Last night, on the eve of Tax Day, I spoke with Sen. Judd Gregg, (R-N.H.) and Sen. Ron Wyden, (D-OR) about their bipartisan tax reform proposal. It's a huge business tax cut, with some flattening of tax-rates and simplification. Take a listen.
15 Nisan 2010 Perşembe
14 Nisan 2010 Çarşamba
Intel, JPM Get Earnings Season Off To A Strong Start
The market is nicely higher again this morning, overbought readings be damned, on the heels of some solid economic data and a strong start to earnings season from two bellwether companies.
I said yesterday that I would rather consider Intel (INTC) as the start to earnings season, and they came through with flying colors. The chip giant reported a very strong quarter, with EPS of $0.43 vs. $0.38 consensus. Gross margins were also well above estimates, and the company guided revenues for next quarter higher.
This led to a wave of buying in the tech sector. Specifically, the chip index (SOX) is leading the way, gaining +3.42% so far.
This morning, JPMorgan (JPM) was the first big bank to announce earnings, and they too topped estimates handily, reporting $0.74 vs. $0.64 consensus. Revenues were also better than expected. The bank index (SOX) is the second leading index today, gaining +2.73% in early trading.
We also had a couple of solid economic reports hit the wire. Advance retail sales for March increased +1.6% (vs. +1.2% estimate). Also, the CPI for March rose less than expected at +0.1%, while the core CPI (excluding food & energy) was flat. Year-over-year, core CPI rose a scant +1.1%.
The strong earnings reports and solid economic data have helped push the S&P 500 Index above the 1200 level for the first time since October 2008. Of course, there are a ton of earnings reports still to come, and INTC and JPM have set the bar pretty high. I would not be surprised to see some companies' stocks sell off on earnings reports that do not beat the estimates.
The dollar is lower today, and that is helping commodities. Oil is back above $85, and gold has regained the $1156 level.
Asian markets were higher overnight; the 10-year yield is also higher to 3.82%; and the VIX is down -2.65% to 15.77.
Trading comment: The put/call ratios were low yesterday, so I still worry about sentiment in here. But these strong earnings reports likely caused a wave of short-covering and more buying on the part of institutions. Topping the 1200 level is significant for the S&P 500, but I would suspect that these gains need to be consolidated before further upside progress can be made.
I said yesterday that I would rather consider Intel (INTC) as the start to earnings season, and they came through with flying colors. The chip giant reported a very strong quarter, with EPS of $0.43 vs. $0.38 consensus. Gross margins were also well above estimates, and the company guided revenues for next quarter higher.
This led to a wave of buying in the tech sector. Specifically, the chip index (SOX) is leading the way, gaining +3.42% so far.
This morning, JPMorgan (JPM) was the first big bank to announce earnings, and they too topped estimates handily, reporting $0.74 vs. $0.64 consensus. Revenues were also better than expected. The bank index (SOX) is the second leading index today, gaining +2.73% in early trading.
We also had a couple of solid economic reports hit the wire. Advance retail sales for March increased +1.6% (vs. +1.2% estimate). Also, the CPI for March rose less than expected at +0.1%, while the core CPI (excluding food & energy) was flat. Year-over-year, core CPI rose a scant +1.1%.
The strong earnings reports and solid economic data have helped push the S&P 500 Index above the 1200 level for the first time since October 2008. Of course, there are a ton of earnings reports still to come, and INTC and JPM have set the bar pretty high. I would not be surprised to see some companies' stocks sell off on earnings reports that do not beat the estimates.
The dollar is lower today, and that is helping commodities. Oil is back above $85, and gold has regained the $1156 level.
Asian markets were higher overnight; the 10-year yield is also higher to 3.82%; and the VIX is down -2.65% to 15.77.
Trading comment: The put/call ratios were low yesterday, so I still worry about sentiment in here. But these strong earnings reports likely caused a wave of short-covering and more buying on the part of institutions. Topping the 1200 level is significant for the S&P 500, but I would suspect that these gains need to be consolidated before further upside progress can be made.
MUSICAL CHAIRS
INTC beat earnings yesterday and this morning the market is loving it. Cramer is wildly bullish. BUY, BUY, BUY!
Unfortunately INTC has a history of marking turning points. Let's just say that buying the gap up on earnings hasn't been kind in the short term. Buying when INTC has closed at new 52 week highs the day they report has led to losing trades three days later every time.
The trend is clearly up and I doubt that we are at a final top for this cyclical bull but is the reward really worth the risk of taking Cramers advice?
As of yesterday the market had moved higher 71% of the days out of the February bottom. Folks that is verging on parabolic. Those never end well.
I liken the current market to playing musical chairs with 10 people but only one chair. Certainly you might catch more upside but almost certainly we are, at some point, going to go back down and test the breakout at 1150.
Unfortunately INTC has a history of marking turning points. Let's just say that buying the gap up on earnings hasn't been kind in the short term. Buying when INTC has closed at new 52 week highs the day they report has led to losing trades three days later every time.
