Dow Jones Will Go Up

Futures rise, combined with gains in Asia, signal a upward shift for the Dow at the start of the week. With the effects of the auto bailout settling in after last Friday’s rocky session, news that China and Denmark are taking action to add liquidity to the system should contribute to propel the market up, offsetting reports of production cutbacks in tech industries, Toyota’s first-ever losses and the continuing shock waves of the Madoff scandal.

As a plethora of analysts starts to forecast a stocks recovery in 2009 in spite of the continuing grim economic data, the extra liquidity is expected to begin trickling back into the market, with investors slowly reversing the selling trends.

Assessment
Expect a slight rise at the end of a volatile session.

Auto BailOut Plan Insufficient To Keep Dow Up

A stronger than expected auto bailout plan, announced before the opening bell, provided a potent boost to the market on early trading, propelling the Dow into the green for most of the session.

However, hopes that Congress will release the rest of the TARP money before the end of the Bush presidency and Japanese strong action to inject liquidity in the market at the end proved insufficient to keep the Dow from closing down once again.

Assessment
Despite decisive action from governments, the market is still on distrust mode, with investors not taking any chances and cashing in on early gains.

Dow Jones Will Fall

Trends are set for another day of market losses. With the effects of the Fed’s intervention wearing off and investors beginning to wonder what’s left on Bernake’s arsenal, news of a fresh $850bn stimulus plan will be insufficient to offset the negative clouds hovering over Wall Street.

Adding to the negative mood are news of automakers cutting back on production, SEC’s admission that it failed to act on Madoff’s case despite warnings, losses in Europe and new unemployment figures that, although showing a slowdown on new claims, still register the worst month since 1982.

Assessment
Expect moderate losses at the end of a roller coaster trading.

Carbon Price Will Fall

The EU approved an action plan on climate change that sets ambitious goals for the bloc. The EU now vows to cut CO2 emissions and energy consumption by 20% and achieve a renewable energies ratio of 20%, all by 2020. However, concessions made to secure approval of the deal, especially to Germany and Eastern European countries, put the stated objectives at risk.

Assessment:
Climate change trends are mixed in the Near Future. The way is open for concerted EU and American leadership on next year’s climate change conference in Copenhagen, but overly generous emissions caps for industries in the EU’s plan threaten to derail the fledgeling carbon market.

Markets Will Receive Boost

Financial trends seem brighter in the Near Future. After the Senate rejection of the $14 billion bailout plan, the White House is now considering allowing the automakers to share some of the $700 billion earmarked for the banking system. In Europe, and after initial strong resistance from Germany, the EU approved a package of €200 billion to stimulate the economy.

Assessment:
The converging effects of this two plans should build some confidence in the market, prompting gains across all main indexes on Monday.

US Will Commit To Emissions Cuts

Trends on Climate Change seem to be improving. The US is set to join the global effort to cut carbon emissions, with Sen. Kerry saying that the US will be willing to lead if other countries commit to emission cuts. The auto industry troubles open a window of opportunity for the government to push for the adoption of a green business model in exchange for aid.

Assessment:
The Obama administration will commit to concrete emission cuts in the Near Future, taking advantage of the crisis to promote a medium and long-term transition to a green economy.

Senate Rejects Auto Bailout Plan

Global economic trends continue gloomy, with ongoing problems compounded by the Senate rejection of the $14 billion bailout for the auto industry. The bill’s collapse sent shock waves through the global market, prompting losses across all the main indexes. However, given the weight of the auto industry in the economy, it is unlikely that the US government will allow for the bankruptcy of one or more of the Big Three.

Assessment: Some deal will be hammered out in the Near Future that will prevent the loss of the 3 million jobs that the auto industry sustains.

Organic farming ‘could feed Africa’ – Africa, World – The Independent

Organic farming offers Africa the best chance of breaking the cycle of poverty and malnutrition it has been locked in for decades, according to a major study from the United Nations to be presented today.

New evidence suggests that organic practices – derided by some as a Western lifestyle fad – are delivering sharp increases in yields, improvements in the soil and a boost in the income of Africa’s small farmers who remain among the poorest people on earth. The head of the UN’s Environment Programme, Achim Steiner, said the report “indicates that the potential contribution of organic farming to feeding the world maybe far higher than many had supposed”.

via Organic farming ‘could feed Africa’ – Africa, World – The Independent

In Cash-Rich Japan, World’s Financial Woes Inspire a Grand Plan – washingtonpost.com

Kotaro Tamura, an investment banker turned Japanese lawmaker, has an immodest proposal for healing the sick global economy, making all Japanese richer and compelling the United States to be more deferential toward Japan.

“We are in a special position because we have huge money,” Tamura said, referring to about $950 billion in government foreign reserves, $1.5 trillion in public pension funds and $15 trillion in personal financial assets, about $8 trillion of which is on deposit at shockingly low interest rates in Japanese banks.

“We should send the signal that we are ready to save the world with this money,” he said in an interview.

Tamura leads a group of 65 lawmakers from the ruling Liberal Democratic Party who have proposed to Prime Minister Taro Aso that Japan treat the global financial meltdown “as a huge opportunity for us.”

They are urging the government to inject some of its abundant cash into troubled U.S. and European banks, in return for equity, and to purchase distressed corporate assets at fire-sale prices.

“The economy of every major power has crashed, and Japan has the least tainted market in the world,” Tamura said.

“Everything is very cheap right now [in world stock markets], and 10 years from now we would make very big money,” he said

Finally, Tamura said, Japan could gain much more than mere money by coming to the aid of the United States and its many distressed companies. “If we can save the United States economy, then the U.S. government will owe us in other ways,” he said.

A U.S. move that has offended many Japanese is the Bush administration’s decision last weekend to take North Korea off its list of states that sponsor terrorism.

The Japanese public vehemently opposes the delisting because North Korea has refused to provide satisfactory information about the fate of eight Japanese citizens who were abducted by North Korean agents during the 1970s and ’80s.

“If we make the proper moves with our money, we can gain diplomatic fruit,” Tamura said. “We can insist that the United States put more pressure on North Korea. As I said, this is a huge opportunity for us.”

via In Cash-Rich Japan, World’s Financial Woes Inspire a Grand Plan – washingtonpost.com

Wall Street bankers in line for $70bn payout | Business | The Guardian

The sums that continue to be spent by Wall Street firms on payroll, payoffs and, most controversially, bonuses appear to bear no relation to the losses incurred by investors in the banks. Shares in Citigroup and Goldman Sachs have declined by more than 45% since the start of the year. Merrill Lynch and Morgan Stanley have fallen by more than 60%. JP MorganChase fell 6.4% and Lehman Brothers has collapsed.

At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank.

In the first nine months of the year Citigroup, which employs thousands of staff in the UK, accrued $25.9bn for salaries and bonuses, an increase on the previous year of 4%. Earlier this week the bank accepted a $25bn investment by the US government as part of its bail-out plan.

At Goldman Sachs the figure was $11.4bn, Morgan Stanley $10.73bn, JP Morgan $6.53bn and Merrill Lynch $11.7bn. At Merrill, which was on the point of going bust last month before being taken over by Bank of America, the total accrued in the last quarter grew 76% to $3.49bn. At Morgan Stanley, the amount put aside for staff compensation also grew in the last quarter to the end of August by 3% to $3.7bn.

Days before it collapsed into bankruptcy protection a month ago Lehman Brothers revealed $6.12bn of staff pay plans in its corporate filings. These payouts, the bank insisted, were justified despite net revenue collapsing from $14.9bn to a net outgoing of $64m.

via Wall Street bankers in line for $70bn payout | Business | The Guardian