Markets are off to a good start this morning ,a condition that might last an hour or the entire week. This frothiness is mostly due to lower LIBOR rates and a diminished TED spread. On the international front it appears that China's growth has slowed to a meagre 9% ,although other economic numbers released over the weekend, such as lower inflation and wage growth, have shown improvement. As we should each know by now, Asian economic success is a major key to our own recovery, a tenet particularly applicable to a resource reliant nation such as Canada. The low for the market could well have been put in on the 10th of October and if this proves to be the case the next five to seven years will prove to be a pleasant investing experience. The surviving banks will make out like bandits as will the governments that own equity in them, so make them your priority while you remember that resources are finite and although they too will stage a short term recovery their real strength will be come later in the cycle. This is also a good time to improve the income side of your portfolio by purchasing beaten down income trusts, particularly in the oil and gas sector.
Barring something tragic or manufactured , Barack Obama now seems assured of winning the Presidency which he unfortuneatly will be unable to assume until mid January due to the silliest electoral rules in the modern world. But as often repeated here, markets are discounting mechanisms and they will be busy assessing the future as they quickly stow away the past. Mid cap and small cap stocks always do well under Democrats; and don't forget the stem cells stocks which soared when it appeared that Kerry was going to win in 2004.
Tomorrow we will be off to Iraq, well at least on paper.
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