Research in Motion, the folks who make the Blackberry, reported
dynamite earnings and sales last night and the share price is up 10% in the
early going. That and the over ballyhooed iPhone introduction tonight have
added a positive tome to this morning’s market goings on. The S&P 500 has
fallen on 10 of 11 of the last trading days of the quarter.
Asian was mixed overnight with Shanghai
down over 2% on top of yesterday’s 4% drop and Hong Kong
lower while Japan
was higher. European bourse indexes are lower at .
Oil is over $70, Gold is $2 higher and Treasuries have a bid on the back of a
lower PCE Price Deflator.
Personal Income was up 0.4% while Personal Spending was up 0.5% and the PCE Price Deflator for May (inflation) was up 0.1%. The price index
for personal consumption expenditures rose 0.5% in May compared to the prior
month and 2.3% from a year earlier. Excluding food and energy, the
"core" index rose 0.1% in May and 1.9% from a year earlier, the first
reading below 2% since April, 2004.
You scratch my back…: private equity company Clayton, Dubilier
& Rice has agreed to sell Brakes, a food service group with sales in excess
of 1.6 billion pounds ($3.2 billion), to funds affiliated with investment firm
Bain Capital. Clayton bought Brakes in 2002 for roughly 430 million pounds.
Clayton said in a statement on Friday that Brakes had seen its turnover grow by
14 percent and its operating profit by close to 70 percent over the last five
European bourse indexes closed higher across the continent. Mexico
were also higher.
Oil closed at $70.46 up 89 pennies. Gold was unched at $650. Treasuries
had a strong bid all day and the two-year ended at 4.88% with the ten-year at
The Model Portfolio is up 11%
since June 30, 2006.
Stocks almost gave up the ghost
in the last hour of the last day of the quarter. At one point in the final hour
of trading the DJIA was down 110 points but the big boys and girls had saved
enough ammo for the close and the DJIA
closed down only 16 points at 13404. The S&P
500 lost 3 points to close at 1503 and the NAZZ dropped 5 points to 2603.
Breadth was flat all day and turned negative in the last hour and volume was moderate.
There were 275 new highs and 135 new
The bears won the
day but he bulls won the quarter and the first half of the trading year.
28 June 2007 Daily Comments
In a reverse of yesterday’s
action in Asia, Shanghai
was down 4% overnight while most of the rest of the Asian indexes were higher.
European bourses are again playing catch up with most higher. Oil has a $69
handle and Gold is up $4. Treasuries are weaker.
Final GDP for Quarter I was up
0.7%. We aren’t sure whether this is the final final GDP number or whether there
is a revised final GDP number down the road. Core PCE Deflator (Core Personal
Consumption Deflator is an index of prices for all domestic purchases excluding
food and energy which is the Fed’s inflation measure) was revised to 2.4% from
2.2%. The overall PCE Deflator which includes Food and energy rose 4.2%.
The Fed concludes its two day meeting
today with its thoughts issued at .
Traders may hold their fire today until that announcement.
Jobless claims were 313,000 down
The WSJ and CNBC are reporting
that several recently announced Leveraged Buyouts are having trouble raising
money through debt offerings of billions of dollars to fund the transactions.
The LBOs will go forward since the investment banks have provided bridge loans.
And the funding problem is more a question of how much interest the borrowers
will have to pay than of available funds. But the higher interest rates mean
that the deals may not be quite as profitable as the LBO buyers initially
Oil is over $70 at and Gold is up $6 in
GM is up $1.25 at $38.15 on news that it is selling its heavy duty
truck Allison Transmissions for $5.6 billion. With the GMAC sale and this sale,
GM is doing what the Bear Stearns funds did in that they are selling the good
stuff that they can to sustain the less good stuff. The pop in the price today
is worth 20 DJIA points and is probably the result of short covering and end of
quarter window dressing.
The Fed does not yet see any
sustained moderation in inflation and so they are on hold. On that news we all
can go back to sleep.
Treasuries are selling off a bit
and stock measures initially moved higher but after 20 minutes are giving ground.
This is an interesting article on
hedge fund performance:
The 2002 bottom of the tech bear
market is almost here and so from now on the 5 year records of mutual funds and
others will not reflect the two or three bad years most of them incurred.
Treasuries closed lower on the day with the two-year at 4.95% and
the ten-year at 5.11%. Gold gained
$6 to $650 and Oil closed higher but
below $70 at $69.57.
European bourse indexes maintained their gains into the close and Mexico
also closed higher.
The DJIA lost 6 points to finish at 13420. The S&P 500 was down points at 1505 and the NAZZ was up 3 points at 2609.
Breadth was 2/1 positive on the NYSE and 5/4 on the NAZZ
but volume moderated.
There were 260 new highs and 110 new
lows as the bulls regained the high ground.
Today was a tie
for the bulls and the bears.
27 June 2007 Daily Comments
was up 2.5% overnight while the rest of Asia was lower.
European bourses indexes are lower as are Gold and Oil. Treasuries are stronger
on a lower than expected Durable Goods Number of -2.8%.
In opposing the Whole Foods/Wild Oats merger the WSJ reports that the FTC says: Whole Foods and Wild Oats can't combine
because they are the two biggest operators of "premium natural and organic
supermarkets," offering "a distinct set of products and services to a
distinctive group of customers in a distinctive way." That's a new market
description, but the natural-foods business until now has been too small to
matter. A post merger Whole Foods would "increase prices and reduce
quality and services," the FTC says.
Obviously no one at the FTC has
ever shopped at a Whole Foods and Wild Oats. A merger would substantially
improve the quality of food and offerings at the Wild Oats stores. It would
increase the prices at Wild Oats because of the increase in quality and service.
Crude oil inventories were up in
the latest week while gasoline inventories fell more than expected.
GE is lower and we think it is down because of its finance subsidiary.
We are sure GE Finance owns a ton of sub prime loans and we would guess that if
the sub prime problems expand that GE Finance will be buying more sub prime
In every financial crisis that we
remember over 40 years GE’s share price has reacted negatively to the crisis because
of the Finance subsidiary but the Finance subsidiary has always survived and
profited from the debacle. That is because GE Finance doesn’t have the SEC or
NYSE or FDIC looking at its books and requiring it to mark to the market.
The only folks who look at GE
Finance are the auditors and they have always been cooperative and we would
assume will continue to be so. And the bargain sales of sub prime debt will
offer GE Finance an opportunity for larger profits from buying that debt at
fire sale prices.
As we said yesterday this crisis
is not a crisis of quality but one of leverage. The foreclosures and forfeitures
that are occurring are statistically understandable to purchasers as long as
the purchasers and holders of the sub prime debt are not overleveraged.
The wealth of the world's rich
and super rich surged 11.2 percent to $37.2 trillion last year but the elite
group gave less than 1 percent of their net worth to charity, a study released
on Wednesday said. For the first time, the 11th annual World Wealth Report detailed
philanthropic giving, and estimated that high net worth individuals turned over
$285 billion to charitable causes in 2006. That's equivalent to someone worth
$100,000 giving about $766 to charity, or 0.76 percent of their wealth.
Oil closed up $1.19 and $68.94 and Gold was unchanged at $644. Treasuries
were higher most of the day but gave up their gains to close lower in price
when stocks rallied. The two-year ended at 4.90% and the ten-year at 5.09%.
European indexes closed lower but Mexico
The DJIA gained 90 points to finish at 13430. The S&P 500 closed up 15 points at 1508 and the NAZZ led today up 30 points to 2605.
Breadth was 2/1 positive and volume
was summer active.
New lows again outdistance new
highs with new lows at 235 and new highs at 150.
With stocks down
over 70 points early in the day but up at the close the bulls managed to win
26 June 2007 Daily Comments
Asian bourse indexes were lower
overnight with no large drops. European bourses indexes are playing catch-up
with yesterday’s rally failure in the U.S.
and are off large fractions at .
Gold is down $4 and Oil is also off 40 pennies with a $68 handle.
Treasuries are a tick weaker with
the ten-year at 5.08%. There is a two-year note auction today which may set the
tone for the day.
The papers and view media are
filled with sub prime stories and the S&P 500 is at an inflection point.
1490 is an important level. Stocks opened higher this morning as dip buyers
were again at work but an hour into the session the major measures are back to
even. The S&P 500 is holding in the 1490s which is where it bounced in
March and May and the bulls are hoping it will do so again. The bears obviously
are hoping otherwise.
There is talk that deal money is
harder to come by, and Bear Stearns has pulled an IPO of a sub prime hedge fund
management company. That is really no great surprise since the fellow running
the company in the IPO is the same fellow running the two hedge funds that blew
up. In a few years he will be saleable again, but for now….. .
being the better part of valor we sold Ford for a profit and Yahoo for a
scratch loss this morning in accounts and also lowered positions in NCC at a
trading profit and INTC at a $1 loss in our larger accounts. We
continue to think that there is at least one more push higher left in the bull
run thus our buys last week and holds this week but we have often been
incorrect in our short term guesses and we would rather sell when we can.
The two Bear Stearns hedge funds
are in trouble because they borrowed so much money against the assets they
held. Leverage -- not credit -- caused the problems. Had
they not borrowed any money they wouldn’t have had any margin calls and there
would be no crisis. Of course had they not borrowed oodles of money they
wouldn’t have been able to demand the high performance and maintenance fees.
And, if the hedge
funds don’t leverage their investments there will be less demand for the
investments (?) they hold. And if there is less demand the pricing of these
instruments will come under pressure. Without the leverage all the CDOs and LBOs
and CMOs and other stuff would never have been able to be sold. And so there is
a problem unwinding very much of the leverage at anywhere near the prices the
products are marked. We imagine the Fed members are talking about this-off the
record- at their meeting today. *****
Blackstone’s shares fell below the $31 offering price this morning.
