How high can a dead cat bounce? Investors see post-Iraq rally coming to an end, fear downturn.The slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. that has hit our recent stock rally has left us with a real half-full/half-empty scenario. As the strong post-Iraq run finally loses steam we are left with one question, "Which way are we headed now?" The key event locally, the midterm mid·term n. 1. The middle of an academic term or a political term of office. 2. a. An examination given at the middle of a school or college term. b. midterms A series of such examinations. elections, has given us no significant direction and caused only a minor hiccup hiccup or hiccough, involuntary spasmodic contraction of the diaphragm followed by a sharp intake of air, which is abruptly stopped by a sudden, involuntary closing of the glottis (opening between the vocal cords); the consequent blocking of air in financial markets. This is due to two factors: 1) no party achieved a majority in Congress, and 2) no nasty shocks or surprises (e.g. vote tampering tampering The adulteration of a thing. See Drug tampering. or dirty tricks dirty tricks pl.n. Informal 1. Covert intelligence operations designed to disrupt the economy or upset the political situation in another country. 2. ) marred election day. Therefore stocks continued to rally in relief, though long-term bonds saw a momentary mo·men·tar·y adj. 1. Lasting for only a moment. 2. Occurring or present at every moment: in momentary fear of being exposed. 3. Short-lived or ephemeral, as a life. dip to a four-year low and the likelihood of any sovereign debt upgrades by major rating agencies appears doubtful in the short term. Looking broadly at equities markets in Europe and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , there has been plenty of talk about "recovery" and an "inflexion inflection, inflexion the act of bending inward, or the state of being bent inward. point" where the bear market becomes a bull. A number of leading commentators have already called the bottom in the United States, which has seen a subsequent renewal of interest here in Mexico, evidenced by an increase in average daily volume and the leading indices extending their fresh-found highs. Within the market, many big names have hit new 52-week highs in the process--namely Televisa, Telecom Americas and Inbursa. Others have done even better--the market's leash-holder Walmex has reached its third-highest valuation, while its lighter-weighted C issue shares have hit an all-time high. Another Bolsa heavyweight heavyweight - High-overhead; baroque; code-intensive; featureful, but costly. Especially used of communication protocols, language designs, and any sort of implementation in which maximum generality and/or ease of implementation has been pushed at the expense of mundane , America Movil, has hit its highest levels since the week it was first spun off, while its holder, America Telecom, has breached a lifetime high. So has cement company Apasco. Still, so much unanswered buying has left a rather large nagging doubt--is this rally a "dead cat bounce Dead Cat Bounce A temporary recovery from a prolonged decline or bear market, after which the market continues to fall. Notes: Ever heard the saying, "Even a dead cat will bounce if dropped from high enough!"? ?" Such a strong rally has left plenty of room below, and with investors worldwide still jumpy (as well as the susceptibility susceptibility the state of being susceptible. Refers usually to infectious disease but may be to physical factors such as wetting or to psychological factors such as harassment. of financial markets to panic-selling), a return of the bears cannot be discarded dis·card v. dis·card·ed, dis·card·ing, dis·cards v.tr. 1. To throw away; reject. 2. a. To throw out (a playing card) from one's hand. b. should any bad news break. Just remember, we had a similar rally at the beginning of 2002, which took the Dow as high as 10,500 points and Bolsa up to 8,000 points, only for everything to tumble following the revelation of some shady accounting practices in a handful of multinational firms. Looking pessimistically pes·si·mism n. 1. A tendency to stress the negative or unfavorable or to take the gloomiest possible view: "We have seen too much defeatism, too much pessimism, too much of a negative approach" , the latest indications (Iraq situation, Fed rates very low, unemployment figures) combined with recent analysis of stock charts suggest we may see a reaction to the downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. , and the sooner it happens, the softer it should be. Despite fears that current gains may not be sustainable, bankers have been increasingly confident of stability returning to equity markets. This is an essential scenario for the almost forgotten mergers and acquisitions business. In addition to a flurry Flurry A drastic volume increase in a specific security. of big moves in London and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , there have been goings-on here in Mexico. The biggest news in June was the purchase of wireless flounderer Iusacell, with owners Verizon and Vodafone finally giving in a falling inwards; a collapse. See also: Giving and selling their majority stake for a paltry pal·try adj. pal·tri·er, pal·tri·est 1. Lacking in importance or worth. See Synonyms at trivial. 2. Wretched or contemptible. US$10 million to Grupo Salinas Grupo Salinas is a group of dynamic, fast growing, and technologically advanced companies, focused on creating shareholder value. Created by Mexican entrepreneur Ricardo B. subsidiary MovilAccess. Where there hasn't been action, there has been increased chatter Chatter See: Whipsawed . The majority involves Telmex and Televisa which, depending on your sources, have both been linked with moves into the United States and Brazil. The local market leaders are eyeing up the opportunity, faced with slow growth at home, and following legislative moves in the United States and Brazil to build on their regional strength. Any move by these heavyweights may open the floodgates for other regional plays. Finally, looking forward, the market awaits the outcome of second quarter results (due in July and August) which should help determine our direction in the short term. Solid (or at least, steady) results, combined with strong regional fundamentals that Mexican blue chips enjoy, may ensure that this dead cat bounces right back onto its feet.
