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Market Commentary Stocks overcame early selling to close Stocks overcame early selling to close moderately higher as Daimler AG reported better than expected results and knowledge that the SEC did not vote unanimously to sue Goldman Sachs. According to news reports the vote was 3-2 along party lines. Some questioned my comments that Goldman is a potential political football, a view supported by the observation that Goldman is the poster child of all what is wrong on Wall Street. Politics is defined as the division of power amongst groups in an attempt to dictate or influence direction thus suggesting everything in life is political. As written many times, markets are a microcosm of life comprised of an infinite amount of variables each changing daily in their degree of significance. It appeared yesterday market participants were relieved that the fraud suit may be an isolated event given the close SEC vote as to whether to file such legalities. As noted in yesterday’s comments I believe the greatest potential fallout from Goldman is a financial reform bill that is more onerous than needed. Have the odds of such occurrence declined? Commenting briefly about earnings, early announced profits have been incredible. Some are suggesting these results could be the catalyst to permit the economy to grow over 4% for 2010, reducing the odds of the much heralded but rare event of double dip recession to under 10%. As per Bloomberg companies—ex the financials who alone have $1.4 trillion in excess reserves-- have a surfeit of excess cash rising to a record $1.8 trillion. In my view it is not matter of if but rather when these funds will put to work. What will occur today? Earnings and other corporate developments should be the prevailing guiding factor given the lack of economic data scheduled to be released. Last night the foreign markets were up. London was up 0.76%, Paris up 1.18% and Frankfurt up 1.29%. Japan was down 0.07% and Hang Sang up 1.02%. The Dow should open moderately higher on strong earnings. The 10-year is off 3/32 to yield 3.81%. The information is the personal views of Kent Engelke and is not necessarily indicative of those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed here are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. Capitol Securities Management, Inc. is a Mid-Atlantic based, privately owned brokerage and investment firm with branch offices in Mclean and Richmond, VA, Boston MA, Hickory, NC, Florham Park, NJ and Tampa, FL. Capitol employs over 170 fulltime investment professionals and independent affiliates in locations from New England to Florida and has been serving the needs of its investors for over 25 years. It is a member of FINRA and SIPC. © Copyright 2008 Capitol Securities, Inc. All Rights Reserved. |
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