Trader Talk

Yen Intervention Called Huge 'Fake-Out'


The S&P futures dropped to lows of the morning, as the New York Fed Empire Manufacturing Survey came in below expectations for September. This is first industrial number out for September.

Japan intervenes to weaken yen: if this doesn't make you crazy...we were assured by currency traders yesterday that newly re-elected Japanese Prime Minister Noda was NOT in favor of intervention, that his re-election greatly reduced the chances of intervention by the BOJ, which was why the yen strengthened and the dollar weakened....what happened?

Today, we are assured by currency traders that it was all a huge fake-out, that Kan never exactly said he wasn't going to intervene. That the BOJ want to tell the market that Kan's victory was NOT a carte blanche to buy the yen up to the sky. That business leaders leaned on the ruling Democratic Party. That their economy, like many, is showing signs of slowing and they can't afford to have their export business weaken any further.

We are now also assured that interventions never thoroughly stave off speculation. Thank you. The yen is up 3 percent against the dollar; the Nikkei rallied 2.3 percent

Elsewhere, there's still signs of weakness in housing and steel:

1) Home builder Beazer said new home orders for the fourth quarter would be 700-800 versus previous guidance at least 767.*

(Editor's note: a previous version of this story had incorrect figures for Beazer.)

2) Steel Dynamics follows Nucor in guiding lower for the third quarter: $0.05-$0.10 vs. $0.20 consensus. The problem: lower prices, and lower volumes from recycling operations.

3) Kroger beats estimates ($0.41 vs. $0.36 consensus) despite narrower margins as it continued to provide customers discounts on their supermarket shopping. That successfully brought in traffic as revenues grew more than expected, with comps rising 2.7 percent.

Guidance for the year is reaffirmed between $1.60-$1.80 (vs. $1.74 consensus).

4) Micron Technology falls 3 percent after Goldman Sachs downgraded the chipmaker to neutral. Goldman cites reduced demand for the firm's DRAM memory chips as laptop sales slump from cannibalizing tablet PC sales.

Additionally, Goldman downgrades chipmaker Maxim Integrated Products to sell on expectations that it will underperform its rivals as the PC market weakness continues.

5) Warren Buffett's Berkshire Hathaway   announced it was selling 1.35 million shares of Moody's , reducing its stake in the credit ratings agency to 12.6 percent.

Investor Nelson Peltz sold about a third of his stake in foodmaker Heinz . After his sale of 1.6 million shares, he still owns 3.3 million shares of Heinz, about 1% of all shares outstanding.

6) Anglogold Ashanti falls 5 percent after it announced it would raise $1.37 billion in capital by issuing stock and convertible bonds to eliminate its current gold hedges. Just like other gold miners have done, in unwinding its gold hedges, Anglogold Ashanti will gain full exposure to spot gold prices, which have been hovering at all-time highs.

* (Editor's note: a previous version of this story had incorrect figures for Beazer.)

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