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Sunday, October 16, 2005

Thoughts going into Monday, Oct. 17th

The market acted interestingly last week. I noticed that the Volatility Index spike Friday morning and then reversed course - broadly lifting many stocks. I suspect that we're seeing the effects of a number of bad events work their way through the market:
  • Hedge Fund collapses: Bayou, Wood River, some to be named soon I'm sure...
  • Refco: Hey, guess what? SOX hasn't cured executive malfeasance! Who'da thunk?
  • Katrina, Rita, The Next Big One: What global warming?
Considering how well the market has held up, I can only surmise that it will power up when the skies begin to clear. One area that I think will brighten up things is the Christmas retail season. I've been a strong proponent of the housing sector because I feel that the "overleveraged consumer" story is a red herring (is that the right term?). Consumers aren't overleveraged, they're "right leveraged". In other words, *most* people have a good idea of what their monthly income is and what they can afford to pay out. When they do hit the heavy end of the meter, they scale back accordingly and work it off. The scare tactics are (once again) the product of a financial media that needs a story that will garner attention.
But I digress. I'll take a bid that this Christmas season will be okay. Not great, just okay. Which considering the gnashing of teeth in the market lately, will be just fine for stocks.
So, given that I'm looking for upside, here are other ideas that I'm working through:
  • Datalink's earnings call brought up the idea of a technology refresh for storage (and back-end infrastructure, I suspect) technology. Need to figure out if EMC or the other biggies are seeing this as well. HPQ could get a lift from this.
  • GE just got dinged by their NBC subsidiary. Revenues fell 4% (Olympics adjusted), reflecting a lack of ratings for hit shows. Is this another "ad dollars to Internet" data-point? Eh, I'm thinking it's just piss-poor show development. However, I can see GE working with NBC on an Internet related acquisition soon. iVillage? I need to figure out what is going on with the whole MSNBC alliance/branding...thing.
  • Palm & RIMM announce a Blackberry/Treo phone. Is RIMM reacting to the competitive threat posed by Microsoft's impending delivery RIMM like access to email through the new Exchange 2003 update? Is this a signal of future weakness for RIMM or will getting on the Treo add enough momentum to keep the good times going?
  • Lexar finally gets the $465MM verdict against Toshiba confirmed. Unfortunately, it looks like this would more than wipe out Toshiba's $350MM+ operating profit expected (or unexpected) for this quarter. The reason for the strong quarter? Yep, strong NAND flash memory sales. Ouch.
More to come! Enjoy your Monday morning. Invest well...and remember, it's only money.


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