Wednesday, June 29, 2011

Today's M^3 - India's Sensex 30 Index up 6.5% for the Week

The BSE Sensex 30 Index is up nicely this past week with a 6.5% gain. In fact, many of the Indian indexes are among the top performers globally over the prior 7 days.

We had featured another Indian equity index, the Bombay Stock Ex 100, back on the 19th of this month. At that time the news was less positive as Indian equities were down around 2.5% for the day. Very shortly after that post (within a couple of days) the Indian markets rebounded strongly.

The big reversal appears to be riding on the global wave of positive equity movement that resulted from the news out of Greece. Approximately 66% of the global equity indexes we track on are in the green over the past week. India's markets probably got an extra boost because they were so beaten down the weeks just prior.

(Click on the images for a larger view.
Click here for the current performance of global equity indexes.
Click here for the line chart of the BSE Sensex 30 Index.)

Tuesday, June 28, 2011

Today's M^3 - Biogen Idec (BIIB) up 16% for the Month

Today's Major Market Move featured item, Biogen Idec (ticker BIIB), has been the best performer in the S&P 500 this past month by climbing over 16%. It has also performed well for 2011, rising 60% since January.

The stock price received 2 huge boosts in April: one on the 11th when it was reported that the company had seen positive results from a late stage study covering a multiple sclerosis drug, and the other was on the 21st when they released their fiscal 1st quarter results. I don't quite understand the market reaction to the earnings release because on a non-recurring basis they actually missed the EPS estimate by 20 cents.
In the first quarter, net income attributable to the company increased to $294.33 million or $1.20 per share from $217.44 million or $0.80 per share in the previous year.

On a non-GAAP basis, earnings per share were $1.43, up from $1.08 per share in the preceding year. On average, 23 analysts polled by Thomson Reuters expected earnings per share of $1.41 for the quarter. Analysts' estimates typically exclude one-time items.

This is a table from the last earnings announcement that provides detail on the difference between the GAAP and non-GAAP numbers (in millions):

The bulk of the difference is from the line item "Amortization of acquired intangible assets". I don't have an accounting degree which might be why I'm struggling to understand how the amortization of a finite asset could represent an ongoing income stream. The key going forward will be to keep an eye on their revenues.

(Click on the images for a larger view.
Click here for the current performance of stocks in the S&P 500.
Click here for the current line chart of Biogen Idec (BIIB).)

Monday, June 27, 2011

Today's M^3 - Ukrainian Equity Market Down 3.8% for the Week

Today's Major Market Move covers the Ukrainian Equities Index which is down 3.8% over the last 7 days and is down over 13% for the year. The Ukraine has been having its own sovereign debt issues over the past few years, with the IMF stepping in on 2 different occasions and pledging over 30 billion in loans. The first loan was established back in 2008 and caused their equity markets to quadruple from 500 to 2000. The 2nd loan in July of 2010 caused another surge to 3000 but by now almost all of that has been given back.

Goldman Sachs, in their ongoing mission to do "God's work", has offered to provide consulting services for free. Will these be the same types of services that Goldman provided Greece when they attempting to gain entry into the Euro?

This article from the Kyiv Post highlights many of the reasons why the Ukraine's markets are perceived negatively by both domestic and international investors. The recent downtrend that started back in April was exacerbated when earlier in June "the state securities commission surprised the market by freezing trades on one of the more liquid equities on the market, shares in Yasynivsky Coke Plant."

Sunday, June 26, 2011

Today's M^3 - Cypriot Stock Market Worst Performer For 2011

Which equity market is the worst performer of the year? If you were thorough enough to read the title of this post then you would know the answer is Cyprus, the subject of today's Major Market Move post. The stock market in Cyprus is down over 33% for the year, with Greece in a distant second at -24%.

Cyprus has their own serious debt issues but Cypriot banks also have significant exposure to Greek sovereign debt. Cypriot sovereign debt was recently downgraded 3 notches by Fitch.
From the Cyprus Mail:
“Right or wrong, the [foreign] markets’ assessment is that Cyprus is next in line to enter a support mechanism, much like Greece. Consider: right now our loan spreads are as bad as Portugal’s when that country was about to receive financial support.”

