Published June 06, 2014

STOCKS

• Dow  +98.58  16,836.11  +0.59%
• Nasdaq  +44.59  4,296.23  +1.05%
• S& P  +12.58  1,940.46  +0.65%

Stocks soar thanks to ECB, hedge fund

You can thank two men for Thursday' s zooming stock prices: Mario Draghi and David Tepper.

Stocks shattered all-time records after Draghi and the European Central Bank unleashed negative interest rates to fuel growth. And then the markets raced even higher after Tepper, the hedge fund heavyweight, revealed he' s no longer nervous about the market.

The burst of buying leaves both the Dow Jones industrial average and S& P 500 at fresh all-time highs. Both indexes closed about 0.6% higher. The Dow is now less than 170 points away from the 17,000 threshold. The Nasdaq built on Wednesday' s advance by soaring 1.26%, while the small-cap Russell 2000 surged almost 2%.

More easy money!: U.S. capital markets tend to take their cues from Janet Yellen & Co. at the Federal Reserve, but recently they' ve been moved by Mario Draghi' s efforts to breathe life into the European economy.

Hoping to encourage inflation and spur bank lending, the ECB cut interest rates, as expected, to a record low and set a negative deposit rate on Thursday.

The negative rate is meant to penalize banks that decide to park their cash at the central bank instead of lending it out to businesses and consumers. But it' s not like Draghi has a credible playbook to follow to avoid unintended consequences -- the ECB is the first major central bank to move into negative territory.

Still, investors liked the moves as European markets shook off an earlier malaise to close sharply higher.

Related: ECB cuts rates

Tepper' s words of wisdom: U.S. stocks achieved liftoff after CNBC reported that Tepper, the founder of Appaloosa Management, said his chief market concerns have been " alleviated" in part due to the ECB move.

Tepper spooked many investors last month by saying he' s " nervous" about stock prices and preaching caution given concerns about U.S. and European growth and China' s slowdown.

But Tepper, who hauled in $3.5 billion in pay last year, now believes all of those fears " one by one" have been eased.

Have you benefited from the bull market? Share your stories with us!

That was enough to send the Dow surging as high as 16,845.8, a new all-time intraday record. The S& P 500 climbed as high as 1,941.7.

" I see this continuing in the short term, and it could end in a climactic melt up before the inevitable pullback to reality," said Michael Block, chief market strategist at Rhino Trading.

Record breaking has become commonplace on Wall Street. Thursday marked the S& P 500' s 17th record close this year alone. Still, it' s worth noting the index is still trading below its all-time inflation-adjusted highs.

Related: These stock market ' records' aren' t that great

Earnings and economic data: The Labor Department said 312,000 Americans filed for unemployment benefits last week, up from 304,000 the week before.

But Wall Street is already looking ahead to Friday' s all-important jobs report, which economists surveyed by CNNMoney predict will show the U.S. added 200,000 jobs in May. The unemployment rate is expected to tick up to 6.4%.

 

 

 

 

 

S& P hits record focus shifts to payrolls

The S& P 500 hit a record for the seventh time in eight sessions after the

European Central Bank cut rates to record lows and pledged to do more to fight off the risk of deflation.

 

Chaotic commute ruining Iskandar dream

Two years ago,  one family move  from S' pore to Nusajaya, Johor.  To improv standard of living. He quit SG to live in Johor, yet still want to be able to reach Raffles Place in 45 minutes.

• Dow  +15.19  16,737.53  +0.09%
• Nasdaq +17.56  4,251.64  +0.41%
• S& P  +3.64  1,927.88  +0.19%

S& P 500 hits ' sweet 16' mark

The S& P 500 closed at a record high for the sixteenth time this year Wednesday, but you won' t hear much cheering. The gains were slight.

The S& P 500 was up a mere 0.2% to just shy of 1,928. The Dow Jones industrial average rose less than 0.1%, falling just short of a record. The Nasdaq was the top performer for the day, adding 0.4%.

Jobs data: Paycheck processor ADP (ADP) said private sector payrolls grew by 179,000 in May, which was below the 210,000 figure that economists had predicted.