Oil is now down over 41 and Gold
is down $4. In the good old days if there was a financial crisis Gold would be
higher. But since hedge funds control the day to day activity in the stock and
commodity and financial markets a crisis in one usually affects the other markets
as the hedge funds close out various hedges to raise cash.
The WSJ has an article again
today on the CDO crisis (?). We especially love this sentence: Many CLO investors are sophisticated money
managers. Over the past few years, hedge funds, French insurance giant AXA, the
California Public Employees' Retirement System and the General Retirement
System of the City of Detroit have all poured millions of dollars into the
riskiest CLO tranches.
If the article had been written
last month we are sure the fellow at Bear Stearns would have been mentioned as
a sophisticated investor.
Sales of new homes fell 1.6%
to an annual pace of 915,000 last month, the Commerce Department said. The
decline follows April's unexpected surge of 16%, which
was revised lower to 13%, though that remains the largest
increase since September 1993. The median price of a new home fell 0.9 percent
to $236,100 last month from $238,200 a year earlier. Inventories declined, but
the decline was less than sales, pushing the supply of homes at the current
sales rate to 7.1 months from 7 months in April.
reported a second-quarter loss of $244.2 million. Last July the company
actually reported a net profitof $324.7 million. LEN reported a 28% drop in home deliveries
year-over-year. Revenue fell 37%. New orders in the quarter declined 31%.
The average sales price of homes fell more than 7% year over year. The
cancellation rate was 29%.
The character of the market has
changed again in the last week. The rallies have been sold much more
aggressively then the sell offs have been purchased. With month/quarter end
approaching one could expect a rally or at least not a sustained sell off. The
next few days should be interesting.
The Treasury auctioned $18
billion of two-year notes at a 4.90% yield.
European bourse indexes closed large fractions lower across the
Oil was off $1.26 at $67.93 and gold was down $10 at $645.
Treasuries closed weaker with the two-year at 4.89% and the
ten-year at 5.10%.
were both lower.
The DJIA finished down 15 points at 10335. The S&P 500 lost 4 points to 1493 and the NAZZ was down 3 points to 2575.
Breadth was 3/2 negative and volume
New lows outdistanced new highs at 215 to 140 new highs.
The bears won a
squeaker today. *****
25 June 2007 Daily Comments
A week ago everything is the
markets was rosy. Today we counted five major stories in the WSJ with negative
Asian market indexes were lower
overnight with Shanghai down 3.6%. European
bourse indexes are also lower at .
Treasuries have a bid and Gold is down $3 with Oil down $1.50 in early NYC
The Fed meets this week.
Goldman Sachs raised GM to a buy and GM is trading higher by
And the use of borrowed money is
on the rise. In May, the sum investors borrowed from brokerage firms to buy
stocks hit $317.99 billion, up about 14% from the previous record in March
2000, according to the New York Stock Exchange. Net borrowings by large
bond-market dealers stood at about $1.33 trillion this month, up from $730
billion in 2003 and about $300 billion when the stock market peaked in 2000,
according to Chicago
market-research firm Bianco Research LLC.
As with the phony electricity
crisis in 2001 in which all consumers paid exorbitant prices because Enron and
others, including big oil, were manipulating the price of electricity in
California; a Senate subcommittee reports, a year too late to help, that
Amaranth Hedge Fund, which went bankrupt last year, manipulated the price of natural
gas last summer to the detriment of natural gas consumers.
According to the WSJ: the Senate report shows what many traders
suspected but couldn't prove: Before Amaranth went under, the investment fund
held as much as 40% of all open bets on gas contracts at the New York
Mercantile Exchange that is the world's largest energy marketplace. By virtue
of its size, Amaranth had the power to influence market dynamics and the
closing prices of some contracts, the subcommittee said.
The Senate report contends that gaping holes in the regulatory
oversight of energy markets allowed one large hedge fund to game natural-gas
futures prices in 2006, increasing risks for other participants and causing
utilities to incur unnecessarily high costs last summer. *****
The tech guru we follow says the
S&P 500 needs to hold 1507 for the bull move to remain intact and move up
through 1521 for the rally to spike higher. He sees the end to the rally by mid
July even if the spike higher occurs.
From a psychological point of
view the rally continuing into July makes sense as the end of June is quarter
end and also the financial year end for many non profit entities.
The annual rate of Existing Home Sales was down but almost
The total amount of unsold homes
reached 4.41 million in May, up from 4.220 million in April, 3.806 million in
March, and 3.589 million in February. The current level is about a million
units above normal. Relative to sales, current inventory levels are at 8.9
months' supply, the most since June 1992 and well above a normal reading of
about 5 months' supply. The median price rose 1.8% and the average price
increased 1.3%, putting the year-over-year figures at -2.1% and -0.8%,
The major stock measures opened higher
this morning. Then, after 15 minutes of trading, moved negative before
improving at the hour mark. At
the DJIA is up 100 points. But breadth is flat and so the surmise would be that
programs are moving the measures in the early going.
According to the Gallup Poll
optimism is in a distinct minority in the U.S.
The Apple iPhone is going to have very slow download speeds using a
wireless phone connection because it is using technology that is 5 years old.
The only way the iPhone is going to work for browsing is if the user has WiFi
Tero Kuittinen@realmoney.com writes:The fact is that the Edge technology (which
Iphone uses) will deliver literally 10 times slower data access than current
top 3G phones; speed may regularly drop to below 100 kbps. The performance gap
of this magnitude is headline material for most products. Yet Apple and its
courtiers have mostly managed to sidestep the issue entirely. Most consumer
backlashes breed in swamp ponds of unrealistic expectations. Blurring the
difference between Edge and Wi-Fi access only works if consumers find getting
Wi-Fi access easy. *****
We bought some Motorola
in our larger accounts at $17.87. This is the week the iPhone is being
offered and we said we were going to buy Motorola as a contrary buy to the
hype. We will buy more around if conditions favor.
A report by Citigroup that sub
prime instruments issued by Goldman
Sachs are being downgraded by rating agencies at the fastest rate of any sub
prime issuer caused stocks to turn lower with an hour and one half of trading
left in the day. The DJIA is in negative territory after being up 110 points in
the second hour.
The Goldman Sachs news adds a whispered name to the Bear Stearns mess
and GS shares are down $5. GS makes a bunch of money in the sub prime market.
The S&P 500 is finding
support at 1497, which it needs to from a technical point of view. Breadth
never was better than 5/4 positive this morning. Oil is now flat after being
down $1.50 this morning and Treasuries remain higher in price lower in yield on
Oil ended up 4 pennies at $69.18 and Gold was down $2 at $654. Treasuries
finished strong on the GS news with the two-year at 4.87% and the ten-year at
European bourse indexes were mixed to small fractions lower. The
European bourses closed when the DJIA was up 100 points. Mexico
The DJIA had 500
plus point up/down/up/down/up/down range today.
The DJIA closed down 5 points at 13355. The S&P 500 lost 5 points to 1498 and the NAZZ dropped 12 points to 2576.
Breadth was 2/1 negative and volume
There were 180 new highs and 200 new
The bears won the
day by a large margin, especially with the failed rally attempt by the bulls.
22 June 2007 Daily Comments
lower overnight with Shanghai down
over 3%. On the days Shanghai is lower
it goes down more on a percentage basis than it goes up on the days it is
higher. This has been the pattern for the last month.
European bourses are lower at on poor German economic news and Gold is
up $3 while Oil is down 30 pennies with a $68 handle in the early going in NYC.
Treasuries remain flat on the short end and a couple of ticks lower as maturities
Blackstone priced at $31 and
opened trading today at $36.45.
Bear Stearns is going to take on
all the loans of its two hedge funds from Merrill and others to prevent the sale
of the collateral in the marketplace. Our guess is that this was a Fed workout
of the situation
Talking heads are saying that the
latest crisis isn’t a question of the underlying quality of the issues used as
collateral but one of liquidity and pricing. We agree but then that is the
nature of any panic. When GE dropped $30 in trading in one minute during the
1987 Crash there was no thought that GE was going broke. The price drop was a
reaction and attempt to re-price GE and many other securities that the markets
suddenly decided were over priced. During the great depression very few large
companies went broke. But prices dropped as the marketplace decided to move the
value of securities lower than they had been valued. That is the nature of
corrections and panics.
the DJIA is down 155 points and trading is active. We are adding some
Starbucks and Whole Foods and Timberland to accounts that don’t own them.
Gold gained $3 to $657 in NYC trading and Oil was up 49 pennies to $69.14 to end the week. Treasuries were higher with the short
end rising on a flight to quality and the long end tagging along as traders and
common folk don’t know what will occur in the Bears Stearns et al hedge fund
soap opera over the week-end. The two-year was 4.92% and the ten-year was
The Fed stepped in
in the Long Term Capital situation and that is the road map for this situation.
We also bought more National City in our large accounts.
European bourse indexes finished lower on the day as did Brazil
It’s raining in Chicago and so:
Corn futures at the Chicago Board of Trade fell almost 5 percent on
Friday on crop friendly rains in the U.S. Midwest overnight and forecasts for
better crop weather to continue, traders said. "It's raining in the dry
areas and we'll have to get used to this volatility. What used to be a 5 to 10
cent move is now 15 to 20 cents and it isn't easy," said Dan Cekander,
analyst for FIMAT USA. *****
The DJIA closed 186 points lower at 13360. The S&P 500 was off 20 points at 1503 and the NAZZ dropped 28 points to 2588.
