Wednesday, November 25, 2009

Morning Note...

Safe travels today and Happy Thanksgiving tomorrow… Futures +30bps this morning as the dollar weakens (breaking the key USD/EUR 1.50 level), gold continues to achieve record highs (India hinted it may buy more), and bullish economic data is released.  Personal Income for October ticked slightly higher to +0.2% vs. +0.1% expected.  Personal Spending also ticked higher to +0.7% vs. +0.5% expected.  The prior month reading was -0.6%, and any bump in Consumer Spending is seen as bullish for the economy.  Further, Initial Jobless Claims finally broke down through the 500k barrier for the first time since January, coming in at 466k.  Continuing Claims were 5.423M vs. 5.556M expected.  On the bearish side, Durable Goods Orders were being widely ignored this morning, but came in light at -0.6% vs. +0.5% expected; the prior period’s reading was +2%.  [At the time of posting this, it looks like it DID get some attention, as futures sold off from +70bps when I started to +30bps at finish.]  UMichigan Consumer Confidence is due at 10am today, along with New Homes Sales data.  In corporate news, TIF is up 6% on earnings, DE is down 2% on earnings, and JCG is up 7% on earnings.  Across the pond, Greece is on the ropes this morning, as the potential for debt default escalates.  This would obviously be troubling for the entire Eurozone…  In Asia, China is following Brazil’s aim to slow down the potential for currency appreciation by taxing buyers of the yuan.  Expect volumes to be light today as people check out for the holiday.  As a result, price swings may be exaggerated. 

Liberals in Congress are pointing towards a tax on stock and derivative transactions (25bps) aimed at job creation.  There’s a proposed bill which would claim to raise $150B per year and would hurt speculators more than the “buy and hold” crowd, and thus help stabilize markets as well.  Obviously the “free market” crowd is up in arms over this, but it represents a legitimate shot across the finance world bow, and marks a clear attempt to ride the wave of public enmity towards improvement of Main Street by penalizing Wall Street.  Meanwhile, I read a recent study which showed that members of Congress “out-trade” the markets by some ridiculous number of standard deviations, averaging over +1% returns per month during their terms in office.  The implication is that everyone points at Wall Street insider trading abuses (and well that they should…) but true insider trading occurs when politicians consistently beat the markets by using information they see in Committee.  While we are levying taxes and laying blame, let’s take a look at that please.  Stay tuned…   In other political news, Obama’s made a symbolic gesture by hosting India at his first State Dinner last night.  India has been concerned with all the attention the US has been giving to Pakistan and China of late, and it may have been a very shrewd political move to re-align with India, especially as a major counterbalance to China’s continued strength.  Recall that we have seen this movie before, when Nixon courted China in the 70’s as a counterbalance to Russian strength.  Across the pond, Britain surprisingly criticized Obama for his delay on Afghanistan.  You don’t often see an ally that outspoken.  Obama is expected to announce his decision next week (smart to delay any announced surge or troop increases until after the Thanksgiving holiday) but has said he is committed to “finishing the job.”  (Whatever that means)  Since we’re on a political theme, yesterday’s Gartman Letter had some interesting data on our President.  Pre-election, a staggering 66% of those earning over $200k/yr supported him and his intent to reign in government excess and perhaps even tax those high earners in achieving that end.  How’s that working out?  It seems the pendulum is beginning its political swing, as Obama’s policies – or lack thereof, perhaps? – are now met with a sub-45% approval rating from the over-$200k earners.  That’s a pretty dramatic -20% swing in support base… At this stage, the President’s subtle language shift post-election (I recall he started dropping this into speeches in Feb/Mar) towards comments like “in my first term” and “by the end of my eight years” may have been very premature.  Hubris, anyone?  Interesting cover story from Time Magazine as we head into the holiday proclaiming this past 10 years to have been “the decade from hell,” which started with 9/11 and ended with the financial meltdown (with the Katrina disaster in the middle).  Not exactly cheerful stuff, but beyond just selling magazines, the shock value cover may have some validity.  Looking back, historians may indeed mark this past decade as the “beginning of the end” of the American Empire…  (And for those of you looking for something to read over the holiday, check out Cullen Murphy’s book “Are We Rome?”)

CITI ups VPRT.  JEFF ups EXXI.  UBSS cuts NRG.  JDSU initiated Buy at CITI. 

Asia higher overnight.  Europe holding onto +40bps gains.  USD -75bps.  Oil flat.  Gold +130bps.  Bonds higher. 

Brightpoint News

Brightpoint PreMarket (yest close/premkt/% change/volume):

S&P 500 PreMarket (last/% change prior close/volume): 
TIFFANY & CO               44.27    +5.83% 191581
JDS UNIPHASE               7.64      +3.24% 6160
CONSTELLATION-A         17.90    +3.17% 400
VULCAN MATERIALS       51.40    +3.01% 200
TELLABS INC                  5.93      +2.95% 22200
AKAMAI TECH                24.94    +2.76% 400
MBIA INC                       3.53      +2.62% 7560
CENTURYTEL INC           36.58    +2.55% 335

Today’s Trivia:  There a Bloomberg story this morning that mentions Vietnamese inflation and makes reference to something called a “tael.”  Does anyone have any idea what this is and why we may hear more and more about it?  (p.s. it pertains to gold, and I just looked it up, having never heard of it…)

Yesterday's Answer:  “WC” stands for Water Closet, which was once the polite term for “toilet.”   

Best Quotes:  Some random quotes from my survey question last week on the S&P into year-end…up, down, or sideways?

s and p will remain strong into yr end

With weak volumes at lack of catalysts either way, my uneducated guess is steady sideways..wouldnt be surprised to see 1100 give or take 2%

Seems like too many people are saying WHY TRADE ... gains are locked in ... wait for the calendar to flip... The only fly in that ointment would be a sell-signal data point ... it does seem that more people are leaning toward the exit rather than the entrance.

survey response from me into year-end is sideways action...

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