First Metro Asset Management Inc

BAD NEWS BEARS

9:15am   Tuesday   June 23, 2009 ( the Philippine Stock Exchange has not yet opened)

More on Philippine stocks as gloomy news abound overnight in the U.S.  There are more Americans out of work today than there has ever been in the last 25 years with the unemployment rate at 9.4%.  That’s not the gloom yet.  The White House says that the unemployment rate could rise to as high as 10% before this year is over.  Does this look like a recovery?

Famous economist Dr. Nouriel Roubini (dubbed Dr. Doom) thinks that the U.S. is in for a double dip recession, meaning recent signs of recovery are likely to reverse due to rising oil prices and long term interest rates similarly spiking higher.  He thinks that oil is headed for $100 a barrel.  That would really throw water to whatever recovery that is in the making.

Can we expect to see Philippine equities do better today?  I wouldn’t hold my breath for it.  Tokyo is down 281 points as I write.  Is it panic time, then?  I don’t think so either.  We did not have a strong rally from March into the middle of June simply because investors wanted to have fun.  There were very good values that had been seen in a number of front and second line  issues.  However, as I said in earlier notes, we had gone ahead of ourselves.  It’s time to come back to earth and revisit these indicators for value.

In a few weeks, we’ll be seeing 2nd quarter results being disclosed.  This should give us a better picture on how these companies are doing.  Recently, we’d seen another round of dividend declarations: BPI, SPH, COAT, PSB, and CHIB will all be paying cash dividends soon.

As in any enterprise, there is time to be aggressive and a time to be patient.  With gloomy news ruling the airwaves, patience is definitely what will bear us out.

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First Metro Asset Management Inc