Update on the Markets, Economy - 3.3.2010

Here are the things I've been focusing on the past month and will continue to focus on moving forward.

1.) Greece, Europe, and Euro:
It's imperative for traders to take advantage of any perceived weakness in the U.S. stock market due to the situation in Greece. Their economy is only 1/5th the size of California's and U.S. banks have little exposure to Greek's debt. The EU has pledged to aid Greece in rectifying their deficits. This signifies how the EU will aid any other EU member-country with deficit problems in the future. As Jamie Dimon points out, California is the greater threat. If markets are weak due to the situation in Greece, it's a buying opportunity.

At a hedge-fund gathering last week, prominent players in the industry talked about how the euro could reach parity against the dollar. At the very least, they were in agreement about how the Greece situation could only result in euro depreciation. I think parity is quite an extreme forecast that could only come to fruition if the US/Euro interest spread widens from -25bps to around 400bps.

2.) GBP :
The pound has been hitting new 1-year lows against the USD and JPY the past month.  Look for a bounce - the pound is extremely oversold here.

3.) Economic Data:
The Jobless Claims report is getting a lot of press lately and will continue to move the markets. Unemployment report comes out on Friday, though it will be interesting to see how the winter storm affects the numbers.

4.) Holdings - TSL and FCX
Sold out of TSL with a 5% loss. I'm still in FCX however, up 14%. Obviously, I'm watching copper and gold very closely to decide when to exit my FCX trade.

5.) Outlook
I'm bullish at these levels. Economic data has been improving, albeit there have been mixed signals. The key will continue to be the unemployment number, which comes out on Friday. With that said, the easy money was made in 2009 and this year is without question, a stock picker's market.

Buy the high-betas on the dips and hunt for the undervalued companies for long term investments (3-5 years). Be willing to change the composition of your portfolio if the leading labor indicators -jobless claims, temp hirings, average hours worked manufacturing sector - take a turn for the worse. These are the most important indicators to follow right now, as all other econ statistics have at least modestly improved while the unemployment rate is stagnant in the high 9s.