Good Morning All,
Yesterday may have been blogless here but it certainly wasn't snowless, at least not in beautiful Montreal and its environs. Markets too had a stormy day as profit taking and other stories assumed temporary precedent over their recent show of optimism.Things look a little better on both fronts this morning as the upward trend attempts to reestablish itself. We will continue to monitor the TED spread,( now two...ish versus five..ish), the LIBOR rate, the U.S dollar, and the technicals for signs of danger but right now the generally bad news seems to be enjoying a market discounting that is set to run through inauguration day.
The news out of Illinois may have added to the market concerns yesterday although Fox News must have had a field day. No one of a serious or patriotic nature would want anything to interrupt the Obama inspired hopes that have most recently pervaded the American pysche. It would seem that this creep of a Governor has already cleansed the President elect of any possible collusion by having referred to him on tape using the F word.
Wednesday, December 10, 2008
Monday, December 8, 2008
December 8th Edition
Good Morning All,
Markets around the world were soaring as we slept here in North America and they were doing so on the back of a number of things, the most important of which was Friday's strong New York performance in reaction to the worst job numbers report in 34 years. This letter has stated more than once, and most recently on December 5th, that a market that rises in the face of bad news has found a base upon which to build. The worse the news, the more important the contrarian rally will become. We have just witnessed such a successful test at 818 on the S&P 500 slightly above our suggested support level of 815.
Adding to this good reaction to bad news market scenario was some actual good news as Barack announced plans for an Eisenhower-like stimulus package just as Congress appeared to reach a bailout agreement for the auto industry. China too has joined the spending fray as it now seems that stimulus will quickly replace my favourite candidate, the short-lived prorogue, as word of the year.
Infrastructure spending will not be limited to America or China as Governments around the world realize that bridges, roads, schools, hospitals and the sewer and water systems that supply them cannot be imported; better still both the workers employed and the companies employing them will be paying taxes. Beats the hell out of a 500 dollar cheque to individuals who will drive to Wal-Mart and boost the Asian economies and speaking of driving, think of how much of a tax cut the drop in gas prices is, about 400 billion I believe.
There will be no shortage of Canadian political news this week, beginning with a Quebec election and on through to the leadership change in the Federal Liberal party. A good week for both Charest and Ignatieff looms.
Look for a big week with 1025 S&P 500 in sight.
Markets around the world were soaring as we slept here in North America and they were doing so on the back of a number of things, the most important of which was Friday's strong New York performance in reaction to the worst job numbers report in 34 years. This letter has stated more than once, and most recently on December 5th, that a market that rises in the face of bad news has found a base upon which to build. The worse the news, the more important the contrarian rally will become. We have just witnessed such a successful test at 818 on the S&P 500 slightly above our suggested support level of 815.
Adding to this good reaction to bad news market scenario was some actual good news as Barack announced plans for an Eisenhower-like stimulus package just as Congress appeared to reach a bailout agreement for the auto industry. China too has joined the spending fray as it now seems that stimulus will quickly replace my favourite candidate, the short-lived prorogue, as word of the year.
Infrastructure spending will not be limited to America or China as Governments around the world realize that bridges, roads, schools, hospitals and the sewer and water systems that supply them cannot be imported; better still both the workers employed and the companies employing them will be paying taxes. Beats the hell out of a 500 dollar cheque to individuals who will drive to Wal-Mart and boost the Asian economies and speaking of driving, think of how much of a tax cut the drop in gas prices is, about 400 billion I believe.
There will be no shortage of Canadian political news this week, beginning with a Quebec election and on through to the leadership change in the Federal Liberal party. A good week for both Charest and Ignatieff looms.
Look for a big week with 1025 S&P 500 in sight.
Friday, December 5, 2008
December 5th Edition
Good Morning All,
The much anticipated November U.S. employment figures were released this morning, and they were well beyond the consensus call, but not too far removed from the whisper number. Yesterday's late day, low volume sell-off was likely symptomatic of these rumours thereby discounting the actual news in advance. We are now about to see, on this important trading day, whether the markets bend to this news or rally in the face of it. The initial movement will reflect the former while we await a hold around 815 on the S&P 500.
Fed Chairman Bernanke's fearful comments did nothing to reassure markets either as his "deer in the headlights" look has become increasingly unsettling. It is once again interesting to point out that one of the few apparently calm and confident people at this juncture is the President elect; fortunately for all of us, his name is Obama and not McCain.
