Friends
We will attempt to keep you up to date with the Libyan situation and its effect on the markets. Today was similar to yesterday with oil trading higher (at one point crossing $100 on the NYMEX) and stocks trading lower. At one point, the Dow Jones Industrial Average was down about 150 points but ended the day down about 106 points . Gold was also up nicely for the second day in a row and treasury bonds are holding steady as money continues to seek safety.
The most affected stocks seem to be economically sensitive companies such as retailers and deep cyclicals. On the other hand, energy stocks are surging and consumer durables (which we refer to as defensive stocks) are holding steady. Oil prices, driven by worries of both Libya and potentially even Saudi Arabia, are the force behind the move in stocks. The worries of much higher energy prices potentially putting a squeeze on the fragile economic recovery, is what traders seem to be focused on. Even though we have noted some of the improving aspects of the economy, the market can’t stand uncertainty, and the Middle East is full of uncertainty right now. Unfortunately, this uncertainty will trump the improving economic news for the time being.
We will continue to keep you informed as to developments. For our clients, we continue to seek opportunities amongst the uncertainty, while continuing to manage risk.
Have a nice evening everyone.