There has hardly been any media coverage about Cyprus. That's either because of its relatively smaller size or it's due to the fact that the letter C screws up the PIIGS acronym. Regarding its size, Cypriot GDP is twice the size of Iceland's and Iceland generated a fairly sizable shock wave when it blew up at the end of 2008.

Here's the line chart of the main equity index in Cyprus, the General Market Index CSE:

(Click on the images for a larger view.
Click here for the current performance of global equity indexes.
Click here for the current chart of the General Market Index CSE.)

Saturday, June 25, 2011

Today's M^3 - Shanghai SE B Share Index Rebounds 8% Last Week

This is the 2nd time we'll be referencing the Shanghai B Share Index in our Major Market Move post in the past couple of weeks. The last time was on June 10th when the index experienced a 12% weekly drop. This time the news is more positive; the index was the best performer globally last week, up 8%. Now to paint a complete picture, we have to point out that the index is still having a rough 2011. It's down about 18% from the high back in April and 10% from the beginning of the year.

For those of you not familiar with the B Share Index, it's priced in USD and targeted towards foreign investors. A good portion of the losses this year are due to several accounting scandals, one of the more notorious involving Sino-Forest. I don't have enough visibility into the Chinese Stock markets to figure out why the B share index was disproportionally more affected by these scandals compared to the other Chinese indexes. Perhaps Chinese domestic investors perceive accounting irregularities as just part of the normal course of doing business. Of the Chinese equity indexes we track on PikeFin, the worst performer for 2011 is the ChiNext Price Index at -18.4%.

The ChiNext index is a listing of high growth companies (i.e. high risk) based in Shenzhen. According to this article on Want China Times, it's barely over a year old and is down over 15% since its inception (it hit 986 on opening day 6/1/2010 and the most recent print was 832).

(Click on the images for a larger view.
Click here for the most recent performance of global equity indexes.
Click here for the current chart of the Shanghai B Share Index.)

Snake Oil: Cures Cancer, Creates Jobs

It always strikes me as comical when an economist states that the economy would be so much better and there would be so many more jobs created if we only did x,y and z. The economic axiom that should override every other is this one: "There is no free lunch." Every economic discussion should be structured in the form of a cost-benefit analysis. Articles, like this one from Irwin Kellner, really rub me the wrong way when they smugly claim to have a magic elixir with no side effects.

Creating jobs is not rocket science.
If this were the case, then no economy in the world ever need experience double digit unemployment. Today's global economy is as competitive as ever. Now here is something that doesn't require an advanced degree in extra-terrestrial propulsion systems to comprehend: those countries who's input costs (particularly land and labor) are high relative to their productivity are going to struggle to create jobs.

On the hiring side, the first thing that comes to mind is that the government should make it less expensive for business to hire U.S. workers. This means some combination of tax credits and a payroll-tax holiday when a firm adds to its payrolls.
According to data from the OECD, US corporate tax rates are admittedly high relative to the rest of the world. However they are on the same level with advanced industrial nations who are our primary competitors, like Germany and Japan. Both of which have much lower unemployment rates than the US. The major categories of labor costs can be broken down into salary, benefits and taxes. If the tax portion is small relative to the other two, then reducing taxes will have a minimal effect at best.

Additionally, no mention is made of the effect of lowering taxes by a government that has $14 trillion in debt and is running a $1.6 trillion annual deficit. Government debt at these levels creates all kinds of uncertainty regarding the future direction of fiscal spending as well as the overall economy. Forced austerity is generally not conducive to an expanding economy (case in point: Greece, Ireland, Iceland...).

