Today's Major Market Move: Sweden's 5 Year Credit Default Swaps Decline 45% Year to Date

Perhaps their economy was steeled by the debt crisis they experienced back in the 1990s, since Sweden now has arguably one of the healthiest economies in Europe and even the world. In order to back this statement up we'll take a look at several metrics, starting with credit default swaps. Swedish 5 year credit default swaps, after dropping 45% so far in 2012, are the second lowest priced (of the ones we track) after the U.S. For those of you not familiar with how CDS work, a lower price means the market places a lower probability of default on that country's bonds. Here's the top ten 5 year CDS ranked in order of lowest current price:

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In terms of GDP growth, Sweden is expected to have the highest GDP growth in the European region for the time period 2007-2015 (data and estimates courtesy of the IMF):

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The Krona, when looking back over the past 15 months, has been relatively stable with the USDSEK cross trading in a range between 6 and 7. The currency is currently stronger by a modest 2.2% since the beginning of 2011.

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In terms of equity market performance, the benchmark OMX Stockholm Benchmark Index is up 6% since 2007. This places it 28th out of the 86 benchmark equity indexes that we track and ahead of the equity indexes of  the major industrialized countries (excluding the BRICs) and all other European countries. The following images shows positions 22 through 32:

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Is there a lesson to be learned from the Swedish approach to handling its crisis? This has been and continues to be debated. One major difference between the Swedish incident and the current crisis is that today's downturn was global in scope whereas Sweden went through theirs in relative isolation. The tactic of currency devaluation to reduce imports and boost exports is much more effective when other countries aren't attempting to do the same thing. It is worth pointing out that Sweden did not accept any outside bailout money nor did it receive any assistance from the IMF.

Today's Major Market Move: Sears Holding (ticker: SHLD) Drops 8.3% in Past Week

Back on February 23rd, Sears Holding (ticker: SHLD) announced their third quarter results and it was a doozy. In the Christmas quarter that usually provides a windfall for retailers, Sears ended up losing over $22 a share. We thought for sure this number included at least one, if not more, extraordinary items but according to Google Finance, it does not:

We are going need to add a log() option to our stock price / eps comparison chart since this print essentially renders it useless in linear format:

Click here to go to the live chart.

Amazingly, the stock rallied 23% after the earnings announcement. We can only suspect that this was a reaction to the restructuring plans that were presented along with earnings. More from the Worcester Telegram:

Sears Holdings Corp. said Thursday it plans to raise as much as $770 million by selling 11 store sites and separating some smaller-format businesses in an effort to regain profitability and market share, after posting its largest quarterly loss in at least nine years. 

In the past two weeks, after Sears announced the closure of another 62 stores (which comes on the heels of a 120 store closure announcement at the end of last year), investor sentiment has changed. The stock has given back all of the gains from the rally that started on Feb 24th.

Click here to go to the live chart.

What is perhaps most remarkable about this entire situation is that SHLD still holds the top spot in the S&P 500 for stock performance in 2012, and by a wide margin (104% vs 66% for BAC):

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Astounding considering SHLD lost over $29 in the prior fiscal year. I suppose this is a testament to the faith the investor community has in Eddie Lampert's ability to right the ship. It is going to be very interesting to see in the next earnings release if the current trend of quarterly losses (now at 4 in a row and increasing in magnitude) is abated.

Today's Major Market Move: WTI Crude Oil Futures Drop 2.2% in Thursday's Session

Almost the entire commodity complex dropped in price in Thursday's session with 25 out of 29 front month commodity futures contracts declining. Natural Gas Futures led the way with a 4.8% drop.

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The 2.2% drop in WTI Crude futures was not that large on a relative basis but we are going to focus on oil today because a) WTI Crude just broke out of a range in had been trading in for the past three and a half weeks and b) oil's significance to the global economy.  WTI Crude has now given back half of the February run up and is heading back towards double digits.

