Monday, July 23, 2007

Monday Morning Musings

After last week's drubbing, stocks are getting a nice bounce in early trading. A lack of any bad economic news coupled with more M&A activity is luring buyers back into the market.

On the earnings front, both Merck (MRK) and Schering-Plough (SGP) reported strong results. That is lifting the drug sector. In M&A news, the big merger in the oil patch is Transocean (RIG) and GlobalSantaFe (GSF). Also, URI is being taken private for $6.6 billion, and there is a rumor that Tellabls (TLAB) could be taken out.

Oil prices are plunging more than a buck, pushing crude prices back down below $75. Bond yields are also steady, witht the 10-year around 4.95%. These two factors should help support equities.

Asian markets were mixed overnight, with China and India up, but Japan and Australia lower.

The pressure on the financial sector is not going to go away overnight, even though it has temporarily been forgotten by investors this morning. I still have cash on the sidelines, and will wait for some futher weakness to deploy some of it.


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