Market Soapbox 04/09/07

MON, split tape, DJIA +9 on thinly traded volume with midlin internals. All UP cept NDX, NAZ, SOXX, XOI, RUT.

Bonds slapped silly again, 10 yr yield +6 bps 4.74, as the low end of the yield curve got hammered, 2 yr yield +11bps 4.73, $ up vs 1.3357E & vs 119.29Y, WTI crude down 4.3% $61.51, gold down $676.90

Sanmina-SCI Corp. (SANM.O) on Monday cut its quarterly revenue forecast and said earnings would be worse than it had expected because of weak demand in the communications and high-end computing markets.

Semiconductor company Advanced Micro Devices (AMD) says it expects Q1 revenues to fall short of Wall Street expectations. The semiconductor giant cites sharply weaker quarter over quarter sales results at its computing solutions unit.

The company cited lower overall average selling prices and significantly lower unit sales, especially in the resale channel. Shares were up 5% after announcing plans to REDUCE 2007 capital expenditures by about $500 M.

Intel went along for AMD's ride up, jumping 2.7%, this single move kept the DJIA in the green for a 7th day… Subprime slime spreading: American Home Mortgage shares got hammered 15%… as the Nattering One has said all along…

"If we have a continued house-price decline, Alt-A will be more affected" than subprime mortgages, said Howard Hill, a managing director in Springfield, Massachusetts at Babson Capital Management LLC.

Hill said Alt-A lenders were more likely to combine low documentation and low down payments, and more likely to have extended mortgages to speculators, while offering less protection for bondholders.

Such layering of risks is "two to four times as common in Alt-A deals as in subprime deals," Hill said

For now, hold on to the siderails, the housing squall is just starting to get rough. John Q. better get ready to bend over for some sort of bailout cuz somethings gotta give...

when the MBS & CDO derivative market blows up; the counterparty bond insurance and mortgage insurance co's fail; and the major banks, FNMA, FHLMC & FDIC start getting hit.

Earnings Season kicks off: Tues Alcoa; Wen Bed, Bath & Beyond; Research in Motion; Ruby Tuesday; Thur Cost Plus; Pier 1; Krispy Kreme; Rite Aid; Lam Research; Fri GE.

Today crude futures clubbed down for 4%, DJTA jumping 2%+ after Berkshire Hathaway disclosed that it took a 10.9% stake in Burlington Northern Santa Fe.

02/27 NDX gap down started at 1819.76, today NDX rising to 1819.04, almost filling up the gap, SP500 hit 1448.

Next, perhaps a rise to our target SP500 1455 & revised NDX target of 1828? Not so fast Joe…This was the 7th consecutive up day for the DJIA, aren't we due for some consolidation?

Perhaps disappointing forward guidance will fuel some profit taking after we hit the targets? You bet, especially when capital spending which is already in the tank, gets trimmed even further (see AMD above).

Oh yeah, that housing squall is pushing those dark clouds in the distance, much closer... This is the Nattering Naybob, and your not!!

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