Wednesday, May 17, 2006

Investor Anxiety Is Rising

Morning News of Note:
  • TWX: AOL Enters Social-Network Fray Playing catch-up with rivals like MySpace and Microsoft Corp., AOL has launched a social-networking site for its 43 million U.S. instant-messaging users. AIM Pages, which debuted last week, allow AIM users to chat with "buddies" while creating and searching profile pages similar to those on other leading social-networking sites. (Full Story) WSJ
  • MOT: Motorola's Q could ring by next week Motorola's Q, a multimedia phone that's something of a cross between a BlackBerry and a video iPod, will hopefully come out next week, said the company's CEO. "We're in the final throes of getting it released," Ed Zander, Motorola's CEO, said during a question-and-answer session at the Gartner Symposium ITxpo taking place here this week. "We are a little late. We thought it would be out in January." (Full Story) CNET
  • Hedge Funds / Commodities: Heard on the Street... Fast Money Cools on Commodities Despite the criticism being leveled at hedge funds for driving up commodity prices this year, many of the large funds have actually been cautious, or downright bearish -- costing them money in the process. The prices of gold, copper, silver and other commodities have weakened this week and energy prices have eased, so some of these skeptical funds and other large speculative investors are seeing gains. (Full Story) WSJ
  • AAPL: How Apple's Store Strategy Beat the Odds When Apple Computer Inc. opened its first Apple retail store in 2001 in a shopping mall in McLean, Va., critics saw the initiative as an expensive, dubious gamble. But as Apple prepares to take the wraps off its latest, most ambitious store yet -- on New York's Fifth Avenue, opposite the Plaza Hotel and Bergdorf Goodman -- there are few doubters left about Chief Executive Steve Jobs's retail strategy. (Full Story) WSJ
  • GE: The Financial Times reports General Electric (GE) sharply increased its revenues from environmental goods and services last year, and more than doubled its future order book from these businesses. The co will announce on Wednesday that revenues from products and services gathered under its Ecomagination brand, for environmental products, rose from $6.2 bln in 2004 to $10.1 bln in 2005, and the co's backlog of advance orders, mostly to be fulfilled in three to five years, has risen to $17 bln. GE estimates that revenues from Ecomagination will continue growing at a similar annual rate.
  • YHOO GOOG: Yahoo seeks to narrow search engine gap vs. Google-Financial Times: Yahoo (YHOO) on Tuesday set out plans to harness the collective knowledge and interests of its 400M regular users to develop the next generation of search technology and narrow the gap with Internet juggernaut Google (GOOG), the Financial Times reported Tuesday. The vision, to be outlined at the company's analyst day in San Francisco, comes as Google's growing lead in search and its steady encroachment in e-commerce and other forms of Internet activity have touched off a scramble among rivals

Market Comments: The market has opened down this morning on a slightly higher than expected CPI report (+0.3% vs. +0.2% consensus). This news of creeping inflation is disconcerting to the market as it raises fear that the Fed will have to keep raising rates to stave off rising inflation.

Of course, I think the market is poised for a bounce. Not only is the market now short-term overosold, but the put/call ratio has been rising sharply over the last few days. It has closed over 1.0 for the last 3 days, and this morning opened at 1.72. This is as high a number as I have seen in a long time. I wouldn't be surprised to see a snapper in the market today.

That said, I am still looking for the market to put in more time on this correction. But these things never come in a straight line, so I expect to see some strength that will serve to keep the newly minted bears on their toes.

long GE, GOOG, TWX


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