Buzz Bits: Dow Gains, Nasdaq Slides
Your daily Buzz & Banter highlights...
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Fueled by Rage - Jeff Macke - 3:44 PM
Greetings from NYC where I've been to the Department of Motor Vehicles ("Regular" and "Express") three times and I still haven't completed my mission. If not for my long-standing calming chant I could really be worked up in a rageful way right about now. Things I'm watching while I chant...
- Wal-Mart (WMT) and Home Depot (HD) report tomorrow, Nordies (JWN) later this week. Which would I buy in front of the report? Gun-to-head: Home Depot. Since there's no gun being held, I'm just going to stay long Nordstrom.
- With three heads guarding the door to Hades, you'd think Cerberus would have been able to prevent his eponymous fund from plunging itself into the hell which is a Chrysler (DCX) turn-around.
- What happens when a fear of selling ("what if I miss another move?!") meets a fear of buying ("slowing everything")? Days like today.
Position in JWN
Buzz in the Afternoon - Todd Harrison - 3:02 PM
- Hello level my old friend, we're at 1500 yet again...
- That's the technical toggle, Minyans, along with our oft-mentioned piggy pokes (BKX 118, XBD 260) and our asset class proxy (CRB 310-311).
- I was at an event Saturday night with alotta hedge fund folks and while there were certainly some happy pusses, there was also a fair amount of angst. The haphazard nature of the tape, of late, is the likely culprit. Performance anxiety runs deep.
- The M.O. for the market show has been slinky days and strong closes. With S&P 1498 right here, right now, we don't have to guess. But we must respect the 2:1 negative breadth, along with the sell stops that surely reside on the other side of the ride.
- After paring some Goldenstar on the pop near $5 a week ago, I added some back today near $4. Feel free to hold me to task (for not communicating the pare) but I was simply trading around a core position and wanna stay long this particular name.
- This isn't the same as losing your car keys or misplacing your wallet. We're talking billions of dollars---billions---with a B. That's astounding.
- Next Wednesday, May 23, Minyans will migrate to the Miracle in Manhattan to hang with the 1980 gold medal winning Olympic hockey squad and talk tape with our circle of trust. Spomboy will be there, as will Santoli, MVHQ and, of course, Hoofy and Boo!
position in gss
Steepening Station!!! - Bennet Sedacca - 1:32 PM
I have been asked by many friends, clients, Minyans and traders what I thought about the relentless fall in T-bill yields. Well I guess the economy isn't so great but that isn't the whole story.
As you know, I track the hedgers closely.
Thanks to the power of Bloomberg analytics, I am able to quickly see their positions in virtually anything instantly.
How are they positioned? Well duration neutral and looking for a steepening--and a more 'normal' shaped curve.
They are record long 2's (thank you Professor Lance Lewis for pointing this out) but as I mentioned earlier short 10's in size.
But overall (and this is complicated) they are flat. Basically the way I calculate this is by taking their position in 2's, 5's, 10's and 30's and 'duration weight them.'
See the chart of 10's.
See the chart of 2's.
See the Overall chart.
Breaking Down the News - Sally Limantour - 9:12 AM
The fear of inflation and tighter rates had the market play defense on Thursday but snapped back on Friday along with the carry trade. This morning has the yen weaker and the euro +250. There are more talk of buyouts with news of an affiliate of Cerberus Capital Management to buy control of Chrysler for $7.4 bn.
Chatter is getting loud concerning expected Fed rate cuts in the second half of 2007. I am not as sure of that and one thing we need to be mindful of is how the foreign central bank hikes will weigh on the US. ISI Group did a study and found that changes in short-term rates actually have more impact on US real GDP (with a quarter lag) than do moves in fed funds. "In other words, what happens there doesn't stay there."
Commodity prices have risen sharply led by the grain markets, energy and the metals. Gold has held the important 665 level while silver tested the 13020 level briefly before rallying.
Over the weekend Alan Abelson in Barron's points to the consumer who may be pinched but does not see the hidden inflation as "the poor soul doesn't realize that runaway gasoline prices and escalating food prices don't count because they're not 'core' prices." Please.
There is more talk of potential slowing in China both on TV this morning and in Barron's. Dresdner Kleinwart believes the current pace in China is unsustainable and will slow in the second half of the year. They think the torrid pace of export growth will slow in response to a softer tone of the US and Japanese economies and they see the big boom in capital investment losing a bit of its zest as building activity for next year's Olympics slows down.
In other Chinese news it was reported that last month alone the Chinese opened 4.8 million brokerage accounts. This compares to a total of 3 mln the prior year.
I will dissect this more and look at both sides later in the week as now I am attending the Hard Asset conference in NY to get a beat on more companies in the natural resource sector.
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