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Buzz Bits: Markets Rise on Minor Inflation


Your daily Buzz highlights...


Earnings Report - MV News

  • Viacom (VIA.B) reported Q4 EPS of $0.37, unclear if comparable to $0.47 cons, on revs of $2.72 bln vs $2.61 bln cons. The company guided '06 revs and operating income growth to double digits, and '06 EPS from continuing ops to $1.95-2.00 vs $2.01 cons.

Motor Skillz - Hoofy the Bull - 3:33 PM

Hey Boo, there's an old saying in my 'hood--"don't hate the player, hate the game." The same mechanism that served you serious coin in 2000 through 2002 has simply flipped the switch. That's not "right" or "wrong," it's just "what is." At least for now.

If I were to bake up a wish list of what I wanna see during a rally, I would tick off leadership, breadth, balance and technical confirmation. We're seeing that now---the banks, trannies and brokers are at all-time highs and the small-caps aren't far behind. And if the S's get get through S&P 1295, we'll likely see another spate of technical buying.

I hear you on the caveats--there's dandruff in tech land and the semis have softened. But the ability to absorb "rolling rotations" and avoid "outright migrations" is a sign of strength, not weakness. There is risk--a ten handle VXO in this global landscape is an absolute disconnect--but it is two-sided.

And this you must manage if you hope to stay in the game long enough to capitalize on your views.

"That's the way, uh-uh, uh-uh, I like it, uh-uh, uh-uh". . . . - Fil Zucchi - 2:34 PM

Alright Boo chill out. Yes Whole Foods (WFMI) did not get Hoofy's memo, but you - my little bear - don't have much to celebrate today. In fact, even WFMI may be due for a bounce here, with oversold stochastics, and having filled the July gap and testing the October lows. That's unless the go-go growth guys are having second thoughts about both (the go-go and the growth) in which case . . .

Flashback! - Bill Meehan - 1:47 PM

This day in market history...

  • Closing levels 4 years ago
    • DJIA: 9968.15
    • Naz: 1724.54
    • S&P 500: 1089.84
    • Crude: 20.92
    • Gold: 292.90

This day in Minyanville history...

In other news...

  • As we watch Team USA try to come from behind over Finland in the final minutes, today marks the 26th anniversary of the Miracle on Ice in which USA beat the heavily favored USSR.

Interesting comments from both Bennett and Scott on banks... - Vitaliy Katsenelson - 1:06 PM

Here are my thoughts: Banks are not as sensitive to the yield curve now, as opposed to say, 10-15 years ago, because their fee business is a much higher portion of net income than ever before.

Now banks own mutual funds, insurance companies, they charge a monthly fee for Quicken access, ATM fees, overdraft fees, credit/debit card processing fees and the list goes on.

Also, the compression of spreads so far has been offset by declining charge offs. The charge offs will not be declining forever and likely are approaching the end of their run. However, the yield curve, arguably, will not stay flat forever either. Banks still are probably one of the cheapest sectors. If you have not read the article I wrote on why banks trade at low P/E I recommend you do so.

Two year auction soon. This may tell us alot - (just like the utes might be) - Bennet Sedacca - 12:26 PM

Utilities have reversed course as the morning has worn on. Is this a 'tell' on a reversal in bonds? We'll just have to see. I think the two year auction this afternoon may tell us a lot also. Buying from indirect bidders (foreign central banks?) was meager last time around as they participated less than normal. Their focus was on 10's and 30's instead, as you may recall.

The bid to cover last time was a meager 2.11:1 and today's bid to cover will be an important tell if the market is really into the inversion deal. If the bid to cover is robust, it could have interesting implications for the curve today. We are unsure and hence, sitting this one out. As said before-note to self - never trade just to trade.

I got flavor and all those things you know... - Todd Harrison - 10:29 AM

Yeah Boo, part two bum rush the show? He'll need some help in a hurry, lest the bovine believe the hype and clamor to climb aboard.

An early peek at the tea leaves finds breadth back to 2:1, frisky financials--PLEASE WATCH THE BKX AS IT TRIES TO PUSH TO ALL-TIME HIGHS--and steady action in other arenas.

In fact, the only Debbie Downer I see is in the energy patch, which is resting on the heels of down-a-deuce crude.


There's somethin' happening here - John Succo - 9:00 AM

Bennet and I were just talking.

Both of us have been trading now for about 25 years.

Both of us are looking at the reaction of bonds and stock futures to the CPI numbers just put out.

Both of us are shaking our heads.

If anything, both bond and stock futures should be down on this number. It cannot get much clearer to me that we are experiencing a weird stagflation where costs continue to rise and profits are under pressure. Corporate margins are up with cost cutting. How much cost is their left to cut? As Vitaliy pointed out yesterday, corporate margins are very mean reverting in general and the environment is right for that to start.

The markets just act weird, manipulated. I get the strong feeling that markets are "managed," expectations are influenced, and central banks are buying riskier assets to make that happen.

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