Good Morning All,
I don't believe there is much left to say about the past year that has not already been either mumbled in one's sleep or screamed from a rooftop, so let's move on to the coming battle for safety and sanity in 2009.
On January 20th the world will finally be rid of George W. Bush and the last remaining puppet masters that have surrounded and managed this forlorn Presidency. There could be no better time for a positive beginning and by all appearances, no better emerging leader than Barack Obama, for it is at these watershed moments in history that such dramatic change is not just necessary but demanded. The words and themes of the seemingly endless election campaign were all about change and as the days and weeks became months, the problems in America grew worse and the global economy which had appeared to be coasting... collapsed, bringing not simply urgency to the fore, but desperation. Now Barack will inherit all of the above, including the cobbled together bandaid solutions of what had become the Paulson/Bernanke administration.
The words to look for in 2009 have already been tossed about and they include infrastructure and trade protection, the former being a positive, while the latter looms as a potential menace. It does not however appear that Obama wishes to revisit the Smoot-Hawley tariff bill of the 1930's, nor does it seem that labour is in any position to make unreasonable demands. Regulation will likely be another hot topic and a rescindment of the Gramm-Leach-Bliley Act coupled with the reinactment of the Glass-Stegall legislation that separated banking and investment banking is likely. Look also for an increased emphasis on international cooperation and a move forward on the DOHA trade talks.
Tax loss selling for Canadians ended last week, today it will end for American tax recipients (as opposed to payers) for there will be little in the way of capital gains entering government coffers this year. With this final lifting of much selling pressure comes the opportunity of a major rally over the coming weeks wherein market indexes are set to put in their best performance of the coming year. I fully expect index gains of 20 to 30 per cent before January ends along with individual stock doubles, triples and more among the more junior issues, particularly within the beaten down tech, biotech and commodity sectors. We should see 1100 to 1200 on the S&P 500 (presently 890) and equivalent gains across the board. This will all happen very quickly and will be over before most of you have mustered up the courage to join in the fray. You can if brave enough, make your entire year in these few weeks.
There are several trillion dollars sitting in 0 interest T Bills that will be put to work during this period and this probablity, combined with the 500 billion dollar energy cut at the pump and furnace, and the aforementioned relief from selling pressure make this prediction a logical one....that and a bit of history.
A happier year to all
Wednesday, December 31, 2008
Tuesday, December 23, 2008
December 22nd Edition
Good Morning All,
As there appears to be a veritable dearth of earth shaking news to report or comment upon at the moment, I will only seek to remind you of the obvious and the understated. This is the beginning of the holiday season and the end of the tax loss selling that accompanies year end. In 28 years of writing this letter in one form or another, I do not believe I have ever either quoted or paraphrased the present Queen of England. Now, as so many others have likely noted, may be the time to do so, as this past year has surely topped all others in recent times as being the true annus horribilus. Yet, as many on the Obama team have stated, "we must not waste this opportunity to bring change" and I would humbly suggest that this national goal of the future President become both that of the world and of ourselves.
Permit me to once again iterate the following; market indexes have traded 40 to 50 % off their highs of either early 2008 in the case of Canada or October 2007 most everywhere else. Commodity prices from metals to energy to food have fallen much farther. The financial, and thereby the currency world is in turmoil while the physical world is less safe than it was eight years ago. So by the numbers, all of the above are definitivly cheaper and therefore better buys than they were 40 or 70 per cent higher. There are of course remaining pitfalls and potential failures and yes, just maybe the expectations lent to the incoming administration are wildly inflated. But just maybe they are not.
I have often thought that 1968 was a pivotal year in 20th century history with the deaths of Robert Kennedy and Martin Luther King being crucial to the rebirth of Richard Nixon. The Nixon effect was a powerful one and it did not end with Watergate because his legacy went on to include, not just the tragedy of Vietnam but the advancement of the careers of Rumsfeld, Cheney and George Bush the Elder without whom there would have been no George the younger. The Ford pardon of tricky Dick also had far more important and long lasting effects than first thought for it essentially led to excesses of the outgoing administration whose members have always felt protected from prosecution or even impeachment by this rule of precedent and during the next few weeks we are likely to see much evidence to support this arguement.
Sometime ago I wrote of an interesting way of regarding the passage of time by comparing times past to the present in terms of their relativity. This is sometimes known as the farther now nearer then phenomena and since everyone is talking and thinking depression, let's do the math. Choosing our pivotal year of 1968, first think of where you were, if you were a were at the time, and subtract 38 years.....ta dah the start of the Great Depression. Now flash forward to our present circumstance and note that we are 40 years from the outset of the Nixon era. You can have fun or fear in doing this with a lot of stuff, but for history buffs such as I, it does seem to bring some perspective to life and to its brevity.
Happy Holidays to all.
As there appears to be a veritable dearth of earth shaking news to report or comment upon at the moment, I will only seek to remind you of the obvious and the understated. This is the beginning of the holiday season and the end of the tax loss selling that accompanies year end. In 28 years of writing this letter in one form or another, I do not believe I have ever either quoted or paraphrased the present Queen of England. Now, as so many others have likely noted, may be the time to do so, as this past year has surely topped all others in recent times as being the true annus horribilus. Yet, as many on the Obama team have stated, "we must not waste this opportunity to bring change" and I would humbly suggest that this national goal of the future President become both that of the world and of ourselves.
Permit me to once again iterate the following; market indexes have traded 40 to 50 % off their highs of either early 2008 in the case of Canada or October 2007 most everywhere else. Commodity prices from metals to energy to food have fallen much farther. The financial, and thereby the currency world is in turmoil while the physical world is less safe than it was eight years ago. So by the numbers, all of the above are definitivly cheaper and therefore better buys than they were 40 or 70 per cent higher. There are of course remaining pitfalls and potential failures and yes, just maybe the expectations lent to the incoming administration are wildly inflated. But just maybe they are not.
I have often thought that 1968 was a pivotal year in 20th century history with the deaths of Robert Kennedy and Martin Luther King being crucial to the rebirth of Richard Nixon. The Nixon effect was a powerful one and it did not end with Watergate because his legacy went on to include, not just the tragedy of Vietnam but the advancement of the careers of Rumsfeld, Cheney and George Bush the Elder without whom there would have been no George the younger. The Ford pardon of tricky Dick also had far more important and long lasting effects than first thought for it essentially led to excesses of the outgoing administration whose members have always felt protected from prosecution or even impeachment by this rule of precedent and during the next few weeks we are likely to see much evidence to support this arguement.
Sometime ago I wrote of an interesting way of regarding the passage of time by comparing times past to the present in terms of their relativity. This is sometimes known as the farther now nearer then phenomena and since everyone is talking and thinking depression, let's do the math. Choosing our pivotal year of 1968, first think of where you were, if you were a were at the time, and subtract 38 years.....ta dah the start of the Great Depression. Now flash forward to our present circumstance and note that we are 40 years from the outset of the Nixon era. You can have fun or fear in doing this with a lot of stuff, but for history buffs such as I, it does seem to bring some perspective to life and to its brevity.
Happy Holidays to all.
Tuesday, December 16, 2008
December 16th Edition
Good Morning All,
The Federal Reserve will make yet another attempt to stimulate the U.S. economy this afternoon through cutting rates to their lowest level on record. This is not bad news, but it has been, and is being, positively discounted in markets as we write. The more important good news in our view is the recent decline in the LIBOR and TED Spread numbers, an indicator of loosening credit markets. Meanwhile the reverberations of one man's scam continue to echo around the worlds of both banking and private investing, much to the devastation of some and to the amazement of many.
Futures and European markets are once again rising in the face of other not so good news, and later today GE will give guidance, news that will catch the momentary interest of mavens far and near. In the end, what will really matter in the post tax loss selling period will be the perception of where the economic numbers will be in quarter three of 2009, this, and the need for money managers to earn their keep is what will drive markets higher over the near term. These guys can only get paid for conserving capital if markets are going down, not when they are rising 10% per month. The herd will once again begin to move and at the first whiff of water they will start a stampede.
Paul Krugman, the recent Nobel recipient, wrote yesterday of Angela Merkel's intransigence in the face of a failing German economy. This is something we have also been concerned with for some time as well, due to the lack of cohesiveness of the European Community in this time of crisis. There are a number of things we don't need to see happen at this juncture and political posturing in front of an election is surely one of them. This is yet another situation that bears watching, as the tipping point is still evident.
The Federal Reserve will make yet another attempt to stimulate the U.S. economy this afternoon through cutting rates to their lowest level on record. This is not bad news, but it has been, and is being, positively discounted in markets as we write. The more important good news in our view is the recent decline in the LIBOR and TED Spread numbers, an indicator of loosening credit markets. Meanwhile the reverberations of one man's scam continue to echo around the worlds of both banking and private investing, much to the devastation of some and to the amazement of many.
Futures and European markets are once again rising in the face of other not so good news, and later today GE will give guidance, news that will catch the momentary interest of mavens far and near. In the end, what will really matter in the post tax loss selling period will be the perception of where the economic numbers will be in quarter three of 2009, this, and the need for money managers to earn their keep is what will drive markets higher over the near term. These guys can only get paid for conserving capital if markets are going down, not when they are rising 10% per month. The herd will once again begin to move and at the first whiff of water they will start a stampede.
Paul Krugman, the recent Nobel recipient, wrote yesterday of Angela Merkel's intransigence in the face of a failing German economy. This is something we have also been concerned with for some time as well, due to the lack of cohesiveness of the European Community in this time of crisis. There are a number of things we don't need to see happen at this juncture and political posturing in front of an election is surely one of them. This is yet another situation that bears watching, as the tipping point is still evident.
Monday, December 15, 2008
December 15th Edition
Good Morning All,
World markets are in the process of digesting last week's two major news events as it now appears that the probable auto bailout is outweighing the 'Madoff 50 billion dollar scandal". In the end this latter occurrence may well prove to be of less importance than the former even though the amount at stake here is three times as large. The Madoff affair has once again proven that even the world's largest banks (who appear to have been among the biggest victims) have no business handling huge pools of investment capital; just maybe they ought to stick to what they do best, lending and charging usurious transaction fees.
Challenging the copious number of possible winners in this year of the tragic comedy is the George Bush appearance in Iraq where he was not welcomed with open arms but with freshly unshod feet. This shoe throwing is apparently among the greatest of Islamic insults and strangely front runs the none too soon end to the American occupation of Iraq. After what may be a final cost of one or three trillion dollars (depends on what you include) this inane exercise in out of mind hubris will have been responsible for the displacement of 4.5 million Iraqis and the deaths of several hundred thousand others. It will have taken the lives of over 4000 "coalition" troops and permanently maimed many more. Remember forever that this deed was done in the wake of 9/11 and under the ostensible rationale of a search for "weapons of mass destruction". Remember also how quickly the lessons of Vietnam were sacrificed on the altar of self serving ideology. And while you are once again mulling all this crap, think about how 19 of the 21 September terrorists were Saudis, and that none were Iraqis or Afghanis. Remember as well the next time you hear a CNBC or Fox News tirade that the United Nations inspectors were right and that U.S. intelligence knew it. All this to replace a Sunni dictator with a Shia strongman who may become......?
The Federal Reserve meets today and tomorrow but it doesn't really matter, the real key to ending the deflationary fears are reflationary policies. So far the banks have all the money they need and they are keeping it, the thought most current among those in the investment community is that the neo Keynsians in the incoming administration will force the banks to lend the wads of fiat currency presently in their possession. This will spark an economic recovery but it will also lead to much higher inflation as the year goes on. We have lately seen evidence of this in the dollar weakness/gold strength trade, one that is likely to continue gaining attention. Hedge in precious metal or precious metal stocks for the coming year.
And finally for today the good news is that markets continue to fare reasonably well in the face of really awful news. LIBOR is well below two as is the TED spread. This is telling us that credit markets are finally beginning to loosen up. This, combined with a declining VIX or volatility index, is of major importance.
And finally, finally for all the Barack fans out there....Google Corrigan Brothers Obama and tune in to their Irish ditty;"there's no one as Irish as Barack Obama"
World markets are in the process of digesting last week's two major news events as it now appears that the probable auto bailout is outweighing the 'Madoff 50 billion dollar scandal". In the end this latter occurrence may well prove to be of less importance than the former even though the amount at stake here is three times as large. The Madoff affair has once again proven that even the world's largest banks (who appear to have been among the biggest victims) have no business handling huge pools of investment capital; just maybe they ought to stick to what they do best, lending and charging usurious transaction fees.
Challenging the copious number of possible winners in this year of the tragic comedy is the George Bush appearance in Iraq where he was not welcomed with open arms but with freshly unshod feet. This shoe throwing is apparently among the greatest of Islamic insults and strangely front runs the none too soon end to the American occupation of Iraq. After what may be a final cost of one or three trillion dollars (depends on what you include) this inane exercise in out of mind hubris will have been responsible for the displacement of 4.5 million Iraqis and the deaths of several hundred thousand others. It will have taken the lives of over 4000 "coalition" troops and permanently maimed many more. Remember forever that this deed was done in the wake of 9/11 and under the ostensible rationale of a search for "weapons of mass destruction". Remember also how quickly the lessons of Vietnam were sacrificed on the altar of self serving ideology. And while you are once again mulling all this crap, think about how 19 of the 21 September terrorists were Saudis, and that none were Iraqis or Afghanis. Remember as well the next time you hear a CNBC or Fox News tirade that the United Nations inspectors were right and that U.S. intelligence knew it. All this to replace a Sunni dictator with a Shia strongman who may become......?
The Federal Reserve meets today and tomorrow but it doesn't really matter, the real key to ending the deflationary fears are reflationary policies. So far the banks have all the money they need and they are keeping it, the thought most current among those in the investment community is that the neo Keynsians in the incoming administration will force the banks to lend the wads of fiat currency presently in their possession. This will spark an economic recovery but it will also lead to much higher inflation as the year goes on. We have lately seen evidence of this in the dollar weakness/gold strength trade, one that is likely to continue gaining attention. Hedge in precious metal or precious metal stocks for the coming year.
And finally for today the good news is that markets continue to fare reasonably well in the face of really awful news. LIBOR is well below two as is the TED spread. This is telling us that credit markets are finally beginning to loosen up. This, combined with a declining VIX or volatility index, is of major importance.
