

Yak, Le Charts, Doodles, Tea Leaves, 5-Tribes, and The Barn Yard.

Kingdom Yak:
Pro-Yak....................................Moving averages for SPX remain bullish, above the 13d MA which is above the 50d MA. B. bands indicate SPX is relative stable evidenced by the tighter width.

Con-Yak...................................The stochastics oscillator for SPX is still registering bearish with %K under %D, however the indicator is out of the >80, overbought range.

Jester-Yak................................Little bit of a rough day. The crosswinds were up!

Le Charts

Charts courtesy of www.stockcharts.com

Doodles:
Stops.......................................Alert (-1%)....Trail (-2%)
.....SPX........1518.11 +2.38.........1510.............1495

Dollar........................................82.3 6 -0.06 for the day.

Lube (NYMEX) Closed at...............63.15 -2.05 for the day.
Oil Markers.................................<60= ok, 60-70= worry, >70= panic.

Tea Leaves:
Yakndoodles...............................Yellow!

5-Tribes
Tomorrow...................................Tribes are still holding 2.5 bears to 2.5 bulls.

The Barn Yard
Location.....................................60% G, 40% CSI. The market seems to rise to least resistance, but not with much strength. Will stay with a safe (?) allocation between L-2010 and L-I.

Economists say a fall in the markets should have little impact on China's economy, because growth is driven by exports. Also, households have much more money in savings than in shares.
A fall in prices of even 20 percent is likely to have only a modest economic impact, J.P. Morgan economist Frank Gong said in a report to clients.
Gong noted that during a long bear market in 2001-2005, when the main market index fell from 2,300 to under 1,000 points, China's economy grew by about 10 percent per year.
The World Bank, in a report Wednesday, raised its forecast of China's economic growth this year to 10.4 percent, up from 9.6 percent, and said its current account surplus could reach $340 billion.
The stamp tax was set at 0.6 percent when it was introduced in the early 1990s but has been cut repeatedly to encourage the Chinese public to invest in stocks. It fell to 0.1 percent in 2005. Analysts have been forecasting a possible Chinese correction due to the sharp price rise, reducing the likelihood that markets abroad would be taken by surprise.

http://biz.yahoo.com/ap/070530/china_markets.html?.v=8

Someone with the name of Gong commenting on China's market.

Originally Posted by Show-me

A fall in prices of even 20 percent is likely to have only a modest economic impact, J.P. Morgan economist Frank Gong said in a report to clients.
Gong noted that during a long bear market in 2001-2005, when the main market index fell from 2,300 to under 1,000 points, China's economy grew by about 10 percent per year.

ha ha ha ha

Briefing.com
08:00 am : S&P futures vs fair value: -5.0. Nasdaq futures vs fair value: -8.0. Futures indications are trading well below fair value, suggesting stocks will open sharply lower. A sell-off on the Shanghai Composite similar to the one in late February that caused widespread panic puts the valuations of U.S. equities under the microscope and is giving investors an excuse to take some money off the table.
News of the Chinese government tripling the tax on stock trading to 0.3&#37;, as an effort to curb speculative buying activity in the market, sent the Shanghai Composite plunging 6.5% overnight after hitting record highs a day earlier.

Briefing.com
09:00 am : S&P futures vs fair value: -6.0. Nasdaq futures vs fair value: -9.5. The stage remains set for equities to open on a downbeat note as the Shanghai sell-off serves as a reminder that the U.S. stock market, which has also gotten ahead of fundamentals, is ripe for a pullback. Aside from the repercussions from the first Shanghai surprise in late February, stocks have climbed virtually unabated since last July, closing the Dow in record territory 24 times this year and pushing the S&P 500 above its all-time closing high intraday last week.

http://biz.yahoo.com/ap/070530/wall_street.html?.v=37

NEW YORK (AP) -- Wall Street showed little reaction Wednesday after the Federal Reserve released minutes from its last meeting that indicated that inflation remained a concern.
Investors apparently saw little new in the minutes from the central bank's May 9 meeting, during which the Fed's Open Market Committee called inflation levels "uncomfortably high." With concerns about inflation still hampering the economy, it made it less likely that the Fed would act to cut interest rates, but Wall Street appeared to be coping well with that reality.

looks like housing concern is offsetting inflation concern

Looks like we're going to finish strong today.

Nice.

It seems to me that we're continuing on that strong road north.

The Fed's FOMC meeting minutes are now posted on the internet:

http://www.federalreserve.gov/fomc/minutes/20070509.htm

Really nothing much new- although it does sound to me like the price of oil is kicking in as a moderating force on the economy.