I think the news about Japan and a potential meltdown has been a bit misleading. From a colleague of mine, here is an excerpt from an email written by a distinguished nuclear physicist from the University of Michigan regarding the crisis in Japan:
"I'm not expert on this particular engineered system (not a nuclear engineer); but rather a nuclear physicist. That said, I see no reason to expect that, even if attempts to cool these cores completely failed and there was a worst case so-called meltdown of the entire core, the ultimate container vessel would not completely contain the entire mass and it's radiation indefinitely.
The radiation releases to date are quite well understood as simply radiation entrained in steam that undergoes controlled releases as it is generated in cooling the rods with water. The rods are indeed cooling and the steam releases are apparently decreasing. Meanwhile spent rods in the pools are not in danger of some full meltdown, but need to be covered in water to dissipate heat and suppress radiation.
These are of course serious matters; but no one should be telling the public that a 'meltdown' would release large amounts of radiation or contaminate large areas as long as there is no evidence that the ultimate container has ever been damaged. I have seen no such claims."
16 Mart 2011 Çarşamba
Japan Situation Weighing On Markets
Japan's market got a big bounceback last night, rallying +5.7% after its big 2-day plunge. Other markets in Asian were up overnight as well.
But in Europe, Moody's downgrade of Portugal's debt weighed on those markets. In addition, ongoing social and political unrest in the Middle East and the continued concerns about the nuclear facilities in Japan have further hurt sentiment.
Our markets opened down slightly, and have since added to the declines after some weak economic reports. Housing starts for February plunged more than expected, and the PPI inflation figures rose more than expected.
The flight to safety trade is back on today, with Treasuries rallying, the dollar a bit higher, and gold prices up as well. The rally in bonds has pushed the 10-year yield down to 3.22%. Gold prices are higher back to the $1400 level, and oil prices are also higher today near $99.50.
Trading comment: Yesterday's bounce back from the morning lows was encouraging. The market is getting further into oversold territory, and should be getting closer to a bounce. I put some of our cash to work yesterday in big-cap stocks that have pulled back with the market. The S&P 500 has now tested the 1260 level twice and held, so we could get some short-covering if the market is able to mount more of a turnaround. Bearish sentiment is also on the rise, with the put/call ratio above 1.0 yesterday and opening at a whopping 1.99 today. That's a lot of puts being bought, and could mark a short-term extreme in bearish sentiment.
But in Europe, Moody's downgrade of Portugal's debt weighed on those markets. In addition, ongoing social and political unrest in the Middle East and the continued concerns about the nuclear facilities in Japan have further hurt sentiment.
Our markets opened down slightly, and have since added to the declines after some weak economic reports. Housing starts for February plunged more than expected, and the PPI inflation figures rose more than expected.
The flight to safety trade is back on today, with Treasuries rallying, the dollar a bit higher, and gold prices up as well. The rally in bonds has pushed the 10-year yield down to 3.22%. Gold prices are higher back to the $1400 level, and oil prices are also higher today near $99.50.
Trading comment: Yesterday's bounce back from the morning lows was encouraging. The market is getting further into oversold territory, and should be getting closer to a bounce. I put some of our cash to work yesterday in big-cap stocks that have pulled back with the market. The S&P 500 has now tested the 1260 level twice and held, so we could get some short-covering if the market is able to mount more of a turnaround. Bearish sentiment is also on the rise, with the put/call ratio above 1.0 yesterday and opening at a whopping 1.99 today. That's a lot of puts being bought, and could mark a short-term extreme in bearish sentiment.
TRACKERS IN THE ALPS
The travel and accommodation details for the next "trackers" trip to Zermatt Switzerland have been posted to the website.