And finally, finally for all the Barack fans out there....Google Corrigan Brothers Obama and tune in to their Irish ditty;"there's no one as Irish as Barack Obama"
Friday, December 12, 2008
December 12th Edition
Good Morning All,
The presumptive failure of the Senate's ability to pass auto bailout legislation led U.S. markets lower yesterday and last night's resolution of the fact has negatively impacted world markets during our overnight trading hours. This failure, or victory for those who opposed the funding, has also diminished the U.S. dollar and had a lowering effect on oil prices despite the OPEC production cuts and the technicals that were leading that commodity trade higher.
Whether you are for or against the auto bailout it is interesting to place the dollar amount in perspective and link it to the short and long term job risks. The alternative bankruptcy option appears to be the popular solution for many business and economic observers, none of whom are auto suppliers who would be left holding the debt. Okay so let's see; the U.S. government has been spending between 10 and 15 billion per month on the inane war efforts in Iraq and Afghanistan while AIG and CitiGroup have already been in receipt of amounts 10 times as large as the initial 14 billion at stake here and they are still paying bonuses to senior management. The list of banks and bankers goes on and on and on.
So who is to blame here? Well the most popular whipping boy among opponents appears to be, surprise, the workers themselves and the UAW leadership. And of course they share the blame, along with the American auto and other executives who are (unlike their Japanese counterparts) paid in excess of 10 times the average labourer's wage. So the difference as best I can figure is about 14$ per hour based on salary and benefits. It does not of course take into account the tax and other concessions given to foreign car makers by Tennessee or Alabama or wherever. It should also be noted that the UAW has not said no to negotiating downward, it has simply refused to sign a blank cheque.
The ball is now in George Bush's court as the Whitehouse can, if it wishes, order the money up from the TARP which is still sitting on the much of its unspent treasury funds. The Republicans have now essentially conceded the rust belt states for the foreseeable future but the mostly abandoned outgoing President still has his legacy to worry about. Just think how far a little love will go for this guy no matter what the source. Detroit can count on these funds, maybe before you read this.
Further to Wall Street's problems has been the disclosure of former NASDAQ Chairman and Advisory Broker owner Bernard Madoff's 50 billion dollar Ponzi scheme wherein he appears to have blown a lot of very rich people's money.As has been said about a lot of this year's goings on "You couldn't make this stuff up".
Look for a market recovery later if Bush comes through.
Obama Worked to Distance Self From Blagojevich Early On
By Eli SaslowWashington Post Staff WriterFriday, December 12, 2008; A01
Like every other politician in Illinois, Gov. Rod Blagojevich waited for Barack Obama's call this summer. He told colleagues that he expected a speaking role at the 2008 Democratic National Convention, a nice bit of payback for being the first governor to endorse the senator from Illinois in his campaign for president. By showing off a connection to Obama in Denver, Blagojevich hoped to repair his own diminished reputation.
Obama's campaign made speaking offers to the Illinois treasurer, the comptroller, the attorney general and a Chicago city clerk. Sen. Richard J. Durbin (Ill.) was asked to introduce Obama on the convention's final night; Rep. Jesse L. Jackson Jr. (Ill.) was told he would speak on television during prime time. Finally, fed up and embarrassed that he still had heard nothing, Blagojevich joked to a crowd at the Illinois State Fair that, yes, he also had been asked to speak -- at 4 a.m., in a Denver area men's bathroom.
Long before federal prosecutors charged Blagojevich with bribery this week, Obama had worked to distance himself from his home-state governor. The two men have not talked for more than a year, colleagues said, save for a requisite handshake at a funeral or public event. Blagojevich rarely campaigned for Obama and never stumped with him. The governor arrived late at the Democratic convention and skipped Obama's victory-night celebration at Chicago's Grant Park.
Even though they often occupied the same political space -- two young lawyers in Chicago, two power brokers in Springfield, two ambitious men who coveted the presidency -- Obama and Blagojevich never warmed to each other, Illinois politicians said. They sometimes used each other to propel their own careers but privately acted like rivals. Blagojevich considered Obama naive and pretentious and dismissed his success as "good luck." Obama disparaged Blagojevich for what he viewed as his combativeness, his disorganization and his habit of arriving at official events half an hour late.
Under different circumstances, friends said, Obama might have derived some satisfaction from seeing Blagojevich handcuffed for allegedly trying to sell off Obama's vacated Senate seat to the highest bidder. But, only six weeks after Obama won the presidency by casting himself as a reformer, the Blagojevich scandal is a jarring reminder that Obama's political origins are in a city and state long tainted by corruption.
Blagojevich was elected in 2002 as a reform governor, but he has faced a series of investigations and charges of ethical irregularities ever since.
"Obama saw this coming, and he was very cautious about not having dealings with the governor for quite some time," said Abner Mikva, a former congressman and appeals court judge who was Obama's political mentor in Chicago. "The governor was perhaps the only American public officeholder who didn't speak at the convention, and that wasn't by accident. He's politically poisonous. You don't get through Chicago like Barack Obama did unless you know how to avoid people like that."
But Obama and Blagojevich shared pieces of the Chicago political network, which is why this has been an uncomfortable week for Obama's presidential transition team. Senior adviser David Axelrod once advised Blagojevich. Antoin "Tony" Rezko, a developer who was convicted in June of fraud and money laundering, raised money for both men. Robert Blackwell Jr., a longtime Obama friend, served on Blagojevich's gubernatorial transition team. Blagojevich appointed one of Obama's closest confidants, Eric Whitaker, as director of the Illinois Department of Public Health.
The president-elect's connection to Blagojevich is emblematic of his political rise in Chicago. Obama had contact with corruption, but rarely firsthand. He relied on the establishment when he needed it, but he maintained enough distance to cast himself as an outsider.
"Few people I've ever known have as good a sense about who might end up getting you in trouble," said Denny Jacobs, a retired Illinois politician from East Moline who befriended Obama when they both served in the state Senate. "It's like a sixth sense. Chicago's a mess, and he was surrounded by it. But he knew the people that could drag you down and tarnish your image."
Even though they both began their careers in Chicago, Blagojevich and Obama operated on distinct tracks. Blagojevich, the son of a steelworker who was born in Serbia, grew up on the city's predominantly white North Side and rode a pair of buses with his mother to his first Chicago Cubs game. He married the daughter of a gritty, deal-making alderman and entered politics as an unapologetic product -- and representative -- of the Chicago Democratic machine. He drew support from the city's white middle class and was elected to the state legislature in 1992.
Obama, a transplant from Hawaii and New York City, moved into the progressive, integrated Hyde Park neighborhood and attended White Sox games on the South Side. In his campaign for state Senate, he cast himself as the righteous alternative to what he called "old-school politics" and pitched his case to a coalition of African Americans and Hyde Park's liberal upper class.
Obama and Blagojevich rarely interacted until Blagojevich ran for governor. Obama told his friends in Springfield that he was unimpressed by Blagojevich's résumé, and he tried to lobby his friend Durbin to enter the race before deciding to support Roland Burris in the Democratic primary.
"When Blagojevich beat me, I told Barack to get on board with him," Burris said. "It was kind of like swallowing his pride a little bit, because he didn't really see that they had anything in common."
About all Blagojevich and Obama shared was searing ambition, which is what occasionally brought them together. Obama recognized that a Democratic governor could help him pass legislation and build his résumé in anticipation of a U.S. Senate run, so he helped Blagojevich's campaign as an informal adviser. Once Blagojevich was elected, he and Obama formed an awkward, arranged marriage: Obama passed a steady succession of legislation and built his reputation as a power player in Springfield; Blagojevich signed the bills and took the center seat at celebratory news conferences.
It worked just fine, Springfield politicians said, until Obama started to eclipse Blagojevich as the rising star in Illinois politics. Blagojevich never endorsed Obama in his U.S. Senate bid in 2004, and he expressed a preference for two other Democratic candidates. On the campaign trail, Obama sometimes made a point to highlight his distance from Blagojevich and the rest of the administration. "Nobody sent me," he often told his crowds.
"The governor didn't offer his support, and to be honest, we didn't really ask for it," said Jim Cauley, a Kentucky native whom Obama hired to run his U.S. Senate campaign. "We weren't going to the old hall or chasing the county chairs. We wanted to show we weren't a part of that world."
While Obama prepared to deliver the keynote address at the 2004 Democratic National Convention, a speech that would launch him to stardom, Blagojevich was back in Springfield watching his own reputation dissolve. After a poor first term, he fought over the state budget with Democratic leaders before flying to Boston and arriving an hour late at a party held in his honor. The event was sparsely attended. Obama made only a brief appearance.
"We have one salvation, and that is Barack," Jacobs, the state senator, said at the time. "It probably knocks Blagojevich down a peg from the leadership chart."
Not long thereafter, Obama started cultivating Illinois leadership of his own. He mentored a basketball buddy, Alexi Giannoulias, and supported his run for state treasurer. He befriended Attorney General Lisa Madigan and Comptroller Daniel W. Hynes. On one night in August, Obama boosted the gubernatorial hopes of all three by inviting each to speak during the opening night of the Democratic convention. Blagojevich watched from his seat.
As Obama went on to win the presidency and his rift with the Illinois governor crystallized, Blagojevich grew increasingly desperate. In phone calls reported in the criminal complaint, he pined for a spot in the Obama administration. Maybe, the governor reasoned, he could let Obama pick his own Senate successor in exchange for a job as an ambassador or as secretary of health and human services. Or maybe Obama could set up Blagojevich's wife, Patricia, with a cushy, high-paid position on a corporate board.
But Blagojevich's solicitations went nowhere, and it became clear that Obama had abandoned him for good.
"They're not willing to give me anything but appreciation," the governor told his chief of staff, John Harris. "[Expletive] them."
Staff writer Peter Slevin in Chicago contributed to this report.
The presumptive failure of the Senate's ability to pass auto bailout legislation led U.S. markets lower yesterday and last night's resolution of the fact has negatively impacted world markets during our overnight trading hours. This failure, or victory for those who opposed the funding, has also diminished the U.S. dollar and had a lowering effect on oil prices despite the OPEC production cuts and the technicals that were leading that commodity trade higher.
Whether you are for or against the auto bailout it is interesting to place the dollar amount in perspective and link it to the short and long term job risks. The alternative bankruptcy option appears to be the popular solution for many business and economic observers, none of whom are auto suppliers who would be left holding the debt. Okay so let's see; the U.S. government has been spending between 10 and 15 billion per month on the inane war efforts in Iraq and Afghanistan while AIG and CitiGroup have already been in receipt of amounts 10 times as large as the initial 14 billion at stake here and they are still paying bonuses to senior management. The list of banks and bankers goes on and on and on.
So who is to blame here? Well the most popular whipping boy among opponents appears to be, surprise, the workers themselves and the UAW leadership. And of course they share the blame, along with the American auto and other executives who are (unlike their Japanese counterparts) paid in excess of 10 times the average labourer's wage. So the difference as best I can figure is about 14$ per hour based on salary and benefits. It does not of course take into account the tax and other concessions given to foreign car makers by Tennessee or Alabama or wherever. It should also be noted that the UAW has not said no to negotiating downward, it has simply refused to sign a blank cheque.
The ball is now in George Bush's court as the Whitehouse can, if it wishes, order the money up from the TARP which is still sitting on the much of its unspent treasury funds. The Republicans have now essentially conceded the rust belt states for the foreseeable future but the mostly abandoned outgoing President still has his legacy to worry about. Just think how far a little love will go for this guy no matter what the source. Detroit can count on these funds, maybe before you read this.
Further to Wall Street's problems has been the disclosure of former NASDAQ Chairman and Advisory Broker owner Bernard Madoff's 50 billion dollar Ponzi scheme wherein he appears to have blown a lot of very rich people's money.As has been said about a lot of this year's goings on "You couldn't make this stuff up".
Look for a market recovery later if Bush comes through.
Obama Worked to Distance Self From Blagojevich Early On
By Eli SaslowWashington Post Staff WriterFriday, December 12, 2008; A01
Like every other politician in Illinois, Gov. Rod Blagojevich waited for Barack Obama's call this summer. He told colleagues that he expected a speaking role at the 2008 Democratic National Convention, a nice bit of payback for being the first governor to endorse the senator from Illinois in his campaign for president. By showing off a connection to Obama in Denver, Blagojevich hoped to repair his own diminished reputation.
Obama's campaign made speaking offers to the Illinois treasurer, the comptroller, the attorney general and a Chicago city clerk. Sen. Richard J. Durbin (Ill.) was asked to introduce Obama on the convention's final night; Rep. Jesse L. Jackson Jr. (Ill.) was told he would speak on television during prime time. Finally, fed up and embarrassed that he still had heard nothing, Blagojevich joked to a crowd at the Illinois State Fair that, yes, he also had been asked to speak -- at 4 a.m., in a Denver area men's bathroom.
Long before federal prosecutors charged Blagojevich with bribery this week, Obama had worked to distance himself from his home-state governor. The two men have not talked for more than a year, colleagues said, save for a requisite handshake at a funeral or public event. Blagojevich rarely campaigned for Obama and never stumped with him. The governor arrived late at the Democratic convention and skipped Obama's victory-night celebration at Chicago's Grant Park.
Even though they often occupied the same political space -- two young lawyers in Chicago, two power brokers in Springfield, two ambitious men who coveted the presidency -- Obama and Blagojevich never warmed to each other, Illinois politicians said. They sometimes used each other to propel their own careers but privately acted like rivals. Blagojevich considered Obama naive and pretentious and dismissed his success as "good luck." Obama disparaged Blagojevich for what he viewed as his combativeness, his disorganization and his habit of arriving at official events half an hour late.
Under different circumstances, friends said, Obama might have derived some satisfaction from seeing Blagojevich handcuffed for allegedly trying to sell off Obama's vacated Senate seat to the highest bidder. But, only six weeks after Obama won the presidency by casting himself as a reformer, the Blagojevich scandal is a jarring reminder that Obama's political origins are in a city and state long tainted by corruption.
Blagojevich was elected in 2002 as a reform governor, but he has faced a series of investigations and charges of ethical irregularities ever since.
