The Consumer Price Index is up 1.1% for the month – that's a 13.2% run rate!
Of course the "core" CPI, for all you consumers who don't use food or energy and simply exist to purchase other things (sort of like Buddha with a gold card) is up "just" 0.3%, a run rate of 3.6% but the overall core is now up 5% year over year so the truth is probably somewhere in between. Well I say Jimmy crack corn and I don't care because oil prices are still down this morning and THAT is the ONLY reason we have a high CPI in the first place.
I'm in a good market mood this morning because we've already recovered from a 100-point pre-market drop as oil fell off it's usual BS after-hours pump and WFC laughed off Meredith Whitney's predictions and reported a net INCOME of $1.75Bn, or 53 cents a share (down from .67 last year) on revenues of $11.46Bn (UP 16%), a nice beat on the .50 expected by the average analyst. "We are open for business and getting lots of it," said President and Chief Executive John Stumpf. "We also continued to benefit from opportunities in this environment to gain new business and customers through selective acquisitions." WFC is raising it's dividend 10%.
Ms. Whitney downgraded WFC in April and said the company would need "at least" $4.5Bn in additional reserves (they needed $1.5Bn) and that they would earn just $1.20 for the year (the company is ahead of projections to earn $2.12). WFC is where I choose to put my own money as they are a very solid bank who have barely flinched in this financial mess despite being very heavy in California, Vegas and other beaten-down West Coast markets. Since her April attack, WFC has fallen 33% with a $5 drop in the past 5 days to $20.51 at yesterday's close. This is the irrationality of the markets – there was no evidence whatsoever that this bank was in crisis other than Whitney and her pack of roving hyenas effectively screaming fire in a crowded theater.
While the SEC is finally starting to ask Goldman Sachs a few questions about what BSC CEO Alan Schwartz claims was manipulation of BSC stock by the London office of GS in BSC's final days. LEH CEO Richard Fuld told GS's Blankfein he was hearing "a lot of noise" about Goldman traders who allegedly spread negative rumors about Lehman. In recent months, Mr. Fuld has contacted traders he felt may have been bad-mouthing his stock, according to someone familiar with the matter. Spreading rumors one knows to be false with the intention of manipulating a public company's price is illegal – we're talking Martha Stewart in the slammer kind of illegal, the kind of illegal even GS's CEO may not be able to wriggle out of if it all hits the fan…
Contrary to what Blankfein's gang would have us believe, NTRS reported Q2 earnings ROSE 4% to .96 a share on $1.09Bn in revenues (up 24%). The .96 a share was a miss from the $1.05 the average (non GS, non Whitney) analyst was looking for but it included a .39 per share acconting charge. Northern Trust said its corporate and institutional services business reported a 32 percent jump in revenue to $409.2 million, reflecting strong securities lending fees and new business. The group's assets totaled $3.6 trillion, down 1 percent from last year.
Oh no – PANIC – run away from the financials. Really folks, can you really believe that GS, Whitney, Cramer et al are merely incompetent analysts who can be off by 100% in their estimates of a financial institution's earnings, or is it possible that they are nothing more than manipulative crooks trying to foment (Cramer's word) panic in the markets in order to rake in profits and scare the retail sheep who follow them out of perfectly sound positions while they (or the people who pay them) secretly pick them up on the cheap for pennies on the dollar?
Isn't it interesting that, the FRE/FNM crisis gives former GS CEO Paulson an excuse to get the SEC to curb short selling of GS and other financial the same day that earnings start coming in that clearly show the panic was way overdone. What does curbing short selling do? It now allows GS et al to turn around and buy the very same financials they chased you out of with impunity as they can now manipulate the stock UP and they will get away with their sudden reversal by saying that the situation has fundamentally changed due to the SEC and Fed action initiated by former GS CEO and now Treasury Secretary Hank Paulson. The fox is truly guarding the hen house and we, the investing public, are getting nothing but rotten eggs!
Asia was flat this morning and Europe is mixed with the UK off 2% on rising unemployment and the DAX flat but none of that matters to US markets today as we have oil inventories at 10:30 and Fed minutes at 2 pm along with testimony from Bernanke that will hopefully include my very favorite thing on TV, an episode I like to call "When Ron Paul Attacks."
We should have a very choppy market until we get past the testimony and past the inventory and past the Fed minutes so let's just try to survive into the afternoon. As I said last night, we are hoping for a weak oil reaction to the almost certain draw-down in crude, caused by NYMEX crooks shorting the oil market 20M barrels at the close of trading in June. That is costing us 5Mb per week of July imports.
INTC gave us a good report last night, driven by strong laptop sales (good for AAPL?) and should keep the Nasdaq up but we need the horsemen to pull it together. I like RIMM right now, the Aug $110 calls are a nice buy at the open.
Be careful out there, it could go either way or both ways today!
