The Fed is meeting only today-not
having a two day meeting as we stated yesterday. But they will be issuing their
statement at today and of
course we await the statement with bated breath.
4th Quarter GDP was up 3.5% on
annualized basis. That was a stronger number than expected but there are still
revisions to be announced to the number so who knows. The inflation data
connected with the number were less than expected so all in all everything in
the economic sphere is nirvana.
On the GDP news Treasuries lost
their bid and the two-year moved towards a 5% yield again.
Overnight Asian markets were
lower with Hong Kong down 1.7% and Shanghai
was down 4%. But fear not for those invested in the Shanghai
market since it is up 100% over the last twelve months.
European bourses are mixed and
Gold is up $1 in early NYC trading while oil is down 50 pennies after its large
Investors Intelligence has 53% bulls and 21% bears.
Time Warner beat fourth quarter estimates but lowered guidance and
the shares are off a few pennies in the early going.
An hour and one half into the
trading day Boeing is up $4 and 3M is down $1 as the DJIA is higher but
most other major measures are lower with breadth negative.
The Chicago Purchasing Mangers Index for January was 48 versus 52 in
December. A number lower than the number 50 indicates a contraction and the
markets were expecting a number greater than 50. This Index contrasts with the
benevolent GDP number this morning. The boys and girls are delighted by the dueling
indexes because they like to trade uncertainty.
The Fed left rates
unchanged at 5.25% and said some inflation risks remain. Stocks are
higher immediately after the announcement. Treasuries are flat and the dollar
Oil ended up $1.17 at $58.14 in NYC. Gold jumped $7 to 657. Treasuries
joined the rally party with the two-year at 4.93% and the ten-year at
European bourse indexes finished lowered as they closed before the
rally in the U.S.Mexico and Brazil are both up more
A rally after the Fed announcement
cemented the day, week, month and maybe the year for the bulls. The as January
goes so goes the year mantra in now in play. Next up is the
super Bowl predictor where if Da Bears win the bears lose again.
At the bell the DJIA was up 103 points at 12626. The S&P 500 jumped to 1440 up 10 points
and through resistance at 1433. The NAZZ
gained 15 points to 2464.
Breadth was negative until the last hour and finished the day 2/1 positive
on the NYSE and 3/2 to the good on the NAZZ. Volume was brisk.
There were 440 new highs and 60 new
And now that month end mark-up is
over the big boys and girls will have a harder time keeping the numbers up at
the big casino.
30 January 2007 Daily Comment
The Fed begins its two day meeting today.
Consumer Confidence was 110.3 which is up a tad from a revised 110
in December. The Conference board, which compiles the Index, said an improving
job market was responsible for the strength.
Arabia is going to cut production by 138,000
barrels a day and that news has Oil higher at $54.67 up 66 pennies in the early
Treasuries have a bid and are a
few basis pints lower in yield. Gold is flat.
3M missed and is down $4 a share in the first hour of trading. Motorola is higher by a dollar on news that
Carl Icahn has a 2% holding and wants a position on the board in order to tell
the company how to make better and more profitable cell phones. UPS also missed and is down $2.
Asian markets were mixed overnight
with Hong Kong up over 1% and European bourses are higher
by fractions at .
CNBC is showing pictures that
show there were lines to buy Vista.
The Washington Post reports that: Fannie Mae CEO
Daniel H. Mudd received salary, stock and bonuses of more than $14.4 million in
2006, an increase of about 25 percent
from the year before. His pay included a
bonus of $3.5 million, restricted shares worth nearly $10 million and a salary
of $950,000. Fannie Mae remains unable
to file timely financial statements More than two years after its accounting
problems came to light, and its shares continue
trading on the New York Stock Exchange by special dispensation. What kind of
bonus will he receive when they do catch up on their reports? And if Deloitte
audits their books we are sure any delay is not Deloitteís fault.
It has been 978
trading days since the Dow Jones Industrial Average has seen a 10% decline from
a high, the second longest such run on record, says Ned Davis Research. The Dow
has gone 135 trading days without a 2% decline, the longest stretch since 1958.
Todayís WSJ has a story about the
demise of Amaranth Hedge Fund last September which lost $6 billion in 15 days. It
is an interesting story and one of the largest beneficiaries of the Fundís collapse
was JP Morgan which was also the Fundís clearing broker. JPM refused to release
money it was holding as collateral. That refusal quashed a rescue plan that had
Goldman Sachs taking over the portfolio of the fund. Then JP Morgan, as the
only game in town, stepped up and bought the portfolio on which it subsequently
made a $725 million profit.
We have commented on how we are
bemused that funds want to trade with the Goldmanís† and Merrillís and JP Morganís of the world
when those firms make their profits from taking opposite positions from their
customers and being smarter or richer than they.
In this case JP Morgan was very
pleased with their coup as the WSJ reports:
Amaranth deal produced a "very nice increment to fixed-income
trading," Mr. Dimon, J.P. Morgan's CEO, said in a speech in November.
"But we did take a lot of risk."
