Thursday, January 31, 2008

Stocks higher

Stocks had pretty much an up day. The Dow ended up 207 with advancers beating decliners 4-1. But all is not well. MBIA, a prominent bond insurer & one of the very few companies whose bonds are rated AAA, has all but lost the AAA status & may be facing even bigger problems just remaining alive. Dow pulled back in closing minutes related to increased worries about them. Google (GOOG) reported after hours & the market did not take it well, sending the stock down 50 points. This has been a down month for Jan. Since 1950, that measure has predicted a down year for stocks. Traditionally Feb is a flat month. Gold is up to 928 & volatility in the market remains. Watch out for tomorrow's markets.

MBIA reports $2B loss

What's going on with the economy is today's big question. MBIA (MBI) just reported a $2B loss but the stock is up 1.15. Dow is up 49. Loan probl ems contnue, not to mention weak housing & retail sales.

Stocks recover after early losses

Stocks recovered after early losses. Dow is up 80, advancers over decliers 2-1 & NAZ up 11. The stock market is trying to figure out what's going on in the economy given confusing signals. Gold is at record levels around 930 while the Treasury bond yields 3.65%, a little higher than a few days ago.

Wednesday, January 30, 2008

Little changed after FED rate cut

The FED's rate cut of 50 basis points was well advertised, hardly a surprise. In the last few days the Dow rose almost 500 points in anticipation of the cut. Today, Dow slipped all of 37 points while NAZ dropped 9, rather quite when compared to recent swings. Now that it's over, back to earnings reports & watching for downgrades.

Amazon (AMZN) reported after the close, beating estimates but pulled back over 2 in after hours trading. There is a gloomy feeling about this year's retail sales which AMZN is caught up in. Of course, a P/E over 80 may require even higher expectations from the market.

Stocks lower ahead of meeting

Stocks pulled back ahead of the FED meeting, Dow down 50 & decliners over advancers 3-2. Not much to do but wait.

UBS (UBS) reported a very ugly Q4, over $14B loss due to bad sub-prime loans. Merck (MRK), a Dow stock, & Yahoo (YHOO) are down after earnings announcements. Merck set aside almost $5B for claims against Vioxx.

Tuesday, January 29, 2008

Asian markets mixed ahead of FED meeting

Asian markets are mixed as they wait for tomorrow's FED meeting. As in the US, they expect an interest rate cut of at least 50 basis points. China's bad weather is a major news story. Between extreme cold & heavy snow, this is the worst winter in 50 or 100 years depending on the news report. China is deploying 500,000 troops to help people cope. As the Chinese new year approaches, the weather makes it difficult for many to reach their destinations. This weather will reduce exports, China exports almost $1B to the US every day.

Stocks up on hope for a rate cut

Stocks moved up on hopes for a rate. Dow was up 96, near the highs for the day, advancers beat decliners 2-1 & NAZ rose 8. Everybody is assuming the rate cut will be at least 50 basis points although I just heard somebody suggest only 25 basis points & that would be just fine with him. Hmmmmm!!

Last year, home foreclosures rose 79%. No matter how much the FED cuts the interest rate, home problem loans will continue. Google (GOOG), hosting my web site, was down 5 today & another 5 after hours. Their earnings should be out soon & maybe not so good. Earnings reports will continue but tomorrow will be the big day with the FED announcement.

Bulls are back

Bulls are busy buying stocks. Dow is up 111 & advancers over decliners better than 3-2. The House approved the economic recovery plan which includes tax rebates for individuals of $600, marrieds $1200 & breaks for business. Now it's up to the Senate where the tax package's approval is considered fuzzy. The Senate has already added billions for seniors & unemployed among other things. At least the FED's decision will come first.

Market fizzles before Fed meeting

Now stocks are mixed although advancers lead declines 3-2, a positive bias. The market was up anticipating a rate cut at the FED meeting but enthusiasm has dimmed, the bulls gave up. Countrywide (CFC) reported another ugly quarter . It appears Bank of America (BAC) wants them to clean house before the acquisition later in the year, both were up fractionally. US Steel (X), another Dow company, reported a large decline in Q4 profits. Even after increasing the quarterly div to $.25, the stock is down over 9.

The market is expecting (demanding?) a minimum of a 50 basis cut by the FED. We'll find out soon.

Monday, January 28, 2008

Asian stocks move up

In the overnight markets, Asian stocks moved to the upside. They were able to watch the president's speech on Bloomberg TV & CNBC-Asia. After the Shanghai market dropped 7.2% yesterday, it is rebounding 1% tonight. China estimates that problems from power shortage due to a shortage of coal has cost the economy $3B. Higher markets in Asia are counting on a minimum 50 point cut in interest rates at the FED meeting tomorrow.

Solid gains on hope for a rate cut

Today was one of those days you could have thrown darts to pick a winner. Averages were up a good 1% & advancers over decliners almost 4-1. Just about everything was up on the expectation the FED will cut the interest rate tomorrow by at east 50 basis points to 3.00%. McDonalds (MCD) was down 3 on disappointing earnings. After the market closed, American Express (AXP), another Dow stock, fell 1 (after an up day) on their earnings. Quarterly profits fell 10% & they have to set aside money for defaults on their credit cards. Google (GOOG) hosts my site & they had a rough day, down 10 & another 5 after hours. Their earnings will be posted tomorrow & the early bets are not favorable.

Tonight the president gives the state of the union speech, but tomorrow is the big day with the FED meeting. The market has priced in a nice cut. The aftermath can be disappointing as in the past. Housing numbers (the worst in 50 years) today were a reminder that the US economy has a lot of problems.

Stocks rise on hopes of interest rate cut

Stocks were up on hopes about an interest rate cut. Dow was up 47, advancers beat decliners 2-1 & NAZ was up 8. This FED's meeting will have a major affect on stocks & the feeling on Wall Street is 50 basis points (if not 75) are needed.

The Commerce Dept reported new home sales declined 26% last year to 774M, the worst decline on record! Of course, that was hardly a surprise. McDonalds (MCD), a Dow stock, reported earnings were so-so, down 2.25. They said same store sales in Dec were flat. There is also a feeling that the housing slump is negatively impacting them. Verizon (VZ), another Dow stock, down 0.73, reported a 4% rise in Q4 earnings & said they are not seeing evidence of a slowdown in consumer spending. Corning (GLW), the maker of flat TV screens, reported good earnings & outlook, up 0.82.

The Senate is proposing changes to the president's budget plan. Every special interest group wants changes. Can you spell, "Delay?" The FED's meeting is closer. For the time being, the markets will slosh around trying to guess about the FED's rate cut.

Sunday, January 27, 2008

Asian markets continue weak

The week started off on the wrong foot for Asian stocks, typically they're down 2-3%. This has caused American futures to fall, the Dow is down 58.

China has a major power shortage caused by a coal shortage. The Shanghai Exchange is down 5% today (yes, I said down 5%) to 4500 because of the coal shortage. In addition China is getting hit with a major snowstorm in the mid region. The decline in their stock market is based on business being negatively impacted by the lack of power. In addition, they're down over 25% from the peak just a few months ago. Analysts fear their market will fall further as the market is over-bought after almost doubling last year. These problems can flow thru to the US. Every day the US imports from China almost $1B making China the largest holder of US treasury bonds.

Asian stocks begin week lower

Asian markets first to open, Japan, Tokyo, Korea, are down 1-2%. Also, they are looking for the FED to lower the Fed Funds rate by 50 basis points.

This weekend, I was thinking about the tax refund package aimed at stimulating the economy. It may not play out quickly, there is a lot of talk about the Senate taking it's time to evaluate the plan. Presidential candidates in the Senate will not be anxious to rush through legislation which they haven't personally approved. Earnings announcements this week will probably be fairly good, but I'm not sure they will carry the day (or week).

Friday, January 25, 2008

Stocks repeat yesterday's decline

Once again, stocks started strong with Dow gaining over 100 points. By the end of the day, Dow was down 171, decliners ahead of advancers almost 3-2 and NAZ pulled back 35. The 4 leading new lows were : SGP, BMY, WYE & HSY; 3 big drugs & Hershey, quite a combination. Overall, there were 82 new lows. The yield on the Treasury bond is back to 3.58% & gold is over 900. Worries continue, traders do not want to be long over the weekend.

