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Buzz Bits: DOW Dips Below 11000 Again


Your daily Buzz highlights...

Mid-quarter Update - MV News - 4:03 PM

In its mid-quarter update, Texas Instruments (TXN) guided Q1 EPS to $0.31-0.33 vs prior guidance of $0.29-0.33 and revs to $3.22-3.35 bln vs $3.11-3.38 bln prior guidance.

The company sees Q1 semiconductor revs of $3.15-3.28 bln vs $3.05-3.3 bln prior.

My name is Jeffmacke and I use a Macintosh. - Jeff Macke - 3:27 PM

(APPL) may be broken, stockwise, but as of yesterday's purchase of a Power Mac G5 I am officially, 100%, can't-deny-it-anymore an Apple convert. I don't like the stock and I loathe to be associated with the cult of Steve Jobs but the computing experience is simply better. I may have to short the stock, as a sort of Psychic Hedge, such is my shame.

Speaking of Jobs and his silly-rumored acquisition target, Disney (DIS), the theme parks have announced the incorporation of a biometric identification system, for park goers with multiple-day passes. While this solves some of the logistic issues, the use of such technology is creeping some privacy folks out a bit, as you can read here.

It's good to see the parks shaping up a little bit but, after spending more time than I wanted to at the Apple store yesterday, I'm not sure Apple is the best place to look for Customer Through Put solutions.

Commodity Drop - Tom Peterson - 2:59 PM

Today bonds are selling off again, which is part of our scenario for rates to break out of course. This and the nat gas weakness are impacting utilities, which is also in accordance with our view that the Utilities had the peak in their rebound in January 2006 (see Jan. 24th BER alert).

Some are wondering how we can have bonds drop while we have almost all commodities dropping hard as well. The explanation is - this is a sign of important long-side liquidation by investors. The 'warning shot' appears to have been fired on Tuesday Feb 28th. Now we have more follow-through selling. There has been some decent-sized program selling today to back this idea up.

Re Gold: our scenario continues to unfold. On the XAU there is an important trendline using the 2005 lows that comes in around 120, but we're using 122-125 as our target. Word from the pits today is that some sellers who sold a while ago and have been absent are now returning to dip their toes in modestly. This is great confirmation we're on the right track.

Mini-Minyan Mailbag - John Succo - 2:23 PM


With the ten year 'breaking out', many rate-sensitive areas aren't doing that well today. However, the real estate ETFs ICF and IYR are strong. Is there a simple explanation?

Minyan Ron

MR -

The simple explanation is there are just too many dollars and the world is tiring of them (debt).

We are currently in a stagflation profile in the U.S. either heading for deflation or hyper-inflation.

Thanks Alan and Ben!


Coming up on first round of 10's - Bennet Sedacca - 12:20 PM

See the chart here of the yield of the 10 year note. You will notice the 4.88-4.90% area is the 'first line of support' and will likely be defended. By the time it got there (if it does, the market will likely be 'oversold in terms of price' and 'overbought in terms of yield' at that time. But remember two important traits of bear trends:

  • Support exists to be broken, and...
  • Bear markets get oversold and stay oversold

While the new 'on the run' 10 year note is 4.72%, note the last several issues of 10's are nearer to 4.8%. So, as I suspected, we are moving quickly now that support has become MAJOR Resistance. As a trader, I suppose that is where one might cover shorts. As investors (as we are), it is simply a possible pause before we see a 5 handle across the curve. Not advice. Just a hunch.

Positions in short-term treasuries

Prognosis: Negative Equity - Kevin Depew - 10:48 AM

Housing, and more housing.

According to housing data compiled by Merrill, the median price of a newly built home at $238,100 is basically flat since February 2005. While median single-family home prices in the resale market are up 13% year-over-year, this hides the fact that they are lower now than they were in June.

Merrill found the following statistics on the idu)/">LoanPerformance web site:

  • 17% of properties with ARMs have negative equity right now.
  • 29% of those who purchased or refinanced in the first three quarters of 2005 have negatvie equity right now.
  • 8.4% of those who purchased or most recently financed their first loan in 2003 now have negative net equity.
  • Looking at the entire homeownership segment, a 10% turndown in real estate nationally, which would take prices to year ago levels, would put 17.7% of homes in negative equity positions.

Did anyone else happen to notice that the entire New York Times magazine this past Sunday was devoted to real estate? "What could be more solid, more firmly rooted, than real estate?," the magazine asks on page one. "This week, we devote an entire issue to the topic of real estate and how it changes us."

Early morning randoms - Fil Zucchi - 8:16 AM

  • An anecdote here , an anecdote there . . .
  • We are only one large baby bell away from getting Ma-Bell back. Has anyone made any money – other than the investment bankers – in the process?
  • One thing is certain: just when I was about to dig into whether last week's moves in bygones like Ciena (CIEN), Finisar (FNSR), and JDS Uniphase (JDSU), might have had some real possibilities behind it, the T/BLS merger has saved me a whole bunch of digging. When the merger's press release talks about synergies in the IP network, telco tech players better make sure they know the location of the closest exit.
  • According to uber-trader Brad Sullivan, last week's selling smelled of long liquidations, i.e. the bad kind of selling. Could Hoofy and Snapper's "can't get them down" tune, turn into Boo's "they can't get 'em up" song?
  • On the News & Views page you will soon see the first edition of "The Small Cap Recap." It'll be a weekly column looking mostly at fundamental and/or technical ideas in the small cap world . . .with the occasional macro rant.
  • The NY Times reports that internet carriers are thinking about charging higher fees to large users of bandwidth in order to ensure prompt delivery. Am I having a deja-vu all over again moment as to Akamai's (AKAM) original business model (i.e. caching content at the edge of the network to minimize bandwidth costs)?

Position in AKAM

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