Winters, co-head of J.P. Morgan's investment bank, said at a November conference
that through its hedge-fund relationships, such as trade clearing, "we
have the insight into what's going on in these funds" and can
"respond quickly to opportunities when they come up. Amaranth was one
obvious example of that."
added, "I imagine there will be others...where our ability to be both on
the inside, but not compromised, is extremely powerful [as a way] to generate
The huge, complex deal with Amaranth helped build J.P. Morgan's profile
as a commodities player. This month, a magazine called Risk named the firm
"Energy Derivatives House of the Year.Ē
$750 million of profit is a good
chunk of the $ 4 billion JPM earned in the fourth quarter. Are they planning on
a hedge fund blow up every year?
By the way the WSJ says that Brian
Hunter, the trader at Amaranth who took the large positions that caused the
losses, is thinking of beginning his own hedge fund. So is Nicholas Mouranis
who is the founder and president of Amaranth Management.
Too bad he didnít do this five
years ago and of course how wonít be in office but:
President George W. Bush said on
Tuesday he plans to submit a budget proposal for fiscal 2008 that would pave
the way for the government to balance its budget in five years while still
keeping taxes low. "I'm going to submit a budget for Congress to look at
that shows how we can balance the budget in five years and keep your taxes
low," he said in a speech to workers of heavy equipment maker Caterpillar.
Oil surged to end
up $2.96 at $56.97 in NYC. Gold
was up $1 at $644 and Treasuries
gained with the two-year at 4.96% and the ten-year at 4.87%.
European bourse indexes closed higher across the continent as did Mexico
The DJIA closed up 35 points at 12525. The S&P 500 gained 8 points to 1428 and the NAZZ rose 8 points to 2448.
Breadth was 2/1 positive and volume
There were 340 new highs and 55 new
And the Fed speaks tomorrow and
the boys and girls in the casino will be ready to play fund games with the
29 January 2007 Daily Comment
Microsoftís new Vista operating system is available for sale to the
public tonight. We havenít heard of any lines forming.
Asian markets were mixed
overnight and European markets are small fractions mixed at . Gold is lower by $2 in early NYC trading and Oil
is down at $55. Treasuries are flat.
The markets have been moving
sideways with a downward bias for the last two weeks so this week may help
define a trend. We continue to think that down is more likely than up.
On the other hand, and there
always is one, Wednesday is month end and the bulls certainly want an up month.
Thatís because according to the Stock Traderís Almanac and up month of January
for the DJIA portends an up year 90% of the time.
Also on Wednesday the Fed is
going to issue its policy statement for its January meeting.† Friday brings the monthly employment report
A un-fact checked European newsís
source is reporting that Sanofi-Aventis
is going to acquire Bristol Myers.
We think that nothing will occur until the Plavix patent trial is concluded. Schering Plough announced in line earnings
to day and is a bit lower. It had been suggested as a BMY merger partner with
CEO Fred Hassan taking the reins of the combined company.
Symantec, maker of Norton antivirus software, said on Monday it
will buy Altiris for about $830
million as it expands into the corporate software market from its previous
consumer focus. Altiris makes software that helps companies manage and maintain
information-technology assets, from laptop computers, desktops and mobile
devices to servers and storage assets. SYMC is paying about 3.3 times revenues
for the company.
Oil is down 80 pennies after being down over $1.25 an hour ago. The two-year
Treasury is touching a 5% yield for the second day in a row.
With respects to all the violent human
death in the world that goes unnoticed and uncommented upon - this news is still
sad. Horses are special animals. Kentucky Derby winning racehorse Barbaro was put to death on Monday
after failing to recover from a shattered hind leg suffered in the Preakness
Stakes last May.
Oil ended down $1.43 at $53.99 in NYC. Gold lost $2 to 643. Treasuries
ended weaker with the two-year at 4.98% and the ten-year at 4.89%.
European stocks were higher at their close and Mexico
lost 1% and Brazil
The DJIA closed up 6 points at 12492. The S&P 500 lost 2 point to 1420 and the NAZZ rose 6 points to 2441.
Breadth was barely positive and volume was moderate.
New highs expanded to 335 and new
lows were 50.
And the week has just begun.
26 January 2007 Daily Comment
Durable Goods orders were up 3.1%
in December when up 3.5% was expected. But ex autos the number was up 2.3% when
up 0.5% was expected. New U.S. homes rose 4.8 % in December and prices climbed
1.2 % as the number of homes on the market decreased, showing some firming in
the weakened housing sector. On that news treasuries lost their bid. The
two-year touched 5% in yield.
The canceling of new home
building is probably firming the market but for how long is the question.
Gold opened lower by $4 in NYC at
$543 and Oil was higher by 51 pennies at $54.74. Asian indexes were lower overnight
with Hong Kong losing 1.8% and European bourse indexes
were also fractionally lower at .
Microsoft reported in line but lower earnings and in late trading
yesterday the shares price rose fractionally. But the report was not enough to
jump start the major measures this morning and after opening higher stocks
turned lower in the first hour of trading.
General Motors canít file its quarterly report because it canít yet
compute how much money it lost.
Slowly but surely we are
eliminating our Wild Oats position. The difficulty of
selling this stock without knocking the share price down $1 is why we are
selling it. This holding is in the class of the companies where we took too
much risk when we were Masters of the
Universe last month. The shares can trade at $20 or $8 and neither price
would surprise us. Ron Burkel has a 15% position in the shares and that is the
reason they are selling at this price. If he didnít own the stock it would be
at $8. It ran to $20 last year because
he owned the shares. We bought it towards year end because we thought it would
pop. Instead it fizzled.