15 Mart 2011 Salı
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET:MARKET FEAR
- Jim Rogers, Rogers Holdings Chairman Author/ Investor
- David Goldman, Fmr. head of fixed income research at Bank of America
- Gary Shilling, A. Gary Shilling & Co. President
IMPLICATIONS OF JAPAN’S NUCLEAR REACTOR DISASTER
- Daniel Aldrich, Purdue University Japan expert - Purdue University
- Kevin Kamps, Nuclear information & Resource Service; Nuclear Waste Specialist
GLOBAL IMPACT OF JAPANESE DISASTER
- Amb. Tom Schieffer, Fmr. Amb. to Japan (2005 - 2009)
THE RIGHT PATH TO PROSPERITY
- Jim Owens, Fmr. Caterpillar Chmn & CEO
GETTING AMERICA'S FISCAL HOUSE IN ORDER
- Sen. Rand Paul (R) Kentucky
- Sen. Mike Lee (R) Utah
Please join us at 7pm ET on CNBC.
One-on-One with John Boehner: Is a Corporate Tax Cut in the Cards?
Here's the transcript from my interview last night with Republican House Speaker John Boehner. We covered a wide range of topics including the tragedy in Japan, U.S. energy policy, the budget battle and taxes. On that final topic, according to Speaker Boehner, a corporate tax cut is still possible this year.
LARRY KUDLOW:
Speaker Boehner, welcome back to the Kudlow Report.
JOHN BOEHNER:
Good to be with you.
LARRY KUDLOW:
Thank you. Let me begin, of course, with the catastrophe going on in Japan-- and ask you first, are there thoughts, policies, discussions in Congress? What can we do to help our Japanese friends?
JOHN BOEHNER:
Well, clearly our hearts and souls go out to the people of Japan, and the tragedy that they have faced and are facing. Whether it's military help, or whether it's our expertise-- food supplies-- a lot that we will be doing-- to help the Japanese people.
LARRY KUDLOW:
Will the Congress appropriate additional funds for these kinds of emergency assistance?
JOHN BOEHNER:
I think that's yet to be seen. But I would not be surprised.
LARRY KUDLOW:
And, do you think these food supplies and military assistance is gonna start right away? Is it in motion as we speak?
JOHN BOEHNER:
I think it's been in motion all weekend, and will continue.
LARRY KUDLOW:
Let me ask you also, of course related to this, is the whole issue of-- the threatened nuclear meltdown in Japan. Is that gonna effect American energy policy? Are you gonna hold additional hearings on this?
JOHN BOEHNER:
Well, Chairman Upton at the Energy and Commerce Committee already has a hearing scheduled for this week with the head of the Nuclear Regulatory Commission. And, I'm sure the question will come up about those types of plants-- what kind of experience we have here. But, it's clear that there are lessons to be learned from what's happening in Japan as we speak. And, I think that we need to learn those lessons as we continue to look at how do we produce more energy from nuclear sources here in America.
LARRY KUDLOW:
You were home this weekend and Ohio has some nuclear power plants. Did local folks, did voters, were they talking about this? Were they worried about their own nuclear plants?
JOHN BOEHNER:
No, I didn't hear any concerns raised. But as you watch these images on TV, you can't help but be concerned about what caused this. The design of these plants, as I understand, is about, they're about 40 years old. And, what improvements have been made over the course of the last 40 years and, what's the risk that we face if we continue to push more nuclear energy here in the United States. I think that's the question the American people wanna know.
LARRY KUDLOW:
And-- I'm sure you're right. Is it, are people saying, "This is the end of nuclear energy policy"? I mean, is it gonna be cut and dry? Or, are they gonna give this an honest look?
JOHN BOEHNER:
Listen, I think we need we need to take a step back, understand what happened, understand what changes have been made, and really understand what are the risks here. As we all know Japan sits in volcanic area-- prone to earthquakes. You know, they have some 1,500 earthquakes a year.
We've got parts of the United States that have some inclination toward earthquakes. But, we have other parts of the country where there's no threat. But, we need to learn those lessons. But, I don't think it should deter us from trying to do everything we can to move America toward energy independence.
LARRY KUDLOW:
Let's turn back to the budget. On Friday, you unveiled a new continuing resolution, I guess to stop a shutdown this Friday. You got another $6 billion of budget cuts in there towards your $61 billion target. Can this one get through?
JOHN BOEHNER:
I believe that the continuing resolution this week will pass for another three weeks, keeping the government open. And yet, though, cutting some $6 billion, which means that over the last several weeks, we'll be able to accumulate $10 billion worth of real savings.
