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Buzz Bits: Dow, Nasdaq Rise

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Your daily Buzz & Banter highlights.

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


Toll Brothers Call - Kevin Depew - 3:17 PM

Listening to the Toll Brothers (TOL) call, here are some highlights (or lowlights, depending on your perspecitve):

  • By many measures, Fiscal 2007 was most challenging in 40 years TOL has been in business.
  • 1974 was a tough year, but it was only one year, not ongoing as this has been.
  • 88% of TOL buyers are prime loan qualifiers.
  • Bob Toll: "If I had to make a bet on a recession or no recession right now I'd probably think we're going to have a recession."
  • Company is requiring higher deposits to fend off the higher cancellation rates they have been seeing.
  • Quarter over quarter improvement in gross margin was primarily due to New York City deliveries (Manhattan, Brooklyn, Queens).
  • Incentives today are averaging $50k per home, or 7.5%, compared to $30k and 4% last year at this time. Last quarter was $33k.



Pop Quiz! - Todd Harrison - 2:55 PM

Alrightee then, Moral Hazard or not, the tape is doing the Alfred E. Newman today as it pushes and prods towards the top end of our aforementioned resistance zone. That's S&P 1490-1500 for those keeping score at home which, if you're reading this, likely means you are.

Some top-line vibes:

  • That "overage" in the S&P puts was dutifully unwound as a function of discipline on the other side of S&P 1490. Yes, this is a resistance zone (which now includes the 50-day at 1502) but I didn't have the fight in me after looking at the breadth (and my schedule).

  • The good news is that Pulte Homes is up 10%, which is a nice, although I'm biting my tongue as I've learned not to tempt the trading Gods (I'm still there). I'm a renter, not a homie owner, and was only looking for a few bucks in the name. I'm rolling stops and playing along, O-Dog.

  • I will also share that, while I continue to sense that the greenback has some room to the upside, I've moved to the sidelines in the UUP. Too thin for my blood.

  • While I'm disturbed by these bailout plans and the moral hazard they represent--not to mentioning having grave concerns that they won't work--I'm trying to step into the collective mindset (and balance my own).

  • The toughest thing to do as a trader is to allow a thesis to unfold as the only difference between being wrong and being early is whether you're still there to ring the register.


    R.P.

Position in PHM, SPY.



The Motorola Motor - Sean Udall - 12:55 PM

Editor's note: Motorola affirmed its guidance in a conference call this morning for 4Q of $0.12-0.14 EPS versus estimates of $0.13. The company addressed the recent decline in share prices and announced plans to increase the share repurchase this quarter versus last quarter. Further the company added that it will not be a bidder in the 700 MHz spectrum auction but expects to be a significant player in the products. (Briefing.com)

Professor Udall offered us his thoughts regarding this news.

First, I feel Motorola (MOT) should have been more aggressive in acquiring assets to help them compete and take advantage of myriad future market opportunities in the wireless and wireline infrastructure markets. Buying out names like Juniper (JNPR), Harmonic (HLIT), C-COR (CCBL), RBAK or AV at fire sale prices over the last year or two come to mind.

Also, its large use of cash for stock repurchase is a positive but I would rather see it acquire assets and drive for dynamic growth. If it were to do this it could then possibly create another strong spinoff like Freescale (FSL) and create even more shareholder value.

Overall, it's probably due or overdue for a run off its low share price but I would be more bullish on it if it chose to grow more aggressively.

Position in HLIT.


Looking forward to tomorrow's NFP report... - Bennet Sedacca - 8:43 AM

Beeks!!! Everyone got all excited about the ADP number yesterday, I for one, did not. I would love to know where the growth is coming from. Retail? Nope. Financials? Nope. Homies? Nope.

So I doubt the number and its meaning. I have charted the difference from the ADP payroll number and the Non farm payroll number which you can see below.


Click to enlarge image


One of the two, or perhaps both, are meaningless. From my perch, I see a weakening economy. Still avoiding credit risk here.

Also, with subprime news on the cover of my local newspaper, the Orlando Sentinel, I will now pay less attention to it as 'what the markets know isn't worth knowing'. What am I paying attention to now?

Credit card delinquencies and prime delinquencies. And I don't like what I see. Look for the Fed to move 50.


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No positions in stocks mentioned.

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