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Buzz Bits: Dow, Nasdaq Sink Into Red

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Your daily Buzz & Banter highlights.

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Drop the Ball Already - Jeff Macke - 3:10 PM

Hello from NYC's Times Square where, no matter how much I stare and try to will it lower, the New Year's Eve ball seems determined to stay aloft until December 31st. Apparently my being done with 2007 doesn't mean the rest of the world has to go along with me. It seems sort of selfish of the rest of the world to me but who am I to judge. Here's what I'm watching, besides the ball and the clock:

  • I took an extended walk through the retail mecca that is the Midtown area today. I've seen busier holiday shopping seasons (1999, 2000) but it's hard to reconcile a dead consumer with lines out the door at Saks (SKS), Apple (AAPL) and Disney (DIS).

  • Also, did anyone else note the smack-talking joy of the Corning (GLW) CEO on last night's Fast Money? The guy was giddy over LCD TV and Notebook sales. And he does not seem like a man given to false giddiness.

  • There are just a couple of bullish data points on a down day in a tape that was rather vocal about selling earlier this week and I still don't like now.

Position in DIS.



Platinum Too? - Lance Lewis - 1:12 PM

Gold isn't the only precious metal that is threatening to make new all-time highs. Platinum is just half a percent away from a new all-time high of its own and is actually higher by half a percent today despite the dollar rallying.


Click here to enlarge image


The closed-end fund ASA (ASA) has quietly moved 25% of its assets into platinum producers (with the rest remaining in gold producers) and is still trading 12% below NAV. It might be worth a look for those looking to gain leveraged exposure to new all-time highs in platinum prices, as well as gold prices.

Position in ASA.


Commodities Cruisin' - Ryan Krueger - 11:59 AM

I chewed through the Bloomberg survey of commodity analysts out with their 2008 forecasts. Three stood out, in their views, as having the most room to fall from here judging by their price targets: Wheat, Crude, Coffee, are set up for an average of 20% declines from here to their 2008 ending price forecasts.

Certainly a reasonable case, and many risks are inside each of those prices, but in secular bull markets this can be viewed another way, and I do. These are three commodities that analysts have the most revisions to make, in order to catch up to actual prices, even before another leg higher.

I have raised stops aggressively but am still long all three (among others) and many of the businesses in the equity markets needed to support them that are going to be flooded with new orders.

Position in Wheat, Crude, Coffee.


Carry Trade Commentary - Mark Bloudek - 9:40 AM

Some are probably wondering this morning what is happening to the correlation between the Yen and the equity markets.

When thinking about the carry trade, we must remember that the attractiveness from a risk reward perspective has two variables. One of those variables is the interest rate differential and that is going higher this morning as a new dynamic (concern) has entered the world of interest rates: inflation.

For the past many months, interest rates were a proxy for credit worries. They went down as the credit worries worsened and therefore the carry trade became less attractive due to the narrowing differential. The result was the USD exchange rate went down against the yen.

The real question that one needs to ponder now is the following: Is the bond market saying the credit crisis is abating by seeing rates move up or is the bond market saying inflation (think food/energy/commodities) is a bigger concern in the midst of continuing credit problems? If the answer is the latter, look out because the equity market will suffer.


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No positions in stocks mentioned.

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