Market briefing---Matt (slow)
NYSE---Deb (fast)
Euro---Bob (fast(
Currency report:
Interview: Cliff Bennett---Currency Strategist---F.X. Australia
>> let’s look at markets this tuesday. the closing numbers here as you see the dow down not even .1% that works out to about five points. s&p on the rise ever so slightly and the nasdaq the best performer, up a half percent. new york stock exchange 1.5 million shares and the nasdaq 2.2 billion shares today. we will look at the broader indexes. the new york stock exchange composite little change, amex better, .4 higher and russell 2002 up .%. the wilshire little change. the bond market mixed. you will see the 10 and five rising, little change on the shorter end of the curve. bonds rallying with the economic news. we look at currencies. again the euro taking a toll against the dollar. the euro you see trading down now in the most recent trade but the new york trade testing 128 momentarily. the dollar buying less pound right now as well. the equity markets may have traded in the narrow range but a lot of traders are telling deb kostroun that the trend is still higher. she joins us with the latest.
>> that’s right, matt. even though the dow might have been down five points you saw the s&p and nasdaq up and what traders kind of focusing in on is the fact we had a big move yesterday and today the market really didn’t give back all that much. so stocks still looking very positive at this point even with the economic reports that came out today that really didn’t give us a lot to trade off of. so today’s mixed performance really not that much of a concern to many traders. a good sign that we have been seeing not only yesterday but today better than average volume. we have not seen that in quite some time. in fact, in today’s session just shy of 1.5 billion shares, yesterday better, 1.57. that tells us that we have more institutions coming into the market, more trading activity and tells us more cash is coming in to work. not only that,le of the traders saying a lot of cash waiting to be put to work. so what we do have is a outlook looking good. one area that held us back was the materials, man san toe released their earnings tomorrow but an article in the “new york times” that they and pioneer hybrid met repeatedly in the 1990’s to discuss prices for genetically modified seeds. butle of the materials stocks have been such good performers over the last month looking at good economic numbers. back to you.
>> we have been mentioning the dollar fell to a record low against the euroed to. in fact it has lost ground against the euro six out of seven sessions or is it eight of nine this bob bowdon has the answer and he joins us now to bring us up to date.
>> traders and investors can point to three reasons the dollar is down and euro up. the belgian finance minister said that the euro’s rise is not a problem and europe can have a strong euro with a strong economy. number two, atlanta federal reserve president jack gwinn saying they won’t raise rates soon which increases demand for euros.
>> i think it is very hard to communicate in realtime to the market and avoid the problems they experienced in the middle of last year when they seemed to experience one thing and did another. they try to calm the markets and say we are getting good growth numbers but at this point the growth numbers haven’t been strong enough for us to think about raising rates.
>> a third reason, the u.s. service industry reporting supplier expansion in december than november. matt has been talking about that. another booming month. if we had december that might have created more demand for dollars. stephen gallagher chief economist in new york called the i.s.m. report another excuse to sell the dollar. some currency strategy gists see the dollar even getting weaker still.
>> i think when you look at the bigger picture we need to think of it in the context of what has to happen for foreign exchange. our best guess is you will enter an overshooting phase of the dollar decline and the rate exchange up to 140 and dollar yen exchange rate down to 85.
>> at the international auto show in detroit the weaker dollar has been a topic of conversation where cfo’s like the one of general motors are pleased with that weak dollar and strong yen.
>> the major impact with the weaker dollar is much more about the japanese yen. obviously in our view because the japanese government has been artificially stimulating the yen, keeping it weak against the dollar over the last couple of years by buying dollars, we think that has given a subs ski to some of the japanese companies. so we are pleased with the direction of the yen.
>> pleased with the result as those japanese cars that he competes with will be more expensive. similarly, the c.e.o. of daimlerchrysler says the chrysler unit will be helped by the strong yen.
>> we do believe that the japanese competitors have some strong tail wind from very low yen value and buy some high valuation of the yen we think our competitive edge will strengthen somewhat in the u.s. market.
>> now taking a look at the chart of the dollar against the yen, that is a one-year and you see the dollar moving down against the yen hitting today at a three-year low finishing there at $1 equaling 106 yen. and the euro, moving up really for the last four or five months on a pretty consistent basis we see the euro up to $1.2727 and earlier hitting $1 boy 28 before falling off.
>> bob, just can be confusing in terms of the daily performs because the currencies trade around the clock. soccer sometimes the superlatives can be hard to track but the big picture is in at that particular time. now maybe a currency expert named cliff bennett the streef strategist at f.x. max from sidney, australia. talk to me about the belgian finance minister’s comments, not a problem. do you agree?
>> yes, i think this is correct. we’ve got to realize that while the euro might be striking all-time highs relative to the basket of european currencies it -- the dollar has been a lot lower than where it is now. if we go much further there will be a change of rhetoric. i think around 134 on the euro is about where the political rhetoric would change. but until we get up there i suggest we will hear more comments along those lines. the europeans are reasonably happy with how things are going in terms of their domestic economy.
>> what would the new rhetoric sound or look like?
>> i think you will probably to see, probably start to see i guess what will happen is the u.s. will make behind the scenes moves around 134 for the rest of the world to stop supporting what could be a dollar collapse of the background forces are immense against the dollar at this stage but we would see comments along the line of the euro and dollar exchange rate is at fundamentally correct levels and any further movement won’t be advantageous. we will hear that sort of rhetoric particularly from the e. c.b. around 134 euro.
>> thank you very much, cliff. we will have you back on again. stick around. natural gas futures soared again spurring the biggest two dow rally in 10 months as cold weather moves into the central and eastern part of the u.s. we will have a chat with an energy expert up next after the break.