Click here to go to the live chart.

One of the main reasons for the drop in WTI prices was the higher than expected rise in U.S. crude oil inventories. From the Nasdaq:

Crude oil stockpiles rose 7.1 million barrels to 353.4 million barrels, compared with an average survey estimate calling for a build of 2.2 million barrels.

Brent has seen a recent drop as well but not to the same extent as WTI and Brent is still trading within this past month's range:

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With Brent remaining elevated, it means that European consumers, with some of the highest gas prices in the world (as seen on the following chart), are less likely to see any relief than U.S. based consumers who already deal with below-average fuel costs.

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Today's Major Market Move: South Korean Kosdaq Star Index Declines 7.6% in March

South Korea's Kosdaq Star equity index is down 7.6% in March, which is a decent sized drop by any measure however there are 5 other equity indexes that have performed worse this month.

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So why did we choose the Kosdaq Star index for today's topic? Why makes this move notable is that the Star index is sitting right at the 2011 lows and there are very few equity indexes on the planet that can say that right now. And lest you think that this index is composed of high beta stocks, here's the description courtesy of Bloomberg:

The KOSDAQ Star index is a free-float weighted index of top 30 companies in terms of financial stability, liquidity, market capitalization and etc.

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If we look at the comparison chart of the South Korean major equity indexes alongside GDP growth, we see a large disconnect between the Kosdaq Star Index and many of the other indexes. It appears as if the small and mid caps are outperforming the large caps by a fairly wide margin.

Click here to go to the live chart.

Today's Major Market Move: Natural Gas Futures Drop 4.4% In Past Two Days

Natural Gas Futures hit a ten year low on Tuesday after dropping 4.4% in the past 2 trading sessions. The 2.25(ish) level had held twice before, once in back in January when Chesapeake infamously announced they were cutting production, and it held again two weeks ago on March 15th. This third attempt was the proverbial straw that broke the camel's back as front month natgas futures finished the day at 2.18.

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With the historically warm winter and all of the new wells, storage facilities are now running out of space. This means that producers will then have two choices, sell the gas immediately at distressed prices or cut production. Here's more details from Reuters:

If capacity is reached, the prospect of producers selling their gas below market prices -- or even giving it away -- is sending shivers through a market whose prices have already fallen to 10-year lows.

U.S. futures fell to $2.17 per million British thermal units on Wednesday due to huge oversupply. Last summer they traded above $4. Low prices are great news for consumers but a bane for producers whose profits have been slashed by slumping prices.

Injection restrictions are not common for this time of year.

"It is unusual to see capacity restrictions this early," an analyst at a major storage owner said. "We usually see those notices deeper into the summer."

When storage is filled, pipelines are the next link in the chain, and when they are full, producers will likely be forced to cut supply, a move they are reluctant to make. Even at low prices, producing wells make a slight profit.

Let's take an updated look at our chart comparing stock prices of the natgas producers with the commodity price:

Click here to go to the live chart.

The companies are actually outperforming the commodity by a fairly wide margin. While natgas prices are down over 40% in the past 15 months, Range Resources Corporation (ticker: RRC) and EQT (ticker: EQT) are still in the black. Chesapeake (ticker: CHK) has been hit the hardest but has only dropped half as much as the commodity.

Today's Major Market Move: Soybean Meal Futures Gain 7.7% in March

It may not be as sexy as gold or oil, but nonetheless soybean meal futures have managed to take the top spot for March in the commodities complex. Front month soybean mean contracts are up 7.7% in March and 21% for the year.

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According to this article from the Wall Street Journal, the main driver appears to be lower crop yields from South America with demand from China holding steady. All three soybean related commodities that we track (beans, oil and meal) have risen this year and after a precipitous drop at the end of 2011, are now approaching the highs from 2011.

Click here to go to the live chart.

