MARKET COMMENT
December 4, 2006
When I saw the news this morning that PFE’s
new drug was being pulled I said to myself:
“Oh oh, that’s gotta
hurt!” But, as has been the trend, bad
news is isolated and set aside as bulls focus on deals. With so much “cash” floating about and the anxiety
to spend it bulls are encouraged and still in charge.
Today Bank of New
York acquires Mellon in a $16.5B deal creating the
largest custodian bank. Also, LSI Logic
buys Agere for $4B and gives tech a lift. Last week, rumors were swirling about a $100B
deal to take Home Depot private. All
this leads me to wonder what money is really worth? These guys are throwing around billions like so
many nickels. Is that part of the
message of rising asset prices—too much money chasing too few goods? I wonder.
At the same time Fed Governor Moskow
was out “talking” and his message was intended to soothe investors nervous by
last week’s weak economic data as he said: “The economy is still on solid
ground.”
And also chiming in was our favorite pundit, David Lereah from the realtors group saying in response to lower
pending home sales data: "It's important to focus on where the housing
market is now -- it appears to be stabilizing and comparisons with an
unsustainable boom mask the fact that home sales remain historically high." Ah, that “stabilizing” description and more
spin again.
So forget the PFE bad news and focus on the all that cash. A hundred years ago, the US was
dominated economically by “Robber Barons” or the more friendly term, “Captain’s
of Industry” [Rockefeller, Vanderbilt, Morgan, Mellon, Carnegie and so
forth]. Now it’s Global Megabanks [Money Center Banks & Trading Desks] and
Hedge Fund managers. Just look at the
bonus money being handed out on Wall Street and the McMansions
being built for Da Boyz. In fact, it was reported today by Bloomberg
that Megabank Goldman Sachs was said to be the
largest manager of hedge fund money, with $29.5B in assets. The more things change, the more they stay
the same.
Senator Couzens: Did Goldman, Sachs and Company
organize the Goldman Sachs Trading Corporation?
Mr. Sachs: Yes, sir.
Senator Couzens: And it sold its stock to the
public?
Mr. Sachs: A portion of it. The firms invested originally in ten per
cent of the entire issue for the sum of ten million dollars.
Senator Couzens: And the other ninety per cent
was sold to the public?
Mr. Sachs: Yes, sir.
Senator Couzens: And what is the price of the
stock now?
Mr. Sachs: Approximately one and three quarters.
—from the Senate Hearings of Stock Exchange Practices, 1932
And, speaking of the above era,
the SEC voted 5-0 today to eliminate the up-tick requirement for short
sales. This will be referred for public
comment. Go ahead, try!
Okay, enough negativity and sarcasm. What else was going on today?
And, the rest of the usual suspects:
And around the globe:
It used to be a maxim to say that within good trends, Monday’s
and Friday’s were “countertrend” days.
Last Monday was that way; let’s see if this Monday holds up for the
week.
There’s a lot of cash around and those with it want to put
it work. That’s the bottom line period.
Disclaimer: Among
other securities, The ETF Digest maintains positions in: SPY, QQQQ, IWM, MDY,
XLU, XLE, USO, GLD, SLV, CEF, DBC, EFA, EEM, ILF, IFN, TRF, and EPP.