David Moenning's Daily State of the Markets
Get Alerts NVDA Hot Sheet
Price: $840.35 -3.87%
Overall Analyst Rating:
BUY (= Flat)
Dividend Yield: 0.1%
Revenue Growth %: +240.5%
Overall Analyst Rating:
BUY (= Flat)
Dividend Yield: 0.1%
Revenue Growth %: +240.5%
Join SI Premium – FREE
Blame It On The French?
Wall Street's wild ride continued on Thursday as the market reversed course from a three-day rally and plunged lower. As to why stocks decided to head south in a big way once again, it would be all-too easy to blame the move on the French. But in reality, there was plenty of blame to go around.
As we reported yesterday morning, BNP's announcement that they were not allowing redemptions in three of their hedge funds certainly got people's attention. What's more, the company's CEO said that the move was in response to "the complete evaporation of liquidity in segments of the US markets." And in short, this announcement brought the idea of a liquidity crisis screaming back to the forefront.
With foreign markets dropping like a stone and currencies moving fast, the European Central Bank opened the liquidity spigot as wide as it would go. While it is true that central banks inject money into the system on a daily basis, this move was viewed by analysts as a panic by the ECB and actually created more fear as traders recognized that no one really has a handle on this thing.
But to blame a 387 plunge on those across the pond isn't quite fair as there were plenty of problems here in the U.S. to go around. First, it was reported that Goldman Sachs was having problems at a couple of its "Quant Funds" - funds that are driven by sophisticated computerized trading strategies - and the funds were selling assets to raise cash. This created worry that there is more forced selling to come in hedge-fund-land, which, of course is never a good thing.
Next, while the company itself didn't say so, Reuters surmised from an AIG presentation delinquencies are moving beyond subprime and into prime mortgages. AIG said that one of its arms is currently experiencing a significant decline due primarily to unfavorable loss experience in the domestic second-and first-lien mortgage businesses as a result of the continued softening in the U.S. housing market. Thus, Reuters concluded that "the threat to the mortgage market may be spreading."
Next, the relatively weak same store sales reports from retailers, renewed the worry about the health of the economy.
It is safe to say that none of this was viewed in a positive light and stocks suffered from the opening bell. But, in a move that added insult to injury, traders once again went wild in the last 15 minutes of trading as the Dow once again moved more than 100 points in the final minutes of trading - this time to the downside.
And finally, while this may be a case of wishful thinking, we should point out that the Fed Funds futures are now pricing in a very strong probability of a Fed rate cut either in September or October.
Turning to this morning, the red ink continues to flow as Countrywide Financial reported late yesterday that it is experiencing "unprecedented disruptions" resulting from reduced investor demand for mortgage loans and mortgage-backed securities. However, the FOMC is trying to help this morning by injecting liquidity into the banking system.
Running through the rest of the pre-game indicators, foreign markets are down hard across the board. In the oil pits, crude futures are moving down and the latest quote shows oil off $1.01 to $70.58. Interest rates are lower this morning as the flight to quality continues. The yield on the 10-year is currently trading at 4.76%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to another tough open at the present time. The Dow futures are currently off by 100 points; the S&P's are lower by about 14 points, while the NASDAQ looks to be about 18 points below fair value at the moment.
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
Nvidia (Nasdaq: NVDA) - Reported $0.43 vs. $0.34
99 Cents Only Stores (NYSE: NDN) - Reported $0.04 vs. $0.05
First Marblehead (NYSE: FMD) - Reported $0.83 vs. $0.81
Today's Earnings Before the Bell:
Echostar Comm (Nasdaq: DISH) - Reported $0.50 vs. $0.50
News, Upgrades/Downgrades/Brokerage Research:*
Essex Property Trust (NYSE: ESS) - Upgraded at BofA
Marathon Oil (NYSE: MRO) - Upgraded at Citi
Tesoro (NYSE: TSO) - Upgraded at Citi
Valero (NYSE: VLO) - Upgraded at Citi
DirecTV (NYSE: DTV) - Upgraded at Credit Suisse
Noble Corp (NYSE: NE) - Upgraded at Credit Suisse
Helmerich & Payne (NYSE: HP) - Upgraded at Deutsche Bank
Holly Corp (NYSE: HOC) - Upgraded at Deutsche Bank
Chemed (NYSE: CHE) - Upgraded at Deutsche Bank
Sun Microsystems (Nasdaq: SUNW) - Downgraded at Goldman
Seagate Technology (NYSE: STX) - Upgraded at Goldman
Brinker Intl (NYSE: EAT) - Upgraded at JP Morgan
Nvidia (Nasdaq: NVDA) - Downgraded at Merrill Lynch
Family Dollar Stores (NYSE: FDO) - Downgraded at Oppenheimer
Mr. Moenning holds Long positions in stocks mentioned: None
Note: All earnings reports compared to Reuter's consensus estimates
** For More of David Moenning's Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM's programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
Wall Street's wild ride continued on Thursday as the market reversed course from a three-day rally and plunged lower. As to why stocks decided to head south in a big way once again, it would be all-too easy to blame the move on the French. But in reality, there was plenty of blame to go around.
