Warning: Cannot modify header information - headers already sent by (output started at /homepages/29/d215803067/htdocs/blog/index.php:9) in /homepages/29/d215803067/htdocs/blog/wordpress/wp-includes/feed-atom.php on line 8 D&D Securities - blog2009-12-02T14:03:34ZWordPresshttp://blog.dndsecurities.ca/feed/atom/Ed Pennock<![CDATA[The Morning Call - September 1st, 2009]]>http://blog.dndsecurities.ca/?p=2232009-09-01T16:42:55Z2009-09-01T16:42:33Z
D&D Securities Company
The Morning Call: Tuesday, September 01, 2009
North American markets reacted to the continuing decline in Shanghai. This market has lost almost a quarter of its value in the month of August. It broke through the 50-day then the 100-day moving average and is half way to the 200-day. Just one more day like yesterday and it will get us there. We checked the new 21 day average and it, too, has broken. The implied loss of economic pull from china had commodities and oil (under $70) selling off and bringing the stocks with them.
There’s a well known seasonality to buying resource stocks in October and November then trading them out in March. It works most years. To get cheap enough, the stocks have to go down in September and into October. But looking at this another way: we’ve started a classic rotation, and the market is going to be led by the banks, non-banks, and the interest-sensitive as we move higher. Maybe the Shanghai market has come off because the Chinese banks have eased off on lending: too much of that money was finding its way into the market. Again, the action is more about flow of funds than about the underlying economy. Chinese purchasing Managers’ index came in at 54 up from 53.3 in July, making that up 6 in a row. Question is whether Chinese stimulus will buck the trend.
Our former partner Ed Yardeni is saying that the Fed will keep the Fed Funds rate at zero and, between the Fed and other central Banks, half the deficit is being monetized. Good for markets. The American Association of Individual Investors (AAII) polled 34 % bulls down from 50% bulls two weeks ago. The long term average is 38%. So we aren’t counting out North American markets yet.
This morning we will watch for the ISM at 10 o’clock. At the same time “pending home sales” will come out and both can impact the market. It’s like that silly time in the eighties when we all waited for the Fed funds rate or whatever it was… Today’s fixation speaks volumes as to the confusion of the participants to today’s markets.
It’s time to talk about gold. There are very few things that always work in the markets. When real rates are negative, you have to own gold stocks. Keep them as long as rates are negative. Often they do well while the rest of the markets are sorting themselves out. We’ve read, but not verified, that golds (between 2001 and 2008) have been up, on average, 27% in Sept, 9% in October, 31% in November, and 28% in December. -That’s an argument for the carry trade of long gold stocks and short the US$ if we ever saw one. Is it time to “Go for the gold?”
It’s really exciting what’s happening in Japan. The DPJ (democrats) have won a majority (308 seats out of 480) in their Parliament (Diet). They aren’t going to sell any more bonds than they did last year: ¥144 Trillion. The say they’ll curb public spending and the bureaucracy. Very difficult to do in an export dependent economy, but luckily China is their largest customer - and then it’s the US. They need to stop the climb in unemployment. They say they will cut gasoline taxes and highway Tolls. They will focus on childcare and education offering a bounty of ¥100K for anyone (unemployed) taking training for a job. The problems include a CPI that was down 2.2% in July and a Public Debt of 200% of GDP. Taro Aso resigned. Exciting times.
So we wait for the numbers and advise…
Invest the money.
Nuclear Tuesday
Inactive markets have drifted a $1 lower for spot and term leaving them at $46 and $64, respectively. UX revises the long term price every month. They did mention this week that although $64 was the lowest offer accepted for term, other and higher offers were also accepted.
There just seems to be very little interest by U3O8 buyers.
Quote of the Day:
“Punctuality is one of the cardinal business virtues: always insist on it in your subordinates.” Don Marquis
The above note is prepared by an Institutional Salesperson based on morning meeting comments and general Institutional desk discussion and should not be construed as a research report or a solicitation. For information purposes only. D&D Securities, its clients, and principals may have positions in these securities.