Index 30 June 2003 NOMINAL
Monthly Accrued
Stock Market INDEX
IPC 7,054.99 5.3% 15.1%
INMEX 394.47 5.9% 18.1%
Mutual Funds
Equity 2,293.07 5.2% 12.4%
Debt for Individuals 4,046.81 0.4% 3.4%
Debt for Corporations 1,583.74 0.4% 3.4%
Economic Activity
Industrial 2,634.12 2.8% 4.5%
Retail 10,688.23 7.2% 16.4%
Non-Financial Services 5,317.43 7.2% -9.0%
Insurance and Banks 3,584.76 0.0% 6.4%
Broker Firms 414.03 0.0% 0.0%
Financial Groups 284.18 1.4% 9.8%
Sector
Mining 4,425.07 -2.2% 12.9%
Industrials 2,603.67 3.7% 4.6%
Construction 11,587.65 4.5% 12.9%
Retail 14,054.98 5.0% 24.5%
Communications & Transportation 28,267.00 7.5% 14.7%
Services 954.59 3.0% 14.1%
Holding Companies 2,394.44 1.8% 9.6%
Index 30 June 2003 REAL (1)
Monthly Accrued
Stock Market INDEX
IPC 7,054.99 5.1% 13.6%
INMEX 394.47 5.7% 16.5%
Mutual Funds
Equity 2,293.07 5.0% 11.3%
Debt for Individuals 4,046.81 0.2% 2.1%
Debt for Corporations 1,583.74 0.2% 2.0%
Economic Activity
Industrial 2,634.12 2.6% 3.1%
Retail 10,688.23 7.0% 14.8%
Non-Financial Services 5,317.43 7.0% -10.2%
Insurance and Banks 3,584.76 -0.2% 4.3%
Broker Firms 414.03 -0.2% -1.4%
Financial Groups 284.18 1.2% 8.3%
Sector
Mining 4,425.07 -2.4% 11.4%
Industrials 2,603.67 3.5% 3.2%
Construction 11,587.65 4.2% 11.4%
Retail 14,054.98 4.7% 22.9%
Communications & Transportation 28,267.00 7.3% 13.1%
Services 954.59 2.8% 2.6%
Holding Companies 2,394.44 1.6% 8.1%
Index 30 June 2003 DOLLARS (2)
Monthly Accrued
Stock Market INDEX
IPC 7,054.99 4.6% 13.3%
INMEX 394.47 5.2% 16.2%
Mutual Funds
Equity 2,293.07 4.5% 11.1%
Debt for Individuals 4,046.81 -0.3% 1.8%
Debt for Corporations 1,583.74 -0.3% 1.8%
Economic Activity
Industrial 2,634.12 2.1% 2.8%
Retail 10,688.23 6.5% 14.5%
Non-Financial Services 5,317.43 6.4% -10.4%
Insurance and Banks 3,584.76 -0.7% 4.7%
Broker Firms 414.03 -0.7% -1.6%
Financial Groups 284.18 0.7% 8.0%
Sector
Mining 4,425.07 -2.9% 11.1%
Industrials 2,603.67 3.0% 2.9%
Construction 11,587.65 3.7% 11.1%
Retail 14,054.98 4.2% 22.5%
Communications & Transportation 28,267.00 6.8% 12.8%
Services 954.59 2.3% 2.3%
Holding Companies 2,394.44 1.0% 7.8%
(1) June inflation: 0.08%
January-June inflation: 1.25%
(2) June depreciation: 0.07%
January-June depreciation: 1.6%
Information provided by AMCHAM economist Jose Antonio Hernandez Balbuena
Gianluca Baratti works as a stock market analyst at Finamex Casa de Bolsa. |
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