Morning Call

0 CommentsMonday • June 29, 2009 • by alwaters

“Failure lies not in falling down. Failure lies in not getting up.”
(Traditional Chinese proverb)

Despite a steady stream of dramatic events around the world, the stock market has been barely able to garner any real momentum lately. At one time, political unrest in Iran, saber rattling in North Korea, or a military coup in Honduras might have caused a noticeable ripple in the stock markets. Add to this, a threat from Venezuelan leader Hugo Chavez to take military action in Honduras or Russia’s holding of major “War Games” in the Caucasus region and you might expect a reaction in equities, gold, or oil. Instead, we have had minimal movement in the indexes and this morning’s futures activity has seen only a modest upside. Commodities have all fluctuated in a tight range as well. It is as if traders have become so numbed from recent events, and so confused by conflicting predictions of recovery or collapse, that few are willing to commit.

In Asia, stocks moved lower by an average of 1%, but most banks fared worse as did the technology sector. In Europe, however, the indexes are higher by nearly 1% and most of the financial sector has stayed in positive territory. In the US, futures remain slightly higher, but it appears that the banks stocks will not be among the winners today. Although it has no bearing on the stock market, many will be watching for details from the court scene today as Bernie Madoff is scheduled for sentencing and Allen Stanford faces a bail hearing.

Commodities are generally mixed this morning, although both gold and oil have moved higher. Crude has jumped higher by over 1% at just under the $70 mark. Gold has gained a Dollar to reach $942. Despite the fact that China added some relief to the Dollar by issuing a statement ruling out any “sudden changes” in its foreign reserves policy, the Dollar remains lower against the Euro and Pound.

There are no scheduled economic reports today. For earnings, we will hear from Apollo Group, H&R Block, and several smaller companies.

Somewhat overshadowed by celebrity and political news stories over the weekend, there were also five more bank failures; bringing the year total to 45. Together, the banks represented over $1 Billion in assets. This can’t be played off as an insignificant occurrence, particularly because we do not believe the worst is over for the small to regional banks. Even though the total numbers appear nowhere near that of the Great Depression, it is all a matter of what numbers you look at. In terms of total branches closed, total assets involved, or the total number of banking jobs lost as a result, we have already exceeded the scenario from the 1930s. The large institutions will not remain immune if the bleeding is not controlled at this level.

Posted in: Morning Call: Daily Analysis of the Global Markets and Economy

Tagged with: bonds, economy, gold, money management, oil, stocks, wall street