There is a lot to look forward to next week starting with a bunch of earnings. Earnings so far have been surprisingly good if you ignore the ugly financial earnings (with huge write-downs) which are largely reported. The president addresses congress next week. Speaking of congress, they will start considering the tax package & that may not go quickly in the Senate. The FED has it's meeting, the only question is whether they owe the markets 25, 50 or 75 basis points. Given this week's rebound, I think they will lean towards the low number.

Early stock gains evaporate

Out of the gate, the Dow was up 100. But stocks slipped back & are now about even (both Dow & NAZ), however advancers lead decliners 3-2. Last night, Microsoft (MSFT) had a good earnings report. Today the stock started out strong, but also slipped back to little changed. Caterpillar (CAT), a favorite of mine because it is an S&P 500 Dividend Aristocrat & a Dow stock, had a good earnings report, up 1.10.

The economic stimulus package may be getting bogged down in the senate, we will have to watch for delays of the tax rebates. In addition, rumors are flying about a number of hedge funds being in trouble. Right now this is only babble, but maybe rumor spreaders are on to something. These worries are enough to dampen any market rally.

MLPs have had an exciting week. After falling to new lows this week, they rebounded & are up 7% from the lows just a couple of days ago. It should be remembered that they have a low beta (low volatility), not this week.

Thursday, January 24, 2008

Stocks up, 2 days in a row

Stocks rebounded, extending their winning streak to 2 days. Dow was up 108, advancers over decliners better than 3-2 & NAZ was up an impressive 44. Well, well. The tax rebate plan was ironed out & announced. Tax rebates will be $600 for singles & $1200 for marrieds plus extra for children. If all goes well, it is expected to be signed by Feb 15 (that's considered fast) with money reaching taxpayers starting in May. Sounds good if.......

The short term over-bought banks & REITs pulled back while MLPs continued their sharp rebound to 2 days (like the Dow). The VIX pulled back to "only" 27.78 (20+ is very high) and the Treasury bond sold off, increasing the yield to 3.64%. Dow is up a little on the week. If it holds at least tomorrow, this will be an up week.

Stocks mixed

Stocks are trying to decide which way to go after yesterday's wild finish, advancers lead decliners 3-2. Dow is up 13 & NAZ is up an impressive 19 after getting hammered for a few weeks. On yesterday's after-hours earnings, EBay (EBAY) is down 2.31. Nokia (NOK), a Finnish company, largest maker of mobile phones, is up 2.26 on good earnings news. AT&T (T) is down .65 after issuing a fairly good report. Ford (F) slipped a little on disappointing earnings which was expected. Meanwhile, there was gloomy news on last year's home sales. Sales of single family homes dropped 13%, biggest decline since 1982. The average price for a home suffered the first decline in 40 years. Today's news gives us a lot to think about after yesterday's late day rally.

For newcomers, I'll give a plug for the S&P Dividend Aristocrats, companies in the S&P 500 with track records of at least 25 years of higher dividends year of year. The link used is a year old, it includes First Horizon (FHN) which will have to be dropped this year after failing to increase the div last year. There are about 56 on the list (11%), an excellent group to look at when thinking about investing especially during these troubled times.

Wednesday, January 23, 2008

Dow has 600+ point swing

Starting out down more than 300 points, Dow ended with a gain of 299. Advancers were ahead of decliners 3-2. Even NAZ recovered, picking up 24 points while the Treasury bond was little changed offering a yield of 3.43% (i.e. bond buying was cut back). The market thinks the FED owes another 75 basis point cut at it's meeting next week. Maybe traders have been reading my blog, banks & REITs offering high yields rallied sharply - gains of 2-3 were common. What's there to say?

After the close, Ebay (EBAY) announced earnings & gave a disappointing forecast. Google (GOOG), hosting my site, declined 36, up from a 65 point decline earlier in the day. NAZ investors are getting nervous, anything touches off selling. More earnings reports are on the way, let's see what they have to say. In the meantime, I'm chalking up a rally that lasts for just a few hours as "technical." The VIX closed at 29.02, above 20 is considered quite high, telling us to expect another bumpy road with very big bumps.

5 day losing streak ends

Losing streak is over, Dow up 299 & NAZ up 24, not bad. However, decliners beat advancers only 2-1. The VIX pulled back from the 30's to only 29.23 remaining very high. Who knows what's going on?

Stocks recover a little

Stocks recovered a little. Going into the close, Dow is up 81, yes I said up, and NAZ recovered to be down only 9. Advancers are just ahead of decliners. Buyers came back, but maybe they're only buying to cover short sales. The VIX is 31 (had been as high as 34) which is still extremely high territory. The Treasury bond yield is down to 3.42%, one of the few winners today. Into the close anything is possible.

Dow down even more

Not much else to say, Dow is down 260 & NAZ down 76. The sort of good news is the breadth ain't that bad, only 3-2 in favor of decliners & "only" 353 new lows. Hang on for a bumpy ride!

Markets down for 6th straight day!

Stocks are down again although they bounced back from the opening when Dow was down 300. Now Dow is down 190, decliners are ahead of advancers 3-2 & NAZ is getting hit hard, down 62. Lower interest rates are bringing buyers into financials but the rest of the market is weak. On the good side, Pfizer (PFE), up 20 cents, reported favorable earnings & an improved outlook for 2008. However, Motorola (MOT), & Apple (AAPL) are getting most of the attention. MOT gave a very gloomy forecast while AAPL gave a very bearish outlook with a forecast much worse than analysts had predicted. Each one is down almost 20% adding fuel to the argument that we are already in a recession.

While banks & REITs are doing well, MLPs continue to pull back to new 52 week lows.

These are a favorite of mine but have fallen on hard times related to recession worries. This is the 6th straight day of declining markets (down 1000 in just 6 days) & the worst start for a new year in history. Unfortunately fundamental conditions are not changing, more bleeding is expected.

Tuesday, January 22, 2008

Asian stocks rebound

Asian stocks rebound, but well off their highs, responding to the FED rate cut in the US. The up markets have not recovered losses from just the prior day. Asian markets are also having a tough start, down 15% this year. US markets are pulling back with Dow futures trading down 100, an early indication that tomorrow will see continued declining markets in the US.

An Australian analyst just said they were forecasting a 1 1/4% interest rate cut for this year. If the FED cuts 50 basis points next week, they would not have any ammunition for the rest of the year.

Asian stocks up

Out of the gate, Asian stocks are up:


NIKKEI 225 (^N225)


KOSPI Composite Index (^KS11)

After all is said & done, another down day!

Before trading, the US markets looked to open down big-time following steep declines in overseas markets. Then the FED gave a surprise present, a 75 basis point cut in the interest rate which brought back buyers. In pre-trading the Dow was down 500, but rallied 200 points in minutes after the announcement. For the rest of the day, the rebound failed to really follow thru. Dow ended down 128 with NAZ down almost 48. Decliners beat advancers about 3-2, still a tough day. Beaten up financial & retail stocks recovered from oversold depressed levels. Without those gains, today's results would have been a lot worse. The VIX (volatility index) is at 31, an extraordinarily high level. Bumps ahead will be getting even bigger, hang on!

My favorites, like junk bond funds, REITs, banks, etc. all rebounded. The Treasury 10 year bond also rallied, driving it's yield down to only 3.48%. However, the MLPs pulled back. Their index dropped to a new 52 week low, 385, down 3.61. It rallied off the day's lows, but is still on defense. Many ordinary stocks pulled back. When my Coca Cola (KO) declines 1.95, you know it's been a rough day!

Tomorrow will be a new day with the rate cut fading in memory. Another cut is expected next week at the FED''s meeting, but earnings announcements will be driving the market. The most optimistic will probably be so-so, others will announce poor results. There is a general feeling the US is in a recession which is probably the single most important force driving the market as evidenced by the pullback of the MLPs. Their pipelines keep the economy running. Be strong!

Stocks still slide

This morning was exciting in the markets. Early in pre-trading, the Dow was down over 500. Then the FED cut their interest rate by 75 basis points which brought back buyers. 200 points were immediately shaved off the loss, now Dow is down "only" 156 while NAZ is down 53 (over 2%). Decliners lead advancers 2-1 with over 1000 stocks setting 52 week lows (not surprising all considered). Banks are strong on the rate news, up 1-2% but maybe not that strong considering the size of the rate cut. The 10 year Treasury rallied on all this uncertainty with a yield of 3.55%.

Bank of America (BAC ) & Wachovia (WB), Ambac (ABK) & Johnson & Johnson (JNJ) reported earnings, only JNJ is down. More earnings reports are coming. By tomorrow, the rate will be fading into memory, new earnings reports will move the market. Expect a very bumpy ride ahead in the stock market.

Monday, January 21, 2008

India & Philippines markets down

India & Philippines markets have opened & are following the other markets significantly lower. Selling pressure should spread to Europe in a few hours. While I write, Asian financial TV is talking about recession in the US & how it may spread around the world, calling it a market melt-down.

Asian markets plunge Tues AM

Asian markets are down around 4%, selling continues in a big way. Mainland China banks are down over 10% on fears of problems like the US is having. Dow futures are trading down 500, that's right down 500, taking them to the 11.6K area. That level indicates an 18% decline from the peak (over 14K just a few months ago). Tomorrow will be a memorable day in the US.

Tomorrow's markets may be ugly!

This current posting from Reuters discusses today's sharp sell-off in global markets & US futures. Expect bleeding tomorrow.

Overseas stock markets plunge

We're lucky markets are closed today because overseas markets went into free-fall. Foreign markets are not convinced an economic stimulus plan will help the US economy. In addition, Chinese banks have major problems. Among many, they are concerned that their banks may have to deal with large sub prime loan problems. Prices on American stocks trading in Europe were pretty ugly (Bloomberg TV includes those prices on their tape). Trading tonight will show if declines are continuing. Get ready for a very tough day tomorrow, seems like I have been repeating that message a lot in recent weeks!

Friday, January 18, 2008

More punishment for stocks

Dow had another rough week. Today, after gaining 180 out of the gate, it ended down 60 as S&P & NAZ also declined. There has been a lot of bleeding with no indication of when it will stop. With a 3 day break, there is time to sort things out.

The president announced a plan to stimulate the economy which brought the big sell-off today. The more he talked, the more stocks fell. Senator Reid, majority leader, said that if they push thru the bill on a fast track it will "only" take a month. And that assumes it moves on a fast track, something congress is not noted for. First, the presidential plan will be presented next week.

Banks, REITs & junk bond funds slipped again today. Many high yielding stocks are at multi year lows. The Alerian MLP index fell 4 to 389, a new low for the last 6 months. Check out stocks making new lows, there are plenty. While probably not near the bottom, plans can be readied to buy at more favorable times. But earnings reports will continue next week & they don't look to be pretty, more of the same. Try to relax & have a good weekend!

Dow concludes a terrible week

Dow dropped 600 this week to near 12K, a sensitive level. Decliners are only ahead of advancers 2-1, not so bad. The number of new lows is quite high:

New Highs 11
New Lows 619


After short oversold rally, stocks down

I was getting ready to write about the oversold rally. After stocks sold off as badly as they have in the last few days, it was time for an oversold rally. It sort of happened. Dow was up 180 early on, then the president spoke. He proposed a $145B economy plan, the market didn't think much of it. At a minimum the Dems in congress have to pass the legislation, that won't come without a fight! Congress will be happy to pass any spending bill in an election year (to keep their jobs) but will fight over what is in it. Dow has fallen badly from it's high to down 56, decliners over advancers 3-2 and NAZ down 6. So much for the oversold rally.

Banks, REITs & junk bond funds are down in the depths, many at lowest prices in a few years. Yields are high, for junk bond funds they can be 700 basis points above the Treasury bond yield at a very low 3.63% (bonds have had a very nice rally in the last 6 months). MLPs, also with high yields, have fallen thru an important technical level. For the last 6 months they have been living in the 290-310 range. Today they fell thru the floor to 288. I'm not a technical expert but know a lot will say, uh-oh!


Thursday, January 17, 2008

New NYSE lows

Below are just a few of the stocks setting new 52 week lows on NYSE:


Lower markets affects more than just banks & other fnancials. Unfortunately, stock markets are on defense & are probably going lower. New Zealand, Australia, Japan & Korea are already heading lower in their early Fri trading, following NY's declining markets.