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0Ed Pennock<![CDATA[The Morning Boxscore - September 1st, 2009]]>http://blog.dndsecurities.ca/?p=2212009-09-01T16:40:35Z2009-09-01T16:40:35ZThe Morning Boxscore: Tuesday, September 1, 2009
Today vs. Yesterday
US Libor – Overnight .229 vs. 229
US Libor – (3 Mo) .334 vs. 348
Euro Libor – Overnight .279 vs. 282
Euro Libor – (3 Mo) .786 vs. 799
TED Spread .20 -0.02
US 10 yr Yield 3.381 -2.00
US 2 yr Yield .960 -1.00
S&P 1013.0 -6.70
OIL 69.64 -0.32
NATG 2.959 -0.018
GOLD 949.3 -4.30
VIX 26.01 +1.25
Baltic Dry 2421 –
Rig Counts as of Aug 28, 2009
US 999 vs. 985
CA 184 vs. 164
MX 30 vs. 29
CDN/USD 0.9130 -.0014
EUR/USD 1.4302 -.0032
As of 7:20 AM
Investment Headlines
-China’s manufacturing expands at fastest pace since April 2008 on Lending
-Manufacturing in US probably grew in August for first time in 19 months; ISM Manufacturing @ 10:00
-EBAY may sell Skype to Andreesson, private investors, New York Times says
-Canada Q2 GDP shrinks at 3.4% annualized pace; June grows 0.1%
-PetroChina to acquire Athabasca Oil-sands project stake for $1.73B
-Newport Partners Income Fund agreed to sell its Elliot Special Risks unit to insurer Markel Corp. for $75MM
-Crude Oil trading below $70 as USD rises vs. Euro
-US economic data: ISM (10:00); Construction Spending (10:00); Pending Home Sales (10:00); ABC Consumer Confidence (17:00)
* Source Bloomberg
]]>0Ed Pennock<![CDATA[The Morning Call - August 31st, 2009]]>http://blog.dndsecurities.ca/?p=2172009-08-31T12:59:56Z2009-08-31T12:59:56Z
D&D Securities Company
The Morning Call: Monday, August 31, 2009
The US markets responded to the fall in consumer confidence (Michigan/Reuters) to 65.7 from 66 in July. That was despite the Commerce department saying that consumer spending was up 0.2% (read: Cash for Clunkers). We expect the focus this week will be on the jobless number this Friday which is expected to climb to 250K from the 247K in July. (Not our forecast.)
The Business Press is full of articles on why to sell in September. The evidence is all there historically and it’s been written up so many times that it should be in the market. A strategy of selling some Calls might be safe and appropriate. Call premiums are taxed as ordinary income, we believe.
So we are looking at bullion and wondering. The resistance is at $975 and what a change in sentiment a breakout would bring. Coincidently the US$ would fall after yet another large auction. The other side is a rise in the C$ - it’s all about commodities and the trade. Japan’s July Industrial production was up 1.9% (expected 1.6%), rebounding from an awful 2008 where GDP fell 5.7%.
An interesting read we had is that 10% of American households account for 40% of the spending (consumption) in the US economy. This group has only 25% of their assets in real estate. So, for them the big stock market rally off the March Bottom really has had a “wealth effect”. The other 90% of the population has 50% of their wealth in real estate. This is a new cut at numbers that we were already aware of. A small percentage of the US population does a disproportionate amount of the spending. It’s the same globally. So take a rich person to lunch.
We think they will.
…Invest the money.
Quote of the Day:
“If writers were good businessmen, they’d have too much sense to be writers.” Irvin S. Cobb
The above note is prepared by an Institutional Salesperson based on morning meeting comments and general Institutional desk discussion and should not be construed as a research report or a solicitation. For information purposes only. D&D Securities, its clients, and principals may have positions in these securities.
]]>0Ed Pennock<![CDATA[The Morning Boxscore - August 31st, 2009]]>http://blog.dndsecurities.ca/?p=2152009-08-31T12:58:27Z2009-08-31T12:58:27ZThe Morning Boxscore: Monday, August 31, 2009
Today vs. Yesterday
US Libor – Overnight .229 vs. 227
US Libor – (3 Mo) .348 vs. 361
Euro Libor – Overnight .282 vs. 269
Euro Libor – (3 Mo) .799 vs. 796
TED Spread .21 –
US 10 yr Yield 3.414 -3.00
US 2 yr Yield .992 -2.00
S&P 1020.9 -6.50
OIL 71.07 -1.70
NATG 3.024 -0.011
GOLD 955.3 -3.50
VIX 24.76 +0.08
Baltic Dry 2421 -4.00
Rig Counts as of Aug 21, 2009
US 999 vs. 985
CA 184 vs. 164
MX 30 vs. 29
CDN/USD 0.9061 -.0099
EUR/USD 1.4276 -.0027
As of 7:20 AM
Investment Headlines
-Leverage Rising on Wall Street at Fastest Pace Since ‘07 Freeze
-German Bonds Rise for Third Week on Concern Optimism Misplaced
-Japan’s Output Rises at Slowest Pace in Four Months
-Yen Rises After Japan’s Opposition Party Wins General Elections
-Baker Hughes buys BJ Services for $5.5B
-Consumer prices in Europe declined less than economists forecast in August
-China stocks slump most since June 2008, capping year’s first monthly loss
-Shipping rates may drop 50% as China cuts coal imports amid fleet overrun
-UK Home prices post first gain since 2007 on low supply
-Fed will miss inflation target over next decade, economists say in survey
-UK is closed for its Summer Bank Holiday
-Chicago Purchasing Manager reading due out @ 9:45
* Source Bloomberg
]]>0Ed Pennock<![CDATA[The Morning Call - August 27th, 2009]]>http://blog.dndsecurities.ca/?p=2112009-08-27T12:39:03Z2009-08-27T12:39:03ZD&D Securities Company
The Morning Call:Thursday, August 27, 2009
We agree with Capital Economics that the Recession is all but over and probably ended mid year. New homes sales were an impressive 9.6% while the median price dropped 11.5% year over year. Durable goods were a little light at 4.9% but New Orders were up 18.4%, ex transportation 0.8%. Capital goods was up 9.5% and shipments up 2% from 0.7% in June. A poll of senior accountants in Canada shows they are positive on the economy. So what more can one need?
