Tuesday, June 1, 2010
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The stock market is now clearly headline driven and a lot of the news continues to be negative. Although today's May ISM report was positive, there continues to remain so much noise in the market, high frequency trading and extreme short term outlooks.
The markets are so focused on a possible slowdown that has yet materialize. Instead of focusing in on interest rates at record lows at least on the short end. Corporate profits might very well be at two-year highs this year. With the Euro declining, you don't want it to collapse, but a gradual decline...which is pro growth. Lower interest rates are pro growth. Is the Federal Reserve about to tighten any time soon? I don't believe so. Is China going to tighten now? No. So we could be looking at an extended period where there is no monetary tightening and maybe a possibility of quantitative easing.
So, does this present an environment that is necessarily bad for equities? NO!
Dennis Gartman, founder of The Gartman Letter, shares his outlook on the energy market and the effect of the oil spill in the Gulf of Mexico.
Forecasters warn the oil spill in the Gulf of Mexico could threaten the Mississippi and Alabama coasts as early ask this week. John Hofmeister, former CEO of US operations at Shell, shares his insight.
Walter Energy took it on the chin with an 11% decline, having entered just last month at $75. Similar chart pattern to the $SPX & FXI with support @ $65.