Before The Bell: U.S. Still The Leader; Gold Bump
The U.S. is still the most important economy in the world. Gold bulls hit a bump. Stock futures are down.
Bloomberg reports the U.S. economy is still proving itself to be the most important economy in the world as emerging markets have dropped the most in a year and a half. The MSCI Emerging Markets Index ETF (EEM) has dropped 9.8% this month compared to an 8% drop in the S&P 500. With the possibility of a U.S. recession, investors previously viewed companies such as PetroChina (PTR) as a safe haven for their money. The recent performance of PTR, however, has debunked that theory: Shares of PTR have fallen 44% since November, erasing about $400 bln in market cap. Read Professor Woody Dorsey's The Recession Of The Recession.
From the Bull Pen: Investors may stick with textbook safe-havens in the consumer staples sector such as Kellogg (K) and General Mills (GIS). The stocks were both upgraded this morning by Citigroup. Sell-stops below $46 and $50 respectively.
From the Bear Cave: Bears may play the downside in EEM; buy-stops above the 200 DMA ($140).
Bloomberg reports AngloGold Ashanti (AU) and other gold miners in South Africa are uncertain of when production will resume. Mining activities were shut down last Friday after state-run utility Eskom requested gold, diamond, and platinum miners operate at a minimum due to power shortages. But industry leaders are currently meeting with Eskom and discussing ways in which they may reduce sector demand by 10%. Furthermore, AU CEO Mark Cutifani said he is confident the reduction target can be achieved without jeopardizing workplace safety or production. For context on gold, read Professor Lance Lewis' article Central Banks Pushing Gold.
From the Bull Pen: Gold stocks were hit hard last Friday when the news was announced. But Professor Lewis said the panic was a gift because the country needs the money and the companies will work something out with Eskom. Bulls may play AU and GoldFields (GFI); sell-stops below $40 and $14 respectively.
From the Bear Cave: Bears know shorting gold in a bull market can be risky. A better alternative may rest in the GDP-sensitive base metals. Downside entry on Freeport McMoran (FCX) at $90; sell-stops above.
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
A fresh set of five steps into the huddle and looks upon a team of red foreign markets.
Asian trading closed with the Hang Seng -4.25%, Nikkei -3.97%, Sensex -1.14%, Taiwan -3.28% and Shanghai -7.19%.
A quick look towards Europe finds the CAC -1.99%, DAX -1.57%, FTSE -2.08%, ATX -3.25%, Swiss Mkt. -1.84% and Stockholm -2.12%.
A Look At Commodities
Commodities are mixed this morning. Crude oil is lower -1.07 to 89.64. Gold is higher +10.0 to 920.70. Silver is up +0.155 to 16.428, and copper is down -4.60 to 313.00.
As of 9:00 AM EST, S&P futures are lower -4.70 to 1329, and Nasdaq futures are down -2.25 to 1791.
On the Radar
10:00 New Home Sales: 649 k cons
Click here for the full trading radar.
Happy Monday! Good luck!
GET THESE INSIGHTS AND MORE IN REAL-TIME. CALL 212-991-9357 FOR A 14-DAY FREE TRIAL TO THE BUZZ & BANTER OR CLICK BELOW.
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