Earnings!

by Larry Levin


Today was all about earnings. The other news was like gnats at a picnic: mildly bothersome at worst. Crude oil is at ANOTHER new high? Hmmm, shelve that for another day. Inflation at the producer level is red hot? Hmmm, better shelve that for another day as well. After all, when earnings come in as expected and the market trades higher, the other problems will just go away...right?

Washington Mutual said today that it lost more than $1.1 billion in the first quarter as the slowing economy and real estate values pummeled the bank's borrowers. This was the bank's second consecutive quarterly loss - and a big one at that. The company lost $1.40-per share, compared with a profit of $784 million, or 86-cents per share, in the first quarter last year.

The CEO said to shareholders, "I want people to calm down and have a little faith." He went on to say, "We have a very solid foundation for success." But the problem is its foundation - John Q. Public. And Mr. Public is having problems due to the housing market, gas prices, food prices, and the general economic slowdown, which is causing WaMu's consumers to miss payments on their bills. Maybe they need "to calm down and have a little faith" too?

WaMu closed up 3.0% today.

Cruse oil closed at another new high. But I guess that's "priced in" - right?

Producer level inflation is back - big time. Today's PPI reported soaring inflation of 1.1% for March, led by food and energy, and was nearly 300% worse than economists expected. Now that a full quarter is in the books we can make a decent assumption for the year. The first quarter PPI inflation was 2.4%, which makes a realistic annualized inflation rate of 9.6%!

But who cares about the headline number, right? When you strip out all the sections of the report that lead to inflation, you're left with good looking data. This "core rate" of inflation is simply a line of B.S.!

There are people around the world who are suffering from soaring food inflation and rioting in protest. I wish that weren't true, but it is. There are many reasons why this is happening and surely the main reason is due to the military dictatorships they suffer under. Beyond that, however, the plummeting US dollar and outrageously stupid corn-ethanol boondoggle are partly to blame. Somehow I have to think that if Greenspan or Bernanke or the BLS (Bureau of Labor and Statistics) told these people to just ignore the rising food prices, like us moronic lapdogs here in the US do without nary a complaint, that they would be ignored...not the food prices.

After the bell we got some good news, I guess. Intel reported a 12% earnings loss...and its stock immediately jumped 7% in the aftermarket, taking the indices along for the ride. Oh happy day! Its earnings are down, but the CEO promises that next quarter will be better...seriously, he promises.

Real Time Trading Signals*for

Trade Date: 4/15/08

E-Mini S&P Trades*
(before fees and commissions):


1) B/away buy @ 8:35am at 1338.25 = -1.75 (1 lot)

2) PP buy @ 9:15am at 1331.75 = +1.00 & -2.00

3) OTF sell @ 10:00am at 1331.75 = +3.75 (1 lot)

4) OTF sell @ 11:30am at 1328.50 = b/e & b/e

5) Engf sell @ 11:45am at 1328.75 = b/e & -1.50

6) 80% buy @ 12:35pm at 1329.50 = +1.50 & +3.25

7) VA sell @ 12:50pm at 1333.75 = b/e (1 lot)

8) PP buy @ 1:20pm at 1332.25 = +1.50 (1 lot)

9) VA sell @ 2:25pm at 1333.50 = +1.00 & -.50

10) Algorithm trades (12)…totals...+17.50

E-Mini Russell Trades*
(before fees and commissions):

1) Sell @ 9:38am at 687.5 = +.8 (1 lot)

2) Sell @ 10:24am at 685.6 = b/e (1 lot)

3) Sell @ 11:26am at 686.2 = -1.1 & -1.1

4) Sell @ 2:12pm at 689.9 = +.5 & -.6

5) Buy @ 2:37pm at 690.7 = +.2 & -1.0...-$230


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