The question is: What now? Obviously, the market has priced all this into the stock market. -The Merrill survey of advisors has 51.6% bulls to 19.8 % bears.We found this was a very good indicator while we were doing our obligatory stint at Merrill in Canada. The trader sentiment is volatile but more upbeat.Barrons’ online headline was about converting the Bernanke Put into a Bullish Call. We’ve broken out and should pull back to test this new support. The US$ still could rattle the markets and certainly the next round of G20 rhetoric will have concerns.
However, we continue to believe that this market is driven by Funds Flow. The market has decoupled from the economy and is, as ever, driven by fear and greed. With only a third of Managers surveyed being overweight stocks, there’s a lot of performance fear out there. As far as we can see, there’s also an extra wide spread between the quartiles of performance measurement.
September and October are often bad months… Does anyone forget last year? No, and never will. It could happen again but where would you have gone to if you had sold in May and went away? Tough calls and, really, no history to act as a guide. The market is paying for taking a risk – which is the Bull’s call. The risk for them is complacency. One client put it very well yesterday saying that he’s being paid to be paranoid.
The truth will out.
Invest the money.
Quote of the Day:
“You don’t want another Enron? Here’s your law: If a company, can’t explain, in ONE SENTENCE….what it does….it’s illegal.” Lewis Black
The above note is prepared by an Institutional Salesperson based on morning meeting comments and general Institutional desk discussion and should not be construed as a research report or a solicitation. For information purposes only. D&D Securities, its clients, and principals may have positions in these securities.
]]>0Ed Pennock<![CDATA[The Mornnig Boxscore - August 27th, 2009]]>http://blog.dndsecurities.ca/?p=2092009-08-27T12:37:52Z2009-08-27T12:37:52ZThe Morning Boxscore: Thursday, August 27, 2009
Today vs. Yesterday
US Libor – Overnight .227 vs. 227
US Libor – (3 Mo) .361 vs. 372
Euro Libor – Overnight .269 vs. 269
Euro Libor – (3 Mo) .803 vs. 811
TED Spread .22 -0.01
US 10 yr Yield 3.451 +2.00
US 2 yr Yield 1.055 +1.00
S&P 1025.2 -1.40
OIL 71.01 -0.42
NATG 2.844 -0.066
GOLD 948.2 +2.40
VIX 24.95 +0.03
Baltic Dry 2427 +39.00
Rig Counts as of Aug 21, 2009
US 985 vs. 968
CA 164 vs. 170
MX 29 vs. 30
CDN/USD 0.9117 +.0004
EUR/USD 1.4259 +.0004
As of 7:20 AM
Investment Headlines
-Housing prices in UK increase at fastest pace since 2006, nationwide says
-European retail sales drop for 15th month as unemployment rises
-Federal Reserve says loan disclosures will hurt banks and the US economy
-Yen funding-cost spread widest since 1993 as Fed cash flows into the economy
-Pessimism on US stocks declines to lowest level since 2007, survey
-S&P is approaching 200-Month moving Average
-Toll Brothers posts 8th straight loss as recession saps demand for luxury homes
-Treasuries advance before report that may show GDP shrank at faster pace
-Royal Bank Q3 profit rises to record, reports EPS of 1.21(ex-items) vs. 93c estimate
-Dollar risks falling through “established lows”, Goldman Sachs
-CIBC considering acquisitions to expand outside Canada
-Alberta’s deficit to soar to $6.88B on lower Nat Gas prices
-US Economic Data: GDP QoQ; Personal Consumption; GDP Price Index; Initial and Continuing Jobless Claims
* Source Bloomberg
]]>0Ed Pennock<![CDATA[The Morning Call - August 26th, 2009]]>http://blog.dndsecurities.ca/?p=2052009-08-26T17:53:24Z2009-08-26T17:53:24Z
D&D Securities Company
The Morning Call: Wednesday, August 26, 2009
The confirmation of Benanke by Obama was also confirmed in the market. We don’t like change and he did save us after all, “The right guy at the right time. He had studied the Great Depression!” We have now all studied the Great Depression and would have preferred not to. The non-traditional Republican Fed chairman for a Democratic President has good Historical precedence.