Breadth was 3/1 negative and volume
There were 198 new highs and 186 new lows.
The bears won
the day and with that victory they take the week and are in the lead to take
the month with the S&P and DJIA both down about 2% on the month.
21 June 2007 Daily Comments
Happy summer! *****
The sell off yesterday may have
been occasioned by the Bear Stearns fund stuff and also the Blackstone offering
tonight. Today’s market action should tell. The fact the Gold moved lower
yesterday and is down today by $4 suggests some cash raising.
By the by, the NYT has a story on
the Bear Stearns fiasco and reiterates the point we made yesterday: (we should
have said CDOs and not CMOs in yesterday’s post)
One worry about the possible unwinding of the Bear funds is that it
will cascade into larger liquidations by other investors who hold similar
securities at far higher prices. Accounting rules require investment banks to
mark the value of the investments to the price of similar assets trading in the
market. Many mortgage-related securities and C.D.O.’s in particular, do not
trade frequently, making them hard to value….Such an approach helps to keep the
pricing of the securities under wraps, allowing Wall Street firms to avoid
marking down their own stakes. Keeping the sales price quiet also means that
the firms may not have to add collateral immediately to shore up their
portfolios…….Yet another emerging worry is that the big investment banks that
until now have generously lent billions of dollars on good terms to traders and
portfolio managers are pulling back or demanding stricter terms.
One industry executive, who asked not to be named because of the
delicacy of the subject, said the banks involved in the Bear funds could
collectively lose $1 billion on their lendings to the Bear funds. While the
amount is not itself significant given the size of these banks, it suggests the
potential for bigger losses down the road.
It’s nice to know that a billion
dollars is not much these days. Having begun our business life in the 1960s
when the total federal Budget was less than $100 billion we have
difficulty comprehending that a
billion is not a billion as we used to know it.
This is a comment from one of our
favorite technicians on the hedge fund stuff:
When over leveraged hedge funds are dealing in derivative instruments
where there is no tick-by-tick bid and the valuations are marked to a model and
not a market, it exposes a psychological Achilles heel. Wednesday that heel was
apparent. There is always the potential for a crisis of confidence when you
have to invent a price. And it seems to be that trying to invent a price in
an over leveraged landscape is like trying to turn a mirage in the desert
into an oasis. *****
CNBC is saying that the hedge funds
carry the CDOs at a value of 100 and that the bids for some of the CDOs are in
the 30 to 80 range.
If the CDOs are sold at those
levels then other hedge funds and brokers loaning money on the CDOs would have
to value the CDOs at the transaction prices. That would set off a wave of
margin calls. Thus, there is a need for the Fed and the big NY brokers to find
a funding arrangement. They don’t want the house of cards to tumble.
higher across the board overnight while European bourse indexes are mostly big
fractions lower at . Short Treasuries
have a flight to safety bid while ten
years and out are a bit lower and Oil is up 70 pennies with a $69 handle in the
Jobless claims for the latest week were up 10,000 to 324,000.
Starbucks is down $1 today as its CFO said that SBUX would be
challenged to hit the high end of its forecast range of earnings of 88 pennies
to 93 pennies for September 2007 year end. Those earnings will be up 14% if
they hit 89 pennies but it’s that kind of market for this former high flying
We are adding
shares equal to what we hold in our larger accounts at $26.18.
The major measures opened higher
but almost immediately were met with selling and were down 90 points at . After an hour of trading the DJIA has
recovered and is now down 17 points.
With the Blackstone deal pricing
tonight and the rebalancing of the Russell 2000 tomorrow we will be surprised
if the major measures don’t close higher today. The Bear Stearns hedge fund
brouhaha is a yawn for the bulls. It is an emperor’s
clothes scenario and no one is worried because it is still warm and
summertime so the emperor won’t catch a cold if everyone ignores the obvious.
Bloomberg is reporting that GE is
no longer looking at DJ. Our guess is that Jack Welch squelched the deal as a
favor to his friend Rupert.
Oil was up $1 in the early going
and now at it is off 50 pennies.
Gold is down $7. We continue to believe that the volatility in gold and oil the
past two days is related tot the hedge fund stuff.
European bourse indexes closed mostly lower with some down over 1%.
The close in Europe occurred while the major U.S.
measures were lower. Also Europe closed higher yesterday
and maybe was playing catch up with the U.S.
market sell off of yesterday.
Oil closed down 26 pennies at $68.56. Gold was down $6 at 654.
were up on the day.
Treasuries closed flat on the short end and lower on the long end
with the two-year at 4.97% and the ten-year at 5.17%.
Sell programs in the am and buy
programs in the pm ruled the trading day.
The DJIA closed up 55 points at 13545. The S&P 500 gained 10 points to 1622 and the NAZZ rose 17 points to 2617.
Breadth was slightly positive and volume was moderate.
New highs just managed to stay
ahead of new lows today. There were 200 new
highs and 180 new lows.
The bulls -with
higher major stock measures- and bears - with punk breadth and the increased
new lows - tied for the day.
20 June 2007 Daily Comments
It looks like it is going to be
the longest day of their lives for managers of two Bear Stearns hedge funds.
The names of the funds are enough to give one pause before investing in them: High Grade Structured Credit Strategies
Enhanced Leverage Fund and High
Grade Structured Credit Strategies Fund. (Of course sophisticated investors
might like sophisticated names.) The rescue plan that BS was trying to cobble together
yesterday failed as Merrill was smart and said we loan money and collect interest. You take the risk, we don’t take
risk. And so Mother Merrill said she is going to sell $850 million in
collateral to pay of margin loans.
The WSJ has a story on how the
funds structure their investment. It is interesting because it shows that BS
put in a relatively small amount of money and had investors pony up the rest.
Bear Stearns and some of its executives had invested only $40 million
in the two hedge funds, raising more than $500 million of additional
investments from outsiders, including wealthy individuals and a breed of money
managers known as "funds of funds," which spread their money around a
collection of hedge funds. In addition to the cash raised from investors, Bear
Stearns's Enhanced Leverage and Credit Strategies funds have invested billions
of dollars borrowed from lenders.
As of March 31, the Enhanced Leverage fund had $638 million in investor
capital and at least $6 billion in borrowings. It used the money to make $11.5
billion in bullish bets and $4.5 billion in bearish bets, according to
documents reviewed by The Wall Street Journal. Its sister fund had $925 million
in investor money and made $9.7 billion in bullish bets and $4 billion in
A high level of "leverage," or use of borrowed money, magnifies
returns for a fund if everything works as planned. If the security drops in
value, that same leverage can amplify losses.
Consider the impact of an investment in a $1,000 security with $100 of
a fund's own money and $900 of borrowed money. Annual interest of 6%, or $60,
on that security could be amplified to returns of 15% for the fund. However, if
the value of the security dropped by just 3%, to $970, the loss would translate
into a 30% drop in the fund's own money. That, in turn, could trigger a margin
call by the fund's lenders.
The leverage on these investments
is 10 to 1, certainly not for the faint hearted. The real problem is that no
one really knows what these investments are worth until they go to sell them.
Unlike stocks and Treasury bonds, whose prices are continually quoted
and easily obtained, many of these derivative instruments trade infrequently
and don't have clear market prices. To come up with market values for these
investments -- a process known as "marking" their positions to market
-- investment funds often rely on their own valuation models.
They might also ask the dealers who sell them the bonds to update them
on changes in the bonds' underlying value. When there are no sales to base
prices on, dealers come up with prices based on their own statistical models
and an array of assumptions about what's happening in the market or the assets
that back the securities.
"There's some real concern about how realistic dealer quotes
are," said Andrew Lo, a finance professor at the Massachusetts Institute
of Technology who is also a principal in AlphaSimplex Group LLC, an
asset-management company that also runs a hedge fund. "You're talking
about quotes during normal times that are very different from quotes during
The old adage is, “sell when you can sell not when you have to
One reason why the various
brokerages were trying to keep from selling the collateral of the two hedge
funds that the brokerages held to guarantee loans is that the sale prices are
going to require other hedge funds holding similar or lower quality CMOs to the
CMOs being sold to re-price their securities. That in turn may cause the
brokerages for these funds to ask for more collateral for the loans they have
Treasuries are lower today and it
may be hedge funds selling Treasury positions to raise cash to meet collateral
higher overnight with the two darlings India
and Shanghai leading the way higher
with both up over 2%. European bourse indexes are fractionally higher and Oil
is down 30 pennies while Gold is flat. Treasuries are a bit weaker.
CircuitCity missed and is trading lower. Darden Restaurants disappointed and Fed Ex also missed and guided lower. Traders
are taking these reports as signs of a continued weakening in the U.S.
Home Depot is selling its home
supply business for $10 billion and using the money plus another $10 billion
(borrowed?) to buy back $22 billion of its stock. It says something about the
economy and HD’s business and stock options for executives that HD can’t figure
out a better use for the money.
Three LBO firms are buying the
home supply business. And our question is, “who are the smart ones in this
Fed Ex is trading higher in the early going so bad is still good in
Whole Foods CEO John Mackey sent an e-mail to board members saying
that the merger with Wild Oats would help prevent a price war in several
cities. That is a no no and the FTC is going to use
that against the merger. We think the FTC is nuts but Mackey is a dope for
saying that in an e-mail. Do these executives follow the news at all?
We’ll say again that if the deal
falls through it will hurt Wild Oats. Wild Oats may be acquired by someone else
but no one knows how to do it like WFMI.
