Buzz Bits: DOW Back Above 11,000
By Jonathan L Schwartz Mar 08, 2006 4:52 pm
Your daily Buzz highlights...
Earnings Report - MV News
TiVo (TIVO) reported Q4 EPS of ($0.23) vs ($0.24) cons on revs of $46.96 mlnvs $45.25 mln cons. Stand alone net sub adds were 183k vs 130k exp.
Flashback! - Bill Meehan - 3:38 PM
This day in market history...
- Closing levels 6 years ago
- DJIA: 9,856.53
- Naz: 4897.26
- S&P 500: 1366.70
- Crude: 31.22
- Gold: 288.25
This day in Minyanville history...
- In '04, following 2 months with no PPI report, Prof. Succo asked Where's the Number?
In other news...
- In 1971, Smokin Joe Frazier became the undisputed world heavyweight boxing champion by decision over previously undefeated Muhammed Ali.
Stress Test - Vitaliy Katsenelson - 3:16 PM
In February, Greg Weldon warned Minyans about Japan raising rates. The fallout from this may lead to higher interest rates world wide, including the US of A. Higher interest rates in Japan may attract capital from other countries which may lead to higher interest rates as investors will be selling bonds to buy Japanese bonds. However, even if Japanese rates rise they'll still be below the world average.
I hate to sound like a broken violin (I make up my own expressions) but investors need to stress test their portfolios for higher interest rates. Housing stocks and discretionary spending stocks come to mind as being the front line casualties.
Mini-Minyan Mailbag - John Succo - 1:23 PM
Truly the largest problem facing humanity is its need for energy. How we can be in the current situation (high oil prices, obvious signs of topping reserves, etc.) without societies mobilizing to address the serious, no, catastrophic impacts these issues will cause is stunning in its stupidity. Apparently we are incapable of planning much beyond next week (or the next election cycle). Mr. Practical is quite savvy, but I would expect that of someone who steps back to see the larger trends.
Revolutions are nothing new, Mr. Practical taught me that. Self-interest builds imbalances over time.
Imagine a world where there is perfect transparency, where we know how some of our leaders are making money, how wealthy they are and how they "obtained" that wealth. There would be nowhere to hide and problems would be resolved much quicker.
But I am dreaming.
Fire drill!! - Fil Zucchi - 12:23 PM
With the precious one getting drilled for what feels like $1/minute, we are now in the low 120's for the Philly Gold (XAU). 200 DMA is at around 111. My sense is that Boom Boom is prolly watching the screens and thinking: "If I keep tightening, the debt pile blows up in my face and financials, real estate, etc. . . are toast. If I take a ride in my chopper and make people think they are rich again . . . traders who are passing on today's "precious" prices will fork their hands into a piece of swiss cheese."
I am repeating the same mantra of deflation vs. hyper-inflation that's been mentioned at least once a day in the 'Ville for the last 2 years - at least. What has driven Boo to talking to himself in frustration is that up to now the markets have defied the logic of our mantras. But the historical correlations between interest rates, precious metals, commodities and equities, seem to be coming back into order just as the boat is tipping with players counting on the non-correlation to continue.
Be careful out there.
Position in XAU
Eye on Gold - Tom Peterson - 12:13 PM
If you're wondering about gold, refer back to this piece I wrote, and the following excerpt from my report on Feb. 10:
"...We thought there would be a free look bounce from the 34-day e.m.a. and we said to watch for divergences between gold, the HUI and the XAU. One should have noticed that despite yesterday's large rally from the 34 day e.m.a. the XAU and HUI did not respond very well. In addition, sentiment never really had time to get bearish enough on the break (but we will see bearishness in the future this Spring, we think)..."
I also revisited this on the Buzz this week.
Do you that see the 34-week moving average is lining up with the trendline off the 2005 lows? I think it may turn slighlty above there - I'm encouraging people to think in terms of 122-125 as a potential bottoming zone, but to be exact we're waiting for the right setup in the oversold oscillators and will alert people when it happens.
I will put together another update shortly.
Position in gold
Update: Ken Langone is still Angry - Jeff Macke - 11:43 AM
Charlie Gasparino had a great interview with Ken Langone on CNBC this morning. Minayns will recall Mr. Langone for his noteworthy, indeed refreshing, insistence on taking business personally. The NYSE (NYX) is now public and Mr. Langone now has allies on the NYSE board which hung Langone out to dry for months as "the only person on the board who knew what Dick Grasso was being paid, but Ken is still angry or, as he himself put it, "ready to rumble."
Not for the first time I find myself thinking the world would be a more interesting and productive place if we had actual candor as a communication standard.
