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Monday, January 4, 2010

Morning Market Report

Stocks have kicked off the new year well. They've gotten back most of what they lost in the last trading session. The Dow is currently up 123 points and we have similar percentage gains for the S&P and NASDAQ as well. Stocks all over the world are rallying following good numbers out of the Chinese manufacturing sector.

Stocks and commodities rose on the first trading day of 2010 as China’s manufacturing expanded at the fastest pace in more than five years and the outlook for American job losses improved. Oil climbed after freezing weather hit the U.S.

The MSCI World Index of 23 developed nations’ stocks advanced 0.7 percent at 9:11 a.m. in New York and futures on the Standard & Poor’s 500 Index gained 0.8 percent. The MSCI Emerging Markets Index added 1 percent to a 17-month high. Natural gas for February delivery gained as much as 5.8 percent and crude oil rose for an eighth day, exceeding $81 a barrel.


Meanwhile, businesses appear to be having as much trouble paying back their loans as individuals are on their home mortgages.

Severe delinquencies by small and medium-sized U.S. businesses on the loans, leases and lines of credit to finance capital equipment rose again in November as lenders remained reluctant to extend fresh financing, PayNet Inc reported on Monday.

Accounts behind 180 days or more, and unlikely ever to be paid, rose to 0.91 percent in November from 0.87 percent in October, according to PayNet, which provides risk-management tools to the commercial lending industry

It was the 22nd consecutive monthly increase in loans so far in arrears they ultimately may have to be written off by lenders.


Nestle and Kraft are involved in old fashioned bidding war for Cadbury.

Speculation of a bidding war for British candy maker Cadbury mounted on Monday after Swiss food group Nestle agreed to sell off its majority stake in eyecare unit Alcon and announced a smaller-than-anticipated share buyback program.

Analysts suggested that Nestle could be clearing its decks in preparation to counter a hostile $16.3 billion (9.8 billion pound) cash and shares offer from Kraft Foods


Crude oil has in fact crossed $80 a barrel and is now trading at $81.10 a barrel. Gold is making a move. It's at $1125 an ounce. That's up $25 an ounce today and almost $50 an ounce since hitting recent lows last week. Bonds, on the other hand, are relatively quiet. The ten year is slightly worse at 3.84%. The yield spread between the two and ten year continues to tighten. That's now at 2.72%. The three month t bill is slightly worse and now it's at .071% yield. So, that's gained near ten basis points since falling into negative territory.

The Chinese manufacturing news must have come after their markets closed because things were mixed in the Far East whereas Europe is all positive. The Chinese Hang Seng was down .22%, the Japanese NIKKEI was 1.03%, while the Straits Time Index in Singapore was down .11%. The broader Chinese index was down 1.02%. In Europe, the FTSE in London is up 1.13%, the DAX in Germany is 1.12%, and the Spanish index is 1.13%. Most European indices gained at least 20% in 2009.

The Dollar is weaker this morning. It's off .72% against the Euro, off .01% against the British Pound and off .41% against the Japanese Yen. So, we're back to the inverse relationship between equities and the dollar that Nouriel Roubini has been so worried about.

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