Buzz Bits: Dow, Nasdaq Move Lower
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Buzz and Buzzards - Todd Harrison - 12:31 PM
- PPT? No, that doesn't stand for Please Pass the Turkey. It's the Wall Street lingo for the Plunge Protection Team. Minyan Jamie passed along this link in response to my pseudo-rhetorical questions earlier.
- With an hour left in the session, the Minx has settled in and settled down. The stand out action remains in the metals (XAU +3.5%) which are responding to the dandruff in the dollar (DXY -88 bips). I'm long exposure in this sector---as discussed--and will remain so into the weekend.
- There is a lot going in behind the scenes these days--some business, some personal, some good, some not-so-hot--and I'll certainly circle up on it all with some year-end reflections at a point. During these days of being thankful, however, I'm trying to focus on what we have rather than what we don't. It's a matter of perspective, as most things in life are.
- Other than that, it's quieter than a mouse fart as we edge towards the rest of our weekend. For my part, I'll be trying to re-fasten my top button as I scribe some vibe and write some speeches for Friday's big event. l hope you all have a fine weekend and enjoy the down time. We'll be here bright eyed and bushy tailed on Monday to bring home the bacon with fresh pizazz.
- May peace be with you.
Position in metals
Something else looks like a turkey... - Fil Zucchi - 11:36 AM
As we were stuffing our faces with turkey, the greenback was doing its best impersonation of one getting womped to the tune of $0.015 against the euro and putting in a breakout that's got to have technical types drooling. Meanwhile, the broader Dollar Index (DXY) is teetering on the edge of its own major breakdown.
Without remotely pretending to be a currency expert, I'll offer the following thoughts:
- Levels notwithstanding, the speed of the recent move is enough to make one ponder the potential for a financial accident.
- The precious one so far has followed / led the weak greenback, and it may need a rest as both look like they need to consolidate their losses / gains. A bit further out, Prof. David's suggestion that gold might revisit the highs is looking good to me as well.
- Should the dollar completely breakdown, the "potential" reflationary benefit to stocks ought to be weighed against the possible unintended consequence of higher interest rates. With the long bond ramping as fast as the dollar falls that probably sounds like a silly suggestion (would not be the first), but fast moves more so than large moves are prone to not behave as the "broader powers" might wish them to.
Position in ECZ06, gold equities / futures
Walgreens Is Getting Cheap - Brian Gilmartin - 11:21 AM
I'll have more early Monday morning, but Walgreens (WAG) is now down $10 or more than 20% from its September high, and is nearing longer-term support between $39 - $40.
October comp's - reported in early November - were very good.
With this strong rally off the July bottom, my firm has been focusing our efforts on looking for names that are oversold and prime for a bounce.
WAG fits that description.
Have a good weekend.
Position in WAG
Spin City... - John Succo - 9:16 AM
Wall-Street and K-Street have a way of spinning things to Main Street.
This morning my firm sees the dollar breaking down. This may be the result of uncertainty arising from Treasury and Fed officials traveling to China to "talk" about the yuan's strength causing the massive trade imbalances.
Already China is putting out there that the cause of the trade imbalances is "Chinese labor costs." I read this to mean they are saying the Americans make too much (their standard of living is too high for the amount of production). This is true, but disingenuous.
But no surprise there. Our politicians are just as disingenuous.
There is no doubt the U.S. is spending beyond its means (standard of living too high). But the root cause has been re-inforced by Wall and K Streets.
Government intervention is a perfect example of the bad risk assessment I mentioned the other day. There is no political will to reduce risk today so that things don't blow to smitherines for the next generation or even the next elected official.
When governments can create credit out of thin air I can guarantee you that debt will get out of control.
Sorry to digress. A weaker dollar is not a panacea. A weaker dollar spun by W-K Street will correct imbalances and be good for U.S. companies. This will eventually be true, but what happens in the meantime? Foreign companies will fight for their market share and allow margins to decline before giving it up. This will hurt margins of U.S. companies as well. All it will do, for example, when the yen goes from 120 to 110 will be for Japanese companies to make less money (lose) than before.
They will try to print even more and debt will grow even more. So will we.
And the probabilities for a deflationary bust will grow even more.
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