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Happy Fourth of July
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Enjoy the fireworks, family barbecue and maybe even the Yankees-Red Sox series this weekend. Most importantly, be sure to remember this country’s Independence Day and the liberty and freedom that have come from it and make up the American Dream that we all try to live out each day. |
Thursday Equity Ideas: DELL, ABK, NGAS
Dell Inc. (DELL) – computer maker spent $1 billion to buy back 52 million shares, reducing the total count to 2.04 billion. Had $9.8 billion in cash at the end of the first quarter and expects to spend another $1 billion to repurchase shares. But it’s not just the company, it’s also the founder himself, Michael Dell, who is buying shares. And make no mistake about it, it’s no token gesture. Recent regulatory filings showed that he bought 4.51 million shares over the past few days, or about $100 million, no small chump change. This should secure a solid floor on the stock. Trade the range between $22 and $24.
Ambac Financial Group Inc. (ABK) – bond insurer announced that its Board of Directors has authorized up to $50 million for share repurchases of its common stock. CEO Callen believes that the share buyback “represents a good investment of our capital and reinforces our confidence in the long-term stability of our company.” The company has much better ways to spend its money and is probably looking to keep the stock price above a buck. The news did the trick as shares surged 13% late in the day. With the press release out with a little over an hour to go in the session, this could be a Monday morning gapper as 26% of the float is short.
NGAS Resources Inc. (NGAS) – absolutely no item to support the 9.57% pre-holiday trading shortened session thrashing. Most likely just some profit taking as the stock has been a late energy stock bloomer, doubling since March. Always an interesting name to trade this time of year with the upcoming hurricane season. The 2008 National Hurricane Outlook calls for 12-16 named storms, 6-9 hurricanes with 2-5 of those becoming major hurricanes (for you weather buffs, that is category 3 and above).
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A look at some unusual options activity in this morning’s screener.
Ford Motor Co. (F) – looks like a major strangle trade here. A couple 10k blocks in both the Sept. call with a $5 strike and the Sept. put with a $4 strike where 20,367 and 20,014 contracts have traded respectively.
Chesapeake Energy Corp. (CHK) – perhaps some nibbling on the July calls with a strike of $70 and $75 as the stock dropped to an intra-day low of $63.63 after hitting a 52-week high of $74 yesterday.
Companhia Vale ADS (RIO) – news of a global stock offering has put this name under pressure. There is substantial put option activity this morning in the July $35 strike and Sept. $30 strike where 14,875 and 18,506 have traded. The options volume represent almost one third of the open interest in those strikes with just two hours into the session.
SPDR Gold Shares (GLD) - possible straddle trade here. Seems that a trader took a position in both a call and put with the same strike price and expiration date – the July $92 strike, expecting a significant move in either direction.
Centex Corp. (CTX) – homebuilder just off a 52-week low with 22.4% short interest. There is speculative activity in the August $17.50 calls where volume stands at 8,510 and open interest is at 644.
Alcoa Inc. (AA) - notable interest in the October calls with a strike of $35 and the puts with a strike of $27.50.
Subscribe to our RSS feed to ensure that you receive the latest word on the street.Wall Street Dodges a Bullet with Inline Unemployment Report
The Street really dodged a bullet with this morning’s unemployment report. The Labor Department reported 62,000 jobs were lost in June as the unemployment rate held firm at 5.5%, roughly in line with economist forecasts. We could have easily been looking at a triple digit loss today. Total nonfarm unemployment was hurt by 43,000 jobs shed in the construction, 33,000 in manufacturing and noticeably the largest, professional and business services which dropped by 51,000. That was somewhat offset by a 29,000 increase in education and health services, 24,000 in leisure and hospitality and 29,000 in government employment.
Some other notable statistics that can be gleaned from the unemployment report according to the AP:
• Job losses in both April and May turned out to be considerably deeper than had been thought. Payrolls dropped by 67,000 in April, versus the 28,000 previously reported. And, losses in May came to 62,000, rather than the 49,000 initially estimated.
• It was the sixth consecutive month of jobs losses; no overall gain has been reported in 2008.
• So far this year, the economy has lost a total of 438,000 jobs, an average of 73,000 a month.
• The number of unemployed people in June was 8.5 million, up from 7 million a year ago.
For more interesting statistics and charts on the unemployment figures, copy and paste the following link into your browser: http://www.bls.gov/web/ceshighlights.pdf
Subscribe to our RSS feed to ensure that you receive the latest word on the street.July 3 CNBC Daily Bonus Bucks Trivia Questions and Answers
Squawk Box
Question: On July 2, strategist John Carter told CNBC he sees the Dow below 10,000. Where did he suggest putting your money?
Answer: both
Squawk on the Street
Question: According to “Warren Buffett Watch,” the bear market bit Berkshire Hathaway. What was its Tuesday closing price?
Answer: $120,100
The Call
Question: In Darren Rovell’s post on Nike’s Air McFlys, what Back to the Future “science” term did he quote?
Answer: all of the above
Power Lunch
Question: According to the Fast Money Trade School article, “All Or Nothing Options”, who is expected to trade binaries?
