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David Moenning is a the proprietor of StateoftheMarkets.com. In addition to providing free and subscription-based portfolios on "State", Dave is a full-time money manager and the President and Chief Investment Strategist of a Chicago-based Registered Investment Advisory firm. Dave... More
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Daily State of the Markets
  • A Greek Tragedy (Continued) 0 comments
    Apr 7, 2010 8:58 AM

    Daily State of the Markets 
    Wednesday Morning - April 7, 2010

    Just about the time investors had been able put the fears relating to Greek debt and the questions of who would do what in order to bail out the country aside, the issue came roaring back on Tuesday. While concerns over Greece didn't wind up impacting the U.S. market to any great degree by the time the closing bell rang here in the U.S., the problems of a country with too much debt trying to borrow more money was in the spotlight for much of the session.

    The macro concerns surrounding Greece returned Tuesday morning on the back of a Market News International story that Greece may be looking to get the IMF out of the rescue package picture in order to avoid severe austerity measures. In addition, the Telegraph reported that the wealthy in Greece were starting to move their money out of the country. Next, the FT reported that Germany continues to oppose lending money to Greece at the same rate as countries such as Ireland and Portugal are receiving. And finally, Greece announced that it was coming to the U.S. with a bond offering in an attempt to raise $5 - $10 billion.

    The bottom line here is the report that Greece was looking to change the bailout deal did not sit well with investors. And while the Greek Finance Minister denied the rumor, yields on Greek debt soared on Tuesday as worries grew that the country would not be able to borrow at reasonable rates. The yield on the Greek 10-year jumped up 70 basis points (or 0.7%) to just under 7.2%, which was the highest level in 11 years. On the short end of the yield curve, yields on the six-month note rose an astounding 220 basis points (2.2%) while the one-year note rose by 160 basis points. In addition, Credit Default Swaps (CDS) spreads rose to 400 bps, which is a level not seen since the height of the crisis on February 24th.

    While the situation in Greece kept traders busy for much of the morning, after lunch the attention returned to the state of the U.S. economy as the Fed released the minutes from its March FOMC meeting. In short, the FOMC put the worries about a change in monetary policy to bed. Although the meeting did take place before the March Jobs report and the plethora of upbeat economic data seen recently, the minutes made it clear that the Fed will keep rates exceptionally low for as long as the economy remains weak.

    The only real change that can be taken from the minutes of the meeting is the Fed appears to be making an effort to state that there is no time table associated with the "extended period" language. While the market takes the phrase to mean 3-6 months, the FOMC indicated that the language does not preclude them from taking action when it is needed - either sooner or later.

    Although the indices finished off their best levels, anyone on the long side was heartened by the fact that the market once again did not succumb to the negativity surrounding Greece. In short, the bulls continued to be resilient as the S&P, NASDAQ, Russell 2000, and the Midcap indices all finished at new cycle-highs. Thus, the phrase that seems most appropriate these days continues to be "the trend is your friend."

    Turning to this morning... Once again, we don't have any economic data to review today and the corporate news calendar is light in front of the start of earnings season. The mood of the markets is less than enthusiastic before the open as the dollar is rising and there continues to be concerns about the Treasury's auction of 10-year notes today and 30-year bonds tomorrow.

    Running through the rest of the pre-game indicators, the major overseas markets are mixed with Europe now moving lower. Crude futures are down $0.83 to $86.01. On the interest rate front, the yield on the 10-yr is currently trading at 3.95%. Next, gold is unchanged at $1136 and the dollar is higher against the Yen, Euro, and Pound. Finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a lower open. The Dow futures are currently off by about 30 points; the S&P’s are down about 4 points, while the NASDAQ looks to be about 6 points below fair value at the moment.

    Wall Street Research Summary


    • Darden Restaurants (NYSE:DRI) - Cowen & Co.
    • Callifornia Pizza Kitchen (NYSE:CPK) - Cowen & Co.
    • KeyCorp (NYSE:KEY) - Goldman
    • NCR Corp (NYSE:NCR) - Target increased at JPMorgan
    • Finish Line (NASDAQ:FINL) - Morgan Stanley
    • Nokia (NYSE:NOK) - UBS



    • Netflix (DFLX) - Barclays
    • California Water (NYSE:CWT) - Brean Muray, Carret
    • Sony (NYSE:SNE) - Citi
    • Silgan Holdings (NASDAQ:SLGN) - Macquarie Research
    • Parexel (NASDAQ:PRXL) - Wells Fargo


      Long positions in stocks mentioned: PRXL

      Make the decision to have a great day...

      David D. Moenning
      Founder TopStockPortfolios.com

      For more "top stock" portfolios and research, visit TopStockPortfolios.com


      The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.

      Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

      The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

      The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (NASDAQ:HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.

      Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

      Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.

    Disclosure: none
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