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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.

Morning Perspective: U.S. Is Still The Leader

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).

Gold Bump

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!

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No positions in stocks mentioned.

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