Rise in Jobless Claims Takes Shine Off of Stocks

Stock-Markets / Stock Markets 2010
Oct 14, 2010 - 10:38 AM

By: PaddyPowerTrader

The QE trade is alive and well and risk assets are firing on all cylinders. Gains in stocks and commodities, in particular, are now accelerating. It seemed to me that QE2 talk would prove bullish for risk assets. And the lack of a cooperative stance within the G20 on currency matters – as the IMF meetings over the weekend showed – is now adding fuel to the fire.

To recap U.S. stocks rose Weds, sending benchmark indexes to five-month highs (but failed to close above the key 1175 level), as better-than-estimated results at CSX Corp. and China’s record currency reserves boosted optimism in the economic recovery. CSX, the second-largest publicly traded U.S. railroad, rallied 4.2 percent after also saying it’s seeing improvements across almost all markets,

Alcoa added 1.3 percent and Freeport-McMoRan Copper & Gold advanced 3.8 percent leading a measure of raw materials producers to the biggest gain among 10 industries in the S&P’s 500 Index, amid speculation that Chinese demand will improve after the world’s fastest-growing major economy announced $2.65 trillion in currency reserves. But JP Morgan which had opened up 2 percent after beating the Street by 13 percent, later turned offered as on second glance the figures were flattered by a higher reserve release and lower provisions and finished the day down 1.5 percent.

I think those Chilean miners have become too mainstream…I preferred them when they were underground !

Today’s Market Moving Stories

•The seemingly friendless USD slid across the board overnight following the decision of the Monetary Authority of Singapore to widen the band of the Singapore Dollar and thus allow more strength against the USD. So they have effectively tightened policy by slightly raising the speed of
SGD appreciation against a trade weighted basket and widening the managed band. This in response to an economy which has eaten into all its spare capacity and is at risk of inflation. Clearly Singapore is at the opposite end of the economic spectrum to the US. And the move contrasted with the recent attempts by Emerging Markets central banks to prevent further appreciation of their currencies. Importantly, there was also little to suggest that other central banks in the region are following suit in the immediate aftermath of the MAS decision. The fact that freely floating currencies like EUR and SEK were among the top performers against USD overnight also indicates that there was little to suggests that investors are anticipating more burden sharing and less unilateral FX interventions to come going forward.

•Richmond Federal Reserve Bank President Jeffrey Lacker said a Fed policy devoted primarily to reducing unemployment risks damaging the central bank’s credibility in containing inflation. “With inflation reasonably close to any plausible definition of price stability, and all expectations measures pointing in the right direction, making unemployment a policy imperative poses clear risks to the credibility of our long run inflation goals,â€