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Daily Market Commentary

The write down parade in the financials continues this morning... is anyone reading this anymore?  Barclay's PLC wrote down $3.3 billion in credit market losses, and announced they may raise capital to replace it with a share sale.  We're still baffled why all this money is pouring into financials which are continually writing down assets... there seems to be a blind faith in the recovery of these institutions.

We've heard lots of stories about piles of cash on the sidelines waiting to be put to work, and we don't disagree, having seen directly the volume of money markets that we've been trading ourselves.  The question is:  isn't too many dollars chasing too few assets the definition of inflation?  Seems like the classic case in the financials sector.  Persistently low bond yields, however, paint another picture.

Initial jobless claims are in line with elevated expectations, so we're still somewhat worried about the job market.  Empire Manufacturing was somewhat worrying this morning, posting at -3.2.  This still maintains a recovery from the horrible -22 in March, but negative territory is never good news.

Canada's manufacturing shipments also reported poorly this morning, dropping 1.6%.  This series is pretty volatile, so once again we watch trends and not prints, but last month was revised downwards as well.  With a CAD$ hovering around par, we can't say we're surprised.

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