Today's Market Moving News - The Buffet Foxtrot
(Stocks in this article: Nasdaq: EBAY, Nasdaq: GOOG, NYSE: BAC, NYSE: PFE, NYSE: NOK, NYSE: LLY, NYSE: WM, NYSE: BSX, NYSE: SAP, NYSE: CAL, NYSE: PTR, Nasdaq: INTC, Nasdaq: YHOO)
After tech defeated housing yesterday in the first of Q3's death match series, the IT sector takes on the tough banking sector on Thursday. Yesterday, strength born from strong earnings reports that originated out of Intel (Nasdaq: INTC) and Yahoo! (Nasdaq: YHOO) propelled the NASDAQ and growth oriented S&P 500 Index higher, while the Dow Jones Index slipped on the day. This morning, earnings news from Ebay (Nasdaq: EBAY) pits up against a 32% profit free fall reported by Bank of America (NYSE: BAC). Ebay beat numbers and raised guidance but the shares were greeted by a Deutsche Bank (NYSE: DB) downgrade this morning, and the shares opened lower as result. Bank of America was of course impacted by trading losses and loan write-downs.
One thing is for sure, Warren Buffet has to be nimble these days with BAC and his railroads finding tough going, and noting his exit from his quickly inflating PetroChina (NYSE: PTR) stake. The gray fellow never looked more like a young Fred Astaire then he does these days dancing around his positions.
The Geopolitical Factor
Like a professional wrestling match, a third player has emerged with the potential to overtake the focus of today's main event. Turkey's Parliament approved the use of military force across its border with Iraq. Turkey has amassed some 60,000 troops at the border, though President Bush has made public his and Iraq's hope that Turkey will agree to reason and another method of dealing with "terrorist" activities.
We asserted here on Tuesday that America is obliged to defend the nation it has taken guardianship of. As a Greek/American, I have much experience and understanding of the Turkish mindset. Thus, I would place a 90% likelihood of Turkish troops crossing the boarder and flexing some muscle, while doing significant damage to the Kurdish view of having an American ally. While Turkey is likely to temporarily solve its PKK problem, it is also damaging an important relationship with its American ally. However, as usual, America needs Turkey, since a majority of our military and commercial resource flow moves through the Turkish border into Iraq, while an important energy lifeline feeds through the region as well.
We feel for Armenian/Americans today, as it appears the U.S. government will have to make concessions at their cost. Congress is backing off its Armenian genocide resolution. It's a shame, because Armenians suffered a great tragedy, one of many at the hands of the Ottoman Empire and its remnants. However, the Greek agrees that this Congressional action has to wait. America will need Turkey once again, as it confronts Iran.
This week, Vladimir Putin closed a door America might have been planning to use against Iran. In its meeting with Caspian region nations, Russia declared that no American action would use Caspian nation land or airspace. This means that the potential of using new American ally Georgia as a staging ground is limited. Any attack on Iran that would use Georgia would likely also need Azerbaijani airspace. With that limited, flights out of Georgia would fly through a narrow channel over Armenia and into Iran.
After tech defeated housing yesterday in the first of Q3's death match series, the IT sector takes on the tough banking sector on Thursday. Yesterday, strength born from strong earnings reports that originated out of Intel (Nasdaq: INTC) and Yahoo! (Nasdaq: YHOO) propelled the NASDAQ and growth oriented S&P 500 Index higher, while the Dow Jones Index slipped on the day. This morning, earnings news from Ebay (Nasdaq: EBAY) pits up against a 32% profit free fall reported by Bank of America (NYSE: BAC). Ebay beat numbers and raised guidance but the shares were greeted by a Deutsche Bank (NYSE: DB) downgrade this morning, and the shares opened lower as result. Bank of America was of course impacted by trading losses and loan write-downs.
One thing is for sure, Warren Buffet has to be nimble these days with BAC and his railroads finding tough going, and noting his exit from his quickly inflating PetroChina (NYSE: PTR) stake. The gray fellow never looked more like a young Fred Astaire then he does these days dancing around his positions.
The Geopolitical Factor
Like a professional wrestling match, a third player has emerged with the potential to overtake the focus of today's main event. Turkey's Parliament approved the use of military force across its border with Iraq. Turkey has amassed some 60,000 troops at the border, though President Bush has made public his and Iraq's hope that Turkey will agree to reason and another method of dealing with "terrorist" activities.
