Has Recent U.S Data Signaled A Bottom?

By: Bullish Bankers Monday, April 13, 2009 9:40 AM

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A wave of new domestic economic data along with an economic stimulus plan has refueled interest in the Materials sector, particularly precious metals and agriculture stocks. Copper, known as “the commodity with a PhD in economics,” has risen over 28% in the past 30 days while the sector as a whole has gained nearly 33% in the same amount of time. While I agree in the long term prospects of many blue-chip commodity holdings, I feel their current prices have outpaced their valuations. U.S. recessionary indicators, specifically employment data and index performance, have convinced me the global economic plummet in growth may have bottomed, but it by no means has signaled a turnaround in the economy and more particularly the Materials sector.

A Brief Recap of the Q1 2009

We started with an acute bounce in the construction materials companies when details of the Obama stimulus package were being finalized, following a dismal quarterly performance by many of the leaders of the Materials sector. Freeport McMoRan (FCX) reported a drop in performance of 500%, due to write downs of goodwill, Dow Chemical (DOW:) experienced an 80% drop in earnings, Dupont (DD) reported a 32% drop in earnings, and International Paper (IP) reported a drop of almost 210% in earnings. Surprisingly, Monsanto (MON) was able to report earnings growth of 40%,benefiting from a record 2007/2008 marketing season in agricultural commodities. Monsanto however, seems to be one of the few exceptions within the sector. As earnings season begins and economic data is released, I am convinced the worst may not have past for many of these companies. Since Materials is based widely on the health of the economy, I will start by looking at some of the recessionary indicators that have recently been released.

Important Economic Signals

GDP expectations have fallen precipitously over the past four quarters. Quarterly change in GDP was expected to be 0.9% in Q1 2008, but has since contracted 6.3% in the Q4 2008.

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4/14/2009 5:25:33 PM We haven't hit rock bottom yet, but its coming. by JFKFan We have not hit rock bottom yet. There are still a lot of things that are going to happen this year. Our economic situation, should be called "The Float a worthless Check Economy." When a loaf of bread costs $100.00 dollars, we will have hit rock bottom. The American public has gone to sleep. Here is your wake up call. If yourour bank account is overdrafted $50 trillion dollars and you write checks totaling over $800 billion dollars, the people holding those checks are going to be in serious trouble. If you have all forgotten this, US currency is checks from the US Treasury. That account has been overdrafted for years now. All were doing is floating worthless checks. When the rest of this country and world wakes up out of their dreams of recovery, the realization that our money is not worth the paper it is printed on, then we will have hit rock bottom. As for current stocks, be careful with investing in FCX stock. The Freeport McMoran corporation is in trouble in both Indonesia and Africa. (read the articles at http://www.fmisucks.org ) A new government has been installed in West Papua Indonesia and this goverment is very greedy and definitely is going to be taking a larger and rightful share of the profits in the Grasberg gold mine operation there. When that happens, you do not want to be holding on to FCX stock, because it is going to be worthless. Reply Rating: (0) (0)

We have not hit rock bottom yet. There are still a lot of things that are going to happen this year. Our economic situation, should be called "The Float a worthless Check Economy." When a loaf of bread costs $100.00 dollars, we will have hit rock bottom. The American public has gone to sleep. Here is your wake up call. If yourour bank account is overdrafted $50 trillion dollars and you write checks totaling over $800 billion dollars, the people holding those checks are going to be in serious trouble. If you have all forgotten this, US currency is checks from the US Treasury. That account has been overdrafted for years now. All were doing is floating worthless checks. When the rest of this country and world wakes up out of their dreams of recovery, the realization that our money is not worth the paper it is printed on, then we will have hit rock bottom. As for current stocks, be careful with investing in FCX stock. The Freeport McMoran corporation is in trouble in both Indonesia and Africa. (read the articles at http://www.fmisucks.org ) A new government has been installed in West Papua Indonesia and this goverment is very greedy and definitely is going to be taking a larger and rightful share of the profits in the Grasberg gold mine operation there. When that happens, you do not want to be holding on to FCX stock, because it is going to be worthless.

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