Buzz Bits: Dow, Nasdaq Climb Again
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Editor's Note: This is a small sample of the content available on the Buzz and Banter.
Earnings Report - MV News
Dell (DELL) reports 2Q EPS of $0.22 inline on revs of $14.10 bln vs. $14.00 bln cons.
Nordstrom (JWN) reports 2Q EPS of $0.67 vs. $0.65 cons on revs of $2.27 bln.
Gap (GPS) reports 2Q EPS of $0.15 vs. $0.14 cons on revs of $3.72.
Auntie Em! Auntie Em! - Todd Harrison - 3:25 PM
- It feels as if Hoofy is trying to side-step the crimson tornado today. But with the CRB down (almost) a deuce and clinging to the Cliff Branch that is the multiyear trendline, I'm a'ight hoping home with two legs in my bear costume (50% conviction on the short side) and a stop above BKX 114.
- Turnaround is fair play? It must be--I just got CRAWED in the middle of an editorial discussion. Now I know why everyone hates that so much (and why Succo bought perpetual CRAW insurance).
- I certainly don't claim to have any answers---but I think we can all benefit from asking the right questions. The group noodle on deflation--coupled with Pepe, Spoms, Fleck and other Buzz vibage---is the grist of real-time education.
- No seriously--I have business to attend to in Boston. And if we can conduct business on our time while at Fenway...during a Yankee game...on the way to Toronto...then who's to say that's a bad thing? (other than the Red Sox fans who will be sitting near me). The purpose of the journey is the journey itself.
- And finally, in the "no, I'm serious!" category, the VXO is down 4% right now. No...I'm serious!
- I'll be back on the Buzz Monday and will have some fresh News & Views in the morning. Have a great weekend and GO YANKS!
From Stephanie Pomboy of MacroMavens - MV Respect - 3:08 PM
Saw your dollar, asset deflation note. I guess I struggle with the idea that housing deflation in the US will be bullish dollar and bearish commodities (especially gold). This is the point on the deflation path where you, Scott and I all part roads.
My feeling has always been that the 'long risk' trade is a 'long dollar' trade...with US hedgies borrowing in cheap fx abroad (e.g., long dollar) and foriegn central banks and others stretching for yield in the US (e.g., long dollar). So, if/when 'risk' returns I would expect the dollar to get hit.
Commodities, gold and others have increasingly enjoyed a 'speculative' bid but, in the long-term picture, the real commodity bull is barely in its infancy. In a world where the Fed is reflating (and IMHO the dollar is deflating) they sure look relatively more appealing to me than owning UST or Intel (INTC)....or Sears Holding (SHLD).
But it's hot...and the sun may be fryin' my brain!
Ghosts in the machine - David MIller - 2:00 PM
- In 2004, I missed a big biotech rally because I was too wrapped up in the macro malaise to see what was in front of my face. Is this part two?
- If we close about where we are now, the NBI will have back-to-back-to-back 100+ advancers for the first time since mid-February. The NBI went from 806 to 860 in that time frame, where it peaked.
- In the MIM3 breakout panels, I opined that the charts for biotech were looking to form a pennant whose inflection point would likely be in early October. One or two more days of these gains and that pennant goes out the window. This is one of the hazards of slapping a short-term viewpoint on a sector fundamentally driven by longer-term events.
- I cannot shake the feeling the Fed will do it to us like they did in 2000. The single saving grace will be if equities rise without seeing corresponding gains in core commodities. It can be argued the FOMC needs equities to go up and commodities to go down as they can dampen inflation and pass housing "bubble" money into another asset class (equities). Will they get that lucky?
- James Bond scared off by a ghost? Say it isn't so!
Dazed and Confused - Fil Zucchi - 12:19 PM
Other than the obvious "massive short squeeze," "rotation out of safety and into beta" and "expiration strike hunting" arguments that are going around faster than you can hear them, I do not have clue as to what is going on with this ramp. For a change, this type of move is not hurting me . . yet, but as more and more offers are hit, I am growing shorter and shorter - no small task for those who have met me in person. F5 Networks (FFIV) and Garmin (GRMN) are being used as call writing fodder, while small pieces of everything else are getting jettisoned out right.