Madison Dearborn Partners is
going to by Nuveen the bond house of
over $5 billion (25X earnings that are growing at 10% per year). Again the
question we ask is “who are the smart ones in this transaction?”
It is a fact that all these
buyouts are being completed at twice or more of the price they would have
fetched 5 years ago.
As we said above it is not in any
broker or hedge funds’ interest or even the Fed’s interest for the assets of
the two hedge funds to be auctioned because then that would set prices that all
other hedge funds would have to consider when pricing securities
JP Morgan has canceled its
auction of assets from two troubled Bear Stearns hedge funds, a source familiar
with the matter said on Wednesday. Bear Stearns is currently negotiating with
JP Morgan, Merrill, Citigroup, and other creditors in an attempt to restructure
the hedge funds, which have suffered significant losses. Merrill, JP Morgan, and
others had put some of the Bear Stearns assets up for sale, but JP Morgan has canceled
its auction and is negotiating instead, the source said.
This is the same
thing that happened when the Fed had the big Wall Street Brokers rescue Long Term
Capital hedge fund’s assets in the autumn of 1998 to prevent a market collapse.
It shows how sophisticated the game- and we mean game- has become. It is not
the last mistakes that will cause the market drop. It is the next mistakes that
no one knows how to deal with. *****
Oil ended down 91 pennies at $68.19 and Gold was down $5 at $660. Treasuriesgavesome gains
with the two-year at 4.97% and the ten-year at 5.13%.
European bourse indexes closed mostly small fractions higher. Mexico
The Senate Finance Committee is
trying to decide whether it is fair to tax the incentive fee income of LBO fund
partnerships that are going public at a corporate tax rate rather than at the
capital gains rate at which the incentive fee income of private LBO
partnerships is taxed. This is a no brainer. Heck the private LBO funds should
have their fees taxed at the regular corporate income (or the personal income
tax) rate too.
The management partnerships take
20% or more of the gains on client investments as a fee for their expertise.
That is taxed at a capital gains rate and not at the regular income rate.
The capital gains tax rate exists to compensate investorsfor the risk of losing money on an investment.
The incentive fees that the
management partnerships earn, which is usually 20% or more of the gain, are
currently taxed at the capital gains rate. But the management partnership
takes no risk.
If there is a loss the management company does not take 20% or whatever of the
loss. And that is why the management partnership should not receive
the favorable capital gains rate.
We know we are whistling in the
wind on this but….
The DJIA closed 150 points lower on the day at 13485. The S&P 500 lost 21 points to 1514 and
the NAZZ dropped 25 points to 2600. Breadth was 2/1 negative at the close
and volume was moderate.
There were 375 new highs and 110 new lows.
19 June 2007 Daily Comments
birthday to our younger daughter Christine Kelle
Housing Starts for May were down 2% and Building Permits were up 3%. April Housing Starts were revised downward
to up 1% from up 2.5%. Treasuries are lower in yield and higher in price on
that news as the trading day begins.
mostly higher overnight with Hong Kong up another 2% and
India up over
1%. Shanghai was fractionally
higher. European bourse indexes are mixed to lower. Gold and Oil are unchanged
in NYC morning trade.
Terry Semel is out as CEO at Yahoo and CNBC has been blabbering all morning
about the change with founder Jerry Yang taking over as CEO. Yahoo has a yen for Yang and hopes the
ying/yang of Yang yields yahoo results for Yahoo. And no Brobdinagian yahoos
Shed no tears for Semel. He
earned $71 million last year and $450 million since he became CEO in 2001.
Yahoo’s total net income in 2002 was $200 million; in 2006 it was $750 million.
So Semel earned half the net income of Yahoo for those two years combined. And
now he is out because he did a lousy job.
Net foreign purchases of U.S.
stocks in April were $27.4 billion. That is up from $9 billion in March and the
largest amount of stock purchased by foreigners in one month since February
2000. You remember what occurred the month after February 2000 don’t you?
Best Buy missed its earnings number and guided lower going forward.
The share price is trading down $2 in the early going. BBY is loved on the street. BBY’s same store sales were
up 3% for the quarter versus up 4% last year.
We are going to
hop on the rally train again today. As with the correction in March
it looks as if the bulls have weathered the recent correction and will now have
their fun for the summer. We are not going whole hog but we are
repurchasing five stocks we have been trading over the past few
years. We are buying two higher than the price at which we sold and three lower
than the price at which we last sold them. All have been profitable trades for
us this year.
out with big volume on Friday from a 16 month trading range and though we are
paying up for the shares at $24.37 we think the technical chart warrants the
risk involved. Moreover this is a momentum market
and Intel has momentum now. It is a DJIA that has lagged for the past few
years. We are repurchasing in accounts that owned and traded it profitably this
year. We said yesterday we were too old to play this game but this morning we
decided that we weren’t.
The same can be said for GEwhich broke out to a new high today. We are repurchasing
at $38.95 for accounts that have owned and traded it profitably this year. This
too is a momentum purchase.
We are buying Yahoo at $27.74 in accounts where we sold it at $33.15 in
May. We think the action today of firing Semel may act as a catalyst to keep
the talking head tongues wagging for a few days which may create investor
interest. This price level has been a good buy point for the past 6 months.
We are also repurchasing National City Bank in accounts in which we are buying GE. We
have been trading this stock for several years. In 2005 we did well with our
trades in this stock and we have scratched with our trades over the past two
years. We last sold the shares at $36.10. The dividend yield of over 4%
mitigates the risk of owning it. It goes x dividend in the beginning of July.
We have scratched trading Pfizer this year but with the yield of over 4% and the fact
that all the other dog pharma stocks have moved in the past three months we are
guessing that traders will find PFE. We are buying at $26.21 which is a scratch
lower than the price at which we sold last month.
We also are looking at
repurchasing Motorola but we are
awaiting the iPhone release which we think will mark a temporary low on MOT as
Apple steals the limelight and all the talking heads suggest that every person
in the world is going to trade in their old phones for an iPhone.
AT&T Inc. on Tuesday launched what it said is the first service letting
callers share live video between cell phones. The new AT&T Video Share service won't apply to the iPhone,
which uses an older network. AT&T has an exclusive deal to offer service
for much-anticipated Apple Inc. device. But the launch of the video service
adds to the company's momentum as it gears up for the June 29 introduction of
the iPhone, which it called a "game-changer" for the
The iPhone is supposed to be the
top of the line new idea phone? What’s up with it having older network?
Blackstone, the LBO folks who
take companies private and then sell them back to the public a few years later,
is going to be priced on Thursday and begin trading on Friday rather than at
the end of next week.
Nice. Bear Stearns asset mangers set
up a fund; lose at least 20% of the customers’ money; and then Bear Stearns offers
to rescue the fund by buying in after the losses:
Bear Stearns, the biggest broker for U.S. hedge funds, offered to provide $1.5
billion in loans to help rescue a money-losing fund run by its asset-
management unit, a person familiar with the situation said.
The plan calls for New York-based Bear Stearns to provide the money
only if some of the hedge fund's creditors, which include Merrill Lynch &
Co. and JPMorgan Chase & Co., inject $500 million of cash into the fund,
said the person, who declined to be named because the negotiations aren't
Bear Stearns, seeking to stave off liquidation of the fund, made the
commitment yesterday in a meeting with creditors after losses forced the sale
of $4 billion of mortgage bonds last week. Merrill Lynch and JPMorgan had
planned to sell another $800 million of bonds of so-called collateralized debt
obligations owned by the fund this week, the person said. *****
Gold finished up $5 at $665 and Oil was unched at $69.09 in NYC trading. Treasuries gained with the two-year at 4.94% and the ten-year at
European bourse indexes closed mixed to lower and Mexico
and Brazil were
The DJIA gained 23 points to 13636. The S&P 500 was up 4 points to 1534 and the NAZZ was unched at 2626.
Breadth was 5/4 positive and volume was moderate.
There were 345 new highs and 100 new lows.
18 June 2007 Daily Comments
Please note that the Treasuries
we purchased on June 13th had almost 6 months of accrued interest. Thus
accounts were debited for interest that will be paid on June 30th. This caused
the value as shown on Mesirow’s website to drop by about $2500 per $100,000
principal amount purchased. *****
While we were away the stocks markets returned to their
highs made at the beginning of June. It was a quick correction.
The proximate cause of the rally on Friday was given as the
tame inflation numbers relating to Core Inflation.
CPI was up 0.7% for the month of May but the Core CPI was up
only up 0.1%. And so the markets took the news as good and powered higher. That
it was a Quadruple Witching Day also helped.
Asia was mostly higher overnight with
Shanghai and Hong Kong
both up over 2%. European bourses are mixed at
and Gold is up $2 to $661 while Oil is down 20 pennies at $67.80.
The DJ story teaser on the CPI said:
June 15, 2007
U.S. consumer prices rose 0.7% in May,
accelerating at their fastest pace in almost two years on sharply higher energy
prices. The core consumer price index, which excludes food and energy prices,
advanced just 0.1%, down from April's 0.2% increase. The data suggest that
higher energy, wholesale and import prices haven't seeped into broader consumer
inflation, which should keep Fed officials on hold as underlying inflation
remains on the moderating trajectory they have long forecast.
Annualizing the ordinary CPI figure gives an inflation rate
of 8.4%. But in the Goldilocks stock
market traders chose to ignore the CPI figure and concentrate on the core.
Maybe traders don’t eat or drive cars.
Coupled with the higher food and energy prices is the fact
that rents (which are 14% of CPI) are being held down by falling real estate
prices. Stable rents are the result of punk real estate prices which means that
folks are seeing the equity in their homes disappear as house prices ebb lower.
