The Blue-Chip Triad

June 25, 2009
The Dow Utilities are down 5.0% YTD. The Dow Industrials are down 5.4%. And the cherry on the cake of the 2009 bear market in blue chip stocks is the 11.7% decline in the Dow Transports. The blue-chip triad reflects a number of serious concerns: (1) complete and total incompetence in Washington; (2) the worst world wide economy since the 30’s depression; (3) North Korea, Iran, Afghanistan, Iraq; (4) the prelude to a nasty run up in U.S. interest rates and inflation; (5) at a 3.4% yield (Dow 30) blue chip stocks simply do not offer compelling value. Gold is up YTD, reflecting the early stages of a U.S. dollar collapse which, by the way, will help big blue-chip U.S. exporters. Canadian stocks are up 12% YTD. For three reasons. (1) Canada has the soundest banking system in the world. (2) Canada is an exporter of energy. (3) a terrorist attack in Canada is far less likely than in the U.S.