Fed cuts interest rates by .25%

The Fed just announced that they have lowered the interest rate .25% to 4.5%. The Dow was up nearly 70 points before the announcement and is now trading almost flat. It is always interesting to see how the market is going to react to interest rate activity. A lower interest rate allows investors to invest more on margin and pay lower interest expense. This is a great thing for investors, but the flip side is the reason the Fed is lowering interest rates is due to the economy as a whole (including credit markets, ie housing). The real test will come in a few days when the beige book comes out and we see what the Fed was discussing during the past 48 hours. The Fed notes will give us a better look into where the Fed sees the economy going.

I have a standing limit order on Chipotle to sell a few shares, although it does not look like it will hit the number. I still like Chipotle, but I am up over 10% in less than two weeks. It may be time.

The Big Picture

I was reading The Big Picture and came across a comment made by a reader regarding the housing meltdown and the loan performance by area. Here is the comment:

"It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent."

Hilarious.

Chipotle!

Another great quarter for Chipotle! Earnings of 62 cents a share beat expectations of 53 cents, and are up over 72% from prior year. Chipotle stock rose over 3% in after hours trading. Tomorrow could be a huge day for Chipotle if the Fed lowers interest rates and the market reacts positively. Chipotle also announced that they will be opening a location in Toronto in 2008. You know the Canadians are going to love our burritos.

Tech continues to look very strong!

Tech stocks are having a great day today with some of the standouts including Adobe, Baidu, Google, & Garmin. Apple hit another home run with Leopard, announcing today that they have sold over 2 million copies since its release on Friday.

"Analyst Keith Bachman, of BMO Capital Markets, estimated that 200,000 of those sales included Macs that were pre-installed with Leopard. And coming off a quarter in which Apple sold 2.16 million Macs running the previous operating system called Tiger, the question facing Apple is whether Leopard will be a force in adding to Mac sales during the end-of-the-year holiday shopping season." Click here for the complete story. Apple is currently up over $4 trading around $189.

Trick or Treat

The Fed is meeting today to discuss among other things the lowering of the Federal interest rate tomorrow. It is widely believed that the Fed will lower interest rates again, but it is unclear how much (most economists are predicting 25 points). The market has been anticipating another cut since the 50 point cut in September. More importantly the Fed needs to come out with some calming words that can give the market some confidence heading into the holiday season. I am not sure Ben Bernanke fully understands the power of his words. Look for the markets to be calm, slightly to the down side until the announcement.

Romo?

Slow news day today. Gap gets caught using child labor. Oil hits all time high and the Fed will hopefully lower interest rates this week. I think that about sums it up. Oh yeah, Tony Romo was seen this past weekend getting wild with Britney Spears. Nice..

Tech continues to look strong and oil keeps pumping. I may sell off some stocks tomorrow and trigger some gains. I think the market is getting a little finicky.

Congratulations Boston

The Boston Red Sox just won the World Series! Maybe next year my Rangers can make a run (it is not looking good:)

Apple Store

I just got back from the Apple store and the place was packed. The new Leopard software has some really user friendly upgrades. Vista does not even compare. The salesman said the line to pick up the Leopard software last night was huge. He said people were coming in to get the software but many were picking up new laptops, macs and iPods. I don't see the end for apple any time soon. This company has so much potential it is scary.

Disclosure: long AAPL

Bobble Head

I think I know what I am getting my wife for our anniversary! Girls like bobble heads, right? check it out

Friday Afternoon!!

Survived another week of work & market fluctuations. Since it is Friday, take a break and check out this site Faces in Places. Have a great weekend. I also updated my links so take a look and let me know if I missed anyone.

Time to Sell?

Why do investors get out of positions to early? GS, ADBE, & GRMN are a few of stocks that I pulled the trigger on to early. On the other hand, I have managed to get out of some losers before they crumbled. I guess you just have to try and hedged your exposure and asses your risk. If a stock jumps 10-15% in a few days it is hard to stay long.

AAPL, CMG, & DWA are all having nice days. The market has been looking weaker with the recession talk and housing still getting hit hard. Countrywide recovered a little today on positive forward outlook, but the earnings are pretty bad. This is probably a good long term play if you have the stomach for it.

Other stocks I am looking at include Southwest Airlines (LUV). LUV is trading pretty low due to higher fuel prices, so I am going to keep my eye on oil futures and may trade on dips.

Googolplex?

Brainstorming a $208 billion dollar company:

"Sean and Larry were in their office, using the whiteboard, trying to think up a good name - something that related to the indexing of an immense amount of data. Sean verbally suggested the word "googolplex," and Larry responded verbally with the shortened form, "googol" (both words refer to specific large numbers). Sean was seated at his computer terminal, so he executed a search of the Internet domain name registry database to see if the newly suggested name was still available for registration and use. Sean is not an infallible speller, and he made the mistake of searching for the name spelled as "google.com," which he found to be available. Larry liked the name, and within hours he took the step of registering the name "google.com" for himself and Sergey (the domain name registration record dates from September 15, 1997)." See complete story here.

Still Bullish? Amazon

Amazon announced Q3 earnings yesterday with surprising results. Third quarter earnings increased 41% to $3.26 billion. Although investors sold off the stock yesterday on lower forcasted earnings, today analyst H Terry of Credit Suisse raised the price target from $100 to $120. Amazon closed today down .52 cents to $88.21.

Another rough day

The DOW is currently down nearly 80 points & Nasdaq is down 31 points. Today is looking pretty uneventful except Chipotle (CMG) which is up $5.45 (4.41%) on news that it will be joining the S&P Midcap 400.

November 24, 2007 Recap

Daily Recap

Bad news in the housing sector continues to worry investors, but rumors of upcoming fed rate cuts rallies the market back from early losses. Continued deterioration in the housing sector could lead the fed to down tick the federal discount rate before the fed meets next week. The discount rate is the interest rate the fed charges banks to loan money.

Market Clips

Mark Zuckerberg, founder of Facebook, is the newest internet spun billionaire. Starting the social networking site four years ago while a student at Harvard, Facebook today announced they have sold a 1.6% stake to Microsoft for a reported $240 million dollars. This purchase values the company at $15 billion dollars.

Merrill Lynch & Co. reported Q3 earnings yesterday that included a $7.9 billion dollar write-down in mortgage backed securities. This is the companies first loss in six years.