Regarding the demand side of the equation, if China's growth continues to slow (which we talked about in our January 17, 2012 post and more recently the 2012 estimate has been revised down to 7.5%), that will certainly have a dampening effect on soybean prices. If it's enough to counteract supply issues and global currency devaluation remains to be seen.

Today's Major Market Move: Colombian Peso Strengthens 9.1% Against the Dollar Year to Date

The currency that has strengthened the most against the U.S. dollar in 2012 is the Colombian Peso and the Colombian authorities are none too pleased. Forex intervention is the name of the game and the Colombian central bank is more than willing to play along. They've already been making daily purchases of $20 million but it's not having the desired effect so now they're going to pull out a bigger gun. From the WSJ:

So far the government's intervention in the foreign exchange market has been limited to daily purchases of $20 million daily by the central bank, a move designed to soak up U.S. currency from the spot market. Yet with daily trading volumes averaging nearly $1 billion, most traders point out that the central bank purchases are not sufficient to have an impact in the peso's movements.

"We are now in favor of a more intense, more aggressive and more in-depth strategy," [Finance Minister Juan Carlos] Echeverry said.

The finance minister's comments comes on the heels of the central bank's decision Friday to keep its key rate on hold at 5.25%, a move that in theory should dissuade so-called carry trades under which global investors borrow money at low interest rates in the U.S., Japan or Europe and then invest at high rates in Colombia.

The Peso has been on a nice roller coaster ride since the middle of 2011, with the USDCOP cross climbing from 1.74 up to 1.98 and now all the way back down to 1.74 again.

Click here to go to the live chart.

Gas prices at the pump in Columbia are currently $4.10/gallon. People in the U.S. are complaining about close to $4 gas and then consider that Columbia's per capita gdp is about one fifth of that in the U.S. (~10K vs ~50K) and well.... we'll let you do the math. We're also going to take this opportunity to bust out our recently completed global gasoline price chart:

Click here to go to the live chart.

What is interesting is that the equity market has been climbing while the currency has been strengthening. Although considering that the latin american region has a history of inflation issues, it makes sense for investors to view a strengthening currency as a net positive, despite the effect on the current account deficit. We would expect the equity markets to turn back downwards if the central bank shows sustained progress with their devaluation plan.

Click here to go to the live chart.

Today's Major Market Move: Australian Yield Curve Remains Inverted

We are taking the liberty of stretching the criterion for our "Major Market Move" post from a "Move" to a "Condition". The "Condition" we are going to address is the inverted state of Australia's yield curve. We're not sure when it first occurred, but the curve has been inverted for at least the past 30 days. Currently the 3 month bond is paying a higher rate than the 8 year bond:

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Inverted yield curves tend to be signs of recessions but a negative GDP print is not showing up in the IMF's gdp estimates (yet):

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We would be remiss if we didn't make some clarifications. The GDP growth estimates provided by the IMF are yearly and the official definition of a recession (as per NBER) is 2 consecutive _quarters_ of GDP growth. This means a positive yearly GDP print could still have multiple quarters of negative GDP growth which would meet the recession definition. Note that in the above chart GDP growth flattens out considerably from 2012 forward so there is at least an indication of a slowdown in the Australian economy. Furthermore, the IMF estimates are provided every 6 months with the next release due in April, meaning that the current numbers are a little stale.

Today's Major Market Move: Venezuelan Stock Market Up 10% in Past Week

The "oncological boom" continues in full force. Venezuelan stocks continue to surge on the heels of a recurrence of Hugo Chavez's cancer. Today it was announced that Chavez was flying back to Cuba for radiation treatment. It appears that the radiation treatments were planned as part of his treatment all along so today's news shouldn't have any direct bearing on Venezuelan equities. However with the way the market surged 10% this past week, it's almost as if this news came as a surprise and that it was leaked. The 10% weekly gain by the Venezuela Stock Market Index made it the best performing benchmark equity index by far, more than doubling the 4.7% gain by Montenegrin stocks.

