In Copenhagen, major economies, including the United States and China, made a non-binding commitment putting caps on greenhouse-gas emissions. The full significance of the deal will not be known until well into next year. Countries are supposed to fill in details of planned cuts in greenhouse gas emissions, left blank in the final Copenhagen accord, by the end of January 2010.
Thereafter, the U.N. is to follow with more talks towards a legally binding global treaty. Trevor Sikorski of Barclays Capital already said Copenhagen’s failure to agree on a timetable for a treaty would undermine confidence in carbon markets. At the moment of this writing, European carbon credits for December 2010 are 6.25 percent lower compared to their close on Friday.
Speaking in Singapore today, Nobel prize-winning economist and former White House adviser under President Bill Clinton Joseph Stiglitz said there's a “significant” chance the U.S. economy will contract in the second half of 2010. He therefore urged the U.S. government to prepare a second stimulus package to spur job creation.
Stiglitz also called on Washington to make more funds available to state governments that face a substantial drop in tax revenues. By the way, the worst U.S. recession since the Great Depression has drained more than 7 million jobs in the past two years. The government and the Federal Reserve have spent, lent, or committed more than $10 trillion to revive the economy and credit markets so far. Yes, the road to recovery won’t be easy.
Dubai World just communicated that no formal debt standstill proposal was made at meetings with creditors in the emirate as the company seeks to restructure about $22 billion of borrowing. After a presentation given this morning to banks in Dubai a spokesman for the company said: “This is a long process that will take long time. . . Dubai World will keep on servicing its debt.”
About 90 international and local lenders met with Dubai World officials and its restructuring team led by Deloitte's Aidan Birkett after the company's shock announcement on Nov. 25 that it needs to freeze its debts for six months. Today’s meeting was the first official meeting between Dubai World and lenders. Banks will now have to meet with the coordinating committee.
On the U.S. markets this morning I’d like to say unless we have a surprise coming out of the blue, I don’t expect big changes before the 2010 trading year takes off. On Friday, we saw SPY, a fund which mirrors the S&P 500, moving up a bit and closing at 110.21, while it stayed in the middle of its six-week trading range, which, in fact, is a six-week consolidation.
Thus far, this means there is no change in the medium-term up-trend of the SPY. In the first two weeks of November the SPY moved up from 103 to 111 and these gains are still holding. With SPY still very close to its 2009 high, there are no real signs of weakness, at least for now.
No doubt, Thursday’s gap down from resistance was negative. Nevertheless, the SPY remained above its first significant support zone of around 108. Only a downside follow-through below the late November low of 102.53 would warrant a reassessment of the up-trend. The Relative Strength Index (RSI) firmed slightly to above 50. Since mid-August we have seen the 40 to 50 RSI support zone holding up.
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