A.L. Waters Capital, LLC

Morning Call

0 CommentsWednesday • March 10, 2010 • by alwaters

The assembled information disseminated by A.L. Waters Capital in the Morning Call is for information purposes only, and is neither a solicitation to buy nor an offer to sell securities. All assembled information within the Morning Call is subject to change without notice. The assembled information within the Morning Call is based on information believed to be reliable as of the date of the report but no representation, expressed or implied, is made as to its accuracy, completeness or correctness.
Forward Looking Statements:
Information in the Morning Call will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. All readers are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance or portfolio performance is no guarantee of future price appreciation or performance.

“He conquers who endures”

Persius

Morning Call
March 10, 2010

Gold Update

Gold is slowly gaining momentum as the Dollar slips slightly on the Euro. The Dollar index remains higher this morning, but has failed to gain traction thus far. The greenback may have peaked as concerns regarding the Greek fiscal crisis begin to soften and as the currency market levels out, gold should benefit. We some retracement likely during the day, we should see a move closer to the $1130 mark toward the latter part of the day.

Hot Stocks

When stocks are steady but non-directional, it is always good to consider dividend yields as well. As long as the global economy can at least maintain some modest growth, we believe that the technology sector is poised for strong innovation and growth over the next few years. Hercules Technology Growth Capital (HTGC) finances start-up and growth companies in the technology sector and, as such, could benefit from general growth in this area. In addition, Hercules carries a dividend yield approaching 8% on share prices just above the $10 mark.

Public Finance Update

The Municipal Securities Rulemaking Board will file its long-anticipated rule changes with the Securities and Exchange Commission today. The changes will increase transparency for auction-rate securities and variable-rate demand obligations. The SHORT system, as it is known for short-term obligation rate transparency, will allow the MSRB to collect additional ARS bidding information as well as ARS and VRDO program documents.
In Washington, the Joint Tax Committee has released revenue estimates for the Obama administration’s budget proposals, which would extend most of the stimulus law’s municipal bond provisions — including the higher qualified small-issuer limit for bank-qualified bonds — through the end of calendar year 2011. The White House also proposed expanding the Build America Bond program so that state and local governments could issue them for refundings and working capital purposes, and 501(c)(3) charitable organizations could sell them.
In Connecticut, Governor M. Jodi Rell has proposed a combination of cuts, fund transfers and deferred payments to close a $503.9 Million budget deficit.

Market Outlook

There simply isn’t much movement in stocks lately. The Dow rode a wave higher and lower to finish the day just above the flat-line yesterday. Futures this morning suggest equities will give back that small gain at the opening bell today. Globally, the major indexes have all struggled along with minor ups and downs; lacking any real momentum. In the US markets yesterday, the leading sector was energy with a negligible upside of .06%, while consumer stocks were among the losers with an equally modest downside. Economic data just continues to be a mixed bag of information and the fiscal health of several European nations remains a concern.
Former European Commission President Romano Prodi says that he believes the financial crisis in Greece is over and that no other European nation will follow its path. “For Greece, the problem is completely over,” Prodi said in an interview in Shanghai. “I don’t see any other case now in Europe. I don’t think there is any reason to think the euro system will collapse or will suffer greatly because of Greece.” Last week, Greece announced spending cuts and tax increases totaling 4.8 Billion Euros ($6.5 Billion)
After a slow start in Europe this morning, stocks are beginning to move higher, but have just turned positive after the first hour of trading. With a few exceptions, bank stocks are pulling up the broader average with an upside of 2-3% in some cases. U.K. factory production unexpectedly fell in January for the first time in five months, suggesting that the economy is still notably sluggish.
Banks did not perform as well in Asia last night, with modest losses for most of the financial sector. As a whole, the major indexes finished flat as several technology stocks and a few industrials weighed on the greater averages. China’s exports rose more than forecast in February, the third straight gain, which will add pressure on policy makers to withdraw stimulus measures adopted during the global recession.
Exports gained 46% in February from a year before after a 21% advance in January. The strengthening in exports will likely reduce excess capacity in manufacturing and fan inflation; which the latest government figures tomorrow may show reached a 16- month high last month.

Even commodities are relatively flat this morning, although some momentum appears to be building. Oil had lost some ground in the early hours but has since returned to even on the day at a little over the $81 mark. Gold is also moving slowly higher; showing a gain of more than $3 this morning to $1126. Gold’s modest upward movement is despite the fact that the Dollar has moved higher against its peers today.
The latest economic data scheduled for release includes Mortgage Applications, some Wholesale Trade information, and the EIA Petroleum Status Report. Earnings reports are due from Brown-Forman, Datalink, RAM Energy, ReneSolar, US Concrete, and a few others.
Looked at as a whole, the economic data over the past two weeks suggests that the U.S. economy will endure a slow, U-shaped recovery, at best The macro news, including data on consumer confidence, home sales, construction and employment, actually suggests a significant downside risk even to the already modest growth seen thus far. A double-dip recession is still a significant possibility.

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

Tagged with: bonds, economy, gold, oil, stocks