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An undecisive week ahead
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Stocks are likely to be volatile next week in trade thinned by the Thanksgiving holiday, with investors focused on an expanded look at the Federal Reserve's view of interest rates and the economy.But even with the first publication of the Fed's expanded economic forecast on Tuesday, the market is not expected to establish any real trend.
I believe in a holiday-shortened week with little economic data, investors will be in a waiting game.It's hard to say what would drive off the market. It's also hard to say what would drive the market up.We're waiting for economic data to take on a bigger role going forward.
Stock markets will be closed on Thursday for Thanksgiving and will close early on Friday at 1 p.m., which is expected to reduce trading activity and increase price volatility.
Lower volume and thinner markets make for a bigger move in prices but it will almost be an insignificant week with respect to the long-term direction of the market.
The major U.S. stock indexes rose for the week, but they came off a bruising five days the week before when the Nasdaq posted its biggest point loss since the September 11, 2001, attacks.Higher crude prices lifted shares of oil companies, such as Exxon Mobil Corp on Friday, but investors feared the housing slump could slow the economy and financial service stocks fell on concern mortgage-related losses could worsen .
The Dow Jones industrial average rose 66.74 points, or 0.51 percent, to close at 13,176.79 on Friday. The Standard & Poor's 500 Index gained 7.59 points, or 0.52 percent, to end at 1,458.74. The Nasdaq Composite Index added 18.73 points, or 0.72 percent, to finish at 2,637.24.
For the week, the Dow gained 1.03 percent, while the S&P 500 and the Nasdaq each ended up 0.35 percent.
The Federal Reserve on Tuesday, along with the release of the minutes of its October 30-31 meeting of the Federal Open Market Committee, will publish its new expanded economic forecast. The expanded outlook will offer more insight on the Fed's view of the economy and the likely path of interest rates.
Investors will be looking for any indication that the Fed will cut rates again because of a slowing economy or that in fact inflation is the bigger risk.
The last time we left them they had a balanced view of risks of growth and price stability.
Between now and the December meeting the questions are going to be is it the macro element that drives Fed policy toward longer views of inflation control or is it going to be short-term market concerns?
Investors are concerned about the value of risky asset-backed securities and mortgage-related losses at so-called structured investment vehicles, and the exposure banks or mutual funds may have to the SIVs.Because the pricing of many high-risk securities has become difficult, investor uncertainty is unlikely to dissipate until early 2008.
Also next week, the National Association of Home Builders/Wells Fargo Housing Market index comes out on Monday. Analyst expect the index to fall to a new low of 17 from 18, a prior record low.Housing data comes out on Tuesday. Housing starts are estimated to have fallen to a seasonally adjusted annual rate of 1.170 million, from a previous 1.191 million. Seasonally adjusted building permits are forecast to have fallen to an annualized 1.20 million, down from 1.261 million in September.
On Wednesday, the Reuters/University of Michigan Surveys of Consumers is expected to show a reading of 75 for November, down from last month's figure of 80.9. A reading released on November 9 showed consumer sentiment already had fallen to 75.
The earnings calendar will be thin next week. Among key companies to report results are computer and printer maker Hewlett-Packard Co and retailer Lowe's Companies Inc on Monday. Tuesday will feature day D.R. Horton Inc , the largest U.S. home builder, and discounter Target Corp
Clothing chain Gap Inc releases results on Wednesday.
In international relations, I find Opec statetement ''they lost the control over the oil price'' is very important with full of hints about the future trend and US policy over oil. Furthermore, The Group of 20 nations said some Asian countries need to allow their currencies to appreciate more after European and Canadian officials stepped up pressure on China in the past week. The G-20 agreed on the need for ``greater exchange-rate flexibility in a number of surplus countries'' in ``emerging Asia,'' according to a statement released after two days of talks in Kleinmond, South Africa. The G-20 groups the largest developed countries, including the U.S., France and Canada, with emerging markets such as China and India.
While China has allowed its currency to rise about 5 percent against the dollar this year, it has fallen against the euro by about the same amount.
The G-20 also said that ``rising energy and food prices will remain an important source of price pressures'' and central banks ``will need to assess carefully the inflation outlook in light of both tight conditions in commodity markets and the downside risks to growth.''
Policy makers around the world are trying to curb inflation just as fallout from the biggest U.S. housing slump in 16 years spreads through financial markets and a weaker dollar threatens to hurt growth. While the U.S. Federal Reserve has cut interest rates twice since September to shore up U.S. expansion, policy makers in India, China and the 13 euro nations say they are worried about accelerating inflation.
The price of oil has surged 58 percent in the past year and wheat prices have increased 60 percent in the same period. European inflation accelerated to the fastest pace in two years last month and Chinese inflation matched the quickest pace in a decade.
The statement said G-20 nations agreed that easing lopsided trade and investment flows is a ``shared responsibility.'' While Asian nations need to maker their currencies more flexible, the U.S. needs to boost saving, European governments must take measures to spur economic growth and Japan must undertake ``further structural reforms.'' |
| Tarih
: 19.11.2007 |
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© 2006 Mert TOKER All Rights Reserved. |
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