The S&P 500 trend line
support is currently at 1418 which is where the S&P 500 is trading at .
Oil ended at $55.35 up $1.12 in NYC today. Gold dropped $3 to $645.
European Indexes closed large fractions lower on Friday.
Treasuries rallied slightly to close flat on the day after touching
five month highs in yields earlier in the trading session.
The DJIA rallied in the last hour to try to save the day, the week and
maybe the month for the bulls. At
the close the DJIA slipped back into negative territory to close down 15 point
at 12487. The S&P 500 lost 1 point
at 1423 and the NAZZ gained 2points
Breadth was slightly negative all day but turned positive near the
close and volume was active.
New highs contracted to fewer than 210 and new lows expanded to 80.
And the casino is closed until
25 January 2007 Daily Comment
EBay beat numbers and the shares are up 10% this morning so the
traders who purchased yesterday are in hog heaven.
Asian market indexes were lower
overnight and European indexes are small fractions higher. Oil is up a few
pennies at $55.45 in the early going in NYC and Gold is $651. Treasuries are
Three weeks ago Symantec warned and the share price
dropped from $21.50 to $17.50. Last night SYMC reported earnings that beat
their lowered estimate of three weeks ago and the share price is up $1. Go
Jobless claims for the latest week rose 36,000 to 325,000.
Ford lost $5 billion in the quarter and $12 billion for the year.
That loss is a couple of billion dollars more than what Ford paid in a special
dividend in the 2000. And it is a bit more than what they paid for Jaguar, land
rover and Volvo to spend the cash they had on hand. Plan ahead?
The two-year has moved to a 4.97%
yield and the ten-year to a 4.86% at .
With an hour and one half of
trading left in the day the DJIA is down 120 points. The major measures have
gone down today and Monday a lot easier than they went up on Tuesday and
Wednesday. That is an observation, not a prediction.
crude oil futures fell more than a dollar on Thursday amid profit-taking after
two days of gains, oil product inventory builds last week and a drop in natural
gas futures after storage data released by the government was near
According to realmoney.com theS&P 500 is in
danger of completely reversing the breakout move that occurred yesterday. It is
called various names, such as a failed breakout, bearish engulfing pattern and
a tweezers top. And that is supposed to be a negative. *****
Microsoft announces earnings after the bell and its report is going
to set the tone for tomorrow and the weekend.
Gold closed at $645 and Oil lost
$1.14 to $54.23 in NYC trading. Treasuries
closed lower in price higher in yield with the two-year at 4.97% and the ten-year
European market indexes also gave ground while Brazil
was up 1% and Mexico
was down almost 1%.
Near the close the DJIA was off 115 points at 12510. The S&P 500 had lost 16 points to 1424
and the NAZZ had dropped 32 points
Breadth was over 3/1 negative on the NYSE and close to 3/1 negative on
the NAZZ on the day and volume was
There were 365 new highs and 70 new
And there is one more hedge fund
day at the big casino for this trading week.
24 January 2007 Daily Comment
Our large cash
position of over 90% is a reflection of our view that the markets are due for a
Asian market indexes were
fractionally higher overnight and European bourse indexes are higher at . Oil is trading lower by 50 pennies
after its big move of the last few trading days and Gold is also lower by $3
after its large move in the same time period.
Treasuries are flat as the
trading day begins.
Yahoo had lousy numbers but said its new search marketing ads named
which is to compete with Google will be on line by the end of March and that is
earlier than expected. The stock has popped over $1.50 higher on that last bit
of news. Thus, our sale ahead of earnings was not prescient this time although based
on the earnings numbers alone the stock would have been lower.
The main truth we take away from
our failed foray in Whole Foods, Yahoo
and EBay is to avoid high P/E stocks
that we have no stomach to stay with as they plume and plummet on relatively
insignificant news. It a lesson we unfortunately seem to have to relearn on a
yearly basis after we have become Ďmasters of the universeí by making a few
AMD disappointed and is off 5% in the early going.
Itís interesting that among the
stocks we have owned recently Hershey and
Intel ran up $2 in the days ahead of
their earningís report and then sold off $2 on the report. And Yahoo and Motorola were weak before their earningís report and then jumped on
the report. And all the reports werenít much different than what had been
Todayís stock markets are acting
the same as yesterdayís markets. The bears donít seem to have any traction and
the bulls are grinding away higher. The new highs and new lows are about the
same as yesterday. The move higher in the DJIA is being led by a few issues and
oil stocks are under pressure as the price of oil has retreated but is rallying
Investorsí Intelligence has Bulls at 52% up from 50% and Bears at
20% down from 22%.
EBay is up $1.50 is seems to be running ahead of earnings tonight
as traders attempt to front the news and catch a gain. This action seems to be
initiated by the run up of Yahoo today after its earnings report last night. It
will be interesting to see what happens tomorrow.
Oil ended up 31 pennies in NYC at $55.35. Gold gained $2 to $648. Treasuries
were slightly weaker with the two-year at 4.93% and the ten-year at 4.81%.
Most European country stock indexes ended 1% or higher.
The DJIA gained 85 points to close at 12620. The S&P 500 rose 12 points to 1440 and the NAZZ jumped 33 points to 2465.
Breadth was 2/1 positive all day and volume was active.
There were 415 new highs and 50 new
And there are two more fund game
days this week at the casino.