Most folks who bought houses in the last two years have seen a drop in their
home equity. And those who purchased earlier are not looking at prices.
But the markets have chosen to ignore the negative and
stress the positive and that is the way it is- for now.
By the way the NYT reports that:
After taking inflation
into account, the average weekly earnings for workers in nonmanagement jobs —
some 80 percent of the work force — fell for the second consecutive month in
But since the 0.7% or 8.4% annualized inflation figure
doesn’t matter to the Fed or to traders maybe it doesn’t’ matter to wage
earners either. It’s all in the numbers, isn’t it?
Some folks have taken to calling this time the Second Gilded
Age. The Gilded Age refers to the
period of the 1880s in the U.S.
The growth of industry and a wave of immigrants marked this period in American
history. The production of iron and steel rose dramatically and western
resources like lumber, gold, and silver increased the demand for improved
transportation. Railroad development boomed as trains moved goods from the
resource-rich West to the East. Steel and oil were in great demand. All this
industry produced a lot of wealth for a number of businessmen like John D.
Rockefeller (in oil) and Andrew Carnegie (in steel), known as robber barons
(people who got rich through ruthless business deals). The Gilded Age gets its name from the manygreat fortunes created during
this period and the way of life this wealth supported. Mark Twin wrote a
book titled The Gilded Age in which he ridiculed the figures in Washington
The difference between the first Gilded Age and the present
one is that in the first jobs were being created and wages were rising.
Certainly the income disparities were huge and the jobs were menial and
difficult and dangerous but jobs were being created and eventually wages did
rise. This second Gilded Age is the opposite. Wages are falling and jobs are
being eliminated while the LBO folks take companies private, pay themselves
large dividends, saddle the companies with debt to pay the dividends and huge
salaries to management and hope to re-sell to the public in a few years. And in
this second Gilded Age non profit institutions and universities are happily
along for the ride not questioning the tactics as long as the profits are
There is news that GE and Pearson are considering a bid for
Dow Jones. Our take has been that GE is nuts if they don’t buy it.
Wendy’s announced slower earnings and by the way they may
sell themselves. That is the new mantra for preventing a share price slide when
earnings disappoint. Unfortunately it hasn’t helped as the share price is off
Last week the S&P 500 was up three days in row without
ever trading in negative territory. That is the first time that has occurred in
The WSJ is reporting that Ford is going to take its time selling Jaguar and Land Rover. Also
the numbers mentioned are about $2 not the $8 billion we read and reported last
week. The $2 billion figure seems more realistic.
Weak housing is now a plus for the economy because it is
putting the brakes on the inflation at which the Fed looks. That is the new
thinking. $70 oil is good because it slows the economy without the Fed having
to do it. That is the new thinking. The lower dollar is good because that brings
foreign money to the U.S.
to buy companies. That is the new thinking. Actually in this market all news is
it was lowering prices and on Friday Goldman Sachs raised its rating to buy and
the stock jumped in price. INTC is now through the $23.25 gap/resistance area
and we may miss the ride higher. We don’t want to buy it up here although we
would if we were younger since it broke though resistance that had held four times
over the last 16 months.
We own Treasuries not as a play on lower inflation but as a
play on Treasuries as a flight to safety parking place in reaction to a substantial
move lower in the markets caused by an untoward political event or rally exhaustion.
Oil closed up
$1.03 at $69.03 and gold was up $1
at $660 in late NYC trading. Treasuries
were a tick or three higher on the day with the two-year at 5.01% and the ten-year
closed mostly lower while Mexico
and Brazil were
The DJIA moved
lower in the last hour to close 25 points lower on the day at 13615. The S&P 500 was down 2 points at 1531
and the NAZZ was unchanged at 2627.
Breadth was flat
and volume was active.
There were 420 new
highs and 95 new lows.
14 June 2007 Daily Comments
We will be
traveling tomorrow and so the next post will be Monday June 18.
Happy Flag Day.
The Securities and Exchange Commission voted yesterday to lift price
restrictions on short selling. From now selling a stock short on down ticks
will be allowed. The commission’s 5-0 vote ended a rule that had been in effect
since 1938, which placed rules on when investors could sell a security short.
This adds a new unknown to the next market downturn.
Asian indexes were higher
overnight except Shanghai which was
down 1.5%. European bourse indexes are strong at
and Oil is touching $67. Gold is flat as are Treasuries.
Core PPI was up 0.2% and Jobless Claims were 311,000. Both were in
line. PPI was up 0.9% but it doesn’t matter because it only represents the real
figure for cost increases in the month.The price of gasoline was up 10% but that
doesn’t matter because so few folks use it. *****
Other Peoples Money as in we get the fees they take the risk from the
Bear Stearns fund, which was down 23% in value in the year through April, has
more than $6 billion in assets. Bear's own exposure to it is limited. The firm
and some of its executives have invested just $40 million in the fund, meaning
Bear isn't likely to be hit deeply by losses if the fund's problems mount.
Other investors include wealthy individuals and other hedge funds. It
is run by Ralph Cioffi, a Bear mortgage-bond veteran. *****
And this commentary by Jim Cramer
is why the current market scares us. it is an example of buy the stock not
because it has value but because another company has problems and so in order to
mask the problems they are going to go out and spend $70 billion on a do
Sanofi-Aventis has to buy Bristol-Myers to make the numbers. Isn't that why
people are cottoning up to BMY despite the company's lack of anything really
compelling.It's worth thinking about.
The Sanofi disaster over the fat pill's potential to cause suicides --
something that we know the FDA is totally sensitive to, or I should say
everyone but Sanofi knew -- has forced Sanofi to buy another company because
that seems to be the only way to make numbers.
life of me I thought that the upgrade by Citigroup of BMY yesterday on the
thought that Plavix, the controversial drug that went off patent and drove BMY
to $21 as almost every analyst panicked, and then drove the stock back up, when
it went back on patent, would be safe seemed so disingenuous. That's not a
reason to buy.
I am now
thinking it was a brilliant upgrade because Sanofi must do what it did when it bought Aventis: get numbers.
liked BMY for some time but I am a big believer that if there is a bid here it
won't go for $33 as people are talking about; it will be more like $38 to $40.
Which means that you get paid to wait and could have lightning strike?
I like many other stocks better, but this one just got much better than it was
two days ago thanks to the FDA's biggest concern of late: suicide
By the way, Cramer didn’t like
BMY at $22 but he thinks it is a trade at $30. Given today’s market environment
that makes sense. He didn’t like the fundamentals at $26 and he doesn’t like
them a $30. But he thinks there is a greater fool our there with $70 billion to
And on the lighter side:
generation, we were asked by the Smith vocational office how many words we
could type a minute, a question that was never asked of then all-male students
at Harvard or Princeton. Female-only typing was rationalized by supposedly
greater female verbal skills, attention to detail, smaller fingers, goodness
knows what, but the public imagination just didn’t include male typists,
certainly not Ivy League-educated ones. Now
computers have come along, and "typing" is "keyboarding."
Suddenly, voila! --- men can type! Gives you faith in men’s ability to change,
---Gloria Steinem at Smith College
"You’ve been told during your high school
years and your college years that you are now about to enter the real world,
and you’ve been wondering what it’s like. Let me tell you that the real world
is not college. The real world is not high school. The real world, it turns
out, is much more like junior high. You are going to encounter, for the rest of
your life, the same petty jealousies, the same irrational juvenile behavior,
the same uncertainty that you encountered during your adolescent years. That is
your burden. We all share it with you. We wish you well."
---Tom Brokaw at Skidmore College
European bourse indexes ended over 1% higher across the continent. Oil gained $1.39 to $67.65 and Gold was up $3 to $655 in NYC trading.
Treasuries were a tad a weaker on the day with the two-year at
5.09% and the ten-year at 5.22%. Although it doesn’t make sense to us, if bonds
weaken again tomorrow on a strong CPI number then stocks will probably weaken
also. And it is an expiration day so the day’s action is at best a guess.
were also higher.
The DJIA gained 73 points to 13555. The S&P 500 rose 7 points to 1523 and the NAZZ jumped 18 points to 2600.
Breadth was 2/1 positive and volume
There were 345 new highs and 110 new lows.
The bulls won the
day for two in a row after their shutout on Tuesday. Enjoy the ride tomorrow
without us and we’ll be back on Monday.
13 June 2007 Daily Comments
was up over 2% overnight but the rest of Asia was lower.
European bourse indexes are mixed at
futures indicate a higher opening... gold is flat and oil is lower as the
trading day begins in NYC.
Retail Sales were up 1.4% and ex autos they were up 1.3%. Ex autos
and gas sales were up 2.3%.That was higher than expected and the news jolted
Treasuries higher in yield and lower in price for a few minutes. The ten-year
touched 5.32%. Treasuries then rallied and are a bit better on the day after
yesterday’s slaughter. We would guess that Treasuries aren’t going much higher
in yield until the dealers who bought a big chunk of the auction yesterday are
able to unload their inventory.
Stocks have gapped higher on the
openings but will probably retest yesterday’s lousy action later this morning.
We said that last week and were wrong when the markets opened higher on Friday after
the downer on Thursday and just kept moving higher.
We purchased U.S.
Treasury 5.125% due June 2011 in most of our larger accounts.
We bought them at par. The blowout down in
Treasuries overnight and their recovery to yesterday’s closing lows has
probably put in at least a temporary bottom in Treasuries. Treasuries moved to these
levels last year at this same time and then rallied to 4.5% by the autumn.
Given our negative outlook for stocks in the late summer we think there
is a trading opportunity in the four-year maturity without exposing ourselves
to too much risk. If they would rally to 4.5% we would pick up 2% in principal.
