Wednesday, April 18, 2007

Morning Market Comment

It was the night from hell for me last night with a stomach virus so this is going to be brief.

Stock futures are lower following the earnings shortfall from Yahoo. It posted earnings of 10c vs expected 11c. As usual the usual barrage of analysts recommending the ol' "buy on weakness". Here are a few who are going against the grain:
  • DBAB has a hold on YHOO and notes that at $29 the stock still trades at 36x 2007 estimates.
  • Needham is the only downgrade I can find - to Hold from Buy
  • While Citi maintains a buy, Citi says upside limited until 2H07 and drop justified given bullish intra-quarter company statements.
  • Merriman notes that YHOO's woes are a positive for names like AQNT, TSCM and VCLK

We've gone over this in the past, but why is Terry Semmel still CEO?

Google (GOOG) is down by a modest $1.55 following the YHOO news.

The dollar continues to get hammered: Here's a comprehensive write up from Kevin's Market Blog. The yen is catching a bid again today up 35 and back above 85. Ultimately this will further prove to be gold positive, but $700 won't easily fall. It's a big psych level and a level that shows the failure of many parties to address our financial structural problems.

Motorola (ex-items) beat lowered expectations by 100%. That's not saying much given the reported profit was 2c vs expected 1c. But that may be enough to get my out of a long call position (May 19s) with a tidy profit.

Washington Mutual (WM) - please see the comments section in the post below and the "phantom profits". I didn't like the action in the market yesterday and dumped my XLF call position and will just ride out the present situation in WM - no sense in throwing good money after bad. WIth futures down 4 this morning - glad I unloaded the XLFs at breakeven yesterday afternoon. H&R Block (HRB) has been instructive, by the way. Remember they were supposed to sell Option One by the end of Q1? End of Q1 comes along and guess what? They simply say we need more time to sell it. These companys have huge latitude in what they can do.

While everything is Mac Davis Beautiful at WAMU: Foreclosures up 47% year-on-year in March: RealtyTrac

Big Downey (DSL) miss, but only a small dip in share price. - Thanks, Mike! More later.

JPMorgan Net Income Increases to Record on Bond Sales, Mergers

RIM's BlackBerry system down: report

Pete Stolcer's has a full list of movers this morning.

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