"Obama saw this coming, and he was very cautious about not having dealings with the governor for quite some time," said Abner Mikva, a former congressman and appeals court judge who was Obama's political mentor in Chicago. "The governor was perhaps the only American public officeholder who didn't speak at the convention, and that wasn't by accident. He's politically poisonous. You don't get through Chicago like Barack Obama did unless you know how to avoid people like that."
But Obama and Blagojevich shared pieces of the Chicago political network, which is why this has been an uncomfortable week for Obama's presidential transition team. Senior adviser David Axelrod once advised Blagojevich. Antoin "Tony" Rezko, a developer who was convicted in June of fraud and money laundering, raised money for both men. Robert Blackwell Jr., a longtime Obama friend, served on Blagojevich's gubernatorial transition team. Blagojevich appointed one of Obama's closest confidants, Eric Whitaker, as director of the Illinois Department of Public Health.
The president-elect's connection to Blagojevich is emblematic of his political rise in Chicago. Obama had contact with corruption, but rarely firsthand. He relied on the establishment when he needed it, but he maintained enough distance to cast himself as an outsider.
"Few people I've ever known have as good a sense about who might end up getting you in trouble," said Denny Jacobs, a retired Illinois politician from East Moline who befriended Obama when they both served in the state Senate. "It's like a sixth sense. Chicago's a mess, and he was surrounded by it. But he knew the people that could drag you down and tarnish your image."
Even though they both began their careers in Chicago, Blagojevich and Obama operated on distinct tracks. Blagojevich, the son of a steelworker who was born in Serbia, grew up on the city's predominantly white North Side and rode a pair of buses with his mother to his first Chicago Cubs game. He married the daughter of a gritty, deal-making alderman and entered politics as an unapologetic product -- and representative -- of the Chicago Democratic machine. He drew support from the city's white middle class and was elected to the state legislature in 1992.
Obama, a transplant from Hawaii and New York City, moved into the progressive, integrated Hyde Park neighborhood and attended White Sox games on the South Side. In his campaign for state Senate, he cast himself as the righteous alternative to what he called "old-school politics" and pitched his case to a coalition of African Americans and Hyde Park's liberal upper class.
Obama and Blagojevich rarely interacted until Blagojevich ran for governor. Obama told his friends in Springfield that he was unimpressed by Blagojevich's résumé, and he tried to lobby his friend Durbin to enter the race before deciding to support Roland Burris in the Democratic primary.
"When Blagojevich beat me, I told Barack to get on board with him," Burris said. "It was kind of like swallowing his pride a little bit, because he didn't really see that they had anything in common."
About all Blagojevich and Obama shared was searing ambition, which is what occasionally brought them together. Obama recognized that a Democratic governor could help him pass legislation and build his résumé in anticipation of a U.S. Senate run, so he helped Blagojevich's campaign as an informal adviser. Once Blagojevich was elected, he and Obama formed an awkward, arranged marriage: Obama passed a steady succession of legislation and built his reputation as a power player in Springfield; Blagojevich signed the bills and took the center seat at celebratory news conferences.
It worked just fine, Springfield politicians said, until Obama started to eclipse Blagojevich as the rising star in Illinois politics. Blagojevich never endorsed Obama in his U.S. Senate bid in 2004, and he expressed a preference for two other Democratic candidates. On the campaign trail, Obama sometimes made a point to highlight his distance from Blagojevich and the rest of the administration. "Nobody sent me," he often told his crowds.
"The governor didn't offer his support, and to be honest, we didn't really ask for it," said Jim Cauley, a Kentucky native whom Obama hired to run his U.S. Senate campaign. "We weren't going to the old hall or chasing the county chairs. We wanted to show we weren't a part of that world."
While Obama prepared to deliver the keynote address at the 2004 Democratic National Convention, a speech that would launch him to stardom, Blagojevich was back in Springfield watching his own reputation dissolve. After a poor first term, he fought over the state budget with Democratic leaders before flying to Boston and arriving an hour late at a party held in his honor. The event was sparsely attended. Obama made only a brief appearance.
"We have one salvation, and that is Barack," Jacobs, the state senator, said at the time. "It probably knocks Blagojevich down a peg from the leadership chart."
Not long thereafter, Obama started cultivating Illinois leadership of his own. He mentored a basketball buddy, Alexi Giannoulias, and supported his run for state treasurer. He befriended Attorney General Lisa Madigan and Comptroller Daniel W. Hynes. On one night in August, Obama boosted the gubernatorial hopes of all three by inviting each to speak during the opening night of the Democratic convention. Blagojevich watched from his seat.
As Obama went on to win the presidency and his rift with the Illinois governor crystallized, Blagojevich grew increasingly desperate. In phone calls reported in the criminal complaint, he pined for a spot in the Obama administration. Maybe, the governor reasoned, he could let Obama pick his own Senate successor in exchange for a job as an ambassador or as secretary of health and human services. Or maybe Obama could set up Blagojevich's wife, Patricia, with a cushy, high-paid position on a corporate board.
But Blagojevich's solicitations went nowhere, and it became clear that Obama had abandoned him for good.
"They're not willing to give me anything but appreciation," the governor told his chief of staff, John Harris. "[Expletive] them."
Staff writer Peter Slevin in Chicago contributed to this report.
Thursday, December 11, 2008
December 11th Edition
Good Morning All,
World markets are mixed going into this morning's opening while oil is recovering and gold is stronger for yet another day. Despite today's spate of economic news having mostly met forecast expectations, futures have trended lower and will likely erase yesterday's modest New York gains in the early going. The indexes however do not always reveal the complete story as it has been interesting to note the recent recovery in some of the underlying sectors, particularly among techs and some commodity based stocks such as fertilizers. This bottoming process appears to be ongoing despite the forever bad news and the seasonal tax loss selling that continues to pervade market sentiment.
One positive sign has begun to emerge in the investment banking area as several successful stock issues have cleared in the past few weeks. The next important step in this area will be the reemergence of mergers and acquisitions, something that will tell us not only how cheap some companies are but it will provide us with a monitor on how healthy the credit markets will have become.
There is in life a large difference between confidence and arrogance, just as there is between wisdom and intelligence. When the former are present the next best attributes of great leadership are experience and good judgement. We are about to find out just how crucial these factors are because for eight long years the world has survived without them. Let us hope that we have now come to the end of the era of hubris and ideological rule before we will have run out of history.
World markets are mixed going into this morning's opening while oil is recovering and gold is stronger for yet another day. Despite today's spate of economic news having mostly met forecast expectations, futures have trended lower and will likely erase yesterday's modest New York gains in the early going. The indexes however do not always reveal the complete story as it has been interesting to note the recent recovery in some of the underlying sectors, particularly among techs and some commodity based stocks such as fertilizers. This bottoming process appears to be ongoing despite the forever bad news and the seasonal tax loss selling that continues to pervade market sentiment.
One positive sign has begun to emerge in the investment banking area as several successful stock issues have cleared in the past few weeks. The next important step in this area will be the reemergence of mergers and acquisitions, something that will tell us not only how cheap some companies are but it will provide us with a monitor on how healthy the credit markets will have become.
There is in life a large difference between confidence and arrogance, just as there is between wisdom and intelligence. When the former are present the next best attributes of great leadership are experience and good judgement. We are about to find out just how crucial these factors are because for eight long years the world has survived without them. Let us hope that we have now come to the end of the era of hubris and ideological rule before we will have run out of history.
Wednesday, December 10, 2008
December 10th Edition
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.
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.
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.
Friday, November 28, 2008
November 28th Editon
Good Morning All,
A recent letter to the New York Times once again reminded me of the simplicities inherent in the business cycle and how little attention most investors pay to its repeating truisms. Sparsely put, the cycle consists of five basic conditions that last varying lengths of time over a peak-to-trough period ranging from five to seven years; prosperity, crisis, liquidation, recession/depression and recovery. What sticks out here are the obvious questions of where are we now and which will we experience....recession or depression? My answer to this trick or tricky argument is that we have at this point witnessed the bulk of part three having seen part one disappear sometime ago, and that due to the fiat money flooding markets, the world will only suffer varying degrees of recession. Recovery in the economy may still be several quarters away but as so often stated here, markets will rise from the liquidation stage long before the GDP reflects a recovery.
Today is known as black Friday in America's retail business and for those of you unfamiliar with the term it means that strong sales take these enterprises from the red to the black for the year. Weak sales....well you can figure that no one expects great numbers in this area.
Worries in Europe and elsewhere have now turned from inflation to deflation making one wonder about the merits of economic or any other kind of forecasting including this writer's. So on the off chance that you remain skeptical of the latter's views, reread paragraph one and judge the state of the world for yourself by paying close attention to the things you know most about and then applying that knowledge to your thoughts on the future.
A recent letter to the New York Times once again reminded me of the simplicities inherent in the business cycle and how little attention most investors pay to its repeating truisms. Sparsely put, the cycle consists of five basic conditions that last varying lengths of time over a peak-to-trough period ranging from five to seven years; prosperity, crisis, liquidation, recession/depression and recovery. What sticks out here are the obvious questions of where are we now and which will we experience....recession or depression? My answer to this trick or tricky argument is that we have at this point witnessed the bulk of part three having seen part one disappear sometime ago, and that due to the fiat money flooding markets, the world will only suffer varying degrees of recession. Recovery in the economy may still be several quarters away but as so often stated here, markets will rise from the liquidation stage long before the GDP reflects a recovery.
Today is known as black Friday in America's retail business and for those of you unfamiliar with the term it means that strong sales take these enterprises from the red to the black for the year. Weak sales....well you can figure that no one expects great numbers in this area.
Worries in Europe and elsewhere have now turned from inflation to deflation making one wonder about the merits of economic or any other kind of forecasting including this writer's. So on the off chance that you remain skeptical of the latter's views, reread paragraph one and judge the state of the world for yourself by paying close attention to the things you know most about and then applying that knowledge to your thoughts on the future.
Wednesday, November 26, 2008
November 26th Edition
Good Morning All,
This morning will effectively bring an end to the trading week as Americans begin to board planes and pack their cars for the annual Thanksgiving fest, thereby beginning a long weekend that is likely to include a different sort of dinner table conversation than that of recent years. To finish on a bright note, we have now had the markets up for three days running, including a two day record performance on Friday and Monday. Would it be so that a bottom has been made and that only good things lie ahead....we may only hope.
The Barack appointments will continue to be announced on through today with most of the important stuff likely to have been concluded by next week. It now appears that Robert Gates will be retained as Defence Secretary and this is seen as both a smart move and a conciliatory gesture by most observors although we are now beginning to see and hear a considerable amount of blowback from the left, particularly among those who want nothing short of a revolution. Gee whiz, I don't think that at my age I would go along with that solution but I would not mind seeing a street of lamp posts decorated with the likes of Rove, Cheney and the bank execs who have recently been seen leaving their bankrupt enterprises with large seven figure cheques in hand.....or as Richard Nixon aide John Ehrlichman once imagined the fate of his presumed enemies.....twisting in the wind.
And finally, after watching the Obama press conferences this week I was truly thankful that it was not John McCain and Sarah trailer trash that were hosting them.....wow, just think about that for a moment...okay wake up.
This morning will effectively bring an end to the trading week as Americans begin to board planes and pack their cars for the annual Thanksgiving fest, thereby beginning a long weekend that is likely to include a different sort of dinner table conversation than that of recent years. To finish on a bright note, we have now had the markets up for three days running, including a two day record performance on Friday and Monday. Would it be so that a bottom has been made and that only good things lie ahead....we may only hope.
The Barack appointments will continue to be announced on through today with most of the important stuff likely to have been concluded by next week. It now appears that Robert Gates will be retained as Defence Secretary and this is seen as both a smart move and a conciliatory gesture by most observors although we are now beginning to see and hear a considerable amount of blowback from the left, particularly among those who want nothing short of a revolution. Gee whiz, I don't think that at my age I would go along with that solution but I would not mind seeing a street of lamp posts decorated with the likes of Rove, Cheney and the bank execs who have recently been seen leaving their bankrupt enterprises with large seven figure cheques in hand.....or as Richard Nixon aide John Ehrlichman once imagined the fate of his presumed enemies.....twisting in the wind.
And finally, after watching the Obama press conferences this week I was truly thankful that it was not John McCain and Sarah trailer trash that were hosting them.....wow, just think about that for a moment...okay wake up.
November 25th Edition
Good Morning All,
World markets have taken kindly to the Fed's latest bailout news and to the announcements surrounding the incoming administration's economic team. More news on this and other Barack moves will be forthcoming over the next ten days or so, including the Hillary adoption.
Thanksgiving Day in the U.S. will dramatically shorten this important trading week, but maybe that's a good thing. A better thing may be a "no letter from Bill" Thursday and barring a compelling reason on Friday, as it too may draw a blank from this quarter.
It is interesting to note that the S&P 500 closed back up at its former support level of 850. According to David Nichols of the Fractal Report we should be looking for a monthly close over 944 if this latest move is to prove lasting. I have been calling for a recovery of as much as 50% of the index losses by Inauguration Day on January 20th for some time now and continue to maintain this positive outlook. History shows us how recoveries from major bear markets are their most swift during the early stages. The harder the fall the bigger the bounce so punters ought to take a good look the "tech notes" I sent yesterday. The same theory applies to groups of beaten down stocks in Canada, with the stated caveat that spreading the risk makes more sense than being right on the market or even the sector but wrong about your individual choice; ergo the ETF's so often discussed here. To wit, the Russell 400 Mid Cap, symbol MVV in the U.S. has risen from its new low of 15 made Friday morning to a 20.12 close last night. The 52 week high was over 90 so you can see that this game is not over.
The word I have most often used to describe the Obama team is adult, to this we might add the term professional as the structure of operations being created here appears so relatively sane that aside from being reassuring it is almost shocking to think of what the world has survived these last 8 years. So much so that the ever sexy George Bush now appears to have the most popular ass in America as nearly everyone wants to see the last of it as he boards his last helicopter ride from the WhiteHouse lawn.
World markets have taken kindly to the Fed's latest bailout news and to the announcements surrounding the incoming administration's economic team. More news on this and other Barack moves will be forthcoming over the next ten days or so, including the Hillary adoption.
Thanksgiving Day in the U.S. will dramatically shorten this important trading week, but maybe that's a good thing. A better thing may be a "no letter from Bill" Thursday and barring a compelling reason on Friday, as it too may draw a blank from this quarter.