In addition, we should see to it that the dollar is appropriately valued in world financial markets so that our exporters have a level playing field on which to compete.
Good old competitive devaluation (this should be added as an Olympic event in 2012). Doing this in a controlled fashion is easier send then done. Kellner makes no mention of the negative effects, such as higher energy prices, which at this very moment are considered one of the major impediments to the economy. Just this past week the US announced it was releasing 30 million barrels of crude from the Strategic Petroleum Reserve.

More free-trade agreements would help as well.
Generally agreements involve give and take. Are we to believe that other governments are going to willingly enter agreements that will obviously be net-job positive for the US?

Banks should be encouraged to step up their lending.
Alcohol as cure for the alcoholic. Loose lending standards were a major cause of the current mess and banks are still saddled with billions of dollars in suspect loans. Banks, by their very nature, are in the business of making loans to make money. Why not let them decide whether or not a loan is viable?

Flattening the yield curve, thus reducing the appeal of Treasurys over business loans, is one way; lower capital requirements on loans as opposed to investments is another
Kellner provides no specifics on how to exactly achieve this. All of the methods I can think of have consequences. Two ways to flatten the yield curve: 1) bring down long term rates and/or 2) bring up short term rates. I'm absolutely certain that Kellner is not advocating option 2 because all of his other suggestions are text book Keynesian and the last thing a Keynesian would suggest at this point is for the Fed to raise overnight lending rates. That leaves option 1 which the Fed has already been engaged in with Quantitative Easing. A direct correlation appears to have been established between QE and energy prices. Again, lunches are not free.

To this end, the government should offer more cash for clunkers, another tax break for home buyers and — my long-standing suggestion — a gift card loaded with $3,000 that must be spent within 90 days, sent to everyone over the age of 16.
As ludicrous as this sounds on the initial reading, be aware that this is just another form of currency devaluation. Currency devaluation = higher energy prices. Also be aware that the US has a significant Current Account Deficit, meaning we spend a lot more on imports than we receive in exports. A good portion of that increased consumer spending is going to find its way into the pockets of foreign companies. I've always been of the opinion that the current account deficit has to be fixed first before making attempts to encourage consumer spending. The problem is, selling stuff has always been more difficult than buying stuff.

Friday, June 24, 2011

Today's M^3 - Swiss Franc Strengthens Over 4% vs the USD in a Month

Over the past 30 days the Swiss Franc strengthened 4.7% vs the USD, by far the best performance (or worst if you're the Swiss National Bank) out of all currencies and thus making it the subject of today's major market move post. The next best performers were the Norwegian Kroner, the Brazilian Real and the Colombian Peso, all coming in at 2.4%.

The Swiss Franc continues to be popular as a safe haven trade to escape all of the Euro turmoil. We mentioned the Swiss Franc previously back on June 6 and the USDCHF is at about the same level it was back then (very close to the 2011 low).

One notable difference between now and earlier in the month is that the USD has strengthened somewhat (DXY went from 73.5 to 75.5) so that means that the CHF has strengthened even more relative to other currencies. In order to reduce the amount of data we have to gather and store, we only track currencies relative to the USD. Then one just has to use some basic math to figure out the other crosses. If the USDCHF is down 4.7% and the USDEUR is up 1% then the EURCHF is down 5.7% (if that's not the case then you've found a great arbitrage opportunity).

The Euro set a record for weakness vs. the Swiss Franc today despite the claims of the announced (2nd) bailout for Greece. From the wsj:
"There are concerns over contagion since Italy's economy is very weak and also over the lack of transparency in the banking sector," Peter Rosenstreich, associate director and chief market analyst with Switzerland's Swissquote Bank SA, said. "Without a total and credible solution to the Greek and [European Union] sovereign debt crisis, all EU nations are susceptible to sudden exodus of confidence and capital."

The Greek parliament still has to vote next week on the most recent version of the austerity program. Even if it passes by them, the general population may issue their own veto in a form much different, and more violent, than a ballot. On the remote possibility that the ECB and euro pols achieve the best possible outcome for Greece, I still don't see how the market doesn't shift its focus on to the next of the PIIGS (most likely Portugal). The only way the bankers had any shot at halting the momentum of increasing bond rates was to deliver, without a lot of deliberation, a forceful, convincing and universally supported plan. The fact that this is dragging on demonstrates a declining resolve, a resolve that is not going to get any stronger when the next debt ridden basket case is brought to the forefront.

