Markets opening higher on IBM's numbers but don't be foooled as 60% is currency driven growth at the company. In a recession environment, can we really expect that 40% genuine growth to be sustainable in 08? It's like picking a fighter with one hand tied behind his back... At $910 an once, goldbugs probably backed by hedge funds are continuing to see the greenback in a downward spiral. This will reverse... still saying gold below 800 at one point this year.
I hate what I am reading on the mortgage fiasco solutions being provided. Wether it is a five year moratorium on changes to the floating rates, postponments on foreclosures, it sounds like prolonging the pain. Market hates uncertainty and the sooner this is all cleared up the better. In the meantime, I see companies floating 14% paper to shore up their balance sheets. I think that is really healthy and that the right pricing will show there is liquidity and that more money will come into play. In the meantime, Bernanke should change his tune on the hinted 75bps of cuts and some shorts might get kicked in the shins...
Meantime looks like a good time to look at renewable energy investments while adding to short positions on heavy machinery manufacturers...
All for now
DCW
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