Never mind the bears and bulls or even the pigs and chickens, I think between Wall Street and Washington D.C. the goofs and ghosts are leading the charge.What I mean by this is that the rationale for certain market activity and advisement makes no sense to me. Maybe we are not recovering from the recession but we are moving into something like a shadow economy, where people look at what is going on in the market and rationalize it after the fact, when all the real energy is in the darkness.
Today American Eagle (NYSE: AEO) was upgraded to Overweight from Equal Weight at Barclays, and Lazard Capital Markets upgraded AEO from hold to buy. Why now, after the stock has run up 65% this year, do they finally wake up and think there might be something here?
Why should investors be surprised that Anadarko Petroleum (NYSE: APC) is selling more shares to take advantage of its 40% runup in the last six months? This is a good idea and existing shareholders will benefit from the company's stronger balance sheet going forward.
What was Citigroup (NYSE: C) thinking when they downgraded Burlington Northern Santa Fe (NYSE: BNI), not when it was $114 dollars a share but only after it sank to $64? By the way, it closed yesterday at $70.29 and that was on a down day in the market.
Although General Motors (NYSE: GM) stock is down 21% this morning to $1.13, why isn't it zero if it's destined for bankruptcy and the insiders are selling? What is propping it up? Must be index funds that have to hold on as long as it's breathing and trading.
Why is MBIA (NYSE: MBI) down this morning when last night it was trading up over 20% to $8.50? Flash: MBIA on fire -- huge earnings news! MBI reported shockingly strong first quarter earnings and who could bid it up after hours, not Joe Main Street? How is it possible that those in the know bid it up only to be sand bagged this morning by those who may not?
Microsft (NASDAQ: MSFT) is going to issue corporate bonds for the first time ever, even though it has no debt and $25 billion in cash and short term securities? Is it just taking advantage of the low interest rate environment?
There is market speculation that MSFT might be looking at a huge merger like acquiring SAP (NYSE: SAP) Microsoft to Buy SAP? A 'Random Rumor,' Says Ballmer -- like the European Union would go for that? It is more likely they will go after previous targets like Yahoo (NASDAQ: YHOO) or what if they have decided to get into the phone business and acquire Motorolla's (NYSE: MOT) handset division on the cheap and infuse it with capital but this would be challenging even for Microsoft. I actually see Microsoft making a play for a web security company as more likely.
So, who are you going to call for answers? Do you think your broker is on the ball or is he reading his companies in-house analysts calls for reference? Where can you find information you trust and is there a shadow economy? Silly as it seems, sometimes you might as well call the ghostbusters.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of AEO, APC and MBI and have open options as well.
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