The trend is clearly up and I doubt that we are at a final top for this cyclical bull but is the reward really worth the risk of taking Cramers advice?
As of yesterday the market had moved higher 71% of the days out of the February bottom. Folks that is verging on parabolic. Those never end well.
I liken the current market to playing musical chairs with 10 people but only one chair. Certainly you might catch more upside but almost certainly we are, at some point, going to go back down and test the breakout at 1150.
When it happens it's going to happen quickly. These kind of extreme momentum moves have a tendency to erase several weeks or even months of gains in just a handful of days. So one has to consider is the minimal upside really worth the risk of getting caught in a vicious correction?
At this point one is better off stepping to the side until the correction occurs and then buying back in.
Keep in mind I'm certainly not advocating going short. Because who knows how much longer this could go on. But the potential reward just isn't worth the risk of pressing the long side anymore.
An Interview with the Godfathers of Supply-Side Economics
Here are the clips from last night's historic interview with two powerhouse economic thinkers, both former economic advisors to Ronald Reagan. Joining me on set were Nobel Prize winning economist and Columbia economics professor Robert Mundell, as well as the Laffer Curve's very own Arthur Laffer. What a great privilege and honor.
13 Nisan 2010 Salı
The Flat Tax: How it Works and Why it is Good for America
In the spirit of tax week, here's a terrific video hosted by my old friend Dan Mitchell showing how a flat tax would benefit American families and businesses. It also explains how this simple and fair system would boost economic growth and eliminate the special-interest corruption of the internal revenue code.
Quote of the Day
"Good communication is as stimulating as black coffee, and just as hard to sleep after."
— Anne Morrow Lindbergh: American writer and aviation pioneer
— Anne Morrow Lindbergh: American writer and aviation pioneer
Greek Bonds Find Strong Demand
The market is slightly lower this morning, on the heels of weakness in overseas markets, strength in the US dollar, and a lackluster start to earnings season.
I am not a big fan of looking at Alcoa (AA) for market direction, but their earnings report last night is one of the things being cited today. I would actually rather look at Indian business outsourcing firm Infosys (INFY), which reported very solid numbers last night. Tonight is what I consider the real kickoff to earnings season, when bellwether Intel (INTC) reports.
The dollar is bouncing today, and that is causing weakness in energy and materials stocks. Oil prices are down to $82.75 currently, and gold is back below $1150, currently $1148.
In overseas news, Greece sold 1.56 billion euros in 6-12 month bills in an auction that was actually oversubscribed. In Britain, retail sales grew +4.4% yr/yr in March.
In Asia, most markets were lower with the MSCI Asia falling -0.5%. China managed to gain +1.0%.
Among the etf sectors, energy (-1.18%) and materials (-0.72%) are down the most. Tech (-0.09%) is down the least. And the only industry etfs to buck the weakness so far are the real estate etf (+0.97%) and hombuilders (+0.40%).
The 10-year yield is lower again to 3.83%, and the VIX has bounced from yesterday's mutli-year lows, currently +6.2% to 16.54.
Trading comment: The market continues to levitate around these levels, and it seems traders are showing skittishness. To wit, at the first signs of a lower market this morning, the ISEE call/put opened at an extremely low level of 54.
This highlights that at the first sign of weakness, traders rushed out to load up on puts. That is not exactly the type of action you would see if everyone was complacent. If that was the case, traders would just shrug off the weakness instead of rushing out to buy puts. This reinforces my inclination that any pullback could be short-lived.
I am not a big fan of looking at Alcoa (AA) for market direction, but their earnings report last night is one of the things being cited today. I would actually rather look at Indian business outsourcing firm Infosys (INFY), which reported very solid numbers last night. Tonight is what I consider the real kickoff to earnings season, when bellwether Intel (INTC) reports.
The dollar is bouncing today, and that is causing weakness in energy and materials stocks. Oil prices are down to $82.75 currently, and gold is back below $1150, currently $1148.
In overseas news, Greece sold 1.56 billion euros in 6-12 month bills in an auction that was actually oversubscribed. In Britain, retail sales grew +4.4% yr/yr in March.
In Asia, most markets were lower with the MSCI Asia falling -0.5%. China managed to gain +1.0%.
Among the etf sectors, energy (-1.18%) and materials (-0.72%) are down the most. Tech (-0.09%) is down the least. And the only industry etfs to buck the weakness so far are the real estate etf (+0.97%) and hombuilders (+0.40%).
The 10-year yield is lower again to 3.83%, and the VIX has bounced from yesterday's mutli-year lows, currently +6.2% to 16.54.
Trading comment: The market continues to levitate around these levels, and it seems traders are showing skittishness. To wit, at the first signs of a lower market this morning, the ISEE call/put opened at an extremely low level of 54.
This highlights that at the first sign of weakness, traders rushed out to load up on puts. That is not exactly the type of action you would see if everyone was complacent. If that was the case, traders would just shrug off the weakness instead of rushing out to buy puts. This reinforces my inclination that any pullback could be short-lived.
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