David White

Equities Roundup: Gains, But Commodities Strongest

The financial sector luster is wearing thin these days. JPM got another ding today as S&P downgraded $4.12B of RMBS (Alt-A loans).

The USD Index was down -0.65% -- a lot. This had a lot to do with commodities prices going up.

The SPY seemed to bounce off overhead resistance in the $107+ area today. The Trade Deficit news tomorrow (and the USD performance) will likely determine if the SPY breaks through resistance, or resumes a retracement mode.

The VIX got down into the high 23 range today. There is a support base at approx. 23.0. If the VIX rallies off the support base, that could mean the market will resume a downward course.

Gold keeps going higher. One gold miner in particular did well today -- AUY. It received multiple rating upgrades and even more target upgrades today alone.

Closing Update for Monday, August 17: Global Sell-Off Visits U.S.

Excluding one time items Agilent earned $.15 vs an average estimate of $.11. The stock was up after hours.

I tend to agree with Bill L. The sell off has likely started. Still declines led advances by a more than 6 to 1 margin. Plus the building permits and the housing starts numbers tomorrow will be good if they keep with their recent trend (and housing market recent trends). On top of the good empire state manufacturing numbers this morning, this should allow the market to rebound tomorrow morning.

Plus some companies are expected to do well. TJX and GYMB may perform well in the retail sector. They report Tuesday. This may relieve some of the distress about the retail sector.

I am not expecting the PPI data to be a huge factor.

HPQ reports after the market closes on Tuesday. Its results may big a big factor in Wednesday's performance. HD reports Tuesday also.

Wall Street Breakfast: Must-Know News

People know the bar is being set low for earnings this season. Beating will always be a positive. However, as earnings progress analysts expect the overall markets to react to forward guidance more than this quarter's earnings. If business leaders are starting to see growth in the realtively near future, the markets may be able to rally (or hold steady). If not, we may be in for a long retreat.

Wall Street Breakfast: Must-Know News

Earnings season is upon us. AA lost money again, but not as much as had been expected. AA stock is up about $.50.

Some analysts believe this may be the trend for this earnings season. Apparently the bar for earnings estimates has been set at approximately a 34% decrease over this quarter last year. Some analysts believe the actual decrease to be more in the area of 28%.

Wall Street Breakfast: Must-Know News

Analysts believe a surge in June lending by Chinese banks may lead Beijing to tighten monetary policy to avoid inflation. Chinese banks were under pressure in the market early Thursday. New loans approximately doubled to $224B in June.

Japanese banks were also under pressure as several were notified their performance was not adequate.

The likelihood of tightening credit in Asia is probably not good news for the markets there (or here eventually).

Global Growth Trades - Fast Money Recap (9/3/08)

The petroleum data show much much bigger than expected draw downs, and next weeks data are yet to come. Add Hanna, IKE, and Josephine to the equation. Then you come up with a scenario in which oil and gas seem likely to rise.

Global Growth Trades - Fast Money Recap (9/3/08)

Correction: The data from the shut ins and damage due to Hurricane Gustave will likely not appear until next week. The oil and gas companies did not really shut in until the very end of last week. The not as relevant petroleum data is due out today at 11am EST.

Global Growth Trades - Fast Money Recap (9/3/08)

The market is starting to go down seemingly based on more bad news form the banking sector. LEH is struggling with KDB. MER and AIG are having similar difficulties with their balance sheets.

Global Growth Trades - Fast Money Recap (9/3/08)

Also oil and natural gas (especially) are used in the production of fertilizer products. With the prices relatively fixed for the rest of this year, POT et al should make better than expected profits in Q3 with cheaper manufacturing costs due to the recent energy commodities price slide. This will likely be tempered by some hedging on the part of the fertilizer makers.

Global Growth Trades - Fast Money Recap (9/3/08)

POT is down about $3 on the day. The only possible explanation I can find is that the US Dollar is up relative to the Euro. Usually this tends to make oil prices go down. However, oil has been mostly holding steady this morning. Perhaps the market is looking to the future. Perhaps the market knows something about the pertoleum stocks that will be bad news for POT? Perhaps this is just a semi-manipulation before the petroleum stocks announcement? Perhaps POT's profits do much better when the US Dollar is low and other currences are higher. If profit is reported in US Dollars, this makes some sense. I still think an upward movement for the near term should be in the cards, especially with the market holding up reasonably well today. The non-mfg stats led one to think inflation might be tempering. That should have been good.

Global Growth Trades - Fast Money Recap (9/3/08)

The petroleum stocks numbers are due out a little later this morning. They seem likely to drive oil to the upside also.

Global Growth Trades - Fast Money Recap (9/3/08)

I agree with the fast money folks about POT. The options bunching up make it look like the sellers are expecting a move upward. That is good if you are going long. We also have a parade of tropical storms / hurricanes headed toward us. Hanna is currently a tropical storm. People are guessing it will go up the east coast or into Florida. However, then there is IKE. IKE is a strong hurricane at this time. If it keeps its strength or strengthens further, it could be a very bad storm indeed (145mph sustained winds so far). Then there is Josephine. If this parade isn't enough to make oil prices turn around at least in the short term, I am not sure anything could. This likely turn in oil to the upside should likely affect other commodities as well such as grains. POT is a good bargain at its current price. It is a high growth stock for some time yet. Likely this is a good time to buy it. There is very good support at $145, and there is good reason to believe it can pop up to $163-4 and $175 in the short term (Perhaps as high as $190).

Replacement Candidates for David Merkel's Portfolio: From AA to ZZ

NM is a good bet. It has excellent value. It has an extremely low PE and FPE. It also has an excellent Price to Book value ratio. Further it has both a new fleet in South America (for the river traffic mostly) which is supposed to begin adding 35% to EBITDA beginning in the 4th quarter of this year. It got pushed further downward in the recent market move in that direction, so it is an excellent buy now.

Is the Market Bounce for Real?

Actually AA provided very negaive guidance for its industry, saying it would lose money this year (with AA still making a good sum). As for the bounce, who can tell right now how real it is. Market timers are speculating that it will only be a move to 1440 on the S&P500 index. The reality is that it will be dependent on the economic news of earnings and possible Fed moves. The higher than expected trade deficit numbers this morning probably did not help. Merrill Lynch's announcements of bigger write downs was another negative. Mr. Bush and Mr. Paulson have yet to weigh in on their stimulus package. We will have to see what the future holds. Even Mr. Bernanke does not have a crystal ball.