It is interesting to note that the S&P 500 closed back up at its former support level of 850. According to David Nichols of the Fractal Report we should be looking for a monthly close over 944 if this latest move is to prove lasting. I have been calling for a recovery of as much as 50% of the index losses by Inauguration Day on January 20th for some time now and continue to maintain this positive outlook. History shows us how recoveries from major bear markets are their most swift during the early stages. The harder the fall the bigger the bounce so punters ought to take a good look the "tech notes" I sent yesterday. The same theory applies to groups of beaten down stocks in Canada, with the stated caveat that spreading the risk makes more sense than being right on the market or even the sector but wrong about your individual choice; ergo the ETF's so often discussed here. To wit, the Russell 400 Mid Cap, symbol MVV in the U.S. has risen from its new low of 15 made Friday morning to a 20.12 close last night. The 52 week high was over 90 so you can see that this game is not over.
The word I have most often used to describe the Obama team is adult, to this we might add the term professional as the structure of operations being created here appears so relatively sane that aside from being reassuring it is almost shocking to think of what the world has survived these last 8 years. So much so that the ever sexy George Bush now appears to have the most popular ass in America as nearly everyone wants to see the last of it as he boards his last helicopter ride from the WhiteHouse lawn.
Monday, November 24, 2008
November 24th Edition
Good Morning All,
Friday's late day rally was obviously keyed off the Obama announcement of Tim Geithner as Treasury Secretary, this is a popular choice on both sides of the aisle and around the business world where support for the incoming President is growing exponentially...well seems like anyway. There will be some additional follow-through this morning during the leadup to Barack's noon hour press conference at which the formal "economic team" statements will come to light. So far, so good on the Obama front as slow and steady seems to be winning the race for public support reminding everyone in concrete terms of just how silly the present American system really is. The succession rules need to be changed before the mid term elections in 2010 and ten days post voting day seems to be a reasonable time allowance for the newly elected to take charge.
Most of us have either worked for or with incompetent managers during our careers and been observant of the failings of others in public life or in competing firms. One of the most consisitent measures I have noted over the years is found in the inverse relationship between various managers' confidence levels and the collection of toadies gathered around them. We know that George Bush was not the "decider" he thought he was and that had it not been for Ronald Reagan having chosen his father for the Vice Presidency in 1980, he would have remained an unsuccessful faux oilman. As history has already shown us, it was the Cheney, Rove, Rummie, Wolfowitz and oil business interests that were the real controllers of U.S. policy and that most everyone else were simply courtesans and sycophants with a similar ideological bent.
This Obama guy is quite visibly different; his no-nonsense approach to problems and appointments represents not just a refreshing change but a recognizable remaking of government business based on competence and pragmatism...a polar opposite of what has most recently gone before. Let us hope that this adult approach continues for the long life of his tenure because the world is sorely in need of it.
Friday's late day rally was obviously keyed off the Obama announcement of Tim Geithner as Treasury Secretary, this is a popular choice on both sides of the aisle and around the business world where support for the incoming President is growing exponentially...well seems like anyway. There will be some additional follow-through this morning during the leadup to Barack's noon hour press conference at which the formal "economic team" statements will come to light. So far, so good on the Obama front as slow and steady seems to be winning the race for public support reminding everyone in concrete terms of just how silly the present American system really is. The succession rules need to be changed before the mid term elections in 2010 and ten days post voting day seems to be a reasonable time allowance for the newly elected to take charge.
Most of us have either worked for or with incompetent managers during our careers and been observant of the failings of others in public life or in competing firms. One of the most consisitent measures I have noted over the years is found in the inverse relationship between various managers' confidence levels and the collection of toadies gathered around them. We know that George Bush was not the "decider" he thought he was and that had it not been for Ronald Reagan having chosen his father for the Vice Presidency in 1980, he would have remained an unsuccessful faux oilman. As history has already shown us, it was the Cheney, Rove, Rummie, Wolfowitz and oil business interests that were the real controllers of U.S. policy and that most everyone else were simply courtesans and sycophants with a similar ideological bent.
This Obama guy is quite visibly different; his no-nonsense approach to problems and appointments represents not just a refreshing change but a recognizable remaking of government business based on competence and pragmatism...a polar opposite of what has most recently gone before. Let us hope that this adult approach continues for the long life of his tenure because the world is sorely in need of it.
Friday, November 21, 2008
November 21st Edition
Good Morning All,
By the look of overnight numbers in world markets and this morning's strong futures it would appear that I am not alone in thinking that yesterday's declines in stock prices were just plain silly. Yes I am aware of all the bad news and the problems that continue to beset the unaptly named "big three" auto companies, but I am also confident that a solution will be forthcoming and the result of these pending actions will be less onerous on the workforce, the companies and their suppliers than most are already discounting. I am not suggesting a buy on either GM or Ford here as there are so many less complicated giveaways too numerous to mention offered across the board. Time to act on the tax loss switches I mentioned in a previous letter as you can go back three years to recoup gains paid, and forward forever.
Yesterday's 700 point plus decline on the TSX does have a silver lining as it now means that 10 more days of such absurdity would take the market to zero and if anyone seriously thinks that is a likelihood, it is time to visit a gun shop.The oil and gas sector, once the darling of mutual and hedge fund investors seems to have discounted a complete abandonment of autumobiles and furnaces so either buy a wood lot or ignore the nonsense in favour of an energy ETF...or just PetroCanada.
The bottom may yet to be made and or tested but it is close enough to allow everyone to breathe again; and for the daring to move forward. The 1000 point back to back up days this letter predicted ten days ago should occur by next week.
I'm done....go Als Go
By the look of overnight numbers in world markets and this morning's strong futures it would appear that I am not alone in thinking that yesterday's declines in stock prices were just plain silly. Yes I am aware of all the bad news and the problems that continue to beset the unaptly named "big three" auto companies, but I am also confident that a solution will be forthcoming and the result of these pending actions will be less onerous on the workforce, the companies and their suppliers than most are already discounting. I am not suggesting a buy on either GM or Ford here as there are so many less complicated giveaways too numerous to mention offered across the board. Time to act on the tax loss switches I mentioned in a previous letter as you can go back three years to recoup gains paid, and forward forever.
Yesterday's 700 point plus decline on the TSX does have a silver lining as it now means that 10 more days of such absurdity would take the market to zero and if anyone seriously thinks that is a likelihood, it is time to visit a gun shop.The oil and gas sector, once the darling of mutual and hedge fund investors seems to have discounted a complete abandonment of autumobiles and furnaces so either buy a wood lot or ignore the nonsense in favour of an energy ETF...or just PetroCanada.
The bottom may yet to be made and or tested but it is close enough to allow everyone to breathe again; and for the daring to move forward. The 1000 point back to back up days this letter predicted ten days ago should occur by next week.
I'm done....go Als Go
Thursday, November 20, 2008
November 20th Edition
Good Morning All,
"Once more into the breech, Dear Friends" or so spake Henry V and now Bill upon a different subject. Markets continued their disintegration yesterday and on into Asia and Europe today. There is no single reason for this latest attack, just a reaction to the compilation of the many man made problems that have infested the world's economies. It will be over when it is over and as I have written and spoken many times before...life will once again resume some form of normalcy.
I should mention however that the October intraday low on the Dow of 7882 will be in play today and as Art Cashin says we need more than just a bounce from this level. The equivalent S&P 500 number of importance is 775 which we last saw in 2002 and even worse, or better if you like, David Nichols of the Fractal Report points out that in real U.S. dollar terms the market is actually 30% lower now than it was then.
Oil is threatening to cross 50$ on the downside and now appears to be mirroring our July 15th call for a top of 150$. As so often learned and relearned in booms and busts ; stock and commodity prices will always exceed our greatest or worst expectations by an unknown factor of "N".....for nutty.
In times of war it is not the Generals who face the line of fire but the troops, the NCOs and the Junior officer corps. Similarly in times of economic crises it is not the creators of the debacle who suffer the wrath of the investor but the purveyors of the sometimes faulty product or advice who man the front lines of the investment business. This is a time to be worrying about the money you need, not the money you will be leaving in your estate, that will take care of itself with time. The real victims of the economic meltdown are not those who will continue to live a largely unaffected lifestyle but those middle aged workers or middle managers who have, or are about to, lose their jobs, their savings and their homes.... those with little prospect for renewing their careers when all this temporary nonsense is finally over.
We are now just that much closer to the end of the beginning.
Once more...should you consider this letter to be clutter .....please opt out by advising the undersigned.
"Once more into the breech, Dear Friends" or so spake Henry V and now Bill upon a different subject. Markets continued their disintegration yesterday and on into Asia and Europe today. There is no single reason for this latest attack, just a reaction to the compilation of the many man made problems that have infested the world's economies. It will be over when it is over and as I have written and spoken many times before...life will once again resume some form of normalcy.
I should mention however that the October intraday low on the Dow of 7882 will be in play today and as Art Cashin says we need more than just a bounce from this level. The equivalent S&P 500 number of importance is 775 which we last saw in 2002 and even worse, or better if you like, David Nichols of the Fractal Report points out that in real U.S. dollar terms the market is actually 30% lower now than it was then.
Oil is threatening to cross 50$ on the downside and now appears to be mirroring our July 15th call for a top of 150$. As so often learned and relearned in booms and busts ; stock and commodity prices will always exceed our greatest or worst expectations by an unknown factor of "N".....for nutty.
In times of war it is not the Generals who face the line of fire but the troops, the NCOs and the Junior officer corps. Similarly in times of economic crises it is not the creators of the debacle who suffer the wrath of the investor but the purveyors of the sometimes faulty product or advice who man the front lines of the investment business. This is a time to be worrying about the money you need, not the money you will be leaving in your estate, that will take care of itself with time. The real victims of the economic meltdown are not those who will continue to live a largely unaffected lifestyle but those middle aged workers or middle managers who have, or are about to, lose their jobs, their savings and their homes.... those with little prospect for renewing their careers when all this temporary nonsense is finally over.
We are now just that much closer to the end of the beginning.
Once more...should you consider this letter to be clutter .....please opt out by advising the undersigned.
Wednesday, November 19, 2008
November 19th Edition
Good Morning All,
Once upon a time just a short while ago a 150 point upward move on the widely followed Dow Jones Average would have been cause for delight, if not celebration. Sadly, in today's rather volatile markets, it can at best be considered ho hum and at worst anemic. However, as this letter has far too often noted, markets are in search of both a bottom and a reason to put a final one in place. Although the process seems interminable at this juncture and the fear of it not happening palpable, it remains my view that such a turning point is not just inevitable it is close at hand. This is not to suggest that a healthy economy lies just around the corner but resides in a sense that the vast hordes of cash, presently locked away in treasuries and in banks, must be put to work before year end. The increase in the velocity of money will determine the power and the glory of this awakening as the interest in this most important economic factor becomes more reportable. Spend a moment revisiting Economics 101 by way of Google if you have forgotten its meaning.
Many of you must also remember the heady days when our Loonie briefly traded at 1.10 versus its U.S. counterpart and how crossborder shopping and southern vacations once more became affordable. You might also remember that at the same time your energy bill was going through the roof and that your U.S. stock portfolio was down despite the record level of the Dow Jones. A 40% move on the currency you live on versus the one you are invested in will do that; ask the people in Euroland. So this time around watch this trade as it has proven to be even more volatile than the markets and for Canadians that means watching or hedging in commodities.
The Budweiser takeover money got spent yesterday, we await today's driver.....and of course news about Detroit. No wonder the Lions are winless.
Once upon a time just a short while ago a 150 point upward move on the widely followed Dow Jones Average would have been cause for delight, if not celebration. Sadly, in today's rather volatile markets, it can at best be considered ho hum and at worst anemic. However, as this letter has far too often noted, markets are in search of both a bottom and a reason to put a final one in place. Although the process seems interminable at this juncture and the fear of it not happening palpable, it remains my view that such a turning point is not just inevitable it is close at hand. This is not to suggest that a healthy economy lies just around the corner but resides in a sense that the vast hordes of cash, presently locked away in treasuries and in banks, must be put to work before year end. The increase in the velocity of money will determine the power and the glory of this awakening as the interest in this most important economic factor becomes more reportable. Spend a moment revisiting Economics 101 by way of Google if you have forgotten its meaning.
Many of you must also remember the heady days when our Loonie briefly traded at 1.10 versus its U.S. counterpart and how crossborder shopping and southern vacations once more became affordable. You might also remember that at the same time your energy bill was going through the roof and that your U.S. stock portfolio was down despite the record level of the Dow Jones. A 40% move on the currency you live on versus the one you are invested in will do that; ask the people in Euroland. So this time around watch this trade as it has proven to be even more volatile than the markets and for Canadians that means watching or hedging in commodities.
The Budweiser takeover money got spent yesterday, we await today's driver.....and of course news about Detroit. No wonder the Lions are winless.
Tuesday, November 18, 2008
November 18 Edition
Good morning all,
Markets held 850 on the S&P 500 yesterday despite another late day selloff. It is important at this juncture that we see a bounce off anything close to the 840 level as technically a higher low than we saw on Friday would be a bulllish sign. Surprisingly good earnings from Hewlett Packard are lifting the NASDAQ this morning, a much needed positive for the beleagured tech sector. Once again we must each be aware that 1480 on this index is a long way from the March 2000 high of 5100 plus and we don't expect to see that again; we are however, capable of envisioning a return to the 2800 number of last year. When things finally move to the upside the movement will be breathtaking. Buy the index ETF or Intel and Western Digital both of which are in the thirteens.
Take time now to look at capital loss strategies and think about switching within groups. Banks for banks , oils for oils , even royalty trusts and reits for similar issues. In this way you can book the loss without losing potential upside in the sector. The senior stocks move as a group with few exceptions, even better sell your CIBC and buy the bank ETF symbol XFN
Markets held 850 on the S&P 500 yesterday despite another late day selloff. It is important at this juncture that we see a bounce off anything close to the 840 level as technically a higher low than we saw on Friday would be a bulllish sign. Surprisingly good earnings from Hewlett Packard are lifting the NASDAQ this morning, a much needed positive for the beleagured tech sector. Once again we must each be aware that 1480 on this index is a long way from the March 2000 high of 5100 plus and we don't expect to see that again; we are however, capable of envisioning a return to the 2800 number of last year. When things finally move to the upside the movement will be breathtaking. Buy the index ETF or Intel and Western Digital both of which are in the thirteens.
