Archive - Dec 2010

It's Reggie Middleton vs Goldman again. This time on Apple. Who has the better track record? Let's delve into the logic of an Apple buy and realize who is making the recommendation and why...

With Best Buy stock now down almost 15% for the day, it is not a good day for holders of the name, starting at the very top with Chairman Richard Schulze, whose 67.5 million shares in stock are now worth $400 million less than they were about two hours ago. And of course, with holdings of 22.5 million shares, expect Black Rock's Bob Doll to make 5 surprise appearances on CNBC explaining to the infidels one last time (expect for the next "last" time) how he expects the S&P to print at 10,000 in the next 12 months. That said, it is a little surprising to find none other than Hussman in spot 34 with 1.5 million shares.

BBH's Marc Chandler picks up where John Taylor leaves off and makes his case for a stronger dollar. Nothing new here, but the report appears to be having an impact on the market. In broad terms, Chandler is positive on a hawkish Fed which would bring back some strength to the dollar, while he observes nothing but total chaos in Europe: "European officials finish the year very much as they began it: finding it exceeding difficult to navigate the treacherous channel. Ironically, Obama and the Republicans have found a patch of common ground before Europe reconciled the conflicting demands. While there is a common understanding that there is no alternative to monetary union, there appears to be no meeting of the minds on how to ensure this. And there’s the rub." As he puts is so poetically, "Europe, Your Rope."

Meet the contestants in the European insolvency race, direct elimination round:

And the comedy continues. After Best Buy makes it clear that not even liquidation level prices are enough to draw consumers in, the Department of Truth is out with its latest attempt to make Americans believe that even with $10 billion in November credit card and other revolving debt declining $10 billion from October, and home equity loans outstanding falling another $2.6 billion, coupled with a drop in average hourly wages, retail sales actually picked up by 0.8%, better than expectations of 0.6%, a decline from the October reading which was revised from 1.2% to 1.7%. Retail sales ex-autos increased by 1.2%, on expectations of 0.6%, a decline from the revised October increase of 0.8%. Not too surprisingly, the biggest beneficiary in the pick up in spending was at gasoline stations which saw $38.1 billion in spending compared to $36.7 billion last month. Expect much more strength in gas sales going forward as the Chairman's genocide plan becomes appreciated by all: after all the PPI also jumped from 0.4% to 0.8%, beating expectations of 06% by a wide margin.

Is the retail revolution over? Best Buy, which was seen by many as the best indicator of retail hunger for all sorts of irrelevant Made in China Gizmos is plunging in pre-market trading, now down over 10%, after the company announces a massive top line miss of $11.89 billion in Q3 revenue on expectations of $12.45 billion. We can't remember when a retailer had a nearly 5% miss in top line, and is certainly a major cause of concern for not only the retail renaissance but for... Apple, for whom the store is the second biggest seller. Some other horrendous data points: Q3 comp sales down 3.3%; domestic Q3 comp sales down 5.0%, the company sees year EPS USD 3.20-3.40, saw USD 3.55-3.70, vs. Exp. USD 3.59, and notes domestic sales were softer than expected (as if it wasn't obvious). Broader market futures are also moving lower on the news that the market has managed to extract as much as it could out of a consumer base that is no longer paying its mortgages. Incidentally, how this could be a surprise is stunning: on October 31 we wrote that "TV pricing bloodbath threatens already razor-thin retailer margins" - of course, what is obvious to some, is completely opaque to the robots who only focus on positive headlines news. Perhaps a number for RenTec to tweak that algo a little?

And so European contagion is back as S&P, now clearly with a mandate to remind that Europe is in a heap of trouble every month or so, puts Belgium on Outlook negative, saying that it is basically just a matter of time before the country loses its AA+ rating. The bogey: 6 months, which likely means that around May of next year, just like a year prior, we will see the same fireworks out of Europe, only this time not from Greece, but from the very heart of what is left of a solvent continent. "If Belgium fails to form a government soon, a downgrade could occur, potentially within six months. Should a government be formed but is, in our opinion, ineffective in its fiscal stance or devolution, we are likely to consider rating action within two years." Sure enough, the EURUSD does nothing on the news.

All the major stories from around the world shaping today's market.

Retail sales will probably provide the most important information in a day that also includes reports on small business sentiment, producer prices, business inventories, consumer confidence, and the final FOMC meeting of the year….There is no POMO today.

Deliver those bars and melt that bitch!

When a corporate partnership deal turns sour, it has every bit of the drama as a high profile Hollywood celebrity divorce. The verbal clashes between Starbucks (SBUX) and Kraft (KFT) have been escalating over the past month or so. Then, on Monday Dec. 6, Kraft took the fight to court seeking an injunction to stop Starbucks from unwinding a 12-year partnership.

RANsquawk European Morning Briefing - Stocks, Bonds, FX – 14/12/10

Retail traders are notoriously wrong at picking market direction/tops and bottoms. Most retail traders very naturally seem to adopt a counter-trend stance and this offers very accurate signals for individuals looking to trade against this group. This daily report is designed to help traders focus their efforts on higher probability pairs.

Not much happened in the market today as volume was lighter than the audience for a Hasselhoff reality TV show (and also about 900 IQ points higher) as investors continue to...

A round up ...