- Stocks that broke out going into the Fed announcement, such as retailers, are giving back the gap higher. Volume is key.
- The market is responding more negatively to "disturbing" reads on the macroeconomic front. I think the Empire State index was "disturbing" for these reasons: (1) it was worse off a disappointing prior-month figure; (2) new orders remain soft; (3) employment was weak, thus fanning the flame of the idea that the Fed is unable to help; and (4) inflation expectations were up relative to slowing growth and amid the new Fed action. Although this report stank, the market did not get itself into a selling tizzy, which would be seen in across-the-board selling.
- A bellwether company in FedEx (FDX) has downplayed the impact of QE3, has lowered growth estimates and has cast a dark cloud over non-transport stocks -- for example, Amazon (AMZN).
The Dimly Lit Rumor BarHere are some quick thoughts from my daily experiences.
- I'm never too keen on buying into takeover rumors. However, I'm intrigued by Providence Equity's reported interest in Electronic Arts (EA), given that this firm was a player in Hulu. There is a certain familiarity here with the digital business model, which is where Electronic Arts is positioning itself to succeed in the future. A valuation range of $18 to $21 seems justifiable.
- The more I dig in to Zynga (ZNGA), the more I appreciate the market's lack of confidence in its business model over the next 12 months. Not only are the barriers to entry small, but the company on its own is proving unable to monetize its mobile ambitions in order to offset potential issues stemming from the Electronic Arts copyright-infringement suit.
- Just to reiterate: I'm still not a fan of Decker's Outdoor (DECK) after my negative call last week. Price increases have been too robust for the consumer to swallow on products that are borderline-commodity at this stage in the game.