Take time now to look at capital loss strategies and think about switching within groups. Banks for banks , oils for oils , even royalty trusts and reits for similar issues. In this way you can book the loss without losing potential upside in the sector. The senior stocks move as a group with few exceptions, even better sell your CIBC and buy the bank ETF symbol XFN
Monday, November 17, 2008
November 17 Edition
Good Morning All,
The opportunity to make a facile comment on these three days of market activity is too overwhelming to miss. To paraphrase a famous movie, Thursday's bullish reversal was the great, Friday's failure to follow through was the bad and today's premarket futures are looking ugly. Day one looked so technically perfect that even Art Cashin smelled a bottom, and then we had stink out Friday, a day that may not live in infamy but will certainly rank high in the annals of the most disappointing in this present cycle. Today is Monday and if we stick to our credo of largely ignoring action at the beginning and end of the week then so be it, after all turnaround Tuesday looms.
Although the G20 meetings, as expected, produced very little in the way of short term solutions they did something very important by setting a tone of cooperation in the post debacle world that now lies before us. Look for more on this theme after the inauguration on January 20th as the world decides to work together to repair itself. Don't however be so naive as to expect nirvana as this three, five or ten year spirit of unanimity will once again be overtaken by the next bubble. It has often been thus as what goes around comes around, sometimes in spades.
So let's all relax and watch this play out as we remember that nothing is forever....good or bad.
The opportunity to make a facile comment on these three days of market activity is too overwhelming to miss. To paraphrase a famous movie, Thursday's bullish reversal was the great, Friday's failure to follow through was the bad and today's premarket futures are looking ugly. Day one looked so technically perfect that even Art Cashin smelled a bottom, and then we had stink out Friday, a day that may not live in infamy but will certainly rank high in the annals of the most disappointing in this present cycle. Today is Monday and if we stick to our credo of largely ignoring action at the beginning and end of the week then so be it, after all turnaround Tuesday looms.
Although the G20 meetings, as expected, produced very little in the way of short term solutions they did something very important by setting a tone of cooperation in the post debacle world that now lies before us. Look for more on this theme after the inauguration on January 20th as the world decides to work together to repair itself. Don't however be so naive as to expect nirvana as this three, five or ten year spirit of unanimity will once again be overtaken by the next bubble. It has often been thus as what goes around comes around, sometimes in spades.
So let's all relax and watch this play out as we remember that nothing is forever....good or bad.
Friday, November 14, 2008
November 14th edition
Good Morning All,
Another week of fear and loathing is about to enter the books and with a little bit of luck and a whole lot of optimism it just may finish with a positive tone. Yesterday we saw what was effectively a 900 point afternoon reversal move to the upside and although this wasn't quite the way I had perceived that our "back to back 1000 point days" would begin I guess I will enjoy the moment and anxiously await the outcome of today's adventure. The G20 meetings, largely ignored until now, are finally beginning to draw the media attention they deserve. Even though the final draft that will emanate from this historic event is unlikely to contain immediate short term solutions to our international crisis, the very concept of having the world's most important leaders (save one) present together in the same room, can only bode well for the future of cooperation, agreement and progress. The elephant not in the room is of course the President elect, although his support for such negotiation is already well known and his new kind of leadership a harbinger of future goodwill. Economists and historians now look back upon the first weeks of the July 1944 meetings of what would become the Bretton Woods Agreement as an historic turning point, I suspect that this too will one day be seen as such. Next on the agenda may be a Marshall Plan for America's middle class to complement the one the banks and top 5% of its citizenry have long been in receipt of during the Bush years.
Meanwhile at least three major wars are raging in Africa while the "West" runs around the Middle East chasing phantoms dressed in costumes, but more about that next week or whenever some semblance of calm returns to markets.
Futures are pointing to a down opening as more bad economic news has interrupted markets. Yesterday I suggested that we might watch to see if INTEL's stock price could rise in the face of bad earnings guidance...it did. Today the same may phenomena may be observed with Nokia and Sun Micro. As Art Cashin notes this morning, a successful retest of yesterday's reversal rally could well lead to a significant upward move. In my words, if we get some decent follow through today or early next week, those of you still left with a truck and a reverse gear ought to consider backing it up to the loading dock. Bear markets end long before the good news begins.
Another week of fear and loathing is about to enter the books and with a little bit of luck and a whole lot of optimism it just may finish with a positive tone. Yesterday we saw what was effectively a 900 point afternoon reversal move to the upside and although this wasn't quite the way I had perceived that our "back to back 1000 point days" would begin I guess I will enjoy the moment and anxiously await the outcome of today's adventure. The G20 meetings, largely ignored until now, are finally beginning to draw the media attention they deserve. Even though the final draft that will emanate from this historic event is unlikely to contain immediate short term solutions to our international crisis, the very concept of having the world's most important leaders (save one) present together in the same room, can only bode well for the future of cooperation, agreement and progress. The elephant not in the room is of course the President elect, although his support for such negotiation is already well known and his new kind of leadership a harbinger of future goodwill. Economists and historians now look back upon the first weeks of the July 1944 meetings of what would become the Bretton Woods Agreement as an historic turning point, I suspect that this too will one day be seen as such. Next on the agenda may be a Marshall Plan for America's middle class to complement the one the banks and top 5% of its citizenry have long been in receipt of during the Bush years.
Meanwhile at least three major wars are raging in Africa while the "West" runs around the Middle East chasing phantoms dressed in costumes, but more about that next week or whenever some semblance of calm returns to markets.
Futures are pointing to a down opening as more bad economic news has interrupted markets. Yesterday I suggested that we might watch to see if INTEL's stock price could rise in the face of bad earnings guidance...it did. Today the same may phenomena may be observed with Nokia and Sun Micro. As Art Cashin notes this morning, a successful retest of yesterday's reversal rally could well lead to a significant upward move. In my words, if we get some decent follow through today or early next week, those of you still left with a truck and a reverse gear ought to consider backing it up to the loading dock. Bear markets end long before the good news begins.
Thursday, November 13, 2008
November 13th Edition
Good morning All,
I am shocked, totally and absolutely amazed that Germany has fallen into recession and that U.S. retail sales are projected to be lower. Wow! an actual economic decline is now recognizeably upon us. Just kidding. Disturbing market moving data has transcended the world which brings us to the question as to which direction this continuing trail of bad news will take stocks over the next days, weeks and months.
Well unless it's different this time, and it never has been, the world economy will stage a recovery and our lives will return to normal; the only remaining quandary is when. As so often stated in this and most other letters of its kind "the market is a discounting mechanism that prices in the future, not the past" and that "this phenomena generally precedes change by six to nine months". This bear market, to the surprise of many, began in the Spring of 2007 with the topping out of the financial indexes. August of that year saw the first public disclosures of major internal paper problems and the market crashed; the subsequent rise to new highs in October '07 was a classic get out rally that was thinly based. In Toronto, our commodity heavy index kept rising through June of 2008 even while its financials were warning us of increasing disarray. The last three months have largely completed the cycle with everything now having been taken behind the woodshed more than a couple of times.
Markets teach the same principle over and over again; they will always move far above or far below rational expectation EVERY time, thereby lending credence to the terms "boom and bust". We are now witnessing a deeply oversold market that is in the process of testing the October lows. If this test proves to be successful we can look forward to a couple of back to back 1000 point up days. This does not mean that the economic numbers will not continue to deteriorate for some months or even quarters to come, it simply suggests that the market will be buying a 2009 recovery that will begin next summer. You may believe or disbelieve in the prospect for such good news but as you assess your position ask yourself what you thought in the Spring of this past year when TECK Cominco, now 6$ was trading at 52$....the list is endless and the examples are on our monthly statements.
The news ahead of us will be better than that which we are seeing today but what is really important is to watch what happens to stocks reporting bad news. Intel is one such example and is now trading at a 12 year low. If its stock price can digest their recent dire forecasts and trade higher, a major signal for a substantial tech rally will have been given.
I am shocked, totally and absolutely amazed that Germany has fallen into recession and that U.S. retail sales are projected to be lower. Wow! an actual economic decline is now recognizeably upon us. Just kidding. Disturbing market moving data has transcended the world which brings us to the question as to which direction this continuing trail of bad news will take stocks over the next days, weeks and months.
Well unless it's different this time, and it never has been, the world economy will stage a recovery and our lives will return to normal; the only remaining quandary is when. As so often stated in this and most other letters of its kind "the market is a discounting mechanism that prices in the future, not the past" and that "this phenomena generally precedes change by six to nine months". This bear market, to the surprise of many, began in the Spring of 2007 with the topping out of the financial indexes. August of that year saw the first public disclosures of major internal paper problems and the market crashed; the subsequent rise to new highs in October '07 was a classic get out rally that was thinly based. In Toronto, our commodity heavy index kept rising through June of 2008 even while its financials were warning us of increasing disarray. The last three months have largely completed the cycle with everything now having been taken behind the woodshed more than a couple of times.
Markets teach the same principle over and over again; they will always move far above or far below rational expectation EVERY time, thereby lending credence to the terms "boom and bust". We are now witnessing a deeply oversold market that is in the process of testing the October lows. If this test proves to be successful we can look forward to a couple of back to back 1000 point up days. This does not mean that the economic numbers will not continue to deteriorate for some months or even quarters to come, it simply suggests that the market will be buying a 2009 recovery that will begin next summer. You may believe or disbelieve in the prospect for such good news but as you assess your position ask yourself what you thought in the Spring of this past year when TECK Cominco, now 6$ was trading at 52$....the list is endless and the examples are on our monthly statements.
The news ahead of us will be better than that which we are seeing today but what is really important is to watch what happens to stocks reporting bad news. Intel is one such example and is now trading at a 12 year low. If its stock price can digest their recent dire forecasts and trade higher, a major signal for a substantial tech rally will have been given.
Wednesday, November 12, 2008
November 12th Edition
Good Morning All,
Markets are mixed to ugly around the world and are likely to remain so through the weekend meetings of the G20 in Washington.There is little of a concrete nature that will come from this event, at least not in the short term, but the sense that world leaders are talking to each other will be pervasive if not pursuasive. Unfortuneatly Obama and his economic team will not be attending because as the President elect has said there is "only one President at a time". The absurdity of the 10 week transition period from election to the assumption of office in America must be corrected as the danger of this anachronistic practice becomes ever more evident in these stressful times.
One idea that may find purchase at these meetings is the creation of a World Financial Organization mandated to write and enforce a set of international rules on supervision and regulation of financial transactions. Similar to other such organizations as the IMF and WTO its potential success will depend upon those who back it up. Bretton Woods ll this may not be but I expect that a new world order will arise from the ashes of this past decade just as one did in the aftermath of the Second Great War.
Markets are searching for a bottom and in my view we have already seen the woodshed, one more whipping out back of it may well be in the cards afterwhich we will burn the damn thing down. The greater the fear, the greater the resolve; we are not a collectively stupid mass of humanity and we will get out of this mess and be better for its having happened.
Markets are mixed to ugly around the world and are likely to remain so through the weekend meetings of the G20 in Washington.There is little of a concrete nature that will come from this event, at least not in the short term, but the sense that world leaders are talking to each other will be pervasive if not pursuasive. Unfortuneatly Obama and his economic team will not be attending because as the President elect has said there is "only one President at a time". The absurdity of the 10 week transition period from election to the assumption of office in America must be corrected as the danger of this anachronistic practice becomes ever more evident in these stressful times.
One idea that may find purchase at these meetings is the creation of a World Financial Organization mandated to write and enforce a set of international rules on supervision and regulation of financial transactions. Similar to other such organizations as the IMF and WTO its potential success will depend upon those who back it up. Bretton Woods ll this may not be but I expect that a new world order will arise from the ashes of this past decade just as one did in the aftermath of the Second Great War.
Markets are searching for a bottom and in my view we have already seen the woodshed, one more whipping out back of it may well be in the cards afterwhich we will burn the damn thing down. The greater the fear, the greater the resolve; we are not a collectively stupid mass of humanity and we will get out of this mess and be better for its having happened.
Tuesday, November 11, 2008
November 11 Edition
Good Morning All,
Yesterday's promising start generated by news of the Asian stimulus package quickly rolled over into despair after further doubts about the viability of America's financial institutions. More money for AIG, AMEX having to become a bank and the ongoing disintegration of the automotive industry combined to set the tone for bad vibrations. Generally I believe that Mondays and Fridays should be ignored when volume is low and new news is not a huge issue. So don't sell the China story short because their 600 billion expenditure is very real and very important. Remember also that Washington won't be rebuilt in a day and neither will Wall Street, but construction has begun.
Each Remembrance Day should give us time to pause and think of the living as well as those who have gone on before. On that note I will begin with the former. If there is such a thing as a famous Canadian military historian my much older brother Terry fits the description. Terry returned from a research trip to Italy in October and underwent a successful bypass procedure from which he is recovering nicely. Many of his former students at Loyola, Concordia, McGill and Sir Wilfred Laurier remember him as their favourite history professor. Many Canadian veterans have also been rewarded by his interest in their personal histories, we wish him well.
Many of us have our own connections to the wars of this and the last century, as for myself I would like to mention my longtime friend Elizabeth Gallagher Tremblay who spent D Day in the middle of the North Atlantic on her way to overseas duty. My able associate, Jason Graves' grandfather Ernie Evans who survived 30 some missions as a tail gunner in World War ll, and to my own father Oswald Meredith who missed the big show due to a heart murmer caused by a childhood bout with rheumatic fever. I on the other hand have only been blessed by a lifelong addiction to romantic fever, something I may have been unable to experience had my Dad gone to war and there had been no I.
Watch oil for a break toward 50$ and the financials to start showing some stability. Once again....financials lead markets up and down. The down began 20 months ago which is a long time in market life.
"Two men look through the same bars, One sees the mud, one the stars"
Frederick Langbridge
Yesterday's promising start generated by news of the Asian stimulus package quickly rolled over into despair after further doubts about the viability of America's financial institutions. More money for AIG, AMEX having to become a bank and the ongoing disintegration of the automotive industry combined to set the tone for bad vibrations. Generally I believe that Mondays and Fridays should be ignored when volume is low and new news is not a huge issue. So don't sell the China story short because their 600 billion expenditure is very real and very important. Remember also that Washington won't be rebuilt in a day and neither will Wall Street, but construction has begun.
