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Buzz Bits: Fed Leaves Rates Unchanged, Markets Edge Lower


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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

(CSCO) reported 4Q non-GAAP EPS of $0.30 vs $0.28 cons on revs of $7.98 bln vs $7.92 bln.

News Corp (NWS.A) reported 4Q EPS of $0.23 (in-line) on revs of $6.78 bln vs $6.75 bln cons.

The Fed's Really Makin' a Statement! - Kevin Depew - 2:21 PM

At the end of June the statement noted that readings on core inflation "have been elevated in recent months" and that the "high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures." This time they add a big HOWEVER. "However, Inflation pressures seem likely to moderate over time."

Data dependent? Well, that's what they say. "The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."

Also noteworthy, Jeffrey Lacker was a lone dissenter.

Here is the full text of the statement.

For comparison's sake here is the statement from the last FOMC meeting.

Gold shares are making a move higher and the dollar is hitting new lows for the day.

Hurry Up and Wait - Adam Warner - 11:15 AM

Love this new ad. I can only infer that the 18,000th rendition of "Rock N Roll, Hoochie Koo" caused the trader to hurl himself backwards off his stairwell. And unlike any other service out there, you can apparently still execute an order that you entered and left open. Just brilliant.

But I guess that's why I am not on Madison Avenue.

Options are showing moderate nervousness ahead of The Announcement. Whichever way we blip at 2:15, I would certainly expect volatility to cave again, as this may be the last Big Bad Event until Labor Day.

Transport Charts Are At a Key Support - Brian Gilmartin - 10:25 AM

Attached below are the daily and weekly charts of the Dow Jones Transports. The daily chart is heavily oversold on a stochastics basis (thus we could get a bounce off this level), and the weekly chart shows the DJ Trannies hitting the 50-week moving, which has been key support the last three years, or since the March, 2003 bottom.

Will a Fed reprieve on rates provide the Trannies with a reason to bounce? Tough to tell, and I won't speculate, but will let the price action dictate our strategy.

The key level for the Trannies is 4,332 per my firm's technical software.

UPS (UPS) and FedEx (FDX) are the two largest components (by market cap) of the Transport index.

Daily Chart

Weekly Chart

Tales from the crypt - Fil Zucchi - 9:52 AM

  • Comstock Homes (CHCI) reports a loss and writes off about 10% of its book value. At this morning's open its market cap is $63 mln against debt of $262 mln.

  • General Growth Properties (GGP) misses consensus FFO by a mile citing lower than expected land sales. Without the benefit of listening to the conference call, I am guessing that the Columbia, MD residential properties acquired in the Rouse deal are beginning to weigh heavily around its neck.

  • A snapshot of the Unit Labor Costs report screams stagflation, with ULC's jumping as employment slows, and compensation after inflation flat to down. Hoofy suggests that that's what you'd expect as the economy reaches its cyclical tipping point, and costs will show a pullback in coming quarters. If that's true, does that mean that the already lagging compensation of American workers is going to get whacked even worse in both nominal and real terms?

Cheer up Minyans!! It's another sunny, 70 something degrees with no humidity at MIM3, and when you stand on top of the mountains and look down there is no room for EPS, UCL's and CPI's.

Consumer Credit Numbers - John Succo - 9:02 AM

After looking at the consumer credit numbers from yesterday, we are coming out (surprise) on the negative side.

Revolving credit, the type of credit that is most expensive and easiest to get, drove consumer credit higher than expected. Credit card debt is becoming a higher percentage of consumer debt.

We view this as a stress on the system, consumers taking out this debt not as a sign of strength, but as desperation. There is little place else to turn. Consumers are taking more risk, period.

This at a time when rates are rising.

Everyone is waiting, hoping, and praying for a Fed pause. After the higher than expected unit labor costs the odds of a rate pause are still about 3.3 to 1. The market is still expecting a pause from the Fed.

That's the buzzer, thanks for playing! - Rod David - 8:18 AM

Sellers pushed all the right buttons Monday. They just didn't push hard enough. Friday's rejection of new highs had reversed down to close under multiple prior highs. Monday's open gapped down, rejecting Friday's last-hour bounce. S&Ps spent the entire session in negative territory, including a break to new session lows to start the session's last hour. Despite expressing so much pessimism (justified by Oil's spike on production concerns), sellers failed to extend Friday's post-open decline.

None of which amounts to a buy signal. And Monday's relatively low volume pace doesn't make the next trending attempt any more relevant. Currently, S&Ps are indicated to gap up above Monday's range - optimistic, yes, but not necessarily bullish, as gaps up don't improve the ability of momentum to gather steam. And similar to Thursday's post-open rally ahead of Friday's Employment report, the overnight price action seems a little too optimistic ahead of this afternoon's FOMC announcement.

Stiff resistance remains at last Wednesday and Thursday's prior relative highs in the SPX 1284 (ESu 1288'00) area. There is still potential to retest part or all of Friday morning's peak. But testing and then closing back under prior relative highs would just be another straw on the camel's back. The last straw would be a long-overdue close under prior lows.

What you need to know... - Jon Doctor J Najairian - 8:05 AM

Nokia (NOK) Buying Loudeye For $60 Million - Mobile-phone maker Nokia announced it is buying Loudeye for around $60 million. Loudeye shareholders will receive $4.50 a share, more than double the share's Monday closing price of $1.77.

Google (GOOG) To Pay $900 Million To Search MySpace – This Rupert Murdoch is one shrewd dude. He bought MySpace last year for under $700 million and yesterday signed a deal to let Google search listings for the social-networking site in a four-year deal that will give Fox Web sites at least $900 million in payments.

Wal-Mart (WMT) Hikes Pay – Often accused of paying "slave wages", WMT announced it will increase starting pay at 1,200 of its 3,900 stores. On average the starting pay will rise by 6% versus WMT's average full-time wage of $10.11 an hour.

Apple (AAPL) Previews Leopard - Apple showed off Leopard, a new version of its Macintosh operating system for personal computers. The new operating system comes with a computer data backup service, called Time Machine, which allows Macintosh users to restore their computers to undo errors.

Positions in AAPL, WMT

No positions in stocks mentioned.

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