China is still expanding
Europe is improving
USA is still adding jobs
The small business bill is still in progress, this will support more job addition in the next months ahead.
Interest Rates are ultra low, yet inflation remain low
As long as inflation does not threaten the low interest rates, the FED is able to allow low interest rates to remain for an extended period of time, this promotes economic growth.
Earnings will continue to grow, maybe at a slower rate
Earnings should continue to be healthy as most companies have successfully completed their profit draining restructuring plans, they are now able to survive tough economic conditions and continue to profit.
Metals stock levels are going down
There is real demand for the metal now. India and China and the Latin Americas are driving this demand. Metal demand will increase by 10% this year, and next year.
Capacity Utilization at healthy 75% level
Factories are operating at the profitable 75% level. Companies like US Steel are expecting to start profiting in Q2. Despite lower metal prices, metal companies would be able to profit decently due to better operating margins after the restructuring.
Metal prices are still higher than Analysts’ previous year estimates.
In September 2009, analysts called for average aluminum price in 2010 at only $0.80/lb. Analysts were overbullish on copper though. They had also called for a 10% growth in the metal demand, and this view is still held till today.
EURO Worries
Economists and analysts are afraid that Europe might be experiencing a dip in its economy, however, recent economic data has supported that Europe is still expanding at 1.3% rate which is decently healthy. Spain will be releasing its bank stress very soon, and we will be able to put Spain’s woes at ease finally.
A bullish rally in the making? Dow to 11800, could it happen?
Let’s revisit 2009, the market was in a bullish mode, worries about China slowing growth rattled markets, this was further fueled by the downgrade of Greece and Spain last December. The DOW fell sharply as a result in February. However, it quickly recovered as investors were happy about the job creation sparked by the euphoria of OBAMA JOB PLAN.
However, this time, our President is busy with BP, busy with Financial Bill, busy with bills that hurt the economy.There is no optimism except a few words and I quote “ We are heading in the right direction ” (Obama’s reaction to the latest job figures).
Furthermore, negative news continued to bombard the street.
- China PMI decreases
- Germany chooses to cut its budget
- MOODY, FITCH, S&P started to time the market and DOWNGRADE SPAIN, GREECE at critical support levels so that traders can break those supports.
- Economic indicators kept showing poor results
- Unemployment claims could not go below 450k.
- BP OIL Spill hurt economic growth in the Gulf
- Spanish bank bailed out. Cajasur.
- CAPITULATION kept buzzing the street, CNBC kept trying to create negative sentiments.
However, this is going to end soon.
What positive news await us?
- Bank Stress test in Eurozone
- Spain grows
- Obama Small Business Bill
- China Yuan revaluation boosts US exports
- EURO rally, sparking DOW rally
- Oil rises to $100
- BP oil settles
- Australia SuperTAX compromised
- China need not cool its economy
- India Growth spurs
- another stimulus?
Why the WEST lags the EAST and Asia?
Beats me.
I am bullish at this level. We are already at a major support level after going through so much, the market is fully oversold. I expect fund managers to start buying shares at this level.
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