Happy Friday… Futures ~20bps higher this morning as both Oracle (ORCL; +3.9%) and Blackberry-maker Research in Motion (RIMM; +4%) reported better-than-expected earnings after last night’s close. Texas Instruments (TXN; +2.7%) also boosted investor sentiment by announcing a $7.5B buyback and a dividend raise. In spite of market strength today – or perhaps because of it – Gold continues to make new record highs and bonds are also bid higher. In economic news, the Consumer Price Index (CPI) for August was in-line with expectations, at +0.3% month-over-month and +1.1% year-over-year. Worth noting that Credit Default Swaps on
’s debt have risen to record highs. Ireland Europe is down ~50bps on aggregate. Asia was mostly higher overnight. The USD basket is up slightly, Oil is flat, and Gold – as previously mentioned – is up 45bps. Looking ahead, we’ll hear from the FOMC next week, and no policy change is anticipated.
Very bullish trader commentary here, but note the ETF mention…great stuff, to be sure, but what if all the ETF inflows mentioned are simply going into Gold and Silver?
Good Morning – Interesting things appear to be happening. Watch the money. Risk appetite is returning. All equity funds see another week of inflows. Mostly in ETFs, but it is a start. Fixed income continues to see strong inflows, that remains a constant. Money Market funds see large outflows of 22 billion outflows, the biggest in 13 weeks, unwinding the bulk of inflows over the past 5 weeks. Large cap equities were the big winners ($7.4 billion), International equities ($1.4 billion) also garnished a good amount of money. EM equity funds have seen 16 consecutive weeks of inflows. The
has the biggest 2 week inflow since December of 2008. Election-cycle. The typical trough in the cycle is Mid September in the mid-term election year. 1130 has been a struggle technically for us, a move above breaks a 12 week high. 1150 next stop. Get bullish! U.S.
Here’s an interest observation from the CSFB derivatives desk:
The unavoidable theme in the index/etf options market has been the buying of protection (including but not limited to SPY, QQQQ, IWM, EEM, XLF, and XRT). Almost every sizable trade that printed in this sector today was a buyer of puts, put spreads, or putspread collars, the majority of which were customers preparing for a moderate selloff of 5-10%. The put spread buying has softened skew a decent amount to roughly its 12 month average as consensus deems to be that we won't face a double dip scenario leading customers to not mind capping their protection by selling a lower strike put.
Couple interesting stories on Bloomberg this morning on the alternative investment space:
Citadel Said to Consider Fee Cuts as Hedge Funds Seek Clients 2010-09-17 04:01:00.16 GMT By Saijel Kishan and Katherine Burton
Sept. 17 (Bloomberg) -- Citadel LLC is considering cutting fees on its two main funds as it attempts to attract clients during the worst climate for raising money in two decades, said two people with knowledge of the firm’s plans. The Kensington and Wellington hedge funds at Chicago-based Citadel, the $11.1 billion firm founded by Ken Griffin, are among a handful that pass along all expenses to clients rather than charging the industry-standard 2 percent annual management fee. Expenses at the firm have reached as much as 8 percent of assets, and typically range from 4 percent to 6 percent. Citadel lost 55 percent of assets as markets tumbled in 2008, and when investors sought to take out $1.2 billion the firm suspended redemptions before restoring them in late 2009. Even after last year’s 62 percent return and this year’s 4 percent gain, the funds would still need to climb about 30 percent to make clients whole. Assets fell from $13.5 billion a year ago as money was returned to customers.
Carlyle Said to Seek Stake in Hedge-Fund Firm Amid Buyout Slump 2010-09-17 04:01:00.20 GMT By Cristina Alesci, Saijel Kishan and Jason Kelly
Sept. 17 (Bloomberg) -- Carlyle Group, the world’s second- largest private-equity firm, may buy a stake in a hedge-fund manager and is negotiating with several firms as it seeks to add more liquid investments, said three people briefed on the plans. Carlyle is talking to firms including one hedge fund with as much as $5 billion in assets that trades across multiple markets, said the people, who asked not to be identified because the information is private. The firm is also seeking to raise two new debt funds and a $1 billion pool to buy small companies, the people said. The biggest private-equity firms are adding more liquid investments after the financial crisis sapped investors’
appetites for large buyouts. Blackstone Group LP expanded its debt business with the 2008 purchase of hedge fund GSO Capital Partners LP, and KKR & Co. has formed a group to underwrite debt and equity offerings. A previous effort by Carlyle to add hedge funds failed in 2008 when the firm liquidated a pool hurt by investments in mortgage securities.
Finally, on a personal note, I have never heard Home Depot co-founder Bernie Marcus speak before, but he was terrific on CNBC this morning. Hopefully his pro-small business and anti-academic-economic-theory rant will resonate in
, especially within the Obama Administration. He basically asks, “what the heck do Summers, Pelosi, and Obama know about running a small business? They’ve never had to in their lives, and they are out of touch.” If things end up slow later today, please take the time to skim through this video: http://classic.cnbc.com/id/15840232?video=1593436488&play=1 Washington
JNJ to buy CRXL for EUR24.75/share. MEE expects to report Q3 loss and guides FY 2010 to low end of range. BofAMLCO ups DCI. BARD ups OSK. CITI cuts FMX. PIPR cuts SHPGY, ARNA. UBSS cuts NBL.
S&P 500 PreMarket 8:30am (last/% change prior close/volume):
Today’s Trivia: Under what name was Kool-Aid originally marketed?
Yesterday’s Question: What is the important distinction – other than the most obvious – between male and female mosquitoes?
Yesterday's Answer: Female mosquitoes are the only ones that bite…