All of this because the democrats did no budget last year. They did no appropriation bills, and dumped this mess in our lap. I want the continuing resolution through September 30th finished as soon as possible. But, that's gonna mean real cuts. It's gonna mean real limitations on what this administration can do for the balance of this fiscal year. And, I'm hopeful that we'll get it finished as soon as possible.
LARRY KUDLOW:
I mean, you've got a lotta pressures, as we know. You've got tea party conservatives on one side. You've got people that want policy defunding of Obamacare on the other side. Democrats are way apart. I mean, it's almost a $50 billion gap. You told me a little while ago if the democrats won't take the whole loaf of budget cuts, you're gonna give it to 'em one slice at a time. Do you think you can get most of the original $61 billion in cuts?
JOHN BOEHNER:
Well, I think we'll see. We're in discussions with the democrats in the Senate, with the administration. We want to cut spending because cutting spending will lead to a better environment for businesses to help create jobs in America. That's the core of what we're trying to do, bring some fiscal sanity to Washington DC.
LARRY KUDLOW:
And, you've also been talking about next year's budget, if you get to it, for 2012. And, you want to put some entitlement reforms in there. You wanna put some entitlement limits and caps. How specific will you be? What kind of size reduction in spending might that come to?
JOHN BOEHNER:
We've got serious fiscal challenges facing our country. And, it's time that we, as Americans have an adult conversation with each other about the serious challenges that face our country. No more kicking the can down the road. I've watched it go on for all the years that I've been here. So, you will see us bend the curve. You will see us lay out a plan that will not only balance the budget, but pay off the debt.
It's gonna take a long time to do this. But, it's time to make decisions. And, the unfortunate part of this is that the President a year ago set up a Deficit Reduction Commission. They did a lot of very good work. And, they worked very hard. And, I don't agree with everything they did.
But, when the President submitted his budget about a month ago, not one idea from his own Deficit Reduction Commission. That's just kickin' the can down the road. It's whistling past the graveyard. And, House republicans, along with our colleagues in the Senate are not going to do that. If he won't lead, we will.
LARRY KUDLOW:
How do you react to criticism from democrats? Let's see, Senator Reed, Senator Durbin, Senator Schumer, they say republican spending cuts are bad for economic growth, bad for jobs. How do you react to that and, has the Republican Party focused too much on spending austerity, and not enough on economic growth?
JOHN BOEHNER:
I gave the President a letter signed by 150 economists over a month ago that said that cutting federal spending will lead to a better environment for job creation in America. Businesses and, I used to be a small business man understand that you can't continue to borrow 40 cents for every dollar the federal government spends.
And, if we begin to cut spending, and people understand that we're serious about putting America on a sound fiscal footing it will send the signal to business people and investors that America is a place they can invest in. It's that investment that creates jobs.
LARRY KUDLOW:
What about pro-growth tax reform, particularly business tax cuts? What about pro-growth regulatory moratorium? There's been a lotta talk about over-regulation of energy, for example. We got, what, $3.50 at the gallon. Many economists believe that's gonna raise the inflation rate and lower the economic growth rate. So, tax cute-- an-- and regulatory freezes, where's the GOP on that?
JOHN BOEHNER:
Well, when you look at what it's gonna take to create jobs in America, we talked about cutting spending. We also need to look at all of this regulation coming out of this administration. And, whether it's Obamacare, whether it's the Dodd-Frank financial services bill, the EPA that's choking our ability to produce more American energy, we need to look at the regulatory side as well.
But, how about the three free trade bills that are sitting downtown the administration's holding Panama, Colombia, South Korea? Free trade will create more jobs here in the United States. And, we need to produce energy. We need to produce energy because we need to bring energy prices down.
But, let's not forget that if we begin to do all of the above on the energy side we because it'll create up up to a million new jobs here in America. So, we need to do all of these things, if we're going to create a better environment for our economy to get up and get moving and get Americans back to work.