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Extending our view further back, the numbers are even more remarkable. The Venezuelan stock market is up over 60% year to date and an astounding 185% going back to January 2011.

Click here to go to the live chart.

We've still been unable to find a free source for Venezuelan stock quotes so we're unable to analyze the performance of individual companies within the index. It would be very interesting to see which stock was the top performer out of an index that has gained 185% over the past 15 months. However it could very well be that the gains are fairly evenly distributed across the index especially considering that the main motivation for the surge (potential regime change towards a more free-market oriented administration) is macro based.

This next chart is a possible sign that the equity markets may have gotten way ahead of themselves. GDP growth since 2007 is about 60% while equities are up 250%. Stocks would have to fall about 35% from here to fall back in line with GDP growth.

Click here to go to the live chart.

Today's Major Market Move: First Solar (ticker: FSLR) Declines 27% in March

The S&P is having a good month with a 2% gain and is back in a range that it hasn't seen since before the financial crisis in 2008. 60% of the stocks in the S&P are positive for the month, however today we're going to focus on one of the stocks in the other 40%, First Solar (ticker: FSLR). FSLR is down over 27% so far in March, making it the worst performing stock in the S&P 500.

Click here to go to the live table.

Not only is the company having a rough month, but also a rough year and decade. With oil prices at elevated levels, one might wonder why solar isn't getting more respect from the investing community but most likely natural gas is a commodity that more directly competes with solar technology. As has been noted on this blog several times (the last time being on March 4), natgas prices are at historic lows. The declining price of FSLR also is not necessarily an indictment of solar technology in general, but of FSLR's (and other U.S. based solar manufacturers) ability to compete globally in the solar market. Here's the line chart of FSLR going back to the beginning of 2011:

Click here to go to the live chart.

Today's Major Market Move: Spanish 5 Year CDS Gains 3.4% in Wednesday's Session

With this last debt agreement and bailout for Greece, events have settled down in Europe for the time being. Equity markets around the world have resumed their upward trajectory. Commodities have leveled off for the most part with the two most important commodity futures (arguably), WTI and Brent, hovering around the 105 and 125 levels respectively. Bond yields are starting to tick up which is probably starting to draw the attention of central bankers and investors but they still remain at historically low levels. Sovereign CDS prices have for the most part dropped off, however there is one country where they are starting to climb back up again: Spain.

Click here to go to the live chart.

Spain's 5 Year CDS price gained 3.4% in Tuesday's session which isn't a crazy amount but it does bring it that much closer to the swing high achieved back in November. Many were expecting the bond bears to focus their attention on Portugal next but perhaps we are seeing the inital signs of a redirection towards Spain instead. Portuguese 5 Year CDS having risen in march as well, but as the following chart will demonstrate, they diverged from Spain's around the 15th and started to drop:

Click here to go to the live chart.

On a somewhat related note, we wanted to point out that the combined 5 Year PIIGS CDS appear to have been re-calibrated after the ISDA's credit event ruling on Greece. We haven't been able to find an actual announcement but based off of the dramatic drop (as seen in the chart below), we're guessing that Greece has been removed from the group.

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Today's Major Market Move: 3 year US Treasury Note Climbs to 60 Basis Points in Past Four Weeks

We are starting to see hints of an upward movement in bond yields which if it gains steam could have all kinds of interesting ramifications. There's one group of investors that we can definitively say missed out on the rally over the past couple years in both equities and commodities: sovereign bond investors. One of the more pronounced moves has been with the U.S. three year bill which has gone from .44 to .60 in the past 29 days. In fact, every bond duration has gained over that same time frame:

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It's not just the United States. The U.K, Australia, Germany and perhaps most ominously of all, Japan, have all seen interest rates start to inch up in the past few weeks. Japan has been fighting deflation for over 20 years so are they now finally going to get the inflation they've been looking for? With a debt to gdp ratio well north of 200%, Japan may be ill equipped to handle it. The U.K. has been engaged in financial alchemy with QE and with suggestions that the BOE simply void the government debt they hold. Is the market for Gilts expressing some concern for rampant money printing? Another bad omen for Britain is that their yield curve recently became inverted about a week ago, although since then it has 'un'-inverted itself. Inverted yield curves are a classic signal for a recession, although the sign has to last a lot longer than one or two days.

