Market Montage
Stock Market, Economics, Equity Analysis
Apr01
The multi year 0%ish Fed funds yield plan has had many outsize effects, not the least of which is a massive transfer of wealth from savers to debtors. Those savers, many usually a very conservative bunch, have been desperate to pick up any sort of meaningful yield to keep ahead of inflation – or to reach those promised annual return assumptions of 7%+ if you are a pension fund. As Treasury bond rates have swooned, so have corporate bond rates – both at the high end and at the low end of quality as economics 101 kicks in. As demand swamps supply, prices go up – which in the bond market means yield goes down. …
Mar31
This data should bode well for Monday, China's PMI surprised significantly to the upside and varies quite significantly from the flash numbers seen about a week ago. Keep in mind there are 2 sets of PMI's in China; the official number covers larger and state supported businesses while the HSBC private version covers smaller and mid sized companies. Generally I would put more stock in what a private firm is saying than any official government data, but the markets believe what they believe. This should be a relief of sorts for for those who have been grappling with the potential for significant slowdown in China for the past few months. …
Mar30
Oh the dreaded Friday afternoon press release – the place companies go to tell you things they hope you will forget by Monday! Groupon (GRPN) just dropped a nice anvil on investors with a restatement of the previous quarter by 4 cents lower and cites material weakness in its accounting. While this doesn't affect current quarter estimates it's one of those trust issues. This company already had a ton of push-pull with the SEC in their offering documents on how they wanted to report their financials. Looks like they are still working on it. …
Mar30
An interesting session despite the mixed and "quiet" tape. The S&P 500 regained that 1404 level that was a weekly high from 2008, and sits over the 1405 10 day moving average. But most of the leaders of the past few months were non participants today. Can't remember how few times the NASDAQ was lagging the DJIA this quarter.
The last day of the quarter was fitting on how things have gone for most of the past 2 months – big caps led, small caps lagged: +0.37% SP 500 v -0.23% Russell 2000 – a 0.6% variance among the two, something we saw over and over throughout February and March. …
Mar30
I have to say I was quite shocked by the performance of Red Hat (RHT) yesterday, up some 20% on a small earnings beat and modest increase in guidance in the conference call. Perhaps it was the dearth of names for speculators to daytrade yesterday plus some form of short covering but the performance did not make much sense in relation to the results. Either way, Red Hat is apparently now a "cloud computing" play and it took the entire group up with it. Quite a few names now associated with this sector, I'd mark as suspicious in terms they are not really cloud plays but it is what it is. Tibco Software (TIBX) was one of the names that was run up sharply along side Red Hat yesterday, in anticipation of its earning report last evening. Much like Red Hat, a decent beat and ok guidance but the reactions are polar opposites. …
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