Market Recap

What a moody day on the street - MU got praises across the board and the stock sold off today. I posted some reports on it but for the most part here is a recap of MU earnings:

The shares are off a bit as investors lock in the 400% gains from the lows in March. In addition, management set a pessimistic tone for the pricing outlook for the current quarter, which probably spooked the traders as well. CEO Steve Appleton said that the market was still "challenging" but is "beginning to improve." Management also stated that DRAM product sales were up 28% sequentially, thanks to a 19% jump in sales volumes and an 8% increase in ASPs.
Revenue from NAND flash products were up 10% sequentially due to a 23% increase in sales volumes. This increase was partially offset by an 11% decrease in ASPs in NAND flash products.
Management stated that if pricing remains flat for the rest of the current quarter, Micron would benefit by a 5% increase in ASPs in both DRAM and NAND flash. The company said that it would be profitable in the November quarter. The expectations are for gross margins to expand significantly in the current quarter given cost per bit productions in the low to mid teens for both DRAM and NAND, combined with our expectations for sequential average selling price for both products. All in all, good numbers and a return to profitability for Micron. I was surprised to see it trade lower.

As for the market in general, the Chicago PMI data was horrific this morning. It shows we have a weak consumer and a slowing productivity. If earnings are weak this quarter, we could lose 100-150 points on the S&P, due to the high expectations. We need some solid revenues this time. In addition, there has been alot of thought and talk on deflation. Pimco's Bill Gross is one of the best investors of all time and said he is buying long bonds. That floors me honestly because he is either 1) shorting other type of bonds and hedging or 2) he is betting on deflation. The General Mills (GIS) quarter had a deflationary flavor to it. Only 6% of professional investors believe deflation is a threat and in my view, I think deflation is more of a problem than inflation. If deflation hits, load up by buying TLT and short every energy and commodity stock in sight.