Once again, housing was a key feature with prices up 1.4% in June which was backed up by the Federal Housing Finance Authority announcing that prices were up 0.5%. There is an opinion that housing sales have bottomed but that prices could still go down meaningfully. The reason is that the resets on mortgages are still kicking in and adding to the foreclosure risk. The other side of that risk is that with every drop in price, we get an offsetting rise in affordability. The mess is sorting itself out. The reason we fixate on housing is that when a pricing floor has been established, the bank balance sheets can actually be gauged even if only implicitly. Only when the Banks are OK can we have a sustainable market.
Cash for Trash may be the next program, but it has worked on the US consumer as the Conference Board reported that Confidence rose from 47.4 to 54.1 in July. The Goal posts are 100 for strong growth and the February low was 25. The combination of all three above items was all the market needed to rally.
One of the calls we received was asking if there was a rotation from the energy sector to the Financials/Banks happening. It would seem so. And as market confidence grows there will be a pursuit of Dividends aiding that trade. With the BMO results, which were very fine, and the admission of over $6B in excess capital they might even put up the dividends one day. Capital markets were a very bright spot for them and we expect this to be a theme for Canadian banks this quarter. And for BMO, maybe we should rename Mr. Bill Downe as Mr. William UP?
Internationally, Japan’s Trade surplus being up 364% shows that we are starting to move along again.
Spot gas in Alberta traded down to $2.35. Awful. And, for once we don’t agree with Fabrice’s assessment of the prospects for gas. They’re getting back to work soon in Sudbury but with non-union employees. It’s sad that it only took the Brazilians a couple of years to do what had eluded Canadian management for 100 year
Just talking about yield again. There’s a global hate-on for Telco’s. But for all the warts, isn’t a 6% yield on BCE pretty good? -At least it approaches the actuarial assumption used in pension fund accounting?
With only a third of the manager’s over weight stocks in the Merrill survey…
Invest the money.
Quote of the Day:
“My son is now an “entrepreneur”. That’s what you’re called when you don’t have a job.” Ted Turner
The above note is prepared by an Institutional Salesperson based on morning meeting comments and general Institutional desk discussion and should not be construed as a research report or a solicitation. For information purposes only. D&D Securities, its clients, and principals may have positions in these securities.
]]>0Ed Pennock<![CDATA[The Morning Boxscore - August 26th, 2009]]>http://blog.dndsecurities.ca/?p=2012009-08-26T17:51:29Z2009-08-26T17:51:14ZThe Morning Boxscore: Wednesday, August 26, 2009
Today vs. Yesterday
US Libor – Overnight .227 vs. 228
US Libor – (3 Mo) .372 vs. 380
Euro Libor – Overnight .269 vs. 268
Euro Libor – (3 Mo) .811 vs. 811
TED Spread .22 -0.01
US 10 yr Yield 3.433 –
US 2 yr Yield 1.047 -1.00
S&P 1024.8 -1.30
OIL 72.28 +0.23
NATG 2.850 -0.032
GOLD 949.3 +3.30
VIX 24.92 -0.22
Baltic Dry 2388 -49.00
Rig Counts as of Aug 21, 2009
US 985 vs. 968
CA 164 vs. 170
MX 29 vs. 30
CDN/USD 0.9156 -.0045
EUR/USD 1.4283 -.0013
As of 7:15 AM
Investment Headlines
-German business confidence climbs more than forecast
-China may impose curbs on overcapacity in steal, cement, coal industries
-CIBC profit rises 5-fold to $371MM on higher capital markets fees, however missed EPS estimates by a nickel
-Eldorado Gold makes $1.8B offer for rest of Australia’s Sino Gold
-Forsys terminates agreement with George Forest
-Gazprom reports $3.3B Q1 net income, beating estimates
-Crude Inventories due out at 10:30, a decrease of 1.2MM barrels is expected
-MBA Mortgage Applications rose 7.5%, up from 5.6%
-US economic data: durable good orders due out at 8:30 (3% est.) and New Home Sales at 10:00 (390m est.).
