Saturday, April 10, 2010
The first quarter of 2010 closed out a few weeks ago and things are looking steady for the portfolio. Corporate earnings are improving on a year over year basis, but unemployment is still extremely high. Commercial loans continue to sour, and sovereign debt risk in Greece still looks unclear as the EU/IMF workout an aid package of 45B euros. The big shoe to drop this past week has been the charges brought forth against Goldman Sachs. This doesn't bode well for the XLF position in the short term. The most recent addition to the portfolio was Noble Corporation (NE), a Swiss based offshore contract oil and gas drilling services company. Noble Corporation sports really attractive valuations (P/E of 6.29ttm, Return on Assets at 16.4%, and profit margins at 46.1%) especially as China's voracious demand for oil continues to rise. Even as corporate earnings continue to show improvement, I am somewhat cautious as unemployment is still high of 10.4% while regional banks continue to workout the mess they are working with now in commercial property loans.