We asserted here on Tuesday that America is obliged to defend the nation it has taken guardianship of. As a Greek/American, I have much experience and understanding of the Turkish mindset. Thus, I would place a 90% likelihood of Turkish troops crossing the boarder and flexing some muscle, while doing significant damage to the Kurdish view of having an American ally. While Turkey is likely to temporarily solve its PKK problem, it is also damaging an important relationship with its American ally. However, as usual, America needs Turkey, since a majority of our military and commercial resource flow moves through the Turkish border into Iraq, while an important energy lifeline feeds through the region as well.
We feel for Armenian/Americans today, as it appears the U.S. government will have to make concessions at their cost. Congress is backing off its Armenian genocide resolution. It's a shame, because Armenians suffered a great tragedy, one of many at the hands of the Ottoman Empire and its remnants. However, the Greek agrees that this Congressional action has to wait. America will need Turkey once again, as it confronts Iran.
This week, Vladimir Putin closed a door America might have been planning to use against Iran. In its meeting with Caspian region nations, Russia declared that no American action would use Caspian nation land or airspace. This means that the potential of using new American ally Georgia as a staging ground is limited. Any attack on Iran that would use Georgia would likely also need Azerbaijani airspace. With that limited, flights out of Georgia would fly through a narrow channel over Armenia and into Iran.
Turkey turned us down when we needed to fly over in our effort against Saddam. With Turkey unlikely to allow American use of its airspace again, America's options become limited, though certainly not blocked considering the significant presence in Iraq and Afghanistan.
Regarding Iraq, there remains high risk that civil war could expand if Shiite neighbor Iran is attacked. Saudi Arabia risks severe repercussions of its own should it aid America, especially if America fails to insure its safety by rendering Iran impotent. As you can see, Russia is actively working to complicate America's options.
International Market Activity:
Asia:
Hang Seng Index +0.57%; Shanghai/Shenzhen CSI 300 -3.58%; NIKKEI 225 +0.89%; S&P/ASX 200 +1.31%; Taiwan TAIEX +0.78%; BSE SENSEX 30 -3.83%; KRX 100 +0.78%; Ho Chi Minh -1.15%
U.K., Europe & Middle East:
DJ STOXX 50 Index -0.54%; FTSE 100 -1.07%; CAC 40 -1.22%; DAX -0.82%; Russian RTS Index -1.15%; ASE General -1.12%; ISE National 100 (Turkey) -3.12%; Tel Aviv 25 -0.55%; Tadawul All Share +1.3%; DFM 20 +2.08%
There are important events playing out in China this week. Discussion of combining A and H-Class shares has Hong Kong's lower valued shares of mainland companies on the rise. However, if the markets are combined and capital is allowed to flow more freely, this also threatens the valuations of mainland A Class shares. This morning the mainland indices are lower as a result, and we believe a trigger may be in place to severely hurt emerging market shares over the short-term.
You would think Indian shares would benefit from volatility in China, but a flight to safety is possible, and in that event, we see short-term risk to all emerging world shares. After the initial shock of such a change, should it occur, we would then look to India. We note that China has a tendency to back off of actions that prove detrimental to its markets. However, we view the opening of capital rules as a long-term positive event.
Europe appears damaged this morning by America's Beige Book release yesterday afternoon. Also, its trade gap with China was reported wider than ever, though retail sales appear to be strong according to a recent report as well.
Economic Data & Analysis
This morning, Weekly Initial Jobless Claims were reported above the forecast 312,000, at 337,000. At that level, claims ran ahead of the four-week average of 316,500, which is adjusted higher for this week's figure. There's not discernible trend here yet, but you should be monitoring this weekly report for labor market weakness.
This morning, The Conference Board will produce its Leading Indicators Index still too late for the Fed to use in its new effort to predict economic change (God bless em). The month-to-month change in the figure is expected by Bloomberg's consensus to show increase of 0.3% in September, after a 0.6% decrease in August.
The EIA Natural Gas inventory report is due at 10:30, while hurricane season comes to an end. At noon, the Philly Fed Index should show Philadelphia area manufacturing sentiment decreased versus the prior month. Bloomberg published a consensus estimate for a reading of 7.0 this time around, compared to 10.9 in September. However, after the strong Empire State figure, it seems entirely possible Philly could surprise higher as well.
Regarding Iraq, there remains high risk that civil war could expand if Shiite neighbor Iran is attacked. Saudi Arabia risks severe repercussions of its own should it aid America, especially if America fails to insure its safety by rendering Iran impotent. As you can see, Russia is actively working to complicate America's options.