(Click on the images for a larger view.
Click here for the current performance of currency crosses.
Click here for the current USDCHF chart.)

Thursday, June 23, 2011

Today's M^3 - Brent Crude Futures Down Over 4% for the Day

As most people have heard by now, the IEA in collaboration with the US, announced a 60 million barrel draw down of petroleum reserves. This event, along with weak economic data reported in the US, contributed to a 4% daily decline in Brent Crude Futures making it the subject of our Major Market Move feature.

Here are the details from reuters:

U.S. crude futures fell to a four-month low on Thursday as news that the consuming nations would tap reserves and more weak economic data pressured oil prices.

A release of 60 million barrels of oil from government-held strategic reserves was announced by the 28-member International Energy Agency. The IEA said it would release 2 million barrels a day (bpd), mostly crude, over an initial 30 days to offset the disruption to Libya's output.

The United States will provide half the volumes from its huge 727-million barrel crude oil reserve, about 1.5 days of U.S. consumption, with Europe supplying 30 pct and the rest from Pacific OECD nations.

It's my opinion the main motivation behind this ploy is to give the Fed more room to pursue another round of US treasury purchases aka quantitative easing. The Fed has admitted that growth is slowing and US GDP estimates have been revised down 3 consecutive times. I guarantee that the Fed would prefer to continue to provide additional stimulus but they are restraining themselves out of fear for the effect on commodity prices. Now the next round of QE most likely will come with a different name and a slightly different format. Bill Gross of PIMCO recently predicted that the next move by the Fed would be interest rate caps. How does one put a ceiling on bond rates? By buying them. QE by any other name is still QE.

(Click on the image for a larger view.
Click here for the current performance of commodity futures.)

Wednesday, June 22, 2011

Today's M^3 - Greek Equity Index FTSE/ASE Small Cap IX Up 6% for the Week

The Major Market Move post for today highlights one of the Greek equity indexes, the FTSE/ASE Small Cap IX. It's received a recent boost from the news that the Europeans are close to finalizing another bailout plan as well as the results of the confidence vote for Greek prime minister Papandreou.

The Small Cap index benefited the most from the recent good news while the other Greek indexes were only up about half as much over the same time frame. Apparently the bailout program is seen by the markets as having a more positive effect on smaller companies.

But we need to keep things in perspective. This is a minor retrace compared to the drop that stocks have experienced from the beginning of the year. Greece is by no means out of the woods yet with their debt problems.

(Click on the images for a larger view.
Click here for the current performance of global equity indexes.)

Tuesday, June 21, 2011

Today's M^3 - Cabot Oil and Gas (COG) Gains 13% in Past Month

The Major Market Move being discussed today involves a US equity, Cabot Oil and Gas, which has been one of the top performers in the S&P over the last 30 days. It's up over 13% since 5/20:

There are only 2 other stocks that are performing better over that time frame: ProLogis (PLD) which was boosted by its merger with AMB Property Corp, and Forest Laboratories (FRX), where the news became public that Carl Icahn was gobbling up shares. The gains in COG are interesting in that it is predominately a natural gas company, despite the name. According to the last quarterly report, over 90% of their revenues were from natural gas. One would expect their stock performance to track the price of Nat Gas fairly closely, but that hasn't been the case.

Natural Gas Futures:

COG stock price:

Nat Gas prices are essentially flat for the year while COG has been on a tear, up 63% for 2011. From an earnings perspective, it looks like most of the run up is due to a big beat in calendar Q4 2010. The stock price continued the strong trend upwards despite the mediocre Q1 of 2011. Q2 of 2011 will be pivotal in determining if that trend upwards was warranted.

