Pescod summarizes Coxe...
After the turmoil in the markets for the last couple of
days and weeks, there’s nothing one needs more than just
a bit of hand holdings and there’s probably no one better
at it than Don Coxe. As far as we’re concerned, BMO’s
Coxe, who writes Basic Points monthly, just did a weekly
conference call on Friday that certainly made us feel a
little bit better and we thoroughly enjoyed his take on the
market.
It was interesting for his general overall take as he suggests
that for much of the last few years, Main Street has
not been involved in the stock market at all (at least in the
United States) and instead, the main participants have
been Wall Street and the newly minted billionaires and
other rich types. All of a sudden he suggests, that it’s the
new rich that are suddenly needing big help from the
Feds. He also points out that never have we seen a crash
that has ended something significant if Main Street wasn’t
involved.
As far as the market which has seen commodity prices
hurt, he notes that commodity stocks have been hurt a lot
more than commodity prices and he suggests that when
the rally does comes (whenever that is) he expects commodity
stocks to lead the way.
All of a sudden though, there is a sector of the commodities
that he is very much in favor of and that’s agriculture
and he points to interesting price increases in
products such as wheat and dairy products.
As far as oil, he points out that oil inventories remain
lean and that big oil is simply not replacing its production.
He predicts that oil over the next while will be somewhere
between $55.00 and $75.00 and while he is not a believer
in $100.00 oil, he is a huge believer in the oil sands and
points to the recent takeover of Western Oil Sands. The
oil sands remain one of his favorite places.
As far as natural gas, it was interesting to hear his comment
there, as he points out that drilling in the lower 48
States has created a surplus of the commodity, but he
suggests that one normal winter could mop up that surplus.
Once again, he suggests when the rally resumes,
commodities will lead the way, but we (like him) wonder
just when that starts. Hopefully, we assume, when people
get back to work sometime this fall.
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