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Buzz Bits: Dow and Nasdaq End in the Red


Your daily Buzz & Banter highlights.

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

There's Blood in the Street it's up to my Ankles - Todd Harrison - 3:34 PM

Minyanville is a community that streches throughout 110 countries around the world. German Minyans. Brazilian Minyans. Costa Rican Minyans. Australian Minyans. It's like the Bubba Gump Shrimp offering with human capital taking the place of crusteceans.

While we're all different, we share a common DNA. Folks that believe there's a right way to live life, surrounding ourselves with people we trust and trying to serve the greater good. It's a noble goal but one we've embraced. Sometimes you need to believe in something, particularly the notion of eachother.

The reason I bring this up is that I continue to field email after email and call after call from frustrated folks. Some are looking for jobs, others are tired of them. Most all of them are at the end of their proverbial rope, tired of fighting the good fight. It's tough to stomach as many of these people are "friends," good people with the right type of moral compass.

In 2000, I penned a piece called "The Long Hard Road" that spoke to the looming liabilities of Wall Street. We followed it up through the years, monitoring societal stress and keeping our fingers on the pulse of the street. We spoke to the risks in the system while we were marching to new highs, asking the same questions that politicians are asking this week.

I don't profess to have answers but sometimes sharing fare allieviates angst. No, you're not alone and yes, it'll likely get harder. That's the world we live in and the hand we've been dealt. Tenacity, perserverence and resolve were the hallmark of yesterday's success and they're the roadmap to tomorrow's survival.

I continue to feel like we're gonna see a massive move and, gun to head, it'll be lower. There are two sides to that trade, however, particularly if further socialization leads to continued hyperinflation. In that scenario, "good" markets don't necessarily equate to better times. It's an unnatural concept to digest but one that is becoming all too familiar with time.

Capital preservation, debt reduction and financial literacy remain three things we'll need to know as we find our way through this fragile fray. I offer this without vice or virtue and in the interest of mutual benefit. I, like you, have a lot on the line and we'll find our way step by step, day by day and Minyan by Minyan.

May peace be with you.


Pour some sugar on me ... - Ryan Krueger - 2:50 PM

I buzzed a few times in '07 about my taste for Sugar.

To answer some questions after its sharp rally, yes I am still long and have added to positions while raising stops as always. Unlike some of its cousins in the fields, Sugar's price is at a different place historically.

Below is the other side of the very popular notion that "the relentless run in commodities is a bubble and they are all overbought." (you'll hear a different version of this daily for I'm going to guess a very long time)

Here is an inflation adjusted historical chart of Sugar prices. And remember, that's before we started trying to pour it in our car as well.

Click to enlarge image

On another note, my trader -- who's been around long enough to have seen the size of these daily moves equal what entire contracts were once worth -- was successful at a major brokerage firm before it and many others shut down their entire commodity divisions. Not too many of that type of closures often correlates with bubbles. Think they regret worrying about where the real risk on their books was?

Position in sugar

Where there is fire, there is pricing power... - Kevin Depew - 2:30 PM

I'm looking at Del Monte Foods (DLM) up almost 10% on the day. The reason? Largely because this company has some degree of pricing power. In the consumer fruit, vegetable and tomatoes segment the company said it expects pricing to fully offset costs in fiscal 2008. The company is continuing to battle increases in segments such as seafood and pets, where pricing actions have been less effective, but it appears the effectiveness is less a pass-through issue than a rapidity of the cost increases issue. More pricing action is forthcoming.

Notably, DLM says it expects some 4Q softness in vegetables as its customers have bought forward in advance of our mid-January price increase. This is one of the first companies I've followed in the space to note customers pushing forward purchases.

Even Heinz (HNZ), which earlier this week said it had been able to pass through partial price increases to offset rising raw materials costs, has at least some pricing power.

This sector is full of companies I believe can be owned both for defensive purposes and for the possibility that commodities prices are peaking here. These price increases will not roll back in pace with a decline in commodities prices, and that should leave many of these companies well positioned in the second half.

The negative equity blues... - Minyan Peter - 12:36 PM

Coming out of JPMorgan's (JPM) analyst conference, Goldman's analyst wrote "With 10% of its home equity portfolio having a CLTV (combined loan to value) greater than 100% (negative equity), the [home equity] charge-off rate could go as high as 4% if house prices decline 10% nationally."

In the same piece, the analyst also wrote, regarding credit card losses, "indications from management suggest that net charge-offs are moving higher and they reiterated that the charge-off rate is likely to approach 4.5% in [the first quarter] and could climb to 5% in the back half of the year."

I share these comments from JPMorgan together to demonstrate an important theme: the unprecedented convergence of "secured" home equity loan loss rates with "unsecured" credit card loss rates.

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