As we reported yesterday morning, BNP's announcement that they were not allowing redemptions in three of their hedge funds certainly got people's attention. What's more, the company's CEO said that the move was in response to "the complete evaporation of liquidity in segments of the US markets." And in short, this announcement brought the idea of a liquidity crisis screaming back to the forefront.
With foreign markets dropping like a stone and currencies moving fast, the European Central Bank opened the liquidity spigot as wide as it would go. While it is true that central banks inject money into the system on a daily basis, this move was viewed by analysts as a panic by the ECB and actually created more fear as traders recognized that no one really has a handle on this thing.
But to blame a 387 plunge on those across the pond isn't quite fair as there were plenty of problems here in the U.S. to go around. First, it was reported that Goldman Sachs was having problems at a couple of its "Quant Funds" - funds that are driven by sophisticated computerized trading strategies - and the funds were selling assets to raise cash. This created worry that there is more forced selling to come in hedge-fund-land, which, of course is never a good thing.
Next, while the company itself didn't say so, Reuters surmised from an AIG presentation delinquencies are moving beyond subprime and into prime mortgages. AIG said that one of its arms is currently experiencing a significant decline due primarily to unfavorable loss experience in the domestic second-and first-lien mortgage businesses as a result of the continued softening in the U.S. housing market. Thus, Reuters concluded that "the threat to the mortgage market may be spreading."
Next, the relatively weak same store sales reports from retailers, renewed the worry about the health of the economy.
It is safe to say that none of this was viewed in a positive light and stocks suffered from the opening bell. But, in a move that added insult to injury, traders once again went wild in the last 15 minutes of trading as the Dow once again moved more than 100 points in the final minutes of trading - this time to the downside.
And finally, while this may be a case of wishful thinking, we should point out that the Fed Funds futures are now pricing in a very strong probability of a Fed rate cut either in September or October.
Turning to this morning, the red ink continues to flow as Countrywide Financial reported late yesterday that it is experiencing "unprecedented disruptions" resulting from reduced investor demand for mortgage loans and mortgage-backed securities. However, the FOMC is trying to help this morning by injecting liquidity into the banking system.
Running through the rest of the pre-game indicators, foreign markets are down hard across the board. In the oil pits, crude futures are moving down and the latest quote shows oil off $1.01 to $70.58. Interest rates are lower this morning as the flight to quality continues. The yield on the 10-year is currently trading at 4.76%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to another tough open at the present time. The Dow futures are currently off by 100 points; the S&P's are lower by about 14 points, while the NASDAQ looks to be about 18 points below fair value at the moment.
Stocks "In Play" This Morning:
Yesterday's Earnings After the Bell:
Nvidia (Nasdaq: NVDA) - Reported $0.43 vs. $0.34
99 Cents Only Stores (NYSE: NDN) - Reported $0.04 vs. $0.05
First Marblehead (NYSE: FMD) - Reported $0.83 vs. $0.81
Today's Earnings Before the Bell:
Echostar Comm (Nasdaq: DISH) - Reported $0.50 vs. $0.50
News, Upgrades/Downgrades/Brokerage Research:*
Essex Property Trust (NYSE: ESS) - Upgraded at BofA
Marathon Oil (NYSE: MRO) - Upgraded at Citi
Tesoro (NYSE: TSO) - Upgraded at Citi
Valero (NYSE: VLO) - Upgraded at Citi
DirecTV (NYSE: DTV) - Upgraded at Credit Suisse
Noble Corp (NYSE: NE) - Upgraded at Credit Suisse
Helmerich & Payne (NYSE: HP) - Upgraded at Deutsche Bank
Holly Corp (NYSE: HOC) - Upgraded at Deutsche Bank
Chemed (NYSE: CHE) - Upgraded at Deutsche Bank
Sun Microsystems (Nasdaq: SUNW) - Downgraded at Goldman
Seagate Technology (NYSE: STX) - Upgraded at Goldman
Brinker Intl (NYSE: EAT) - Upgraded at JP Morgan
Nvidia (Nasdaq: NVDA) - Downgraded at Merrill Lynch
Family Dollar Stores (NYSE: FDO) - Downgraded at Oppenheimer
Mr. Moenning holds Long positions in stocks mentioned: None
Note: All earnings reports compared to Reuter's consensus estimates
** For More of David Moenning's Market Analysis, Stock Portfolios, and Trading Ideas, visit:
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM's programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
You May Also Be Interested In
- Q1 earnings buy list: Morgan Stanley picks Nvidia, Amazon and these 10 stocks
- China Tells Telecom Carriers to Phase Out Foreign Chips - WSJ
- Helmerich & Payne (HP) PT Raised to $42 at Citi
Create E-mail Alert Related Categories
ContributorsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!