Monday, March 03, 2008

Monday Morning Musings

The market opened on a weak note, following large losses in Asian, but has rebounded from its lows.

Asian markets were down big overnight, with Hong Kong falling -3.1% and Japan declining -4.5% on new highs in the Yen which pressured stocks.

Oil and gold are also making new highs this morning, with gold touching $991 and oil nearly hitting $104. This weighed on our markets in early trading.

There was also some negative headlines in the mortgage market, with Thornburg Mortgage (TMA) saying it had some liquidity issues, and is seeing margin calls. And Ambac (ABK) cut its dividend, as the much anticipated bailout has not yet materialized.

In deal news, Northrop Grumman (NOC) beat out Boeing (BA) for a $40 billion Air Force contract. Also, United Tech (UTX) made a $2.6 billion bid for Diebold (DBD).

The 10-year yeild is up slightly, at 3.55%. My relative valuation models are showing that stocks are the most undervalued relative to bonds that they have been in several decades.

Biotechs are higher this morning, along with energy stocks. All other sectors are currently lower.

The volatility index (VIX) is higher this morning, after a huge spike on Friday. The put/call ratios are also very elevated again today.


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