LARRY KUDLOW:
You know, President Obama and especially Vice President Biden-- Mr. Biden was over in Russia recently, talking about admitting Russia into the World Trade Organization, which would require a congressional vote. Wouldn't it be better to get these free trade deals passed before we put Russia into the World Trade Organization?
JOHN BOEHNER:
Well, these free trade bills, some of them have been out there for three or four years. I believe that-- and then, the South Korea trade agreement. Let's deal with these. And if Russians want to actually agree to play by the rules then we can have a discussion about whether ascension into the WTO is the right step.
LARRY KUDLOW:
Let me ask one last one. Do you believe that President Obama has turned pro-business? I get this question all the time. He had a charm offensive, he spoke to the Chamber of Commerce, and particularly his new Chief of Staff, Bill Daley. Have you spoken to Mr. Daley? Have you heard from him that they want a pro-business, pro-growth agenda? How do you come out on all that? Have any changes really been made in the last couple months in the White House?
JOHN BOEHNER:
Well, I've talked to the President a lot over the last couple of months. And, I've talked to Mr. Daley a number of times. Talk is cheap. Actions speak louder than words. I haven't seen any new actions yet.
LARRY KUDLOW:
What are you looking for? What would be a hint?
JOHN BOEHNER:
Well, send the three free trade agreements to Congress for our consideration. Let's put a real moratorium on new regulations coming out of his administration, which he's also called for.
LARRY KUDLOW:
How about Mr. Camp, your Chairman of the Ways and Means Committee? He runs tax policy, I know he runs trade policy too. Have you deputized him to come with a business tax cut reform bill?
JOHN BOEHNER:
If we want to make America more competitive, we've got to reform our corporate tax code. It is in the way of job creation in America. Dave Camp is a great Chairman. We came to Congress together 21 years ago. He is working on that reform. There's a number of hearings that are already set up. The administration appears to have some interest in wanting to pursue this. And, I'm optimistic.
LARRY KUDLOW:
Could this happen in my lifetime?
JOHN BOEHNER:
It could happen this year.
LARRY KUDLOW:
(LAUGH) Okay.
JOHN BOEHNER:
I hope that much was in your lifetime.
LARRY KUDLOW:
I have high expectations. You think it could, you think you could get business tax reform this year, that's possible?
JOHN BOEHNER:
I do. I actually do.
LARRY KUDLOW:
All right. Speaker John Boehner, we appreciate your time very much, sir.
JOHN BOEHNER:
Nice to see you.
LARRY KUDLOW:
Great.
* * *END OF TRANSCRIPT* * *
LARRY KUDLOW:
Speaker Boehner, welcome back to the Kudlow Report.
JOHN BOEHNER:
Good to be with you.
LARRY KUDLOW:
Thank you. Let me begin, of course, with the catastrophe going on in Japan-- and ask you first, are there thoughts, policies, discussions in Congress? What can we do to help our Japanese friends?
JOHN BOEHNER:
Well, clearly our hearts and souls go out to the people of Japan, and the tragedy that they have faced and are facing. Whether it's military help, or whether it's our expertise-- food supplies-- a lot that we will be doing-- to help the Japanese people.
LARRY KUDLOW:
Will the Congress appropriate additional funds for these kinds of emergency assistance?
JOHN BOEHNER:
I think that's yet to be seen. But I would not be surprised.
LARRY KUDLOW:
And, do you think these food supplies and military assistance is gonna start right away? Is it in motion as we speak?
JOHN BOEHNER:
I think it's been in motion all weekend, and will continue.
LARRY KUDLOW:
Let me ask you also, of course related to this, is the whole issue of-- the threatened nuclear meltdown in Japan. Is that gonna effect American energy policy? Are you gonna hold additional hearings on this?
JOHN BOEHNER:
Well, Chairman Upton at the Energy and Commerce Committee already has a hearing scheduled for this week with the head of the Nuclear Regulatory Commission. And, I'm sure the question will come up about those types of plants-- what kind of experience we have here. But, it's clear that there are lessons to be learned from what's happening in Japan as we speak. And, I think that we need to learn those lessons as we continue to look at how do we produce more energy from nuclear sources here in America.