Each Remembrance Day should give us time to pause and think of the living as well as those who have gone on before. On that note I will begin with the former. If there is such a thing as a famous Canadian military historian my much older brother Terry fits the description. Terry returned from a research trip to Italy in October and underwent a successful bypass procedure from which he is recovering nicely. Many of his former students at Loyola, Concordia, McGill and Sir Wilfred Laurier remember him as their favourite history professor. Many Canadian veterans have also been rewarded by his interest in their personal histories, we wish him well.
Many of us have our own connections to the wars of this and the last century, as for myself I would like to mention my longtime friend Elizabeth Gallagher Tremblay who spent D Day in the middle of the North Atlantic on her way to overseas duty. My able associate, Jason Graves' grandfather Ernie Evans who survived 30 some missions as a tail gunner in World War ll, and to my own father Oswald Meredith who missed the big show due to a heart murmer caused by a childhood bout with rheumatic fever. I on the other hand have only been blessed by a lifelong addiction to romantic fever, something I may have been unable to experience had my Dad gone to war and there had been no I.
Watch oil for a break toward 50$ and the financials to start showing some stability. Once again....financials lead markets up and down. The down began 20 months ago which is a long time in market life.
"Two men look through the same bars, One sees the mud, one the stars"
Frederick Langbridge
Monday, November 10, 2008
November 10th Edition
Good Morning All,
Markets are soaring around the world this morning due in part to the massive stimulus package in China. This is an across the board advance that includes everything but G.M., which has been downgraded to a target price of zero by one analyst. I say in part, because nothing on a global basis ever happens in a vacuum. My personal bias suggests that this is more a combination of the passage of time that has allowed for the massive liquidity injection to begin to work, the oversold condition of stock and commodity prices and the general uplift in confidence (read hope or relief) that has followed the election of Barack Obama. Never sell confidence short for it is the backbone of all economic progress, be it in currency, in lending or in the general condition of humankind; and such confidence is born of strong leadership and respectful international relationships.
The Premier of Quebec has followed on the heels of his Ottawa counterpart by calling an unnecessary election likely based on the party's fear of an economic meltdown. This is probably bullish news because even though Harper and Charest may be privy to inside economic information, I doubt their ability to call either market performance with any degree of agility. Contrarian that I am, I will take this as a good market indicator. Thankfully too, this election will be over in less than 30 days and it does not appear that the Quebecois are likely to vote against their own self interest in these times of trouble. As I have often said, governing Canada with its vast resources and underpopulated expanses is not a difficult task, except during those times when we have been threatened by separatism and internal mayhem. I do not believe that we are entering one of those.
It is no secret that there are a number of policy issues facing the Barack administration and for want of other subject matter I will attempt to humbly cite my view of the particulars over the coming days. The first and foremost issue at hand is the assemblage of today's team of the "best and brightest" and great promise has so far been shown in this regard. Remember it is all about judgement and I don't see a chance of there being any Sarah Palins in Obamalot.
Note, Stem cell stocks are soaring again on rumours of government support for research. Democrats equal small and mid cap stocks; R&D that means tech, alternative energy , bio science and infrastructure.
Markets are soaring around the world this morning due in part to the massive stimulus package in China. This is an across the board advance that includes everything but G.M., which has been downgraded to a target price of zero by one analyst. I say in part, because nothing on a global basis ever happens in a vacuum. My personal bias suggests that this is more a combination of the passage of time that has allowed for the massive liquidity injection to begin to work, the oversold condition of stock and commodity prices and the general uplift in confidence (read hope or relief) that has followed the election of Barack Obama. Never sell confidence short for it is the backbone of all economic progress, be it in currency, in lending or in the general condition of humankind; and such confidence is born of strong leadership and respectful international relationships.
The Premier of Quebec has followed on the heels of his Ottawa counterpart by calling an unnecessary election likely based on the party's fear of an economic meltdown. This is probably bullish news because even though Harper and Charest may be privy to inside economic information, I doubt their ability to call either market performance with any degree of agility. Contrarian that I am, I will take this as a good market indicator. Thankfully too, this election will be over in less than 30 days and it does not appear that the Quebecois are likely to vote against their own self interest in these times of trouble. As I have often said, governing Canada with its vast resources and underpopulated expanses is not a difficult task, except during those times when we have been threatened by separatism and internal mayhem. I do not believe that we are entering one of those.
It is no secret that there are a number of policy issues facing the Barack administration and for want of other subject matter I will attempt to humbly cite my view of the particulars over the coming days. The first and foremost issue at hand is the assemblage of today's team of the "best and brightest" and great promise has so far been shown in this regard. Remember it is all about judgement and I don't see a chance of there being any Sarah Palins in Obamalot.
Note, Stem cell stocks are soaring again on rumours of government support for research. Democrats equal small and mid cap stocks; R&D that means tech, alternative energy , bio science and infrastructure.
Friday, November 7, 2008
November 7th Edition
Good Morning All,
I'll betcha a couple of hundred of them EEElectoral votes that I can name the capital of Africa and don't you worry China, your place in the North American Free Trade Agreement is secure. I wish this were an exaggeration and it may well be because one of Sarah's aides has assured everyone that McCain's campaign advisors are lying and that the Nieman Marcus dressed barracuda really does know that Africa is a continent and that South Africa is not just a region. I guess this brings new meaning to the "dumbing of America" syndrome of which we have each grown tired these past eight years. I would also hazard the thought that "executive experience" does not include the disciplines of high school geography, basic economics or current affairs. Sadly this probably means that we won't have Sarah to kick around anymore..... unless she gets the chance to appoint herself to the Senate or the Republican base is really stupid enough to entertain the prospect of her as a future leader. These revelations also tell us something about McCain's judgement and the blessing that a Barack victory has been to us all.
The Obama machine appears oiled and ready to go starting with the appointment of Rahm Emanuel as his Chief of Staff. A press conference today and news over the weekend to come will reveal more good stuff as we head into the all important G 20 meetings on the economy November 15th. We can rest assured that Obama's economic team will be in place by that time and that the likes of Paul Volker, Larry Summers and maybe Tim Geithner will be in attendance. It is not difficult to figure out that the light of interest will be shining on the incoming presence and not the outgoing dimness as the world convenes what is being referred to as Bretton Woods ll. I was going to do a piece on the history that surrounds this important subject area but "like" Iraq it will have to wait for time and space next week.
Employment numbers this morning are disastrous as were the revisions of the pre election data which makes you wonder what hanky panky might have been at work in this regard. Auto numbers and other earnings have also been frightening but remember that this is present and backward looking news, I am even willing to concede that not much is about to change for the better in the coming quarter but after that we may look ahead to much better news and goodness knows that stocks are a better buy now than they were last year when indexes were 6000 points higher and George Bush still had a year left to go in power.
I'll betcha a couple of hundred of them EEElectoral votes that I can name the capital of Africa and don't you worry China, your place in the North American Free Trade Agreement is secure. I wish this were an exaggeration and it may well be because one of Sarah's aides has assured everyone that McCain's campaign advisors are lying and that the Nieman Marcus dressed barracuda really does know that Africa is a continent and that South Africa is not just a region. I guess this brings new meaning to the "dumbing of America" syndrome of which we have each grown tired these past eight years. I would also hazard the thought that "executive experience" does not include the disciplines of high school geography, basic economics or current affairs. Sadly this probably means that we won't have Sarah to kick around anymore..... unless she gets the chance to appoint herself to the Senate or the Republican base is really stupid enough to entertain the prospect of her as a future leader. These revelations also tell us something about McCain's judgement and the blessing that a Barack victory has been to us all.
The Obama machine appears oiled and ready to go starting with the appointment of Rahm Emanuel as his Chief of Staff. A press conference today and news over the weekend to come will reveal more good stuff as we head into the all important G 20 meetings on the economy November 15th. We can rest assured that Obama's economic team will be in place by that time and that the likes of Paul Volker, Larry Summers and maybe Tim Geithner will be in attendance. It is not difficult to figure out that the light of interest will be shining on the incoming presence and not the outgoing dimness as the world convenes what is being referred to as Bretton Woods ll. I was going to do a piece on the history that surrounds this important subject area but "like" Iraq it will have to wait for time and space next week.
Employment numbers this morning are disastrous as were the revisions of the pre election data which makes you wonder what hanky panky might have been at work in this regard. Auto numbers and other earnings have also been frightening but remember that this is present and backward looking news, I am even willing to concede that not much is about to change for the better in the coming quarter but after that we may look ahead to much better news and goodness knows that stocks are a better buy now than they were last year when indexes were 6000 points higher and George Bush still had a year left to go in power.
Thursday, November 6, 2008
November 6 Edition
Good Morning All,
I am sure that many of you have either read or heard of the late David Halberstam's study of the Kennedy and Johnson Administrations entitled "The Best and the Brightest" first published in 1972. It is a book , as I remember it, that is both hopeful in its essence and tragic in its outcome, as it moves from the assembly of a very smart people team to the assassination of JFK and beyond to the devestating errors of the Vietnam War. Obama, unlike the present occupant of the WhiteHouse, is likely aware of all this important history, and through employing such knowledge as a template for his own administration it is not a stretch for us to believe that many of the mistakes made in that other time will be avoided in this one.
News on Barry's boys and girls will be forthcoming over these coming days as most stories have had Obama ahead of the curve for some time in this regard. We are dealing with a very different leader this time around, one who is in charge rather than one who has been put in place by agendized ideologues; and most importantly....one who is both lucid and informed. The Chief of Staff and Treasury Secretary appointments appear imminent, as well as a replacement at Homeland Security, Rahn Emmanuel and Timothy Geithner look set to fill the first two although there is no dearth of emminently qualified names being bandied about. What a refreshing change. Across the aisle it may be about former Republican Senators Lugar or Hegal, or even Colin Powell. Enough speculation for now however as what will be will be and it will be a vast improvement.
Markets took a much deeper breath yesterday than I had bargained for but what the hell, they were coming off an 18% pre election splurge and apullback was likely healthy. London cut rates by 150 beeps this A.M. and Europe by 50. LIBOR will tell the short term tale. We are headed for 1200 S&P soon from these 940 levels despite the bad economic news.
I am sure that many of you have either read or heard of the late David Halberstam's study of the Kennedy and Johnson Administrations entitled "The Best and the Brightest" first published in 1972. It is a book , as I remember it, that is both hopeful in its essence and tragic in its outcome, as it moves from the assembly of a very smart people team to the assassination of JFK and beyond to the devestating errors of the Vietnam War. Obama, unlike the present occupant of the WhiteHouse, is likely aware of all this important history, and through employing such knowledge as a template for his own administration it is not a stretch for us to believe that many of the mistakes made in that other time will be avoided in this one.
News on Barry's boys and girls will be forthcoming over these coming days as most stories have had Obama ahead of the curve for some time in this regard. We are dealing with a very different leader this time around, one who is in charge rather than one who has been put in place by agendized ideologues; and most importantly....one who is both lucid and informed. The Chief of Staff and Treasury Secretary appointments appear imminent, as well as a replacement at Homeland Security, Rahn Emmanuel and Timothy Geithner look set to fill the first two although there is no dearth of emminently qualified names being bandied about. What a refreshing change. Across the aisle it may be about former Republican Senators Lugar or Hegal, or even Colin Powell. Enough speculation for now however as what will be will be and it will be a vast improvement.
Markets took a much deeper breath yesterday than I had bargained for but what the hell, they were coming off an 18% pre election splurge and apullback was likely healthy. London cut rates by 150 beeps this A.M. and Europe by 50. LIBOR will tell the short term tale. We are headed for 1200 S&P soon from these 940 levels despite the bad economic news.
November 5, Edition
Welcome back America, welcome back to the world and congratulations on a job well done. November 4 2008 will prove to be one of those dates that people look back upon many years from now and remember where they were on this special day. There were a number of memorable moments last night and for channel hopping political junkies such as I the list is long so I will cite only one of the less obvious. Jim Lehrer of PBS provided a whole new perspective on the night when he said, after a particularly long set, "we are going to take a break for a moment while I get a cup of tea and....ahem, tend to some other things"
This is day one of the transition process and not the Obama Presidency, a fault in the American system that needs to be corrected forthwith. This President elect has proven over the past 20 months that he is not just a great campaigner/orator but that he is a magnificent organizer, manager, listener and delegator; skills that will serve him and the world well in these coming days and years. Getting off to a good start is immensely important and by the weekend we should have a pretty good idea on just how this is all going to work and with whom, so everybody take a deep breath and enjoy the fresh air.
Markets are selling on news in Europe and futures are down in the early going in New York but don't be concerned too much by the Republican/economic numbers sell off, confidence is the foundation of stable markets and the world just received a huge injection of this magic serum. The Obama rally will continue, albeit with some abatement.
I don't know whether to write phew or WOW...so here's both
This is day one of the transition process and not the Obama Presidency, a fault in the American system that needs to be corrected forthwith. This President elect has proven over the past 20 months that he is not just a great campaigner/orator but that he is a magnificent organizer, manager, listener and delegator; skills that will serve him and the world well in these coming days and years. Getting off to a good start is immensely important and by the weekend we should have a pretty good idea on just how this is all going to work and with whom, so everybody take a deep breath and enjoy the fresh air.
Markets are selling on news in Europe and futures are down in the early going in New York but don't be concerned too much by the Republican/economic numbers sell off, confidence is the foundation of stable markets and the world just received a huge injection of this magic serum. The Obama rally will continue, albeit with some abatement.
I don't know whether to write phew or WOW...so here's both
Tuesday, November 4, 2008
November 4, 2008 Edition
History does not happen in a vacuum and certain events presage the arrival of others and influence our future course. Some of these are at the margin; think of how we each count the paths taken or not in our own lives whilst we spend our mature years wondering what might have been. Others are far more momentous in their impact on history as witnessed by the acts of individual leaders for better or worse, as well as many of the avoidable confrontations that have in their time, spun the world out of control and beyond civilized norms. Forty years ago, to employ one such example, during a time of conflagration and social evolution when most of this readership was at least alive if not in young adulthood, Bobby Kennedy and Martin Luther King Junior were assassinated thereby changing both change and the future course of history. Suffice to say that had Kennedy lived, there would have been no Watergate, no Nixon impeachment and a much earlier end to the war and the deaths in Vietnam. It is not difficult to look back and wonder about any number of such events but for the moment, live the moment for we are onlookers, some of us are even "deciders", present at this watershed occasion.