International Market Activity:
Asia:
Hang Seng Index +0.57%; Shanghai/Shenzhen CSI 300 -3.58%; NIKKEI 225 +0.89%; S&P/ASX 200 +1.31%; Taiwan TAIEX +0.78%; BSE SENSEX 30 -3.83%; KRX 100 +0.78%; Ho Chi Minh -1.15%
U.K., Europe & Middle East:
DJ STOXX 50 Index -0.54%; FTSE 100 -1.07%; CAC 40 -1.22%; DAX -0.82%; Russian RTS Index -1.15%; ASE General -1.12%; ISE National 100 (Turkey) -3.12%; Tel Aviv 25 -0.55%; Tadawul All Share +1.3%; DFM 20 +2.08%
There are important events playing out in China this week. Discussion of combining A and H-Class shares has Hong Kong's lower valued shares of mainland companies on the rise. However, if the markets are combined and capital is allowed to flow more freely, this also threatens the valuations of mainland A Class shares. This morning the mainland indices are lower as a result, and we believe a trigger may be in place to severely hurt emerging market shares over the short-term.
You would think Indian shares would benefit from volatility in China, but a flight to safety is possible, and in that event, we see short-term risk to all emerging world shares. After the initial shock of such a change, should it occur, we would then look to India. We note that China has a tendency to back off of actions that prove detrimental to its markets. However, we view the opening of capital rules as a long-term positive event.
Europe appears damaged this morning by America's Beige Book release yesterday afternoon. Also, its trade gap with China was reported wider than ever, though retail sales appear to be strong according to a recent report as well.
Economic Data & Analysis
This morning, Weekly Initial Jobless Claims were reported above the forecast 312,000, at 337,000. At that level, claims ran ahead of the four-week average of 316,500, which is adjusted higher for this week's figure. There's not discernible trend here yet, but you should be monitoring this weekly report for labor market weakness.
This morning, The Conference Board will produce its Leading Indicators Index still too late for the Fed to use in its new effort to predict economic change (God bless em). The month-to-month change in the figure is expected by Bloomberg's consensus to show increase of 0.3% in September, after a 0.6% decrease in August.
The EIA Natural Gas inventory report is due at 10:30, while hurricane season comes to an end. At noon, the Philly Fed Index should show Philadelphia area manufacturing sentiment decreased versus the prior month. Bloomberg published a consensus estimate for a reading of 7.0 this time around, compared to 10.9 in September. However, after the strong Empire State figure, it seems entirely possible Philly could surprise higher as well.
Market-Moving News
- CNN Money: Asian Stocks Rally on Growth Forecast
- Bloomberg: A Look at Europe
- CNBC: Oil Above $87, OPEC and Turkey in Focus
- BBC: Turkish Parliament Gives Go Ahead for Incursion
- Yahoo!: Bush Urges Turkey to Consider Other Options
- TheStreet.com: Ebay (Nasdaq: EBAY) Survives Skype Scrape
- AP/Yahoo!: Bank of America (NYSE: BAC) Profits Slide 32%
- Bloomberg: Weekly Initial Jobless Claims Run Hot
- Pending 10:00 AM - Leading Indicators September (Consensus +0.3%)
- Pending 12:00 - Philadelphia Fed Survey October (Consensus 7.0)
- Bloomberg: Greenspan Says Dollar Drop Might Not Be Drastic if Foreign Capital Withdraws
- TheStreet.com: Google (Nasdaq: GOOG) Gets Hot Again
- Yahoo! Earnings Calendar
- Bloomberg: Fed's Beige Book Indicates Growth Slowed
- DailyFX: Dollar Backtracks on Fed Beige Book
- MarketWatch: Nokia (NYSE: NOK) Profit Up 85%
- CNBC: Pfizer (NYSE: PFE) Profit Rises
- AP/Yahoo!: Lilly (NYSE: LLY) Profits
- AP/Yahoo!: Washington Mutual (NYSE: WM) Profit Shrinks
- AP/Yahoo!: Boston Scientific (NYSE: BSX) Cuts 2,300 Jobs
- Forbes: SAP AG (NYSE: SAP) Profit Rises 10%
- AP/Yahoo!: Continental (NYSE: CAL) Profit Inches Higher
- Financial Times: Armenian/Americans Day Delayed
- Economist: Bhutto Back in Pakistan
- Iran Daily: Tales from the Dark Side
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posted by The Greek | 9:30 AM
1 Comments:
I have to agree, the Buffett shuffle, is a real piece of dance choreography to watch. And, you're right, among the sleepers to watch are some of the Mainland China stocks hustled on the Hong Kong Exchange.
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