Today's Major Market Move: KBW Bank Index Gains 10.3% Month to Date

Last Wednesday we discussed Bank of America and how many banking and finance companies were performing well in the wake of the recently completed stress tests. So it should come as no surprise that one of the best performing indexes in March so far is the KBW Bank Index. March has been a good month for equities in general with 224 out of 320 equity indexes that we track in the green. The KBW Bank Index is currently in second with a 10.3% gain:

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It's worth pointing out that the Venezuela Stock Mkt Index is yet again in the top spot. People talk about AAPLs stock going crazy having gone up 50% in 2012. The Venezuela Stock Mkt Index (bear in mind we're talking about an entire index, not just an individual stock) is also up over 50% in 2012 which is on the heels of an over 80% gain the year before. Unbelievable. Here's the current chart of Venezuela Stock Mkt Index which is clearly going parabolic:

Click here to go to the live chart.

This post started off being about the KBW Bank Index but the 'oncological boom' ended up usurping it.

Today's Major Market Move: Sri Lankan Rupee Depreciates Over 10% Against US Dollar Year To Date

Up until November of last year, the Sri Lankan Rupee had been pegged to the US Dollar in the vicinity of 110 Rupees / Dollar. At that time, following the advice of the IMF and in order to boost the competitiveness of exports, the Sri Lankan central bank performed a one-off devaluation (at least that was the expectation at the time) of 3%. Over the following two months the economy continued to struggle, so in the beginning of February 2012 the decision was made to remove the peg completely. It's been in something of a free fall since then and the currency has yet to find a firm footing. Here's the events described in this paragraph in visual form:

Click here to go to the live chart.

That weakening stretch since February has resulted in the Rupee being the currency that has weakened more against the Dollar in 2012 than any other. In many cases a weakening currency provides a boost to equities because of the beneficial effect on export pricing. But when the weakening is pronounced and appears uncontrolled, as in this case, the effect is the opposite. Here's GDP growth (acutal and estimate) against the benchmark Sri Lankan equity index (Sri Lankan Colombo All Share):

Click here to go to the live chart.

Both stocks and GDP growth have been on a nice run since 2007 but the current trend is worrisome. According to this article from the Pakistani based Business Recorder, the Sri Lankan CB is expecting a recent inflow of $350 million to help stabilize the currency. Others have their doubts. From that same article:

But currency dealers said they were skeptical the inflows would ease depreciation pressure on the rupee, as the inflows would not be coming to the market.

Instead, dealers said the central bank has been absorbing them via swaps.

"If those inflows are swaps, definitely they are not going to help the market." said a currency dealer on condition of anonymity.

Cabraal said a "fair amount" of the inflows will be absorbed by the central bank to boost reserves.

Today's Major Market Move: Coffee Futures Drop Over 10% in March

While natural gas prices have been hit hard again this month and just recently made a new all time low, the hardest hit commodity in March has been coffee. Coffee futures are down 10.3% month to date and are down over 18% year to date. Here are the top 10 front month commodity futures when ranked by declining prices for March:

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The recent softness in prices is in large part due to a bumper Brazilian crop which is expected to keep prices constrained for the next six months. More color from the Business Recorder:

Andrea Illy said he expected coffee production from Brazil's upcoming 2012/13 coffee crop to reach 55 million 60-kg bags, the same estimate he had given late last year for the harvest in the world's top coffee producer that starts in around two months.

"Brazil's harvest will be good in terms of quality and quantity," Illy said.

