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Buzz Bits: Dow Edges Lower, Nasdaq Gains


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

  • Pacific Sunwear (PSUN) reports 1Q EPS in-line of ($0.04) on revs of $320.6 mln vs. $310.86 mln cons.

Bell Buzz - Todd Harrison - 3:51 PM

  • There's chatter out there that some ETF volume data is inaccurate today so if you see out-sized "trading," please treat the information subject.

  • Red Bank(s), NJ continues to weigh on the fray as the Boo desperately tries to play whack-a-mole. What is it they say about Goldman being the single most important stock in the universe?

  • I just got off a quick 'view regarding the market and offered some thoughts. First, there's nothing particularly magical about S&P 1527 other than it's on every single radar. The fact that we lifted 12% into this number is likely the cause for pause, at least on the first attempt.

  • Were there any clues that we would pause? Two, actually. One was pre-market, when the futes were flattish given the great weekend news. The second was the relative laggage in the financials, which we discussed above.

  • Just another day in paradise, Minyans, let's make it count. Tomorrow, as they say, is promised to nobody.


Mini-Minyan Mailbag - John Succo - 2:52 PM

Prof. Succo,

your article today, if China is gonna use some of those funds to take down a large position in Blackstone, then Blackstone is gonna go public, how is it that nobody is screaming at the top of the mountain that this seems a little dangerous?

Isn't the "money" they will be using nothing more than the liquidity created by the Fed, which China once used to buy US treasuries, keeping rates lower?

I know its not a matter of "if" but "when" this credit bubble will pop, and the debt created by all the money expansion from the Fed topples under itself, but will we look back at this event as the proverbial straw the broke the liquidity camel's back? Or is this just another engine/game which will keep the music (liquidity) playing?

I can definitely "see" both sides but it seems as though everyone else just sees the good and not the evil...

Thanks for your Feedback...
Minyan Mike


Who is going to object?

Certainly not the Fed that created all those dollars that China is so obligingly buying.

Certainly not China where economic decisions are not made by markets, but by a few individuals who have no understanding of how markets interact with debt.

Certainly not Wall Street which wants to keep the train going as long as possible.

Certainly not Blackstone which is getting rich beyond belief.

Certainly not the US Congress which is afraid of its own shadow.

And finally, certainly not Mr. U.S. consumer who is drowning in debt and looking to just stay above water.

Humans are inductive creatures. We will ignore peril until it cannot be ignored any longer. Only then will we realize our folly.


The Buzz of Lists - Jeff Macke - 1:42 PM

Greetings from NYC where, like the rest of the MV crew, I'm still settling in and grooving the systems. It's my first official NYC office, so you can mix in personal trips down memory lane, as you see fit, but I'll leave them to your imagination. Among the non-imaginary things I'm watching...

  • A seemingly freshly revived Farley and I are still searching for "reason" behind the aggressive move higher in Amazon (AMZN) today. So far guesses include: 1) The market is open, 2) A short fund is blowing-up, 3) (a variant on #2) A short fund is being cruelly taunted by longs on its way to blowing up.

  • Two observations on Microsoft (MSFT) as I watch techies feverishly load system CDs at every PC in the office: 1) The stock is moving higher as the Street digests the Aquantive (AQNT) purchase, 2) No matter what you do with MSFT products, it's almost impossible not to think of the "Mac & PC" commercials.

  • Speaking of Apple (AAPL), it's utterly (not almost) impossible for me to watch the stock move higher without counting down the days until Admiral Bolling stops mocking my picking Berkshire Hathaway (BRK.A) over AAPL in the Fast Money March Madness contest. It's a long way until next March, Minyans (and Eric).

  • It's still earnings season in my neck of the nape (retail stocks). Later this week we hear from: GameStop (GME), Abecrombie (ANF), Dick's Sporting Goods (DKS), Gymboree (GYMB) and Zumiez (ZUMZ), just to name a few.

Energy Update - Adam Michael - 10:32 AM

Commercials have reduced their net short position in crude by over 50,000 futures contracts since mid April and now are just slightly net short. Instead of declining, crude essentially churned sideways between $61 and $65. In 2005 and in 2006, crude bottomed out around the 20th of May before advancing into August. I expect any weakness in crude in the coming weeks to be limited as the bullish seasonal fundamentals take over. With driving season just around the corner, and gasoline inventories well below their five year range, don't expect any relief at the pump soon. See the chart here.

I have repeatedly said that the strength in energy prices is primarily a result of supply/demand rather than geopolitical uncertainty. One of the best measures of this is Chinese imports of crude oil where there has been a strong correlation of crude oil price since 2000. As you can see from the chart here, Chinese crude oil imports continue to ramp.

According to my regression of crude oil and Chinese crude imports, fair value for the price of crude oil (NYMEX) is now about $70 (see regression in this chart).

No positions in stocks mentioned.

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