The private sector data is often seen as a preview of the government' s monthly report on hiring and unemployment, which comes out Friday. But the ADP report is " far from infallible," said Jim O' Sullivan, chief U.S. economist at High Frequency Economics, who is not changing his forecast for a gain of 200,000 jobs on Friday.

The upcoming jobs report could mark an important milestone. The U.S. economy needs to add 113,000 more jobs in order to finally recover all the jobs lost in the financial crisis.

In other economic news, the Federal Reserve released the latest edition of its Beige Book, which showed that economic conditions continued to modestly improve across the central bank' s various regions.

Related: U.S. soon to recover all 8.7 million jobs lost in the downturn

News from Europe: Meanwhile, investors are also looking ahead to monetary policy announcement from the European Central Bank on Thursday.

In general, investors have been showing an appetite for risk. CNNMoney' s Fear & Greed index shows investors have become greedy again.

European markets ended little changed. Asian markets mostly ended with losses, though the Nikkei in Japan edged up.

 

 

 

 

Published June 04, 2014

 

Published June 04, 2014

 

Crisis is written as 危 机 in Mandarin. The two Mandarin characters that are used are literally translated as danger (or risk) and opportunity

The wisdom in those two characters seems to suggest that only by having danger are there opportunities to be exploited. Currently, some of the risky and dangerous situations that are at the forefront of people&rsquo s minds include the tension between Ukraine and Russia the rising indebtedness prevalent in corporate China and for a more local bent, the slowdown in the property market in Singapore.

Each carries with it its own set of dangers and problems. But more importantly, each situation carries with it, a different kind of risk from an investors&rsquo vantage point.

Know the ABCs of your risks

Risk can be viewed along a spectrum. On one end, there are risks that are associated strictly with only the company in question. For instance, a company might have poor management that&rsquo s over-cavalier with leverage, leading to the company suffering from bankruptcy risks. That&rsquo s something that&rsquo s specific to only the company in question.

On the other end, there are macroeconomic risks on a regional or even global level that are beyond the control of most companies, such as an economic slowdown due to war between various nations. When we review the risks involved with any investment, risks that are identified can be classified along this spectrum.

Let&rsquo s use the land transport outfit SMRT Corporation as an example. The company runs train and bus services and each day, there&rsquo s a possibility that the company&rsquo s train services might be disrupted. This can disrupt the company&rsquo s revenue and profit and is a risk investors have to face. But, this is a company specific risk in the sense that it is something SMRT Corporation has a huge degree of control over.

Meanwhile, the fares that the company charges commuters are not within its purview as that&rsquo s controlled by the local authorities. This creates the risk of the company being forced to operate with declining profits or even losses if the authorities refuse to allow fares to be adjusted. However, this is a type of regulatory- and policy-related risk that SMRT Corporation has little control over.

As investors, it is important for us to understand the type of risks a company faces and if these are under the control of the company. Risks that the company has control over tends to be more short-term in nature. In fact, when such risks flare up and cause price declines in the market, it might even be an opportunity for investors to start investing into such a company provided they have confidence in the ability of the company&rsquo s management to right previous wrongs and handle those risks.

Apart from viewing risks along the spectrum ranging from company-specific risks to macro risks, we should also examine if the risks involved are structural or cyclical in nature.

The main distinction between the two is that cyclical risks tend to pass after a period of time while structural risks are things we as investors want to avoid. A boom and bust in the property market can be considered as a cyclical risk as markets tend to move in cycles. Structural risks, on the other hand, often result in a permanent decline for instance, the demand for music on compact discs has been permanently stunted following the switch to the online streaming and digital downloading of music. This has caused the compact disc industry to be in a structural decline.

Foolish bottom line

There are many companies listed in Singapore that are facing potential danger at the moment. For instance, Food Empire&rsquo s (SGX: F03) main markets for its instant beverage products are Russia and Ukraine, the two main characters in one of the most closely-watched international conflicts today. Meanwhile, residential property developers like City Developments  and CapitaLand both big companies that are part of the Straits Times Index are exposed to a slowdown in Singapore&rsquo s property markets.

Are the risks those companies are facing company-specific or macro in nature? Are they structural or cyclical? If those questions can be answered, investors will then get a much better picture on their investment merits at current prices.