Schaeffer's Trading Floor Blog

Into the Open

by 5/4/2005 9:20 AM
Stocks quoted in this article:

It looks like the bulls are pushing for a positive open...


Chart Courtesy of Thomson/ILX

As you can see, the bulls rallied the S&Ps which now sit roughly four and a half points above fair value...


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Bond Re-Run

by 5/4/2005 9:16 AM
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Also hitting the wires...It looks like the Treasury Department is considering bringing back the 30-year bond...Perhaps the most interesting aspect for the moment, is a comment I saw on MarketWatch that noted how the Treasury stopped issuing the 30-year four years ago because, at the time, the government was forecasting surpluses that would ultimately eradicate government debt. If the issue of the deficit wasn't such a macro concern, the bolded comment would be funny...

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The big news of the morning...outside the Fed discussion...is an announcement that Kirk Kerkorian's Tracinda Corp is making a tender offer for 28 million shares of General Motors (GM). The offer price is 31 and GM shares appear to indicated near 30.60 in pre-open action...

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Fed Blunder

by 5/4/2005 8:24 AM
Stocks quoted in this article:

I have received a number of questions and comments relating to last night's Fed blunder. As I noted, the omission of a key phrase relating to inflation did give a small bounce to the indices but more interestingly, it raised a number of questions.

As someone who pounds out more words on a keyboard than I ever thought I could do, I completely understand omissions and mistakes...believe me I do. However, the entire financial system doesn't wait to see what I am going to say before making decisions! Their release is more or less a copy and paste from the previous release. How hard is it to remember one of the few lines on inflation. Com'on, can we get someone to read over the release before it goes out!??!?!?!?!

Okay...sorry about that, but it had to be done...

Of course, my angst is predicated on the belief that the omission was an honest mistake and not done intentionally. Many have speculated that this was either done to see how the market would react to concerns or to give a boost to the market after the release failed to spur buyers.

I have never been one for conspiracy theories but such a striking error does raise questions as to what is going on behind the scenes of an already murky state of affairs. However, we are not likely to get easy answers to the questions. As we discussed yesterday, the complacency on the Street appears to put the Fed in a difficult situation and that still remains the case. On the bright side though, does the new precedent of "add-on" comments give hope that I may yet see the phrase "Git-R-Dun" uttered by Mr. Greenspan?


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Good Morning

by 5/4/2005 7:54 AM
Stocks quoted in this article:

We follow the Fed blunder with an interesting futures picture. At first glance it may appear that the S&Ps are signaling a slightly negative open as they trade down 1.30. However, the cash market and futures diverged at the end of the day yesterday. The net result of this is that futures would have to trade down more than three points to be at fair value. In other words, even though the S&Ps are trading lower than yesterday's close, they are still two points above fair value which indicates a slightly higher open.

If this seems confusing, I wouldn't spend too much time on the issue as I don't think it is a tremendously important in the grand scheme. After all, whether the SPX opens two points higher or two points lower, it is still a relatively flat open. I just thought you might find it interesting and wanted to mention it as I have seen some contradictory comments this morning on what futures were pointing to...

Outside stocks, I see that gold is up 2.30 to 430 while oil is up a nickel to 49.55...

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