I don't think the day matters much now that we got good numbers from RIMM.
Q3 earnings were .65 vs. .62 expected and the report was strong across the board and capped with an upbeat guidance, raised to .70 from .65. By itself this would probably not have been such a big deal but coming on the heels of ORCL's great earnings, we should be able to get back over 2,650 on the Nasdaq – the point at which we fell off the table last week, leading to Monday's terrible drop.
The Dow will have a tougher job impressing us as it has to get back over 13,500 to turn bullish but clearly we are reaping the rewards of the EU's $500Bn cash injection on Tuesday when I said: "While this may goose the World’s financial markets into the holidays – we are heading for on mother of a hangover in 2008!" We saw money pouring into the bond market on Wednesday and misinterpreted that as a sign of panic and we discussed how the markets held up well despite all the money that was going into treasuries etc. but we failed to consider that this was NEW money, coming in from Europe and getting ready to be deployed.
At 2:29 I noted: "This is the reverse of yesterday, money is stampeding out of bonds back into stocks" and we had to uncover some of our new covers which I called for at 12:01 when the Philly Fed report had TERRIBLE numbers but luckily, 10 minutes earlier, when I was calmer and not caught up in the moment, I had said: "Action into the Philly Fed suggests they don’t expect a good report so we may get relief even on bad numbers." By 12:28 I was already having doubts about my cover call saying: "Any new covers should have 20% stops if you weren’t planning on covering and that would be the cost of insurance as that Fed report was absorbed rather well. I’d say AAPL and GOOG are the key to the universe today – if they stay green, we should hold up."
And that was pretty much how the rest of the day went. I didn't have the heart to jump in on calls after getting whipped like that on the reversal but my end of day pronouncement was: "This is, on the whole, another pathetic day but we’re holding our mid-range so well I’m still long-term bullish. Tomorrow we get bad PCE numbers and who know what from RIMM." The news from RIMM was as good as it gets and we still have the PCE to deal with but if Santa Clause is coming to town, tomorrow is pretty much his last chance to stuff Wall Street's stockings so props to Xian, who predicted it all week!
We're in such a good holiday mood that we will ignore JBL's in-line earnings and downside guidance and we will pay no attention to MU's quarterly loss, which was worse than expected or to FDX's shortfall because how could that possibly reflect on the US economy? Ho ho ho…
- The market seemed jolly enough to laugh off MBI's revelation that they have YET ANOTHER $30Bn in CDO exposure because we're sure this is an isolated incident and the rest of the financials are just fine. "We are shocked that management withheld this information for as long as it did," writes Ken Zerbe, analyst at Morgan Stanley in a note Wednesday. Please don't tell Ken the truth about Santa either!
The S&P still believes in Santa as it seems to take more than MBI's staggering losses ($8.1Bn yesterday) to get them to dop a triple-A rating as they affirmed it yesterday, saying the company's CDO exposure was factored into that decision. Another rating agency, Fitch (rhymes with Grinch), did put MBI on ratings watch over the CDO exposure so we know someone who's getting coal in their stocking this year.
Speaking of coal – we were wondering how the Senate Minority Report (Republicans) could have found 400 "scientists" who disputed global warming and it turns out THEY PAY FOR THEM with money from coal and other evil, earth destroying businesses. If the Republican party keeps selling their political souls to the highest bidding creeps, the Dems will be able to run next year's campaign with bumper stickers that read "It's the Earth, stupid!"
