Forex Investment

In the most widely anticipated public offering of the young year, Fortress Investment Group (http://www.businessweek.com/ticker/), the first U.S.-based hedge fund to go public, stormed the ramparts. Shares in the alternative investment outfit were trading around $32 in the early going Feb. 9 — 73% above the offering price set the previous day but down from the intra-day high of $37. The shares opened trading at $35.

At that level the company had a market capitalization of more than $12 billion. A group of five company insiders hold more than three quarters of the company’s shares.

The deal priced late Feb. 8 at $18.50 per share, at the top end of the estimated range, raising $634 million for the company. The 34.3 million shares in the offering represent about 8.6% of the company.

New York-based Fortress manages almost $30 billion in three primary businesses: private equity, hedge funds and ?the castles? two publicly traded companies managed by Fortress that invest mainly in real estate and real estate debt instruments. For 2005 the company reported net income of $192.7 million on revenues of about $1 billion.

Fortress’s strong pop out of the gate reflects a widespread interest in hedge funds and other complex investments that can produce huge returns but are closed to many investors. Having watched Fortress’s remarkable offering, peers in the alternative investment space are likely to follow its path. A couple of European hedge-fund outfits — Switzerland-based Partners Group and RAB Capital, which trades on the London Stock Exchange — had already successfully tested the IPO waters last year.

Prior to the company’s initial offering, Donald Putnam, founder of Grail Partners, an advisory merchant bank, predicted that “if the Fortress deal goes through, I think there’ll be 30 hedge fund IPOs in the next 18 months” (see BusinessWeek, 12/11/06, ).

Even in the light of the Fortress IPO some remain skeptical of hedge funds. The offering came as a senior official at CalPERs, California’s $200 billion plus public employee pension fund, complained to Bloomberg that hedge funds’ performance frequently doesn’t justify their exorbitant management costs. Though no analysts cover the company and there are not any other public U.S. hedge funds, the remark did not seem to dampen enthusiasm for the company.

Goldman Sachs and Lehman Brothers were the lead underwriters of the deal. Prior to the offering, the Japanese bank Nomura acquired 55.1 million shares, giving it a 15% stake.

(01-29) 05:14 PST NEW YORK, (AP) —

JetBlue Airways Corp. reported a narrower than expected loss in the fourth quarter and its first full-year profit in three years as an increase in traffic helped the discount airline compensate for skyrocketing fuel costs.

JetBlue, based in Forest Hills, N.Y., said Tuesday it lost $4 million, or 2 cents a share, in the three months ended Dec. 31 in contrast to a profit of $17 million, or 10 cents a share, in the year-ago quarter.

Revenue rose 16.6 percent to $739 million from $633 million.

Analysts polled by Thomson Financial expected a loss of 5 cents a share on revenue of $731 million. The analysts’ earnings estimates typically exclude one-time items.

For the full year, JetBlue earned $18 million, or 10 cents a share, versus a loss of $1 million, break-even on a per-share basis, in 2006. Revenue jumped 20.2 percent to $2.84 billion from $2.36 billion in 2006.

Analysts had expected a 2007 profit of 7 cents a share on revenue of $2.8 billion.

JetBlue’s fourth quarter traffic increased by 7.1 percent to 6.2 billion revenue passenger miles ? a measure of one paying passenger flown one mile ? on an 11.5 percent increase in capacity. Occupancy fell 3.1 percentage points to 76.6 percent.

Revenue per available seat mile, a measure of unit revenue, rose 2.5 percent in the quarter to 8.34 cents from the fourth quarter of 2006. However, unit costs rose 11.7 percent in the quarter to 8.73 cents, mostly due to higher fuel costs.

For the full year, unit revenue rose 6.3 percent, while unit costs rose 7.1 percent.

SCIENTISTS have succeeded in repairing the nerve damage that causes multiple sclerosis.

The breakthrough, made in experiments with laboratory mice, raises the prospect of new treatments that could prevent serious disability caused by the auto-immune disease.

Patient trials of the therapy are planned following further animal studies.

Multiple sclerosis is caused by “friendly fire” from the body’s immune system, which destroys myelin, the fatty insulation around nerve fibres in the brain and spinal cord.

The damage disrupts nerve messages, leading to mild or severe symptoms ranging from blurred vision and numbness to complete paralysis. Around 85,000 people in the UK have the condition, including 10,500 in Scotland - the country with the highest proportion of sufferers in the world.

Although the symptoms can to some extent be managed, there is currently no cure for MS.

Treatment involves calming down the immune system and reducing damaging inflammation, but nothing yet exists that can restore lost myelin. Finding a way to repair damaged myelin is the “Holy Grail” of MS research.

