Buzz Bits: DOW, Nasdaq Mixed
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Earnings Report - MV News
Chipotle Mexican Grill (CMG) reported earnings of $0.16 versus a net loss of $0.14 on revenues of $173.3 million versys $127.5 million. First call estimates were for earnings of $0.11 on revenues of $169 million. Q4 comps increased 14.3%.
Mini-Minyan Mailbag - John Succo - 3:01 PM
I really enjoy your writings as you (and all the profs) always make so many wonderful thought provoking comments. One thing I love about Minyanville is how interactive it is, it feels like I am back in school. Although this time it is really exciting!
Your latest comment about central banks buying risky assets made me think of several questions I was hoping you could comment on. What assets do you think central banks should be allowed to purchase? Are there certain assets you think central banks should not be allowed to purchase? How do you define "risky assets"? Do central banks currently have any obligations to disclose what they have bought or sold? Are they limited in what they can purchase? Where do you get your information on what central banks are purchasing?
Thanks for any additional comment you can make on this topic.
First of all, I don't think there should be a central bank. So I think that answers the question which assets they should be allowed to buy: none.
The Fed (or any standard central bank) can print money (create credit out of thin air). Does it not smack of insensibility that an entity should be allowed to buy an asset with printed money? And the riskier the asset (like stocks) the worse it is: it crowds out private market asset allocation decisions and forces investors into riskier assets.
As far as disclosure, it is telling that the Fed is doing away with M3. They are becoming less and less transparent as they go about their destruction. Is there any rational, thinking person left that thinks the government is straightforward with the populace?
Coldman? Tell Armand over at the Greek Consulate! - Todd Harrison - 1:31 PM
A good buddy asked for my thoughts on Goldman and I told him that the financials are tough traders during earnings season. Why? Earnings, by definition, are backward looking while stocks in general (and the piggies in particular) trade on future prospects.
The yield curve and (trading) margin compression are obvious headwinds while a pick-up in M&A and the perception of an accomodative Boom Boom will likely put some wind back in the sales. But given the fact that GS is up 30% off the October low, we gotta wonder how much of that is already reflected in the name.
Bank Pains - John Succo - 11:45 AM
As investors nonchalantly buy stocks and take more risk, Martin Feldstein just put out a paper that basically agrees with our macro picture of what is really happening.
Capital inflows, much needed to finance U.S. consumption and keep the debt ponzi going, are not being supplied by private investors who decide that the U.S. is a good place to invest.
They are over-whelmingly being supplied by central banks.
There is no excess savings. Central banks are printing money and sterilziing: using that printed money to buy first government, and now risky assets of the U.S. Private investors are being "cajoled" by government bureacrats to make asset allocation decisions they don't really want to make, but have to.
Doesn't this bother anybody else? Does everyone just blindly trust these bureacrats to make these decisions for them?
This is extremely dangerous in the long run.
Hot Spot - Adam Warner - 11:33 AM
Where is the hottest option spot in America? Clearly the ultra-sexy area of publicly traded Exchange shares. While the VIX struggles to memorize those bar mitzvah lessons, options on such high-flyers as ICE, ISE and now NYX sport volatilities in the 40's and 50's. And they justify every bit of it with their stock action.
But wait, it gets better, now that they are all public (well, except the AMEX where they are clearly studying the trend and getting ready to pounce any decade now.) it is time for Beach Blanket Merger Bingo. The NASDAQ was rebuffed last weekend in a bid for the LSE, but have no fear, they will be back. But they will apparently have to outbid the new NYSE and their high-flying new "currency."
Now I kid, but the last thing you want to do with solid volatility in a hot sector like this is get aggressive fading into it. The volatility I mean, I have no real opinion on how long it will be until the stock's themselves cool. NYX has a well-publicized lock-up expiration next month, but beyond that, no real catalyst out there pointing to when this concept runs its course.
Randoms - Fill Zucchi - 11:27 AM
- Congrats to the Orangemen going through my puppy Hoyas and on to the Big Feast Championship. Dinner for our fearless leader is on the house.
- Whole Foods (WFMI) needs to start digging into their inventory of Power Bars. Meanwhile fresh and much BIGGER dandruff is forming. Could it be that Safeway's (SWY) new (and far less pricey) "O" line of organic foods is starting to leave its marks? With still a 45 P/E . . .right hand up Minyans.
- Is Capital One's (COF) buying binge (first Hibernia now North Fork Bank (NFB)) a sign of confidence or doubt about its credit card operations?
- The Philly Gold (XAU) took a peak at the low 120's and and made a U-turn. Retest and and then chop around for a while?
- The Fed Fund futures are now pricing in a 50% chance of 5.25% by the August meeting.
Position in WFMI, COF, XAU
No Beast So Fierce - Kevin Depew - 10:52 AM
- The Dow has resistance at 11,100 that will not be broken on PnF basis until a move to 11,125, if/when.
- April Natural Gas is up 4% today, testing a potential new PnF "buy" signal at 7. That would be the first buy signal for Natural Gas since February. The primary downtrend line does not come into play until about the 9 area right now, with shorter-term resistance around the 7.60 area.
- Meanwhile, the fire department just stopped by and said not to worry about the natural gas odor permeating our building since 6:30 this morning.
- Network Appliances (NTAP) registered a TD-Sequential 13 sell signal last Thursday. A move to 32 would be a sell signal on aPnF basis.
- Scotto forwarded me an incredible article from the SFGate.com this morning. "Home Sweet Cash Cow - How our houses are financing our lives." Naturally, I expected the article to be a bearish take on cash-out financing. But no. "Home ownership isn't a road to dominion but a temporary investment you can enjoy," the author says without a shred of irony.
Knight Fever? - Vitaliy Katsenelson - 9:39 AM
Last week I was interviewed by Fort Worth Star-Telegram about Knight Ridder (KRI) and the chance of it being taken over. I speculated that it doesn't really make a lot of sense for a hedge fund to take it out as it would be buying a business that will begin to decline in revenue.
As I have written before, newspapers have seen their circulation decline over last couple of years, however, they still were able to raise prices. This is not a sustainable trend as advertisers are a smart bunch and will not pay more for less especially considering that their options have increased with internet advertising.
In the Star-Telegram interview, I opined that we'll likely see mergers between newspapers as this way they'll be able to increase economies of scale and cut costs in the process. Part of me itches take a second look at Gannett (GCI ). It looks very cheap, generates great cash flows (at least for now) and has a decent yield. Also, I am getting intrigued by radio stocks which are scraping along at multi-year lows; Westwood One (WON) comes to mind here.
FYI before I head to zzzzz land... - Laurie McGuirk - 9:20 AM
Wow, got the Friday/weekend pretty right, almost to the cent! Gold physical market is very strong and silver bounced straight off $9.71…. Hmmm.
Meanwhile, Gold looks like [Australian slang for "not so good"] and may hit 534 on the Comex open and close back at 544 by London a.m. fix on Monday. Just my take, not advice.
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