* Source Bloomberg
]]>0Ed Pennock<![CDATA[The Morning Call - August 25th, 2009]]>http://blog.dndsecurities.ca/?p=1982009-08-25T13:36:57Z2009-08-25T13:36:57Z
D&D Securities Company
The Morning Call: Tuesday, August 25, 2009
The aversion to risk is returning to markets. It’s not enough to glibly announce that we’ve got $109B notes and $117 Bills being auctioned this week and so the market is down. That’s been the pattern: US$ up and equity markets struggle. However, in Canada managers were looking to hedge their bets as the banks start to report (BMO first). James Wells the 3rd of Suntrust bank in Georgia forecasted more Loan Loss provisions and brought the sector down. The Bank Credit Analyst has an article showing that the Fed’s action to drain the system in the mid 1930’s was to blame for the double dip. Roubini wrote about the Risks of a double dip on the FT yesterday. However, we believe that the Fed will stay with low rates (and easy money) for next couple of years. The market is worrying about the sustainability of the Q3 growth rates and we aren’t even there yet.
The house price statistics come out today as does the Case Shiller Index. -Stay tuned. The Canadian Bank earnings start and, again, stay tuned. We remain optimistic.
The fear is that the P/E’s are too high for where we are in the recovery. Well, both could be wrong. The EPS forecasts could be too low. A Strategist for whom we have the highest regard just added $100 to his S&P TSX Earnings forecast. Could more follow? The multiple of 17 or 18 seems high but is quite in line with the rule of 20. -Which states that the P/E should be 20 minus the inflation rate. We’ve actually seen times when it was 22x the DOW.
We think that the price of oil is starting to look like a shorthand read on the economy. We will do more work in the coming days.
Late news this morning Bernanke has been renominated and US house prices rise for the second month.
Invest the money.
From the Short View – Financial Times
Uncompetitive Chinese mine production has plunged with lower global prices. China has relied heavily on imports, mopping up surpluses and raising prices. This is good news for mines with high volume + low production cost assets such as Rio Tinto and BHP.
Nuclear Tuesday
The UX spot market dropped 1$ to $47. Term prices were unchanged at $55. The market has no buyers and the few that are out there are being coy. There is fear that the DOE may liquidate some inventory. There’s no reason to buy product until October and that’s what the market is acting like. That’s notwithstanding the quote attributed to Fletcher Newton of UUU who said that, “no one can produce uranium at 40 f***ing dollars”.
Quote of the Day:
“There’s no business like show business, but there are several businesses like accounting.” David Letterman
The above note is prepared by an Institutional Salesperson based on morning meeting comments and general Institutional desk discussion and should not be construed as a research report or a solicitation. For information purposes only. D&D Securities, its clients, and principals may have positions in these securities.
]]>0Ed Pennock<![CDATA[The Morning Boxscore - August 25th, 2009]]>http://blog.dndsecurities.ca/?p=1962009-08-25T13:34:27Z2009-08-25T13:34:27ZThe Morning Boxscore: Tuesday, August 25, 2009
Today vs. Yesterday
US Libor – Overnight .228 vs. 229
US Libor – (3 Mo) .380 vs. 387
Euro Libor – Overnight .268 vs. 270
Euro Libor – (3 Mo) .811 vs. 818
TED Spread .22 -0.01
US 10 yr Yield 3.485 +1.00
US 2 yr Yield 1.025 +1.00
S&P 1025.9 +1.40
OIL 74.03 -0.34
NATG 2.916 -0.007
GOLD 947.8 +4.20
VIX 25.14 +0.13
Baltic Dry 2437 -31.00
Rig Counts as of Aug 21, 2009
US 985 vs. 968
CA 164 vs. 170
MX 29 vs. 30
CDN/USD 0.9270 -.0022
EUR/USD 1.4288 -.0016
As of 7:00 AM
Investment Headlines
-Bernanke to be nominated by Obama for Second Term as Fed Chief
-Court orders Fed to disclose $2 Trillion Loan Program details
-China down 2.6 % as stocks retreat from recent run up
-Cdn Retail sales rose 1% in June, the fifth gain in last six months
-BMO reports adjusted Q3 EPS of $1.05 vs. $0.95 street consensus, benefiting from strong Personal and Commercial Banking, Diversified Business Mix and Capital Market opportunities
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