-0.32%
-0.43%
Here’s the transcript for Jeff Millers Markets Diary for January 27, 2012. You can find Jeff live writing about his trades and chatting it up subscribers five days week at WallStreetAllStars.com/miller.
Q4 GDP is the big economic news of the week. Up 2.8% was a touch light of the 3 - handle expected by most economists. As I have frequently noted, the role of inventories is always watched, and always subject to interpretation.
This quarter included building of inventories. Some people may view this as “unwanted” and needing to be worked off. Others see inventory as a business interpretation of future needs. We can follow this more closely on a monthly basis with the ISM data. However you want to look at it, GDP would have been only about 0.8% without inventory building. Government spending is a continuing drag.
This is also the “first estimate.” Many of the components include data that are subject to revision. By the time we know the final answer, Q112 will be over!
Europe news includes progress on the talks between the Greek government and private debt-holders. There seems to be a greater likelihood that the result will be deemed a “credit event” triggering the payoff on credit default swaps. This was a possibility that was deemed to be a disaster scenario a few months ago, but now seems to have largely been reflected in market prices.
Another successful Italian debt auction — 6 month bills at under 2%, down from 3.25% last month — shows the market reaction to progress there.
No changes from Felix for the trading universe. Still in XLB, XLI, and IWM. AAXJ still in the penalty box. The broad market ETFs are positive as well. IWM has been in the green even when the market was down on the day, so the relative strength is good.
The ratings are close to the list published yesterday https://wallstreetallstars.com/weekly-sector-update-012512/
The broader universe (ignoring names in the P has KOL, PSAU, and FXI in the lead with IBB, KBE, GXC, and IDX not far behind. In general, the list of attractive sectors has broadened. Felix does not try to anticipate a market top and does not react to a day or two of moderate selling in the context of a good move.
Related posts:
