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Buzz Bits: Dow, Nasdaq Climb


Your daily Buzz highlights...


Editor's Note: This is a small sample of the content available on the Buzz and Banter.

B-o-a-r-d, bored - Kevin Depew - 3:28 PM

  • Now is the time to say something useful about the market, about the better than half a percent gain in all the indices except for the Russell 2000 (RUT).
  • Or maybe point out the potential bullish catapult and spread triple top in the AMEX Gold Bugs Index (HUI) if 256 is hit.
  • Or the still positive-skewed PnF new buy/sell signal ratio.
  • Or take a shot at Ben Bernanke Day.
  • Instead, how about a Friday-before-Labor Day timeline of exciting MVHQ events since 1 p.m.?:
    1:03 p.m.: Answer hate mail generated by latest Five Things column.
    1:06 p.m. Answer hate mail generated by first answer to hate mail generated by Five Things column.
    1:14 p.m. Play Asteroids online.
    1:35 p.m. Throw away horrible Philly cheesesteak and soggy fries from Nations Cafe.
    1:45 p.m. Regret throwing away soggy fries.
    1:50 p.m. Look in trash can to see if fries are touching anything gross.
    1:50 p.m. Explain to Ariana "just looking for a paper I lost" after caught trying to take soggy fries out of trash can.
    1:59 p.m. Reformat Thomson screens to show upticks in red, downticks in green.
    2:25 p.m Reload Thomson, pretend open put positions are crashing.
    2:45 p.m. Wake up Farley with Surprise Dodgeball.
    2:53 p.m. Think about possible Buzz post
    3:03 p.m. Try to get soggy fries while Ariana isn't looking.
    3:03 p.m. Throw away stapler "because I hate staplers" after again caught trying to take soggy fries out of trash can.
    3:24 p.m. Write buzz post.

Orders of Magnitude - Scott Reamer - 1:11 PM

One of the helpful analogs to understanding the present situation is that of a debt bubble. Consumers (and by proxy most corporations despite the on-balance sheet cash reserve they report) are piling on debt. They are engaged in a debt boom. And like all boom-bust cycles, this one:
(1) Is fueled by central banks the world over (which is why its a worldwide debt bubble and thus has been harder to pinpoint an end).
(2) Will inevitably end in a debt bust. And all you need to remember is what happened to the last major boom-bust cycle: in capex/tech spending in the media/tech/telecom space in 2000.

However, the debt bust is likely to be different than the capex bust in 2000 in 2 important ways:
(1) The capex bust was relatively limited in scope: there were entire sectors of the global economy that only hiccuped; most sectors didn't go down 90%+ like semiconductors. The debt bust is likely to have much wider negative implications given that the consumer is at the heart of this debt bubble; at 70% of the economy, a consumer debt bust will reach everywhere.
(2) The debt bust has much larger systemic implications from a financial infrastructure standpoint and as a result has far greater probability of creating a vicious deflationary cycle of default/bankruptcy/write downs than did the capex bust (which was largely equity-based).

Whereas the semiconductor industry in 2002 wrote down something like 750 billion in inventory, the potential for massive write downs by banks and other financial intermediaries of the US housing stock, of car loans, of credit card balances etc. (instead of DRAM) is orders of magnitude larger. Orders of magnitude larger.

So the analog is clear, and much more worrisome: the capex boom was equity-financed and limited in sector scope as well as limited in systemic implications for the financial infrastructure. The consumer debt boom is the opposite: debt-financed, touches everything in the economy, and has high probability for a systemic, contagion-like event. Oh, did we mention that you can buy index vol at 12?

Oh oh, oh oh, and off the cliff we go... - Fil Zucchi - 10:56 AM

Looking hard for a typo in that -7.0% in existing homes sales but don't think I'm gonna find one. Residential construction spending was not so hot either down 2.9%. Remember Minyans that some 50% of the jobs created between 2001-2004 were somehow tied to real estate.

Meanwhile, one of the Fed heads (Poole? Boom Boom?) suggested focusing on "inflation expectations." Well, according to UoM, those expectations for the next 12 months are almost at a 6 month high of 3.8%. At the same time expectations for the economy as a whole are heading the wrong way.

Good News Sucks? - Woody Dorsey - 10:34 AM

It's not always the data, it can be how the data makes you feel. My read is that investors are cognitively satiated with the "good news" paradigm here. The behavioral trading pattern here of a thrust up on news into a holiday strongly argues for a short-covering environment and the risk that all investors are "full" or satiated here on the good news. Be tuned for a reversal today or Tuesday. Sometimes good news just "sucks."

CME August Volume - Brian Gilmartin - 9:42 AM

The Chicago Mercantile Exchange (CME) just reported an August volume increase of 35% versus the Chicago Board of Trade's (BOT) August volume increase of 23%.

However, the key metric in the CME release is "rate per contract" or RPC, which actually rose in August to $0.637 versus July's $0.632. (Daily volume is reported on the CME's website each day, thus the RPC is the real news in each monthly volume report.)

CME managed to close August above its 200-day moving average, but it has been lagging as have most of the exchanges.

Let's see if the group can catch a bid after a decent August.

Finally: be sure and read Professor Jon Najarian's excellent piece on the CBOE - BOT standoff regarding seat rights, which I have written about previously, but Jon goes into much more detail.

Again, I'm no lawyer, but if the CBOE gave full trading privileges almost 40 years ago to the BOT seat owners to improve liquidity on the CBOE at the CBOE's inception, then how can they suddenly say, "well, we were just kidding" now that the CBOE wants to come public.

Common sense says that the BOT gets compensated in some fashion by the CBOE. Then again, we are dealing with lawyers and judges. Never bet on a lawsuit...

Position in CME

Get in. Get out. Get lost. - Rod David - 8:24 AM

The Employment Situation report has already influenced price action - from yesterday's last-minute drop (perhaps even the rally into yesterday's highs), and to the overnight bounce. If the reaction doesn't force the cash session to gap above yesterday's highs, then it's probably because S&Ps are pre-occupied with a steep drop.

The Employment report isn't alone; it only has the highest profile among this morning's economic data, higher than Consumer Sentiment which is due 15 minutes after the open. Post-open reports tend to accelerate or reverse any trending already underway. That is even more probable today, with ranks likely to start thinning by noon as traders try to stretch a three-day weekend into four days.

What you need to know... - Jon Doctor J Najarian - 8:11 AM

Jobs Report Takes Center Stage – Our models do suggest that today's numbers should come in at 4.8% unemployment (versus a street estimate of a dip to 4.7%) and 137,000 workers added to payrolls.

Bristol-Myers Squibb (BMY) Wins Block Of Generic Plavix - Bristol-Myers Squibb shares are up as much as 12% in late trade after a federal judged blocked sales of a generic version of the blood thinner Plavix, made with partner Sanofi Aventis.

Starbucks (SBUX) Revenue Up 21% - After the bell last night SBUX announced fantastic net rev growth and same-store sales up 5% versus street estimates of just 4.2%. The company ended the period with 12,142 stores in the and abroad, and increase of just over 1,900 from year-ago levels.

Position in BMY

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