In the spirit of full and fair disclosure...... - Bennet Sedacca - 2:29 PM
We have written here over the last couple of months how cheap munis were. We aggressively added for clients in the 4.95-5% range and they have now rallied 4-6 points into the 4.60-4.65 range (keep in mind these bonds have 14-15 year durations).
The November-January timeframe is the strongest for munis and February-May is about the worst. So we are beginning to 'leg out' of position, albeit slowly, as Wall Street trading desks have not totally awakened from their year-end slumber. Keep in mind that they are still 'relatively cheap' at 101% of treasury yields, but that is a trend I do not wish to fight any longer.
The positions in our closed-end municipal funds remain unchanged for clients as they are still 8-9% below net asset value and are about 110% of comparable Treasuries. While not advice, I want to always disclose the other sides of our trades. By January, I expect to be void of these positions. If you do own these sorts of securities and decide on your own to sell, remember to be careful about getting a bid. Traders are a little grumpy right now.
Positions in NXR, NXQ, long-term munis and long-term muni bond funds
Flashback! - Bill Meehan - 2:10 PM
This day in market history...
- Closing levels 6 years ago today
- DJIA: 10,997.93
- S&P 500: 1399.42
- Naz: 3901.69
- Crude: 25.56
- Gold: 282.20
- Pop? That day the DJIA was down (3.2%), Naz (5.6%) and S&P (3.8%).
This day in Minyanville history...
- Prof. Reynolds tabbed 2005: The Year of the Fed Up CEO
In other news...
Also in 1999, Minnesota inaugurated Jesse "Don't call me 'The Body'" Ventura as governor.
Mini-Minyan Mailbag - John Succo - 2:01 PM
I have thoroughly enjoyed your writing over the last two years. I used to work in Structured finance for a major bank and designed derivative structures for clients, so I have a very good understanding of what you are writing about, especially the concept of risk. Can you please update your thoughts on Guidant (GDT) since your views have been spot on?
We should hear from Boston Scientific (BSX) any day now. We think the probability of no bid is 10%, as well as the probability that they do not revise their current bid. That leaves about an 80% chance that they come in with a revised bid. But BSX motives are not entirely known, with some probability that they are just trying to get a close look at GDT's business.
Ultimately, and not intended as advice, we think the distribution of stock prices one month hence for GDT is:
3% below 60
10% between 60 and 63
75% between 63 and 68
10% between 68 and 71
2% above 71
Position in GDT
Battle Royale! - Todd harrison - 12:36 PM
Kiss Irene goodnight, Adrian Adonis. Stop being so classy, Freddy Blassie. Say adios, Pedro Morales. Today's battle at S&P 1275 makes the WWF look like WFF's (warm fuzzy feelings). Tension is that tight...and it's only the second session of the year!
Hoofy has to be happy with the sticky green internals (2:1) amidst the general digestion (after yesterday's rippage). Still, the one fly--the superfly, if you will--remains the lethargy in the financials.
Perhaps Boo is reaching (wouldn't be the first time) but he just walked by my desk and pointed to JP Morgan (JPM), Citigroup (C) and General Electric (GE) (yes, that's a financial). It doesn't matter until it does, we know, but if it does, it'll seem somewhat obvious.
Positive internals and bunk banks? Watch the brokers (XBD) as a tie-breaker as they tickle 200.
position in jpm, financials
PPH-Big pharma update... - Bennet Sedacca - 11:30 AM
Last month we wrote here that we felt PPH was basing and would outperform going forward and in fact, be the leader of 2006. Well, since then Pfizer (PFE) raised its dividend and then won its important Lipitor case against Ranbaxy.
PPH is challenging the 200 day moving average and major downtrend as we speak. While there are many known negatives ('what the market knows isn't worth knowing', however), if the PPH pushes through, look for a huge surge of technical buying. While there isn't huge short interest in the group yet (a slight negative in itself), our hope is that shorts would sell strength, feeding the rally later on.
The time to sell this group, and XLV, the broader health care ETF? When the Fed eases. At least that is what history tells us. From a valuation perspective, this is still the cheapest group with the best balance sheets in the SPX.
Positions in PPH/XLV
Take to the sky on a natural high - Kevin Depew - 10:24 AM
Another day, another 4% haircut for Natural Gas. Scott Reamer noted yesterday how quickly the market gives back its gains (not factoring in today's decline, NG/ had given back 106 days of gains in just 21 days) - a hallmark of complex systems.
On a Pnf basis, all downside targets for NG/ have been met, for now, and we are nearing a DeMark 9 on a daily basis.
Reports of a possible contract worker strike in Chile against Coldeco (as well as this morning's earthquake) have copper up more than 2% this morning to a new contract high, basis March. The price objective based on the recent breakout at 203 is 222.5.
Interestingly, the iShares Dow Jones U.S. Real Estate Index (IYR) has formed a bullish shakeout. Parameters for the potential trade are resistance at 66.5, with 67 being a triple top breakout, while a move to 63.5 voids the bullish pattern potential.
Say what? - Kevin Depew - 8:36 AM
A look at commentary, opinion and analysis from around the world:
Bloomberg's Fed Watcher, John M. Berry, says the Fed can see an end to interest rate increases.
Did you know that Kroger is really a media company? The company's vice president of marketing says, "What I think people are realizing today is that Kroger is a media company." Then what's with all the food lying around the studio, dude?
Venezuela's top selling Christmas toy this year was a Hugo Chavez action doll. Different versions of the doll include one in a combat uniform and another that reads one of the president's anti-American speeches!
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