BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise...

BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? Computer networking company Cisco Systems Inc., citing strong sales of its routers, set-top boxes and other products, reported higher-than-expected earnings on Wednesday. Cisco said its latest quarterly net income was $2.2 billion, or 35 cents a share, an increase of 37 percent from a year ago. Excluding certain charges, the company reported a profit of 40 cents a share analysts were expecting Cisco to report 36 cents per share on that basis. Chambers said he expects overall economic conditions to cool Cisco's U. S. enterprise division, which sells to businesses. For example, Cisco saw a dramatic decrease in orders to its financial services customers, he said, and similar softness in orders from the automotive sector. Cisco (CSCO) was at $34 two days ago. After blowout earnings it is now down to $30.00 or so after hours. Clearly Cisco was priced for perfection. It seems someone 'thought' they knew what was going to happen tonight. The Open Interest in calls dwarfs PUTs. I have seen this pattern with Cicso more than any other stock. People think they know something (in this case strong earnings), but that knowledge is fool's gold when the stock reacts the opposite direction. At some point we are going to see the same type reaction in Google (GOOG), Research in Motion (RIMM), Amazon (AMZN) and a bunch of other bloated issues as well. All of those issues are overvalued by any reasonable measure of valuation. Cisco saw a dramatic decrease in orders to its financial services customers, Chambers said, and similar softness in orders from the automotive sector. The 'safety of tech' as a place to hide from the bombardment in the financial sector looks like it is now being called into question. Futures are down sharply on the news. What's different about this decline vs. the mid-summer decline is that bullish sentiment remains strong. This makes for a very dangerous combination. The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

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