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.
Friday, November 28, 2008
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.
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