TCM Notes : 4/17/09

• Earnings : C, GE, BBT, FHN, MAT, STU, PRSP, PFBC
• May 4th will be the day we get the results from the bank "stress" test.
• Credit Suisse upgraded steel pointing to Chinese growth as the main catalyst. PKX, MT, and NUE were cited as their choices. The default here would be SLX. Also noted was the utility sector being under weighted by everyone. They want to go long here. XLU is the default. Which was in our pairs trade of XLU / UGA. However, even though gasoline is in a glut at the moment I think it would be prudent to wait for the mid to end of the driving season to put the short on. UGA is in an uptrend at the moment. It could very well run up into the 30s where it should offer a good short.
• Barclays now has a 15% share of the Treasuries market thanks to the assets they scooped up from Lehman.
• RF saw heavy call action at the 5, 6, 7 calls for the April contract expiring today. They also claimed they would be profitable.
• RST saw a very nice launch for their IPO yesterday. The past few IPOs have proven to be well received by the market. There will be more to come, but I think the main beneficiary of this will be the NYX. Couple that with the proliferation of etfs (which most traded on the AMEX now owned by NYX) and I think the volumes will return and continue to grow at the NYX. Never underestimate the Big Board.
• Watched an interview with the ceo of GNK. Apparently cape size ships were 140 at anchor back just a few months ago. That number is now 30. They are still benefiting from contracts in place a few years ago. The main thing that's being shipped is iron ore from Brazil and Australia to China. Since the dollar is down it's cheaper for them to import ore right now. This could pick up more as I just saw some Japanese steel makers are cutting prices. This should pressure the iron ore producers to keep contracts flat to contracting when they sign new deals.
• The Economist had a short piece about a new book on the "bare knuckled capitalist approach" of Cornelius Vanderbilt. The Commodore did have a colorful business life especially the dealings with Drew, Gould, and Fisk. The main thing I pulled from the piece was a Mark Twain quote. Apparently Twain lampooned the Commodore on more than one occasion, but this one pertained to a cartoon of a horse drawn cart running people over. The motto was "no matter I'll pay for them." Twain's take on that parallels the populist outrage being voiced towards Wall Street today. "You are the idol of only a crawling swarm of small souls." I would say this is how the masses perceive Goldman Sachs and a few select others at this point in time. No worries though. If their 401k doubles in the next 5 years they'll forget all about it. Hell, 5 positive weeks sure has changed the tune of many. Funny thing is now all the masses have finally received explanations of what happened dumb enough so that they even understand, so they really don't want in the market now. And low and behold if that's not when Mr. Market goes the other way! He's a consistent joker if nothing else!
• INFS has an offer for a .95 cash takeover outstanding. While far from being finalized this one looks like a done deal. Arb opportunity for those that can grab some .85 -.90. Although I think that this one looks strong to others so the spread is tightening up on this one.