In Canada, parliament will now be prorogued until the end of January at which time a budget will be presented and voted upon. What I would like to know is why we have to wait so long for something that can be composed in days. Budgets come from behind doors one, two or three as they either raise taxes or cut them, print money or constrain spending, this need not be a long drawn out process. It seems simple to this writer: allot money to the provinces for infrastructure spending; as the dusty engineering plans already exist across the land. Let's get busy and make a deal sooner rather than later....and let's stop the divisive politics that raises the spectre of separatism while ignoring the more important threat of deflation. It is also time to prorogue the government's head in the sand attitude toward a stimulus package. I knew I could sneak that word in somehow.
The much anticipated November U.S. employment figures were released this morning, and they were well beyond the consensus call, but not too far removed from the whisper number. Yesterday's late day, low volume sell-off was likely symptomatic of these rumours thereby discounting the actual news in advance. We are now about to see, on this important trading day, whether the markets bend to this news or rally in the face of it. The initial movement will reflect the former while we await a hold around 815 on the S&P 500.
Fed Chairman Bernanke's fearful comments did nothing to reassure markets either as his "deer in the headlights" look has become increasingly unsettling. It is once again interesting to point out that one of the few apparently calm and confident people at this juncture is the President elect; fortunately for all of us, his name is Obama and not McCain.
In Canada, parliament will now be prorogued until the end of January at which time a budget will be presented and voted upon. What I would like to know is why we have to wait so long for something that can be composed in days. Budgets come from behind doors one, two or three as they either raise taxes or cut them, print money or constrain spending, this need not be a long drawn out process. It seems simple to this writer: allot money to the provinces for infrastructure spending; as the dusty engineering plans already exist across the land. Let's get busy and make a deal sooner rather than later....and let's stop the divisive politics that raises the spectre of separatism while ignoring the more important threat of deflation. It is also time to prorogue the government's head in the sand attitude toward a stimulus package. I knew I could sneak that word in somehow.
Thursday, December 4, 2008
December 4th Edition
Good Morning All,
Markets in Canada continued to drift yesterday in front of the Harper address and a couple of bank earnings reports. New York on the other hand rose on some late day buying as December money was put to work. Heed must be paid to both the former and latter points made here because although the Canadian market might lag its U.S. counterpart by a few days due to our ongoing political crisis, the need to put money to work before year-end is a shared condition. Investment managers are not being paid fees to hold zero interest treasuries in the face of 20% weekly run-ups. Sometime soon they will have to stick more than one toe in the soup.
Rate cuts in Europe have so far done little to ease markets as the immediate reaction to these dramatic moves has been one of fear rather than relief as talk of the recession/deflation cycle getting out of control has held the greater weight this morning. As often stated in this rant, we must watch for a market that goes up in the face of bad news, and particularly for signs of one that fares well in the last hour of trading. Not silly folks, just history.
The Harper speech last night and the general tone adopted by the Conservatives over the past few days has been enlightening. It is almost as if Karl Rove had moved his operations to Canada where a new fear mongering campaign can drive a wedge between Canadians. Once more....agree or disagree with the coalition's actions, there is nothing illegal or immoral or even banana republic like about them. Furthermore, the Bloc Quebecois is a joke and it is not being made powerful by the Liberals and NDP but by the desperate attacks of the Conservatives. Read the agreement.
Markets in Canada continued to drift yesterday in front of the Harper address and a couple of bank earnings reports. New York on the other hand rose on some late day buying as December money was put to work. Heed must be paid to both the former and latter points made here because although the Canadian market might lag its U.S. counterpart by a few days due to our ongoing political crisis, the need to put money to work before year-end is a shared condition. Investment managers are not being paid fees to hold zero interest treasuries in the face of 20% weekly run-ups. Sometime soon they will have to stick more than one toe in the soup.
Rate cuts in Europe have so far done little to ease markets as the immediate reaction to these dramatic moves has been one of fear rather than relief as talk of the recession/deflation cycle getting out of control has held the greater weight this morning. As often stated in this rant, we must watch for a market that goes up in the face of bad news, and particularly for signs of one that fares well in the last hour of trading. Not silly folks, just history.