Scientists from the Mayo Clinic in Minnesota, yesterday said they had used a human antibody to regrow myelin in mice with progressive multiple sclerosis.

The scientists, who genetically engineered the protein, are cautiously optimistic about their early results, describing them as “very promising”.

Dr Arthur Warrington, presenting details at the annual meeting of the American Neurological Association in Washington DC, said: “The findings could eventually lead to new treatments that could limit permanent disability.”

Action Insight | Written by ActionForex.com | Dec 01 07 15:38 GMT |
Forex Weekly Review and Outlook Carry Trade Returned, Focus on 5 Central Banks and NFP

Yen and Swissy were the major mover last week as carry trade returns, boosted by strength in the global market that’s triggered by a serious events including Bernanke’s signal of rate cut in Dec. Euro was weighed down by expectation that ECB will be on hold for a while even though inflation accelerated sharply. Sterling was mildly weaker against dollar on rate cut expectation but strengthened against other majors on carry trade. Dollar was generally firm but dropped slightly against Aussie and Kiwi. After all, a Dec rate cut from Fed is like a done deal and further easing is expected down the road in early 08. But before that, market will turn focus to five central banks meetings this week (ECB, BoE, BoC, RBA, RBNZ) and a string of important economic data from US first.
Prev Week’s High Prev Week’s Low Prev Week’s Close Last Week’s High Last Week’s Low Last Week’s Close Change (pips) Change (%)
EURUSD 1.4967 1.4620 1.4837 1.4908 1.4628 1.4632 -205 -1.38%
GBPUSD 2.0761 2.0449 2.0621 2.0803 2.0532 2.0563 -58 -0.28%
USDCHF 1.1200 1.0885 1.1019 1.1326 1.0954 1.1317 298 2.70%
USDJPY 111.07 107.53 108.29 111.22 107.20 111.21 292 2.70%
USDCAD 0.9924 0.9703 0.9880 1.0017 0.9800 0.9980 100 1.01%
AUDUSD 0.8995 0.8652 0.8775 0.8919 0.8669 0.8842 67 0.76%
NZDUSD 0.7666 0.7455 0.7586 0.7759 0.7486 0.7638 52 0.69%
EURJPY 163.29 159.46 160.68 163.82 159.36 162.75 207 1.29%
EURGBP 0.7214 0.7125 0.7182 0.7196 0.7110 0.7114 -68 -0.95%
EURCHF 1.6429 1.6297 1.6353 1.6587 1.6303 1.6563 210 1.28%
GBPJPY 228.34 221.27 223.33 229.31 221.90 228.72 539 2.41%
GBPCHF 2.2965 2.2601 2.2728 2.3295 2.2682 2.3276 548 2.41%
AUDJPY 99.89 93.55 95.03 98.66 92.99 98.35 332 3.49%
NZDJPY 84.49 80.69 82.15 85.94 80.30 84.99 284 3.46%

While messages from Fed speakers were generally mixed last week, markets took the comments from Fed Chairman Bernanke and Vice Chairman Kohn as the most important ones. Bernanke said that outlook has been “importantly affected over the past month by renewed turbulence in financial markets” and policy makers should judge whether balance of risks has shifted. Bernanke also noted there are greater than usual uncertainty surrounding the outlook and Fed will be “exceptionally alert and flexible”. Housing slump and rising energy prices is expected to create some ‘headwinds for the consumer in the months ahead.’ Kohn said deterioration in credit condition is deeper than he anticipated. Also, the Fed’s Beige book pointed out that seven of the Fed’s 12 districts reported slower growth, with the rests showing moderate expansion. Retail spending is cautious going into holiday period.

After the week, futures market is pricing a 100% odd of 25bps cut on Dec 11 with 42% odd of a 50bps cut. Nevertheless, the greenback strengthened in general last week on the view that Fed’s easing will help the economy. News that Bush administration and major banks are nearing a deal to freeze interest rates on sub-prime loans and the government is preparing a plan to allow homeowners to renegotiate adjustable mortgages also provided support to the dollar. Also, dollar got a lift from news that Bahrain would maintain the dinar’s peg to the greenback.

Housing continues to show deterioration in the markets. Existing home sales tumbled -1.2% to 4.97m annualized rate in Oct. New home sales recovered mildly by 1.7% to 0.728m in Oct following a sharp downward revision from 0.77m to 0.716m in Sep. Q3 house price index dropped -0.4% qoq. Construction spending dropped -0.8% in Oct.