23 January 2007 Daily Comment
We sold stock yesterday and have
been in a selling mood for the last few weeks. Unfortunately we didnít sell
quickly enough to lock in this yearís gains but we are preserving last yearís
gains. And with cash yielding 4.3% we will be happy to sit and watch for a
while at least.
As we said last
week after the large move up over the last six months and the substantial move
over the last 40 months a correction would seem to be in the cards. The markets
can move sideways to correct or they can move down. Our guess is that with all
the hedge funds looking for action that any serious down move is going to be
exacerbated by the funds piling in on the selling to the downside.
Asian market indexes were fractionally
higher overnight and European bourse indexes are mixed at . Oil is higher again toady at $53.21 and Gold is up
$4 at $638 as the new trading day begins. Treasuries are flat.
Gap and its CEO have agreed to part ways and one of the Fisher boys
has taken over as interim CEO. They had better find a new CEO quickly.
Pfizer is going to fire 7500 plus folks and last week Motorola announced that it was going to
fire 5000. Happy New Year.
Alcatel Lucent disappointed and the share price is down a quick
10%. Texas Instruments earnings were
in line with expectations. National City had in line earnings.
With the expiration hangover of
yesterday absorbed a rally may be in the cards for today.
We sold National City at $36.19, we also have earned a $0.39 dividend and with
that dividend the trade is a scratch in many accounts to a 1% profit or 1% loss
in the others. The CEO said NCC was trying to figure out how to do their stock
buybacks to raise the price of the stock. They should raise the dividend and
make better loans so they donít have to write stuff off if they want the stock
price to rise.
We reduced our
holding ofWild Oats in our larger accounts.
Oil jumped over 4 percent to $55
a barrel on Tuesday as the United States
announced plans to build up its emergency crude reserves and as colder weather pushed
up demand in the world's top consumer. †U.S. Energy Secretary Sam Bodman announced the
government will buy 100,000 barrels per day (bpd) of oil over a few months starting
in the spring to add 11 million barrels to the Strategic Petroleum Reserve. In
addition, President George W. Bush plans to call for a doubling of the
Strategic Petroleum Reserve's capacity in his State of the Union speech
Tuesday, the White House said.
Oil ended up $2.25 at $54.83. Gold
jumped $12 to $646. Treasuries were
weaker with the two-year ending at 4.93% and the ten-year at 4.80%.
European market indexes closed mixed while Brazil and Mexico
were both up over 1%.
At the bell the DJIA was up 53 points at 12530. The S&P 500 gained 5 points to 1428 and
the NAZZ was up 2 points at 2433.
Breadth was 2/1 positive and volume
There were 340 new highs and 60 new
And there are three more days of
trading at the casino till the big boys and girls take a rest.
22 January 2007 Daily Comment
We are again back in the land of milk and honey and more
snow and ready for whatever the markets bring. The Bears are in the Super Bowl
so all is well in Chicago.
Asia was higher overnight with Hong
Kong up 2% and Europe is higher at . Gold jumped last week but is off $1 in
early trading at $635 and Oil is back over $62 so the sheiks are making plans
to visit Monaco
again. Treasuries have a bid.
Wal-Mart, the controversial retailing
giant, is under investigation in the US over allegations it is trying to pass off
non-organic foods as organic.
It has been accused of using
misleading labeling that is "tantamount to consumer fraud" by an
organic farming watchdog, the Cornucopia Institute. The body has handed its
complaints to the US Department of Agriculture (USDA).
The Wisconsin Department of
Agriculture, Trade and Consumer Protection is also conducting an investigation
into whether Wal-Mart is placing "natural" produce on shelf space labeled
as containing organic items.
The Cornucopia Institute claimed to
have found dozens of examples of Wal-Mart's mislabeling products - from
"all- natural yogurt" to soya milk "made from organic
USDA is examining the watchdog's
claims, while the Wisconsin authorities are examining Wal-Mart's
practices and those of other supermarkets within the state.
Wal-Mart said it had written to store
managers to ask them to be careful, but added that consumers could tell whether
a product was organic by looking for the USDA label.
The Cornucopia Institute first raised
the issue with Wal-Mart last autumn, but found fresh examples of mislabeling on
return visits to stores this month.
"The vast majority of organic
farmers and food marketers operate with a high degree of organic
integrity," said Tom Willey of T&D Willey Farms of California, an organic producer of fresh market
vegetables. "These abuses endanger the credibility of the organic label
for all of us."
Wal-Mart, which owns Asda in the UK,
is trying to build a green reputation and attract more affluent consumers.
A year ago the retailer announced that
it would stock new ranges of organic food.
We are selling Palm for a 10%
loss. It has been making a series of lower highs and lower lows. Palm
has been the subject of takeover rumors but our guess is that the patent
lawsuit which was filed after we purchased the shares will be s deterrent to
any takeover until it is resolved.
Yahoo announces earnings
tomorrow night and we are selling ahead of that announcement. We have a 7% loss
in the shares. We are also selling Intel for a scratch, J Crew for a 5% loss
and WFMI for an 8% loss. We donít like taking losses but with the
tentativeness of the markets we would rather have the cash than the risk. We
can always repurchase these shares if the market climate improves.
Gold ended at
$633 in NYC down $3. Oil was down 86
pennies to $51.13 and Treasuries
were firm with the two-year at 4.91% and the ten-year at 4.76%.
indexes closed lower.