The Harper speech last night and the general tone adopted by the Conservatives over the past few days has been enlightening. It is almost as if Karl Rove had moved his operations to Canada where a new fear mongering campaign can drive a wedge between Canadians. Once more....agree or disagree with the coalition's actions, there is nothing illegal or immoral or even banana republic like about them. Furthermore, the Bloc Quebecois is a joke and it is not being made powerful by the Liberals and NDP but by the desperate attacks of the Conservatives. Read the agreement.
Wednesday, December 3, 2008
December 3rd Edition
Good Morning All,
Not much special about yesterday's market activity except the S&P 500 did manage to close back up at the important 850 level. This morning's poor job claims numbers, the declines in Europe and the diminished guidance by Mr. BlackBerry have all served to lower today's expectations. However one day does not make a market or a week, up or down, so let us all stay tuned.
It is not surprising that Canadians are extremely divided over the latest political machinations in Ottawa. Harper supporters are rallying around the anti-separatiste banner while the Liberals and NDP are dismissing the Bloc's influence as a necessary evil in their bid to form a new government. The breakdown is as usual, mostly an east-west split, wherein the recently chastened Albertans are ripe for fuming due to the 100$ drop in oil prices. It is always a joy for this writer to bring up the point that neither Ralph Klein nor that province's citizenry ever put a drop of oil in the ground.
Whether you agree or disagree with the opposition's tactics or strategy here is opinion; the question involving the legality of the action or the precedent behind it is not. The British Parliamentary system has proven itself, despite its flaws, to be superior to any other form of democracy for several centuries, and if you don't believe that just take a look at the recent two year primary and election campaign in America even as you try to understand how a country can have a President-in-waiting for two and one half months. I could go on about how George Bush would never have survived one question period let alone eight years of them, but I digress.
The most interesting thing to come out of all this may not be a new government with a much needed stimulus plan, but the word prorogue, a far better candidate than paliniste for word of the year.
Not much special about yesterday's market activity except the S&P 500 did manage to close back up at the important 850 level. This morning's poor job claims numbers, the declines in Europe and the diminished guidance by Mr. BlackBerry have all served to lower today's expectations. However one day does not make a market or a week, up or down, so let us all stay tuned.
It is not surprising that Canadians are extremely divided over the latest political machinations in Ottawa. Harper supporters are rallying around the anti-separatiste banner while the Liberals and NDP are dismissing the Bloc's influence as a necessary evil in their bid to form a new government. The breakdown is as usual, mostly an east-west split, wherein the recently chastened Albertans are ripe for fuming due to the 100$ drop in oil prices. It is always a joy for this writer to bring up the point that neither Ralph Klein nor that province's citizenry ever put a drop of oil in the ground.
Whether you agree or disagree with the opposition's tactics or strategy here is opinion; the question involving the legality of the action or the precedent behind it is not. The British Parliamentary system has proven itself, despite its flaws, to be superior to any other form of democracy for several centuries, and if you don't believe that just take a look at the recent two year primary and election campaign in America even as you try to understand how a country can have a President-in-waiting for two and one half months. I could go on about how George Bush would never have survived one question period let alone eight years of them, but I digress.
The most interesting thing to come out of all this may not be a new government with a much needed stimulus plan, but the word prorogue, a far better candidate than paliniste for word of the year.
Tuesday, December 2, 2008
Good Morning All,
A more contrite group of auto executives will meet with Congress once again today and it is likely that some deal or another will be forthcoming. Futures are up this morning as are European markets despite today's descent in Japan. This is Tuesday and some important numbers need to be surpassed and held by day's end if my call for a bullish two weeks is going to get started . Yesterday's huge decline in Toronto was typified by major losses in golds and oils; but that was really just the surface picture. Aside from the fact that this was a low volume sell-off both here and in New York, it would seem that profit taking played a large part in this activity. Petro Canada par example lost 4$ plus over the trading day, a large number until one considers that it had gained over 13$ during the previous five and it was one of many such trades.
The Canadian political situation would be laughable were the economic problems not so serious. Some may believe these latest opposition manoeuvres to be unnecessary and self serving while others are cheering them on. Allow me to make one point; Canada is in surplus and the present government does not believe that economic stimulus is needed. In the U.S where deficits have reached so far past historical records that they are close to unfathomable, stimulus will be increased under Obama, not diminished, and few, if any, economists oppose these scheduled expenditures. The risk of doing nothing in this deflating economy is far greater than the risk of growing larger deficits, or in our case, creating them.
