Before The Bell: Commodities Break Records; No Bailout For Ambac
Gold, Oil, Copper hit highs as Ambac plunges.
According to Bloomberg, commodities are surging as the dollar continues to slide. Crude oil rose to a record $105.96 a barrel in New York and gold reached record highs touching $992 an ounce in London. Copper extended its best start to a year in two decades as stockpiles monitored by the London Metal Exchange shrank for an eighth consecutive day. The dollar fell against 13 of the world's 16 most actively traded currencies and the euro climbed to a new high of $1.5347 vs. the dollar, the highest since the currency debuted in 1999. Read Todd's view on commodities in yesterday's Random Thoughts.
From the Bull Pen: Bulls see upside in the Energy ETF (XLE) and Gold Fields (GFI); sell-stops below $75 and $14.50.
From the Bear Cave: Bears are wary of shorting a bull market and conscious of a rally by the dollar. Instead, bears expect these high prices to pressure the margins of companies like refiner Tesoro (TSO) and restaurant Cheesecake Factory (CAKE); buy-stops above $38 and $22 respectively.
No Bailout For Ambac
Ambac (ABK) rocked the financial markets yesterday after revealing its decision to issue $1.5 bln in equity. Shares of ABK plunged as much as 25% because investors had been waiting since last week for news of a bailout by the investment banks. Analysts remain skeptical that the plan will work as credit-default swaps on the company rose 38 basis points to 513. Further the company scared Wall Street after saying it could still operate with AA ratings. Credit Suisse (CS), Citigroup (C), Bank of America (BAC), and UBS (UBS) will handle the stock sale. For context read Bennet Sedacca's Credit Default Swaps Signal Brokerage Trouble.
From the Bull Pen: Bulls looking for financial exposure can look to MasterCard (MA). Professor Jeff Macke said he'd be a buyer of a sustained dip. Sell-stops can be set below $180.
From the Bear Cave: Bears can short the underwriters for this deal. Buy-stops above $40 for BAC and above $50 for CS.
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed in the green with the Hang Seng +0.99%, Nikkei +1.88%, Taiwan +2.06% and Shanghai +1.59%.
A quick check of European bourses finds the CAC -0.22%, DAX -0.33%, FTSE -0.24%, ATX-0.03%, Swiss Mkt. +0.13% and Stockholm -0.08%
A Look At Commodities
Commodities are mixed. Crude oil is up +0.33 to 104.85. Gold is lower -4.40 to 984.00. Silver is lower -0.03 to 20.655, and copper is higher +1.05 to 400.00.
The dollar index is lower -0.248 to 73.231.
As of 8:45 AM EST, S&P futures are down -12 points to 1323, and Nasdaq futures are lower by 11 points to 1748.
On the Radar
Initial Jobless Claims: 351 k vs. 373 k prior.
Continuing Claims: 2831 k vs. 2807 k prior.
10:00 Pending Home Sales (m/m): -0.8% cons
1:30 ICSC Chain Store Sales (y/y): 0.5% prior
Click here for Minyanville's full trading radar.
Good luck, Minyans! Have a great day!
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter