Taking Stock of Wall Street 2008-10-07
Who Won Today - the Bull or the Bear?
Expectation of a quick, miraculous support just from a speech of Fed Chairman Bernanke shows how desperate the market is.
But when market is not being supported with healthy company fundamentals and optimal worker-hours, the market has to latch on to any thin straw that comes along. If that does not happen, then it will fall.
People has lost faith in whatever things the government says and does so that even the good things being done are ignored.
The world markets also are in turmoil again.
Russian markets halted another day of trading as the indices fell by nearly 20%. Their premier Medvedev proposed to infuse $36 bln into their banking system to assure liquidity.
Australian central bank cut interest rate by 1% against the forecast of 0.5%.
Bank of Japan left its benchmark rate unchanged at 0.5%.
Iceland was again in the news today with another bank bailout, this time of its second largest bank, the Landsbanki. Last week we saw the nationalization of their third largest bank, Glitnir.
Iceland got a $5.4 bln Russian loan to bolster their currency , the krona.
Asian and European stock markets were mixed in their response.
The U.K. government is willing to nationalize all their banks that request for it, without waiting for the situation to get out of control.
Here in USA,
the Fed established a commercial paper funding facility to ease the shortage of short-term loan for banks and businesses. The commercial paper market now exceeds $1 tln. The Fed will purchase three-month unsecured and asset-backed commercial paper from those issuers.
Report of the FOMC meeting on Sept. 16 came out today. The decision to keep the 2.00% interest rate unchanged was taken unanimously by the members.
ECONOMIC DATA
Available consumer credit - fell by $7.9 billion in August. The expectations were for a gain of $5.0 bln.
The decrease was at an annual rate of -3.75%. Revolving credit also decreased at an annual rate of -0.75% and non-revolving credit at -5.5%.
ICSC Weekly Retail Store Sales - rose by 0.1% compared to previous week. It was 1.3% more than the reading for the same period last year.
Redbook National chain store sales for September - fell by -1.4%. It dropped by -1.3% from the previous year.
The ABC News Consumer Comfort Index stands unchanged at -41 on its scale of +100 to -100. That's far below its 22-year average of -10.
Gold went up by $15.80 (1.82%) to $882.00.
Oil rose by $2.25 (2.56%) to $90.06.
CBOE Volatility (VIX) is still high at 53.68.
MARKET INDICES
Dow went DOWN by -304.22 (-3.16%) to 9642.09
S&P 500 DOWN by -35.45 (-3.48%) to 1020.04
Nasdaq DOWN by -69.39 (-3.87%) to 1792.14
NYSE
Daily Volume: 1.69 bln
A/D Ratio: 429 stocks advanced against 2840 declined
52-week Hi/Lo: 1 stock topped new Highs while 1040 went dropped to new Lows.
NASDAQ
Daily Volume: 2.84 bln
A/D Ratio: 563 stocks advanced against 2410 declined
52-week Hi/Lo: 4 stocks climbed to new Highs while 691 went down to new Lows.
MARKET NEWS
With the additional burden of Merrill Lynch, Bank of America is issuing $10 bln in common stock.
CME (CME) and mutual fund managers Citadel intend to bring out an electronic market platform for credit-default swaps (CDS), the instruments that were supposed to insure the financial system against debt defaults and didn't.
M&A NEWS
Morgan Stanley (MS) reiterated the $9 bln stake participation by from Mitsubishi UFJ Financial Group (MTU). News from Japan also says their regulatory authority has approved the request of MTU to convert its present structure to that of a holding company.
AMD (AMD) will be getting cash infusion from Abu Dhabi (UAE) to spin off its manufacturing operations into a separate company.
News Corp (NWS) buys Jamba from Verisign (VRSN) for $200 mln.
COMPANY RESULTS
Yum! Brands (YUM) and Sealy (ZZ) produced better than expected earnings.
Safeway (SWY), Alcoa (AA), F5 Networks (FFIV) and Bank of America (BAC) declared disappointing results.
ANALYSTS' RATINGS
Company stocks upgraded include:
Activision Blizzard Inc (ATVI), ADC Telecommunications Inc (ADCT), Amylin Pharmaceuticals (AMLN), Dell Inc (DELL),
Electronic Arts Inc (ERTS), Freeport-McMoRan Copper & Gold (FCX), Jefferies Group Inc (JEF), Louisiana-Pacific Corp (LPX),
O'Charley's Inc (CHUX), Popular Inc (BPOP), STEC Inc (STEC), THQ Inc (THQI), Windstream Corp (WIN).
Those downgraded are:
A.M. Castle & Co (CAS), Brookdale Senior Living Inc (BKD), Brush Engineered Materials Inc (BW), Columbus McKinnon Corp (CMCO),
Community Health Systems Inc (CYH), EMC Corp (EMC), G&K Services (GKSR), Hardinge Brothers (HDNG), IBM (IBM),
iStar Financial REIT (SFI), Kenexa Corp (KNXA), Middleby Corp (MIDD), Rightnow Technologies (RNOW), Salesforce.com (CRM),
Schnitzer Steel Industries Inc (SCHN), Signature Bank (SBNY), SuccessFactors Inc (SFSF), Taleo Corp (TLEO), Thomas & Betts Corp (TNB),
TLC Vision Corp (TLCV), United Community Banks (UCBI), Universal Health Services (UHS) and Whirlpool Corp(WHR).
POINTERS TO THE FUTURE
* Fed Chairman Bernanke told the National Association for Business Economics (NABE) that economic activity is more likely to be subdued up to 2009 and may extend further if the financial market continues to be in turmoil.
* International Monetary Fund's (IMF) half-yearly report revised the final US economies losses to $1.4 tln from the previous figure of $945 bln.
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2 Comments
Post a CommentYeah, but it is unfortunate that one sector, the financials are unnecessarily dragging the other nine sectors what was essentially a mismanagement by investment banks. The fallacy of what they did is evident when it is transplanted to the ordinary citizen's level: Example, assuming you are making mortgage payments to your bank. What business I have to sell papers based on your promise to your banker?
It doesn't make sense. Still those guys assumed the debts of people who never knew them and repackaged it. What was preposterous was that even foreign governments bought these useless instruments just because on top of those papers were some names like Goldman Sachs, Lehman, Morgan Stanley etc etc.! Thanks for looking in.
The bear has been winning constantly lately huh?