Suddenly It's a Whole New Ballgame

And the market has bond and equities traders are choosing up sides. Also, highlights of a conference call with the director of venture capital firm Draper Fisher Jurvetson.
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The Times, Are They a' Changing?

SAN FRANCISCO -- What a difference a few days makes. Heading into this week, even some players

not

bearish (or even naughty) by nature were talking seriously about the possibility of a crash. Following

Wednesday's advance, some reasonably thinking people are talking seriously about the market being a "screaming buy," as one trader declared Wednesday.

Whether that sentiment is more than just a passing fancy could depend largely on which carries the day tomorrow --

America Online's

(AOL)

robust earnings report or

IBM's

(IBM) - Get Report

less-than-stellar results. In a cautionary portent for those long (or hoping to get there), IBM was down 7 3/4 to 105 in after-hours trading, according to

Reuters

, while AOL was off 3 to 118.

The Internet's Future: Join the discussion on

TSC

Message Boards.

Meanwhile, there's a clear break in the mood among equity traders vs. their fixed-income counterparts.

"I don't see anything real wrong," said Sam Ginzburg, managing director of equity trading at

Gruntal

. "We think

the market is going higher."

Even as the market has struggled to find its (ball) bearings of late, Ginzburg said there's been "plenty of opportunities" for aggressive traders.

"There's opportunity almost every day to be in and out of positions" in situations like

Xerox

(XRX) - Get Report

, he said. "You have motivated sellers who have to let

a stock go. During those moves you have a chance to trade in and out and make money."

While that violates

Gary B. Smith's golden rule about not buying a stock after it's first big dip, Ginzburg is talking about trading vs. investing, comparing it to "being a sniper."

I got the sense Ginzburg (and other traders no doubt) is employing these kind of tactics as an interim strategy until they can break out the big guns.

But the "buyside bazookas" will remain shelved unless the bond market extricates itself from its yearlong funk -- a happening unlikely to occur anytime soon, according to one bond trader.

"What happened on

Oct. 8 was so bearish, you can't get more bearish than that," the trader said, referring to the bond market's inability to rally despite a much weaker-than-expected employment report. "It's an indictment."

The trader, who requested anonymity, said

yesterday's reaction to the

Consumer Price Index

report was similar. As a result, he's covered short positions because "I'm having a hard time figuring what's going to accelerate us to new lows."

But the veteran fixed-income player also sees little hope for bond prices to rise measurably in the near future.

"I'm very confident the

Federal Reserve

is going to tighten" on Nov. 16, he said. "The market is now piecing that together."

The trader came to that conclusion because, of the "four hurdles" the market needs to clear to dissuade the Fed from tightening, three have already proven too steep, he said. First, while the employment report was weak, average hourly earnings were higher. Then, the

Producer Price Index

Friday was "horrendous," and while CPI was "acceptable" it was still "high," he said.

That leaves the bond market with severely bruised shins as it approaches the

Employment Cost Index

, due Oct. 28.

"Bottom line: Our market is going to have a hard time," he said.

Bottom line: The stock market's recent rebound is going to fizzle if he's right.

Jurvetson, Part 2

After much subsequent ado, we go back --

as promised -- to Steve Jurvetson, managing director of San Francisco-based venture capital firm

Draper Fisher Jurvetson

.

In the Oct. 7

Merrill Lynch

conference call, Jurvetson expressed confidence online companies will eventually be able to "monetize" the eyeballs viewing their sites. "Every media found a way to make efficient use of ... advertisements," but only over time, he said, noting the 30-second TV commercial was not standard at the onset of that industry. And the Internet is in the "very early part of the first inning" of its evolution, the venture capitalist declared.

Asked by Merrill Lynch tech analyst Steve Milunovich which public companies he would invest in today, Jurtveston said he's "excited" about

Yahoo!

(YHOO)

for it's "eyeball aggregation," and "natural monopolies" such as

eBay

(EBAY) - Get Report

.

He also sees great opportunities for Internet software developers, especially those focused on business-to-business markets, an example being

Ariba

(ARBA)

.

Conversely, the venture capitalist is avoiding companies whose mantra is " 'I am a dot.com; I want to sell you something.' Unless it's a special angle, product or service that's viral in its nature, we're not investing there."

Waxing philosophic, Jurvetson then discussed how, thus far, there "has not been very creative interpretation of how to use" the Internet.

Amazon.com

(AMZN) - Get Report

, for example, is a "pure carryover from a physical world retailer," and thus "completely out of place on the Web," he said. "We believe strongly Amazon.com is an anachronism."

Although everyone seems to be rushing to build brand-awareness online, Jurvetson believes "the notion of a retail brand is out of place on the Web."

Instead, he foresees customers putting their faith in a "personalization agent," which -- like

Consumer Reports

-- has no economic incentive to "steer you one way or another."

Imagine this: You're at Amazon.com (or any other site) looking at a particular item and an "eyeball bandit" pops up to tell you the same item is available for less elsewhere, he explained.

Furthermore, this party knows your address, credit card number and other pertinent information and "you trust them as your fulfillment agent," Jurvetson continued. "The ability to poach

consumers at the checkout stand is powerful and new."

He mentioned

NetZero

(NZRO)

, the free Internet service provider that went public late last month, and privately held

Brodia.com

as examples of companies with the potential to employ these tactics. Draper Fisher Jurvetson was an early-stage investor in both firms. (

Sniff ... do I smell a merger?

)

As for Amazon.com, "I don't think

they're doomed," Jurveston said. "I have faith in

CEO Jeff Bezos. But Amazon.com as we know it likely to go through some profound changes."

I played phone-tag with Jurvetson Wednesday in an attempt to get additional comment, and will report anything pertinent when (and if) we do catch up.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

taskmaster@thestreet.com .