Morning Call: Friday, April 24, 2009
We had to chuckle to see market action attributed to Cramer. Evidently he's a bear whisperer and as companies reported earnings that exceeded his more negative insights the markets rallied. It was AMEX reporting 31 cents against consensus of 12 cents that got us really going. Better than expected results from regional banks helped. The second derivative on existing home sales (down 3% in April) and higher jobless numbers had set the backdrop. We observe in awe that the Advance / Decline is more often than not 2:1. What market breadth and persistence!
When spoke to one of our friends in London he reported that everyone is "sell in May and go away". Ergo it probably won't happen that way. We obviously can't have another 6 weeks where essentially we went straight up. We certainly could work higher. We expect that the volatility will rise as the tug of war between profit takers and late arrivals to the market recovery goes into high gear.
The Stress tests will be sobering. There's a $100B treasury auction coming. Chrysler imminently and then GM will go bust. Juxtaposition to that are new forecasts for China's Growth with Goldman leading the way, boosting the rate this year from 6% to 8.3% and for next year from 9% to 10.9%. Deutsche says China will have the world's largest economy by 2020. The commodity story for Canada should hold together. And finally Carney does get it. However Harper and Cato are still out there smokin'.
Durable orders were expected to be down 1.5% and they came in at 0.8% China has been adding to Gold. Their Reserves moved up to be the 5th largest in the world, it went north of 1K tons.
About stocks
Metro blew away the top and bottom line with same store sales up 7.3%. Its looking like best in class.
CNR operating ratio ex the EJ&E was 71.7%. Unbelievably good in this economy.
GM was 3 year into a 10 year restructuring. The last 5 year of that process are being compressed into 5 months.
Celestica is benefiting from the smartphone demand and reported 13 cents versus analyst consensus of 9 cents.
Between Apple and RIM they shipped almost 12mm units. Amazing!
So for now we will stick to our guns...........Invest the money.
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
Graham Farrell, Institutional Equity Trading
416-369-4208, gfarrell@dominick.ca
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.
