Morning Call: Friday, June 26, 2009
Good morning.
Bernanke held his ground in Congress and markets rallied. They've got to get it right but maybe there's room to err. However we don’t think so. The FED looks like it did it. The second derivative is turning and maybe it not only won't get worse, sometime soon it might get better. And let's not forget about bond buyers. Very important! The 7 year Treasury auction went very well going out just below 3.3%. That's a relief for equities. Every time they flog the bonds the problem gets to be less, or at least more manageable. There is a new bond paradigm which is that the newly invigorated American consumer has decided to buy Treasury Bonds. If this becomes the norm we will not need the Chinese or others to buy the bond issues. Could it happen? Unlikely but the scare we just had wondering who the bond buyers may have been is turning out to been exaggerated.
Look at the trends in the market and stay with themes. The US$ will work lower so sell the Dollar. Buy those things that hurt your foot when you drop them. That includes a barrel of oil.
One needs to be nimble but it's time to………….. Invest the money
Many people are thinking of security instead of opportunity. They seem to be more afraid of life than death. -- James F. Bymes.
Ed Pennock, CFA, Managing Director
416-369-6921, epennock@dominick.ca
Graham Farrell, Institutional Equity Trading
416-369-4208, gfarrell@dominick.ca
