Friday, July 25, 2008

Is There Reason to Celebrate?

Alan Greenspan coined the term "irrational exuberance" during the bull market (fueled by the .coms) of the 1990's. In six business days, last Wednesday July, 16th to July 23rd, it seemed as though Wall Street bulls had a chance to walk down Memory Lane. For little or no apparent reason, the SP 500 moved approximately 68 points led by the financials. Analysts and other snake-oil salesmen have been quick to call the bottom to financials. After all, the good news continued to roll in:

1. BAC's revenue was only down -42% claiming that the worst is behind the company now. Countrywide debts may go unpaid, and a 75 million share buyback was underway.

2. Wells Fargo shocked the market by beating estimates (since they now calculate delinquencies at 180 days as opposed to 120 days. WFC is up 8.50 since this great news was released.

3. Even Wachovia bounced up 50% from its low of 9.08. WB shareholders got a boost of confidence as the new CEO Robert Steel purchased $16 million dollars worth of shares.

Ax's favorite Wall Street celebrity Jim Cramer appeared on SQUAWK Box Thursday in a pre-market rally playing the old tune "Happy Days are Here Again!" Everyone received a party hat, balloon, and a kazoo... The market had bottomed right??? The Housing Bill was a done deal right??? There was NOTHING holding back the banks right? How many times have we heard this song and dance this year?

Positive numbers from housing in that existing home sales were not as bad as they were last month... Foreclosures were up again, just not up as much as they were the previous month. Some people saw this as good news... others realized that the peak months of summer should be the best months of housing sales. It could be a long winter for home builders and existing home sales.Does this suggest that natural selection in has taken over?

Portfolio is up 13.24% a far cry from close to 100%. I will develop a more effective method of booking profits and even hedging options with OTM calls/puts.

Upcoming Economic Calendar for Next Week:

Monday, July 28, 2008

10:30a.m. Jul Dallas Fed Mfg Production Index: Previous: 0.0.

Tuesday, July 29, 2008

7:45a.m. ICSC Chain Store Sales Index For Jul 26: Previous: +0.1%.
8:55a.m. Redbook Retail Sales Index For Jul 26: Previous: +1.1%.
9:00a.m. May Case Shiller Home Price Index: Previous: -16.3%.
10:00a.m. Jul Conference Board Consumer Confidence: Expected: 51.0. Previous: 50.4.
5:00p.m. ABC/Wash Post Consumer Conf For Jul 27: Previous: -41.

Wednesday, July 30, 2008

7:00a.m. Jul 26 MBA Mortgage Application Survey Refinancing Index: Previous: -5.6%.
8:15a.m. Jul ADP Employment Report: Expected: -55K. Previous: -79K.

Thursday, July 31, 2008

8:30a.m. Initial Jobless Claims For Jul 26 Week: Expected: -8K. Previous: +34K.

8:30a.m. 2Q Advance GDP: Expected: +2.3%. Previous: +1.0%.
8:30a.m. 2Q Employment Cost Index: Previous: +0.7%.
9:45a.m. Jul Chicago PMI: Expected: 51.0. Previous: 49.6.
10:00a.m. Jun Help-Wanted Index: Previous: 17.
10:00a.m. DJ-BTMU Business Barometer For Jul 12: Previous: -0.8%.

Friday, August 1, 2008

8:30a.m. Jul Nonfarm Payrolls: Expected: -60K. Previous: -62K.
8:30a.m. Jul Unemployment Rate: Expected: 5.5%. Previous: 5.5%.
10:00a.m. Jul ISM Manufacturing Business Index: Expected: 49.0. Previous: 50.2.
10:00a.m. Jun Construction Spending: Expected: -0.3%. Previous: -0.4%.

Pick the Biggest Losers or Winners of a Recession?
Gaming/Entertainment Industries
Ideas MECAD may go BANKRUPT at his rate!
LVS earning per share a measly .04.
Consumer Goods/Products
Anything like carpet, furniture, and irrigation supplies deserve a look as well.
SHW plenty of anecdotal evidence this was will be hurting during a recession as well.

1 comment:

AX said...

Beware the false PMI data this week buoyed by rebate checks. Simon Constable has a good article on this on Could lead to big up day on Thursday.

Friday could be huge if June unemployment rises into the 90K range. We'll see if Disney held up another quarter or not, Costco couldn't make it.