Tuesday, July 14, 2009
Looking for Change in Familiar Places
It is 5:29AM, grab a cup and let's take a quick eye test. The ole Colonel will use the headline photo to illustarte a fact about perception. A good tracker will tell you that he doesn't look for something in a scene, he looks for what has changed. Animals process visual information much the same way, especially predators. The change in that case is movement. My Loquita can find her ball in the tall grass as long as it is bouncing, she has a heck of a time finding it when it comes to rest. Market watching is no different. Some mornings there is a news item you didn't expect or unusual movement in a price. Last week it was a quick drop in London's spot silver that caught my eye(Silver Stumbles on the Precious Metal Trail). Fortunately, this wiggle didn't presage a broad decline in precious metals, but it could have.
This week it is not so much much motion as unexpected events. Yesterday Nouriel Roubini saw a ray of light in the economic recovery tunnel (Dr. Doom Speaks, End of Recession in Sight). Last night the Wall Street Journal reported that Meredith Whitney, I call her Ms. Doom, is feeling a bit bullish:
"The financial sector was especially helped by a 5.2% gain in Goldman Sachs Group, which kicks off the wave of bank reports on Tuesday. The bank's shares were upgraded by Meredith Whitney Advisory Group to 'buy' from 'neutral.'
'It's a major positive event' for Ms. Whitney to put a buy rating on any bank, said Kent Engelke, managing director at Capitol Securities Management in Glen Allen, Va., noting that she has a reputation as a bear after being one of the earliest analysts to predict major pain for Wall Street from soured credit bets." (WSJ, 7/13/2009)
Now that's what a I call a change in the scenery; back-to-back positive commentary from two of our biggest gloom-and-doomers in the marketplace. Of course both have had the reputation for being right on the money for the past several years:
"Whitney's extremely bearish view on banks landed her on the cover of the August 18, 2008 issue of Fortune Magazine. Even before the problems in September that befell Merrill Lynch and Lehman Brothers, she is quoted as saying, 'It feels like I'm at the epicenter of the biggest financial crisis in history.'" (Wikipedia)
She is also married to WWE professional wrestler John "Bradshaw" Layfield. Hey, the Colonel ain't going to pick a fight with this soothsayer! That completes our eye test for the morning.
Oh, you ask, "What IS that thing in the headline photo?" I understand that is Ichthys (or "Ickie" or ἰχθύς), Eureka's HWY 50 paleozoic fish. Since much of our basin is an old Devonian seabed, I guess it is fitting for Ichthys to return to visit after a 350 million year hiatus.
Enough fish stories, let's walk the walk:
Oil is up $1.39 to $61.08 in early trading (August contract); Gold is up $2.0 to $924.50 (August contract); Silver is up $0.105 to $12.548905 (September contract); Copper is up $0.0520 to $2.2750 (September contract); Molybdenum is still sitting happily at $11.50.
The DOW is down 11.34 points to 8320.34; the S&P 500, down 0.61 points to 8320.34. The miners are rocking today:
Barrick (ABX) $32.65 up 2.06%
Newmont (NEM) $39.04 1.53%
General Moly (Eureka Moly, LLC) (GMO) $1.95 up 1.03%
Freeport McMoran (FCX) $49.51 up 3.34% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are happy(a "tell" for General Moly):
Nucor (NUE) $42.93 up 0.82% - domestic steel manufacturing
ArcelorMittal (MT) $31.28 up 1.26% - global steel producer
POSCO (PKX) $82.10 up 2.51%- South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is up 1.02% to $946,249.35.