Market Recap: Bloody Monday, Tech Stocks Take Beating
Stagflation spooked bulls. Tech stocks took a beating. Markets fell.
Stocks were hit hard today as talk about stagflation shattered investor confidence. In an interview Sunday, former Fed Chairman Alan Greenspan said there was an increase in stagflation concerns as prices rise in conjunction with increased risks of a slowing global economy. The comments gave bears the edge with tech stocks receiving much of today's pain.
"The standout today?.... It's beta….With Baidu (BIDU) down $33, Google (GOOG) off $20, and Amazon (AMZN) and Research In Motion (RIMM) both taking a 4% haricut, the answer we really wanted to know – whether holders could safely hide in this complex – is being answered in real-time…" said Toddo. BIDU settled -9.55%, GOOG fell -2.9%, AMZN fell -4.7%, and RIMM, closed -5.58%. Read Toddo's Monday Morning Quarterback and Professor Depew's Five Things You Need To Know About Stagflation.
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Even today's M&A activity couldn't give stocks any sort of lift. Ingersoll-Rand (IR)announced this morning that it would acquire air-conditioning provider Trane Inc (TT) for $10.1 bln. Shares of TT surged 21.6%. IR fell -11.35%
The NY Empire State Index came in at 10.3 versus 21.0 consensus. The current account came in at -$178.5 bln versus -$183.0 bln consensus. Net Long-Term Tic flows also came in at $114 bln versus $50 bln consensus. The prior figure was revised to $15.4 bln from $26.4 bln. Mr. Practical noted on the Buzz, "Bulls are breathing a sigh of relief as the new TIC data shows foreign inflows into the U.S. picking up. What they fail to realize is that this is what is to be expected as the credit bubble starts to fizzle….It is just beginning." Read the full text in Current Global Economy Like Nothing Before.
In the commodities space, crude oil fell -0.38 to $90.89 per barrel. Copper futures plunged -2.28%. Silver and gold futures reversed their declines late in the trading day yet silver proceeded to slip back into the red. When asked about the sudden lift Gold specialist Professor Lewis said, "There's no news, really… just more of the same… stagflationary, and that's bullish for the precious metals.
"Other than that we're repeating August nearly to a "T" in the gold shares again. Metal isn't budging but gold bulls are so terrified of the stock market crashing and taking down their gold that they are dumping their shares even harder than the broad market is going down…these sales will look just as stupid as those in August." Although silver proceeded to slip back into the red falling -0.02%, gold settled +0.16% to 799.30.
Adobe (ADBE) reported 4Q $0.49 EPS vs. $0.48 cons on revs $911.2 mln vs. $887.3 mln cons. Company reported gross margins 89.0% vs. 92.4% cons. Company issues upside guidance for 1Q, sees EPS of $0.44-0.46 vs. $0.42 cons.
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Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: NSANY, C, PHM, gold, platinum, ICE NDAQ, FRE, FNM, MCD, BBY, EWC, EWC, ESLR, CY
Some bearish trade or investment ideas: TM, FXI, NILE, SBUX
Happy Monday! See you in the morning!
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