Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Banks--- Betting on the recovery -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (638)	8/19/2009 11:05:49 AM
From: tejek	Respond to of 1428

Just thinking out loud but China makes a lot of discretionary stuff... toys, clothes, just stuff. Also they are a trailing indicator. Lead times are usually about 60 days so what they are doing now is in response to what people were thinking 2 months ago. I guess. I think it may be more complicated than that. In today's trading, the Shanghai fell briefly into bear market territory........down 20% from its 2009 high. That's worrisome particularly if its predicting future economic activity. China Likely to Prop Up Stock Markets With stocks sharply down from their peak in early August, JP Morgan's Jing Ulrich says Beijing will be prepared to put a floor under prices By Rita Raagas De Ramos The sharp fall in the Chinese stock market in recent days is mainly due to worries about the potential for imminent policy tightening in the mainland, according to Jing Ulrich, Hong Kong-based managing director and chairman of China equities and commodities at JP Morgan. Although the closely watched CSI 300 Index was up 1% at 3,171.990 yesterday, it is still down around 16% from its recent peak of 3,787.033 on August 3. The index is cap-weighted and tracks the 300 most representative A-share stocks listed on the Shanghai and Shenzhen Stock Exchanges. Making sense of the trading activity in recent days, Ulrich says China's economic data for July was reasonably strong, but a sharp fall in bank lending has stoked fears that liquidity could dry up in the second half. To boost confidence, Chinese officials have repeatedly pledged that they will stick to a proactive fiscal policy and moderately loose monetary policy. Ulrich believes that the still-challenging outlook for exports and continued deflation suggest that these assurances are credible for the medium-term. "Nevertheless, investors have grown jittery over potential scrutiny of asset price gains and bank lending to ensure that credit flows into the real economy," she notes. Many market participants have been surprised by the magnitude of the recent sell-off, with domestic institutions offering the following feedback, according to Ulrich: First, market players associate the surge in lending in the first half with strong liquidity and buoyant equity market performance. As discounted bills mature (discounted bills and short-term loans accounted for about one-third of new lending in the first half of 2009), Chinese banks are channelling the funds into medium- and long-term loans. Second, domestic mutual funds have been heavily invested in equities. Some managers have been forced to sell-down their positions under enormous performance scrutiny and the absence of new fund launches has weighed on the recent demand for equities. Third, insurers are close to their permissible investment limits in equities. The National Social Security Fund reduced its net exposure to Shenzhen-listed A-shares by Rmb664 million ($97.3 million) in July, but remains cash-rich. Fourth, since April, the share of demand deposits as a proportion of total household deposits has edged higher—a sign that investors are favouring liquid savings products. In July, the number of new trading accounts opened by individuals reached the highest level since late-2007. Chinese bank lending will almost certainly moderate through the remainder of the year, Ulrich says, reflecting the seasonal tendency of banks to front-load new loans. However, she expects credit growth to remain adequate to support the government's fiscal policies and banks have already set aside a certain amount of capital for infrastructure loans in the second half of 2009.The Chinese government could steer the domestic equity market by influencing supply and demand, and stimulating confidence through market signals, she adds. A stable domestic equity market is an important precondition for the successful resumption of IPOs and a number of ambitious capital market reforms planned in the near-term—including the first red-chip listings in Shanghai, A-share listings of foreign companies and the launch of a Growth Enterprise Market, Ulrich notes. Thus, she believes that, in the event of further correction, the Chinese authorities will be prepared to put a floor under stock prices by taking measures such as: temporarily limiting the central bank's issuance of short-term notes, which are designed to absorb excess liquidity; approving new mutual funds at an accelerated pace to boost liquidity (the CSRC recently approved the launch of three new funds after a two-week hiatus); and eliminating the stamp duty on equity transactions to send a positive market signal. © Haymarket Media Limited. All rights reserved. businessweek.com

To: Road Walker who wrote (638)	8/19/2009 2:23:11 PM
From: tejek	Respond to of 1428

Deere shares hit as outlook overshadows results On Wednesday August 19, 2009, 12:14 pm EDT By James B. Kelleher CHICAGO (Reuters) - Deere & Co (NYSE:DE - News) warned on Wednesday that it would barely break even in the current quarter as continued weakness in its construction equipment business and sharp drops in overseas demand for farm equipment forced it to cut production by a third. The news sent its shares down more than 3.5 percent. The warning came as Deere reported a higher-than-expected third-quarter profit as better-than-expected performance in its core agriculture machinery business, as well as its in-house finance arm, helped to offset sluggish sales in construction and forestry equipment. The world's largest maker of tractors and harvesters, which said it was taking "pretty significant shutdowns" during the quarter in anticipation of lower demand next year, reported a third-quarter profit of $420 million, or 99 cents a share, down from $575.2 million, or $1.32 a share, last year. Sales fell 24 percent to $5.89 billion. Analysts, on average, had expected the company to report a profit of 56 cents per share on sales of $5.27 billion. Analyst Eli Lustgarten of Longbow Research called the results "a clean beat," although 20 cents of the earnings came from nonoperating items, including a lower tax rate. Moline, Illinois-based Deere reiterated its forecast for a full-year net profit of "approximately $1.1 billion." Since Deere has already reported earnings of $1.1 billion for the first nine months of the year, the guidance implied a break-even or possibly even a marginally unprofitable fiscal fourth quarter. "They're burying the fourth quarter with these production cuts," Lustgarten said. "And so their guidance is for a marginally break-even quarter." During a conference call to discuss the earnings, Deere said the production cuts would result in one-third fewer production days during the quarter. Because the fixed costs associated with those idled plants would not go away during the shutdowns, analysts warned, however, the company's actions were likely to pressure margins in the current quarter. Analysts had expected Deere to report a fourth-quarter profit of 33 cents a share, according to Reuters Estimates. Deere also cut its forecast for corn prices for the 2009-2010 crop year to $3.40 a bushel, down from a previous forecast of $3.80. That is up from its current price of about $3.12 a bushel, but down 59 percent from the record highs touched last summer. Since farm equipment purchases are highly correlated with crop prices and the cash receipts they represent, that was likely to translate into less demand for the tractors and harvesters produced by Deere and its top rivals, Fiat Spa (Milan:FIA.MI - News) subsidiary CNH Global NV (NYSE:CNH - News) and Agco Corp (NYSE:AGCO - News). With demand from farmers easing, that puts added pressure on Deere's construction and forestry unit, which competes with Caterpillar Inc (NYSE:CAT - News), Komatsu Ltd (Tokyo:6301.T - News) and Terex Corp (NYSE:TEX - News) and has seen demand drop sharply as a result of the worldwide downturn in building. Deere shares were down about 3.7 percent, or $1.72, at $43.37 in late morning New York Stock Exchange trading. (Reporting by James B. Kelleher, editing by Ted Kerr and Maureen Bavdek)