Morning Call: Monday, June 08, 2009
Good morning.
As so often happens, the news of substantially lower than expected US job losses had little effect on markets. But it sure is a "green shoot." So is the $10B aircraft order from United Airlines. The markets had forecast these events or priced them in. The Biggie this week is the Treasury Auctions of $19B 10-year notes tomorrow and the $11B 30-year on Wednesday. Like the last auction, we believe that they will get done without a crisis.
Probably the biggest macro risk is that the US$ becomes the new global "Carry Trade", the effect of that would be a massive US$ devaluation. Likely this would lead to global competitive devaluations and so without wanting to do it, we would end up repeating the major mistakes of the Depression.
Probably the biggest macro risk is that the US$ becomes the new global "Carry Trade", the effect of that would be a massive US$ devaluation. Likely this would lead to global competitive devaluations and so without wanting to do it, we would end up repeating the major mistakes of the Depression.
That the US economy is showing some signs of a turn will help the auctions. Those should help markets and the US$. The strength in Financials and the Oils is signaling that. The base Metals and Golds would take a rest. The technicals on Golds aren't clear to us at the moment. There has been heavy shorting of the Treasury ETF's which might also suggest a switch in emphasis.
A low risk approach would be to look for some economically sensitive stocks that haven't necessarily had a huge move. The VIX is up 3% in the last week and may be looking to more market strength in non-commodities.
We always read John Maudlin and he returned to the theme of the relative costs and benefits of Healthcare in the US. Courtesy of Michael Moore, Canada is always highlighted as a premier example of how to run a State System. We've had experience of it and it’s not quite what it’s cracked up to be. However the US System won't improve until there is comprehensive overhaul of the "Tort" practice in the US.
Given our market view we are moving our focus to stocks like Finning or Aecon as well as the Rails, Steels and interestingly the Nickel stocks are doing well.
A data point in our confidence in the market is that the GM bankruptcy had minimal impact on the CDS markets. Who would have thunk it?
So we continue to advise.………………… Invest the money.
A low risk approach would be to look for some economically sensitive stocks that haven't necessarily had a huge move. The VIX is up 3% in the last week and may be looking to more market strength in non-commodities.
We always read John Maudlin and he returned to the theme of the relative costs and benefits of Healthcare in the US. Courtesy of Michael Moore, Canada is always highlighted as a premier example of how to run a State System. We've had experience of it and it’s not quite what it’s cracked up to be. However the US System won't improve until there is comprehensive overhaul of the "Tort" practice in the US.
Given our market view we are moving our focus to stocks like Finning or Aecon as well as the Rails, Steels and interestingly the Nickel stocks are doing well.
A data point in our confidence in the market is that the GM bankruptcy had minimal impact on the CDS markets. Who would have thunk it?
So we continue to advise.………………… Invest the money.
BDIY Index (Bloomberg): The Baltic Dry Index (replaces the Baltic Freight Index). A composite of Baltic Capesize, Panamax, Handysize and Supramax indices. The index is designed as the successor to the Baltic Freight Index and was first published on 1 November 1999.
Quote of the Day:
“Every man is a damn fool for at least five minutes every day; wisdom consists in not exceeding the limit.” --Elbert Hubbard
Ed Pennock, CFA, Managing Director
416-369-6921, epennock@dominick.ca
Graham Farrell, Institutional Equity Trading
416-369-4208, gfarrell@dominick.ca
Ed Pennock, CFA, Managing Director
416-369-6921, epennock@dominick.ca
Graham Farrell, Institutional Equity Trading
416-369-4208, gfarrell@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.
