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Buzz Bits: Markets End The Week Lower

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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.


Out Like a Lamb - Jeff Macke - 1:21 p.m.

Greetings from Lazyville (population: me) where the most volatile, worst, quarter in years is winding down in a predictably unpredictable way by being almost completely flat, albeit working lower. Here's what I'm watching and toying with as I work my way towards the end of the week:
  • Did I say I wouldn't bet against a "plus-200 Dow kinda close"? Wow... that was a lousy call. With the financials and retailers looking punk and the rest of the tape looking "blah" I wouldn't bet on much of anything from here to the close.

  • We're not totally devoid of enthusiasms, however. "21", the film version of the wildly popular book "Busting Vegas" is out today. I haven't been this fired up since National Treasure: Book of Secrets... Which seems like faint praise until you remember that I'm not actually long stock in the company making 21 the way I am NT's Disney (DIS)

  • Speaking of things exciting, the WWE's (WWE) WrestleMania hits the small screen this Sunday. I've seen more than my fair share of WrestleManias over the years; the smart money suggests I'll end up getting lured into this one as well.

  • JC Penney (JCP) and the rest of the retailers are really really taking down estimates. It sets up an interesting trading idea from a risk: reward view. To whit: "If the results don't simply stink it's an upside surprise; if they do stink, the retailers shrug and say 'we told you so'." Either way, it could make for a 2Q trade, if not business for today.

With that I'm off to the Big City for the final Fast Money of the week. Have a great weekend Minyans and buckle up for what figures to be another bouncy quarter starting Monday.

Position in DIS


Focus on Reality - Woddy Dorsey - 12:05 p.m.

Investors and markets are, at heart, psychological, and would do well to stop reading Wall Street Journal-ists and read from, say, Meister Eckhart and Extraordinary Golf.

Eckhart advises "disinterest." If you can cultivate a relative "disinterest" in your positions, you may discover a new kind of financial freedom. That is, freedom from your subjective investing self. The folks from Extraordinary Golf demonstrate that the golf swing becomes more obvious, or revealed, once you stop believing in your swing stories and simply see how you are actually swinging. When you stop believing in market stories, the market may become more obvious too.

For example, did the Cisco (CSCO) earnings really "matter?" Maybe we should ignore the market story du jour and focus instead on the development of the next phase of the market profile: what the market will do.

Purgation is the "emptying" of the market. This sort of "healing" occurred in August of 2007, January of 2008 and most recently on March 17th. Purgation results in the purification of risk appetite. Note in the chart below that the market has had a rare double purgation.


Click to enlarge


There have been two episodes of acute "puking," as identified by a series of extremely low readings in the daily Semiotics Stock Sentiment. This sort of double purgation typically leads to a compound rally. Stocks have put in a tactical bottom and will recover higher into April 20-ish.


Market movements across currencies - Prier de Plessis - 10:50 a.m.

With the wild action in the foreign exchange markets of late, I thought it would be interesting to look at some global indexes and compare their performance across currencies.

Whereas the local currency comparison seems to point to the S&P 500 Index and the Dow Jones Industrial Index having fared relatively well, this is simply a weak U.S. dollar illusion. Once the returns are converted to reflect a common currency such as the U.S. dollar or euro, the situation changes completely and the U.S. markets are right in the thick of the declines.

Furthermore, the idea of global economies decoupling from the U.S. remains a myth. The bottom line: In times of crisis, correlations between stock markets increase and there is nowhere to hide.


Click here to enlarge image



False Beliefs - Mr. Practical - 9:40 a.m.

With all the problems in the US banking system, it's easy to forget some of the old ones that are just as important and growing. For example, many pensions are underfunded and earnings for companies are still being boosted by bad assumptions.

As interest rates have gone even more negative and even the best money managers are losing money, still pension managers seem to believe they will earn 7% on their assets consistently going forward. Imagine the risks they must be taking to assume they're going to make 7% on their money when 5 year treasury rates are 2.5%!

This sounds like a small problem but with 25% of earnings at S&P 500 companies coming from pension assumptions like this in the 1990's, imagine what is going on now?

Before you buy a stock make sure you understand the quality of earnings you are buying.


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No positions in stocks mentioned.

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