Buzz Bits: Dow, Nasdaq Climb Higher
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Earnings Report - MV News
- Whole Foods (WFMI) reports Q EPS of $0.32 vs. $0.36 cons on revs of $1.46 bln vs. $1.49 bln cons.
- Six Flags (SIX) reports 1Q EPS of ($1.76) vs. ($1.93) cons on revs of $50.7 mln vs. $46.3 mln cons.
Bell Buzz - Todd Harrison - 3:35 PM
- Remember Minyans, the gorillas aren't as trigga happy as the run n' gun crowd and, as such, they're strategizing today for implementation in the days ahead.
- It's true that the "panic" phase (of the denial - migration - panic tri-fecta) is the quickest coin to pocket. But it's also the most dangerous.
- I've heard some folks point to the 2003 tax cuts as the catalyst for the bull market. That was, in my opinion, simply a part of a much broader, coordinated stimuli agenda.
- Lower rates, liquidity injection, everything but the kitchen sink to make stocks the only game in town. Nothing comes for free, however--just ask foreign holders of dollar denominated assets.
- Does that make it wrong? Nope. In fact, I can't help but wonder if I out-thunk the skunk by seeing it and not piling into it with two fists and a foot.
- "If Fortress is the first of many hedge funds to tap the public appetite for risk--and more follow suit--the capital raised by these funds can then be leveraged, creating even more liquidity in the global marketplace. It could build to the point of exhaustion, but not before befuddling the bears who can't fathom the price action."
- Wow, what's the point of going to a personal trainer at 7:00 AM if I can't keep my paws out of the very best cookies in the city of critters?
- I bought some Boots & Coots before I scooted and, well, it hasn't been the snazziest of purchases (always honest). $2 is a technical toggle for this punky brewster and a level to watch for those looking to define risk. I haven't, so you know, touched my small fry try yet.
- Record highs, bull markets, it's all good--trust me, Minyanville is sitting in a hot space right now and continued jig bodes very well for the critters. With that said, we've never been cheerleaders--it's not in our DNA--we're a bit more pragmatic, even though rah rah sells. We'll always tell it like it is and that, my friends, you can take to the bank.
- As always, we hope this finds you well.
Position in WEL
Nice and Refined - Ryan Krueger - 12:27 PM
I am on the Frontier Oil (FTO) conference call right now. The "miss" can be attributed to analysts using tax credits that the company decided to defer, an increase in maintenance costs, and the company does not provide guidance in general.
Nothing to worry about from my perch, business could not be better (except if you are better positioned to refine heavy, sour crude which I believe Valero (VLO) is). But the stocks already knew this. I am long across the board in this space but buzzed just last week I'd be using put spreads in energy for some pullbacks if we got them, and yes, even in the refiners in a slight tip of our caps to the discipline of - what's the hardest trade to make? A good exercise, even if it's against your best ideas.
FTO is generating a lot more cash than it can use, I'll guess an even bigger buyback if this continues. The CEO closes his remarks with: "I started the year cautiously optimistic, I am no longer cautious."
But, my biggest take-away is the surge in maintenance costs. Instead of brushing them off, I want to buy the invoices.
I grow longer and more convinced that the opportunity in refining is at least as good for the guys WORKING on the rigs, as it is with the guys running them. They are cranking full-tilt and breaking down – I am referring to refineries in general, not FTO's specifically. The engineering firms hired to fix the problems are not on this conference call right now, they are too busy billing them.
Position in several refiners and engineers, hedged near term
How one can make anything look cheap... - Bennet Sedacca - 10:03 AM
Let's say I thought that given inflation in things that we need and deflation in things that we want, that U.S. Treasuries were overvalued. Particularly with the latest GDP deflater at 4%. And by using the 'Fed model,' stocks at 19.5x EPS are therefore cheap.
The way stocks appear cheap at 1+% yield and nearly 20x EPS is because, IMHO, we are comparing one overvalued security to another overvalued security. Not the soundest of investment analyses in my book.
It's like saying two-year Treasuries are cheap at 4.6% because Peruvian two-year notes trade at 3.84%. Seriously, is this what analysis has become?
Finally, I recall in 2000 when people told me that Oracle (ORCL) was 'cheap' at 80x EPS because stocks like BEA Systems were 100x EPS. Well, we all know what happened there.
As I look around for value, I can't find any. Anywhere. So I don't take tons of risk. Mind you I am now a little hedged via S&P500 ProShares (SH) against some core longs and focus solely on full faith and credit instruments.
Yes the world is awash in liquidity and yes, valuations seem to drift from macro fundamentals, and yes, there are many wrong-sided shorts.
But this sort of analysis, eventually (2008-2010 is my guess after a blow-off top) will end poorly. I certainly hope someone else wouldn't manage my funds that way. Seriously.
Position in SH
Buyout Frenzy! - Sally Limantour - 9:28 AM
The market continues to focus on the buyout news and discount any negatives such as the rising home inventories and the slackening chain stores sales activity.
I mentioned yesterday the buy out frenzy in the natural resource sector will continue and that I did not expect BHP Billiton (BHP) and Rio Tinto (RTP) to sit back.
Today Rio Tinto's shares are up nearly 7% on a rumor that BHP wants to merge with Rio.
Apparently there is a Merrill Lynch mining conference going on in Dublin and the out-going chief executive of BHP was seen having dinner with the incoming chief of Rio Tinto, Tom Albanese.
Yesterday's early weakness was bid up and the ES came right back into the value area of 1512 after rejecting the important 1506 level. Today we are starting out on a weaker note and I suspect the market may try to test the 1506 level again early in the session.
Keep your eye on the Yen.
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