(Click on the images for a larger view.
Click here for the current stock performance of the S&P 500.
Click here for the current chart of Natural Gas Futures.
Click here for COG EPS actuals and estimates.

Monday, June 20, 2011

Today's M^3 - Finland Equity Market Down 13% in Past 30 Days

Finland's stock market is the focus of today's Major Market Move post. It's been one of the worst performers on the planet so far this year and has had a particularly rough past 4 weeks, dropping 13%. The only two markets that have fared worse are the Shanghai B Share index (which was discussed here) and the Greek market, which has dropped for reasons that any sentient being on the planet should be aware of by now.

The Helsinki Index has plummeted through the lows of the year which you can witness here:

With their own economy struggling, it's not surprising that Finland has been one of the biggest opponents of the European bailouts. From the New York Times back on April 18th:

That day came on Sunday, when Finnish voters awarded 19 percent of their ballots to the nationalist and populist True Finn Party, which is highly skeptical of bailouts for countries like Greece, Ireland and, most pertinently, Portugal. The results made the True Finns the odds-on favorites to become coalition partners in a future government.

Nokia's recent troubles are having an impact as well, both directly and indirectly. According to wikipedia, Nokia accounted for 33% of the market cap of the Helsinki Stock Exchange (of course that percentage is quite a bit lower today). Here's more:
Nokia plays a very large role in the economy of Finland; it is by far the largest Finnish company, accounting for about a third of the market capitalization of the Helsinki Stock Exchange (OMX Helsinki) as of 2007, a unique situation for an industrialized country.[12] It is an important employer in Finland and several small companies have grown into large ones as its partners and subcontractors.[13] Nokia increased Finland's GDP by more than 1.5% in 1999 alone. In 2004 Nokia's share of the Finnish GDP was 3.5% and accounted for almost a quarter of Finland's exports in 2003.[14]

(Click on the images for a larger view.
Click here for the current performance of global equity indexes.
Click here for the current chart of the OMX Helsinki Index.)

Sunday, June 19, 2011

Today's M^3 - Bombay Stock Ex 100 Index Down 3% for the Day

The Bombay Stock Ex 100 Index is taking it on the chin with over a 3% drop earlier today. It briefly broke through the 2011 low.

According to this article from the Business Standard, the selloff is due in part to a resumption in tax treaty talks between India and Mauritius. I'm going to have to do some more research because I'm missing the logic here. India: Population 1.2 billion. Mauritius: Population 1.2 million. (Roughly)
That has to be one hell of a treaty when Mauritius has .001 the population of India yet the treaty can have still have a major affect on India's equity markets.

In the time it took to put together this post, the index has bounced back and is now down just 1.8%. Taiwanese equities have taken over the "worst performer of the day" slot. It's safe to say that the Asian equity markets in general are seeing a lot of selling. I'm going to go out on a limb and declare that the treaty talks between India and Mauritius have nothing to do with the selloff in Taiwan.

(Click on the images for a larger view.
Click here for the current chart of the Bombay Stock Ex 100 Index.
Click here for the current performance of the global equity indexes.)

Saturday, June 18, 2011

Today's M^3 - Lumber Futures Down 20% for the Year

Today's Major Market Move takes a look at Lumber which is down over 20% since the end of January, making it the worst performing commodity over that time frame. Maybe instead of iPad prices, New York Fed President William Dudley could have cited lumber prices as an example of a lack of inflation.

It's hard to imagine any kind of recovery in the housing market while lumber prices remain this depressed, unless the housing industry has shifted to cardboard as the primary building material. The drop in lumber prices in April was lagged by a similar drop in the housing index XHB by a month.

(Click on the images for a larger view.
Click here for the current performance of commodity futures.
Click here for the current performance of lumber futures.)

Friday, June 17, 2011

Today's M^3 - Cotton Continues Decline, Off 43% from Year's High

How times have changed. Back on March 8th we mentioned how among all the other high flying commodities like gold and silver, no one was talking about cotton which was up 40% for the year. Once April hit it was a completely different story and cotton gave up almost all of those gains. It made our Major Market Move feature on June 4th. The downward trend continues... cotton is now trading at 124ish which is 43% off of the high for this year (it's actually bounced back 2% in the time it took me to put together this post).