LARRY KUDLOW:
You were home this weekend and Ohio has some nuclear power plants. Did local folks, did voters, were they talking about this? Were they worried about their own nuclear plants?
JOHN BOEHNER:
No, I didn't hear any concerns raised. But as you watch these images on TV, you can't help but be concerned about what caused this. The design of these plants, as I understand, is about, they're about 40 years old. And, what improvements have been made over the course of the last 40 years and, what's the risk that we face if we continue to push more nuclear energy here in the United States. I think that's the question the American people wanna know.
LARRY KUDLOW:
And-- I'm sure you're right. Is it, are people saying, "This is the end of nuclear energy policy"? I mean, is it gonna be cut and dry? Or, are they gonna give this an honest look?
JOHN BOEHNER:
Listen, I think we need we need to take a step back, understand what happened, understand what changes have been made, and really understand what are the risks here. As we all know Japan sits in volcanic area-- prone to earthquakes. You know, they have some 1,500 earthquakes a year.
We've got parts of the United States that have some inclination toward earthquakes. But, we have other parts of the country where there's no threat. But, we need to learn those lessons. But, I don't think it should deter us from trying to do everything we can to move America toward energy independence.
LARRY KUDLOW:
Let's turn back to the budget. On Friday, you unveiled a new continuing resolution, I guess to stop a shutdown this Friday. You got another $6 billion of budget cuts in there towards your $61 billion target. Can this one get through?
JOHN BOEHNER:
I believe that the continuing resolution this week will pass for another three weeks, keeping the government open. And yet, though, cutting some $6 billion, which means that over the last several weeks, we'll be able to accumulate $10 billion worth of real savings.
All of this because the democrats did no budget last year. They did no appropriation bills, and dumped this mess in our lap. I want the continuing resolution through September 30th finished as soon as possible. But, that's gonna mean real cuts. It's gonna mean real limitations on what this administration can do for the balance of this fiscal year. And, I'm hopeful that we'll get it finished as soon as possible.
LARRY KUDLOW:
I mean, you've got a lotta pressures, as we know. You've got tea party conservatives on one side. You've got people that want policy defunding of Obamacare on the other side. Democrats are way apart. I mean, it's almost a $50 billion gap. You told me a little while ago if the democrats won't take the whole loaf of budget cuts, you're gonna give it to 'em one slice at a time. Do you think you can get most of the original $61 billion in cuts?
JOHN BOEHNER:
Well, I think we'll see. We're in discussions with the democrats in the Senate, with the administration. We want to cut spending because cutting spending will lead to a better environment for businesses to help create jobs in America. That's the core of what we're trying to do, bring some fiscal sanity to Washington DC.
LARRY KUDLOW:
And, you've also been talking about next year's budget, if you get to it, for 2012. And, you want to put some entitlement reforms in there. You wanna put some entitlement limits and caps. How specific will you be? What kind of size reduction in spending might that come to?
JOHN BOEHNER:
We've got serious fiscal challenges facing our country. And, it's time that we, as Americans have an adult conversation with each other about the serious challenges that face our country. No more kicking the can down the road. I've watched it go on for all the years that I've been here. So, you will see us bend the curve. You will see us lay out a plan that will not only balance the budget, but pay off the debt.
It's gonna take a long time to do this. But, it's time to make decisions. And, the unfortunate part of this is that the President a year ago set up a Deficit Reduction Commission. They did a lot of very good work. And, they worked very hard. And, I don't agree with everything they did.
But, when the President submitted his budget about a month ago, not one idea from his own Deficit Reduction Commission. That's just kickin' the can down the road. It's whistling past the graveyard. And, House republicans, along with our colleagues in the Senate are not going to do that. If he won't lead, we will.
LARRY KUDLOW:
How do you react to criticism from democrats? Let's see, Senator Reed, Senator Durbin, Senator Schumer, they say republican spending cuts are bad for economic growth, bad for jobs. How do you react to that and, has the Republican Party focused too much on spending austerity, and not enough on economic growth?
