Traders,
A rebound of the sharp sell-off in January is welcomed, but is it just a rebound (or "dead cat" bounce)? The last couple of weeks has seen a move into suppose "safe haven" treasuries, I find it amazing that investors will rush into treasuries, especially short-term that doesn't even pay 1%. However, I think I know the answer - as I was talking with a broker the other day he said - "What else is there to do?" as to why he stated he moved his clients into short-term treasuries. It seems like the typical knee jerk panic move and it also seems there is still a "strong" feeling that the dollar is "safe" or it psychologically offers comfort. Regardless of the current government balance sheet, deficits, and mounting debt - the reality is unable to convince investors that it is not necessarily "safe". It is confidence and really not math that is creating what seems to be "safe" - for now anyway. |
| Volcker's Rule
the right rule?
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Volcker is now getting some attention, after months of shooting down his ideas. Geithner and even Summers were against Volcker's ideas that would bring back "Glass Stiegel" type legislation. However, with all the populism (hatred for the banks), Democrats losing a prime seat, and Obama's approval slipping - Volker is now brought front and center. Volcker's suggestion is not necessarily a bad idea, however it is not a solution and it is only been brought front-n-center to boost approval ratings and address populist concern. That IS a problem - as punitive legislation is really more a "mob rule" approach. What we need is regulation and regulators - not a rule that re-arranges the deck chairs on the Titanic. We don't have to look far to see how well Congress oversight in public business has worked - Freddie and Fannie. Even Barney Frank is chewing his own words as a previous leading supporter of the expansion and support of Freddie and Fannie.
This morning Wilbur Ross on CNBC made a valid point - the Volcker Rule doesn't address the problem the cause the credit crisis. One only has to look to Canada - where banks invest and trade, as well as lend money. How come the Canadian banks didn't implode - simple - they have very strict lending rules - were clients have to put down substantial funds and there is very little room for creative financing. He is correct - proper regulation and regulators keep problems (or reduces the fall out). In this country our politicians expanded the lending and encouraged Freddie and Fannie with policies like "Everyone should be able to own a home." (at any cost?)
Volcker's rule addresses trading - not the problem with bad lending. If this was a trading problem that created the collapse then maybe Volcker's rule would have more merit. Today we will see how this moves forward. Unfortunately after any crisis - knee jerk and punitive legislation rules the day. When will Congress take any responsibility and accountability?
http://www.cnbc.com/id/35192203 |
| UPS Profits...
looking stronger? |
UPS has been facing difficulties - first it was the higher gas/oil prices and then it was the contraction in business and the credit crisis. It was as if they couldn't catch a break. The company cut costs, look to improve routes and efficiency, and developed new models (sales) for shipping. It worked and the company surprised expectations as it earned 75 cents a share. Sales, which for me is a key measure, increased to 12.38 billion (above the 12.25 billion expected). Sure it was below 12.7 a year ago - but an improvement in sales and margins is showing that company in the most difficult of situations is managing the operation better than expected. What is even better news is that UPS is rather optimistic for 2010 with a profits guidance of 2.7 to 3.05 per share. Where is this coming from? Guess - it's emerging markets and international shipping - not domestic. http://www.cnbc.com/id/35186517 |
| Futures Pre-market
Where's the action! |
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The futures were fairly strong earlier, but they have slipped to almost break-even on the day. If they remain here expect a slightly better opening..
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| Support / Resistance
Going higher or lower? |
INDU 10,000 (We got a solid boost off those lows - that 10,000 level remains a key psychological support area.)
NDX 1750 / 1800 (We got a good bounce and above that 1750 level that was causing some concern on Friday.)
SPX 1075 / 1100 (Looking for a push back up to 1100)
RUT 600 (600 holds and we bounce off the bottom. Watch that 600 area for broad based support.) |
| Conclusion
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Politics will continue to play a role in the market - especially going into the mid-term elections. Democrats don't want to lose control of either house and must boost the approval ratings that have fallen sharply in the last 6 months. Congress approval ratings are close to an all-time low. Australia did surprise everyone by keeping rates unchanged at 3.75%. Expectations were for another move higher after they had raised rates by 75 bps since October. The expectation is that this is a pause and they will continue to raise rates to 4.75 by year-end. The currency is considered a commodity currency as the country is a big exporter of commodities. http://www.cnbc.com/id/35191663 Today Barney Frank is named Porker of the Year for 2009 http://www.cnbc.com/id/15840232?video=1402507921&play=1 (Go figure - Freddie and Fannie) |
