Markets Full Steam Ahead! Recap…February 2 | Posted by Kevin Monaghan | Inside Trader Highlights
Once again, the markets push onwards and upwards without a significant pullback. Traders are still singing the same old tune; you have to be long the markets. It doesn’t matter if you think valuations are high, that underlying debt issues will topple the markets, or that we’re heading for a double dip recession. The bottom line is that the trade that continues to consistently make money is being long energy, commodities, and the equity markets.
The fact remains that most of the world has a negative real rate of return due to the fact that interest rates are below inflation rates. While inflation numbers are creeping up everywhere, investors are realizing that they it simply doesn’t make sense to keep their money in cash getting less than one percent. While US inflation numbers are officially still very low, try telling that to someone filling up their gas tank or buying food at the store.
Market Highlights For Tuesday:
BP plc. (BP)- Announced it was returning money to shareholders again by reinstating its dividend. The company will pay a quarterly dividend of $0.07 per share. Shares of BP closed up just over 1% to end at $47.98.
Exxon Mobil (XOM)- Speaking of oil companies, Exxon is up huge AGAIN after it blew out earnings on Monday morning. Despite climbing from $58 to over $80 in just a short time, valuations are still reasonable.
Natural Gas (UNG)- Despite trying to reverse its long term downward trend, the natural gas trade just can’t gain any footing. At this rate it almost seems natural gas will be free in a few years.
Gold (GLD)- Gold still struggling to find its next push higher, but it still remains above a key support level of $1,280. Silver managed to (SLV) finish 1.75% higher.
Banks- Led higher by Bank of America (BAC), which was up over 4%, bank stocks performed well today on continued good news in the economy.
Baidu (BIDU)- Crushed their earnings estimates! Stock up $10.10 or 9.3%. Enough said.
Pfizer (PFE)- Cut it’s research budget to hit its 2012 profit targets. Shareholders liked the news and the stock went up 5.49%. Finally, the drug companies see some life in them.
Energizer Holdings (ENR) + McGraw-Hill (MHP) were some of the few unlucky ones today, poor outlooks and lower earnings than expected helped these companies lose over 5% each.
Disclosure: Author, Kevin D. Monaghan, Senior Account Executive at Elite Investment Group is long SLV, XOM, UNG