Answer: all of the above
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e-mail alerts to ensure that you receive answers to the daily Bonus Bucks trivia questions and for tips about the CNBC Million Dollar Portfolio Challenge.The Most Important 3.5 Hour Trading Session in Recent Memory
Tomorrow’s three and a half hour pre-holiday trading session could be one of the more important in recent history. In addition to the European Central Bank making a decision on rates Thursday - economists surveyed by Bloomberg expect the ECB will lift its 4 percent benchmark rate by a quarter-percentage point, the U.S. unemployment report is also due. Out ahead of that today was the ADP National Employment Report which said that nonfarm private employment decreased 79,000 from May to June on a seasonally adjusted basis, the first estimated drop since it expected nonfarm private employment to decline 23,000 from the January to February period earlier this year. Some have argued that ADP has undercounted job losses as compared to federal government predictions (even with taking out public sector employment), so it should be interesting to see how bad things really are. From the Bureau of Labor Statistics website, here are the total jobs lost from Jan. to May ; -76,000, -83,000, -88,000, -28,000 (preliminary) and -49,000 (preliminary). Don’t head off to the beach and begin your extended weekend just yet.
Subscribe to our RSS feed to ensure that you receive the latest word on the street.Keeping an Eye on the CBOE Volatility Index
The CBOE Volatility Index (VIX) had its third biggest percentage jump in a month and moved to its highest level since March, rising 9.73% to 25.95. A big push in the closely watched fear gauge occurred in the last two hours of the session when the Dow Jones Industrial Average went from being unchanged to closing down 166.75 points, a decline of about 1.46%. As previously highlighted, the volatility index is still nowhere close to 30 – a level that accurately signaled a market bottom back in March and January of this year, but if there is anything positive about today’s move, it’s that a significant tradable capitulatory low is getting closer each day, albeit ever so slowly.
Subscribe to our RSS feed to ensure that you receive the latest word on the street.July 2 CNBC Daily Bonus Bucks Trivia Questions and Answers
Squawk Box
Question: In the article, “Stock Picker Likes Sunnier Second Half”, who might gain from “the little guy…going out of business”?
Answer: FedEx
Squawk on the Street
Question: Mmm: Food stocks. When Alexia Howard spoke to CNBC on June 24, which one was “at the top of her list”?
Answer: Sara Lee
The Call
Question: On June 25, Erste Bank’s Ronald-Peter Stoferle predicted a massive gold price rise. What is the “total demand for gold”?
Answer: approx. 3,600 metric tons
Power Lunch
Question: In the blog post, “Options Action: Make $$$ on Financials”, Stacey Gilbert talks up a strategy for:
Answer: Citigroup
Street Signs
Question: Guest Blogger Vince Farrell marvelled at Goldman Sachs’ market-moving ability. Who did Farrell say Goldman “unloaded” on?
Answer: Citigroup
Closing Bell
Question: In Fast Money’s Web Extra, “Steel In Second Half?” what event seemed to drive up MacArthur Coal? Answer:
Answer: Arcelor upped Mac stake
Subscribe to our RSS feed or get e-mail alerts to ensure that you receive answers to the daily Bonus Bucks trivia questions and for tips about the CNBC Million Dollar Portfolio Challenge.Tuesday Options Screener: XLF, GM, LM
A look at some unusual options activity in this afternoon’s screener.
Financial Select Sector SPDR (XLF) - the financial sector ETF fell below $20 for the first time this year to hit a new 52-week intra-day low of $19.57 before rallying to get into positive territory at $20.40. There is some interesting positioning going on in the options for the month of August. So far, approx. 199,000 call options have traded or nearly 4x the 55,000 contract volume for the puts. Heavy call volume is concentrated in the calls ranging from $20 all the way up to the deeper out of the money strike at $23.
General Motors Corp. (GM) – the automaker has now reversed earlier losses after falling close to a more than fifty year low of $10.71 following a report that U.S. sales fell just 8.3%, much less than the 19.3% industry analysts had expected. The stock is now up about 2.6% to $11.79. There has been a rush to pick up $12.50 July calls, nearly 22,068 contracts have traded, more than the open interest in that particularly strike and about two-thirds the total put volume for that month.
Legg Mason Inc. (LM) – newswires are abuzz about the possibility of a debt rating downgrade. The stock has tried to rally with the broader market but looks to still close down more than 5% at $41 a share. Put activity is quite active – 6,174 at the $45 strike and 7,589 contract volume at the $40 strike. July call volume on the otherhand is virtually non-existant.
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Lehman Brothers Holdings Inc. (LEH) volatility continues following yesterday’s 11% drop with the stock now reversing and up about 4.69% in early morning trading to $20.74. Lehman notably closed below its March intra-day low of $20.25, but you have to take into account that the weak price action occurred at the end of the second quarter as window dressing and swapping out of financial stocks hit a peak, and on what seems to have been a false rumor of a sale of the investment bank at a steep discount to the current share price, conveniently floated around on the last day of the quarter. Analysts Patrick Pinschmidt and Avi Gho over at Morgan Stanley try to pin the low, with an initiation of Lehman with an “overweight” rating, sticking out their necks to make a pretty solid bottom call.
General Electric Inc. (GE) is seeking a bottom, fresh off a 52-week low of $26.15. Merrill Lynch is boldly out this morning reiterating a “buy” rating on the conglomerate with a target price of $37.50. The bottom line (no pun intended) appears to be that the company won’t miss earnings estimates again and you have to believe that is true. The consensus among analysts is that Immelt won’t make the same mistake twice. Trading at a bargain PE and with a decent dividend yield, this is another timely bottom call. The second quarter report is due out next Friday, July 11.
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