One brutal day!

Another ugly day in the markets. Dow was down 307, decliners over advancers 6-1 & NAZ slipped 47. That qualifies as ugly. Even worse, this looks like more blood letting without a conclusion. Here's the new highs vs new lows on NYSE:

New Highs 26
New Lows 479

The sellers are in charge after a brutal market decline in recent weeks. Dow is down 2000 from it's high registered only a few months ago.

After the close, Washington Mutual reported it's loss. It looks to be wore than anticipated, but the stock was up 54¢ after hours on the news .

Earnings reports will keep coming. Gloom looks it will be the dominant theme, especially for banks & other financials. Prepare for a continued bumpy ride in the markets. It's a good bet, Asian markets will take a pounding when they open in a few hours.

Stocks fall on Bernanke's testimony

FED Chairman Bernanke said risks of an economic downturn are more pronounced after a Philadelphia Fed Reserve survey showed regional manufacturing activity weakened in January. He predicted the housing sector will be a drag on the economy for much of 2008. These comments sent stocks lower. Dow is down 155, decliners over advancers more than 3-1 while NAZ slipped 26. For technical people, it's flirting with the lows of 12K last March. I have a feeling they will take them out (go even lower).

There is a lot of talk about an economic stimulus package (i.e. more gov spending to boost the economy), but so far it's just talk. Chances are in an election year congress will be eager to vote on spending more money, but results from gov spending are not easy to predict. Results from the last cut are still debated.

Financials are weak, what's new? Merrill Lynch (MER) is down 4.39 after reporting $10B quarterly loss, after taking $15B writedown on loans. Again, what's new? They, along with other financials, are taking a "big bath" hoping that huge write offs will put them in better shape to report good earnings this year, not to mention nice bonuses.

Not to be forgotten, home construction fell 25% last year, the largest drop in 27 years. The economy has plenty of problems. These will take time to fix.

Wednesday, January 16, 2008

MLPs earnings season

This is also earnings season for MLPs. MLPs are partnerships with limited partners buying units rather than shares to receive distributions rather than dividends. Most of the distributions are not taxed, but there is also a fair amount of hassle after receiving the K-1 tax statement late in the season.

Reported earnings can be fuzzy. Generally they pay out more than earnings, many times around double. Whether earnings go up or down doesn't seem to matter, distributions are increased regularly (go figgah). They need a lot of new capital (i.e. have to keep selling units to finance expansion) giving them incentive to keep increasing distributions. Many have yields over 6% which attracts investors.

Current earnings vary but seem to look good. As usual, many distributions have been increased. For more info, check out Joe's excellent blog,

Meanwhile Asian stocks are doing well, up 1%, during our overnight period. Even Tokyo is up after falling sharply in recent days. Oil is 91 & gold is down to 880.

Volatile stocks, little decided

After a volatile day, not much decided in the markets. Dow pulled back about 100 points in the final hour for a finish of down 35, advancers equaled decliners while NAZ took a bit hit, down 23 (1%). Fallen angels I watch had a nice day. It looks like traders have been ready my blog, so they bought. INTC news weighed heavily on the tech sector as shown in the NAZ. Earnings announcements from JPM & WFC were absorbed very well. Meanwhile gold fell 20 to 883 & the Treasurty bond closed with a 3.71% yield.

There will be a ton of earnings announcements in the next couple of weeks, high volatility will continue.

Lower stocks on Intel earnings

Intel's (INTC), a Dow stock, earnings announcement sent stocks a little lower. Dow was down 29, decliners were slightly ahead of advancers but NAZ dropped another 29 following the INTC announcement. JP Morgan (JPM), up 1.77 & another Dow stock, & Wells Fargo (WFC), up .65, weren't hurt by their earnings announcements. They have similar stories, large losses from loans, especially home loans. Now they also have to worry about bigger problems with car loans & credit card balances.

