Markets are reacting to a general feeling it is over bought. A 5% to 10% decline is forecast by many with a higher decline for small caps. With more significant earnings announcements coming this week there will be plenty of opportunities to take profits. EPS will not be higher. However, today’s mid-morning market doesn’t seem so ugly. Market leaders continue to lead so I am not planning anything radical.
I continue to hedge with Treasury bonds through TLT, the ETF. This was down hard on Friday but with our Treasury continuing to purchase bonds in the market I figure there is support.
NG. Copper is screaming this morning. It started the move in Shanghai as traders reacted to rumors of another Chinese re-stocking. China has become the dog that wags the tail as world markets, both financial and commodity, reacts to it’s buying power. Copper is a great leading indicator of industrial strength. I have owned FCXprM for months now and have watched it steadily climb. I purchased it when the president of Freeport-McMoran was on CNBC the day after his company’s shares fell precipitously. He mentioned the preferred was then paying a 20% dividend. Now yielding less than 10% it may still be interesting. The fear, of course, is that Chinese purchase rumors are just that, rumors. If industrial strength does not return, as indicated, copper prices will collapse as will copper stocks. On Friday I bought Southern Copper (PCU). This company is a leader in the red-hot Peruvian market. PCU has an erratic dividend but if past is the future it could yield about 8%.
Sidebar
This is a late post today since I had to make a furtive, early ride to the re-cycling center. I wanted to get there before the crowd as I was depositing the weekend’s bounty of bottles. With #’s 1 and 2 sons in town plus a daughter-in-law, a familial personal best of a baker’s dozen wine bottles were pitched into the bins. I am so proud.
