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The Financials Pit Review

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For the week of April 28th, 2008

Tue, Apr 29 2008, 12:04 GMT
by Kalvin O’Brian

Pit Guru

U.S. Economy

This week is going to be all about the FOMC meeting which starts on Tuesday. The S&P 500 has been strong, climbing 9.8% since touching a 19 month low on March 10th, thanks to positive earnings from companies like Google, Intel, Boeing, and Amex. It also appears that the market is acting ahead of the Fed announcement pushing the market over the 1400 mark on Friday. The consensus seems to be another ¼ point cut but with the dollar needing to find strength I would not be surprised to see the Federal Reserve hold the line on further rate increases. Breaking the 1400 mark makes this market appear technically strong however the Fed holds the key this week. We should see solid opportunities around this critical FOMC meeting. However entry and exit points will be crucial - use tight stops. I will continue to play both sides of the 1400 mark.

Currencies

With a critical FOMC meeting this week the announcement on interest rates should shake up the currency market. The dollar needs help in a bad way and it will come if the Fed does not decide to further rate cuts. Across the pond, the U.K.’s Office for National Statistics announced that real GDP slowed to a .4% gain in the first quarter, after increasing .6% in the fourth quarter in 2007. This represents the slowest gain in three years. In Japan, retail sales were up 1.1% in March from a year ago, in line with expectations. Consumer prices were also up 1.2% in March from a year ago. This increase represents the largest annual gain in ten years. The yen looks strong. The ECB did not cut its key rate which is at a six year high of 4%. They did not implement a cut in order to contain inflation, which has increased to 3.6% last month, the fastest pace in 16 years.

Published on  Tue, Apr 29 2008, 12:08 GMT