Somewhat overlooked was the inflation report by the Labor Department. Last year's inflation rate was 4.1% up from 2.5% in the prior year & the worst in 17 years. Inflation news will be important to the FED when they meet at month's end to cut interest rates. Bond investors are doing well, the Treasury yield fell to 3.68% (about 6 months ago it was over 5%). It took a huge rally to reduce the yield that much.

Tuesday, January 15, 2008

Out of the gate, Asian stocks down

Asian & Australian stocks are down about 2% each. First to open are New Zealand & Australia followed by Japan & Korea, all were hit by selling. Then Shanghai opened, down over 1%. Their banks are getting hit hard even though they shouldn't be badly affected by our sub prime problems. US export trade is also a big issue. For example, the yen is "up to" 106.7 to the dollar, highest value in recent years. They are getting ready for more earnings reports from financials in the next few days.

Stocks down big

Stocks fell sharply. Dow was down 277, decliners over advancers 3-1 & NAZ pulled back a whopping 61. This was one brutal day in the markets. The Treasury bond yield declined to 3.70% (plenty of buyers for those bonds) but gold pulled back below 900. Everybody is betting on when the recession starts, some say it already has.

One of the biggest stories was Citigroup's (C) $10B loss. A bullish scenario following would have been a huge sell off followed by a rally in the PM signalling the worst was behind us. That didn't happen, stocks were near their low at day's end. The next couple of weeks will give us a lot of earnings reports, many gloomy.

After the close, the much awaited Intel (INTL) results were posted. It looks like they "made " the estimates but margins were a little weak. The gut, instant reaction was a sell off over 10%. That will probably drag down the Asian markets, opening in a few hours, which will set a negative tone for tomorrow's trading. VIX (volatility index) remains high. Get ready for another bumpy ride.

Markets fall on Citigroup's loss & weak economic data

Another rough day in the markets. Dow is down 209, decliners over advancers 4-1 & NAZ is down 48. NAZ is 400 points (14%) below it's recent high, a significant decline. Dow is flirting with it's lows in the second half of 2007.

News today was not pretty. Ugly news from Citigroup was excepted & they delivered. They lost $10B in Q4, cut the div 41% & lined up $12.5B in added financing. They are cutting 4200 jobs on top of the previously announced 27K job cuts. Their stock is down 2, another new low. Speaking of more financing, Merrill Lynch (MER) is getting $6.6B in added capital.

The Commerce Department report said the economy registered a 0.4% drop after revising Nov numbers down. This follows disappointing sales figures at major retailers last week.

The Treasury bond yield fell to 3.73% & oil slipped to 91 (a decline is a bet on a weaker economy). This is not a pretty time in the stock markets. Near 12.5K, the Dow is on defense & it looks like it may not hold out much longer. Declining markets mean it's homework time. I like fallen angels which don't deserve this kind of treatment.

Monday, January 14, 2008

Up, Up & Away

It must fell that way to many, up, up & away. Dow was up 178, advancers over decliners 2-1 while NAZ was up 38. Not too bad although internals (advancers over decliners was only so- so). IBM's (IBM) good earnings news took center stage even though Sears (SHLD) took it on the chin with poor earnings & US retail sales forecast for 2008 got a downgrade. Gold touched 911, oil rebounded to 94 & the Treasury bond yields 3.79%. Favorites I watch were generally up, but MLPs slipped a little. Their index had a nice move up from 291 to 303 but has slipped back to 298 on a series of small declines, warmer weather may be hurting them. There is talk that the market was over sold, today's bounce could be expected. I go along with that line of thinking. We are still on a bumpy road, tomorrow Citi (C) gives the first earnings report from a bank & it's expected to be ugly which may be followed by a 40% div cut.

Earnings season starts on up note

Earnings season is beginning, actually Alcoa (AA) marked the official start last week. This week a bunch of financials report, tomorrow Citigroup (C) is the first. Today the market is up, it liked preliminary earnings from IBM (IBM) sending the stock up 5.66. Dow is up 109 & advancers beat decliners 2-1 (so-so) while NAZ is up 27. However, Sears (SHLD) is down 6 after lowering Q4 estimates. In addition, the National Retail Federation lowered forecasts for growth in retail sales to 3.5%. Retail stocks have gotten punished badly, take a look at Sears over the last 2 years (down 50% from the peak just a few months ago).