JOHN BOEHNER:
I gave the President a letter signed by 150 economists over a month ago that said that cutting federal spending will lead to a better environment for job creation in America. Businesses and, I used to be a small business man understand that you can't continue to borrow 40 cents for every dollar the federal government spends.
And, if we begin to cut spending, and people understand that we're serious about putting America on a sound fiscal footing it will send the signal to business people and investors that America is a place they can invest in. It's that investment that creates jobs.
LARRY KUDLOW:
What about pro-growth tax reform, particularly business tax cuts? What about pro-growth regulatory moratorium? There's been a lotta talk about over-regulation of energy, for example. We got, what, $3.50 at the gallon. Many economists believe that's gonna raise the inflation rate and lower the economic growth rate. So, tax cute-- an-- and regulatory freezes, where's the GOP on that?
JOHN BOEHNER:
Well, when you look at what it's gonna take to create jobs in America, we talked about cutting spending. We also need to look at all of this regulation coming out of this administration. And, whether it's Obamacare, whether it's the Dodd-Frank financial services bill, the EPA that's choking our ability to produce more American energy, we need to look at the regulatory side as well.
But, how about the three free trade bills that are sitting downtown the administration's holding Panama, Colombia, South Korea? Free trade will create more jobs here in the United States. And, we need to produce energy. We need to produce energy because we need to bring energy prices down.
But, let's not forget that if we begin to do all of the above on the energy side we because it'll create up up to a million new jobs here in America. So, we need to do all of these things, if we're going to create a better environment for our economy to get up and get moving and get Americans back to work.
LARRY KUDLOW:
You know, President Obama and especially Vice President Biden-- Mr. Biden was over in Russia recently, talking about admitting Russia into the World Trade Organization, which would require a congressional vote. Wouldn't it be better to get these free trade deals passed before we put Russia into the World Trade Organization?
JOHN BOEHNER:
Well, these free trade bills, some of them have been out there for three or four years. I believe that-- and then, the South Korea trade agreement. Let's deal with these. And if Russians want to actually agree to play by the rules then we can have a discussion about whether ascension into the WTO is the right step.
LARRY KUDLOW:
Let me ask one last one. Do you believe that President Obama has turned pro-business? I get this question all the time. He had a charm offensive, he spoke to the Chamber of Commerce, and particularly his new Chief of Staff, Bill Daley. Have you spoken to Mr. Daley? Have you heard from him that they want a pro-business, pro-growth agenda? How do you come out on all that? Have any changes really been made in the last couple months in the White House?
JOHN BOEHNER:
Well, I've talked to the President a lot over the last couple of months. And, I've talked to Mr. Daley a number of times. Talk is cheap. Actions speak louder than words. I haven't seen any new actions yet.
LARRY KUDLOW:
What are you looking for? What would be a hint?
JOHN BOEHNER:
Well, send the three free trade agreements to Congress for our consideration. Let's put a real moratorium on new regulations coming out of his administration, which he's also called for.
LARRY KUDLOW:
How about Mr. Camp, your Chairman of the Ways and Means Committee? He runs tax policy, I know he runs trade policy too. Have you deputized him to come with a business tax cut reform bill?
JOHN BOEHNER:
If we want to make America more competitive, we've got to reform our corporate tax code. It is in the way of job creation in America. Dave Camp is a great Chairman. We came to Congress together 21 years ago. He is working on that reform. There's a number of hearings that are already set up. The administration appears to have some interest in wanting to pursue this. And, I'm optimistic.
LARRY KUDLOW:
Could this happen in my lifetime?
JOHN BOEHNER:
It could happen this year.
LARRY KUDLOW:
(LAUGH) Okay.
JOHN BOEHNER:
I hope that much was in your lifetime.
LARRY KUDLOW:
I have high expectations. You think it could, you think you could get business tax reform this year, that's possible?
JOHN BOEHNER:
I do. I actually do.
LARRY KUDLOW:
All right. Speaker John Boehner, we appreciate your time very much, sir.
JOHN BOEHNER:
Nice to see you.
LARRY KUDLOW:
Great.