The DJIA lost 87 points
to finish at 12478. The S&P 500
dropped 8 points to 1423 and the NAZZ
was down 20 points to 2432.
Breadth was 2/1 negative all day and volume was moderate.
There were 265 new
highs and 65 new lows.
And there are four more trading days at the casino in what
is a full week for the markets and for us.
17 January 2007 Daily Comment
We are heading down
to Chicago Thursday morning to see clients and to celebrate a Memorial Mass for
our mother on Saturday so there will be no posts until Monday evening January
22. The Model Portfolio will be updated Friday night.
Intel met earnings and revenue numbers but its gross profit margin
slipped under 50% and the street was
disappointed in that number. The shares are trading 75 pennies lower in the
The Producer Price index was up
0.9% with the core rate up 0.2%. Year over year through December the PPI was up
1.1% with the core rate up 2.0%. The monthly PPI number of up 0.9% induced some
trader selling in short treasuries on the thinking that that number will be a
deterrent for the fed in lowering interest rates.
was mixed and European bourse indexes are also mixed small fractions at . Oil is trading under $51 at a 20 month
Investorís Intelligence reports 50% bulls down from 55% last week
and 22% bears up from 21% with 27% in the correction camp up from 23%. Those
numbers are short term bullish.
At its present price, assuming
the conversion of the $5 billion in convertible bonds recently issued, Fordís equity is valued at $18.5
billion while General Motorsís
equity is valued at $17 billion in the marketplace.
Industrial Production for December was up 0.4% when up 0.1% was
expected. Capacity Utilization was
81% as expected.
come on the 19th and while they have already pre-announced lower results we are
going to sell the stock for a positive scratch. We would like to
continue raising cash and this is the only new name we have purchased this
year. We have a position in Palm and upon further consideration one company in
the cell phone area is enough at this time.
Gold gained $7 to $633 in NYC by the close of trading. Oil also reversed its downtrend for a
day to finish up $1.03 at $52.24.
The Fed Beige Book contained more
gobbledygook and Treasuries remained
lower on the day with the two-year at 4.91% and the ten-year at 4.78%.
European bourse indexes closed mostly lower.
The DJIA closed off 2 points at 12580. The S&P 500 was down 1 point at 1430 and the NAZZwas down 18 points
Breadth was 5/4 positive on the NYSE and 5/4 negative on the NAZZ
and volume was active.
There were 385 new highs and 55 new
And our next post will be Monday
evening but the big boys and girls will be playing their fund games for the
next two days and weíll be watching. Go Bears, the football Bears
that is. *****
16 January 2007 Daily Comment
The land of milk and honey is now
the land of snow and below zero temperature. But the sun is shining so all is
well in our world as we hope it is in yours.
On Monday Hong Kong
was up 2% and the rest of Asia and European bourses were
also positive. Overnight into Tuesday though Asia was a
tad weaker and Europe is mixed at . Gold is a few pennies higher and Oil is down 77
pennies to $52.20.
The Empire State Manufacturing
Index is the only number of the day and is was 9 when last month it was 22 and
so on the suggested slowing there is a bid in bonds and a tempering of higher
stock futures prices before the full out trading day begins.
Goldman Sachs initiated coverage of
Motorola with a neutral this morning.
Symantec is down $2.50 to under $18 today on third quarter revenue
and earnings lowering.
Here is another reason why we
want to have cash on hand:
Crude oil futures are trading
under $51 for the first time since May 2005.
Tomorrow brings December PPI and the Fedís Beige Book. On
Friday CPI and Building Permits for
December are announced.
Oil closed down $1.78 at $51.21. Gold lost pennies to $626 and Treasuries
were slightly higher in price with the two-year at 4.86% and the ten-year
European bourse indexes closed lower across the continent.
At the bell the DJIA was up 25 points at 12581. The S&P 500 gained 1 point to 1431 and
the NAZZ dropped 5 points to 2497.
Breadth was slightly negative and volume was active.
There were 480 new highs and 40 new
And Merck and GE among
others announce earnings this week.
12 January 2007 Daily Comment
The markets are
closed on Monday January 15 for the Martin Luther King Holiday. Our next post
will be Tuesday evening January 16. *****
J.P. Morgan Securities added Sprint to its U.S. analyst focus list, saying
the company should be a turnaround story with the second-quarter of 2007 marking
the turn to positive subscriber growth. *****
AMD warned of lower revenues and earnings and its share price is
lower as is Intelís share price. In
the old days of ten years ago when AMD warned Intel usually went up in price.
But this time the sages are suggesting that AMD is in a price war with INTC and
that both will suffer. We wonder.
up with yesterdayís U.S.
markets by rallying overnight except for Shanghai
which was down 3.5%. European bourse indexes are mixed small fractions. Oil has
bounced up 80 pennies but remains below $53 and gold is flat at $614.
Treasuries are higher in yield
this morning with the two-year at 4.90% on bullish retail sales numbers reported
The S&P 500 has moved over
15% higher from its July low without even a 2% correction. From its 2003 low
the S&P 500 is up over 50% without a 10% correction. There is excess
liquidity in the markets and so the rally can continue for who knows how long
And we always worry about the buts and when we worry we go to
cash. For the past ten years the easy time to make some money in the markets has
been the autumn churning and we were lucky enough to participate this year even
though we didnít buy the July low. We are not young and greedy any more nor do
we like assuming undue risk for any long period of time. Thus we continue our
emphasis on moving to cash yielding over 4%.
budget surplus for December was $44.5 billion when $25.6 billion was expected. Fiscal
year through December the deficit is $80 billion whereas last year it was $118
billion at the same time.
