And the hits just keep on coming!
Building permits and hosing starts were much stronger than expected (10%) and that should push our beloved HOV's higher (but don't get too excited, the gains were the result of code changes in NYC) while jobless claims were slightly below expectations, also very nice. We get the Philly Fed at 10 and expectations there are for a very pathetic -15 and any beat will give us a nice boost. Oil is still down at $133, hopefully they won't take this good economic news as a sign that we like paying $133 a barrel…
Earnings are coming up roses as well with too many beats to list but notably Dow components JPM, KO and UTX, with JPM and UTX in our virtual portfolios (we prefer PEP to KO) and we're looking very good in pre-market trading and looking ahead to the big G(OOG) tonight along with IBM (got 'em), COF, MER and MSFT (got 'em). Tomorrow morning we see if C (got 'em) really deserved to lose $250Bn in market cap or if Meredith Whitney is a loon – that should be fun and you know where my money is on that bet!
We also hear from ex Dow component HON and OIH mainstay SLB tomorrow so a pretty serious day for a Friday. As long as oil stays down we are going to be fine. So far, in this whole big week of earnings, only HST, HOKU and JCI have guided down versus upward revisions from ALTR, CSGP, VFC, LUFK, STJ, AOS, FCS, HBAN (a bank!), KNL and AMTD (a broker!). I still maintain that a lot of the guidance is still very conservative as CEOs and CFOs are affected by the same gloom and doom pronouncements that you are and all these projections were done with oil in the $140s and looking to go higher.
Oil is not dead yet, even though there was an 8M barrel build in inventory and products vs. an expectation of a 4Mb draw (we were surprised too) no one has ever accused the NYMEX of reacting rationally to what has to be the most shocking example of demand destruction ever seen. As I pointed our earlier in the week, imports are off close to 1Mbd and they are shipping 1.4Mbd OUT of the country to make it look like we need more oil than we do and STILL 1Mbd is building up in inventory – that is shocking!
Asia was shocked back to life after seeing our rally yesterday and the Hang Seng gained 500 points (2.4%) with the Nikkei gaining 127 (1%). China's GDP growth "slowed" to 10.1% and C (got 'em) won approval to offer debit cards in China. Europe is off to a flying start, with 2.5% gains so far (9 am) with financials leading the charge. The UBS probe continues and the Senate probe is indicating the US is losing $100Bn a year to offshore tax evasion schemes. Bush is, of course, against closing down those loopholes as many poor widows and orphans have offshore accounts and cutting off their ability to hide assets would be an unfair burden on the average American.
I'd love to see a nice, relaxing gain today, rather than another huge rally. Something to show us that there is thought being put into these purchases, rather than program buying or knee-jerk rushes off the sidelines by investors who think they are bottom fishing as that can be a sign of a bull-trap. We are well covered, perhaps over-covered but, as I said last night, our 3/4 covers in July calls can be rolled to 1/2 covers of August calls and there's no way we want less than that over the weekend and, with all the extra cash we committed this week, a more conservative strategy is appropriate until we get a clear indication that this is more than a bounce off 11,000. If the market really starts to fly again, the DIA calls are the way to go for a nice momentum play.
Things are starting to get fun out there but let's be careful!
