Posted by rahrens_1 on May 20th 2011 at 11:26 am
Don Coxe Update
(May 20th, 2011)
- planting in the midwest is behind schedule
- Europe is dry in wheat growing areas
- we won’t have a replay of the 70′s story WRT stagflation.
- higher food prices and higher fuel are affecting those at the lower end of the income spectrum, which isn’t conducive to economic growth.
- S+P has likely seen its high for a while
- there has been a switch out of commodity stocks and into staples.
- economic slowdown shouldn’t be happening at this stage in a recovery
- earnings estimates will have to be scaled back
- Mark Carney (Bank of Canada Governor) made some private remarks that were supposed to be off the record that got released by CIBC, he gave a very gloomy outlook and said the gloom will be with us for years or decades
- See full article on Mark Carney’s comments here, worth a read.
- Coxe expects a market pullback due to strain on growth prospects
- he says Strauss Kahn has an obvious fatal flaw but made great progress in the packages he helped put together. Not sure if his successor will be as successful
- Bernanke is simply doing what he has to do to keep things going.
- if the huge stimulus thus far has only given the modest growth we’ve seen, what will happen going forward
- agriculture and commodities stocks will still be very successful even with the pullback in gold and silver
- China and India are biggest players in gold/silver, the countries in the best economic shape like China and India will support gold/silver prices.
- agriculture and commodities stocks will have lowest risks going forward if the economy continues to pullback
- in the next few weeks to review the state of planting and will know more on the agricultural stock outlook
- 3.15% on the 10 year note, gives stagnation but no inflation, at least yet. Canada and the UK are showing signs of inflation
- surprises in the bond markets are possible this summer
- if the bond market remains stable then doesn’t expect a significant stock market drop
1. WRT peak farm equipment sales, any signs of peak earnings in farm equipments?
A: Studying this closely. Wouldn’t sell these stocks, there will be expansion across the world. We will see emphasis on smaller equipment for specific purposes. (ie. irrigation equipment)