April 18, 2011
Equities are starting the week down and treasuries are weak after rating agency S&P hinted at a possible downgrade of US credit by issuing a negative outlook due to rising gas prices and slower demand from China. David Beers of S&P’s Sovereign Rating Group warned that the possibility of a downgrade over the next two years rose to 1 in 3. “We believe there is a material risk that US policy makers might not reach an agreement on how to address medium and long-term budgetary challenges by 2013. If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the US fiscal profile meaningfully weaker than that of peer AAA sovereigns.”
Citigroup reported better than expected earnings this morning and is bucking the trend, rising over 1% this morning. Eli Lilly beat sales and earnings estimates for the first quarter, however, the company’s top-selling drug comes off patent in October. Halliburton beat earnings in spite of a charge taken due to the unrest in Lybia.
The central bank of China increased its reserve requirement by 50bps to 20.5%, the 10th increase in the past 15 months.
The Chairman of the Financial Stability Board, Mario Draghi, warned that the popularity of commodity based ETFs is reminiscent of what happened in the securtization market before the crisis.
Colombian central bank president Jose Dario Uribe said the nation’s GDP may exceed 5.5% on top of 2010’s 4.3% increase.
The Economist is reporting that growth in India may have exceeded that of China last year, an event that went unnoticed because India reports GDP differently than China. Initial reports showed China growing at 10.3% and India 8.3%, but the IMF is now estimating that India’s GDP grew by 10.4%.
APAC markets closed strong last night as the Shangai rose 0.3%, the ASX 200 and NZX were up 0.4%, the Sensex 1.2% and the Nikkei up 0.1%. The Kospi fell 0.5%.
Have a great Monday
Ned
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The Author
- Ned Brines
- Ned presently manages money for Andell Inc, the family office of one of North America’s dynastic families. He also is the founder and CIO of Montelena Asset Management, a California based RIA. Prior to founding MAM, Ned was the manager of the Provident Investment Counsel Small Cap fund. He began his money management career in 1994 at Roger Engemann & Associates where he managed the Aggressive Growth Fund, Focus Growth Fund, and Private Client business. Before entering money management, Ned spent six years as an investment banker, focusing on mergers and acquisitions and corporate restructuring. He has an MBA from the University of Southern California, a BS in Physiology from San Diego State University, and has achieved the Chartered Financial Analyst designation. He is a member of Beta Gamma Sigma, a national honor society, and Beta Theta Pi. He is a frequent speaker and lecturer in the financial community, serves on numerous non-profit boards, and has extensive media experience in television, print and radio. He presently lives in California with his wife and three children.
Recent Speaking Engagment
I will be speaking at the Crossroads Lecture Series March 11, 2011 in Orcas Island, WA. Click here to view a link to the lecture series: http://orcascrossroads.org/
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