Category Archives: Analysis

Women and the Economy

Posted by Steven S. - Rutgers ASI on March 22, 2011 5:50pm

HedgeFundLive.com-  During the Recession, men have lost twice as many jobs as women. However, during this recovery, gender bias is starting to emerge as women are having a tough time getting jobs. Of the 1.3 million jobs gained during the recovery, about 1.1 millions of those jobs went to men, while 113,000 went to women. That means that men got 90% of the jobs available. Since the recovery, men have netted 600,000 in new jobs while women are netting negative 300,000. Some argue that men have to provide for the families which is why they are more likely to get hired but in reality women are also major providers for their families as well. This isn’t like early 1900′s where it was a male dominated workforce. Granted there is still some discrimination in salary between the genders but today women have the same if not more skills than men.

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Posted in America, Economy | Tagged 90%, economy, Men, recession, Recovery, Women | Leave a Comment (RSS)

Banks Raise Dividends

Posted by Ankit P. - Rutgers ASI on March 19, 2011 9:51pm

HedgeFundLIVE.com — On Friday, the Federal Reserve gave  the nations largest banks permission to increase dividends and gain more freedom from regulators since the first 2008 financial crisis. This shows signs of the improving economy. Large banks such as J.P. Morgan Chase & Co., Wells Fargo & Co. have announced to buy back some of there shares to drive up the stock price. Healthy banks tend to behavior in this way. They want to increase the price of the stock and pay higher dividend keeping there stockholders happy. It would be wise to hold shares in the nationals largest banks because the price per share will continue to rise.

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Tagged banks, Dividends, stocks | Leave a Comment (RSS)

Yen At All Time High; Traders Expect Intervention

Posted by Nikhil N. - Rutgers LIBOR on March 18, 2011 12:29am

The Japanese Yen surged to an all time high against the dollar yesterday, as the financial markets fight uncertainty of a nuclear fallout in Japan.  The euro also fell to low as 106 against the yen.  The market stabilized today on expectations for the BOJ to intervene in the market once again and possibly turn around the historic appreciation of the currency.

My expectations are for the BOJ to inject record liquidity in the system.  I had expected a second intervention following first one in September, but that was ignored by the bank of Japan as the yen had gone into a sideways pattern and halted its appreciation.  Following the earthquake, Japan’s economy is going to take a huge hit as many towns are away into sea.  It would be tough for the BOJ to sit on the side while the currency appreciation hurts an already fragile economy.

Japan is dependent on exports.  Some of the largest Japanese exporters have been complaining for a while about the stronger yen.  As the Japanese currency grows stronger, foreign competitors begin to gain a competitive advantage over Japanese firms.  This is one of the reasons the BOJ intervened in the market in the first place.   But now the stakes are higher.  There is a high possibility that Japans economy can fall into another recession as a result of the earthquake and the tsunami.  A stronger currency will just deepen that recession, and further diminish the possibility that Japan will once again see robust growth.  Therefore, I feel there is no doubt in the market that the BOJ will continue to intervene (as they did last week) until the trend in the yen turns around.  This is not very favorable for bullish traders.

At the same time, Japan’s government sits on 200%+ debt to GDP ratio, a number that will likely sky rocket in the next few quarters.  The government is expected to bear majority of the cost of the earthquake, which will force them to take on a significant amount of new debt.  At the same time, government revenues will decline substantially as many citizens will not be employed and able to pay taxes following this earthquake, which will again raise the budget shortfall.  The Japanese government will also be expected to pick up spending, as the U.S. did following the financial crisis, to keep the economy running.  And finally, the real GDP in Japan will most likely plummet.  All these outcomes combined will send the debt to GDP ratio soaring, possibly above 250% in the next year or two.  This deterioration in fiscal condition will prove to be a significant burden on the Japanese yen, as investor will begin to lose their faith in the currency.  Yen has long been considered a safe haven for many investors.  With the chain of events that will likely be triggered following this tragedy in Japan, it is likely this will change.

Although in the last article I pointed out the Yen will likely head below 80 ( which it did ), I can’t be too bullish on the currency this point in time.  I would rather recommend that investors take the bearish bet through the ETF YCS.  It is likely, in my opinion, that the yen will crash in the next few months after the initial flight into the currency has ended.

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Posted in Geopolitical | Tagged Bank of Japan, BOJ, currency, intervention, Japan, Yen | Leave a Comment (RSS)

Japan Nuclear Radiation effect on Market

Posted by Tao W. - Rutgers MQF on March 17, 2011 10:41am

The news that the Japan Nuclear Radiation may affact U.S western coast cause people a little bit panic. People begin to buy some anti-radiation pills.

We can see from the market, though the market was bad yesterday. The healthcare sector relatively performed better. So I think the healthcare sector is worth to watch.

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Posted in America, Business, Health Care, Market and Stock News | Leave a Comment (RSS)

Negative Returns on Stocks

Posted by Isuru W. - Rutgers MQF on March 17, 2011 6:03am

This week have being very bad in terms of stock returns. Yesterday we saw a major sell off of the US stocks resulting in S&P and NASDAQ indices erasing their gains for the year. Dow Jones is still barely up with just 0.3%.

