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Buzz Bits: Dow, Nasdaq Turn Downward

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Your daily Buzz & Banter highlights...

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L.A. Buzzer, L.A. Buzzer. L.A. Buzzer gonna have to do...- Todd Harrison- 2:45 PM

I'm flying a bit blind today--no turrets, just a laptop--but I wanted to toss some thoughts out to ye faithful as there's a lot going on...
  • The piggies were once again the tell yesterday as the banks couldn't mount the 200-day despite the squeeze higher. We watch 'em for a reason, Minyans, and their importance is upticked dramatically given the recent market catalysts.

  • S&P 1490 is all-of-a-sudden back in play and I know a LOT of respected market technicians that are using that as a ripcord level.

  • I've always looked at the bear case during rallies and the bull case during sell-offs. In that vein, and as I read the Buzz about the potential KKR IPO, I was reminded about the transfer or risk and the transfer of wealth. My gut tells me that this is "topping behavior"in the space (a la EOP) but I wanna keep my mind open to see both sides of the trade.

  • Birthday boy John Succo gave Minyans a massive heads up regarding CDO's a month or so ago. He again addressed some issues in his missive today. I've long offered that he's one of the sharpest tools in the shed and one of the greatest blessings in my life (personally and professionally). Take advantage of his insight, Minyans, he doesn't have to write---he does so because he cares.

  • I hope this finds ye faithful well. Fare ye well into the bell and have a fantastic weekend!


    R.P.



Iceberg ahead!- Adam Katz- 1:55 PM

I was hoping to be a bullish voice on the 'Ville and wouldn't ya know it… as soon as I start contributing, the poles holding up the red flags in our financial system start getting chopped down.

Flying below the radar today is a broker dealer blow up: Brookstreet Securities. Brookstreet is a firm based out of Irvine, CA that claims to have been designed to support independent contractor brokers who, for the most part, ran retail books of business that generated an estimated $75-120 mln a year in revenue. It is also notable that the firm claims to have net capital in excess of $4,000,000, normally more than enough to cover losses for retail accounts which should not have been carrying much leverage.

Well, unfortunately history has a way of repeating itself and many client accounts were holding leveraged positions in CMOs. The Company's clearing agent, Nationwide Financial Services (NFS), a division of Fidelity, had suddenly decided to re-evaluate where many of those CMOs were marked (undoubtedly prompted by among other red flags such as the Bear Stearns credit fund blow ups). That choice created "horrendous markdowns and unrealized as well as realized losses" according to an email from the Company.

Tip of the iceberg? As I indicated in my buzz yesterday, I suspect so. I bring this up because it serves as a visible anecdote of just how wide spread and real this problem is, and most importantly, the impact it can have on our portfolios in the near term.


Pinnochio- Jeffrey Cooper- 12:29 PM

Earlier I mentioned Research In Motion (RIMM) and Mastercard (MA) being upgraded and that MA going red would be a strike against the market today.

The 3rd strike may be Blackstone (BX) going below the opening price!

The S&P staying heavy and going below the first hour's range is NOT GOOD.

On a Friday in a bull market in the summer---it is a change in character worth noting.

Especially as the S&P kissed its 20 ma resistance and has rolled over.

Has the market been held up by Blackstone (BX) and the Russell 2000 re-balancing act?

If so it may be an accident waiting to happen...


Fil Zucchi: Muse- Jeff Macke- 11:27 AM

There I was, trying to mind my own business which, on this particular morning involves nothing but attempting to scrape myself off the Friday wall to which I am prematurely plastered, and Prof. Fil mentioned that he was working into a synthetic long position in Starbucks (SBUX).

Of such catalysts are Random Lists Formed...

  • I agree with Fil's observation that downgrading a stock 40% off its highs is the very definition of "late." My problem with the long side is that Starbucks itself doesn't seem to think it has a problem. Last year it was Banana Fraps causing them issues. This year its rising milk prices. When SBUX says the problem is "we're totally over-saturated and selling Paul McCartney albums is a dumb idea", I'll be a buyer of the stock.

    Not that a trading long can't work... I would just make sure I was caffeinated enough to ensure I'd take gains like a hyperactive chimp if I were playing Starbucks from the light side.

  • With Rocker... er... Rocket Roger's loss last night, the Yankees are playing .500 ball since Todd-O didn't jinx them by noting their inexorable climb to the top of the AL East. Yankee fans, I'll be happy to undo the un-jinx by pronouncing the Yankees dead on television tonight... for the right price.

  • Speaking of being on television... "THE BLACKSTONE GROUP (BX) IS PUBLIC!!!!" Sorry; I'm sort of emotionally obligated to mention that with some vigor.

  • Then again, in defense of my television peers, it's the first official Friday of the summer. What would you talk about today?
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