(Click on the image for a larger view. Click here for the current cotton futures line chart.)

One theory explaining the decline in prices that I haven't heard discussed is high unemployment around the globe. Without a job, there's no need for a suit. You can lounge around the house all day in boxers, or even a mumu.

Yes, I'm joking...

Thursday, June 16, 2011

Today's M^3 - Iranian Rial Weakens 7% Against the USD in One Week

Today's Major Market Move discusses the Iranian Rial which experienced a 7% drop over the past week. The following table shows it as being the 2nd worst performer after the Belarusian Ruble, which recently underwent a massive devaluation. The Belarusian devaluation actually occurred the previous week and the data provider didn't pick it up until a few days later. So what that means is that Iran actually holds the current top stop in terms of weekly devaluation.

Ordinarily with a move like that, I would be anticipating some saber-rattling rhetoric out of Ahmadinejad to take the focus off of economic issues. But using the stock market as a barometer, the Iranian economy has been performing remarkably well over the past year (up a whopping 76% since June 2010).

(Click on the image for a larger view. Here's a link to the site of the Iranian Stock Exchange.)

Up until the end of 2010, Iran was doling out 60 billion in subsidies. At that time, they began implementing a reform program to wean the economy off of the artificially low prices (coincidentally, that happens to be when the market really took off). The IMF credits this reform program with being largely responsible for the strengthening economy. But not everything is rosy according to this article from Radio Free Europe.

"The IMF institutionally, they really like the idea of markets being pushed towards real prices, taking out distortions, which subsidies are. On the surface, Iran is trying to do that," he says. "But it's really not, because Iran is moving from a model of general subsidies to a model of income support for firms and organizations which are going to be now connected to us [the government] -- i.e., through a Revolutionary Guard network of firms, which are going to be getting everything at preferential rates. The IMF is looking at the picture it is getting and is ignoring what I would call the widespread creeping of Revolutionary Guard firms into the economy at every level."

So if true, rather than a complete phasing out of the subsidies, the Iranian authorities are just changing who the beneficiaries are. If this money is making it into the coffers of Revolutionary Guard-controlled companies which are represented on the Tehran Stock Exchange, that would explain the stock market gains. Income distribution would become more unequal under this arrangement, thus adding to the dissatisfaction of the general populace.

Wednesday, June 15, 2011

Follow Up on the Kenyan Stock Market 17% Move From Yesterday

Either there's some ridiculous volatility taking place in the equity markets in Nairobi or there are some data issues. Bloomberg is no longer showing the sub 3400 prints from yesterday so it appears to be the latter.

Today's M^3 - Corn Futures Down 13% for the Week

This past week corn futures have been getting cornholed, suffering a 12.8% decline. After touching their all time high of nearly $8 a bushel, they are now rapidly approaching their lows of the year, as evidenced by the following chart (can you say whipsaw? I knew you could...:

According to this article on, the main culprit for the drop in price is a corresponding drop in oil prices. The expectation is that lower oil prices will soften demand for ethanol.

Corn has been the worst performer for the week, followed by Lumber which was already down significantly for the year. I expect to be featuring lumber in one of these Major Market Move posts in the not-too-distant future.

(Click on the images for a larger view.

Click here for the current chart of corn futures.

Click here for the current performance of commodity futures. )

Tuesday, June 14, 2011

Today's M^3 - Kenyan Stock Market Down 18% in the Past Week

The Nairobi NSE 20 Share Index is down over 18% for the week and yesterday experienced a one day decline of 17%. When I first saw the number I searched around for some news but didn't find any mention anywhere so I suspected that it might be a bad print. However the Nairobi Stock Exchange website shows the current index value as 3335 so it looks like it's valid. Neither their website nor their twitter feed makes any special mention of the drop so it makes one wonder how large of a one day move it actually takes to get some notice.