Oil ended the week at $$52.99 up on the day and above its low for
the day at $51.88. Gold popped
higher by $13 to $627. Treasuries
were higher in yield with the two-year at 4.90% and the ten-year at 4.78%.
The DJIA closed up 41 points at 12556. The S&P 500 gained 7 points to 1430 and the NAZZ jumped 18 points to 2502.
Breadth was 3/2 positive and volume
There were 390 new highs and 40 new
And the casino is closed for the
11 January 2007 Daily Comment
Jobless claims were 299,000. That
is the first time the number has been below 300,000 for a while. Coupled with
the continued drop in the price of oil which is sporting a $53 handle (the July
high was over $78) this morning, Treasuries are moving higher in yield and
lower in price. That is because those two numbers suggest that the FED is not
going to be lowering interest rates soon.
Asian indexes were mostly 1% or lower
overnight and European bourse indexes are mixed at . The Bank of England unexpectedly raised its
benchmark interest rate by a quarter-point, the third increase since August, as
policy makers said inflation may rise further and spur demands for higher
wages. The nine-member Monetary Policy Committee lifted the repurchase rate to
a five-year high of 5.25 percent today. The European Central Bank said it will
maintain interest rates at 3.5%, after an increase last month.
Cisco is suing Apple
over the use of the term iPhone. It
seems Cisco owns the trademark. And lawyers for both companies rejoice. We
would bet there are also patent lawyers going over all the intricacies of
Appleís new cell phone preparing to sue for patent infringement as they have
sued Research in Motion (the
Blackberry) and Palm (the Treo).
We are taking a
loss on EBAY and moving the money back into YAHOO where we have had more luck
and which seems to have upside momentum. EBAY has popped this morning but earnings
come on January 24 and we are afraid of the numbers. *****
If Intel can get through $22 it may be off to the races.
The air strikes in Somalia
which the media and traders have ignored and the part of Bushís speech last
night that suggested action in Iran
and Syria are
part of the reason we are raising cash. We think there is a good chance of air
strikes in Syrian and Iranian territory which would be an escalation and maybe
lead to increased terrorist activity.
The markets donít care about Iraq
anymore but an escalation to other countries might catch the attention of
market participants on the edge. By that we mean that markets are usually moved
by 1% to 3% of the money involved. It is that 1% to 3% that moves stocks up and
down. Look at the trading volume of any stock on the NYSE and you will see that
on days when the shares move up/down substantially the volume involved are usually
less than 5% of the outstanding shares. And on normal activity days the volume
of trading in individual stocks is usually 1% or less of the outstanding
We sold our TLAB
holdings for a scratch. We are working to reduce our holdings and
with the lousy earnings to be announced in a few weeks we will watch this stock
from the sidelines and hope for a buying opportunity at lower levels later in
In our large
accounts we sold Starbucks for a scratch loss.
The dollar is rallying big time
today and oil is at $51.90 down over $2 as the close in NYC for commodities
approaches. There have to be at least a few hedge funds feeling some pain and
how that manifests itself in the other markets over the next few days should be
interesting. The markets are closed on Monday so tomorrow may be more
interesting than some folks can bear.
Stocks are higher today with the
DJIA having approached up 100 points and currently up 80 points with an hour
and one half to go in the trading day. But the rise today may also have a short
covering component in it for the hedgies that were long oil and short the dollar
and stocks. Only time will tell.
Oil ended the day at $51.88 down $2.14. Gold lost pennies to close at $613. Treasuries were losers with the two-year going out at 4.86% and the
ten-year at 4.75%.
European bourse indexes ended the day large 1% to 2% higher and Mexico
and Brazil also
gained over 1%.
The DJIA closed up 75 points at 12515. The S&P 500 gained 9 points to 1424 and the NAZZ was up 25 points to 2485.
Breadth was 2/1 positive and volume
New highs expanded to 395 and new
lows contracted to 76.
The bulls won the day and hope to
win the week in the last day of casino fund games tomorrow. The Bears hope to
win on Sunday.
10 January 2007 Daily Comment
We raised a good deal of cash
yesterday and will continue to do so today. The meandering markets of the past
few weeks seem to be suggesting some sort of †top. We usually do well trading the
fall rally and we did so last year. We donít want to give up those gains and
with cash yielding 4% we are inclined to reduce our market risk to a few issues
and assume our usual large cash position. The major measures have been rallying
for over three years without a 10% correction and time is now on the correction
Apple is the apple of the markets eye and all by itself it is
keeping the NAZZ afloat and slaying the other cell phone stocks. Google and a couple of other NAZZ names
are along for the ride and our take is that the momentum hedge funds are longing
for Apple and shorting all the other names like Motorola and Palm to name two
of the current also rans that we own.
