An evening taste of the daily buzz...
Mini-Minyan Mailbag - John Succo - 1:52 PM
Whole Foods Market (WFMI), Apple (AAPL), & Caterpiller (CAT) all had bad reports showing an end to the growth of growth, then turned around and ripped up.
My reasoning: Strong long vs. weak shorts.
This is the new trading market. Longs feel stronger with (as you put it) OPM (Other People's Money), than do the shorts who generally put their own dough up
I think the longs are not afraid of bad news anymore.
I agree. As long as portfolio managers have inflows, they are in control. Inflows are dependent on performance (not in the aggregate of course). Performance depends on stocks that are owned to go up.
It is a vicious circle, one that is broken by less liquidity.
5,4,3,2,1.335 and counting to inversion........ - Bennet Sedacca - 1:45 PM
We are now a scant 1 basis point or so from the 2's-10's curve inverting. 2's are now 5 basis points thru 5's which, frankly is good enough for me. As Kevin mentioned earlier, we are thiiiiiis close to what could turn into a major rout of the shorts in bonds.
Does the market smell deflation fears in 2006 with Bernanke taking the helm? Or a dreaded slowdown in consumer spending or slowdown in housing? Perhaps, but I would not want to fight this tape action in bonds, despite their already low absolute levels. From a relative perspective, however, keep in mind that our 10 year yields are still approximately 100 basis points above Europe.
Happy Holidays to all!
Flashback! - Bill Meehan - 1:15 PM
This day in market history...
- In honor of my sister Katie's 15th birthday, we'll look at the markets in 1990. The 23rd was a Sunday, so closing levels that Friday found:
- DJIA: 2633.66
- S&P 500: 331.75
- Naz: 373.60
- Crude: 27.08
- Gold: 383.75
This day in Minyanville history...
- In '02, Snoop Tone looked at herd mentality and conventional wisdom in Using the Right Lane.
In other news...
- In 1982, tiny Chaminade knocked off the #1 ranked and undefeated Virginia in NCAA men's basketball, holding all-world Ralph Samson to 12 pts.
Just Do It..In the Long Run... - John Succo - 12:56 PM
Nike (NKE) is a good example of why fundamentals just don't matter.
After only one day, the stock has recouped all of its losses and then some from a bad earnings report (the stock was down $4 on the announcement).
What matters is the time preferences (risk premium) buyers and sellers attach to the asset. The buyers obviously ignored the short term facts in favor of a long term horizon.
In general, the shorter the time horizon (investment horizon), the higher the risk premium an investor will attach to an asset.
Position in NKE
Thinking Out Loud - Todd Harrison - 12:54 PM
As I clean off my plate, both figuratively and literarily, I can't help but cast a wary eye towards the charts of the banks (BKX) and the brokers (XBD).
While I've been dabblin' in some cheapie spring puts (as a function of the flat-lining yield curve and the volatility wish-bone) both charts look like reverse dandruff near all-time highs (which is potentially very bullish).
Nothing comes for free, we know, but it's important that Minyans see both sides of this risk equation. My bets are defined (via cheap vols) but, alas, they're no less risky.
Oh, we're affiliated alright - Sanjay Somaney - 10:51 AM
Chatter that Affiliated Computer Services (ACS) will be taken out by a group of buyout firms is heating up here in Texas. I think a deal could be announced early next week.
ACS has been a very slow grower of late growing barely 10% YOY. It is really struggling to compete against the Indian IT/BPO companies, like INFY et al, as a result of its much higher cost structure.
If the deal does go through, take it as a total validation that Indian BPO firms are winning the battle against higher cost U.S. based outsourcing companies like ACS . If sold to the buyout firms look for ACS to be spun off a couple of years down the road after the company has been split up into separate units.
Positions in INFY
Say What? - Kevin Depew - 8:33 AM
A look at commentary, opinion and analysis from around the world:
Michael Young, opinion editor for the Daily Star in Beirut, writes "Don't go wobbly [on Syria], George."
Uh, I wouldn't worry too much about "going wobbly" on Syria, Mr. Young. Especially if by "going wobbly," one means, "bombing." Turkish Press reports that the CIA's Porter Goss has told government officials to be ready for U.S. air operations against Iran and Syria.
Well, pardon me! OK, the headline looks bad. But check out Harry S. Truman (2,044 pardons) and Ike (1,157 pardons). Those guys must have pardoned everybody!
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter