BetOnMarkets

FTSE is currently indicating a lower opening as traders prepare themselves for the unveiling of the bailout package. There is still way to many questions left unanswered in the fine print, which is why traders are divesting of stocks that might be affected negatively by this historic event. We expect the FTSE to spend the morning in negative territory.

Commodities, which are affected by the US dollar, have been range bound, while awaiting news about the bailout. Investors believe that this bailout will have a negative effect on the US dollar, which in turn may make commodities more expensive. If the bailout is finalized tomorrow, look for oil and gold to have a very volatile day.

BetOnMarkets

The FTSE is currently indicates a flat opening as traders wait for the release of the European IFO numbers. While this is not UK data, it will affect the FTSE depending on how strong the number will be. After further research we believe the number will be stronger then expected. This should result in a higher opening for the FTSE.

Oil traders were at the mercy of the US dollar yesterday as the bailout bill was debated in congress. We expect the same today, with the added volatility of the inventory numbers to be released around 10.30 AM EST. It seems like the November contract is poised to break above the 110 dollars per barrel level.

BetOnMarkets

Traders, investors, and financial journalists must have been glad to reach the end of a week that will surely go down in the history of financial markets. The FTSE closed the week just 66 points down which the S&P 500 actually managed a small profit. Homeowner, the closing figures do not even begin to tell the whole story with the FTSE trading in a 521 point range and posting its best one day rally in history on Friday.

The turmoil began last week with the bail out of Fannie Mae and Freddie Mac. This raised hopes of a similar bail out of the Lehman Brothers. To say that investors were shocked when Lehmans was not only denied a bailout, but filed for insolvency would be an understatement. Lehmans collapse sent shockwaves throughout equity markets sparking a domino effect that knocked over Merrill Lynch, AIG and HBOS .

Even the most seasoned investors had a hard time steadying themselves last week as the newswires continue pump out dark news, and once in a generation headlines. Fear was understandably widespread with the Russian stock market suspended indefinitely after dropping 10% in an hour, and a large money market fund breaking the buck, meaning they lost their unit holders money. When the supposed safe havens of money market funds start to break down, investors see little choice but to fly to quality. There is a flood of assets transferring to safety of short term US Government Treasuries, forcing the yield on three month Treasury Bonds down to their lowest level since the great depression. Gold endured a remarkable week trading in a $140 range before closing the week up around $90.

On the economic data front, US CPI was in line with expectations, and oil prices have continued to stay below $100. Both of these factors indicate that the inflation monster may be coming back under control. However, the FOMC voted to keep rates on hold last week, initially markets had a mixed reaction. Many believe the Fed has now left itself some ammunition to deal with a weakening economy further down the line. It also sent out the signal that it would not be influenced by market makers into cutting rates as they did back in July.

It was the two emergency announcements on Wednesday and Thursday that had the greatest impact last week. After central banks dropped a coordinated liquidity bomb overnight on Wednesday, global equity and credit markets initially seemed to show a very cautious reaction. The greatest reaction seemed to come from the Feds plan to create a giant bad bank that would absorb many of the toxic subprime assets held by banks. This measure accompanied with a crack down on short sellers, seemed to have hit the nail on the head for the financial institutions, with the root cause of the credit crunch (sub prime assets) being attacked.

Next weeks headlines will be dominated by Ben Bernankes testimony before congress starting on Wednesday. We also have US existing home sales on Wednesday and new home sales on Thursday. However, the planned economic announcements could be secondary to any surprise headlines or further emergency measures. When stock markets move percentage points in the matter of minutes, anything can happen.

Although equity markets bounced last week, the panic at one stage reached such an extreme that the yield on 3 month US Treasuries reached 0.02% on Thursday, returning just $2 on a $10,000 investment. Investors werent just running to safety, they were blindly staggering to anywhere with no exposure to the credit markets. When investors press the panic button as they undoubtedly have done, there is potential for a counter rally to set in the short term as we saw on Friday. However, looking at large crashes from 1987, 1997, 1998, 2000 and 2001, the follow on reaction is typically a range bound market. A barrier range trade returns a profit if neither of two predetermined levels are hit within a specified time. A barrier range trade predicting the Dow Jones not to touch 12200 or 10500 over the next 16 days could return 39%.

BetOnMarkets

The FTSE is currently indicating a higher opening as a buyout of HBOS by Lloyds TSB, has the blessing of the UK government. Sources indicate that the government will seek to waive antitrust restrictions to permit the takeover. Look for other vulnerable companies to get a boost in share price, as traders are counting on cashing in on another takeover.

Commodities benefited from the turmoil in the US equities market yesterday with gold adding more then 70 dollars to its value and oil adding 6 dollars to its per barrel price. We can see gold reaching 900 dollars per ounce before the end of the week, as investors are running for the safe haven that precious metals provided during turbulent times like this week

BetOnMarkets

The FTSE is currently indicating a high opening. Investors around the world are breathing a sigh of relief after it was announced that the US government bailed out AIG. The announcement has bumped up the FTSE to more then 1% in the pre-open markets.

Oil tried its hardest to breach the 90 dollars per barrel mark, however support finally came back into the market, allowing the price to rebound and is currently trading at more then 94 dollars per barrel. Look for the price of oil to be volatile today as the inventory numbers will be very unpredictable

BetOnMarkets