Durable goods orders showed third month of decline by -0.4% in Oct with ex-transport orders dropping -0.7%. However, Q3 GDP growth was revised more than expected to 4.9% annualized rate. Oct personal income and spending missed expectation. PCE and core PCE were slightly higher than expected. Chicago PMI rebounded more than expected to 52.9. Jobless claims surged sharply higher to 352k, signal a more sever deterioration in the job market.

From Eurozone, Nov CPI estimate rocketed higher to 3.0%, much higher than expectation of 2.8% and far above ECB’s target rate. Q3 GDP rose 2.7% yoy, slightly better than expectation of 2.6%. M3 money supply growth surged sharply again to 12.3% yoy in Oct.

German Ifo business confidence surprised to the upside in Nov, rebounding from 103.9 to 104.2 versus expectation of a drop to 103.3. France’s reading also improved to 110 from 108. Germany’s job market continues to show surprised improvement. Unemployment rate dropped further from 8.7% to 8.6% in Nov, as the number of jobless fell by a further -53k. Gfk consumer confidence dropped to 4.3 in Dec. However, retail sales dropped sharply by -3.3% in Oct, keeping yoy rate negative at -0.6%.

Nevertheless, Euro remains pressured in general, in particular on Friday after report that ECB will likely be on hold for a while at least due to uncertainty in the spread over of the financial markets turmoil.

Sterling was weighed down by dovish comments from BoE members on the testimony before Parliamentary Treasury Select Committee, with Blanchflower making clear his intent to vote for a decrease again in December. Though, the overall vote will be tight. Nationwide house price dropped sharply by -0.8% mom in Nov, dragging yoy rate to 6.9%. Consumer confidence dropped deteriorated further as seen in Gfk survey which dropped to -10 in Nov.

From Japan, national CPI unexpectedly rose 0.3% yoy in Oct, the first positive yoy CPI result this year. But that’s primarily due to the recent surge in energy prices. The ex-food and energy measure remained negative and dropped -0.3%, same as in Sep. The positive result for a month is not enough for BoJ to resume tightening yet. Other data from Japan saw unemployment rate staying at 4.0% in Oct. Housing spending rose 0.6%, both met expectation. Construction orders dropped sharply by -20.3% while housing starts dropped -35%. Retail sales rose 0.8% yoy in Oct. Industrial production remains robust and rose 4.7% yoy in Oct.

Data from Swiss were strong. Q3 GBP rose 2.9% yoy versus expectation of 2.6%. Nov CPI rose 1.8% comparing to consensus of 1.4%, hitting a 6 year high. KoF leading indicator, though continuing the down trend, came in at 2.02, staying above 2 and beat expectation of 1.98.

Nevertheless, the yen and swissy were sent sharply lower on return of carry trades.

Canadian dollar continues to correct and tested parity against dollar a few times. PPI dropped sharply by -1.1% in Oct. Though, Q3 GDP rose 2.9% annualized, beating expectation of 2.2%. The Loonie remained pressured by expectation of rate cut from BoC as well as retreat in oil prices which dropped below 90.

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The Week Ahead

Five central bank meetings were scheduled with a string of important economic data from US.

- ECB is the clearer one. With strong inflation and growth but uncertainty in the outlook due to financial market turmoil’s, ECB is expected to be on hold firmly but maintain hawkish stance to guard off inflation expectations.
- BoE will be a close call. Further rate cut is expected undoubtedly as indicated by Nov’s quarterly inflation report. However, opinion is divided on timing. In particular, expectation for a cut in Dec rather than 1Q08 is raised after dovish comments from BoE members last week.
- BoC is also a close call. Strength in Q3 GDP growth put some doubts on whether BoC need to act that quick. But considering the down turn in the US economy, BoC could opt for a 25bps cut this time.
- RBA and RBNZ are both expected to be on hold despite strong growth and inflation.

A number of important economic data will be released this week with special focus on the usually highly anticipated NFP report in US. Markets expect growth of 75k in Nov. Some preview data including the private ADP report will be released before that and will prompt adjustment in expectations as usual. ISM manufacturing index and Services index will be featured too and markets will pay close attention to whether the manufacturing index can hold above 50 expansion/contraction level.

From Eurozone, US and EUrozone, PMI manufacturing and services will be released. Eurozone unemployment rate is expected to remain low at 7.3%. UK industrial and manufacturing production will be watched. From Japan main focus is on Q3 business capex and GDP. From Canada, job report will be released on Friday before US’s NFP. From Australia, Oct retail sales and Q3 GDP are the main focus.

