Good morning. The markets were up and driven by just what the Doctor ordered, a drop in 10 year Treasury yields (the bonds went up), and Oil pushed through $65 which helps the case of recovery. Oil’s new trading range is now up to $55 to $85 (Focus forecast $35 to $65). Natural Gas is up and showing the best numbers in almost 3 months, it looks like copper will follow. Gold is looking to break out above $970 and that should catapult it through $1K to somewhere close to $1100.
The wall of worry
It has real validity. Cutting costs and especially jobs to keep the EPS going is very finite. Cutting jobs will be a significant headwind to recovery. And while it doesn't matter in the global scheme of things, the $C going through 90 cents won’t help either. The shoppers aren't back (yet) in the US and the Malls are ghostlike. Jokes about Anchor stores abound.
GM is going Chapter 11 but that’s so in the news it should have no impact. Fully 12% of residential mortgages are somewhere between late and foreclosure. Dell's sales were down almost 25% (they beat by a penny at 24 cents). Wall of Worry………..
Positives
New Durable goods orders were up 1.9% in March. New single family home sales were 352k up from 351K. And, as we look back on earnings season, most of it was "meet or beat" which helped.
But the Technical that will rivet market participants is the 50 day moving average about to Cross the 200 day moving average. It’s called the Golden Cross and Stay Tuned.
We needed good results from the banks and in the main got them, with ROE's coming at the high teens. In Commerce had problems and National get better than expected trading results. AGAIN in both cases!!!
All that stimulus money has to do a circuit through the market and there's still a ton of money on the side lines to boot. Performance anxiety is in full play but no one has seen the movie. Dial back to the 1970's. Big moves. Commodity moves. Remember the Brits had a company called Slater Walker. They bought companies and sold off the bits that were in total worth more than the company. Think of any candidates today?
One of the axioms of investing in Forest Products applies equally to other commodity plays. If it doesn't scare you to death you shouldn't buy it.
So be scared to Death……………………………………….Invest the money.
DXY(Bloomberg): the US Dollar Index (USDX) indicates the general international value of the US$. The USDX does this by averaging the exchange rates between the US$ and 6 major currencies. The FINEX computes this by using the rates supplied by some 500 banks.
Quote of the Day:
“The incestuous relationship between government and big business thrives in the dark.”
-Jack Anderson
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.
