Lots of people arguing the "go long tech, short financials" position. David Kotok at Cumberland, who has been bearish on home builders and financials, was out pounding the table this weekend on pharma/bio/healthcare. He also liked technology and wireless services. And he was big also on international stocks, "where the problems are not as great, the economic growth rate is higher AND the tax rate on business is lower."
It's true that tech does not have the credit problems, but if corporate borrowing costs go up across the board, as Bears say it will, it will impact tech. The NASDAQ dropped as much as the S&P last week largely because momentum traders just lightened up on their positions across the board.
Earnings still solid. With 60% of the S&P reporting, the blended earnings growth rate is 5.8%. On July 1st, the estimated growth rate was 4.1%, according to Thomson.
Credit is still the big issue. One trader of corporate debt who did not want to be quoted by name told me over the weekend that "there are no bids for high-yield corporate bonds." He noted that high-yield corporate bonds were trading like they were expecting 20% losses. But the fundamentals were sound, and there were many opportunities to profit from the turmoil.
Similar note from Lehman. Their fixed income people were out over the weekend arguing that this "risk reset" (as they called it) was "therapeutic for the global capital markets and will help prolong the life of this global expansion." They sounded a theme that many of the bulls have sounded in the past few weeks: "Although this correction has not concluded and may extend through August, most of the portfolio damage has been recorded."
Indeed, this was a theme I have heard all morning: smart people are looking to increase positions. Lots of discussion about Goldman Sachs Group boosting the size of a corporate debt fund it is starting to $20 billion from $12 billion to take advantage of the turmoil in credit markets.