We own them at decent prices but that doesnít mean they wonít go lower. They
are part of a portfolio and as always we look at the bottom line of the
portfolio rather than individual stocks when we are determining our performance
Asian markets were mostly 1% or lower
overnight except Shanghai which was
higher. The Chinese and Indonesian market indexes were down 4%. The 4% moves
are the result of international mutual funds and the big hedge funds moving too
much money into and out of too small markets. European bourses are large
fractions lower at midday and oil is down 45 pennies at 55.20 in early NYC
trading with gold off $3 to $611. Treasuries are flat.
Part of the reason for the up/down
daily market action may be the fall in commodity prices like oil which would
have affected some hedge funds and forced them to sell stocks to raise cash. The
trillion dollar plus hedge fund juggernaut has an outsized effect on the day to
day movement of stocks because of the amount of money the funds have to play
their games. The hedge funds trade indexes like they trade oil or corn. By that
we mean that the index is a commodity to the hedge fund trader and the
underlying stocks are just different ears of corn. And individual stocks of any
decent capitalization are usually part of some index. So as the hedge funds buy
and sell indexes the underlying stocks are also bought and sold with no regard
to the individual fundamentals of each company.
Bear Stearns upped the technology
sector to overweight from underweight citing a rebounding economic activity and
the current negative attitude on the
street towards the sector.
This morning we
sold Ford ending our misadventure in the stock for a while at least. We also
sold Tribune for a loss and Micron tech for a scratch loss and Texas Instruments for a scratch gain. It is always easier to take gains than
losses. We also sold ESLR in our larger accounts for a loss.
Treasuries are higher in yield and lower in price with the two-year back at a
4.82% yield. Oil has dropped $1.42 to $54.30 and we are guessing that Treasuries
are lower in price on the thought that the oil price drop will be taken as stimulative
to the economy by the FED. The reason given for the price drop is that the
Govt. reported a very large increase in gasoline and heating oil inventories. Our
take on the price drop is that the big boys and girls are just playing their
games on the downside this month trying to Ďgetí
a few hedge funds that were too long commodities.
Sirius Satellite Radio paid
Howard Stern $85 million in stock yesterday because he is responsible for adding
2 million subscribers. The total market cap of SIRI including debt is $6
billion. Is Howard Stern worth $6 billion? And what if something happens to
Oil ended down $1.62 at $54.02. Gold was off $1 to $613. Treasuries
closed a tad lower in price with the two-year at 4.81% and the ten-year at
European bourses ended in the red with Spain
down over 1%.
The DJIA gained 25 points to 12440. The S&P 500 was up 3 points to 1414 and the NAZZ which was helped by Apple jumped 15 points to 2460.
Breadth was slightly negative and volume was active.
There were 225 new highs and 90 new
And there are two more trading
days at the casino until the three day holiday weekend.
9 January 2007 Daily Comment
In the we should have sold yesterday category Sprint is trading down $2 in the early going this morning as the
company said this morning that revenue will be flat or slightly higher in 2007
and profit will remain under pressure due to lower margins. Sprint said it
would cut 5,000 jobs, or nearly 8 percent of its work force, to reduce costs
and further integrate Nextel, which it bought in August 2005. †Sprint said it added 742,000 total net subscribers
in the fourth quarter, ending 2006 with a customer base of 53.1 million. It
lost 306,000 post-paid customers in the quarter, with its churn rate, or
cancellation rate, at 2.3 percent.
We own enough shares for now. The
company sells for about 60% of the price of Verizon or AT&T Wireless and we
continue to believe it will provide a good return to us. We do wish we had been
more adept at trading the shares.
mixed overnight with Japan
higher and Hong Kong lower. European bourses are mostly
higher at and Gold is up $2
with Oil again lower by $1.63 at $54.46.
Treasuries are flat.
The lower price of crude oil is
the story of the day.
affirmed its previous revenue and earnings comments. That is a non event since
the previous guidance sent the share price down to low $30s. The share price
popped $1.60 this morning on the news and we took the opportunity to sell our shares for a scratch. *****
and St. Jude Medicalhave both moved 10% in
the last day and we are selling both. The BSX is a nice
profit and the STJ is a scratch loss.
Stocks were higher out of the
gate but selling has come into the markets after two hours of trading. The
selling seems to have a bit more urgency than the buying did.
With the markets putzing for the last few weeks we have decided that cash is the better part of greed. And
so we are making a concerted effort to raise cash in our medium to larger
accounts. This afternoon we soldSymantec, Rite Aid, Yahoo, and Pfizer for small profits and Qwest for a small profit or loss depending on the account.
We also sold
Verizon, General Electric, Time Warner, Hershey, Veeco, and Circuit City.
All were for profits some greater than others. We also will receive the Verizon
Oil ended down 45 pennies in NYC at $55.64. Gold gained $6 to $615 and Treasuries
were flat with the two-year at 4.79% and the ten-year at 4.66%.
The DJIA closed down 7 points at 12416. The S&P 500 lost 1 point to 1412 and the NAZZ rose 6 points to 2443.
Breadth was 5/4 positive on the NYSE and slightly negative on the
NAZZ. Volume was active.
There were 250 new highs and 95 new
And the casino will be open for
fund games as usual for the rest of the week. Next Monday is the Martin Luther
King Holiday and the markets will be closed.
8 January 2007 Daily Comment
We are back in the land of milk
and honey and a little, very little snow.
