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Buzz Bits: Dow Creeps Up, Nasdaq Falls


Your daily Buzz & Banter highlights...


Editor's Note: This is a small sample of the content available on the Buzz and Banter.

Earnings Report - MV News

  • Google (GOOG) reports 1Q EPS of $3.68 vs. $3.31 cons on revs of $2.53 bln cs. $2.48 bln cons.
  • First Data (FDC) reports 1Q EPS of $0.24 vs. $0.23 cons on revs of $1.84 bln vs. $1.8 bln cons.
  • Capital One (COF) reports 1Q EPS of $1.62 vs. $1.97 cons on revs of $3.43 bln vs. $4.07 bln cons.
  • Advanced Micro (AMD) reports 1Q EPS of ($0.90) vs. ($0.47) cons on revs in-line of $1.23 bln cons.
  • American Express (AXP) reports 1Q EPS of $0.88, not comparable with $0.79 cons on revs of $6.67 bln not comparable with $7.11 bln cons.

China Overheating? The only solution is the exchange rate. - Lance Lewis - 2:41 PM

Regarding the news out of China this morning that its economy may be overheating: The only way that China is going to reduce its inflation rate is to allow its currency to float more freely and push the inflation that the US is currently exporting to them back on to the US. Interest rate hikes and raising reserve requirements are useless, as we have seen time and time again. Note in the chart here that the market appears to be thinking the same thing, as the dollar has broken to a new low against the Chinese yuan on today's news.

When will the Chinese move? Only the Chinese know that, but far from being bearish for gold, such a move would in fact be incredibly bullish for the yellow metal and extremely bearish for the dollar. The result in the US would be a higher inflation rate, reduced profit margins for US companies that produce goods in China or retail them in the US, and higher long-term interest rates. Of course, Heli-Ben told Congress that he would ease short-term rates in order to soften the blow if the Chinese ever sold US treasuries, so perhaps he would also ease if China were to float its currency too? The result of such a move would be even greater inflationary consequences on down the line.

If I had to speculate, I'd say that such a move by the Chinese will probably coincide with the US dollar index breaking 80, signaling the end of the US dollar being the world's dominant fiat currency, as has been the case for the last 30 years. Using that logic, one could assume that the closer we get to 80, the more the odds increase that the Chinese are preparing to move. Today, the dollar index stands at 81.63 and spot gold is just $16 from taking out $700.

Position in gold

Always Be Closin'! - Todd Harrison - 2:10 PM

It's been an active day in the City of Critters on numerous fronts. Clearly, the addition of Coops is a coup for ye faithful and his vibes are seamlessly fitting into our groove. The latest episode of Hoofy & Boo's News and Views is awesome, in my opinion, and it'll continue to get better. Lastly, we're in the midst of some high level discussions that are gonna continually improve the Critter experience.

Know this, Minyans, we're working for you. And we're working hard.

In other, market related thoughts...

  • The collective vibes on the semis and financials does not go unnoticed by these 'ol trading eyes. For my part, I'm viewing these evolutions through the technical context, with the aforementioned levels serving as market catalysts.

  • That the 'inside-out" view. From 40,000 feet, I continue to feel that the dollar is the level for asset classes in general. If it catches a bid, as Pepe has alluded that it might, all bets are off.

  • Expiration is certainly serving as an unforeseen underlying crosscurrent. While that's not gameable, per se, it's certainly worthy of a noodle.

  • With vols where they are (VXO 12ish), I'll again offer that there are ways to craft an advantageous risk reward regardless of your particular market bent. If you're a derivative newbie, please check out Professor Succo's most excellent option tutorial.

  • And finally, I must have written 10,000 posts to Minyanville since 2002 but it's amazing what resonates with ye faithful. I mean, honestly, if I get one more "get in line!" on Kate Beckinsale, I may deem her to be a crowded long!

  • eBay. Down 2%. Reaction to news vs. news itself.

  • Fare ye well as contra-hour is upon us!


Chinatown, The Sequel? - Jeffrey Cooper - 11:56 AM

It's the mother, it's the daughter, it's a test of the highs, it's a new leg up, it's Hoofy in drag, it's Boo in Prada?

Pick one from column A and B.

Seems everyone has seen this flick before--so no need to price in more risk again, right?

Hmmm, that's a disturbing consensus.

The market may be in a potentially more vulnerable position now if the rinse and wash from the end of Feb. was a warning shot over the SS Hoofy.

Why? Markets don't fall about of bed and stay out of bed on a break from new highs. Usually, they break and then according to the Principle of Tests stage a return rally to test the highs.

With the Buy the Dip learned behavior even more ingrained and shorts initiated in March smushed, the market is, from my perch, in a potentially weaker position now...

If, and it's a big if, this morning's lows are breached and the week closes near its lows, we would have some confirmation of a test failure.

So, watch your snouts while you're sniffing for truffles and 'bargains' lest you end up like Jack.

Technical Heads Up! - Cody Tafel - 9:38 AM

Catching up after being out of the office yesterday, so here goes…

First off, a huge welcome from a fellow newbie to Jeff Cooper…he's one of the best in the business and I've been a long time reader. You'll be hard pressed to find anyone better at determining the important levels in the markets, and some darn good swing picks as well! Welcome Jeff…excited to hear your views again…

Watch the Dollar/Yen!!! It's sitting precariously on the 200 day moving average at 118 and the recent uptrend line, a hard break and look out below…if it's not on your screen already it should be…

Some like it hot…China's economy grew 11.1% from a year earlier in 1Q…why am I not surprised?

The Nasdaq Composite is still not confirming new highs in the S&P 500 and Dow Industrials. Negative divergence can be a great signal for short term tops (and in this case, maybe longer term too…)

Buckle your seat belt…

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