Thursday, January 18, 2007

Morning Market Comment 1/19/2007

If I had an art department here, I would have them draw up a picture of a monkey on the back of Ben Bernanke - the name of the monkey would be "Inflation". Aww, nice little monkey. Oww, bad monkey, you just bit me. Overall CPI was up .5%, though core, excluding those insignificant food and gasoline items, was up .2%. The numbers were actually in line with expectations, which will be enough to keep most Fed officials worrying aloud that the pace of inflation remains too quick. The next Fed meeting is January 30 and 31st. At 10 this morning, Helicopter-Ben will be testifying before the Senate Budget Committee. Ok, call me skeptical, but what is the guy going to say to break big news? He's already tasted Al Edmonds, or whatever he wears several times since becoming Fed Chairman. The Fed message of late continues to be the expectation of moderate growth this year with ongoing concern about pricing risks.

December housing starts rose 4.5% in December thanks to warm weather. I've talked a number of times about warm weather and its positive impact, but that it borrows for future activity. Any spinmaster analyst or economists who tries to spin this has a recovery, by saying homes are becoming more affordable, so demand is stabilizing spurring people to buy should have a flame thrower aimed at them by any number of struggling home builders. Housing starts fell 13% last year... who predicted that would happen in December, '05? Only a few sharp tacks.

Apple Computer is down $2 post Q4 earnings blowout, Q1 earnings forecast let down. That's actually pretty good.. but kills call holders in the 95 and up January strikes and the put holders in the 80 strikes and below. So there are actually many call and put writers who are doing magnificently well. Again, as stated last night, this is a just a blip with folks with a long term view on the stock. Personally, I could care less about iPhone, or even iPod, or iAnything. I did buy my daughter an iPod for Christmas and it's cool, but when I want to listen to music, I go into my large living room with two Polk self amplified tower speakers with sub woofers and 400 watts of power and turn it up... WAY up and shake the house. I do have about 5000 tracks on this computer, but that's just for background music when I'm working here. And no way I'm spending $599 for a phone, at least that's my view for now.

Merrill Lynch, less hype, profits rise by 68% and the stock is up 2%.

Overall S&P, Dow futures showing a mixed open.. Nasdaq futures pointing to a lower open. 1432 remains a tough resistance area for the S&P. We've really been in no man's land... lots of backing and filling. Zen's Market Insights has had a healthy dose of skepticism about this market. I agree. I don't see crash and burn tomorrow... but I sure don't Dow 13k in the wings either.

Attention crude bulls: you're screwing it up! $52.65 was the best you could do? I was hope for a run at the 9 day (see last night's note). But it's hard to be bullish with these IEA numbers (Click Here). 10:30 inventory numbers may tell the near term tale. Feb contract expiration may muddy the waters this week, but if the bearish factors continue to outweigh bullish factors... next week could be nasty for the bulls.

Gold got a up to $635 last night... traded to about 632 a little while ago.. back to about $634. $640 seems to be the next target.

I will have something more to say in another post about the dollar and bonds.

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