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- «www.actionforex.com» EUR/USD

After initial consolidation, EUR/USD’s correction from 1.4966 continued as expected and dived to as low as 1.4627 last week. From a short term angle, further decline is still expected as long as 1.4785 resistance holds. As discussed before, rise from 1.4014 has completed after failing 1.5 psychological resistance. Now, daily MACD’s dip below signal line as well as mildly bearish divergence condition in daily RSI suggests that rise from 1.3360 has also completed too. Decisive break of 1.4519 cluster support (50% retracement of 1.4014 to 1.4966 at 1.4490) will confirm such case and bring deeper decline to 55 days EMA (now at 1.4411) and probably further to 1.4014/4281 support zone.

However, strong rebound above 1.4519 cluster support and break of 1.4785 resistance will dampen the above view and indicate that EUR/USD is probably merely in consolidation to the rise from 1.4014 only. Retest of 1.5 psychological resistance should then be seen and another high should be made before forming a medium term top.

In the bigger picture, regardless of internal structure, medium term up trend from 1.1639 remains in force and is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high) and has just failed 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 target which will overlap with 1.5 psychological resistance on overbought condition as seen in weekly RSI. On the upside, sustained trading above this key resistance is needed to confirm medium term rally is still underway to next projection target of 100% projection at 1.7048. On the downside, firm break of 1.3851 resistance turned support is needed to be the first signal that this up trend from 1.1639 has completed. Otherwise, long term outlook remains bullish.

GBP/USD

Cable crawled to as high as 2.0830 last week but after all, rebound from 2.0353 was limited by mentioned 2.0845 cluster resistance (61.8% retracement of 2.1161 to 2.0353 at 2.0852). Cable then weakened again and dipped to as low as 2.0532. Break of 2.0579 minor support suggests that corrective rebound from 2.0353 has completed. From a short term angle, further decline is expected this week to retest 2.0353 low. ABove 2.0699 will turn short term outlook neutral again.

Also, note that with 2.0845 cluster resistance (61.8% retracement of 2.1161 to 2.0353 at 2.0852) remains intact, the original view still holds. That is, rise from 1.9652 has completed after touching medium term rising channel resistance. Fall from 2.1161 is expected to extend further to retest medium term rising channel support (now at 2.0068) on break of 2.0353 low. Decisive break of 2.0845 cluster support is needed to indicate fall from 2.1161 has completed and bring retest of this high.

In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. Next long term target is 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, decisive break of the medium term rising channel is needed to signal that such medium term rally has made a top. Otherwise, medium term outlook remains bullish.

USD/CHF

USD/CHF’s rebound from 1.0890 extended sharply higher to 1.1326 last week. Break of 1.1298 resistance indicates that fall rom 1.2467 has also completed. From a short term angle, further rebound is now expected towards 38.2% retracemment of 1.2467 to 1.8090 at 1.1492. On the downside, below 1.1154 support will turn short term outlook neutral and suggest that rebound from 1.0890 has possibly completed. Retest of this low should be seen but firm break is needed to confirm recent down trend has resumed. Otherwise, consolidation will continue with the prospect of another rise before completion.

In the bigger picture, the current preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend from 1.3283 resumed . Such medium term decline is tentatively treated as resumption of the long term down trend from 1.8305 (00 high) which should extend further to parity after taking out 1.1100 key support after finishing the current consolidation from 1.0890. On the upside, break of 1.1891 is needed to indicate such down trend from 1.3283 has completed. Otherwise, long term outlook will remain bearish

USD/JPY

USD/JPY’s rebound from 107.21 extended further as expected and reached as high as 111.21 last week. From a short term angle, further rally is still expected as long as 109.46 support holds. The current rebound could extend further to test 111.76 resistance but upside is expected to be limited there and bring another fall. Below 109.46 will indicate that rebound from 107.21 has completed and bring retest of this low. However, a break of 111.76 resistance will indicate that strong rebound is underway to 55 days EMA (now at 113.08.

In the bigger picture, sharp decline from 124.13 remains in force and is expected to extend at least further to 100% projection of 124.13 to 111.59 from 117.94 at 105.40 and will likely bring retest key long term support zone of 101.22/65. While the interim fall from 117.94 has completed, break of 115.91 resistance is needed to signal that the fall from 124.13 has ended too. Otherwise, medium term outlook remains bearish.

In the longer term picture, the three wave structure of the up trend from 101.65 to 124.13 suggests that it’s corrective in nature and is part of a large scale consolidation. Coupled with the impulsive nature of the fall from 124.13, such development indicates that the rally from 101.65 could indeed be the final leg of a long term triangle formation (147.68, 101.22, 135.20, 101.65, 124.13). The break of falling trend line (147.68, 135.20) was merely a throwover in the last leg. And another long term down trend has just begun. 101.22/65 key long term support will be the main focus and break will open the way to 95 low of 79.75.