While the world is collectively holding its breath markets appear to be freshening up from east to west. We are about to enjoy the fourth movement of the first Obama symphony as indexes celebrate a new beginning. Look for a solid follow through this week despite the Republican bent of most Wall Streeters. Markets historically fare better under Democrats anyway and from these depressed levels it will be easier than usual.
One sour note this morning has the Republicans running attack ads on major networks proving once again that they just don't understand....or get it.
While the world is collectively holding its breath markets appear to be freshening up from east to west. We are about to enjoy the fourth movement of the first Obama symphony as indexes celebrate a new beginning. Look for a solid follow through this week despite the Republican bent of most Wall Streeters. Markets historically fare better under Democrats anyway and from these depressed levels it will be easier than usual.
One sour note this morning has the Republicans running attack ads on major networks proving once again that they just don't understand....or get it.
Monday, November 3, 2008
November 3 edition
Good Morning All,
World markets have been mixed overnight as they appear to be underplaying the tensions of the coming two days. LIBOR has begun this week with the same positive tone it has exhibited over the last ten settings while the U.S. dollar has continued to lose ground against the Euro and Loonie, a not so surprising occurence considering the incredible gains it had made since summer. The first and most important tenet of financial markets is to provide a stable environment for trade, commerce and the settlement of transactions. In recent months as we are now all aware, the sense of potential failure of the system as described by the daily volatility in commodity, currency, stock and bond markets was palatable. This feeling has eased somewhat in recent days and confidence is once again returning to the economic arena.
The next few months should prove to be less testing and appreciably more enjoyable than the last quarter unless something untoward happens on election night. Imagine for a moment that Obama wins the popular vote by 10 million but loses in the Electoral College.....come to think of it...don't. Believe instead that Barack wins by more than 10 million votes and seals the deal with an Electoral College vote that exceeds the 270 required majority by more than 100, say 379. The Democrats also appear to be on target for Senate and House gains that will give them total control. This will be quite different than the post 1994 situation that Clinton found himself in when the GOP was in charge and harassment topped the agenda. We could go on here about Rawanda ,the Balkans and Monica but space thankfully prohibits us from expanding such rhetoric.
The Stem Cell sector have had a good runup since Thursday (40 plus per cent), the next few days will see them run much higher, but this a trade, not a buy and hold.
World markets have been mixed overnight as they appear to be underplaying the tensions of the coming two days. LIBOR has begun this week with the same positive tone it has exhibited over the last ten settings while the U.S. dollar has continued to lose ground against the Euro and Loonie, a not so surprising occurence considering the incredible gains it had made since summer. The first and most important tenet of financial markets is to provide a stable environment for trade, commerce and the settlement of transactions. In recent months as we are now all aware, the sense of potential failure of the system as described by the daily volatility in commodity, currency, stock and bond markets was palatable. This feeling has eased somewhat in recent days and confidence is once again returning to the economic arena.
The next few months should prove to be less testing and appreciably more enjoyable than the last quarter unless something untoward happens on election night. Imagine for a moment that Obama wins the popular vote by 10 million but loses in the Electoral College.....come to think of it...don't. Believe instead that Barack wins by more than 10 million votes and seals the deal with an Electoral College vote that exceeds the 270 required majority by more than 100, say 379. The Democrats also appear to be on target for Senate and House gains that will give them total control. This will be quite different than the post 1994 situation that Clinton found himself in when the GOP was in charge and harassment topped the agenda. We could go on here about Rawanda ,the Balkans and Monica but space thankfully prohibits us from expanding such rhetoric.
The Stem Cell sector have had a good runup since Thursday (40 plus per cent), the next few days will see them run much higher, but this a trade, not a buy and hold.
October 31 Edition
Good Morning All,
It has been quite sometime since markets have enjoyed three consecutive updays so maybe we should get set for a little pullback today, at least in the morning. Japan lost 5% overnight and in years past this may have appeared to be important but considering that this decline is coming off a multi session rise of 26% we will accept it for something less so. The question now before us lies in dealing with how real the recent stabilization may be and how far the markets can progress from here.
The odds have it that the economy will likely see its worst performance in the final quarter of this year and the first of 2009. The market however is a discounting mechanism and has already begun to buy a second quarter flattening and a final half of next year recovery. It is our view that a rally through mid January will take the major indexes in Canada and the U.S. above 11,000 before giving in to fourth quarter earning news and guidance during that period. Between now and then we may also expect a slowing of the recent extreme volatility, so VIX watchers may wish to advantage themselves of this levelling out.
When it appeared that John Kerry was leading in the days running up to the 2004 election, stem cell stocks made fabulous gains until crashing with the Ohio voting machine outcome. Although this research has not been an issue in this election, I suspect that similar moves will take place this year as memories kick in. Traders and other assorted punters may wish to play the game; STEM, ASTM and GERN are three of many that soared back in the day.
Barack Obama's lead in both the overall polls and in key electoral states is large and growing, so instead of fretting all weekend over a Karl Rovian inspired result I am going to relax and accept the facts on the ground as I reassert my faith in the American people to overwhelmingly do the right thing. We will know very early just how big a sweep this can be as the results in Virginia and even little New Hampshire will presage the night's message. McCain must win both to have the barest chance of victory.
It has been quite a month and I don't know about you but I'm beat.
It has been quite sometime since markets have enjoyed three consecutive updays so maybe we should get set for a little pullback today, at least in the morning. Japan lost 5% overnight and in years past this may have appeared to be important but considering that this decline is coming off a multi session rise of 26% we will accept it for something less so. The question now before us lies in dealing with how real the recent stabilization may be and how far the markets can progress from here.
The odds have it that the economy will likely see its worst performance in the final quarter of this year and the first of 2009. The market however is a discounting mechanism and has already begun to buy a second quarter flattening and a final half of next year recovery. It is our view that a rally through mid January will take the major indexes in Canada and the U.S. above 11,000 before giving in to fourth quarter earning news and guidance during that period. Between now and then we may also expect a slowing of the recent extreme volatility, so VIX watchers may wish to advantage themselves of this levelling out.
When it appeared that John Kerry was leading in the days running up to the 2004 election, stem cell stocks made fabulous gains until crashing with the Ohio voting machine outcome. Although this research has not been an issue in this election, I suspect that similar moves will take place this year as memories kick in. Traders and other assorted punters may wish to play the game; STEM, ASTM and GERN are three of many that soared back in the day.
Barack Obama's lead in both the overall polls and in key electoral states is large and growing, so instead of fretting all weekend over a Karl Rovian inspired result I am going to relax and accept the facts on the ground as I reassert my faith in the American people to overwhelmingly do the right thing. We will know very early just how big a sweep this can be as the results in Virginia and even little New Hampshire will presage the night's message. McCain must win both to have the barest chance of victory.
It has been quite a month and I don't know about you but I'm beat.
Friday, October 31, 2008
October 30th, 2008 Edition
Good Morning All,
The extremely oversold condition of world markets that existed at the outset of this week is well on its way to a massive self correction. I have suggested more than once in recent days that a great downside crescendo would quickly be followed by a "jaw dropping" (in the words of Art Cashin) upside rally. Well the selling climax was not quite as dramatic or satisfying as we would have preferred, at least not in U.S. markets, but it certainly was in Asia and in Europe. It has also been historically severe in commodities, currencies and much of the Toronto stock exchange. This may also be seen as the pre Obama bounce by some of the more biased observors, a group to which I proudly belong. This rally now appears to be gaining legs and may well project to mid January (bumps along the way) when indexes should well have recovered 50% of their bear market losses. After this point or this date, remembering the rule that you may get one or the other right but never both, we will reconsider but first of all enjoy the ride.
My next career has clearly been set out as last night's speech by Barack was right on the Copp target of "vision talk". McCain was not even mentioned, this was a soppy but brilliant exploitation of America's feel good, feel hope sentiment. Cheers to Obama's staff and to the man himself for running a superb campaign from start to finish. Now if I were a religious person I would be in prayer.
The extremely oversold condition of world markets that existed at the outset of this week is well on its way to a massive self correction. I have suggested more than once in recent days that a great downside crescendo would quickly be followed by a "jaw dropping" (in the words of Art Cashin) upside rally. Well the selling climax was not quite as dramatic or satisfying as we would have preferred, at least not in U.S. markets, but it certainly was in Asia and in Europe. It has also been historically severe in commodities, currencies and much of the Toronto stock exchange. This may also be seen as the pre Obama bounce by some of the more biased observors, a group to which I proudly belong. This rally now appears to be gaining legs and may well project to mid January (bumps along the way) when indexes should well have recovered 50% of their bear market losses. After this point or this date, remembering the rule that you may get one or the other right but never both, we will reconsider but first of all enjoy the ride.
My next career has clearly been set out as last night's speech by Barack was right on the Copp target of "vision talk". McCain was not even mentioned, this was a soppy but brilliant exploitation of America's feel good, feel hope sentiment. Cheers to Obama's staff and to the man himself for running a superb campaign from start to finish. Now if I were a religious person I would be in prayer.
October 29th, 2008 Edition
Good Morning All,
Someone recently asked me when I thought the Dow Jones and TSX would trade back over 10,000, I replied November 5th, an answer that has since led me to wonder, considering yesterday's stunning reversal, whether I was being a touch too conservative. Well let us not get too carried away with the power of the recovery as it is still only one day old in North America and two around the world, after all we have seen this movie play as recently as October 12th and 13th. The positive and longer term take we have out of this action is that base for a greater move upwards is growing and that the breadth of this advance has put in place an extremely important building block. Look for today's rate cut by the FED to solidify markets by week's end after the initial rollercoaster ride it often encourages has subsided. This market may have begun to discount bad news and as a forward looking discounting mechanism...this is what it is supposed to do when it is about to change trend.
The Barack speech tonight does not have to be a game changer, it just has to be a good closer. These next few days are going to be nervous ones for many of us around the world and in America as the fear of a Karl Rove inspired upset interferes with our logic. Yes it should be a Democratic sweep, but if things were things and real was real....Al Gore not George Bush would have been President in 2001 and we would not have to talk about Iraq (someday soon) or deregulation concerns now.
A commodity price recovery has also begun and with it our loonie should return to the 85 cent level before your trips south.
Note: 79 years today since the crash of '29. Just a mean thought, not a serious one, to help start your day.
Someone recently asked me when I thought the Dow Jones and TSX would trade back over 10,000, I replied November 5th, an answer that has since led me to wonder, considering yesterday's stunning reversal, whether I was being a touch too conservative. Well let us not get too carried away with the power of the recovery as it is still only one day old in North America and two around the world, after all we have seen this movie play as recently as October 12th and 13th. The positive and longer term take we have out of this action is that base for a greater move upwards is growing and that the breadth of this advance has put in place an extremely important building block. Look for today's rate cut by the FED to solidify markets by week's end after the initial rollercoaster ride it often encourages has subsided. This market may have begun to discount bad news and as a forward looking discounting mechanism...this is what it is supposed to do when it is about to change trend.
The Barack speech tonight does not have to be a game changer, it just has to be a good closer. These next few days are going to be nervous ones for many of us around the world and in America as the fear of a Karl Rove inspired upset interferes with our logic. Yes it should be a Democratic sweep, but if things were things and real was real....Al Gore not George Bush would have been President in 2001 and we would not have to talk about Iraq (someday soon) or deregulation concerns now.
A commodity price recovery has also begun and with it our loonie should return to the 85 cent level before your trips south.
Note: 79 years today since the crash of '29. Just a mean thought, not a serious one, to help start your day.
October 28th, 2008 Edition
Good Morning All,
The late day disappearance of bids in Toronto may not have quite qualified as my projected capitulation but it may have to do because sometimes, as Robert Redford said in the movies, "life doesn't always work out the way you think it will". New York on the other hand was crescendoless as the relatively tiny fallback at day's end was unconvincing. All that being written, it is interesting to note that a "V" shaped market performance over the last pair of days in Asia may have provided us with the fuel required for a sustained rally in Europe and North America. Futures are much higher in New York at this time and promise a memorable opening. To this end I repeat our Art Cashin quote of last week, "when this market turns, the upside will be jaw dropping". No promises yet, but conditional hope that we may have arrived at the pre election rally date.
Barack Obama has reserved 30 minutes of air time tomorrow night and I expect a different type of speech than the standard fare with which we have all become fidgety. His campaign has been a masterfully executed exhibition of political acumen since its outset in Springfield Illinois a century ago, or so it would seem. The no panic serenity shown during the times of crisis with either Hillary, McCain or even during the Palin surge speaks well of both his character and his management skills given the fact that his original team remains in place and on target. So tomorrow night and through the weekend I believe we should look for the "vision thing" as opposed to a trash the opposition one, wherein Barack attempts to raise the bar on expectation, a message not just of change but of hope and the no nonsense actions of what it will take to achieve a better way.
On the other side it appears that the McCain Palin ticket is imploding as the infighting has brought the none too secret personal ambitions of Sarah barracuda to the fore. This is what McSurge gets for putting the campaign first, belieing his slogan to put the "country first". We are now about to see what happens to someone whose reach exceeds their grasp as the real Sarah emerges. I may appear to be out of line in some circles but the candidacy of this ego centric, vindictive witch has posed, and until election day will continue to pose a clear and present danger to both America and the world.
This busy week will end an incredible month. Tomorrow we are likely to top it off with a 50 basis point cut by the Federal Reserve and another rock and roll day. Perspective during times such as these isn't everything, to paraphrase Vince Lombardi, its the only thing.
The late day disappearance of bids in Toronto may not have quite qualified as my projected capitulation but it may have to do because sometimes, as Robert Redford said in the movies, "life doesn't always work out the way you think it will". New York on the other hand was crescendoless as the relatively tiny fallback at day's end was unconvincing. All that being written, it is interesting to note that a "V" shaped market performance over the last pair of days in Asia may have provided us with the fuel required for a sustained rally in Europe and North America. Futures are much higher in New York at this time and promise a memorable opening. To this end I repeat our Art Cashin quote of last week, "when this market turns, the upside will be jaw dropping". No promises yet, but conditional hope that we may have arrived at the pre election rally date.