* * *END OF TRANSCRIPT* * *
Headline Risk From Japan Grips Global Markets
The markets are lower in early trading, but for now the lows of the session occurred right at the market open.
Fears about radiation leaks in Japan, in the wake of the earthquake and tsunami, led to sharp losses in the Nikkei, which plummeted -10.6% overnight. The fears led to a global selloff in stocks, and out markets gapped down at the open with the S&P 500 nearly touching 1260.
But stocks have firmed a bit since the open, and the major indexes are currently all down less than 2%. That is probably far less severe than many investors expected following Japan's losses. With the market heavily oversold, bargain hunters could be stepping in to take advantage of some of the declines.
The only areas that are up so far today is the US dollar and Treasuries. Commodities are lower, with oil down below $100 to $97.30, and gold prices also down near $1394. The yield on the 10-year not has fallen back to 3.27%.
The volatility index (VIX), also known as the Fear Gauge, spiked +20% at the open to 25.50, but has since fallen back to 23.85 (+13%).
The big headline risk right now concerns the radiation leaks in Japan, and if the winds start to blow any contamination into more populated areas. Japan is working furiously to cool the affected reactors, but has not made the decision to simply bury the plants, a la Chernobyl.
Trading comment: I have been saying that I wanted to be patient during this correction. I think today's dislocation in stocks is an opportunity to start doing some buying. There are a lot of stocks that recently reported great earnings, with strong fundamentals, that are being sold off due to headline fears. Right now I want to stick with the higher quality stocks, preferably with yield. I think we have more time to let the growth stocks consolidate and build new bases.
Fears about radiation leaks in Japan, in the wake of the earthquake and tsunami, led to sharp losses in the Nikkei, which plummeted -10.6% overnight. The fears led to a global selloff in stocks, and out markets gapped down at the open with the S&P 500 nearly touching 1260.
But stocks have firmed a bit since the open, and the major indexes are currently all down less than 2%. That is probably far less severe than many investors expected following Japan's losses. With the market heavily oversold, bargain hunters could be stepping in to take advantage of some of the declines.
The only areas that are up so far today is the US dollar and Treasuries. Commodities are lower, with oil down below $100 to $97.30, and gold prices also down near $1394. The yield on the 10-year not has fallen back to 3.27%.
The volatility index (VIX), also known as the Fear Gauge, spiked +20% at the open to 25.50, but has since fallen back to 23.85 (+13%).
The big headline risk right now concerns the radiation leaks in Japan, and if the winds start to blow any contamination into more populated areas. Japan is working furiously to cool the affected reactors, but has not made the decision to simply bury the plants, a la Chernobyl.
Trading comment: I have been saying that I wanted to be patient during this correction. I think today's dislocation in stocks is an opportunity to start doing some buying. There are a lot of stocks that recently reported great earnings, with strong fundamentals, that are being sold off due to headline fears. Right now I want to stick with the higher quality stocks, preferably with yield. I think we have more time to let the growth stocks consolidate and build new bases.
14 Mart 2011 Pazartesi
On CNBC's Kudlow Report Tonight
Tonight at 7pm ET:GLOOM SETTLING OVER THE MARKET?
- Ron Kruszewski, Stifel, Nicolaus Chairman & CEO
- Todd Harrison, Minyanville Founder & CEO
- Jim LaCamp, Macroportfolio Advisors Sr. VP, Portfolio Manager
GEOPOLITICS (JAPAN/MIDEAST) & THE ECONOMY
- Niall Ferguson, Harvard University Prof. of History; "Ascent of Money" Author
- Gen. Barry McCaffrey, 4-star Gen.; NBC Military Analyst; U.S. Army (Ret.); McCaffrey Associates Pres.
ONE-ON-WITH WITH JOHN BOEHNER
House Speaker John Boehner joins us.
ONE-ON-ONE WITH MITCH MCCONNELL
SENTAE Minority Leader Sen. Mitch McConnell joins us.
OIL SHOCK IMPLICATIONS
- Larry Nichols, Devon Energy CEO
- Larry Dickerson, Diamond Offshore CEO
Please join us at 7pm ET on CNBC.
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