The Kenyan market is by far the worst performer globally over the past 7 days:

Here's the line chart doing its Acapulco imitation:

(Click on the charts for a larger view.
Click here for the current performance of global equity indexes.
Click here for the current performance of the Nairobi NSE 20 Share Index.)

Monday, June 13, 2011

Today's M^3 - Egyptian Stock Market Rebounds 10% in Past Month

We're going back to Egypt for today's Major Market Move post. Egypt's markets suffered a significant drop as a result of the revolution. The EGX 30 Index went from ~6720 at the end of January to ~4880 at the beginning of May, a 27% decline. There were also numerous stock market shutdowns, which is why the chart looks so funky:

(Click on the image for a larger view. Click here for the current performance of the EGX 30 Index.)

Now that the political situation has stabilized somewhat, the market is in the process of recovering those losses. The Eqyptian equity markets have been the best performer globally over the last 30 days:

(Click here for the current performance of global equity indexes.)

Sunday, June 12, 2011

Today's M^3 - Wool Futures up 31% Since Jan

Get ready for the appearance of "Cash For Yarn" stores. Wool futures are up over 31% since January and have passed silver to make it the best performing commodity over that time range.

(Click on the image for a larger view. Click here for the current performance of commodity futures.)

According to Msn Finance, a couple of reasons for the rise in price are 1) weather disruptions in Australia affecting output and 2) the pull-string doll response for all commodity price increases: rising demand in Asia.

Saturday, June 11, 2011

Today's M^3 - Belarusian Ruble Devalued by 66%

My condolences to all the savers in Belarus who's central bank took it upon themselves to devalue the currency by 66%. The actual event occurred last Tuesday (5/31/2011) but the new rate didn't show up in my data provider until a couple of days ago. The intention of course is to make ruble denominated debts easier to pay off and exports more attractive. However this type of severe disruption isn't without negative side effects.

This today from Bloomberg:

The Belarus government banned individuals from taking basic consumer goods such as home appliances, foodstuffs and gasoline out of the country following a devaluation of the local currency.

People are also barred from leaving the country by car more than once every five days as of today, according to an e-mailed government statement.

The Beeb posted this on Tuesday regarding energy supplies from Russia:

A source at Inter RAO IUES.MM, the export monopoly, told Reuters news agency: "If Belarus doesn't pay, supplies will be shut off entirely on June 19."

The government in Minsk said it hoped to resolve the matter "as quickly as possible".

"However, it is important to note that the country has certain problems with its currency," an energy ministry spokeswoman said.

Commodity prices have gone up? No one could see that coming. From the WaPo on Wednesday:

Thousands of motorists took part in Tuesday’s action, and some parked in the middle of Minsk’s main avenue to protest high gas prices that have nearly doubled since March to 5,800 Belarusian rubles ($1.10) per liter.

For those of you who don't think something like this could happen in the US, allow me to dredge this up (from wikipedia):

The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35.

Friday, June 10, 2011

Today's M^3 - Shanghai SE B Share Index Down Over 12% for the Week

Today's Major Market Move feature involves the Shanghai SE B Share Index which is the special Chinese exchange for foreign investors. For those of you lamenting the 5% downward move in most of the US indexes this past month:

you can take some perverse consolation in the fact that you weren't invested in the Shanghai B Share Index which is down 12% for the week and 17% for the month(unless of course you were invested in both, in which case be happy that your savings weren't denominated in Belarusian Rubles).

Shanghai SE B Share Index:

(Click on the charts for a larger view. Click here for the current performance of the Shanghai SE B Share index).

The recent major downward move in the Shanghai B index was precipitated in part by a warning from US regulators "about the risks surrounding Chinese companies that have listed there through reverse mergers."

Thursday, June 9, 2011

Today's M^3 - SPLS (Staples) Down 27% for the Month

Today's Major Market Move post (M^3 for you math oriented folks) focuses on Staples Inc (SPLS). Their stock price is down over 27% for the month:

Take notice of how Office Depot (ODP) was the 2nd worst performer over the same time frame. Apparently more consolidation is needed in the office products space, even after Office Depot closed 126 stores at the end of 2008.

