Buzz Bits: Week Ends on a Down Note
Your daily Buzz highlights...
WIT News-Not Widely Disseminated Out Here - Sanjay Somaney - 3:47 PM
Wipro (WIT) has won a $80 million contract from Indian banking major HDFC Bank (HDB). That is the largest Indian outsourcing deal for WIT in its history. The deal requires WIT to set an IT infrastructure on a build-own-operate basis for existing and upcoming branches for HDB.
That's another area that analysts have not been picking up on. Corporate India is sending more and more business to the Outsourcing/IT/BPO comapnies in order to lower costs of setting up their own in-house facilities.
This news has not been widely disseminated here in the US of A. I heard that it was out on DJ as part of their Asia coverage.
Position in WIT, WIPR
Eye on Banks - Jon Doctor J Najarian - 3:27 PM
I've been on vacation in the Dominican Republic, but have returned rested and ready to rock and roll!
Over the past two sessions we've noticed unusual activity in Bank of New York (BK). Both stock and options have been hitting our Heat Seeker program that ferrets out the unusual buying of institutions.
Chase CEO Jamie Dimon wants those BK branches pretty bad and strong institutional buying is telling me that JP Morgan (JPM) may have to deal with a competing bid, meaning either Jamie pays up to close this deal or someone else gets the branches at a higher price!
UBS said they see the possibility of Wachovia (WB) or PNC stepping up to the plate, and our Heat Seeker confirms that with the active speculative buying of the BK April 35 calls, where 26,081 of the calls have traded and all but 50 of these calls were bought on the offer!
The calls are up $.15 to $1.50 today, but with BK trading up $.10 to $36.02, this is still a cheap shot. The open interest is 16,876, so the action cannot be simply shorts covering. Hmmmmm. ;-)
Long positions in BK
Flashback! - Bill Meehan - 3:10 PM
This day in market history...
- Closing levels 8 years ago
- DJIA: 8,799.81
- Naz: 1,835.68
- S&P 500: 1101.75
- Crude: 15.75
- Gold: 301.00
This day in Minyanville history...
- In '05, Toddo told us his tale of Mother Morgan as Morgan Stanley began a bit of turmoil
In other news...
- In 1918, daylight savings time went into effect for the first time in the U.S.
Speaking of the Utes that continue to wretch.... - Bennet Sedacca - 2:42 PM
As you can see, we are coming up on various support zones. The 'oversold line' - the one at the bottom of the channel and also the bottom from a few months back. We are NOT utility analysts, we just understand the significance of them. I think they will pause in here somewhere, so if you were short, 'cha-ching' - could be in order. For a trade, it could just be a temporary stopping point. I don't know, honestly.
In my brain, it continues to underscore the cancer in market, confirms nastiness in bonds, yes higher yields DO MATTER (off the run 10's are just around the double top of 4.88-4.89%) and off the run long bonds around 5.08%, so the nauseating factor is growing - and barf not far behind I imagine? Will we buy then? Most likely. I just want liquidity if I am wrong - entirely possible. What would we buy IF WE BOUGHT? Likely the 10 year note. I like liquidity and safety in strange worlds. Easy to exit if we're wrong, plus it goes with our theory of a blowout in credit spreads.
Backing up our buddy Bennet on Utilities - Phil Erlanger - 2:01 PM
Our rank on the Utility Sector remains 17 out of 18 week over week. There is light short selling for Utilities as the short intensity is 39.19. Twelve percent of Utilities are in a dreaded long squeeze and 6% are in a short squeeze. Notable long squeezes include D, PEG, CEG, AYE and TXU.
Sure enough Utilities were weak in our work during 2000-2002. The UTH and the XLU could be an easy way to hedge our bet against this sector going forward.
Mini-Minyan Mailbag - Todd Harrison - 1:09 PM
"Hi Toddo, Thanks for the interesting discussion on the metals the past couple of days. I really dig the new site! You nailed that top yesterday morning. PAAS is down over 8% from that point! My question regards the article about the election in Peru. NEM has not participated well in this rally at all. In fact, with Gold at 20+ year highs, NEM is $10 off its 52 week high. How much of the scare about the election do you think is already cooked into the share price? What signs would you look for to become bullish on metal equity shares again? Thanks, Minyan Jeremy"
Once again, I'll offer that it's better to be lucky than smart, which is what I view these recent sales as. I don't claim to be a metal analyst and I certainly don't have insight into the Peruvian election. I'm simply trying to trade around a group that I believe is in a secular bull market.
There is risk to this approach--as I learned the last few years in energy--but I'm trying not to let the 'fear of missing' dominate my thought process. If Newmont gets hit hard on the election--I plan to buy that weakness. Again, one step at a time as we watch the script dynamically unfold.
Good luck, my friend.
Oh So Pretty - Jeff Macke - 12:59 PM
Say what you will about the negatives of New York City, it is unquestionably the greatest place on Earth for a guy who just wants to caper down the street singing "I Feel Pretty" without drawing a lot of stares. Having eaten my share of a very thoughtful box of Break a Leg cupcakes just presented to me by Todd-O, Luscious and the rest, I'm feeling well and truly energized for a crowd pleasing (at least to those who notice) afternoon reprise as I continue to prep for tonight's Fast Money.
We'll be discussing stocks, natch, as well as NCAA hoops "from the strictly theorhetical viewpoint of someone who lived in a state or country in which it was legal to 'wager' on the games." It should be great television though, I must confess, I'd be a bit more comfortable going into it if only I knew Pete Rose, Art Shlichter or any other degenerate who would casually denigrate the sanctity of our national sporting rituals by placing a wager on their outcomes.
In the absence of such hands-on research I suppose I'll just have to fake it as prettily as I can manage. Tune in to On the Money tonight at 7pm to see if I can pull it off and/or manage to change the topic to this weekend's REAL sporting classic, WrestleMania22 (for the record, I'm picking HHH to score the One-Two-Three over John Cena).
Un-Rolled Gold - Adam Warner - 10:47 AM
You would think Newmont (NEM) option volatility would lift a bit, given the rather unsettled action in the commodity itself. Think again, it really has gone next to nowhere. More Compression with that morning latte?
I do look at many "objective" measures of volatility, but I also add a ton of subjectivity to it as well. A simple way to look at it is when the volatility of something *should* rally, in my humble opinion, and it fails to, I take note. And I am taking note of gold after this option non-reaction.
Position in NEM
Looking at GDP - John Succo - 8:57 AM
The Wall-Street Journal reports that corporate profits accounted for 11.6% of GDP, the biggest contribution in 40 years.
Is this good news?
Another way to look at it is that personal income as a percent of GDP is dropping. Corporate profits are growing relative to personal income as a percent of GDP.
We know that personal income growth is actually dropping.
Overall corporate profits have been decent, but not thrilling. Where has corporate profits growth come from?
Almost all of it is coming from two places: cost cutting and share buybacks.
Per share income for IBM was 16% higher in 2005 than 2000, but the actual amount of net income was 2.5% lower. Only by retiring shares (essentially borrowing money at low interest rates) has IBM been able to show per share earnings growth.
Position in IBM
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