The natural thing to do at this point in the post would be to put up a comparison chart of coffee futures prices against Starbucks' (ticker: SBUX) stock price. Since we're not one to fight against nature, here goes:

Click here to go to the live chart.

That's a pretty tight inverse correlation starting in October of last year. The 65% gain since the beginning of 2011 made SBUX the 16th best performing stock in the S&P 500. SBUX has now more than made up for the decline it suffered back in 2008 and is currently trading at all-time highs.

Today's Major Market Move: Egyptian Stock Market Up Over 42% Year To Date

Even though it took a hit and dropped 4% this past week, the Egyptian stock market, as measured by the benchmark EGX 30 Index, is still up 42.7% for the year. This put it a close second behind Venezuela for best performing equity market in 2012. Here's the top 10:

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Egyptian stocks were one of the worst performers in 2011 having dropped 49% (third worst), due in no small part to the revolution that occurred at the beginning of the year. The strong rebound this year hinges on the successful completion of a  loan package in the amount of $3.2 billion that is being negotiated with the IMF. Here are more details from the Abu Dhabi based The National:

The cash is needed to help to bolster confidence in the economy and shore up the government's increasingly shaky finances. Egypt's budget deficit for the financial year ending in June is expected to reach 11.7 per cent of GDP, higher than previous estimates of 10 per cent, official data showed last week.[...]

But the loan deal is far from certain. Egypt's interim military rulers last June spurned an earlier IMF offer, prompted by concerns about saddling future elected governments with unwanted foreign debt.

Back in June of last year equities were in the middle of a nice recovery from the decline that took place during the overthrow. But when the IMF deal fell through, they started dropping again and continued to drop steadily for the remainder of the year.

Click here to go to the live chart.

We imagine that the Egyptian authorities will be well aware of the above chart during this second attempt at a loan agreement and will be especially motivated to get a deal done.

Today's Major Market Move: UK 5 Year CDS Decline 36% Year To Date

Along with rising equity prices, this has also been a year of declining sovereign CDS prices. Interest rates on sovereign bonds have come up recently in some places like the U.S., the U.K and Japan but almost all CDS prices (PIIGS company not included) have been and continue to decline since the beginning of the year.  Of the 30 different credit default swaps we track, only 3 have gone up in price in 2012 all three of those are tied to the PIIGS. Here's the bottom 10 performers (in terms of higher prices, i.e. higher default risk):

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On the other end of the sovereign CDS spectrum, where prices have declined significantly, we have the topic for today's post: the UK 5 Year swap. It's been the 5th best performer this year having declined 36.4% and is down 41% from its 2011 high.

Click here to go to the live chart.

There was a very interesting comment last month by Mervyn King, head of the BOE. He said (hat tip to the Economist):

I have absolutely no doubt that when the time comes for us to reduce the size of the balance sheet that we'll find that a whole lot easier than we did when expanding it.

That is very vague and leaves a lot to the imagination as to what the actual methods are that the BOE is considering for reducing the size of the balance sheet. The BOE expanded the balance sheet by buying £325 billion worth of Gilts. So one obvious reduction method would be to sell those same bonds back out on to the open market. However we wouldn't consider this option 'easy' since doing so is going to drive up rates, perhaps significantly. We suspect the UK economy is a long ways away from being able to handle any kind of pronounced rise in rates.

Another option would be to simply "write the debt off". The banks get to keep the money that the BOE paid for the bonds and the BOE then throws the bonds into the shredder or does an rm -rf on the directory where the bond files are stored, or whatever the method might be that central banks use these days to send bonds off to debt heaven. The net effect is that the BOE just pulled £325 billion out of thin air and inserted it into the money supply. If you think this sounds crazy, this is exactly the method that was recommended recently by Jo Owen of the Financial Times:

Instead of selling the debt back into the market, the BoE can retire the debt. At a stroke, £325bn of UK government debt disappears. If the US follows suit, about $1.5tn of US government debt will be retired.

