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Buzz Bits: Dow, Nasdaq Dip


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

  • Principal Financial Group (PFG) reports 1Q EPS of $0.95 vs. $0.93 cons on revs of $2.66 bln vs. $2.63 cons.
  • Centex (CTX) reports 1Q EPS of (-$0.18) vs. (-0.03%) cons on revs of $3.67 bln vs. $3.50 bln cons.
  • Genworth Financial (GNW) reports 1Q EPS of $0.75, ex-items, vs. $0.77 cons on revs of $2.71 bln vs. $2.79 bln cons.

Trends - Sally Limantour - 3:33 PM

Interesting interview in Barron's with Hess and Associates from Inferential Focus who study subtle shifts in behavior and trends. Here's what they see:

Permeable Borders: Walls are being built around the world - Saudi Arabia is building a wall on the border with Iraq. China is building a wall with North Korea and the US is building a wall with Mexico.

This is the first time in the postwar period that the housing market has fueled the economy.
A lot can happen from the ripple effect in housing and corporate reactions to protecting earnings might be a hidden factor that could lead to other shock waves involving housing.

Military is increasingly dependent on satellite communications and they are getting more anxious about the vulnerability (especially since the Chinese knocked out one of our satellites in October). Dept. of Defense is building a whole new global-networking system similar to the internet called the GIG (Global Information Grid) with $34 billion being spent.
Some companies benefiting: Globecomm Systems (GCOM), SAIC (SAI) and Radvision (RSVN)

The need for collaboration tools is growing. Online video and teleconferencing is a trend with Cisco,(CSCO) Citrix Polycom (CRXS), Optelecom (OPTC) and iLlinc (ILC) all companies in this field.

Gold Bug Alert - Jess Thompson - 12:39 PM

Last Thursday, I said "If this break is a buying opportunity...price should regain the 680 handle (June Gold futures) by the close on Friday."

Weakness often begets weakness; and strength more strength. The reason my firm wanted to key off the 680 handle was to see if weakness was being facilitated or rejected. By Friday's close, bug buyers were golden, bidding up the yellow stuff and meeting that 680 performance demand with a close of 682 and a rejection of offers below 680.

At minimum, that forestalls aggressive sellers for a spell; at best it tips the order flow back in a skyward direction.

My firm's analysis shows a decent amount of swing freedom for bulls because we see no offers in large size until 690-93 (68 to 68.30 for the Gold ETF). Caveat: Silver's despondency may undermine the bullish case near-term (more about that below).

What bulls do not want to see (What bears do want to see) Part 1: In order to negate a rally back to the 690+ handle or higher, bulls do not want to see a stalled rally at the 685 handle and a lower close today -- which is then followed by offers coming back in tomorrow (Tuesday, May 1) as supply, near the 680 handle. That would put stops below last week's low within clawing range of bears.

To wit, 680 (Jun futures) needs to develop as support this week not as resistance to attract bids.

What bulls do not want to see (What bears do want to see) Part 2: Gold's sister, July Silver had a more damaging break last week and that may be a tell suggesting the precious metals sell-off has more downside in the offing.

July Silver's pause here is unimpressive so far -- not showing any significant resilience as of midday Monday, which may prove to undercut tentative bids in Gold if Silver breaks to new lows.

Whether Silver breaks out up or down from this tight congestion and the spillover effect, if any, into the Gold ring is simply unknowable at this juncture.

Looking forward, my firm's performance demand for a validation of a more bearish scenario pivots on whether July Silver can demonstrate a lack of resilience by not being able to trade back to a 13.94 or higher print by the end of the week. If so my firm expects Silver will be offered more aggressively on any rally in early May.

Around the Horn Perspectives - Jeff Macke - 11:53 AM

Some of the flow as I continue to dig into my Monday...

  • Interesting that Wal-Mart (WMT) is planning on expanding into corner stores. Not interesting in a "boy, I'm sure happy I got onboard the value-trap that is Wal-Mart" way. More like "Gosh, how many corner stores do you think it's going to take them to make a dent in a billion-dollar-a-day company?" way. For perspective, 7-Eleven was doing about $43 billion out of 30,000 stores before going private in 2005. So, if Wal-Mart becomes the biggest convenience store on earth it'll add about 10% to its top-line and somewhere between 10% and nothing to its stock price.

    Just when you think all the bad news and failed initiatives are "in" Wal-Mart's stock, the company goes ahead and jams a few more in there for you.

  • I'm insanely fired up for the Oscar DeLahoya - Floyd Mayweather fight and I'm not alone. The pay-per-view numbers for the HBO division of Time Warner (TWX) should approach all time records for boxing on home TV; somewhere around 750,000.

    In case you're thinking of getting more bullish on HBO owner TWX because of these results, keep in mind that Vince McMahon's World Wrestling Entertainment (WWE) does 50% more than that for bad Wrestlemanias.

    Were I a betting man I'd take Floyd by late round knock-out, though I think Oscar puts him on the mat early.

Even more "random" than usual... - Fil Zucchi - 10:54 AM

As the "bad me" tempts the "good me" to leave the tickers for the fairways, I'm noticing the following:

  • Uber spec energy play Gastar Exploration (GST), whose management has provided more than a few "head-scratchers" of late, appears to have gotten one right by raising capital through the sale of assets rather than diluting already peeved shareholders. Comforting too the fact that Chesapeake Energy (CHK) now owns more than 20% of GST.

  • While I was planning to remain patient and wait for the low $40's to get back into Akamai (AKAM), further thought about the big picture has pulled me in "right here right now," should it continue to head south I suspect I'll just have to average down.

  • Not sure how anyone can read anything positive in the recent housing data, but a recurrent theme I hear is that things are "stabilizing." I suppose stabilizing is a relative word and one could argue that hitting ground head first after falling off a cliff "stabilizes" you. Hence I would note that the just reported three-month annualized Y/Y decline of 13.2% in residential construction spending is nominally better than January and February 18.2% and 17.2% drops. However, while until a couple of months ago data still compared to pre-bubble peak performance, the current comparisons are against data which had already taken some pretty good hits. For reference, here is the chart of housing starts.

  • Minyan BM asks if today's bid for the International Securities Exchange (ISE) - which operates and electronic equity options system - means a re-evaluation of FCStone (FCSX). I suppose that it can't hurt, but IMHO the ISE and FCSX are rather different animals, with FCSX being in a far superior macro niche.

  • Quintana Marine (QMAR) signs yet another lease for grains transport with Bunge (BG), guaranteeing bookings of about 74% of its current fleet for 2009, after being almost completely booked for 2007 and 2008. That, Minyans, is what you would call "visibility."

Position in CHK, GST, AKAM, FCSX, QMAR, BG

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