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1. Utility Earnings
By Tim Melvin
1:42 p.m. EDT If it really is getting better, why are the utilities reporting lower earnings and given reduced or weak guidance? Duke Energy ( DUK) missed estimates this morning, as did Entergy ( EMO). According to the Energy Information Association industrial demand for energy is down 12% nationally. Duke reported demand that fell even further. Industrial demand was off 18% in the Carolinas and 20% in the company's Midwestern operations. The CEO at Duke told investors that industrial demand may be stabilizing, but he does not see it improving anytime soon. The company CFO affirmed this, saying it may well be 2011 before demand shows any meaningful increase. Even with all the cost-cutting that has gone on in corporations this year, merely stabilizing at these levels does not bode well for earnings going forward. No positions.
2. Canada vs. Europe
By Marc Chandler
1:04 p.m. EDT In recent weeks we have recommended long Canadian dollar positions against the U.S. dollar and the Mexican peso. Over the past month, the Canadian dollar has been among the best-performing currencies, gaining 8.6% against the dollar and more than 7.5% against the Mexican peso. We are concerned that from a fundamental perspective, much of the good news for Canada has been discounted, such as higher commodity prices and the recovery in the auto sector. The persistent strength of the Canadian dollar risks some condemnation by Canadian officials who are worried that it may hamper the recovery.