Mr. Owen then  goes on for the rest of the article explaining why this would be a good thing as long as certain 'preconditions' are met and how the BOE owned debt isn't 'real' anyway. He's right in a sense. Were the BOE to do this, not only would the £325 billion not be considered 'real debt', but the total remainder of the UK's sovereign debt (close to £600 billion)  would be rendered fake as well because the government and central bank will have just demonstrated that they are willing to print money to pay it off.

Keep in mind that there is no difference between what Jo Owen is proposing and what Robert Mugabe did when he printed up a bunch of Zimbabwean Dollars and used it to pay government worker's salaries or to add a new wing on to his palace or to pay for maintenance on his fleet of Benz's. Managing inflation expectations is almost as important, if not more so, for central banks than managing inflation itself. They do this by setting up complicated processes with terms like 'Quantitative Easing' and bombarding us with convoluted acronyms (there were no less than 9 acronyms created by the Federal Reserve during the 2008 crisis)  which all end up being just another way of funneling liquidity into the system. Mugabe's method was just much more efficient and obvious.

Today's Major Market Move: Bank Of America Gains 9.9% This Week

"Buy anything that moves": that pretty much sums up the current investing environment for equities. Here in the U.S. the S&P 500 recently crossed the 1400 level, the DOW is well over 13K and the Nasdaq is over 3000. However, as much as equities are performing great here in the States, the 10.9% gain YTD by the S&P 500 only ranks 36th among global benchmark equity indexes. Here's the top 10:

Click here to go to the live chart.

The S&P has gained 1.7% so far this week and a big contributor to the current move has been the financial sector which got a boost from the stress test results released by the Federal Reserve on Tuesday. The news was decidedly positive (no surprise there) with 15 of the 19 banks receiving passing marks. One of the 15 passing institutions was Bank of America (ticker: BAC) which was not entirely expected considering that back in August of 2011 there were rumors swirling that the bank was desperate for additional capital (see our August 10, 2011 post for more details). Since a passing grade wasn't already baked into the stock price, BAC got one of the biggest boosts from Tuesday's announcement. The stock was up 9.9% for the week making it the 2nd best performer in the S&P 500. As you can see in the table below, the top 10 is chock full of financial institutions:

Click here to go to the live table.

BAC is still well off of its 2011 highs of 15.25 and had only just returned to profitability on a quarterly basis 2 quarters ago. The bank has made the news in the past couple months with announcements of new and/or different fees on different types of customer accounts which shows how the company is actively exploring new revenue sources after other sources, like mortgages and proprietary trading, have shrunk considerably. Below is the chart for estimated EPS, actual EPS, and stock price (in terms of % change) going back to 2008:

Click here to go to the live chart.

Today's Major Market Move: Japanese Yen Weakens 9.2% Against US Dollar Year to Date

The Bank of Japan is notorious for acting against the currency markets in an effort to drive down the value of the yen. In this post on October 30, 2011 we referenced two of the interventions in the latter half of last year. At some point, due in part to Japan's debt issues (well over 200% debt to gdp) and demographics, the market is going to snap back in the other direction. Will eventually the BOJ be the forced to intervene in the other direction (to strengthen the Yen)?

The Yen is currently in the midst of a fairly significant move having weakened 9.2% year to date:

Click here to go to the live chart.

Let's take a look at the Yahoo chart for a view over a longer time horizon:

Click here to go to the Yahoo chart.

The recent 9.2% move shrinks to insignificance and we see that the USDJPY has a long ways to go to get back to 120+ levels seen in 2007. However bear in mind that crude oil prices in 2007 were about 40% cheaper than what they are now. From the U.S. Energy Information Association:

Click here to go to the chart on the EIA website.

Prices at the pump in Japan are currently around $7.20/Gallon which puts Japan in the top 1/5 percentile of countries. In terms of major economies, only Germany has higher gas prices:

Click here to go to the live chart.