Wall Street Climbs Back After NDE
Maybe a NDE (near-death experience) is a little overdramatic, but after durable goods orders missed consensus and new home sales numbers came in at the lowest level ever recorded, the 100 points shredded from the Dow in the opening 30 minutes of trade lastnight was seen by some as a portent of doom.
The contrarians, however, took hold and stocks managed to haul their way into positive territory by the closing bell. After 4 days of nihilism, maybe the sellers needed a rest and those who exited their shorts set up only last week would have been shoutingthe bar come midday.
The deep fall then sharp recovery maintains the unnerving trading pattern that continues to haunt those looking to build longer positions. Yes, if you are in for the long haul then it shouldn’t matter too much, but it’s hard to find someone who is totallybullish and doesn’t have even a smidge of worry that the breakout that is due (we’re in a clear pennant pattern here) won’t be drastically to the downside.
Source: Bloomberg
Roundup
You know the drill. Traders rushing around like they’ve just seen a ghost early, stocks sold off hard, Treasuries soared (yield on 10-years went as low as 2.42%) and rumours of Apocalyptic horses stampeding the floor of the NYSE swept the market. Then,buyers enter and the blokes quoted on Bloomberg TV go from looking like Chicken Little to doing a fair impersonation of the Iraqi Minister for Information.
Volumes still low, here – even lower than the day before. The drop in the dollar helped metals prices during the afternoon.
Crude bounced $1 off its intraday low, and thus consolidated above $70 whereas a finish in the $60’s was on the cards for a while. A 19 point gain for the day is hardly indicative of a key pivot, but the pause/ resilience was at least welcomed. “Stallbefore the fall”? Could be.
Potash fell back in NY as Kloppers said “there is only a small universe of interest” in the play.
Home Sales – Can they Get Worse?
Gee, I hope not. Even after Tuesday’s appalling existing home sales numbers, which had analysts scurrying to downgrade their estimates for the new dwelling data, the consensus forecast was for 330,000 movements for July. When the actual headline came in at276,000, that confirmed the fears of most, surely including many TCD readers, that a recovery sans a betterment of this sector is not a recovery at all.
The figures for June were also revised downwards, so the story was just horrid across the boards. Curiously, luxury homebuilder Toll Brothers beat the street and swung to a profit and found 4.8% accordingly.
Another Bloody iPod
Kidding me. Another one? So it seems. Apple eased despite reports it was just about unveil a new version of the breathtakingly successful iPod, as well as arranging TV shows to be sent direct to your iPhone for 99c an episode. iTelly, perhaps.
Follow the Leader?
With bearishness so hot right now, perhaps let’s consider that Buffett, Icahn and Soros have each confirmed their activity on the buy-side of late. Note, though, that none of those pundits are wading in broadly and continue to use rifles rather thanshotguns. Boring yields, sedate growth prospects, but there is still value in their eyes.
Europe
Most bourses fell, with the terrible US data accentuating losses towards the end of the European sessions. The S&P downgrade of Ireland’s rating hurt that market in particular, with Allied stripped of 3%.
Coalminers eased as the falling price of natural gas had some suggesting that a switch to gas-powered stations would emerge. Not overnight, it won’t.
Australia Dives on Global Weakness
The BHP profit was pretty spectacular, as $15b annual results generally are, but it actually missed the market’s forecast and so there was little to buttress our falling XJO yesterday.
We surrendered 62 points, after trying to hold our own earlier.
The XJO now sits at a 6-week low, with objective eyes rightly viewing the signs coming out of the US, and recent comments from some of our senior banking execs, as necessitating extreme caution.
Still a Stalemate in Canberra
Lots of ambit claims ahead, with the discussions between Abbott, Jules and the independents continuing through the media. Wilkie looks home in Denison and with the Libs catching up in Corangimite, the main game remains the seat count. Get in front there,and Abbott has the whip hand. Brisbane should go to the Libs, and Hasluck is still favouring the Coalition.
Tougher call, but Abbott may be rejecting Katter’s call for a Treasury costing, because he can.
WOW Still #1
Woolworth’s has marked time for a while now, with improving sales at Coles (off a lower vase) and the likelihood that Luscombe’s stellar growth could not be maintained attracting downgrades.
This morning, though, a big effort from our major retailer has seen profit come in above expectations, albeit slightly. The $2b result reminds us retailing is a tough game, but its outlook means it’s no longer overpriced and as a defensive I’m happy toenter around here after reducing in April at circa $30.
Today
Better start tomorrow’s edition a bit early – it’ll be the last with me as author as I move on to other things beyond the house of Chimaera. I’ll miss this outlet, I must say.
Maybe I should get a doco crew to follow me. Luv the Cuz, by the way.
Up 20 – sheep or soldiers?
Cheers
Simon Wallace
Group Relationship Executive
+61 3 8614 8400
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Source: Bloomberg 