Contrarily, if Treasuries move higher in yield, the markets are going
to be affected in a negative way and any sudden drop in stocks will lead to at
least a temporary rally in bonds.
If rates go nowhere we will pick up 0.75% in yield over what our cash
reserves are yielding with the bond portion of the portfolios.
Imagine the ‘no fly’ lists in China:
With more than a billion people
now sharing just 100 surnames, Chinese authorities are considering a landmark
move to try to end the confusion, state media reported Tuesday. Current Chinese
law states that children are only allowed take the surname from either their
mother or father, but the lack of variety means there are now 93 million people
in China with
the family name Wang. In a country of around 1.3 billion people, about 85
percent share only 100 surnames, according to a nationwide survey conducted by
the Ministry of Public Security in April and published in the China Daily
newspaper on Tuesday. The survey found 92 million people shared the surname Li,
while 88 million were called Zhang. A further seven surnames -- including Chen,
Zhou and Lin -- are held by at least 20 million Chinese Another report by the
Chinese Academy of Sciences found at least 100,000 people share China's most
popular name, Wang Tao.
Investors’ Intelligence has Bulls at 57%, up from 52% and Bears at
21% down from 22% for the latest period.
European bourse indexes closed higher helped by the rally in the U.S.
this year, UBS announced it was
closing a large fund after it swallowed a $123 million loss due to sub-prime
Bear Stearns recently informed those invested in one of their
leveraged credit funds that, despite a 23% loss as of April 30th, they were
Global Alpha fund, its largest internal hedge fund, was down 3.4% through
the first four months of the year due to bad bets on bonds and currencies.
The Fed Beige Book was just released with the following observations:
job market picks up, no increase in wages, some materials prices up , luxury
items selling better than low priced goods, auto sales steady, service industry
healthy, manufacturing up in majority of districts, strength in machinery and
equipment manufacturers, reports of some CAP-Expenditure growth, residential
real estate weak, commercial real estate on the upswing, good growth with
little inflation and economic activity continues to expand with no increase in
overall pricing pressure.
Both stocks and bonds liked the
Beige Book report. Goldilocks is alive
and well and currently living on Wall Street.
Oil ended at $66.26 in NYC. Gold
was unched at $653. Treasuries
closed on their high prices for the day with the two-year at 5.08% and the
ten-year at 5.20%. The dealers who bought yesterday’s auction are back in the
(+2%) closed higher on the day.
Today stocks gapped higher and,
after one slight pullback, never looked around as they closed up as big time as
they closed punk yesterday. Today’s market action was a reprise of last Friday’s
market action (after Thursday’s large drop).
The DJIA gained 190 points to finish at 13488. The S&P 500 rose 22 points to 1515 and the NAZZ was up 32 points to 2582.
Breadth was 4/1 positive on the NYSE which is the reverse of
yesterday’s breadth and volume was
There were 200 new highs and 170 new lows.
The bulls ruled
the day. PPI is announced tomorrow with CPI on Friday as well as Quadruple
12 June 2007 Daily Comments
Asian indexes were mixed
overnight and Europe is lower at . Treasuries are weaker and that seems to be
affecting stock futures as the trading day begins. The ten-year is at a 5.2%
Yesterday’s last hour fade in the
major measures has placed a damper on the good feeling the bulls had after
Friday’s rebound. The S&P 500 rallied to its 20 day moving average of 1516
and failed. It needs to get above that level for the bulls to be comfortable
This is an options expiration
week and so anything can occur. Gold has given back the $5 it gained yesterday
and oil is weaker in the early going in NYC.
The Treasury yield curve is
positively sloped for the first time in a long while. That means that yields
are lower on the short end than the long end.
If deal making begins to slow or
a few of the supposed deals don’t occur it could affect the markets. There are
quite a few stocks that are higher on deal speculation and any wrench in that
deal scenario would cause many of those issues to head south. Big bets have
been placed. Also hedge funds are taking outsized positions in companies and then
asking management to do something to increase shareholder value which means make the price of the stock rise so the funds
can reap quick profits. As soon as a few managements refuse to play the
game that too could affect the overall markets.
CPI grew at a 3.5% rate last month. Most of the increase is ascribed to the
rise in food prices. Overall inflation in China
is supposedly running at 1% ex food. That is in an economy growing at 10% a
year. We would guess that Chinese authorities have taken a lesson from U.S.
authorities on how to figure and report tame inflation numbers. In the U.S.
that is done to keep down the rise in entitlements that is tied to inflation
such as Social Security.
The ten-year Treasury is now down
over 4% from its price of a month ago. The Treasury is selling $8 billion in ten-year
notes today. n May 2007 the Treasury sold $13 billion of ten-year notes at a
4.625% yield. Those notes are now under water by as much as the full year
coupon they carry. The ten-year is currently trading at a 5.2% yield. We would
guess that the ten-year will rally on the sale today as dealers will want to
place the notes they buy and the weakness this morning may be related to the sale
Breadth is running 5/1 negative
on the NYSE after three hours of trading and new lows are exceeding new highs
for the first time since March. The Treasury auction today with the results
announced at may set the tone
for the close.
The WSJ said that Ford confirmed it is trying to sell
Jaguar and Land Rover. Citigroup say the sale could fetch up to $8 billion.
Goldman Sachs removed Starbucks from its conviction list and
added McDonald’s. McDonald’s is up
80% in price in the last year and Starbucks is down 30%. Buy high sell low?
The ten-year Treasury auction
fetched a bid-to-cover ratio of 2.55, which was below recent averages. The yield
of 5.223% was the highest yield since November 2000 on the ten-year at auction.
With two hours of trading
remaining the major market measures have moved to the upside. But the move
higher came after markets in Europe ahs closed and the
major European bourse indexes all
closed lower on the day.
The Producer Price Index (PPI) comes Thursday and the Consumer Price Index (CPI) for May is
Gold closed down $7 at $652 in NYC trading. Oil lost 65 pennies to $65.30 and Treasuries closed on their lows for the
day with the two-year at 5.06% and the ten-year at 5.26%.
also finished lower.
The DJIA lost 130 points to 13295. The S&P 500 closed below the 1500 support level at 1493 down 16
points. the NAZZ dropped 22 points
Breadth was almost 5/1 negative on the NYSE and 3/1 negative on the
NAZZ and volume was active.
OK, I hate to disagree with Heather Havrilesky
on anything, because I consider her a minor goddess, but I think the twenty
seconds of black screen did
signify Tony getting clipped. And what other "loose ends" did people
want to see tied up? We know how AJ and Meadow are going to wind up, and Tony
has made the rounds of his surviving family and associates (Uncle Jun the last
among them, reminding us of what we come to in the end), and the NY-NJ war
leaves two families decapitated. As for Havrilesky's objection -- "That's
probably wishful thinking, like hoping that there really is a Santa Claus
simply because it would make the holidays much more interesting. We've never
seen things from Tony's perspective, so why would we start now? And wouldn't we
at least know who killed him?" -- well, I think of the moment in Casino when Joe Pesci's character
gets killed while doing the voiceover
so that the voiceover itself gets cut off. You don't come across that narrative device every day, now,
do you. It's an abrupt and jarring focalization (to use one of those barbaric
terms from narratology), and it suddenly puts us right in Tony's place. But
look at what happens as a result: we don't have to see the "reaction"
shots from his family or from the rest of the patrons as all hell breaks loose.
His life just ends. There's no catharsis for us at all, and that's part of what
people seem to be angry at -- at least the ones who are complaining on the
Sopranos message board that this ending ruins the entire series.
Now, the fact that Chase didn't even give us a gunshot to go on, no clue that
Tony really dies -- well, so what? Are there really ghosts in The Turn of the Screw, or is the
governess mad? (That debate has been going on for more than a century now.)
We're left to wonder whether we've been duped into thinking that Tony dies
because all the staging in that final scene -- the brief shots of each of the
restaurant patrons, the focus on the guy going to the men's room, the closeups
of Meadow having trouble parking the car -- feels like the generic
suspense-creatin' mechanisms that precede a catastrophe. We stop and ask
ourselves how much of our reaction depends on those narrative mechanisms. And
so the ending becomes, in a meta- way, not
Chase's "final fuck you" to the viewers (as so many pissed-off
viewers have said) but, rather, a form of what did you expect? -- except that it's a real question, not a
It might not be utterly brilliant or anything, but it works for me. . . .
Michael Bérubé *****
11 June 2007 Daily Comments
At least GE is taking our freely
offered advice although the company needs to remember who it is. The WSJ
reports that General Electric. and Microsoft were in discussions in recent weeks to combine Dow Jones with some portions of GE's NBC Universal, parrying a bid by
News Corp but the two sides couldn't reach an agreement, according to people
briefed on the discussions.
Our take on Immelt is correct. He
is a pansy. GE should buy DJ outright. A bold bid of $62 would be met with glee
by the Bancrofts and succeed. But it seems that Immelt can’t do anything
without Welch’s OK and so he is tiptoeing around trying to make a deal with
others to help GE with the bid. GE is a
monster company that can do this deal on its own.
Asian markets were higher
overnight with Shanghai up over 2%.
European bourse indexes are also higher and Oil is up trading over $65 with
Gold up $5 in early NYC trading. Treasuries are weaker with the whole complex
Some tech gurus are saying that
90% down days like the markets saw on Thursday mark, at the least, a short term
bottom. In bear markets the climax marks a selling climax but even at the top
of markets such as now a 90% down day usually marks the end of a minor
correction. We don’t disagree since our thoughts have been that the end of this
rally would arrive later in the year; but if the major measures don’t resume
the rally after the selling climax that will be a significant departure from
the last two times the 90% down occurred in June 2006 and March 2007.
