CNBC's Schacknow: Oil, AMD Are Wily -- But Buffett Plays Nice
Senior Producer, CNBC
Go Figure, Part I
After a few years (or decades) covering financial markets, you gain the ability to predict with uncanny insight how certain events might affect trading that day.
You also gain the ability to get it completely wrong.
We knew that Iranian officials would be coming out with a statement regarding the country’s controversial nuclear program, and we know that oil traders are mega-sensitive these days about Iran, especially following the recent capture and release of British military personnel.
Iran’s statements were anything but conciliatory: it announced it had entered an “industrial stage” in its ability to enrich uranium. The U.S. responded by calling it “another signal of defiance.” A sure sign of higher prices for oil, right?
Nope. Oil fell nearly $3 and settled below $62 per barrel, hitting a two-week low.
The most popular explanation was that traders were unwinding the risk premium already built into oil prices from the British military incident.
And this is why I’m glad I have nothing but my reputation -- as opposed to real money -- on the line, when I blithely predict what might happen on a given day.
Go Figure, Part II
Advanced Micro Devices announced new guidance for its first-quarter revenues -- numbers that were well below its original prediction for the three months ending March 31. (The official numbers are out next week).
A revenue warning is a sure sign a stock is about to take a big hit, right?
The computer chipmaker’s announcement was also accompanied by news of a cost-cutting restructuring -- news that did much more to cheer Wall Street than the warning did to cast a damper on AMD shares. The stock rose more than 5% over the day, closing up 3.81%.
And -- An Easy One
Thankfully, some predictions are no-brainers. CNBC’s Liz Claman broke the story that Warren Buffett’s latest area of interest is railroads -- specifically, a 10.9% stake in Dow Transportation component Burlington Northern Santa Fe -- and that Buffett was interested in the entire sector.
Not surprisingly, all the big railroad stocks moved higher, helping the Dow Transportation average rise nearly 2.5%.
I don't know of too many sure things in the world of high finance, but Buffett is one of them. If we suddenly find out he's invested in a stock, or a sector, count on the many not-quite-as-rich people to pile on. They did.
And so we polish off the crystal ball and try again tomorrow.