Morning Call: Tuesday, June 23, 2009
Good morning.
One can’t say we didn't see it coming as the sell off is the best advertised ever. There didn't seem to be much new news except for the declines in commodity prices led by an almost $10 drop in the price of oil. It combined to mow down the green shoots like a latter day St. Valentines. The similarities with 1929 are there, as are the likenesses to Japan’s lost decade.
The decidedly unJapanese rally was suddenly being put down to Western Impatience. We are a generation that wants to "just do it". The outcome will depend on the market’s perception of what Bernanke says. There was a very interesting article published by Maudlins OTB and the links is below. This is history and it puts the current market into context. Please look at the charts.
Margin calls will be the old words that are new again. The Dash to Trash has come a cropper and taken many with it. Especially at the aggressive end, the returns were impressive and encouraged risk taking. The decline started a week ago but really got ugly as the World Bank warned of a redux of the Financial Crisis. Normally the market would have shrugged, but with commodity prices and related stocks well down the effect was a run for the Exits. The World Bank forecast cut the market’s grass or in this case, it’s green shoots. Stocks discounted the positive view of the IMF but that is fair game. The charts show the market is right here and we either hold or we are going a bunch lower. Over to you Mr. Bernanke. It’s widely expected that he will talk about withdrawing further stimulus and we think he will not make that the focus of his address.
One of the Boxscore numbers to watch is the VIX. It’s back up into the low 30's and it’s time to watch closely. Talking of watching, the portfolio managers are watching the quarter's performance erode away. The 2% and 20% crowd are getting depressed again. This market has had a quality of "if you don't like today, wait till tomorrow" about it. Will it change?
Today the Auction of $40B of 2 year Treasuries will have a success based influence on equity markets.
So clench the teeth and…… invest the money.
Nuclear Tuesday
So clench the teeth and…… invest the money.
Nuclear Tuesday
UX contradicted the Trade Tech numbers saying that the price was up only $1 to get to $54 in contrast to trades up $3 to $55.
LIBOR: The London Interbank Offered Rate During 1984 it became apparent that an increasing number of banks were trading actively in a variety of relatively new market instruments, notably Interest Rate Swaps, Foreign Currency Options and Forward Rate Agreements. Whilst recognizing that such instruments brought more business and greater depth to the London Interbank market, it was felt that future growth could be inhibited unless a measure of uniformity was introduced. LIBOR is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). LIBOR will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.
Quote of the Day:
W. C. FieldsI always keep a supply of stimulant handy in case I see a snake--which I also keep handy. --
Ed Pennock, CFA, Managing Director
416-369-6921, epennock@dominick.ca
Graham Farrell, Institutional Equity Trading
416-369-4208, gfarrell@dominick.ca
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.