Barack Obama has reserved 30 minutes of air time tomorrow night and I expect a different type of speech than the standard fare with which we have all become fidgety. His campaign has been a masterfully executed exhibition of political acumen since its outset in Springfield Illinois a century ago, or so it would seem. The no panic serenity shown during the times of crisis with either Hillary, McCain or even during the Palin surge speaks well of both his character and his management skills given the fact that his original team remains in place and on target. So tomorrow night and through the weekend I believe we should look for the "vision thing" as opposed to a trash the opposition one, wherein Barack attempts to raise the bar on expectation, a message not just of change but of hope and the no nonsense actions of what it will take to achieve a better way.
On the other side it appears that the McCain Palin ticket is imploding as the infighting has brought the none too secret personal ambitions of Sarah barracuda to the fore. This is what McSurge gets for putting the campaign first, belieing his slogan to put the "country first". We are now about to see what happens to someone whose reach exceeds their grasp as the real Sarah emerges. I may appear to be out of line in some circles but the candidacy of this ego centric, vindictive witch has posed, and until election day will continue to pose a clear and present danger to both America and the world.
This busy week will end an incredible month. Tomorrow we are likely to top it off with a 50 basis point cut by the Federal Reserve and another rock and roll day. Perspective during times such as these isn't everything, to paraphrase Vince Lombardi, its the only thing.
Monday, October 27, 2008
October 27th, 2008 Edition
Good Morning All,
The following thoughts may not be music to your ears but bear with the story for a moment because like all past market tales, it has a happy ending. Friday did not prove to be, as we opined, "the mother of all capitulations day" but to be fair we did give it until this week to occur, so let's compare the last two months of market devestation to the first movements of a Mannheim school symphony and today's worldwide declines to the fourth and final crescendo. Or even more heart rendering, how about an old Roy Orbison love song that begins in tears and builds to an echoing throb of victory "as the market turned and walked away with me". Okay so that wasn't quite the line but some literary license is surely allowable during times such as these.
On the positive side Bill Gross, reputedly the smartest bond guy around, said this morning that intervention is working and that he expects 3 month LIBOR to drop below 3% very soon. This is important news because recession or not, it must be seen that the solutions being put in place are having such an effect thereby limiting the potential of the coming economic horror show to something manageable.
As the calendar moves toward November 4th we can look forward to a pre election rally that will front run an Obama victory. It is also possible that markets can turn higher without an American capitulation day but it would be easier for all if such an event, no market how intimidating it looks at the time, would occur. This water drip torture is worse than a final shake out. The process continues.
Friday, October 24, 2008
October 24th Edition
Good Morning All,
Well buckle your seat belts everyone and get ready to witness a major piece of history. World markets are down double digits (percentage wise) and S&P 500 futures are down limit and thereby closed through to the market opening. This scary scene may last part of the day, all day or even through to Tuesday morning but by the time it stops it will have discounted the end of the world. We have spoken of capitulation day before and even seen a few in our market lifetime, October 24 is shaping up to be the mother of such events. The good news is that it will soon be over and that the rebound, to quote floor trader Art Cashin, "will be jaw dropping". None of us can put a number or a time on the real bottom, we will just have to know it when we see it. Remember too that you don't have to catch the absolute low in order to win, nor do you have to be a hero. One week from now let's hope we are wondering what it was all about.
He who panics first, panics best. He who panics last is left holding a small empty bag. This is about markets ...not the economy. This transfer of wealth is not just from the middle class to the already wealthy but from the newly rich to the super rich...and more certainly to the cash rich sovereign funds. Be on the side of those who advantage themselves from such opportunity as this is not just a lifetime event we are witnessing but a centennial one.
Alan Greenspan finally admitted to being wrong yesterday and contritely acceded to complicity in the process. I hope he is not a jumper.
Better days ahead.
Well buckle your seat belts everyone and get ready to witness a major piece of history. World markets are down double digits (percentage wise) and S&P 500 futures are down limit and thereby closed through to the market opening. This scary scene may last part of the day, all day or even through to Tuesday morning but by the time it stops it will have discounted the end of the world. We have spoken of capitulation day before and even seen a few in our market lifetime, October 24 is shaping up to be the mother of such events. The good news is that it will soon be over and that the rebound, to quote floor trader Art Cashin, "will be jaw dropping". None of us can put a number or a time on the real bottom, we will just have to know it when we see it. Remember too that you don't have to catch the absolute low in order to win, nor do you have to be a hero. One week from now let's hope we are wondering what it was all about.
He who panics first, panics best. He who panics last is left holding a small empty bag. This is about markets ...not the economy. This transfer of wealth is not just from the middle class to the already wealthy but from the newly rich to the super rich...and more certainly to the cash rich sovereign funds. Be on the side of those who advantage themselves from such opportunity as this is not just a lifetime event we are witnessing but a centennial one.
Alan Greenspan finally admitted to being wrong yesterday and contritely acceded to complicity in the process. I hope he is not a jumper.
Better days ahead.
Thursday, October 23, 2008
October 23, 2008 Edition
Good Morning All,
Yesterday I called for a test of 900 on the S&P 500 and we got that plus some as the index cratered to the 875 level before staging a minor late day recovery. The rumour has it that a massive liquidation by two more failing hedge funds was largely responsible for the no bid low volume market within which this transfer of wealth took place. The real news of the day, month, year, decade remains the coincidental bursting of the easy credit and speculative commodity bubbles that have been ten or more years in the making, all of which plus some took place on Alan Greenspan's watch. Long time readers of this letter have been aware of my disenchantment with this highly overrated former FED chairman for many years beginning with his misplaced fears of inflation in 1994 that engineered the then biggest bond market collapse in history. Greenspan misspeaks again today.
The U.S. dollar strength against the EURO and the commodity currencies has continued to trade out of hand and is also likely related to hedge funds and fears of a EURO collapse. As with everything this is getting extremely overdone. Look for a big bounce through next week on the other side of this trade and a redeployment of U.S. cash hordes into undervalued equities. My favourite floor trader Art Cashin has reiterated that a resolution of markets to the upside is near even though he suggests that an interim rally today may well result in an early (next) week capitulation day. A daily market watch such as this letter has become will soon be unnecessary once things stabilize.....and they will.
So Sarah now believes, and I quote her, that "the election is in God's hands" which leads me to this morning's rant on the sensitive subject of religion. Why can't people just be kind, thoughtful, moral and generous without having to dress in silly costumes, worship mythical dieties, and quote badly documented historical treatises. If I personally had to choose a legend to have faith in it would be Arthur's Camelot and the wish that the spirit and hope generated some 48 years ago by another young President could be once again duplicated and that all those wanting to pray would do so ...for the safety of Barack and the unity of the world.
Wednesday, October 22, 2008
October 22nd, 2008 Edition
Good Morning All,
Well so much for the quiet week I was hoping for although not promising as markets once again exhibited their recently adopted drama which began with an up Monday and a down Tuesday that willl continue this morning. I suppose all is not lost in our quest to put back to back positive weeks together as the day is young and the sense of fear is palpable. So let us look for a quick trip test down to 900 on the S&P 500 and a bounce from there.
On the good news side of the equation it now appears that credit markets are beginning to "thaw" as LIBOR has once again been set at much lower rates and the commercial paper market is active with lower yields. This is shaping up to be a memorable day.
The world economy has been hit with a macro problem that requires macro solutions some of which are presently on the table. The workability of these efforts is in process and the jury is still out. The one thing we do know for certain in these uncertain times is that new and intelligent leadership is required in Washington. To this end we do not need campaigners who appeal to America's lowest common denominator but to its highest ideals, none of which include phoney patriotism or bogus claims about Joe the unplumber's tax bill. Think for a moment about who is advising whom. On the McCain side we have Alan Greenspan who will deservedly receive much of the historical blame for the mess we are in, former Senator Phil Gramm a practicing deregulator and a host of supply side hacks left over from the greed school of business management. On the Obama side we have Paul Volker, the best Fed Chairman ever (even so considered by such right wing frantics as Dennis Gartman), Warren Buffett and the Larry Summers/Robert Rubin tandem that served the country so well under Clinton.
So Sarah thinks Barack is a socialist because he wants to "spread the wealth around" and that some parts of the country are more pro American than others. Hmmm sounds to me as if Barack's musings are more along the lines of Robin Hood or Jesus Christ than they are of Karl Marx, but how would I know....I have yet to be born again.
Well so much for the quiet week I was hoping for although not promising as markets once again exhibited their recently adopted drama which began with an up Monday and a down Tuesday that willl continue this morning. I suppose all is not lost in our quest to put back to back positive weeks together as the day is young and the sense of fear is palpable. So let us look for a quick trip test down to 900 on the S&P 500 and a bounce from there.
On the good news side of the equation it now appears that credit markets are beginning to "thaw" as LIBOR has once again been set at much lower rates and the commercial paper market is active with lower yields. This is shaping up to be a memorable day.
The world economy has been hit with a macro problem that requires macro solutions some of which are presently on the table. The workability of these efforts is in process and the jury is still out. The one thing we do know for certain in these uncertain times is that new and intelligent leadership is required in Washington. To this end we do not need campaigners who appeal to America's lowest common denominator but to its highest ideals, none of which include phoney patriotism or bogus claims about Joe the unplumber's tax bill. Think for a moment about who is advising whom. On the McCain side we have Alan Greenspan who will deservedly receive much of the historical blame for the mess we are in, former Senator Phil Gramm a practicing deregulator and a host of supply side hacks left over from the greed school of business management. On the Obama side we have Paul Volker, the best Fed Chairman ever (even so considered by such right wing frantics as Dennis Gartman), Warren Buffett and the Larry Summers/Robert Rubin tandem that served the country so well under Clinton.
So Sarah thinks Barack is a socialist because he wants to "spread the wealth around" and that some parts of the country are more pro American than others. Hmmm sounds to me as if Barack's musings are more along the lines of Robin Hood or Jesus Christ than they are of Karl Marx, but how would I know....I have yet to be born again.
Tuesday, October 21, 2008
October 21, 2008 Edition
Good Morning All,
Monday's solid market rise will give way to some expected early morning profit taking this morning and then we will see. There is really not too much new to write about in this regard as the market continues in its quest for stability. What we really want to see is not just a solid trading day but an entire week of steady gains and modest losses.
Earnings season remains with us for another few days and as we watch the results, guidance and downgrades we must remind ourselves of how wrong most analysts habitually are in getting things right. As veteran floor trader Art Cashin has been saying of late, "we are close to a resolution in regards to market direction". Trading in Apple after today's poor report, may well be a harbinger for the day and week should it turn around after an early decline. This is a discretionary consumer stock for all intents and purposes. And once again LIBOR is lower and the U.S. dollar is higher ....and this is a good thing.
The oil sector trade proved to be phenonemal as PetroCanada rose from under 23$ Thursday to 32$ yesterday. The levered energy index HEU moved from the low 4's to over 7$ during the same period as the Christmas tree was quickly cleared of gifts. Look for a check back here today and some follow through later in the week.
So the well read Sarah now thinks Barack is a a socialist, this coming from a person who has not only never subscribed to "The Economist" or any other major publication outside of "Field and Stream" but worse .... had never heard of it until her post Katie Couric interview briefing.
The Baghdad flight has been cancelled for the day due to time and space constraints.
Monday, October 20, 2008
October 20, 2008 Edition
Good Morning All,
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.
Friday, October 17, 2008
The Copp Comment - October 17, 2008 Edition
Good Morning All,
Yet another dull week in markets was typified yesterday by an 800 point afternoon rally in New York. The beaten down TSX, temporarily sleeping, managed only a late recovery measuring half that amount. Ho hum we wonder, what will today bring? More of the same would be a proper guess.
Some of you may have caught the joint appearance of McCain and Obama last night at the Alfred E Smith foundation dinner. It appears that John McCain finally had a victory on both the humour side and strangely on the serious side as well, when his final words at the podium seemed to reflect a more decent view of the campaign than we have become used to of late. It even sounded somewhat like a concession speech. Too bad the election isn't this coming Tuesday and the inauguration the following day because the conclusion to this event will go a long way toward reinvigorating America and reassuring the world whose minions rank among Obama's greatest supporters. Instead, due to an outdated constitutional practice we shall be stuck with George Bush and a lame duck congress until mid January.
Although this has been a particularly grinding week, better times lie shortly ahead as it must always be remembered that the markets are discounting mechanisms. I was reminded too of yet another market axiom last night during an enlightening interview with Jim Kinnear, the CEO of Pengrowth, on the Scully show seen on Vermont PBS, when he alluded to the two tenets of great companies and potential acquisitions...."cash and cash flow". There will be much such looking around in the mergers and acquistions world during the coming weeks and months.
The Copp Comment - October 16, 2008 Edition
Good Morning All,
The market giveth and the market taketh away or so said the lord of volatility. In our letter of yesterday it was suggested that some profit taking off the early week's sudden and sizeable rise would be both normal and by definition...healthy. What was not expected was the breadth and depth of the decline as disintegrating hedge funds advantaged themselves of perceived market strength to get ahead the next spate of redemptions. To wit, the bottoming process is rarely a one day event and in circumstances as unusual as this, much to..ing and fro..ing is inevitable. I believe, for whatever it is worth, that the bottom-bottom is in and the tests of its validity will end before October does. Remember that anti biotics take more than a day to work.
The Canadian dollar has been extraordinarily weak this past month as its petro base appears to have disintegrated with the falling commodity prices. It may be time to convert any spare U.S. dollars you may have into buying Canadian banks and the incredibly oversold oil sector thereby benefiting from a rise in both. We repeat, PetroCanada is trading at 3 times earnings and yielding 3% effectively discounting its oil, gas, cash and real estate holdings to nothing. Others such as Encana and Imperial Oil are in similar straits. Aecon, an infrastructure play now 7$, has been irrationally beaten down likely due to mutual fund redemptions, remember how popular these thin market plays were a year or so ago.
Even though Asia encountered a train wreck overnight and Europe has been nervous, I would look for a serious rally to end the week, taking markets up to a positive finish.
If anyone seriously thinks that John McCain would make a better President than Barack Obama, they just aren't listening. More on politics tomorrow. Thank you all for your input, it is always welcome.
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