Taking Stock of Wall Street 2008-09-23

Today saw the markets rising initially, expecting a quick approval of the financial recovery package by the Senate Banking Committee, only to retreat when the senators refused to be rushed into taking a decision.

Much depends on the decision of Senator McCain on the floor as Republican senators would like to side with McCain than with the almost going-gone Bush.

Fed's Bernanke, Treasury's Paulson, SEC's Cox and OFHEO's Lockhart testified before the Senate Banking Committee trying to push for a quick approval of their $700 bln rescue plan. The senator committee felt the $700 billion was too big a burden on the shoulders of the taxpayers. If it was something less like $150 bln, they were willing to go along with the request.

They were not carried away by Paulson's assurance that taxpayers were actually acquiring assets. But, he forgot he has nothing tangible to show other than a few paper instruments based on the hopes that distressed mortgage instruments will be honored at the end of their maturity - unless disposed off in fire sales earlier? As if, the taxpayer gets more from the fire sales!

Bernanke's menacing warning of very serious consequences for the economy too was ignored by the senators.

Taken for a ride by Bush and company on Iraq, the people's representatives do not want to be duped by a parting kick from the administration.

Economic data:

Tuesday saw a flurry of economic data, which got ignored with everybody's eyes and ears directed to Congressional deliberations in Washington:

ICSC report on chain store sales for the week ended September 20 - saw a rise in chain store sales by 1.3% from the year-earlier period. But on a weekly basis it dropped by 1%, the third weekly consecutive drop.

Redbook Chain Store Sales - National chain store sales fell by 1.2% in the first three weeks of September vs. the previous month, but scored 1.2% over same period a year ago.

The State Street Investor Confidence Index - fell to the all-time low of 65.9 set in last December.

Department of Labor Mass layoffs data - In August, 173,955 workers were laid off (seasonally adjusted)

OFHEO House Price Index - Home values fell 0.6% in July with the yearly total standing at 5.3%.

Richmond Fed's Manufacturing Index for September - fell by -2 to -18. Shipments fell from -13 to -16 New orders were less by one point to -23. Sector jobs index decreased by one point further to -13.

ABC's Weekly Consumer Comfort Index stands unchanged at -41 but a far cry to the 20-year average of -10.

Globally, Asian stocks and European stocks fell by 1-4%. Russia's financial sector is facing an upheaval following last week's liquidity crisis.

Commodity currencies like Australian and New Zealand dollars rose against the falling dollar.

Oil fell by $ 2.67 (-2.52%) to 106.61. The EIA believes yesterday rally was due to short-covering or market manipulation.
But that is small consolation to the consumer as oil has retraced above the $100 mark.
Gold fell by -$17.80 (-1.96%) to 891.20

Market Indices were down today:
Dow was DOWN by -161.84 (-1.47%) to 10853.85
S&P 500 DOWN by -18.87 (-1.56%) to 1188.22
Nasdaq DOWN by -25.64 (-1.18%) to 2153.

NYSE:
Daily volume: 1,14 bln
A/D Ratio: 989 stocks advanced against 2244 declined
52-week Hi/Lo: 10 set new Highs while 123 fell to new Lows

Nasdaq:
Daily volume : 1.97 bln
A/D Ratio: 992 stocks advanced against 1924 declined
52-week Hi/Lo: 8 stocks topped new Highs while 115 set new Lows.

Microsoft's (MSFT) was the only trade that was outstanding today due to the company will be repurchasing another $40 billion worth of their shares.

Homebuilder Lennar (LEN) cast a gloom on the housing sector stocks with the announcement of their quarterly losses.

FactSet (FDS) was able to declare earnings that beat market's forecast.

Union Pacific (UNP) expects to exceed the markets expectations for the coming quarterly earnings.

A new name has appeared in the bidders list for Washington Mutual (WM): Canada-based Toronto-Dominion Bank (TD).

Nomura Holdings (NMR) will be acquiring Lehman's European and Middle Eastern operations too. Earlier they had scooped up the Asian operations.

Walgreen won't call it quits even after Longs Drug(LDG) rejected their merger offer. They may approach the LDG shareholders direct to upstage the proposed LDG merger with CVS (CVS).

Another proxy war also seems to be brewing in the pharma sector. ImClone Systems' (IMCL) "we have a mysterious second suitor" claim worked because Bristol-Myers Squibb (BMY) has increased its $60 per share offer to $62. But, if spurned this time, may be BMY will use a straight to the shareholder offer.

T-Mobile (DT) will be offering Google's (GOOG) Android-based G1 phone priced around $180.

Netflix (NFLX) is licensed to offer CBS (CBS) and the Disney Channel (DIS) shows as streaming video on the internet with a one-day delay after their TV airings.

Gap (GPS) is acquiring women's active wear label Athleta.

Analysts' ratings:

There were fewer upgrades today.

Anadarko Petroleum (APC), Novartis AG (NVS), Valeant Pharmaceuticals (VRX) and Xenoport (XNPT).

The long list of downgrades include:

American Oriental Bioengineering(AOB), Cache Inc (CACH), Circuit City (CC), Chico's FAS (CHS), DXP Enterprises (DXPE),
Epicor Software (EPIC), FARO Technologies (FARO), Fortress Investment Group (FIG), GE (GE), Heritage Commerce Corp. (HTBK),
IberiaBank Corp (IBKC), M&T Bank Corp(MTB), National Healthcare (NHC), Pacific Sunwear of California (PSUN), Regions Financial (RF),
Royal Dutch Shell B (RDS.B), Sanofi-Aventis (SNY), SAVVIS Inc (SVVS), Secure Computing (SCUR), SunTrust Banks (STI), Union Bankshires (UBSH) and Zions Bancorporation (ZION).

TOP POSITION CHANGES:

Struggling Circuit City (CC) is replacing president and chief executive, Philip Schoonover. James Marcum will be the new boss. CC expects to produce better quarterly results.

DuPont (DD) announced appointing Vice President Ellen Kullman as the next CEO, in place of Charles Holliday.

State of New York fired the first shot in regulating the Credit Default Swaps (CDS) at the heart of the present financial crisis. Henceforth, NY requires institutions offering CDS to declare in advance provisions for claims on default. Since that affects only those institutions offering CDS in the state of NY, Gov.Paterson wants the Fed to follow up on the national level.

At least a great beginning, though a bit late. Our systems are based on faith and trust that we will control ourselves while enjoying freedom and rights without much governmental intervention. Unfortunately when that trust is broken by a few, government has no choice but to impose controls!

Tomorrow, let us see whether House of Representatives' Financial Committee also gives the bureaucrats a second dose of cold shoulder treatment the Senate Committee meted out today.