- Bob Pisani's ETF Special Monday
- Dow, S&P Down -- But There's Good News
- Dell/Tech Stocks, Gustav Nerves Weigh on Market
- Energy Climbs on Gustav Fears; Japan's $18B Stimulus Plan
- Confusion: Market Rally vs. Dell Disappointment
- Recession Talk Over on GDP Growth
- Fannie Mae Mgt. Shakeup; Oil Shrugs Off Gustav
- Solving the Fannie/Freddie Mystery
- Oil Ignores Gustav, Russia; Oil Cos. Sell Gas Stations
- Housing: The Good & Bad News
- Student Portfolio Managers Offer Stock Picks
- Fishin' For Views on the Economy
- Bond Prices Slip as Traders Focus on Inflation
- As Biomass Power Rises, a Wood-Fired Plant Is Planned in Texas
- Carmakers Deserve Loan Guarantees, GM Official Says
- US Midwest Business Expands Rapidly; Hiring Down
- Consumer Sentiment At 5-month High in August
- Consumer Spending Flags, But Confidence Rises
- Dell's Margin Erosion Prompts Selloff
More Videos
Good morning. Here's what I see today:
1) We have been talking about the "decoupling" of the U.S. economy from the global economy--not that the U.S. isn't important to global growth (of course it is); but that the world is not as dependent on the U.S. consumer as it had been in the past. We see that the biggest trading partner Japan now has is China (U.S. is #2), we see that Old Europe now is getting growth from trading and investing in New Europe (Middle and Eastern Europe).
Technology is a major beneficiary of this global growth, which is why the Nasdaq is also hitting new highs. We hear a lot about the slowing U.S. economy, but look at what is happening in tech land. JP Morgan, for example, this morning raised estimates on Intel [INTC
Loading...
()
] , noting specifically the global strength in the PC market. Both unit demand and the pricing environment are stronger than expected in Q3 (are you listening? STRONGER than expected unit demand and pricing).
Despite all this, and despite Intel at 52 week highs, Intel is only trading at 17x forward estimates; that is at the low end of its normal range of 16x-22x forward earnings. In other words, the stock is not overbought by historical standards.
2) Expect more announcements like Citi [C
Loading...
()
] and UBS [UBS
Loading...
()
] . Analysts are talking this morning about another lackluster quarter from banks, specifically banks will be providing additional loan loss reserves due expected losses in mortgages. This is exactly what Citi did yesterday, and given the positive response from the market expect many more banks to do the same. This is the "kitchen sink" mentality we talked about yesterday; be conservative in your estimates (i.e. write off more losses than expected, provide bigger provisions for expected loan losses than expected), then hope that you can begin a clean slate in Q4 or at least in 2008.
3) Bears who hate this rally do have one strong point going for them. The weak part of the rally of the last two weeks (which has seen the Dow move 600 points) has been demand: volume has been comparatively anemic. It is one of the axioms of technical analysis that rallies based on falling supply rather than rising demand are usually considered suspicious (as Lowry, the dean of technical analysis services, has pointed out many times in the last week).
Questions? Comments?
Del.icio.us
Digg It
Data is a real-time snapshot *Data is delayed at least 15 minutes