Monday, May 19, 2008

What's going on today:

I am not gonna tell you GS upgraded AMZN. Not that's not interesting.

Here's what I found:

1. FRE is $2.15 under FNM from $3.50 under some days ago. Noticeable improvement, but will it FINALLY revert. Thinking yet another swap trade.

2. The splash on AMZN and continued discussion about where to spend the 'bate check (rebate, not m-bate) is driving Overstock (OSTK) up very nicely, regardless of traffic per Will it pierce $35-40 range where it was the last peak?

3. COF is finally up! Thank you pig man for listening on my suggestion on how to "convince" people that this shit is for real, dawg. Yes, there are people voting there is a way to pay for the Tiffanies and Ipods when the statement comes due. Excellent.

4. More news on how cool inflation is for basic material and food processing:
By Duane D. Stanford
May 19 (Bloomberg) -- Campbell Soup Co., the world's
largest soupmaker, fell the most in 5 1/2 years in New York
trading after it posted third-quarter profit and revenue that
trailed analysts' estimates on a decline in U.S. soup sales.
Campbell dropped $1.95, or 5.4 percent, to $34 at 10:32
a.m. in New York Stock Exchange composite trading, the biggest
decrease since November 2002. The shares gained less than 1
percent this year before today.

Condensed soups and ready-to-serve brands Chunky and
Select fell 3 percent in the U.S. as customers bought General
Mills' Progresso brand. Higher prices weren't enough to counter
what Campbell called ``dramatic cost inflation'' for wheat and energy. Chief Executive Officer Douglas Conant has added lower- sodium soups and will enhance marketing to boost sales growth.

``They are losing market share to Progresso and private
label, particularly in the ready-to-serve segment,''
Christopher Growe, an analyst with Stifel Nicolaus & Co. in St.
Louis, said today in a telephone interview. ``Campbell raised
prices, and the competitors have not yet.''
He recommends
investors hold the shares."

5. Look what I just found, as if a footnote is necessary for the Campbell soup story:

By Michael Patterson
May 19 (Bloomberg) -- Most U.S. stocks fell after SanDisk Corp. said high energy prices have hurt sales, spoiling a rally in technology shares that helped propel the market to a four-month high earlier.

SanDisk, the largest maker of digital-camera memory cards, tumbled the most since March after saying April retail sales were ``soft.'' Campbell Soup Co., the world's biggest soup company, posted its biggest drop in five years after results trailed analysts' estimates.

About four stocks retreated for every three that rose on the New York Stock Exchange. The Standard & Poor's 500 Index lost 1.23 points, or 0.1 percent, to 1,424.12 at 3:38 p.m. in New York. The Dow Jones Industrial Average increased 23.69, or 0.2 percent, to 13,010.49. The Nasdaq slipped 16.87, or 0.7 percent, to 2,511.98.

FRE is $2.00 under FNM as I wrote this last bit.


D said...

Too much money short is what's going on.

MTGSPY said...

Well you are assuming they can be bluffed with 5 S&P points. I really don't think so. There is earnest but uninformed buying behind this wave.

D said...

I wouldn't call it a 5 point Spoo bluff. We haven't been back to this level since the beginning of January. The next correction should be much steeper though.

Today's reversal was well-timed and we managed to close the NYA slightly red, nasdaq firmly red, and shave off a healthy 70 points on the Transports.

Energy only retraced 2/3 from its intraday high and is still holding the market up.

really said...

MTGspy, what's your opinion on the Dodd Shelby housing bill agreement?

How do you get a fund of 300 billion from FNM/FRE "earnings" when they are losing money. Help me understand this mechangism.

MTGSPY said...

Well you dont.

Let's say this crap is to lend 97LTV loans with say, 10% loss over the life of the loan.

That means $30B total insurance cost and there are 3 choices:

1. Risk based pricing: no subsidy ask the borrower to pay the fee by increasing their rates.
2. Use tax payers money.
3. Use GSE money, which will be a wishful thinking because both are PRIVATE companies and legally the equity belongs to the shareholder. Not to mention that if there's money left, they are needed to warehouse the losses that will occur from current book.

Anonymous said...


Your COF comment left me confused. Can you point to your earlier suggestion about COF so that I can understand better. COF looks like it wants to go down further.


MTGSPY said...

Yes, I was just being sarcastic. My point is why do people feel cheerful that someone

a) buys blings on COF credit, and thus buys stocks producing those blings (Ipods, Tiffany)


b) refuses to buy COF who grants credit to buy the blings.

Can a society exist in perpetuity where blings got handed out, while pretending the buyers will pay somehow someday?

Why do the likes of Cramer says avoid financials because the debtors wont be able to pay the debt anytime soon, and yet recommend things the debtor WOULD LIKE to buy given the credit.

What kind of BS system is this? Can this machine runs backward in perpetuity? Some kind of white hole where matter constantly emerges out of nowhere?

MTGSPY said...

I should say GREEN hole cuz the matter that shows up is $ bills.

alcan said...

mtgspy: Maybe the Charles in this world are hoping the COF will set up the same arrangement that JCP did with JPM, essentially transfering JCP bad CC debt to the Fed which means to me and you

MTGSPY said...

I hope they do and let loose all the demons. Credit card recovery after it defaults is close to nil.

D said...

I believe the collection companies buy the stuff for .02-.03 on the dollar.