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Buzz Bits: Dow, Nasdaq Close in the Green


Your daily Buzz highlights...


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

Earnings Report - MV News

(CTAS) reports 1Q EPS of $0.53 vs. $0.51 cons on revs of $914.2 mln vs. $920.5 mln.

Bed Bath & Beyond (BBBY) reports 2Q EPS in-line of $0.51 on revs of $1.61 bln vs. $1.60 bln cons. The company reports 2Q comps of +4.8% vs. +3.8% cons and announces a review of stock option grants.

Bring it Home Buzz - Todd Harrison - 3:10 PM

  • Bookham, Dano! Don't believe everything you read, see or hear in the popular press. You'll benefit if you're right---and you'll have to suck it up if you're wrong. Assimilate but please don't defer. To anyone.

  • Contra-hour comes to a close with nary a dent in the breadth or financials. S&P 1326 remains the "rip cord" level for alotta technical types and it could be in jeopardy by the time thy bell tolls.

  • That, of course, might set the stage for the vaunted pop & drop, but we'll jump off that bridge when we get to it.

  • Please circle December 1st in NYC. Minyans in Manhattan. Content, panels, keynotes in the afternoon. Critters' Choice Awards, smiles, music and a very special honoree at night. We're not "there" yet but we're busting hump to make it so. All for the kids.

  • As always, I hope this finds you jinglin' baby.


FOMC Makin' a Statement! - Kevin Depew - 2:21 PM

Highlights from the FOMC statement:

Here is the full release. For comparison, here is last month's statement.
  • Fed's Lacker dissents, asked for hike
    (didn't get it)
  • Energy prices have the potential to sustain inflation
    (doesn't mention CRB Index breaking down or Crude down 19%, Natural Gas down 30% and unleaded gas down 32% since the last FOMC meeting)
  • Inflation Pressures also likely to moderate
    (due to reduced impetus from energy)
  • Repeats further tightening may be needed
    (though apparently not soon enough for Lacker)
  • Repeats housing is "cooling"
    (removes the word "gradual")

So, to sum up, the housing market is now "cooling," though no longer "gradually cooling," and energy prices can potentially sustain inflation while the reduced imeptus from energy prices will cause inflationary pressures to moderate. Got it?

Out With the Old? - Adam Warner - 1:40 PM

Lots o' chatter about a grand shift out of energy and into tech.

Well, looking at the XLE vs. the XLK here, sure seems like energy is about as low as it has been vs. tech all year.

Obviously, it does not necessarily have to hold at the yearly lows. A naked eye look at the 3 year relationship sure shows a break in the action.

Now I realize there are few things that would excite Financial Media more than an extended move out of energy and into tech, but does it make sense to pile in after such a precipitous 6-week reallocation?

One, and done? - Rod David - 10:38 AM

A military coup in Thailand. Dueling speeches at the UN. Tuesday's dip helped to rebuild the proverbial "Wall of Worry," absorbing sellers and establishing a more solid base for launching another upleg. The morning's drop fell from Friday and Monday's trading range to test last Thursday's prior lows, and the close managed to recover back above Friday and Monday's lows.

One day's recovery is not a Wall, it's a sidewalk. The market's objective at that point should have been to add some more bricks to the Wall by proving that sellers were absorbed - another little dip & recovery would have been nice. But this morning's open gapped up sharply and extended to new highs.

Some Wall of Worry. The open's surge has easily discounted the potential for this afternoon's FOMC announcement to deliver a pleasant surprise, and consensus was already high. That might not be such a concern if S&Ps are still in positive territory when the announcement is made, or if another target hasn't been met in the interim.

Neither Baht nor Pope nor Fed? - Woody Dorsey - 10:01 AM

Nothing, No Baht Behavior will prevent this equity culture from folding? The paradigm and the trend continue...until it is over. This is a diverging maturating complacency finale but may continue.

We should be on the lookout for a new negative concept to turn the tide. Obviously it isn't Thailand or very bad spinach. Meanwhile, investors' assumptions retain their bullish bias. There is one correction to this complacency which, as a Mountain Man, I must proffer a pure demurral: we have already had a frost in Vermont. Winter will not be called off on account of weather! Things change, paradigms shift, markets change, but they also trend until they are perfectly ripe to fall.

Two big movers today... - John Succo - 9:01 AM

Oracle (ORCL) is up $2.40, almost 15%, pre-open after earnings. The earnings look pretty clean to me, except for the fact that the first quarter is usually its weakest (opening the door for some possible revenue loading). Most of their revenues were from licensing.

But that is a very big move for the stock and it has busted out of the upward trendline. My firm suspects this big of a move is due to short covering. Where is that coming from? Why, from all those call sellers who now do not want to get called out of their stock at the highs. Inductive behavior of course. We are of course selling stock short against our long calls that we bought from them.

Morgan Stanley (MS) is up about $1 pre-open after earnings. Most are just concentrating on bottom line earnings, which look OK. But there are some real trouble spots.

MS reported a VAR (see my past articles), its measure of the amount of risk it takes. The VAR is unchanged, but this time MS reported a 95% (confidence) VAR instead of the 99% VAR it had in the past. Hmmmm? This means they are using more "fudge" in its calculation. This, on top of the fact that volatility overall is down substantially, thus resulting in a sanguine VAR even though more risky positions were put on. From its revenue stream it is clear that MS is taking more risk to make money. Revenues beat from higher trading profits, a risky endeavor.

And this is consistent with the real trouble spot. MS is losing assets under management. This is very disturbing given the fact that other dealers are picking up assets at the same time. Asset management is the safest and most consistent source of revenues a dealer can have.

Position in ORCL, MS

What you need to know... - Jon Doctor J Najarian - 8:21 AM

Boeing (BA) Wins Border Contract – No, it's not a multi-billion dollar contract for airplanes, it's a contract to place sensors, cameras, and motion detectors along 6,000 miles of our borders with America and Mexico. Boeing's bid includes L-3 Communications (LLL) and Unisys (UIS).

Yahoo (YHOO) CFO Sees "Weakness" – At a conference in NYC yesterday, Yahoo's Chief Financial Officer said she saw weakness in the quarter that will effect results. Shares tumbled from $29 to $25

Oracle (ORCL) Blowout Quarter! Profits up 29%, and revenue jumped 30% as the software giant reported an absolutely fantastic quarter. We had the unusual call activity early on yesterday and will happily take profits today as shares tred up over 13% on 95 million shares in the pre market! Citigroup upgraded the software firm to buy from hold.

Ericsson (ERIC) Upgraded By Citi – This morning the brokerage upgraded ERIC saying they see demand for data applications growing significantly. Citigroup also upped Nokia's (NOK) earnings estimates, which it had already pegged as a buy.

Position in ORCL, BA

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