Prof. Succo has recently mentioned CACI Int'l (CAI), a local defense/government contractor. It reported a lousish quarter last night and guidance was back-end loaded enough to be doubted altogether. Yet the stock is up nicely today. A number of other small defense contractors have been killed of late: Applied Signal Technologies (APSG), Argon ST (STST), Flir Systems (FLIR) to name those I'm involved with. Herbela has written negatively about FLIR's management in the past, something always worth keeping in mind. Nonetheless, I am heeding the suggestion of Raymond James' Jeff Saut, that the defense/homeland security plays are where you want to be and I've been using lower prices to build some nice size positions. Not advice of course, but food for thought.
Positions in CAI, FLIR, STST, FFIV, GRMN
Employee Pricing Returns to the Option Marts - Adam Warner - 11:10 AM
*Toddo is 100% about these cheapo puts. I generally prefer selling them, but the prices on my board are just brutally cheap.
*If I could use the phrase "Ours Goes to 11" to describe SPY options, I would need a half point UPTICK in volatility.
*Speaking of which, a low volatility/low volume situation SUGGESTS more stocks will pin this cycle. And importantly, the old Strike Tracter Beam will come into play sooner. In other words, this tape has less energy than I do before I absorb my morning caffeine, so if you see something near a strike now with any sort of open interest, anticipate a pin.
*There are no shortage of Bobbleheads blaming expiration week weakness on derivatives. But when we rally on Expiration Week? Must be "real."
Position in SPY
Sears Holding - John Succo - 9:30 AM
My firm picked up this very unusual statement from Sears Holding's (SHLD) earnings release:
As previously reported, the company's Board of Directors has delegated authority to direct investment of the Company's surplus cash to its Chairman, Edward S. Lampert, subject to various limitations that have been or may be from time to time adopted by the Board of Directors and/or Finance Committee of the Board of Directors. As of July 29, 2006, the Company's surplus cash was primarily invested in short-term, highly liquid investments.
The company is currently using, and may in the future use, a portion of its available capital to invest in marketable securities and other financial instruments, including derivatives. These investments may include significant and highly concentrated direct investments and/or related derivative positions with respect to the equity securities of public companies. Derivative contracts would be recorded on the Company's balance sheet at fair value and, for non-hedge contracts, changes in fair value would be recognized currently in earnings as unrealized gains or losses.
For those of you who think buying shares of SHLD means you own a retailer, think again. SHLD is Mr. Lampert's Berkshire Hathaway. Mr. Lampert has his hedge fund.
Position in SHLD
Where Facts Have No Home, Dreams Tend to Roam - William Fleckenstein - 8:28 AM
In the tech department, it's interesting to note that after winning at beat-the-number on Tuesday night, Applied Materials (AMAT) wasn't able to guide higher enough and noted (uncharacteristically) the buildup of chip inventories. That bit of sobriety caused AMAT to be red -- though every other equipment stock was green -- until the last hour yesterday. The point being: how powerful the no-news period can be. One equipment stock has news that isn't quite good enough and sinks. But all the others rally, because there is no news for them specifically.
So, for the time being, the no-news period is helping folks to party on the Fed-is-done idea over and over and over -- while simultaneously helping them to deny that the economy is weak and fantasize that things will soon get so much better. That's where we are. The only question is: how long before that bubble of an idea bursts?
What you need to know... - Jon Doctor J Najarian - 8:15 AM
Hewlett-Packard (HPQ) Profit Tops $1.38 Billion – Revenue for the quarter was $21.89 billion and they are projecting $24 billion for the next! These numbers put them in IBM's class ($88 billion rev) and they threw in a $6 billion buy back just for good measure.
B of A Raising $1 Billion Private Equity Fund - The bank has set up a Boston-based fund, BA Private Equity Direct, which is seeking people willing to invest at least $500,000, according to an Aug. 9 filing with the Securities and Exchange Commission.
Peltz Group Wins Heinz (HNZ) Board Seats – Nelson Peltz and his Trian Group, (Heinz's second-largest shareholder), hoped to win up to five seats on the company's 12-member board as part of a plan to rigorously streamline the company and boost shareholder returns, but they'll have to settle for 2.
Position in HPQ
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