Last week we sold
Pier 1 and Sirius. We purchased them at year end for a quick bounce
higher in the New Year. Unfortunately, PIR continued its errant ways and had
lousy same store sales numbers for the December period. PIR is going to lose
$100 million this year which is its cash position. It will probably survive or
be acquired but for every Gymboree that we sold too soon as it came back from
the dead there has been a Spiegel or Merry-Go-Round that we sold soon enough
before they went broke. And so when PIR didnít bounce we bounced it for a
scratch to 60 pennies loss. We sold Sirius for a scratch when it bounced back
to our cost price last Friday.
was mostly lower and Europe is mostly fractionally
higher. Gold is up to $610 after being pummeled last week with most of the
commodities and oil is also 62 pennies higher at $56.96 after a bad week.
Treasuries are a few ticks lower
as the day begins.
Tellabs lowered sales and earnings forecast for the fourth quarter
and said the shortfall should be temporary and the share price is down 10% this
morning to under $10. We like the company and story but we own a large position
now. Under $9 we would be interested in more.
last week when it announced great sales on phones but those sales were of the
cheap not expensive variety. Earnings for the quarter are going to be half
expected. With $7 per share in cash and trading within a dollar of its three
year low weare buying shares in accounts
that own EBAY. We are paying $18.55 when the shares were at $26 in
Jim Cramer named Rite Aid as one of his three
speculative picks for 2007. That comment has the stock up 20 pennies this
morning and says something about the speculative juices of individual investors
that are flowing in the present market environment.
From this mornings WSJ: As tracked by the New York
Stock Exchange, margin debt rose to $270.52 billion in November from $221.66
billion at the end of 2005, the first time in more than six years that margin
debt has topped $270 billion. ...That 22% increase left margin debt not far
from the record of $278.53 billion, reached in March 2000 as the NASDAQ
Composite Index was setting a record high. *****
The Gap has hired Goldman Sachs to explore strategic alternatives.
The stock is up $1.50 on the news. That suggests that the Fishers have given up
on turning the company around. Pier 1 hired JP Morgan last May to explore
strategic alternatives when the share price was at $10. It is now trading at
Oil ended down 22 pennies at $56.09. Gold rose $3 to $609 and Treasuries
were slightly lower.
European bourses closed mixed.
The major measures were lower
most of the morning and then staged a tepid rally into the close.
At the bell the DJIA was up 24 points to 12420. The S&P 500 gained 3 points to 1412 and
the NAZZ gained 4points to 2438.
Breadth was 5/4 negative most of the day but flipped to 5/4 positive
by the close of trading. Volume was
There were 210 highs and 75 new lows.
And there are four more hedge
fund days in the first five day trading week at the big casino in a while.
4 January 2007 Daily Comment
We are heading off early for a
basketball game tonight. And we have a dental appointment and a few client
appointments tomorrow so there will be no posts until Monday January 8 when we
have returned to the land of milk and honey. We are not taking any action on
our portfolio this week as we want to give the markets a chance to adjust to
the New Year. The portfolio will be updated on Friday night. *****
Asian exchanges were mixed overnight with Japan
up over 1% and Hong Kong fractionally lower and European
bourses this morning. U.S.
stock futures are a bit lower and Treasuries are up a bit. Oil continues to
trend lower on top of yesterdayís big drop with is down 85 pennies at $57.65.
Gold is down $1.
raised its earnings estimates on Intel.
Most retailers were close to plan but Gap, Limited, Ann Taylor and Chicoís missed and are trading lower.
Initial jobless claims were 320,000.
As we leave for the day with a few hours of trading remaining
the DJIA is off 20 points and the NAZZ and S&P 500 are higher. Breadth is
slightly negative and gold and oil are lower while Treasuries are a few ticks
3 January 2007 Daily Comment
markets were closed on Tuesday but made up for the closing by rising on
Wednesday. European markets were higher on Tuesday and are mixed today. Oil is
lower by $2.45 at $58.65 at midday and Gold is down $7 at $631.
rallied early this morning on the ADP guestimate of down 40,000 jobs for the
Employment report that is announced on Friday. But they have now given back
most of those gains.
were higher out of the gate and remain up 100 points at 12 noon.
are in the city this week for client meetings and so our posts are going to be
short and sweet.
news and good news all in one:
St. Jude Medical was cut to neutral from overweight, saying the stock
price already reflects an expected rebound in the implanted defibrillator
market. "Part of our concern is that we still see downside risk to
estimates, owing to the challenges of the market and the level of share gains
and margin expansion still embedded in Street models," J.P. Morgan said.
"The challenge for St. Jude is sustaining share gains in the face of a likely rebound by Boston Scientific.Ē
Gold closed down $8 at $629 and Oil
dropped $2.73 to $58.32. Treasuries
were better with the two-year at 4.76% and the ten-year at 4.66%.
Goldman Sachs downgraded most of the
tech area today but remained positive on telecom equipment folks and oil stocks
got hit with the drop in the price of oil and probably some New Year profit
taking. That took the starch out of
As a result, after being 100 points
higher at noon the DJIA dropped to down 40 points near 2 pm and then rallied to
close up on the day. That is volatility.
DJIA closed up 8 points at 12470. The
S&P 500 made the same journey as the DJIA and the NAZZ did also.
S&P 500 lost 2 points to 1415
and the NAZZ rose 5 points to 2421.
Breadth was 5/4 negative
on the day and volume
were 190 new highs and 50 new lows.
there are two more hedge fund days left in this holiday abbreviated trading
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