Look for a close over 850 on the S&P 500 to confirm an advance of meaningful proportion.
A more contrite group of auto executives will meet with Congress once again today and it is likely that some deal or another will be forthcoming. Futures are up this morning as are European markets despite today's descent in Japan. This is Tuesday and some important numbers need to be surpassed and held by day's end if my call for a bullish two weeks is going to get started . Yesterday's huge decline in Toronto was typified by major losses in golds and oils; but that was really just the surface picture. Aside from the fact that this was a low volume sell-off both here and in New York, it would seem that profit taking played a large part in this activity. Petro Canada par example lost 4$ plus over the trading day, a large number until one considers that it had gained over 13$ during the previous five and it was one of many such trades.
The Canadian political situation would be laughable were the economic problems not so serious. Some may believe these latest opposition manoeuvres to be unnecessary and self serving while others are cheering them on. Allow me to make one point; Canada is in surplus and the present government does not believe that economic stimulus is needed. In the U.S where deficits have reached so far past historical records that they are close to unfathomable, stimulus will be increased under Obama, not diminished, and few, if any, economists oppose these scheduled expenditures. The risk of doing nothing in this deflating economy is far greater than the risk of growing larger deficits, or in our case, creating them.
Look for a close over 850 on the S&P 500 to confirm an advance of meaningful proportion.
Monday, December 1, 2008
December 1st Edition
Good Morning All,
Markets will spend a good part of the day giving up some of last week's gains. This activity should evolve into an interesting process that sets up a turnaround Tuesday leading the way to significant early December gains. I would expect that the pre Christmas week will once again be typified by tax loss selling even though it would appear that many capitulators have already accomplished this task. If things go according to Hoyle, (and they rarely do), then a very opportune reentry into markets, particularly among small and mid caps, will take place during the pre year end holiday week. This upward movement will likely exhaust itself by inauguration day but it will be large in percentage gains.
The world as we now know it, appears to be experiencing a leadership gap, beginning with the lame duck Presidency of George Bush and extending through to the inaction of Germany's Angela Merkel and our own out of touch Cabinet in Ottawa. This vacuum of doingness, yes I know it is not a word, has lately been compounded by other world events from India to Thailand and the Gulf of Aden where a motley group of pirates continues to hold powerful nations and their interests at bay. These are each headline events just as the other major ongoing African wars appear not to be, but pay proper heed to the short term nature of their impact and look forward to a more structured and interactive globe just down the road. Meanwhile everything must be done to prevent any further deterioration in Pakistan-India relations. This, not Iraq, not Iran, not Israel is and always has been the world's most important and most dangerous potential battlefield. That's a lot of..... I's......for one sentence, so let's add another while we are on a roll.... Ignatieff....?
I have no idea what Harper has been thinking, so I must believe that he hasn't been.
Markets will spend a good part of the day giving up some of last week's gains. This activity should evolve into an interesting process that sets up a turnaround Tuesday leading the way to significant early December gains. I would expect that the pre Christmas week will once again be typified by tax loss selling even though it would appear that many capitulators have already accomplished this task. If things go according to Hoyle, (and they rarely do), then a very opportune reentry into markets, particularly among small and mid caps, will take place during the pre year end holiday week. This upward movement will likely exhaust itself by inauguration day but it will be large in percentage gains.
The world as we now know it, appears to be experiencing a leadership gap, beginning with the lame duck Presidency of George Bush and extending through to the inaction of Germany's Angela Merkel and our own out of touch Cabinet in Ottawa. This vacuum of doingness, yes I know it is not a word, has lately been compounded by other world events from India to Thailand and the Gulf of Aden where a motley group of pirates continues to hold powerful nations and their interests at bay. These are each headline events just as the other major ongoing African wars appear not to be, but pay proper heed to the short term nature of their impact and look forward to a more structured and interactive globe just down the road. Meanwhile everything must be done to prevent any further deterioration in Pakistan-India relations. This, not Iraq, not Iran, not Israel is and always has been the world's most important and most dangerous potential battlefield. That's a lot of..... I's......for one sentence, so let's add another while we are on a roll.... Ignatieff....?
I have no idea what Harper has been thinking, so I must believe that he hasn't been.
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