James De Porre on realmoney.com
wrote the following this morning. His sentiments mirror our approach to the market:
It has always been my belief that the No. 1
goal of individual investors should be preservation of capital. It is far
better for most folks to err on the side of caution than optimism because if
you are zealous about keeping your gains, you almost always come out ahead over
time. Your capital is your most precious commodity and if you guard it, you can
always find more opportunities. Riding every trend to the bitter end is great
for fund managers, but individual investors should become increasingly cautious
the more extended the market becomes.
The NYT reports that Blackstone
Group’s founders will take in $2.3 billion in bonuses when the firm goes public
in a month. It is nice that China
will invest $3 billion in the Group just before it goes public. That money will
help pay the bonuses.
Congressional Research Service reports
that CEOs make, on average, 179 times as much as rank and file workers, double
the 90-to-1 ratio in 1994.
Thursday and Friday are Quadruple
Witching and so there may be up/don movements related to that event this week
and next Monday.
European bourse indexes closed large fractions to over 1% higher on
the day across the continent.
There are news reports that Ford has hired investment banks to help
it explore options including a sale of its Jaguar and Land Rover European
luxury brands, sources familiar with the matter said, as several companies
ruled themselves out from bidding.
Oil ended up $1.21 at $65.97. Gold
gained $9 to $659 in NYC trading and Treasuries
closed lower in price with the two-year at 5% and the ten-year at 5.14%.
The DJIA gained 1 point to close at 13425.The S&P
500 was up 1 point at 1509 and the NAZZ
lost 2 points to 2572.
Breadth was flat and volume
was summer Monday light.
There were 165 new highs and 125 new lows.
8 June 2007 Daily Comments
birthday to our daughter Lisa. We remember when.
The Treasury ten-year traded at a
5.25% yield overnight and is trading at a 5.14% yield this morning as the trading
day begins in NYC. Yesterday Bill Gross, who is big stuff in bonds and manages
half a trillion dollars worth of bonds, turned bearish on bonds for the first
time in his twenty years of managing money. Of course bonds have been in a 22
year bull market so Gross has never really seen a long term bear market in
Traders who do well in a certain
type of market often don’t in a market that has different characteristics. And
so we will have to see how Gross does. But for the moment his call yesterday
afternoon coupled with Goldman Sachs’ call earlier in the week that there would
be no interest rate cuts this year has placed a negative aura on Treasuries.
Treasuries have rallied a bit
this morning on the short end and the long end has pared overnight losses.
Stocks are opening higher which is
not something the bulls want to see. Bulls would rather see a big kibosh to the
downside this morning to wash out all the novice traders but it looks like that
isn’t going to happen. And we don’t think the bulls will complain much if the
market close substantially high today. What the bulls don’t want is a failed
Yesterday was a 90% down day on volume and breadth o the
NYSE. That same event occurred at the end of the mid correction last March and
also at the real bottom in March 2003. Technicians would expect at least a
bounce if not the end of the corrective phase on that kind of action.
Asian markets were lower overnight
except Shanghai which was up 0.5%. European
bourse indexes are also lower and Gold is down $6 and Oil is off $1 at the $65
Qualcomm was found to have
violated a Broadcom patent on new 3G phones when the U.S. International Trade
Commission ruled that QCOM can’t import those phones into the U.S. QCOM vows to
appeal to the White House to overturn the prohibition in the interest of the
national economy which QCOM says will be ruined if those phones can’t be
imported. Broadcom is saying just pay to play. Somehow not having a bunch more
cell phones in the U.S.
seems to be the least of this country’s problems.
By the by, QCOM is trading higher
on the news which shows that speculation certainly isn’t dead.
The Bush administration on Friday
suspended some of its new, post-Sept. 11 requirements for flying abroad, hoping
to placate Congress and irate summer travelers whose vacations have been
thwarted by delays in processing their passports.
We hope Al Qeda doesn’t know
Morgan Stanley upped its estimate
of 2nd Quarter GDP growth to 4.2% from 3.6%. That should be good for stocks but
bad for bands. And if it is bad for bonds it is bad for stocks.
It should be good for stocks
because higher growth means bigger profits. But higher growth means the Fed
worrying about inflation. And if the Fed is worried about inflation then they
won’t cut and may raise interest rates. And if the Fed raise interest rates the
stock markets wont’ like that.
The S&P 500 made a closing
all time high on Monday of this week. Time is money.
From May31 Comments: Thoughts
Sell in May and go
away. It looks like we are the only folks with that aphorism in mind this year.
We remain of the opinion that this sell off in early June
is not the downturn. We would expect the selling to run its course in the next
week without more than a 5% down and then resume an uptrend into August. Since
the stocks we normally buy are out of favor we aren’t going to try and trade
the move if it does occur since our kind of stocks will probably not
participate. We will buy individual companies that reach our downside price objectives.
Slate.com has a good article on
the idiocy of the FTC opposing the Whole Foods/Wild Oats merger.
We noticed that Gold is down $15
today after being off $10 yesterday. Our guess is that some hedge funds were
the wrong way on Gold/bonds/stocks and are trying to perfect their hedges
From March 2006 to March 2007 Exxon
bought back $31 billion in shares, Microsoft $24 billion, Time Warner $11
billion, and Proctor & Gamble $10 billion. That is a lot of buying for even
these stocks and we wonder what would have occurred to their share prices if
the artificial support hadn’t been there.
the DJIA is up over 100 points and breadth is decidedly positive for the first
Gold ended the trading day in NYC down $12 at $653. Oil lost $2.26 to $64.67. Treasuries bounced slightly with the
two-year at 5.00% and the ten-year at 5.11%.
European bourse indexes closed lower for the fifth day in a row as
their trading closed before the major measures in the U.S. pushed higher.
We missed trading U.S. Steel when it dropped to the teens
four years ago. But we also missed losing money on it as it moved from $25 to
$215 during that drop. We mention that to show we are not expert traders of this
stock. But the following news item caught our eye:
Shares of United States Steel surged 8 percent to $120 per share on
Friday after Russian news agency Interfax reported that German steelmaker
ThyssenKrupp was interested in buying the company.
No one wanted the stock at $15.
Now at $120……?
In case you were wondering:
"Using the 30-year yield in our earnings yield gap model, the
equity market no longer looks appealing at 0.41 standard deviations above the
mean," says Tobias Levkovich, Citigroup chief U.S. equity strategist.
"Our model using Baa yields instead of the 10-year Treasury shows the
market as modestly appealing at 0.48 standard deviations beneath the
mean," he said in a research note.
Entering the final hour of
trading for the week the DJAI is at its high for the day up 106 points and
breadth is good.
The DJIA gained 155 points to close at 13425. The S&P 500 was up 17 points to 1508 and the NAZZ jumped 32 points at 2575. Mexico
market indexes were also fractionally higher.
Breadth was 2/1 positive and volume
There were 100 new highs and 155 new lows.
Please have a pleasant weekend.
7 June 2007 Daily Comments
Treasuries are over 5% this
morning and that has placed a damper on a dip buying rebound. But our guess is
that the dip buyers will wade in before the day is over.
Asian market indexes were mixed
overnight with Shanghai popping 3%
higher. European bourse indexes are also mixed. Oil is over $66 and Gold is
We get mail:
6/6/07 Bud today you
said: "Treasuries are a bit better but still flirting with 5% on the short
end.” Please explain.
Also, why no comments on todays sell off?
The translation is: “Treasuries were up and down all day but managed to
close a few ticks higher”.
To the second question the answer is: “We presume folks
knew a sell off was coming because we went to cash last week”.
There are news reports that a senior member of Israeli Prime Minister Ehud Olmert's government suggested Wednesday
that his country is running out of patience with a U.S. backed diplomatic overture to head off Iran's nuclear ambitions. That is as in bombing the
facilities as Israel did in Iraq.
Olmert is in political trouble over the botched military excursions into Lebanon and so some kind of Iran initiative
would meet the politician’s solution of military action to rally support and overcome negative public opinion.
Jobless claims were 309,000.
In early trading Treasuries tried
to rally and then broke and the ten-year is 10 bps higher than last night at
5.09%. The break in bonds has affected stocks to the downside.
Oil is over $67 at and that isn’t helping stocks.
Actually the steepening positive
sloping yield curve should be a plus for stocks since it suggests that the
economy is in good shape. But traders have become so accustomed to the Fed
lowering rates to help stocks that when rates rise their Pavlovian response is
We don’t think the Fed will consider
lowering rates unless the major stocks measures tank 20% or more and stay down.
time the S&P 500 is down 21 points at 1496 which is through the 1500 support
level. Next support level is 1460. The DJIA is down 175 points. The gurus are
welcoming the sell off as needed and a buying opportunity.
We are not buying
the buying opportunity.
European bourse indexes closed big fractions to over 1% lower
across the board.
Entering the last hour of trading
the DJIA is now down only 105 points. The dip buyers have waded in to try and
rally stocks through the final hour.
Treasuries closed lower in price with the two-year at 5.02% and the
ten-year at 5.12%. Those yield increases represent big time losses for bond
holders on the order of over $10 per bond (three months interest)
for the ten-year and $20 for the thirty-year (6 months interest) just today.
Oil gained $0.93 to $66.93. Gold
was off $10 to $665. Brazil and Mexico
were both down 2%.
