This is The Wall Street Digest Hotline Update for Friday, May 16, 2008, at 6:00 p.m. EST.
Stock prices fell after the Consumer Sentiment reading fell to the lowest level since 1980. Stock prices closed well off the lows of the day. At the closing bell, the Dow fell almost 6 points, closing at 12,986, while the Nasdaq fell almost 5 points, closing at 2,528. Oil closed $2.58 higher at $126.70 per barrel, and gold closed $23.40 higher at $903.40 an ounce.
Consumers are reminded daily of rising food and gasoline prices. The last six U.S. presidents and every Congress since 1976 have shown zero interest in reducing our dependence on foreign oil. The oil lobby is making significant campaign contributions to members of Congress. Hence, no interest in changing the status quo. We have the finest Congress money can buy. Congress could at least repeal recent ethanol legislation to address rising corn prices and rising food prices.
The Dow Transportation Index just posted a new high, which tells investors that the economic recovery is already underway. Plus, the yield curve is steep and positive. That is significant because a steep yield curve has ended every recession and every financial crisis. Stay fully invested.
Do not sell any of our food, seed, agriculture or fertilizer stocks and ETFs. One billion people are starving due to the worst global food shortage in history. Be sure to own Potash Corp. of Saskatchewan, Inc. (POT).
Let's continue to avoid the housing sector. I would not purchase residential nor commercial real estate. I still do not expect the housing market to bottom in 2008.
Stay close to our Tuesday/Friday Hotline Updates. I will be adjusting our portfolio of recommendations to capture maximum profits from a stock market rally.
The next Hotline Update will be on Tuesday, May 20, 2008, at 6:00 p.m. EST.