EUR/JPY

EUR/JPY’ made a low at 159.36 and rebounded strongly to as high as 163.84 last week. But after all, upside is still limited by 164.26/30 cluster resistance (61.8% retracement of 167.62 to 158.67 at 164.26) and is still struggling to take out 55 days EMA decisively. Outlook remains unchanged. The case that rise from 149.27 has already completed at 167.72 is still in favor. That is, price actions from 168.93 is developing into larger scale consolidation and the last falling leg is in progress, with price actions from 158.67 as interim consolidation.

However, choppy trading could still continue until a break of the established range of 158.67 and 164.30. On the downside, break of 158.67 will confirm fall from 167.62 has resumed for 61.8% retracement of 149.27 to 167.72 at 156.31 first. On the upside, sustained break of 164.00/26 cluster resistance will flip favors back to the case that price action from 167.72 is merely consolidation to rise from 149.27 and will bring retest of this high and then 168.93 key resistance.

In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend from 88.97 (00 low) remains intact. But break of 168.93 high is needed to confirm such up trend has resumed.

In the longer term picture, the up trend from 88.97 has taken out an important cluster resistance zone of 162.42 (38.2% retracement of 285.56 (79 high) to 88.97 (00 low) at 164.67). Resumption of this up trend will encourage another rise to next important cluster resistance at 188.22 (50% retracement at 187.26). However, sustained break of 149.27 low will also have the long term rising channel taken out, which in turn add much weight to the case that rise from 88.97 has indeed completed at 168.83 and bring much deeper medium term decline.

(AP)April was such a lousy auto sales month that even Toyota Motor Corp. reported a decrease from the same month last year.

General Motors Corp., Ford Motor Co. and Honda Motor Co. also reported decreases, and DaimlerChrysler AG had a small increase, but the negative Toyota numbers are counter to a long trend of rising sales, sometimes in double digits.

Toyota sales, which include the Toyota, Lexus and Scion brands, dropped 4.4 percent in April, from 219,965 in April 2006 to 210,457 last month, the company said Tuesday.

The Japanese automaker has seen double-digit increases in recent months and it seemed like the rising sales would never end. In March, for example, the company’s sales jumped 11.7 percent.

Ford reported dismal U.S. sales in April, 12.9 percent below the same month last year due largely to slumping car sales.

GM sales also were poor, down 9.5 percent from April of last year, while DaimlerChrysler sales were up 1.2 percent.

Honda sales also showed a big decline, off 9.1 percent from April of last year.

GM sold 307,554 light vehicles in April, down from 339,796 in the same month last year. Its car sales were down 10 percent, while truck sales were off 9 percent.

Ford sold a total of 227,619 light vehicles last month, down from 261,381 in April 2006. Car sales were off 23.6 percent, while truck sales were down 5.7 percent, the company said.

DaimlerChrysler’s overall sales increased from 211,365 to 213,999, due to an increase at its Chrysler Group. Chrysler sales rose by 1.6 percent from 190,095 in April of last year to 193,104 last month. Mercedes sales were down 1.8 percent, from 21,270 to 20,895.

Chrysler said it had a strong retail month, with the Jeep brand up 29 percent due largely to sales of the Wrangler and Compass models.

Honda’s decline was almost as surprising as Toyota’s, with the company’s overall sales going from 139,124 last April to 126,419 this year. Its car sales plummeted 13.7 percent, while its truck sales were off 2.6 percent.

At Ford, even the company’s Ford Fusion and Mercury Milan midsized cars, which had been selling well in previous months, saw a decline, with Fusion sales off 2.5 percent and Milan sales down 5.4 percent.

Ford’s F-series pickup trucks, traditionally the top-selling vehicles in the United States, were down 12.4 percent for the month.

Nearly 60 percent of Ford’s car decline was due to cancellation of the Taurus sedan, which ceased production late last year. The company sold 14,668 Tauruses in April 2006, mostly to fleet buyers. The company plans to rename its Five Hundred sedan the Taurus for the 2008 model year.

Ford pointed to the success of its new products, namely the Ford Edge and Lincoln MKX crossover vehicles and the Ford Expedition large sport utility vehicle, as signs that it is selling vehicles people want.

Expedition sales were up 27 percent for the month, while Ford sold 9,134 new Edges and 2,901 MKXs in April.

Industry analysts had expected a decline in overall U.S. auto sales in April, due largely to the slumping housing market, rising consumer debt and a lack of pent-up demand for vehicles.

Gasoline prices also are at or near $3 per gallon, and many consumers were expected to delay auto purchases until they find out what will happen to gas prices during the upcoming summer driving season.