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Tuesday, June 16, 2009

The story, the offset, and the spin


In today's NY Times, we heard that credit card companies were negotiating with consumers, and slashing balances:

The banks were bailed out last fall, the automobile companies last winter. For Edward McClelland, a writer in Chicago, deliverance finally arrived a few days ago.

Mr. McClelland’s credit card company was calling yet again, wondering when it could expect the next installment on his delinquent account. He proposed paying half of his $5,486 balance and calling the matter even.

It’s a deal, the account representative immediately said, not even bothering to check with a supervisor.

and that there wasn't any good news in credit cards in today's WSJ.

Analysts are picking through fresh credit card data and in search of reasons for optimism buried in otherwise ugly data. There aren’t many.

They then quoted Baird which said, "attribute the improvement to seasonality as consumers’ use of tax refunds to pay down revolving debt. More consistent with the challenging economic environment and employment trends, we expect delinquencies to demonstrate incremental degradation going forward."

The offset of this, that wasn't reported by the WSJ is that Baird said that they preferred the mega cap banks versus the regionals, because they could earn their way out of the losses because of strength in mortgages and capital markets.

Now last Friday Goldman came out with some research, that also looked a bit more kindly on the latest data. Today Morgan Stanley did, which upped it's S&P estimates for 2009 to $51 from $47, and for 2010 to $62, (more here) while they still remain cautious, (but then again, they said the market had topped out at 850 before this latest leg up) also touted the large cap banks, as they said the May credit card Master Trust data was encouraging.

Citibank said the same thing.

JPM said they liked COF's credit card data; even though the non reporting of bankruptcies had helped the data by 50 bps.

So much for the credit card news. The brokerage firms were able to bury that story.

This morning, BBY was down a couple bucks in the pre-market, as Wall Street assumed that their sales should of been better, with the demise of it's competitor Circuit City. Don't sweat that. Just increase the target on RIMM to 100. Didn't Merrill Lynch do that this morning? Even Credit Suisse, which had a target of $61, was forced to move their number up to $76; moving as grudgingly as Morgan Stanley did with their S&P targets. Higher prices force people to change their outlook, and RIMM reports Thursday after the close. Who wants to short this number before earnings? So tech stays in the game.

Now tomorrow morning at 9:00 we know that JPM has a conference call scheduled with TXN's management; who spun a bullish story on tech last week. Jefferies helped by upgrading MSFT (probably because it already has moved 45%) saying that their will be a rapid PC upgrade cycle. The spin starts, until the shoots bud.

Steel was sloppy the last few days, but UBS came out and said that an internal memo from MT, indicated that they were increasing prices by $50 ton in sheet steel, due to better channel checks, and better demand from customers with reduced inventory. NUE helped by saying it's loss would be narrower for the quarter than first envisioned. Remember March 17 when this number was under $32 when they warned about the environment? How did that news help you? It didn't!.

Now to help the steel story, JPM said that in Europe, auto sales were up 30%, and their upgrade of TEN was touted on CNBC. But JPM actually said about TEN was that "upside was to a lesser degree." Maybe because they just discovered this number at 10, while it was touted here at $2.29!

Casinos have been sloppy the last few days, but today UBS came out and said that some of Macau's high rollers were back in action.

Which just shows that the casino on Wall and Broad, unlike Fox, is not in a "spin-free" zone. It's WallStreet's version of spin city. And the brokerage firms, are now towing the party line.

And it's being spun in the bulls direction.

So maybe these firms are actually getting a bit more bullish, or maybe it's just that the Fed needs to get out of all their SPY paper!

11 comments :

Anonymous said...

so why have we gone down so much the last two days...with today falling quite a bit?

Anonymous said...

bang-bang - the Dodos are down!
bang-bang - the Dodos are down!
bang-bang - the wildly bullish Dodos are down! (but they do not know it yet)
Who survived? Bears. Just look around. No Dodos but lots of Bears.

palmoni said...

Score one for the bears!

ben said...

Palmoni,

I still think the market rallies into the July 4 weekend. Do you have any good picks that might gain or have you gone the ZH way? Many thanks for the blog.

Anonymous said...

bang-bang - bears 2: dodos 0
wow, only 11 points from cracking 900. Who would have thought? It is impossible! It will never go down again! Turn those machines back on! I wanna sell at 950!

palmoni said...

I think that this is just about it for the downside; but the bears won a round.

I'm looking at X here for a trade, but the problem is, we are so choppy that you have to be quick to pull the trigger.

That's part of the reason for the weakness.

The market wants to get the bulls punchy, and the bears want to start and press.

We'll see.

But it's just hard to get the next leg up, without some proof that things are getting better, instead of just less worse.

Anonymous said...

wow is this a change in thought?

are you still holding regionals, mgm, goog calls?>

Anonymous said...

Oh wow. A couple of modestly down days (which we've had many these past few months) and the bears are declaring victory (for about the 40th time these past few months). Of course the market will just grind sideways until Friday since it's option expiry, and then come next week it's back towards the upside. Don't flinch Palmoni! You've got an example to set!

X said...

I think markets remain rocky until Wed 24th FOMC. After which we will rally

Palmoni said...

X gave the trade!

Anonymous said...

"after which we will rally?" May be this is not X but ,other market speaking? And how far will "you" rally?