Speaking of which, Minyan Lonnie Smith writes: "Knucklehead: The Braves lost to the Twins in the 1991, not the 1990 World Series as you claimed."
You're right and thanks, Lonnie. No excuses here but, in fairness, I could have named just about any other year of the 90's and the Braves would likely have lost the respective World Series. Thanks for the correction, Lonnie, I hope you find your way "home" soon.
An Offering They Can't Refuse - Adam Warner - 11:11 AM
NASDAQ is not taking this NYSE cowbell celebration lightly, unless having Uncle Junior ring their bell is a mere "coincidence."
Nice early option volume in the "new" NYX. Volatility sits in the mid 50's, an average level over the course of time, although it feels on the low side in the very short term as this animal tries to settle in here.
The newly minted shareholders, formerly known as seat holders, can start unloading in 6 weeks. So that's something to keep on the radar if for no other reason than it should knock volatility down a few pegs.
Why doesn't anyone like me anymore? - Jason Goepfert - 9:32 AM
More signs of increasing risk aversion despite a flat/rising market...the Investor's Intelligence survey reported another increase in those bearish on the market, and that bearish percentage is now the highest since the spring of 2003.
As I've noted previously, this is very odd behavior - we just don't see traders become more bearish as equities in general rise. When we do, it has not always preceded a major bull run like the "wall of worry" theory would have us believe. In fact, those times that it did result in a rally, the gains were given back within half a year every time.
Another possible sign of this was seen yesterday. The DJIA closed positive on a day that NYSE breadth was skewed 3 to 1 negative for only the third time in 60+ years. The other two times were 02/22/80 (after which the S&P 500 lost 13% of its value over the next month and a half) and 08/25/81 (after which it lost 9% over the next month).
Mini-Minyan Mailbag - Bennet Sedacca - 8:33 AM
Your stuff is a pure joy -- completely un-tethered from anything other than your experience and your fiduciary instincts. I see a theme there when I read the 'Ville. If I might, I would like to ask a fixed income question. Suppose, as Jim Grant and others I respect have posited, that something, man made or otherwise, causes the fed funds futures to be wrong. Jim Grant states that fed funds futures or Eurodollar futures are good vehicles by which to express this view. Could you illustrate (not recommend) which vehicles an investor could purchase today to achieve a maximum payoff in the event the fed funds rate is (much) lower than expectations 6 months hence?
It's a vague question and you might feel differently, but one thing is certain, central banks will print and panic at the first hint of trouble. Heck, the printing part goes on unabated without a quiver in things -- which in fact creates the moral hazard that they risk having to live up to. But I digress. Keep up the good work and thanks
Once again, thank you for your kind words. There is only one vehicle I can think of that would TRULY benefit from lower short term-overnight rates, if I get your question right. Obviously, you can just buy two-year notes as we have and they just 'roll down the curve.' The next possibility is more of a 'keg of dynamite.' It is in the world of mortgage derivatives and is an 'inverse floater.' Please note our firm does NOT use derivatives for our clientele, and I am not recommending anyone does. Basically, the security moves a MULTIPLE amount that rates decrease, but in the opposite direction - resulting in a HIGHER COUPON IN A FALLING RATE ENVIRONMENT. These are highly risky, highly illiquid bonds with large spreads. But they would get the job done. Definitely not advice, but thanks for the insightful question.
PS: Will they print money? You betcha. Like crazy. The ongoing deflation versus hyperinflation debate amongst a few of us professors (names held to protect the innocent!).
Position in various Treasuries securities
Pork Bellies, I knew it! - Todd Harrison - 8:15 AM
I settled into the MVHQ digs this morning and powered up my eight screens. What jumped out? The slippage in commodity land. Front month silver futes are off 3% (below $10), gold is down seven bananas and crude is meandering back towards a 60 handle (-60 bips).
Does this "matter" given the eye-popping run (and quick and dirty corrections) we've seen over the past few years? It might....
We've been eyeing CRB $320 as an important technical level. Not just from a "stuff" standpoint, but in the context of our current conundrum. As my thinking goes, we must either turn the printing press on overdrive and flood the market with greenbacks (to keep asset classes inflated) or take our foot off the gas (which is dollar friendly but will deflate stocks, commodities, schnitzel, Ranger tickets and anything else "supply/demand").
Technicals are but one of four primary metrics (and therefore not absolute). But if CRB 320 falls, we will break both the 200-day moving average and the trendline that has supported the commodity craze since the 2003 bottom. And that could be an early flag the equity bulls may be caught offsides.
No positions in stocks mentioned.
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