We would guess that mistaken hedge
fund strategies might create some forced selling this afternoon and tomorrow
for those who were hedged the wrong way on the bonds and stocks. The drop in
gold of $10 is a sign of that selling. Those problems will have to be resolved
before any rally. That resolution might occur tomorrow morning.
The DJIA wasn’t
able to hold the dip rally into the hour and at the close the major
measures returned to make new lows on the day at the close.
The DJIA ended down 205 points at 13260. The S&P 500 lost 27 points to close at 1490 support and the NAZZ dropped 45 points to 2540.
Breadthwas over 10/1 negative on the NYSE
and down volume was 10 times up volume. Breadth was 3/1 negative on the
NAZZ and total volume was active.
New highs contracted to 125 and new lows expanded to 190.
Please have a good night.
6 June 2007 Daily Comments
Stocks in the U.S.
look to open lower this morning. The European Central Bank raised their key
interest rate 25 bps. Asia was lower overnight except
the Shanghai index which was a
small fraction higher. European bourse indexes are lower at and Gold is down $2 and oil is unchanged.
Treasuries are a bit better but still flirting with 5% on the short end.
Investors Intelligence is at 52% (53% last week) bulls, 22% (21%
the DJIA is down 151 points with breadth at over 3/1 negative.
The S&P 500 is down through
1527 support/now resistance and is trading at 1515. The next support level is
1500 and after that 1460.
European bourse indexes closed lower as did Mexico
Gold was unchanged at $675 and Oil was up 37 pennies at $65.95. Treasuries firmed as stocks weakened
with the two-year at 4.95% and the ten-year at 4.97%.
The DJIA closed down 130 points at 13465. The S&P 500 lost 14 points to 1517 and the NAZZ dropped 24 points to 2587.
Breadth was over 3/1 negative all day and volume was moderate.
There were 155 new highs and 120 new lows.
Please have a good night.
5 June 2007 Daily Comments
Shanghai dropped 7% in early trading last night but
then recovered to close over 2% higher. At its lowest last night The
Shanghai Index was down a total of 20% from the high it reached last Monday.
Markets never crash off the top.
The 1987 Crash came after a 20% drop
over a period of two weeks. And so the bounce last night was significant and the
Shanghai market should rebound as
dip buyers enter.
The Chinese Government also
announced the formation of four $1.2 billion funds to invest in the Shanghai
market so that Chinese investors can use them rather than buying individual
stocks. That is known as government support.
The rest of Asian markets were also
higher overnight but European markets are lower at . Gold and Oil are off a bit and Treasuries are
Fed Chairman Uncle Ben spoke in South
Africa and warned that the housing markets
in the U.S.
remain weak and that inflation remains a concern. Why he was telling the South
Africans that is a mystery but the U.S.
markets are lower in the early going as a result of his comments.
The ISM Non Manufacturing Index was 59 in May versus 56 in April.
Amazon is back at 70 times earnings and is up 3% today as the DJIA
is down 125 points. AMZN is higher on the news that it is going to try and
expand operations in China.
That action is just like the good old days of the late 1990s when any announcement
was worth a few points.
The stock markets opened lower,
attempted to bounce, and then sold off again. The buy the dip folks are having
a bit of trouble today but four hours of trading remain.
The Treasury two-year is trading at 5% at .
The FTC is opposing the Wild Oats/ Whole Foods merger. That
opposition reminds of back in the 1980s when the FTC opposed the buyout of
Schlitz by Heileman as being anti competitive. At the time Budweiser had 50% of
the beer market and the combination of Heileman and Schlitz would have amounted
to less than 10%. Of course Schlitz and Heileman no longer exist.
The failure of the WFMI/OATS merger
will lead to Wild Oats demise since they never have been able to get their act
together. While we thought the deal would be good for Whole Foods giving it
stores at a cheap price, WFMI will be able to continue expanding and growing at
a more measured pace.
1527 was resistance on the
S&P 500 for the last month and now it is support. Today the S&P 500 is
down 12 points and trading right at the 1527 level.
Goldman Sachs has changed its prediction that the Fed would cut 75
bps this year. It now says the Fed will do nothing.
We sold Talbot’s
for a scratch to a $1 loss in our larger accounts. We like the stock
but it is a thin trader and we are guessing we will have a chance to repurchase
at a lower price later this year.
Oil ended down 61 pennies at 465.60. Gold was off $1 at $675. Treasuries
were weaker at 5 % on the two-year and 4.98% on the ten-year.
European bourses closed when the DJIA was down 125 points and the
European Indexes closed down large fractions across the board. Mexico
was up and Brazil
also finished lower.
The DJIA lost 80 points to close at 13595. The S&P 500 closed down 8 points at 1532 and the NAZZ dropped 8 points to 2615.
Breadth was 3/1 negative on the NYSE and 2/1 negative on the NAZZ
and volume was active.
There were 310 new highs and 95 new lows.
Please have a good night.
4 June 2007 Daily Comments
Shanghai was down 8% overnight and U.S.
shares opened lower but the dip buyers are back and the major measures are
attempting to move the plus side after an hour of trading. The drop in Shanghai
was not matched in the rest of Asia as Hong
Kong and Japan
indexes managed to close small fractions higher.
European stocks are lower at and Gold and Oil are small changed. Treasuries
have a bid.
market is down a quick 15% in the last week and the U.S.
markets have yawned. The drop in February, which occasioned the quick 5%
correction the DJIA, was a down 8% day.
We have been in and out of Intel for the past year. We are selling today for a scratch
profit. INTC hasn’t been able to get through the $23.25 level and in any market
correction is has a $4 downside risk.
CNBC had a contest that just
ended that allowed folks to trade an imaginary $1 million portfolio. The prize
was to be a $1 million annuity. CNBC can’t declare a winner because there are
allegations that some folks figured out how to game the computers monitoring
the trading. And so the contest was a mirror of the present takeover market
where stocks run up ahead of announcements. The wild days are here again.
Gold ended unchanged at $676 and Oil was up $1.13 at $66.26 in NYC
trading. Treasuries were slightly better
with the two-year at 4.97% and the ten-year at 4.93%.
European indexes finished on the downside as did Mexico
The DJIA gained 10 points to 13675. The S&P 500 was up 3 points at 1539 and the NAZZ rose 4 points to 2618.
Breadth was 5/4 positive in the NYSE and flat on the NAZZ and
volume was summer light.
There were 505 new highs and 65 new lows.
Please have a good night.
1 June 2007 Daily Comments
Nonfarm payrolls added 157,000; forecasts had called for 135,000
new jobs. All the adds were in the service sector as in low paying jobs. The
unemployment rate held steady at 4.5%. Hourly earnings rose 0.3%, in line with
forecasts. Personal income fell 0.1%; forecasts had expected a 0.3% increase.
Personal spending rose 0.5%; a 0.4% increase was expected. Month over month
Core PCE (inflation) was up 0.1%. The year over year Core PCE was 2% which is
where the Fed wants it.
was down 2.6% overnight and the rest of Asia was mixed.
European bourse index are fractionally higher and Treasuries are flat with Gold
up $4 and Oil down 10 pennies going into today’s trading session.
stocks liked the Employment report and with the Dow Jones folks willing to talk with Murdoch and Dell beating estimates stock futures
are suggesting a rock and roll opening. We guess China
only matters when it matters. Oh, Dell
is going to fire 9,000 folks.
Matrix Advisors raise Whole Foods from strong sell to sell
and the shares are higher. Say what?
of Michigan May Consumer Sentiment Index
was 88 versus 87 in April. We think that ws the final, final reading for May. Pending
home sales were down 3.2% in April.
The uptrend line in the Shanghai
market index is at 3650. It closed last night at 4000 down 7% in the last week
and basically unchanged in the last month. The number 4 is an unlucky number in
Treasury Bill rates are at 4.75%
with the two-year approaching a 5% yield. The last time the two-year was at 5%
Treasury Bills were yielding over 5%. The yield curve is turning positive and
the fact that the Bill rate is at 4.75%, which is 50 bps below the Fed Funds
rate, might suggest that a large amount of money doesn’t want any risk.
We think the Bancrofts, who
control DJ, are talking to Murdoch to attract another bid. And we think GE
should make it. The fit of DJ with CNBC is perfect. We don’t think GE CEO
Immelt has the imagination to do it though since his mentor Jack Welch is still
around. Welch picked Immelt so he, Welch, wouldn’t be overshadowed.
According to The Financial Times,
hedge funds are attacking bank
decisions that help delinquent US mortgage borrowers remain in their homes
in a move that pits some of the country’s richest people against its least
well-off. See story here: http://www.ft.com/ *****
CNBC is showing news spot with
the title “Jobs in the Sweet Spot” in reference to today’s employment news. The
video portion of the spot show manufacturing workers in the auto industry and a
tool and die shop. Unfortunately the jobs being created are fast food and
hospital aid jobs that pay less than $12 an hour while the jobs being lost are
the manufacturing jobs with livable wages. Over 150,000 manufacturing jobs have
disappeared in the last year.
In keeping with the above theme
the WSJ has an article today about the new rich needing butlers and the job
opportunities in that field.
Gold ended up 410 at $677. Oil
was up $1.05 at $65.04. And Treasuries
closed the week on their lows with the two-year at 4.97% and the ten-year at
Most European bourses were over 1% higher as were Mexico
The DJIA ended up 40 points at 13667. The S&P 500 gained 6 points to 1536 and the NAZZ jumped 10 points to 2615.
Breadth was about 2/1 positive all day and volume was summer moderate.
There were 635 new highs
and 75 new lows.
The bulls win the week and the
moth of May and the year up till now.
Have a restful weekend; the
casino opens early Monday morning.
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