Zach G. - Freshman Equities Trader - Weekly Desk Notes

Notes for the Week Ending 6/18/2010

Notes for 6/14/10

Global Market Recap:

• Very quiet on the news front, Euro is up small
• We have been seeing declining volumes which has been good for stocks
• We are approaching the top of the range at 1100
• U. of Mich confidence number possibly helped propel the market forward on Friday
• Very few economic numbers this week
• Options expiration on Friday

Shine’s Power Alley:

• Kept an eye on BAC Friday
• Airline stocks; Short puts in JBLU
• X trading up this morning
• MBI, BPOP, MGM, LVS
• Solar space

Other Notes:

• When the market goes up, demand for options (insurance) goes down; since implied volatility is the only variable factor in an option, a change in IV

Notes for 6/15/10

Global Market Recap:

• S&P futures up 6 handles from fair value
• Relatively quiet overnight session
• Greece downgraded to Ba1 yesterday by Moody’s
• European equity markets are at a month high
• Crude oil near its month high & gold is flat

Upgrades/Downgrades:

• JCI upgraded to overweight from equal weight at Morgan Stanley
• CELG upgraded to neutral from underperform at Cowen
• TROW upgraded to outperform
• VVUS downgraded to hold from buy at Lazard
• HEV initiated at buy at Needham

DM in the AM:

• Financial panel will meet today to consider new rules for private pools of capital and credit rating agencies; Barney Frank called for dropping the Senate’s most controversial plan to regulate credit rating agencies
• Bill under consideration includes Blanche Lincoln’s proposal to force banks to choose between OTC derivatives trading and access to gov’t protection such as emergency lending by the fed
• Analysts do not expect yesterday’s downgrade of Greece to affect the market much
• BP is currently capturing 15k per day of oil but expects to be able to capture 40-53k barrels per day
• Starting July 1^st SBUX will make wireless internet free at their stores
• MSFT releasing the newest version of office today

Shine’s Power Alley:

• Watching foreign banks, oil, solar, and Vegas spaces
• Other Notes:
• Reg. T: Brokerage firm may give a retail customer up to 4x the amount of value in the portfolio and 2x the capital overnight
• JK does not want to short the futures at 1:15 because he believes we will continue to grind higher and it is too late to get a reversal
• JF believes that a slight uptick in revenues will be magnified into huge movements in stock price

Notes for 6/16/10

Global Market Recap:

• S&P futures down 8 handles from fair value
• FedEx reported inline numbers for Q4, took down numbers slightly for Q1
• Closing tick sits at -3
• Euro slightly weaker this morning
• Tokyo made a month high yesterday and is down small this morning

Shine’s Power Alley:      

• SNDK, DRYS, BBY, IFLG
• AIG, GME, KEY
• Education names are in play today
• Oil names are all down after Obama’s speech
• Solar names were up big yesterday: LDK, YGE
• Look at stocks going from red to green or stocks that break their opening price

Other Notes:

• Ciena Tellabs merger appeared to be a very “clean” deal passing all regulatory reforms etc.  Announced on the day of the vote that they were adjourning the vote; spread went from 5 cents to 30 cents.  Learn to expect the unexpected
• Many individuals in high ranking positions at the Fed etc. came from merger arbitrage backgrounds

Notes for 6/17/10

Global Market Recap:

• S&P futures are trading higher than yesterday’s highs at 8:00
• Jobless Claims expected at +454, Core CPI expected at 0.1%
• Jobless claims came in at 472 which is weak & took the market down 4 handles
• The situation in the gulf may be inflating the Jobless Claims number

Upgrades/Downgrades:

• NOK upgraded at Swedbank and downgraded at UBS
• FSLR upgraded to outperform from neutral at Credit Suisse w/ a $140 price target

DM in the AM:

• Spain had a successful bond auction
• Stress tests will be published in Europe
• TOL gave a slightly negative business update
• Negative article in the NYT about the housing market saying
• According to a FT article US banks could be forced to payout $2 bln in UK bonuses

Other Notes:

• JK believes that data from 2008 must be thrown out when performing quantitative analysis
• When people don’t ask questions they feel that the discussion doesn’t warrant their question or they are insecure; both are emotionally based.  Not asking the question exacerbates ambiguity
• There will be a hedging account run by Jeremy Klein; this account will not be long
• The second we believe there is ambiguity we should speak up about it
• Create categories for Freshmen projects rather than putting them under our names
• In this business you can leverage your knowledge in one specific area and be very successful.  Stick to what you know
• Potential 4:1 stock split on AAPL could make it a potential candidate for a stock split
• Jeremy’s 4 steps: Financial Reform > Change in earnings picture > Uptick in economic numbers in September > Democratic defeats in November
• Option Basics

Notes for 6/18/10

Global Market Recap:

• S&P futures traded in a 5 handle range overnight, trading down 1 handle
• Moody downgraded BP to single-A status
• Triple witching Friday: US index futures expire at the open.  June index options that trade on the CBOE expire on the open, single stock options expire at the close
• Volumes are very light in the S&P 500 futures

DM in the AM:

• UK budget report showed a less than expected budget deficit
• European bank stress tests are to be published in July
• Banco Santander and BBVA may be rated the two healthiest banks in Europe
• European leaders pushing for a global tax on banks and financial transactions at next week’s G20 summit
• Lincoln/swaps provision would require banks to isolate their swaps desks which would require banks to raise new capital and deprive them of profits they get from dealing but it would allow parent companies to retain the values of these operations

Shine’s Power Alley:

• Looking for the chop trade as we reenter a less volatile environment
• Watching gold and silver names as they have been very strong recently

Other Notes:

• Momentum Change on a dime, sector rankings did not change, begins at an even time, no downtick, a minute before the close the buying pressure lightens up