The close: Bring on the second quarter+Tim Pullback House Buy +Sells

The close: Bring on the second quarterRTGAM

If you place importance in the quarter-by-quarter blows of the stock market - and who doesn't? - the stats are now in. The first quarter of 2008 was volatile and it was a money loser, leaving investors caught between choruses of "stocks are cheap" and "there is worse to come.

"The S+P/TSX composite index fell 3.5 per cent, the Dow Jones industrial average fell 7.6 per cent, the S[amp]amp;P 500 fell 9.9 per cent, most of the major European indexes fell by double digits, and Japan's Nikkei 225 fell 18.2 per cent.But for investors, there was something about these statistics that smacked of old news.

On Monday, the last day of the quarter, the mood shifted to better times in the second quarter - or April, at the very least.The Dow closed at 12,262.73, up 46.33 points or 0.4 per cent. That, of course, includes Merck [amp]amp; Co. Inc.'s 14.7 per cent meltdown that accounted for 53 points. Ignore that, which isn't entirely unreasonable given that the pharmaceutical giant's problems failed to infect the rest of the market, and the Dow ended the quarter with close to a three-digit gain. Citigroup Inc. rose 2.8 per cent and Intel Corp. rose 1.9 per centIn Canada, the S[amp]amp;P/TSX composite index closed at 13,339.2, up 105.41 points or 0.8 per cent.

The Big Banks enjoyed a nice ride, with Royal Bank of Canada gaining 4.3 per cent and Toronto-Dominion Bank gaining 3.7 per cent.The big losers were the gold producers, which did not fare well as the price of gold fell to $921.50 (U.S.) an ounce, down $15. Barrick Gold Corp. fell 1.7 per cent and Goldcorp Inc. fell 1.5 per cent. Is that bad news? If gold soars with heightened fears about inflation and monetary collapse, then its retreat can be seen as a harbinger of better days ahead - well, until the second quarter begins on Tuesday.[amp]nbsp;[amp]nbsp;Copyright 2001 The Globe and Mail

PDP Houses+More

Gross on credit markets: No more autonomy

Monday, March 31, 2008
Bill Gross, managing director at Pacific Investment Management Co., or PIMCO, is never one to hide his real thoughts on the markets and the U.S. economy – and he came out slugging in his most recent monthly commentary to clients. This time, he argues that greater scrutiny of the credit markets is a foregone conclusion.
“In my opinion, the private credit markets have forfeited their privileged right to operate relatively autonomously because of incompetence, excessive greed, and in minor instances, fraudulent activities,” he said. “As a result, the deflating private market's balance sheet is being re-nationalized in some cases with increased regulation, in others with outright guarantees and agency lending.”
The housing downturn, of course, is the main reason why the credit market is shaking in its boots these days. And the solution, Mr. Gross said, must come from the quick response of authorities, even though a helping hand from government runs counter to deeply held Republican beliefs.
That's because a 20 per cent decline in U.S. home prices could spell catastrophe, since most homeowners have substantial debt loads that make a downturn far more of a shock to the U.S. economy than the pop of the dot-com bubble at the start of the decade.
“Ultimately government programs which support private credit market assets may be required in order to prevent an asset deflation of significant proportions,” Mr. Gross said. “A 20 per cent negative adjustment not only wipes out all ownership equity for millions of Americans, it turns their homes ‘upside down' – incentivizing them to let their gardens grow weeds instead of lettuce. The decline needs to be stopped quickly in order to avert additional crises.”
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