Wednesday, June 8, 2011

Today's M^3 - Sugar Futures Up 16% Over the Past Month

Sugar has been the laggard of the commodity complex this year, but it's in the midst of making a nice bounce. With a gain of close to 17%, it's the top gainer over the past 30 days of the commodities we track.

(Click on the chart for a larger view. Click here for the current performance of the commodities market.)

A report came out indicating that the current Brazilian sugar cane crop was expected to have a low yield. However even with this recent gain, sugar is still the worst performer since the middle of January, being down over 23%.

Tuesday, June 7, 2011

Today's M^3 - Peruvian Stock Market - Not For the Faint of Heart

If you're looking for volatility, the Peruvian stock market is the place to trade. There have been huge swings over the past few months as the market reacted to the polling results of the presidential election. Investors panicked whenever the socialist candidate Humala, who is perceived as being from the Hugo Chavez mold, showed strong polling numbers. Yesterday the fears of those investors were realized when Humala came out victorious in a very tight race. The market reaction was severe: down 13% in a single day. That's in Flash Crash territory, although in this case there was an actual news event that caused the move whereas the Flash Crash came out of nowhere. The market made a nice rebound of 7% today although I don't know how reassuring that is for Peruvian investors over the long term. This chart doesn't really do justice to the severity of the moves:

(Click on image for a larger view. Click here for the current chart of the Peru Lima General Index.)

Monday, June 6, 2011

Today's M^3 - Swiss Franc Up 5% Against the USD Over the Past Month

The flight to safety from the turmoil in Europe continues. Today's Major Market Move features the USDCHF which has fallen 5% this month:

(Click on the image for a larger view. Click here for the current performance of forex rates.)

and is down over 13% for the year:

We are a long ways away from where the Swiss bank tried to set up a fire break to keep the Franc from appreciating further. One of their major intervention efforts occurred back in May of last year where the Swiss National Bank was actively selling Francs for Euros. You can see the plateau followed by the sharp cliff:

The EURCHF was trading at around 1.40 at that time. It's now quickly approaching 1.20. So there's a lesson there for all the aspiring central bankers in the world: unilateral currency interventions rarely, if ever, work.

Sunday, June 5, 2011

Today's M^3 - Nat Semi Best Performing S&P Stock Over Past 5 Months

With all the glum US equity news lately, we'll try to brighten things up by focusing on something positive. National Semiconductor (NSM) is up 71% since the end of January and is the best performer in the S&P over that time frame.

(Click on the image for a larger view. Click here for the current performance of stocks in the S&P 500)

There's a very good reason for the big gain - Texas Instruments announced it was acquiring NSM for $25 a share back in April. The total price of the deal was value at $6.5 billion, of which at least $3.5 billion will be funded by debt.

For TXN the market reaction towards the acquisition has been lukewarm; the stock is trading down about 3% since the acquisition was announced.

Saturday, June 4, 2011

Today's M^3 - Cotton Futures Down 36% Since March

We mentioned cotton prices in a post back on May 20th where we discussed the decline in The GAP's (ticker: GPS) stock price. An analyst had used the excuse of high cotton prices to explain the decline in earnings. GPS should be a screaming buy now with cotton in a free fall since March.

According to this article from Bloomberg, slowing demand from China has been a big contributor to the drop in prices. So even though there's been a lot of hype about recent food and energy price increases, the rise in the commodity complex has not been unanimous. Of the 29 commodities we track on, only a little over half are up since January (15 out of 29).

Friday, June 3, 2011

Today's M^3 - KBW US Bank Index down 4% for the week

The Major Market Move for today is KBW, the US based banking index, which was down 4.1% for the week. It was the 4th worst performer of the global equity indexes that we track on

Many of the major US banks had already taken a significant hit prior to this week.