This was due to many reasons such as US housing data and the trouble in Japan which resulted in this major sell off. Furthermore the US Embassy has advised all US citizens to move at least 50 miles from the Fukushima Daich nuclear plant.

S&P lost 25 points yesterday and NASDAQ lost 51 points the other day. Doller matched its lowest with the Yen coming close to 80 Yen for a dollar. VIX which is a volatility index climbed almost 20%.

When the market settles this might be a good time to go long on the stocks. For those who are getting hit I’d say to watch the portfolio closely tomorrow.

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Posted in America, Analyst, Market and Stock News, Stock Market, Trader Thoughts, Wall Street | 1 Comment (RSS)

Oil, Coal, Uranium – Are they just fueling the fire? Or is there a story to be told?

Posted by Chris Y. - Rutgers LIBOR on March 16, 2011 1:01pm

HedgeFundLIVE.com

Although Libya continues to tear itself apart and signs of unrest are spreading to Bahrain and Saudi Arabia, the world has shifted focus to the horrific post-tsunami disaster in Japan. With thousands confirmed dead and thousands more still missing, this natural disaster draws much sympathy from the U.S and its nightmarish experience from Katrina.

Crude Oil WTI futures have pulled back below the psychological $100 level and is settling around $97-98 with expectations that since much of Japan is no longer at operating capacity, they will not have a high demand for oil. Although these expectations are priced in correctly at this time, many are ignoring two certainties: one, Japan has every intention to rebuild, which infers they will have a need and a demand for oil and other forms of energy in order to reconstruct, two, the news media are not covering the Middle East as stringently as it was a week ago but that does not mean the uprisings and protests have stopped. I strongly believe oil will continue its uptrend and push back past the $100 level in the next 2 weeks.

Interestingly enough, Japan’s Fukushima plant explosions have caused several Western nations to reconsider their reliance on nuclear energy.  Germany has gone as far as to shut down seven of its nuclear plant operations. Germany is a country where 29% of all its electricity usage is powered by nuclear plants. This explains why the price of electricity soared in European markets and why many uranium miners have plunged. Shares of DNN, URRE, URG have tanked since Monday’s opening bell, accumulating a three day loss of roughly 40% each. I believe the markets are overreacting to the nuclear situation stemming from Japan; many plants have been operating safely for over 50 years. Furthermore, as a global entity, this world has come to rely heavily on nuclear power. 78% of France’s overall consumption of electricity comes from nuclear power plants, 60% for Belgium, and 43% for Sweden. History tells us repeatedly how dangerous nuclear power truly is, with events as heart breaking as Chernobyl and Love Canal. But history also reminds us how much we have come to need nuclear power; we have recovered from these disasters and have learned many lessons. I will contend I am long-term bullish on uranium miners such as DNN, URRE, and URG.

As investors and traders alike shy away from nuclear energy, we have seen many solar stocks pop in the past few days. But asides from all the noise traders create on the market, one source of energy that never gets old is coal. Coal is likely to see higher demand regardless of what happens to the nuclear power plants. Should nuclear power plants resume operation, coal will be driven by high demand from railroads and transportation. Should other countries follow Germany and cut nuclear operations, coal will see a spike, as electrical generators will need to burn coal to make up for the nuclear powered portion of electricity usage. PVR, a US company that owns and operates coal mines, is my pick for coal’s uptrend. With a healthy 7% dividend and the recent completion of a merger with PVG, I believe we will see PVR trading $28 within a month and a half.

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Posted in Business, Economy, Fundamentals, Stock Market, Trading | Tagged coal, dbo, demand, DNN, Energy, Japan, jaso, libya, nuclear, Oil, pvr, saudi arabia, Uranium, urg, urre, Yen | Leave a Comment (RSS)

Housing Market

Posted by Steven S. - Rutgers ASI on March 16, 2011 9:46am

HedgeFundLIVE.com-   The housing market is not rebounding the way we hope it would. In February, housing starts showed the biggest decline in 27 years. Building permits showed there lowest levels on record. New construction dropped to 479,000 units, but economists were expecting a modest drop to 570,000 units. Some Macro Review, interest rates are at the lowest levels which is supposed to stimulate investment. However, are housing market is saying otherwise. There is too much inventory in the market for the housing market to expand. People can’t sell, most don’t have the money to buy, and foreclosures are piling up. It’s going be awhile until confidence is restored in the housing market. My opinion, if your looking to buy, move down to Southern Central Jersey or North Carolina and save on your taxes.

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Posted in America, Economic Numbers | Tagged economy, housing, Macro, NC, NJ | Leave a Comment (RSS)

Japan Earthquake: Currency Trading with Yen, Aussie and Loonie

Posted by Eric K. - Student/Trader on March 15, 2011 9:49am

HedgeFundLIVE.com - The Japanese earthquake has hit every global market at this point, including the currency markets. Japan is the world’s third largest economy according to the IMF, just behind the US and China. The country itself is a volcanic island, which means natural resrouces are limited, by default such a large economy must also be a natural resource importer. Major imports include iron ore, bauxite, and aluminum. This all means that a near-term collapse (it won’t be permanent) of the Japanese economy will spell trouble for the Yen and for commodity currencies like the Aussie and Loonie. Following are some ideas, to play against the USD, not each other. All of these strategies bet on USD strength and counterpart weakness.

