Buzz Bits: Dow, Nasdaq Step Up
Your daily Buzz & Banter highlights...
Hercules, Hercules! - Todd Harrison - 3:15 PM
The Minxy meander continues to spin as we wave goodbye to contra-hour and eye the third base coach. Some musings from the front as I "get back" at my 7:00 AM trainer by eating a handful of Minyanville chocolate chip cookies:
- Shh...did you hear that? It sounded a lot like someone just whispered "can't get 'em down." Hey, given the bevy of bad news today, I don't blame that train of thought (although a case can me made that the rotation station (into tech, away from wreck) continues to continue).
- My "brother," who scooped the homies this morning, informs me that he's taken his trade. He's quick like that--and very good.
- NYSE internals are trying to creep while ya sleep (currently 3:2 negative). This has been the biggest flaw in the upside craw today.
- I'll say it again--if you don't know whether to buy 'em or sell 'em....don't.
- A loofah?
- The XAU is down today? My friend, if you ran 43% off the August low, you'd be tired too!
- Look at me, I'm CFC! The Magilla Gorilla, er, Gorilla Mozilo is right back at the $18 convert price.
- I'm about to switch my mouse to the left for the first time in history. I mean, I can't even move my shoulder anymore and it only aches when I'm at work (which effectively means it always aches). I know--you don't care--but I'm playing in pain ova here.
- Deep breath, Minyans--we're almost there.
Discover the Numbers with Minyan Peter - Minyanville Staff (Minyan Peter) - 11:33 AM
First, notwithstanding $202 mln in net income, Discover's (DFS) tangible capital base fell by about $117 mln. As far as I can tell there were no stock buy-backs and only about $30 million in dividends this quarter that would have hit capital. I have to assume, therefore, that the difference, a loss of about $300 mln, must have flowed through "Comprehensive Income".
Not to beat a dead horse, but in an environment where capital is king, Comprehensive Income matters a whole lot more than "Net Income." As a result of balance sheet growth (looks like both a build up in card balances as well as liquidity buildup) and the decline in tangible capital managed leverage grew to 13.28:1 from 10.28:1 just a year ago.
Second, the company reported a negative I/O strip revaluation. Put in layman's terms, they wrote off part of a previously taken securitization gain.
Third, while not huge, managed delinquencies rose in the quarter, while charge-offs were down. Interestingly to me, they lowered their provision expense this quarter.
Fourth, managed margins dropped again this quarter. Year on year, return on loans has fallen 20% - from 1.96% to 1.56%.
Oh homie homie! - Fil Zucchi - 10:29 AM
Existing homes sales came in about as expected... in the headlines at least. In the details however, prices fell 2.5% MoM, condos Months Supply remain above 11 months, and Months Supply overall are now at 10 months. Condo unit sales are down 8% MoM.
On a trading basis, I would be inclined to heed Toddo's brother's view, but longer term my sense is that the terms of the Standard Pacific's (SPF) financing deal mark the turning point for homebuilders from "serious problems" to outright "desperation". I am sticking with my prediction that before this whole mess is over the Philly Housing Index (HGX) will print double digits; and any recovery after that will take many many years.
Position in XHB.
View from Q - Quint Tatro - 8:23 AM
Good morning, Minyans. While you're sipping on that coffee and catching up on the news flow, here are some ideas to consider for the day:
Boo and the boys are looking to press early after yesterday's dip and there are plenty of reasons to expect lower prices. It would be very easy to succumb to a bearish thesis here but I am trying hard to remain open-minded and flexible. The S&P 500 is much improved and the recent consolidation has been quite constructive, the NASDAQ also is acting well and basing at recent highs, digesting the Fed move. I will take my cues from the tape rather than the noise that is going on around us and should these averages hang in there, I will continue to look for another push higher as managers scramble into the end of the quarter. If, however, we start to see volume pick up and recent lows taken out, it will be time to retreat quickly and make sure to protect recent gains.
Yesterday, per my opening piece, I started Night Hawk Radiology (NHWK) and I like the way it closed green after seeing some early pressure. I am looking to leg in here slowly and will look to add another piece on a break out above $24.34. I have not started Ciena (CIEN) just yet, but it still looks promising on a break over the $39.20 area. Also, per my post yesterday afternoon, I started Amylin Pharmaceuticals (AMLN) and will be watching for a move over the $49.76 area to add.
With the end of the quarter upon us and the performance anxiety I believe is so prevalent, I have a hard time buying into the fact that we roll over here, but should we start to see some prolonged weakness, I will be very quick to change my tune and step aside. Go get 'em today.
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