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Buzz Bits: Dow, Nasdaq On The Rise


Your daily Buzz & Banter highlights...

Editor's Note: This is a small sample of the content available on the Buzz and Banter.

Answers I Really Wanna Know... - Todd Harrison - 3:32 PM

  • How much more supply can the financials absorb before they pull down the broader tape?

  • Or, should we be thinking "If the market acts this great with nosty banks and brokers, how's it gonna act when these piggies find a bid?"

  • Does anyone remember how great the market acted in early October, 1987?

  • Are you hearing the (unconfirmed) chatter that a major Wall Street firm has pulled the American Home Mortgage (AHM) line of credit?

  • Wouldn't that put them over the edge?

  • What would happen to the many Wall Street firms with billions of dollars in exposure to American Home Mortgage?

  • Isn't that contagian in a nutshell?

  • And yet the S&P remains pixels away from fresh highs?

  • Is there a disconnect between perception and reality or am I simply not reading it right?


Position in SPX

Gold hot as stagflation abounds... - Lance Lewis - 2:31 PM

Per the FOMC minutes, the Fed is both worried about the rate of growth and worried about the rate of inflation. Hence they continue to be "in the box".

What economic environment does that describe? Answer: Stagflation.

Historically, the best performing asset in a stagflationary environment has been gold.

Also note that the HUI has now confirmed the XAU's breakout from its 12-month range with a breakout of its own. Coincidence? I think not...

Click here to enlarge.

Click here to enlarge.

Positions in gold shares

Lots to note folks... - Jeffrey Cooper - 12:46 PM

Seems to be a change in character in Momoville:
  • Crocs (CROX) on good news such as today's gaps and ramps, it's giving up the ghost.

  • Mastercard (MA) up three goes red.

  • (BIDU) breaks the 200 strike and tags 195.

  • Energies rolling over? Western Refining (WNR) mentioned the other day, gets another spanking of distribution.

  • Marathon Oil (MRO) appears to be tracing out a top.

  • Google (GOOG) hit the 555-560 measured move from a month ago. Earnings are tonight. If the numbers are good but the the reaction in the price is poor, the Fat Lady may be singin' in the rain.
Position in MRO, MA

Morning Update - Sally Limantour - 9:28 AM

  • Yesterday's break in equities was a reaction to a revelation that investments in two Bear Stearns (BSC) funds were worthless. The market was down early on and it traded out of the value areas of the previous three days. Bernanke acknowledged for the first time on Wednesday that credit concerns were spreading beyond the subprime mortgage market. He also spoke about inflation. The key here is he has clearly turned his concerns from deflation to inflation:

    "If inflation were to move higher for an extended period and that increase became embedded in long term inflation expectations, the re-establishment of price stability would become more difficult and costly to achieve. With the level of resource utilization relatively high and with a sustained moderation in inflation pressures yet to be convincingly demonstrated, the FOMC has consistently stated that upside risks to inflation are its predominant policy concern"

  • U.S. federal tax authorities are seeking data from Citigroup (C) and Lehman Brothers (LEH) in order to determine whether the complex derivatives trades the companies engineered for hedge-funds and other clients were designed primarily to avoid taxes. This is not good news for the Brokers.

  • On an interesting note, the non-U.S.-dollar, dollar-related, equity markets (Canada, Australia, and New Zealand) have been very strong, while the other markets have been somewhat weaker. That is, the commodity "rich" countries are in demand and the commodity markets, particularly the metals and energy, remain well-bid. Banking, brokerage and private equity companies are avoided for now and the charts are starting to break down.
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No positions in stocks mentioned.

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