David Fry's Daily Market Outlook

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Includes: AGR-OLD, BK, LSI-OLD, MEL, PFE
by: David Fry

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When I saw the news this morning that Pfizer Inc.'s (NYSE:PFE) new drug was being pulled I said to myself: "Oh oh, that's gotta hurt!" But, as has been the trend, bad news is isolated and set aside as bulls focus on deals. With so much "cash" floating about and the anxiety to spend it bulls are encouraged and still in charge.

Today Bank of New York Co. Inc. (NYSE:BK) acquires Mellon Financial Corp. (MEL) in a $16.5B deal creating the largest custodian bank. Also, LSI Logic Corp. (NASDAQ:LSI-OLD) buys Agere Systems Inc. (AGR-OLD) for $4B and gives tech a lift. Last week, rumors were swirling about a $100B deal to take The Home Depot Inc. (NYSE:HD) private. All this leads me to wonder what money is really worth? These guys are throwing around billions like so many nickels. Is that part of the message of rising asset prices—too much money chasing too few goods? I wonder.

At the same time Fed Governor Moskow was out "talking" and his message was intended to soothe investors nervous by last week's weak economic data as he said: "The economy is still on solid ground."

And also chiming in was our favorite pundit, David Lereah from the realtors group saying in response to lower pending home sales data: "It's important to focus on where the housing market is now -- it appears to be stabilizing and comparisons with an unsustainable boom mask the fact that home sales remain historically high." Ah, that "stabilizing" description and more spin again.

So forget the PFE bad news and focus on the all that cash. A hundred years ago, the U.S. was dominated economically by "Robber Barons" or the more friendly term, "Captain's of Industry" [Rockefeller, Vanderbilt, Morgan, Mellon, Carnegie and so forth]. Now it's Global Megabanks [Money Center Banks & Trading Desks] and Hedge Fund managers. Just look at the bonus money being handed out on Wall Street and the McMansions being built for Da Boyz. In fact, it was reported today by Bloomberg that Megabank Goldman Sachs was said to be the largest manager of hedge fund money, with $29.5B in assets. The more things change, the more they stay the same.

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Senator Couzens: Did Goldman, Sachs and Company organize the Goldman Sachs Trading Corporation?
Mr. Sachs: Yes, sir.
Senator Couzens: And it sold its stock to the public?
Mr. Sachs: A portion of it. The firms invested originally in ten per cent of the entire issue for the sum of ten million dollars.
Senator Couzens: And the other ninety per cent was sold to the public?
Mr. Sachs: Yes, sir.
Senator Couzens: And what is the price of the stock now?
Mr. Sachs: Approximately one and three quarters.

—from the Senate Hearings of Stock Exchange Practices, 1932

And, speaking of the above era, the SEC voted 5-0 today to eliminate the up-tick requirement for short sales. This will be referred for public comment. Go ahead, try!

Okay, enough negativity and sarcasm. What else was going on today?

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And, the rest of the usual suspects:

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And around the globe:

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It used to be a maxim to say that within good trends, Monday's and Friday's were "countertrend" days. Last Monday was that way; let's see if this Monday holds up for the week.

There's a lot of cash around and those with it want to put it work. That's the bottom line period.

Disclaimer: Among other securities, ETF Digest maintains positions in: S&P 500 Index (NYSEARCA:SPY), NASDAQ 100 Trust Shares ETF (QQQQ), iShares Russell 2000 Index ETF (NYSEARCA:IWM), MidCap SPDRs ETF (NYSEARCA:MDY), Utilities SPDR ETF (NYSEARCA:XLU), Energy Select Sector SPDR ETF (NYSEARCA:XLE), United States Oil Fund ETF (NYSEARCA:USO), streetTRACKS Gold Trust ETF (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), Central Fund of Canada (NYSEMKT:CEF), PowerShares DB Commodity Index Tracker (NYSEARCA:DBC), iShares MSCI EAFE Index Fund ETF (NYSEARCA:EFA), iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), iShares S&P Latin America 40 Index (NYSEARCA:ILF), India Fund Inc. (NYSE:IFN), Templeton Russia & Eastern Europe Fund CEF (NYSE:TRF), and iShares MSCI Pacific ex-Japan (NYSEARCA:EPP).