Before The Bell: Weak Rand and Good Gold; The Gloomy Seven
The Rand is plummeting while gold soars. The G7 is forecasting possibly $400 billion in losses.
The South African Rand is plummeting faster than any other major currency. According to Bloomberg, the rand is down 12% this year versus the dollar, six times more than the next-worst performer among the world's most actively traded currencies. The decline comes even as gold and platinum reach record levels, signaling the lack of confidence the world has in the country's ability to fix its recent power shortage issues. For context on gold, read Professor Lance Lewis' article Gold Poised For New Highs.
From the Bull Pen: Even with S. Africa's recent power issues, Professor Lewis remains bullish on the S. African gold miners adding that the weak rand is good for companies like Gold Fields (GFI) . He notes that GFI's costs continue to fall while its dollar sales increase with the price of gold. Bulls may place sell-stops below $13.20.
From the Bear Cave: Bears may find better downside plays in other areas such as copper miner Freeport McMoRan (FCX). Sell-stops can be placed above $92 or $98 for those with more risk tolerance.
The Gloomy Seven
FT reports the Group of Seven (G7) is warning that writedowns of losses linked to U.S. subprime securities could now reach $400 billion. The estimate is sharply higher than the $120 billion in credit losses that U.S. banks have already revealed and greatly exceeds the Federal Reserve's forecast last year of $100-150 billion. G7 Finance ministers did say that not all of the losses could be realized as much of the path of the credit markets remain uncertain. But Bank of Italy Governor Mario Draghi warned that the next 10 days to two weeks will be crucial because financial institutions will have their first audited accounts. Minyan Peter has been watching Europe since last September. Read his article Why Europe Matters More.
From the Bull Pen: Bulls may look to other spaces for long-sided plays such as the agriculture ETF (DBA), which is nearing new highs. Near-term sell-stops can be set below $38.
From the Bear Cave: Those bearish may play the ultrashort financials ETF (SKF), which tracks twice (200%) the inverse of the daily performance of the Dow Jones U.S. financials index. Sell-stops below recent lows ($104).
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Traders come back refreshed from their respite only to find foreign markets suffering a mild case of the Mondays.
Asian trading closed with the Hang Seng -3.64%, and Sensex -4.78%.
A quick look towards Europe finds the CAC -0.32%, DAX -0.33%, FTSE -0.57%, ATX +0.11%, Swiss Mkt. -0.60% and Stockholm -0.85%.
A Look At Commodities
Commodities are strong. Crude is trading +0.16 to 91.93. Gold is up +8.30 to 926.70. Silver is trading +0.170 to 17.280, and copper is trading +3.55 to 357.00.
As of 8:45 AM EST, S&P futures are trading +3.20 points to 1333 and Nasdaq futures are higher +10 points to 1786.
On the Radar
Today is a light day on the radar with no economic events scheduled.
Click here for Minyanville's full trading radar.
Happy Monday, Minyans! Good luck!
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