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Tonight’s Agenda

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Tonight’s Agenda

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  1. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS.  Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any financial instruments does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. There are no absolute guarantees in investing. HAWKTRADE and its members do not bear any responsibility for losses or gains made by members trading on their personal accounts based on analysis from HAWKTRADE meetings.
  2. Tonight’s Agenda Macro Issues: Inflation & Fed policy Glencore IPO Q1 Earnings season The Trade
  3. Rising Inflation Market is concerned rising inflation in food and energy will hurt growth Many say U.S. Fed policy is the main driver in the spike in food & energy Should QE2 end sooner than June 30th? Should the U.S. Fed start tightening it’s policy now and raise interest rates?
  4. The Federal Reserve’s Dual Mandate Maximum Employment Price Stability
  5. Fed Policy Fed implemented QE2 in Nov ’10 to boost the economy & asset prices, also low interest rates for extended period (0.25%) Fed has a 2% inflation target, has been fighting deflation for the last 2-3 years Also weaken the U.S. dollar causing food & energy prices to rise Food & Energy are not a big part of the Fed’s CPI (consumer prices index) due to price volatility Many countries around the world are critical of it, especially emerging market economies
  6. ECB Raises Rates European Central Bank (ECB) raised interest rates 0.25% last week to fight inflation ECB just has a SINGLE mandate: Price Stability Isn’t concerned about creating jobs as much as the U.S. Fed Europe has an unbalanced economy, Germany, France, and northern Europe is the strength of the EU economy Weak debt ridden countries like Portugal, Greece, & Ireland have weak growth & dragging down the EU economy
  7. Airtime: Thurs. April. 7 2011 | 7:12 PM ET Should the Fed Follow the ECB?
  8. Fed Tightening Fed policy will tighten in 2011 and even more in 2012 QE2 ends June 30th, commodities could sell off ahead of this date Fed will most likely raise interest rates in late 2011 Market likely to sell off when this happens However, banks benefit from a higher interest rate environment

  9. Glencore IPO: Biggest company you never heard of is about to go public

  10. Glencore World’s largest commodity trader 50% of business is commodity trading (Metals, Energy & Agriculture) 50% mining: copper, coal, zinc, aluminum etc One of the world’s largest private companies Very secretive company, employee owned 2010 Revenue: $145 billion Xstrata’s largest shareholder, 35% stake talk of a Xstrata-Glencore merger in the past, possibly only with Glencore’s mining units
  11. Airtime: Thurs. March. 3 2011 | 12:27 PM ET Glencore IPO Coming Soon?
  12. Glencore IPO Dual listing in London & Hong Kong U.S. retail investors can buy Glencore on Pink Sheets ADRs Largest IPO in 2011 Mid-May likely Company could be valued from $50-$80 billion Many view Glencore in the “must own category” Will help company raise capital for projects & acquisitions

  13. Q1 Earnings Season

  14. Airtime: Fri. April. 8 2011 | 8:00 PM ET Earnings Season Begins

  15. Q1 Earnings Season

  16. Q1 Earnings issues Investors look to corporate profits & outlooks for conformation the market has another leg up to the rally Earnings are critical So is guidance & conference calls The big question for investors: Have surging commodity costs compressed profit margins for companies?
  17. Q1 Earnings Strategy Have exposure to companies who have ability to raise prices or participate in commodity price increases Energy & mining stocks Don’t want to be in companies who have input costs increases and are going to see their margins squeezed by rising commodity prices Consumer staples
  18. Investment Strategy for Financial Stocks Financials ahead of earnings, April 8th 2011
  19. Video Summary Buy banks ahead of earnings Tend to outperform the market after a recession Banks should do well in the next couple of years Balance sheets improving, loan growth, dividends Likes Citibank

  20. Economic Calendar will also be important

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