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Random Thoughts


I hope Hoofy bought me some golden presents last week!

  • Gun to head? Elmer hikes 25 bips tomorrow and leaves the hawkish language (measured pace) in tact (which would likely shake the bovine tree). He's already dusting off his tux for his retirement party and is uber-conscious of the inflationary waves in play (crude/metals). What he won't speak about--but what WE must recognize--is that the other end of the stagflationary equation will suffer as a result. I'm careful not to confuse big picture thoughts with short-term positioning but given the lopsided lean (into quarter-end) and looming resistance (S&P 1250/BKX 100), it is worthy of a discussion as we tickle our way through the minxy fray

  • I haven't seen a blown call like that (Randy Moss touchdown) since, well, since the Tuck rule stole the AFC championship from my beloved Raiders. Bitter? You betcha...

  • I read this and got so angry that I had to take a walk!

  • Is Apple (AAPL) another vehicle for the manifestation of performance anxiety?

  • Marga-RITA!

  • I'll be sneaking out of my turret a few hours early today. Why? My buddy--whose office was high atop the World Trade Center--is having his annual benefit to support the families of his seven lost friends. I'm skipping the golf (not my bag) but I cannot, in good conscience, miss the dinner. That would be inconsistent with everything we stand for in the 'Ville.

  • Actual instant message conversation with Minyan Metro:

    MM: I gotta tell ya, I've felt somewhat immune to gas prices but even I'm noticing them at these levels.
    Toddo: Wow, that's saying something given the elitist Porsche driver that you are.
    MM: Dude, I got the Jag too...
    Toddo: Perhaps we should start a charity drive to assist you in your luxury automotive conundrum?

  • While crude has a renewed 'tude (+5.5%), the XNG (nat gas index) has all kinds of acne (+3%).

  • Our daily tea leaves continue to point west by southwest as the breadth (2:1 negative), banks and brokers struggle. For all those hangin' at the Heritage Club, please keep in mind that Goldman (tomorrow) and Morgan (Wednesday) are getting set to spin their spew.

  • We noted the lethargy in the semis on Friday (as they tested the double top) and they're doin' the downside dance today (-1.5%). Please note they've just snuck under the 50-day moving average as well.

  • We found Farley!

  • Vibes from Snoop Tony Dwyer of FTN Midwest Securities:

    • The fear paralyzing many investors is that consumers are over leveraged via Home Equity Lines of Credit and Adjustable Rate Mortgages to the point where any further increases in short-term interest rates and energy costs will cause a dramatic slowing in discretionary spending.

    • The reality is most focused here and not looking at the income side of the equation. Over the next year, we assume low end consensus income growth and above consensus Fed rate hikes and what we find is increased expenses are overwhelmed by income growth.

    • All in energy costs to the consumer was 5.6% at the end of Q2 and for the purposes of our study on the consumer assume it moves to 6% of total consumption expenditures. The current reading of 5.6% remains well below the average of 6.3% since 1970 and is around the same levels as the early 1990s.

    • At this point in the economic cycle, consumption expenditures are supposed to slow a bit as capital expenditures pick up pace of growth.

  • FedEx (FDX) is nearing another double bottom break with a print of 79. The trend for FDX is already negative following the violation of the trendline from the cyclical rally that began in 2003. Note the new breakdown occurs prior to earnings scheduled for this Wednesday; that gives whole new meaning to the phrase "overnight risk. -- Pepe Depew on today's Buzz.

  • I see dead people!

  • "Late last week we published our Gold vs. Financials indicator which turned negative as bullion broke out through resistance. Such a condition is worth watching, for it tends to burden the equity markets in subsequent weeks/months. On Friday, gold and metal names followed through with positive volatility alerts, breaking downtrend lines in some names, and breaking out through resistance and completing bases in others. The charts look their best in years, and should be added to portfolios. Interestingly, insurance names rallied in conjunction with gold, and next to investment banks, look the strongest of Financials. For commodity players, silver has not been as strong as gold, and probably provides a decent opportunity to pair as the metals should converge if Gold's strength is legitimate. German election results are likely to weaken the euro and increase gold prospects from European buyers." -- Lehman's aptly named technician Jeff DeGraaf

  • Answers I'd Really like to know...

    • Is crude (+5.6%) overreacting to Rita after being jilted by Katrina?
    • Is the confluence of commodity jig and debt dependency (on a low cost of capital) the true Fed conundrum?
    • Will the Apple's (AAPL) and Google's (GOOG) be the upside exception to the quarter-end (ursine) rule?
    • Is "sell the rumor, sell the news (25 bips/same language)" too easy?
    • How long until Succo reminds me that the Bengals are 2-0 and my Raiders are 0-2?
    • Do you see gold up $8?
    • Can that be bullish for the broader tape?
    • Does anyone know a good dentist? (teeth for sale)
    • How long until stagflation gets play in the mainstream media?

  • Vibes from Uber-Minyan John Roque of Natexis Bleichroeder

    • Friday's NYSE composite volume of 2.92 billion shares was the third most active day ever (the prior two heaviest volume days were 2.99 billion on July 19, 2002 and 3.25 billion on July 24, 2002). Surely a lot of this volume was the result of the S&P's shift to a "free-float" structure (i.e. only shares in public hands count toward index weightings) and options expiry but the volume surge seemingly stabilized near-term price activity.

    • If inflation fears are going to manifest themselves materially, we figure the yield on the 10-year Treasury note should, at least, work above 4.5% (currently the yield is 4.26%). Please note, however, that economists preaching the gospel of "no-inflation" because you can buy a personal computer cheaply won't likely be placed in the stockade until the yield on the 10-year gets above 5%.

    • The Transports traded huge volume over the last four days (91 million shares last Tuesday, 71 million Wednesday, 111 million Thursday, and 63 million Friday) and are on support at the 3600 level. Though the index is below its 50- and 200-day moving averages, it gets the benefit of the doubt currently given that these moving averages are upward sloping. However, we're dubious on upside for this index/sector given the big resistance at the 3800 level."

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