terça-feira, 6 de janeiro de 2009

Four at Four: Rally for Now, Worry Later


from WSJ.com: MarketBeat by David Gaffen


  • Another day, another rally, and perhaps a few more believers. It’s premature to term this recent surge as much more than an early-year allocation flurry, bolstered by the hope that perhaps the economic outlook will improve a bit more quickly than expected, but it isn’t a bad thing. “The better tone in the chips and selling in pharmaceutical and defensive names maybesuggests people are getting away from the worries,” says Nick Kalivas, vice president of financial research at MF Global. The semiconductor companies were among the better performers Tuesday, as the Semiconductors Holdrs ETF gained 4.8%. Profit warnings loom, however, and Alcoa’s announcement of a 15% cut in its workforce — while admitting that previous cost-cutting moves were inadequate — suggest a bumpy environment for some time to come. The company will be cutting capital expenditures by 50%. Should other corporations announce similar moves, with similar reasoning, it would pose a detriment to the economy because of the importance of business spending to the economic outlook. As earnings season approaches, there will be others. “My guess is, you’ll probably see the market correct or see some selling in front of these events,” says Mr. Kalivas. “The depth of that correction, and the ability to respond positively to what should be bad news, will give us direction going into February.”

  • Phil Schiller. There

  • Save for a surprise appearance by Steve Jobs, little new was anticipated at the Macworld trade show. The keynote by Phil Schiller, senior vice president of Apple marketing, was well-received, at least. The company announced pricing changes to music sold on iTunes, a new 17-inch MacBook Pro, and a few other items, but buzz about a smaller or cheaper iPhone did not come to pass, and served, in part, as motivation for investors to snap up shares of Research in Motion, which gained 7.5% while Apple slipped 1.7%. “The last few hours, the paths of the two names are distinctly divergent,” noted Jeff Cooper, writing on Minyanville.com. Overall, however, analysts at Piper Jaffray contend that the underwhelming agenda this time around suggests that Mr. Jobs mostly bailed out because he had nothing new or interesting. “If Phil Schiller had made a significant announcement, we would have seen that as a sign of a changing-of-the-guard, but that was not the case,” they write, working their way around to the conclusion that Mr. Jobs is still in fine health. Other analysts expressed similar views of the conference, judging it to be about as expected, with Barclays analysts saying that “we believe Apple continues to be the leading innovator in its space with vertically integrated software & services building a loyal community across a range of devices.”

  • Inflation

  • The first Treasury note sale of 2009, an $8 billion auction of Treasury Inflation Protected securities, came out better than anticipated, and there’s a hopeful message embedded in those results. “It’s good to see the TIPS auction go over well especially in the context of this deflation scare that we are in,” writes George Goncalves, Treasury and agency strategist at Morgan Stanley. The heavy bidding resulted in a high rate of 2.245% for the auction, about 0.1 percentage point lower than the expected rate in the market, which was about 2.345%. What that means is that regardless of the market’s action, investors were still interested in protecting themselves against a possible inflationary scare, and it’s also an acknowledgment that the current difference between Treasury notes and TIPs are a bit unrealistic. (That difference was 0.08 percentage point, which might be the current inflation situation, but is not likely to persist.) For a short-term investor, the demand suggests that “they’re expecting that inflation fears come back over the course of the next eight, 10 or 12 months,” says Ian Lyngen, market strategist at RBS Greenwich Capital. “It’s difficult to imagine that over the course of the next 10 years we’re not going to have an inflationary scare.”

  • Rohm

  • Dow Chemical CEO Andrew Liveris was adamant Tuesday that its planned acquisition of specialty-chemical companyRohm & Haas will happen, despite the breakdown of a $17.4 billion joint venture with a Kuwait-based chemical company. Investors are to be forgiven if they’re hedging their bets on this. Shares of Rohm & Haas fell 3.7% to close at $61.45 after Dow said it is looking to legal action and considering the sale of assets in order to finance its $15.3 billion buy of Rohm & Haas — which may not close any time soon as a result. Options traders were all over Rohm & Haas Tuesday. In addition to a decline in shares, selling in January call options at various strike prices erupted, and the premiums fell, as investors place a reduced possibility on the closing of the deal at the original $78-per-share price. More than 25,000 call options at the $75 strike price changed hands, with the price per option falling to 90 cents from $1.15, and similar selling was witnessed in the $65 and $70 strike prices. Still, analysts at Credit Suisse remain optimistic that the deal will close, “resulting in a trading opportunity for ROH.”

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