AUD/USD chart over the last 6 months.

Australia is one of the world’s largest natural resources exporters, and Japan is one of its biggest clients. Australia exports massive amounts of iron ore to Japan, to be used by auto manfucturers like Honda and Toyota. A massive setback in the Japanese economy will cause the Aussie to relatively weaken. The Aussie is already dealing with downward pressure from massive flooding in January. Look for weakened numbers to hurt the Aussie in coming months. To the right, is a chart of the AUD/USD pairing, it has typically reached resistance near parity $1.02, over the last few months and shot down. Expect to see more of the same.

The Loonie, is another example of a commodity currency. Canada is a huge exporter of lumber, oil, and other natural resrouces. It should be noted that the Canadian economy does not have outstanding problems, like Australia’s floods, so the weakness here won’t be as dramatic. When investors become risk-averse money tends to flow from commodity currencies to safe-havens like the USD. Lately, the Loonie has had similar price action with crude oil. Look for the Loonie to struggle this week, however, world oil demand isn’t changing drastically, so there shouldn’t be long-term weakness. In the long-term, the Loonie will strengthen based on oil prices and that it can be an OPEC competitor (if there is such a thing).

The Yen, should weaken overall. The Japanese economy will be crippled for at least a few months. An article on Bloomberg states:

“The Bank of Japan injected 5 trillion yen ($61 billion) into money markets today to secure financial stability after the March 11 temblor, the country’s strongest on record, and ensuing tsunami. The central bank also said it will offer to buy 2 trillion yen in Japanese government bonds through repurchases.”

Typically when a central bank injects money into an economy the currency weakens in the short-term. This tactic will also battle deflation problems that have been a nuisance for Japanese bankers, as the easing tends to spur inflation. Hopefully the quick action by the Bank of Japan will help. All of these strategies should be played against the USD based its forecasted strength. The USD should see strength mainly due to Euro weakness, US economic strength, and risk-averse investing.

If you make any profit off of these strategies, please feel free to donate to Japanese relief.

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Tagged AUD/USD, aussie, Australia, Bank of Japan, canada, central bank, China, commodity currency, Crude oil, donate japan, Earthquake, easing, economy, hedgefundlive, IMF, iron ore, japanese, loonie, natural resources, Oil, risk averse, usa, USD, usd/cad, usd/jpy, Yen | Leave a Comment (RSS)

Oil Hysteria

Posted by Franklin C. - CEF on March 12, 2011 7:51pm

HedgeFundLive.com - Over the past several weeks, investors witnessed the dramatic rise in the price of oil, which now sits above $100 a barrel. The unrest in Libya, which was influenced by the revolutions stemming from neighboring North African nations Egypt and Tunisia, have led some investors to believe that oil prices have the potential to hit $150/barrel. Some traders are even betting on oil prices rising to $200/barrel. If such a thing were to unfold, history tells us that we should be afraid. Shocks in oil prices have led to or were significant contributors to past US recessions, most notably in the mid-1970s, 1980, 1990, 2001, and 2008-2009. Should the turmoil in North Africa spread to countries in the Middle East, such as Saudi Arabia, which produced nearly 9.1 million barrels of oil a day in February, then such price rises and ensuing pandemonium may be quite likely.

Though such concernment is valid, I am here to write about why such occurrences are unlikely and possibly overblown. The increase in oil prices due to disquiet in Libya has already been priced in and the cut in supply from 1.4 million barrels of oil per day produced by the strife-ridden nation to a paltry 300,000 barrels of oil per day is sustainable due to an excess supply of nearly 4 million barrels per day produced by Saudi Arabia. Furthermore, the so-called Saudi ‘Day of Rage’ was exaggerated and demonstrated the robustness of the Saudi government against unrest and political outcry. Though the minority Shia population continues to be critical of the current regime, King Abdullah has offered concessions in an attempt to insulate the country from riots and revolutions. And so far, there have been no serious uprisings from the major oil exporter. Though there may be a slight slowdown in the US growth rate, any major downturn is improbable. The automotive sector and overall US consumer spending may be hindered from the current rise in oil prices, but we should continue to expect great earnings from corporations, positive economic numbers, and overall bullish sentiment.

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Posted in Commodities, Economy, Egypt, Geopolitical, Middle East, Politics, Saudi Arabia | Tagged libya, middle east, Oil, oil prices, recession, saudi | 3 Comments (RSS)

Impact of Japan Earthquake

Posted by Tao W. - Rutgers MQF on March 11, 2011 5:42pm

What will the impact of Japan Earthquake on stock market and oil?

Due to the disaster, China Shanghai Composite was down 23.35 while S&P was up 9.17. Further impact on U.S stock market needs watching. As for the oil, the oil price was a little down, but according to the CEO of Exxon who believed the oil price/gallon will be $4, stock prices for oil companies may rise. For the last week, due to the bad market, many oil companies’ prices were down. I still believe the oil company is worth to invest.

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