Sunday, May 11, 2008

FX, DPS, AIG, Rally talk

Financial news, or speculation, over the weekend included:
---Bloomberg tonight has a story headline of "Dollar Bulls Gain Control as Futures Signal Euro Close to Peak". The comment that follows says "For the first time since 2005 futures traders are turning bullish on the dollar" and quotes a London bank's FX head as saying "There is a kind of a sea change taking place at the moment" when asked about the market's view on the dollar. See the April 14th post here for thoughts on a dollar rally.
---Dr. Pepper(DPS) began trading on the NYSE last week after its spin-off from the U.K.'s Cadbury Schwepps. Barron's speculates about the lackluster early trading in the name and possible reasons why this is an under appreciated name out of the gates. While David Letterman may have once called the flagship brand "liquid manure" it has a loyal following and a solid position in the U.S. soft drink market. European recipients of the stock on spin-off may well be weak hands for such a uniquely U.S. equity and the various brands including Snapple and Seven-Up have not exactly been stellar in recent years. All the more reason for a look at the potential of this set of brands breaking out of a conglomerate suggests Barron's, especially for those with a bias for the beverage suggests eyesnotsold.
---AIG also gets a note in Barron's after its terrible quarterly report of more losses. Despite the precipitous decline in its stock price, or because of it, this name just has to be a golden opportunity at some point. The business franchise is too strong to overlook.
---Paul Lim in the NYT Sunday business section discusses whether the rally in equities since mid-March is the real thing. Just think, we've been going through a rally in the equity market. He should tell the other writers at the Times to take a look.

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