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At the open...4-28-11

Equity markets – Asia was once again mixed in overnight trading as concerns about the impact on growth in China continues to weigh on the markets, having said that, the KOSPI continues to set all time highs…European indices are up on the morning session and light volume, especially in the UK as everyone makes their final preparations for the wedding tomorrow…US futures indicate a lower opening as all eyes focus on the initial Q1 GDP report due out at 8:30. Bernanke signaled his expectations of slightly below 2% even though the consensus expectation is such there is probably a little room for a small miss.

Oil markets have more or less stabilized over the last week or so…the Fed’s view (according to Bernanke) is that marginal consumption is coming from the developing world as the US actually continues to decrease consumption of oil (although we still account for more than 20% of global consumption)…this ultimately impacts their view of inflation but it remains to be seen how large the ultimate substitution effect will be…$4 /gallon gasoline remains more the rule than the exception.

The economic calendar today is packed with market moving data releases from the initial look at Q1 GDP (see above), to last week’s initial and continuing jobless claims (it is Thursday after all) where the consensus is for a slight improvement in initial claims to 395,000…we also get more price data with GDP Price Index (look for +2.3%) while the “Core” personal consumption price index looks for +1.4% on a quarter over quarter basis…bigger showings in these could spell trouble, especially after Bernanke’s press conference yesterday where he expressed confidence about overall inflation being under control…pending home sale data is also out for March

News –

• Not that we’re surprised but any talk from US officials about being concerned about the value of the US Dollar is pretty much a joke given the decision to keep liquidity in the system at extraordinarily high levels via QE2 and Bernanke confirmed what we’d expected that the FRBNY will keep the SOMA at post QE2 levels by reinvesting any principal receipts that come expectation is that if the Fed decides that additional monetary stimulus is necessary at that point they’ll start investing the interest off of the portfolio in Treasuries…gold rose to a new price record (nominal terms) post the Bernanke press conference. The Fed’s plan ultimately has very little to do with the primary mandate at this point (price stability) and much more to do with the jobs market and the housing market (mortgage rates).
• Some state’s AGs continue to complain about Bank of Americas “tactics” in dealing with the foreclosure “practices” complaints lodged against the industry…in reality, they were undermined by the banking regulators who have essentially cut deals with the banks that undermine all of the AG suits brought against the banks…any public complaining and finger pointing that you hear from now on will just be politics…
• Now the audit committee at Berkshire is trying to make Buffet look better by saying that Sokol “misled” the “oracle of Omaha” as to his involvement in Lubrizol pre-merger…PLEASE…the cover-ups are always worse than the act.
• 173 fatalities across 5 southeastern US (128 in Alabama alone) as spring storms result in more tornadoes

Earnings – another day of heavy earnings releases with 11.6% of the S&P 500 reporting today…with ½ of the 58 companies already reporting 82.8% beat their respective earnings estimates…the trend continues

Phillip Pennell, CFA
Turnberry Capital Management
(203) 861-2708 (Direct)
(203) 861-2700 (Trading)
(203) 917-2255 (Mobile)

The contents of this posting do not constitute recommendations to buy or sell specific securities. Any individual wishing to buy or sell securities for their investment account or that of others should consult with their investment advisor prior to entering into any securities related transaction

Today is: June 29, 2017 - 3:42am
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