7. March 2009 by Dan Walkow, CFA, CMT.

Over the course of the past few weeks many financial publications and analysts have reported on how Canadian Banks are the envy of the banking world with beefed up capital ratios and conservative lending practices.

Have they escaped the market carnage? In relative terms to other banks around the world maybe, but in absolute terms no. The Royal Bank of Canada’s stock price is down almost 52% from May of 2007 closing Friday at $ 29.40.

The question is, despite reasonable valuation metrics and elevated dividend yields at current prices, have we seen the high water mark for earnings this past quarter and moreover are Canadian banks simply lagging the rest of the financial world?

Toronto-Dominion Bank chief executive Ed Clark said Wednesday that while “I’d like to prove myself wrong,” the first quarter would likely be the best for Canadian banks. “In both Canada and the U.S. we see PCLs (provisions for credit losses) going up. I don’t see how they couldn’t be going up,” he said.

Disclosure: I own Royal Bank personally and we own it in client accounts.

Read more here.

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7. March 2009 by Dan Walkow, CFA, CMT.

ETF assets declined in 2008 as markets tanked, but the business ushered about $175 billion through the door last year, while actively run mutual funds saw heavy outflows.

Exchange-Traded Funds continue to grow in popularity versus mutual funds, even in this market environment.

Why? Click here to get the latest.

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6. March 2009 by Dan Walkow, CFA, CMT.

Much has been made of sentiment indicators in recent sessions and how the gloom is so pervasive that we must be at a bottom and the only thing missing is that big capitulation day to give us the final washout.

Micheal Khan writes for Barrons, posting a technical perspective, and he makes the case bear markets end by exhaustion where a drawn-out period of fading interest is the true way bear market cycles end.

He has a good post this week and you can view it here.

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6. March 2009 by Dan Walkow, CFA, CMT.

Warren Buffet? Richard Kovacevich, Chairman of the Board for Wells Fargo Bank,  paid $ 805,000 to buy 100,000 shares of Wells Fargo today at $ 8.05. He owns, are you ready for this? - 2.365 million shares!

As you may know Wells Fargo is one of Warren Buffet’s largest stock holdings…

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4. March 2009 by Dan Walkow, CFA, CMT.

Steve Leuthold, whose Grizzly Short Fund returned 74 percent last year betting against U.S. stocks, said now is the time to buy equities because investors are too fearful about the economy.“These comparisons people make with the Great Depression are totally out of touch with reality, and pretty stupid,” he told Bloomberg Television in an interview today. “We’ve been in much worse, much more panicked and more scary situations in the U.S.”

 Read more

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4. March 2009 by Dan Walkow, CFA, CMT.

Garot list the reasons for optimism on Seeking Alpha.

Check it out here

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4. March 2009 by Dan Walkow, CFA, CMT.

Doug Kass, Real Money Commentator, makes the call: “I am also fully aware that most forecasts (of a stock and economic kind), especially at inflection points, are inaccurate or difficult to time, and I know that I am catching a falling knife, which is often an expensive and painful proposition. …..It is now time for me to adopt another variant view by espousing a more bullish opinion on the U.S.”

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4. March 2009 by Dan Walkow, CFA, CMT.

Is that light at the end of the tunnel? Speaking at an investor conference in San Francisco yesterady, departing Yahoo CFO Blake Jorgensen said the company’s “class one” advertising inventory — the stuff that goes on Yahoo.com — has finally begun to stabilize.

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4. March 2009 by Dan Walkow, CFA, CMT.

As quoted by Peter Brimlow on CBS Marketwatch, “On Feb. 23, Prechter recommended covering the short market positons. Not all his reasons were comforting but one reason was the possibility of a “short and scary” bear market rally. ”

“The five-wave decline that started in October 2007 has now drawn the DJIA beneath its October 2000 low, down 50% in just 16 months. Some measures of investor pessimism have reached extreme levels, suggesting the decline has reached its latter stages. But it’s not over yet. The bond market’s verdict on the US bailout effort is resoundingly negative. Five year credit default swaps on U.S. Treasury debt reveal rapid deterioration in the perceived quality of U.S. credit. Gold and silver ended their respective countertrend rallies and are starting significant declines. Gold should come under $680 while silver should work its way below $8.39. The U.S. Dollar Index remains in an uptrend that is far from over.”

I agree with the bearish argument for golds in the short term per the gold chart posted earlier. Dan

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4. March 2009 by Dan Walkow, CFA, CMT.

Leon Tuey, long-time market analyst and friend of mine made the observation to me in a recent conversation that he believes we are in the beginning phases of a bottoming process. He believes that, led by the airlines, a rolling bottom commenced in July, 2008 coincident with the peak in oil prices.  According to Leon, because of the economic cycle, stocks never go up  or down together and despite the widespread bearish outlook, the economy is showing signs of improvement.  Leon notes the bottoming action in  copper, oil and the Shanghai Stock Exchange Composite Index below. See charts below.

Also, Leon pointed out this week’s improved readings in US personal income, expenditures, and savings.

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