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Buzz Bits: Dow, Nasdaq Edge Lower


Your daily Buzz & Banter highlights...


Editor's Note: This is a small sample of the content available on the Buzz and Banter.

Earnings Report - MV News

  • Sovereign Bancorp (SOV) reported 4Q EPS of $0.33 vs $0.32 cons. ROE was (5.82%) and ROA was (0.57%).
  • Kinder Morgan (KMP) reported 4Q EPS of $0.55 vs $0.52 cons on revs of $2.09 bln vs $2.68 bln cons.
  • Lam Research (LRCX) reported 2Q EPS of $1.15 vs $1.11 cons on revs of $633.4 mln vs $621.2 mln cons. Gross margin came in at 51.0%.
  • Apple (AAPL) reported 1Q EPS of $1.14 vs $0.78 cons on revs of $7.1 bln vs $6.44 bln cons. Gross margin was 31.2% vs 27.2% exp.

Watch for falling satellites! - Fil Zucchi - 2:49 PM

XM Satellite Radio (XMSR) and Sirius (SIRI) have taken a mid-day turn south after FCC Commissioner Martin was quoted as saying that current FCC Rules prohibit the merger of the two satellite radio providers. Geee! Reealllyyyy!?!?!?

I don't think Karmazin and Co. thought about that detail when they started courting each other. I mean, who would imagine FCC / Antitrust issues in the context of creating a monopoly for a radio system?

When I swapped out of XMSR common and into a call spread, I suggested that the price was discounting a fair chance that a merger would take place, and I wanted to take some chips off the table in case the "fair chance" did not materialize. However, of all the reasons why this celestial wedding might not take place, regulatory issues are the least to be concerned about IMHO. Of course Martin is going to put a damper on the deal - IT'S HIS JOB! But does anyone really think that if AT&T (T)/SBC and Verizon (VZ)/MCI were approved, your friendly neighborhood lobbyist will not be able to maneuver around Commissioner Martin's populist concerns?

Position in XMSR, SIRI

Drum roll please... - Bennet Sedacca - 11:56 AM

I wondered aloud recently why non-U.S. investors stopped at 49.9% of U.S. marketable Treasury securities. They also bought 49% of the recent Farm Credit deal, I am told.

So I asked my research provider for the latest amount of Treasuries that they control.

The answer???

50.2%. So much for my theory.

Granted, part of this are offshore hedge funds, but a very small percentage.

But the amount of corporates non-U.S. investors are buying is staggering. It explains why corporates trade so well. So well in fact that I think those buying at these spreads will come to regret it. Eventually.

See the chart here. Thanks to Minyan Conor for the concept.

Position in Treasuries

The Wall of Worry and other fantasies... - Jason Goepfert - 9:06 AM

There is a lot of market "wisdom" out there that is not actually wisdom at all. What passes for knowledge are often worn-out clichés that do not pass muster when subject to the harsh light of scrutiny.

Take the "bull markets climb a wall of worry" bromide. This tops my list of all-time market-related pet peeves. Bull markets DO NOT climb a wall of worry...bull markets climb a wave of ever-increasing comfort and speculation.

That cliché doesn't stand up to reason (if people are worried, then they're not going to buy, and if they don't buy, what's going to make stocks go up?), and it doesn't stand up to testing. I went over this in the spring of last year, and there's a reason to go over it again.

The latest Investor's Intelligence survey showed a large drop in bullish sentiment this week. Over the past four weeks, the bullish ranks have thinned by more than 8%, yet the S&P 500 is trading at a new 3-year high...surely this is the famed wall of worry if ever there was one.

But let's take a look at other times when the S&P hit a 3-year high yet the bulls had retreated at least 5% over the past month. Out of 24 instances, the S&P showed an average return of negative -0.1% one month later, and even three months later it showed a return of only 1.0% (half that of a random return) and was positive barely 50% of the time. In fact, the market was higher less often when bulls had declined by 5% or more than when they had increased by 5% or more.

I'm not saying that the drop in bullish sentiment is a sell signal - the results are not consistent enough to suggest that. But I would most emphatically suggest that this is not a raging buy signal that it will most assuredly by made out to be...far from it.

What you need to know... - Jon Doctor J Najarian - 8:14 AM

Intel (INTC) Earnings Beat, Margins Slip – The chipmaker announced 4Q earnings a penny higher than Street projections after the market's close last night, but shares fell nearly a dollar as margins and projected margins continue to shrink below 50%.

Citi (C) To Drop Umbrella Logo - Executives at the financial giant are preparing to rebrand the company with a shorter name (Citi) and a new logo. That means Citigroup will dump their signature red umbrella, according to a published report.

Hate Your Job? Half Do! Nearly 50% of all respondents to a recent poll are thinking about changing jobs soon. 21% indicated they were already job hunting, while 21% said they'd start looking sometime this year.

Lenar (LEN) Continues Housing Write-Downs – The home builder swung to a fiscal 4Q loss, as conditions continue to erode in the housing market. The Miami-based company also said 2007 deliveries will decline more than 20%. Losses for the quarter exceeded estimates.

Position in C

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