Slowing economy? Buy beta

The UAW invoked its first nationwide strike in 31-years. Somewhat intriguing, shares of General Motors (GM) actually traded higher briefly following the news; I guess applying the logic that they might actually be more profitable not making cars. Shares did close lower by 20-cents by day's end…. Late last week, air freight and package carrier, FedEx (FDX) said it expects second-quarter net income of $1.60 to $1.75 a share, below the previous Wall Street target of $1.97 a share. I might call FedEx a decent proxy for economic activity, right? Major homebuilder Standard Pacific (SPF) warned shareholders that it would eliminate its quarterly dividend and float a $100 million convertible senior subordinated notes; a sure sign of liquidity problems. Shares dropped another 15 percent inching ever closer to “zero.”…..AMR Corp (AMR), parent of American Airlines, warned of lower revenue amid concerns of slowing demand and rising costs. Its shares saw their biggest single-day drop in more than four years ….Harman International (HAR), a leading maker of stereo-speakers, whose $8 billion LBO fell apart last week, warned that its quarterly profit would be less than half of prior Wall Street expectations….. After the close, home improvement retailer, Lowes (LOW) warned that profits for its fiscal year ending in February will be at the low end of forecasts which had been updated as recently as last month.… Also after the close, the second largest retailer behind Wal-Mart (WMT)---Target (TGT), warned that same-store-sales in September at stores open at least a year would be well below its prior forecast. Two regions that experienced a major brunt of the housing price bubble, Florida and the Northeast were singled-out as experiencing particularly weak sales traffic. Lowes and Target, two of U.S.'s largest retailers, might also act as a decent proxy for the economy.….Also, major flash memory maker; Sandisk (SNDK) began bleeding rather suspiciously late in the morning even as the high-beta names were being chased aggressively higher. The crowded semiconductor trade is setting itself up for some serious disappointment. Indeed, today, if you were already a ridiculously overpriced stock, you probably traded higher helped by a Citigroup (C) analyst upping of its target on shares of Apple (AAPL) to something like $29,000 per share. Also, PetroChina (PTR) apparently has been given the go ahead by those central planners to float $5-billion of ‘A’ shares on the Shanghai Exchange; a clear sign that Chinese authorities are trying to sop-up excess liquidity as the Shanghai Index is in the process of blowing a massive bubble reminiscent of the tech and dot-com bubble in the U.S., circa 2000. Nevertheless, this China-related event was deemed to be a fabulous turn of events for what seems like an “un-turnable” China market. Everything with the word, “China” and “Sino” was up a lot. Mind you, the hyperbolic move in Chinese shares is occurring at a time when, almost daily, we hear of a Chinese-related recall for tainted food or lead-ladened toys. Given their penchant for taking short-cuts in their manufacturing industries (not unlike most developed economies today), how much faith can we really have in their accounting and legal controls, let alone ownership rights? I personally have apprehensions about buying into a market with such questionable traits while also priced for perfection pretty much into infinity. We’re almost certainly witnessing a blow-off run in Chinese-related assets that is not unlike tech and dot-com in the late 90’s and real estate in the U.S. and much of Europe two years ago. It will end very badly and create enormous instability nearly everywhere. As Chinese issues and the sundry of ridiculous beta names such as Research In Motion (RIMM), Crox (CROX) and Apple (AAPL) acted as ports in the storm today, a good number of financials and brokers bled throughout the day and have now surrendered a good portion of their post-Fed-rate-cut gains. This coupled with the aforementioned sales and earnings warnings; I came away today with an image of those shrinking glaciers as huge slivers of ice slice-off and crash into the sea. The area of safe-footing for the bulls continues to close-in around their feet.