Trader Talk

Modest Drop Pretty Decent, Considering....

The news was not particularly good today, and so a modest drop was certainly a decent performance. Consider:

1) Semis weak on AMD's poor guidance.

2) Materials mixed on Alcoa below estimates.

3) Fed minutes full of concern about economic slowdown.

4) White House opposes Senate housing bill(builders drop).

5) Washington Mutual raises $7 b in capital, but at the cost of 100 percent dilution (bad).

Still, we do not want to get into a pattern of drifting lower here. The big earnings report is our parent GE on Friday.

Tomorrow we get Circuit City --don't expect too much. Electronic sales have been weak across the board for most electronics companies, from camcorders to DVDs to satellite radio and home audio--all down. Computer sales seem to be OK.

What about flat panel TVs? The big growth period appear to be over. Everyone has bought a high tech TV, and because it is essentially a commodity, we are seeing margin compression--their margins are close to 20 percent for flat panel TVs, but it's in the single digits for discounters like Wal-Mart or Costco . That means pressure.

Questions?  Comments?