Morning Call: Tuesday, May 19, 2009
Good morning. As we celebrated Queen Victoria's Birthday in Canada, the DOW roared back 246 points for the best one day gain since the 235 points gain on April 9th. Is this the end of the correction? We are worried, but think that it’s more of a counter trend move.
The catalyst was better that expected numbers from Lowe's and today Home Depot reported 35 cents vs. 41 last year and guidance was re-affirmed as sales down 9 % and same store sales down 7%. NAHB (National Association of Home Builders) announced that homes have never been more affordable and the sentiment index rose to 16 in May vs. 14 in March and compared to 8 in January. That's an index of zero to 100. The revised Housing Starts at 525 are in line with our expectations.
Another key was that there were brokerage recommendations to buy BAC. That there are buy stories out there on a bank that has to raise $34B REALLY surprises us. Last week FDIC's Blair said that some of the Bank CEO's may be replaced, so its small wonder that Goldman and Morgan Stanley want to repay the $20B of TARP money.
The S&P was up 26. And, in response to militant activity in Nigeria, oil was up $2.70 pushing back close to $60. Barron's said there's a thaw in IT spending, good for teck stocks. Australian unemployment dropped last week, so there are green shoots everywhere. Maybe more than at the Chelsea Flower Show, which started this week.
The end of the civil war in Sri Lanka ends a terrible conflict (read Anil's Ghost). They can take a page from the Chinese and use rapid economic growth as a political tool to silence domestic discontent. They could model themselves after Singapore, using the low taxation, low wage, high growth and skills outsource supplier model. The Indian election, with Congress pushing back, amongst others the communists, has that country embracing the Gandhi family again. Capitalism gained as a result despite its retreat in other jurisdictions. We are seeing more evidence of the importance of the BRIC. Compare that to Euroland whose Q1 GDP was down 9.6%.
Nuclear Tuesday
The UX price is unchanged at $51. Trade Tech is quoted about the $10 rise off the bottom. There are several articles, all positive, about u3O8 and its bright future. The change we see is that the hedgies are back and so is the promo. More to come. Stay tuned.
So we hold our breath and……………………………………….Take The Money
XLF US (Bloomberg): Financial Select Sector SPDR Fund is an exchange-traded fund incorporated in the USA. The Fund’s objective is to provide investment results that, before expenses, correspond to the performance of the Financial Select Sector. The Index includes financial services firms whose business’ range from investment management to commercial and business banking.
Quote of the Day:
“Sooner or later, those who win are those who think they can.”
-Paul Tournier
Ed Pennock, CFA, Managing Director
416-369-6921, epennock@dominick.ca
Kris Fisher, Institutional Equity Trading
416-369-6924, kfisher@dominick.ca
416-369-6921, epennock@dominick.ca
Kris Fisher, Institutional Equity Trading
416-369-6924, kfisher@dominick.ca
The above note is prepared by an Institutional Salesperson based on morning meeting comments and general Institutional desk discussion and should not be construed as a research report or a solicitation. For information purposes only. D&D Securities, its clients, and principals may have positions in these securities.
