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Freaky Friday Potpourri

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After a bevy of bad news that would cause a mortal man to shake and shiver, the tape continues to hang in there, front and center.

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Good morning and welcome back to the freaky pack. It's been a wild week in the city of critters as we power up the finale of our five-session set. After a bevy of bad news that would cause a mortal man to shake and shiver, the tape continues to hang in there, front and center.

Indeed, in the face of less-than-thrilling earnings across the spectrum, from Intel (INTC) to Yahoo (YHOO) to Google (GOOG) to Caterpillar (CAT) to continued sub-primed concerns and horrid action in the financials, the market has had every excuse to turn tail and set sail.

It hasn't, yet, which begs two rather pertinent questions.

  • How much more supply can the financials absorb before they pull down the broader tape?
  • If the market acts this fabu with nosty banks and bunk brokers, how's it gonna react when these piggies finally find a bid?"

The unconfirmed chatter making the rounds yesterday was that Lehman (LEH) was gonna pull American Home Mortgage's (AHM) line of credit, which would conceivably start a downside domino across the bevy of brokers that have billions of dollars in counter-party risk. I heard (again, unconfirmed) that the CFO of AHM denied that story late yesterday but the price action of the stock has yet to reflect that.

The bull case here-and yes, there is one-is that credit concerns will curtail in the riskier segments of the market (sub-prime) but remain buoyant from a broader LBO perspective. That remains to be seen but one thing is for certain. As goes the piggies, so goes the poke so keep that complex front and center as a proxy for our finance-based economy.

Random Thoughts

  • The Fed's Poole will speak on sub-prime at 11:00 EST. What kind of name is Poole? Comanche Indian.

  • China popped almost 4% overnight, back through its 50-day but below the double top we've been watching. If you wanna digest some Chinese food for thought, be sure to check out the module on the home page (starting with Hoofy & Boo's latest news!).

  • "Is the Google (GOOG) miss the fat lady singing? As a follow up to Todd's post, as mentioned previously, the largest up day to date in the DJIA occurred in the first week of Oct 1987. I believe it was in the order of magnitude of 70 plus points on a base in the 2,600 plus area. Does that remind anyone of last Thursday? Does the 14,000 DJIA close today remind anyone of the 2,999.70 close near this date at the July 1990 high, which wasn't seen again for a year? Just askin'..." Professor Jeff Cooper on the Buzz & Banter.

  • Has it really been 22 years since Fletch?

  • Con-tanned? Miami condo glut is pushing Florida's economy to the brink of recession.

  • A moment of silence for July paper please. And keep your eye open for pin risk, which occurs when there is out-sized open interest relative to average daily volume.


R.P.

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