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Friday, March 29, 2024

Thursday Morning

The CPI is out today.

I expect it to be not as tame as the PPI because consumers don’t have departments whose sole job is to make sure they don’t overpay for things, but we should get some trickle down improvement, at least as a slowing of inflation.  Anything else will be a big disappointment although I don’t see how anyone can complain about sub 3% inflation.

Asia was fairly flat, taking a well-deserved rest today and the BOJ held rates steady at .25% which should boost the buck a bit.  It’s very tricky for Japan, who have to double the rates in order to raise them a quarter point…

Europe has no idea what to do ahead of our CPI report so we will ignore them but we do want to see if the FTSE can break 6,250.

I should really wait 90 minutes as it will all change but let’s see if I get this right:

The Dow needs to break 12,300 TODAY in order to really bring in some new money.  Falling all the way to 12,100 would still be fine if we hold it but will sideline new money for quite a while.

The S&P tested 1,400 yesterday and it will be amazing if they break it and 1.390 is a very soft floor.  The NYSE is at 8,901 and holding that level will be huge – let’s look for them for early inidcations of trouble.  The Nasdaq touched 2,450 yesterday and now it has to buy it or get out.

The SOX broke 480, which was a huge barrier last fall and led to the mega semi rally in January.  We are still 75 points (15%) below those highs.  Transports are looking to take out 2,700, on their way to a retest of 2,800 – which may mark a top for now.

[Crude Oil]

Oil is going to try to hold $59 again as traders are stunned by the possibility of cold weather may hit the US in the winter.  There’s a gas inventory report today that is sure to make XOM move up whether it’s a build or a draw or a steep decline.

Ticker Sense has a nice gas chartand postulates that, even if we have the biggest drawdown in gas ever this winter, we will still hit the spring with above average inventories.

I wish I could tell you that makes for a good trade but nothing makes for a good energy trade as long as roaches keep entering the trap at a rate of $11Bn a day (since 10/25).

Since I called a top on oil prices on 9/25, crude has indeed gone down 5% but oil companies have gone crazy!

Gold will firm up on any small sign of inflation but may also do well if the CPI comes in low as we will be back to thinking maybe the Fed will have to ease off.  $620 has been holding up with our $615 target providing a firm floor.

Ah, now we have the CPI and things look good!  Down .5% and up just .1% on the core – very good stuff.  Now we can concetrate on making new highs!

If we can’t break our upside levels on this news, then the market may be getting a little tired.

===================================

Earnings were not thrilling and DELL was scary but the CPI makes up for it all as the future is looking brighter again.

BKS was in-line, BIG had a huge beat, IFX was so-so, REP is down, WTSLA beat,  

WSM missed and warned!  I forgot about the damned Pottery Barn, which drags them down every time!

SHLD “onlytripled profits and beat so, as I predicted in yesterday’s comments, it will sell-off!  Actually sales were weak, again confirming that consumers are buying upscale.

Later we get: GPS, HPQ (might save Dell), INTU, MRVL, SBUX

AMAT missed as expected but they are guiding revenues further down on a decline in display panel making equipment so let’s watch TXN and GLW carefully! 

We might get another crack at AMX, a winner last month, as they are bidding on Brazillian phone co. TIM.  The way that company grows they could buy Vonage and I’d still love them!

In a headline that writes itself, DWA will see profits “Flushed Away” by their latest box office bust, costing the company $25M.  This was their second disaster in the partnership that gave us “Wallace and Gromit.”

If anyone knows a good way to play canola oil, please let me know!  YUM has now switched Taco Bell as well as KFC to canola – that’s a lot of oil!

Now I know why the airlines are rallying – they managed to associate themselves with Ipods!  6 major airlines will provide Ipod connections in business class that even let you watch stored videos on the big(er) screen.  Anyone who want’s to invest in an airport based IPod download and accessory story give me a call!

GYMB had great earnigns but guided down.  Profit was up 56% on a 22% increase in revenue and same-store sales were up 16%.  BUT (and this is why retail is so annoying to invest in) Q4 is projected to be .63 vs .70 expected but the full year is still a beat so I will be liking them on a pullback.

It took them 6 months but GM finally found someone to cook keep their books!  Congrats and GOOD LUCK to former T controller Nicholas Cyprus!  Just remember, in the event of a crash, your chair may be used as a floatation device…

Speaking of Cypress (I know, the stream of consciousness is running wild!), CYis a trade I want to make as they still own 70% of SPWR, which is now worth more than they are.  It’s a proxy trade but I like CY long-term with the  Jan $17.50s at .95.

PRU is buying back 10% of their stock and the company only trades $150M worth of stock a day.  This is an Exxon sized buyback that will take all of next year to complete.  This is very different from XOM though as PRU is sitting on $15B in cash while XOM, by comparison, used 80% of their income to buy stock last quarter (oh, and the other 20% went to dividends).

Possible presidential combo Barack Obama and John Edwardshave gone anti-WMT and, interestingly, pro-COSTas Obama points out that Costco has the same prices yet pays employees 60% more than Wal-Mart.  I wont’ short WMT in a strong market but I like the COST Dec $55s for .90.

I feel like the guys in Seinfeld, watching a robbery being committed and commenting on it, but that’s what I see over at AAUK.  On Sunday Larry Yung (one of the richest men in China) bought $800M worth of AAUK in a private saleOn Wednesday AAUK announces a $4Bn investment in a China coal project that “may” give them up to 60% as partners with the Chinese geology bureau.  Nothin’ says lovin’ like handing $4Bn (the entire market cap of ACI) to your “development partners.”

The US has something else in common with China – we have made the list of countries with corporations that Norway has blacklisted for being involved in “weapons production, human rights abuses, environmental damage or corruption.”

Speaking of human rights abuses – is this good or bad publicity for Taser?  UCLA campus police are caught on tape tasering an Arab student over and over!  What impresses me most is the quality and length of the cell phone video.  The LA Times report makes an interesting read after seeing it for yourself!

Like I said back before Google even bought YouTube, this technology will have a profound impact on society!

We need a big boost today to achieve critical escape velocity as there is not much news fuel left to move the markets higher until Tuesday’s retail sales but, other than that, next week is a dead week heading into the holiday.

There is no shame in profit taking on this morning’s rise and be very, very careful if we can’t hold our breakouts because this is what happens when you chase things and don’t watch your levels!

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