Buzz Bits: Dow Hits Another Record, Nasdaq Rises
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Earnings Report - MV News
- Abercrombie & Fitch (ANF) reports 3Q EPS in-line of $1.11 on revs of $863.4 mln vs. $855.0 mln cons.
- Analog Devices (ADI) reports 4Q EPS of $0.39 vs. $0.36 cons on revs of $644.3 mln vs. $642.7 mln cons.
Bell Buzz - Todd Harrison - 3:53 PM
Dressed myself in green
I went down unto the sea
Try to see what's goin' down
Try to read between the lines
And so it is. Another day, another record. We asked several questions this morning, including openly pondering how many "buy stops" were sitting on the other side of S&P 1390. The answer, as we learned, was to the tune of 120,000 S&P e-minis, or $8 billion of notional value. That's a whole lotta meat, Minyans, and it's why the tape sprung to life late this afternoon. I'm being told, for what it's worth, that much of this order was to close (covering shorts).
Pure eyes, there's not much for the bovine to complain about today. Breadth is 2:1 positive, the semis (+2.4%), homies (+2%) and retail (+2.5%) are providing "traditional" leadership and the technical task is now behind us. Further to that, the potential for percolating performance anxiety remains as portfolio managers cast a wary eye towards their year-end letters.
S&P 1390 now offers nice and defined risk for those hanging with Hoofy. I'm not positioned that way-I'm balanced in my book, weighted to the metals and long some March puts in the financials (which haven't helped my performance). Alas, I know there are different strokes for different folks so I'm trying to map both sides of the ride for Minyan faithful. Just do yourself a favor-focus on your bottom line. As soon as you start trying to keep up with the Dow Joneses, you'll be motivated by the fear of missing. And that, my friends, typically serves as a precursor to pain.
May peace be with you.
Position in metals, financials
Bullish? Bearish? Indifferent? This post is for you. - Kevin Depew - 1:16 PM
- Note the Russell 2000 (RUT) leading the way here as the rally off the lows arrives (a bit later than usual).
- Minyan Rhino this morning on the Japanese Yen. "A break above 86 on December contract or 117 yen/dollar basis, may lead to a big jump in short covering which means yen carry traders may take some money out of S&P 500 futures," he noted. "Interesting how the rise in S&P 500 futures mirrors the surge in yen short positions, which Stephanie Pomboy has talked at length about."
- I see that .86 would be a double top break for the Dec. Yen but it would take a move to .8650 to violate the long-term downtrend line that has been intact since June.
- Do the economy and stocks ever move together? I think that's really the heart of the problem. If they did, this job would be a whole lot easier.
- If you are bullish, this site is for you. If bearish, choose this one. Not sure whether you are bullish or bearish? Click here.
The Pig Market - John Succo - 9:02 AM
DR Horton (DHI) is up $2 pre-open on better than expected revenues and earnings. But the why doesn't concern the buyers, only that it is. The why is that the company took nearly its entire backlog from 1Q 2007 and recognized it this quarter. For a quarter that is supposed to create the lowest leverage in the company because of strong cash flows (seasonal), the debt capitalization actually rose from 35% last year to 43% this. And this from a company that supposedly is balance sheet conscious.
DHI is not the worst of the builders, but that is what is so concerning about this move. As a result of their actions, 2007 EPS most certainly will be lower. I won't even mention Home Depot (HD) or Wal-Mart (WMT).
With sentiment near historic "bullish" levels we have to return to what is going on. Credit created by central banks globally, but especially in the U.S., is by any measure at levels never seen before. This credit is seeping into everything, including sentiment.
People are taking more risk than ever as evidenced by extremely tight credit spreads, very low option premiums, and seemingly endlessly rising stock prices. You can tell the sentiment has turned from "bullish" to "piggy" when every piece of bad news is construed to be a positive thing. The bad news is ending and the good news is coming. But while easy credit is forcing them (they don't realize it) to take risk, debt grows. Debt does not go away by itself...it must be paid back or defaulted on. With the U.S. now consuming 7% more than the income it produces (trade deficit), it won't be paid back.
Position in DHI, HD, WMT
D-E-F-L-A-T-I-O-N - Bennet Sedacca - 8:49 AM
Call me crazy. You wouldn't be the first one. But see the chart here. As you may be aware, my firm focuses on OVERALL inflation. Like I have said, I ate last night and this morning (too much) and will heat my house and drive my car. So will everyone else in the civilized world.
Year over year PPI has now swung to DEFLATION. If you don't believe me, see the chart here.
As for 10's, my firm liquidated a couple of weeks ago at these levels and replaced with higher yielding preferreds, as I alluded to yesterday.
But, if 10's break the multi-year trend line as depicted in the 10 year chart (linked above), I will re-initiate my position and aim for 3 handle 10's.
The Fed now faces the fight of its life. Our economy is precariously balanced between inflation and deflation.
Position in preferreds
What you need to know... - Jon Doctor J Najarian - 8:24 AM
Wal-Mart (WMT) Playing Possum? The world's largest retailer posted a profit that easily beat Street estimates, coming in at the high end of recent guidance, but guidance for the next quarter, every retailer's most important was under Street estimates. Nonetheless, I show shares high by $0.12 to $46.44 in the pre.
Agilent (A) Posts Higher Net – Agilent's net income rose 6 fold to $152 million and said it is buying a privately held provider of high-speed digitizers and analyzers used in commercial, industrial and government electronics.
Home Depot (HD) Net Drops! In what embattled CEO Bob Nardelli called a "very challenging" housing environment, HD's sales were softer than expected and thus their net missed by $0.03 per share. This one was all over my firm's Heat Seeker, which was followed by a downgrade by UBS and then, inexplicably, a recommendation by a mainstream media pundit. We're loaded with Dec 37.50 puts and will let them fly today as shares hit the skids.
Timberland (TBL) Next for Private Equity Buyout? You betcha! Those hip hop stars in music videos have made the moved up the status of the bootmaker and according to published reports, the firm has hired Goldman Sachs (GS) to sort things out. Bottom line? The company (TBL) goes private for north of $2 billion which is just about where it is right now.
Positions in WMT, HD & A
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