Randoms: Fundamental Cause and Flaws
- A face for radio and some words of wisdom.
- As we entered earnings season—and Goldman Sachs (GS) earnings in particular-we offered that this would be the best quarter in years, either way. Given the government backstop (in many ways, shapes and forms), the barn door was open for these companies to gallop in green fields.
- As we reflect on the fundamental state of the union, there have indeed been some strong stories. Goldman, Caterpillar (CAT), IBM (IBM), Apple (AAPL) and Intel (INTC) stand out, although some had flies investors chose to ignore (Mr. Practical delves into this here and here).
- The two reports that stand out this morning were Mother Morgan (MS) (all three divisions lost money) and Wells Fargo (WFC) (bad loans jumped and assets no longer collecting interest climbed 45%, according to Bloomberg).
- Those punk piggies, coupled with less-than-stellar quarters at Google (GOOG) and General Electric (GE) (something still feels funky) beg the question: If not now, when, and if not you, who?
- As is always the case, the reaction to news will be more telling than the news itself.
- Given the proximity of S&P 955 and the widespread anticipation of a whoosh higher, prudence is warranted as we edge ahead and make our bed. The greatest trick the devil ever pulled was convincing the world a breakout (or breakdown) is imminent.
- I've been trading around some short-side exposure but consistent with recent banter, I’m in the process of paring risk as I'm traveling tomorrow for business (and some blackjack with my grandmother).
- I am, however, keeping some out-month out-of-the-money puts on my sheets with an eye towards the "W."
- Speaking of which, Marty Feldman, er, Feldstein—the President Emeritus of the Nat'l Bureau of Economic Research—is officially in the "W" camp as well.
- As I often say, you can pick the direction or the timing but you'll rarely nail both. That's top of mind as I operate with my stylistic approach, but the progression—the dreaded double dip—continues to crystallize.
- I'm not trading the trannies but I'm certainly watching them. Why? Dow Theorists are a flutter that if they break above TRAN 3400, it would "confirm" the next leg higher. Drawn with a crayon rather than a pencil, I'm watching TRAN 3450-3500 as the zone bar.
- I mentioned yesterday that we've got CNBC on in the hallowed halls for the first time in two years and it sure does bring back memories! Talk about being a "bit" early, I'll never forget the weird looks I got when I warned of the cumulative risks of debt and derivatives building behind the scenes.
- In terms of the here and now, the tape is slithering sideways directly at the most important level of the year. While breadth is balanced and green seeds persist (Apple, the Semis and homebuilders stand out), banks are trading under the 50- and 200-day moving averages and big beta is laggy despite St. Stephen's rose of a quarter.
- Keep an eye on Mother Morgan, which is slinking back towards the flat-line. If she can flip the upside switch, that could shift psychology at a time when psychology is paramount.
- Think positive, Minyans—it could be worse...you could be ordinary!
R.P.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
Their quarterly report proclaims that the bear market is most likely over. Their reasoning and analysis is quite compelling. The "Second Quarter Review 2009 July 20th" highlights states:
The European Central Bank increased its balance sheet by $621 billion / 25% overnight. Interbank lending rates have dropped to the lowest on record. Credit spreads have narrowed. Stocks earning yields are historically cheap compared to bond yields. Globally yield curves are VERY steep making banks eager to lend. Short of a nuclear war they see very little reason for the bear market to return.
