'Dead Fish' on Parade

Editor's note: This column, which reflects market activity from the day before, originally appeared June 30 on RealMoney.com. To sign up for RealMoney, where you can read Bill Fleckenstein's commentary every day, please click here for a free trial.

The overnight markets were modestly lower, but that didn't stop us from having a nice preopening ramp job to salute the end of the quarter. Tech was especially hot, as a big dead-fish house raised its opinion of Intel(INTC Quote) this morning (more about that below). The early-going frenzy petered out around the time the Chicago Purchasing Management index printed slightly less than expected. However, I don't think that precipitated the slide. I think the complete and total bull of the preopening ramp job couldn't be maintained, and we started to sink.

For Whom the Bonds Forebode: About midday, we hit our lows, right around unchanged, and then the Dow and S&P bounced back close to the day's highs. But after that fizzled late in the afternoon, we wound up closing nearer to the lows, with the action in Nasdaq land slightly weaker. Intel finished on the low of the day, up about 20 cents, after having opened 70 cents higher. Otherwise, there was little worth pointing out, besides the suspicious weakness in housing land. If the bond market has peaked, those stocks could have seen their highs. Obviously, that would not bode well for economic action in the second half. In any case, it will be most interesting to see what the rest of the week brings in all these various markets. Tomorrow I'll share some quotes from one of the two stock market technicians that I pay attention to.

Away from stocks, it was quite a mixed picture. The Japanese yen and Canadian dollar were initially very weak but then crawled back all day long to close down fractionally. The euro was up about 0.5%. Gold was slightly firmer, and silver was up 1%. Fixed income saw a bounce as well. How much those markets were influenced by the quarter's end is anyone's guess. Meanwhile, in the canary-in-the-coal-mine department, Japanese government bonds were thumped again last night for 10 basis points, with the yield now up to 85 basis points. Obviously, that's not a giant number, but relative to half that yield on JGBs a couple weeks ago, it's a mighty big change, and one that ought to produce some ramifications. I added modestly to my positions in gold, silver, the euro and the Canadian dollar today.

Poof Goes the Burden of Proof: Returning to Intel, as I read the "research" from this particular dead fish, a couple of things came to mind. Was he trying to curry votes among portfolio managers who'd like to see that much-loved stock ramped up at the end of the quarter? His thesis for believing that Intel will make the numbers and not lower them for the third quarter is the categorical statement that "overall chip demand is decelerating," while demand for Intel's products is "beginning to accelerate."

Once again, it's a case of arm-waving by the dead-fish community, because this report is completely lacking in evidence to support his case. It contained no corroborating data in the form of what PC vendors have been saying, or what motherboard makers have been saying, or what components manufacturers closely aligned with PC makers have observed, or what the corporate buyers of IT have been saying (more about that below). The omission of such supporting data is, of course, no oversight, since it doesn't exist in the first place.

Index	Close	Change
Dow	8985.44	-3.61
S&P 500	974.50	-1.72
Nasdaq Composite	1622.81	-2.45
Nasdaq 100	1201.72	-3.53
Russell 2000	447.05	-1.70
Semiconductor Index (SOX)	359.69	+0.23
Bank Index	857.56	-3.17
Amex Gold Bugs Index	149.45	+2.95
Dow Transports	2412.86	-4.17
Dow Utilities	250.99	+1.49
NYSE advance-decline	+12	+191
Nikkei 225	9083.11	-20.95
10-year Treasury Bond	3.53%	-0.053

On the contrary, as I have pointed out many times, PC vendors such as Ingram Micro(IM Quote), Tech Data(TECD Quote) and the PC companies themselves have said they see no signs of "acceleration." In fact, knowledgeable industry observers will tell you that anything but acceleration is taking place. Intel has only "succeeded" in the second quarter because it has a new product and it's been able to, in my opinion, stuff the channel with its Centrino chip. Ex that, nothing is happening. Further, Intel faces big trouble in Q3, not just because of weak demand but also due to competitive inroads and pricing pressure from Advanced Micro Devices(AMD Quote), via its Athlon and Opteron chips.

Itty-Bitty IT = Intel Uphill: In any case, if dead fish can dispense with reality when it gets in the way of a tech fantasy, reality is the singular view from the knowledgeable technology insider whose emails I have shared over the course of the year. Today I would like to share his final commentary from the vantage point of corporate America, as chief architect of a major Fortune 100 company that consumes massive amounts of IT, as he heads off shortly for an IT position with the government. (He also sent this to Herb Greenberg, who covered it in his column on Street Insight.) Here are his thoughts:

Just wanted to give you a quick summer technology update. As I figured, budgets are not expanding in any way to support the idea of a second-half technology spending rebound. This comes not just from me but from many people I speak to in the industry. It's just flatness and stabilization in terms of money spent.