Sears Holdings Corporation (SHLD)

Back to financials, Citigroup is expected to post an ugly report which will be followed by more from financials. Treasury bonds continue to do well as the yield falls to 3.77% & gold sets new records reaching 911. This should be an interesting week, the VIX (volatility index) is over 24 (20 indicates high volatility). Hang on for a rough ride!

Sunday, January 13, 2008

Sun night update

Asian markets are up, Dow Jones futures are already up 35 (down 12 in the last few minutes). Gold is 900 while the yield on the Treasury bond fell 9 points to 3.79%. Higher gold prices, among other things, are bets on lower yields in the US which will drive more gold buying.

On Bloomberg, I just heard a Hong Kong economist predict Chinese growth may slow, helping them fight inflation pressures. Since China runs a trade surplus of over $300B with the US, his prediction gives signals for the US business outlook.

Earnings season begins

Last week was another very bumpy week, typical behavior of stocks in recent months.


For the week, Dow Jones pulled back 1%. Commodities did very well, especially gold nearing 900. Junk bonds & MLPs slipped while REITs edged up. Financials, dominated by banks, had another rough week, many at multi year lows. Billion dollar loan write offs have become common, as a result we see more div cuts. Citigroup (C) has a 40% cut priced in the stock. Retail & restaurant stocks have fallen sharply in the last few months, again many at multi years lows. Investing in fallen angels generally pays over the long run.

The start of earnings season will give us plenty of stories next week. These should keep us on a very bumpy road.

Friday, January 11, 2008

Dow down 246

Stocks had another bad day. Dow lost 246, decliners continue to beat advancers 2-1 while NAZ dropped 49. The breakout for new highs & lows is:

new highs 41
new lows 216

New lows include: AXP, M, LTD, XRX, ANN, PBI, LIZ & HSY.

Even the recovery, there remain a lot of new lows
In the Dow, American Express (AXP) & McDonalds (MCD) accounted for 1/3 of the decline. Banks held fairly well with Bank of America (BAC) one of the few posting a loss, down 80¢. REITs rebounded slightly, junk bond funds & MLPs pulled back. Even though my focus is on div companies on the Big Board, techs have been getting hit hard in the last 2 weeks. Worries about a recession are affecting them.

According to RBC Cash Index, consumer confidence fell to 56.3 in early January, which compares with 65.9 in December, the worst since the index began in 2002. There are a lot of indicators pointing to a recession have arrived already. Sleep well over the weekend, then research stocks that are pulling back to attractive buying points.

Stock market sinks more

Dow is down about 250 with decliners over advancers 2-1. Major losers today include: Countrywide (CFC) an indirect investment in Bank of America assuming the acquisition goes thru. American Express (Dow component), Tiffany (TIF) and Mastercard (MA). Bloomberg TV pointed out that just in the last 3 months retailers & restaurants have been hammered, some down over 50%. While their turnaround may be down the road, some of these values will look good when the market turns.

Financial worries send stocks lower

It's difficult to keep track of all the stories, mostly on the negative side. Bank of America (BAC) will buy Countrywide (CFC) for roughly $7 in stock (85% below it's peak). Merrill Lynch (MER) will take a $15B hit related to mortgages, it needs more investors. JP Morgan (JPM) is buying mortgages from Northern Rock (UK's version of Washington Mutual) to help Northern Rock repay $50B in loans. JP Morgan & Washington Mutual (WM) are holding preliminary merger talks. Let's not forget, American Express (AXP) last night warned about lower estimates for Q4 earnings & gave a cautious outlook for this year. This one worries me the most because consumers use their cards for retail sales.

Dow is down 135 & NAZ declined 25 with decliners beating advancers 2-1 (not that bad considering this news). Gold hit another record of 900, that's where frightened money goes.

I guess the market is holding up fairly well given this news. However, the Dow is getting used to being under 13K (today it's 12.7K). For the nibblers, junk bond funds still yield a good 700 basis points above the Treasury 3.84% and some REITs have high yields. S&P's Dividend Aristocrats are a favorite of mine. The attached list is not from them, S&P tries to keep it secret so I went to another web site. The stocks are arrayed in order of yield, but be aware of the highest, First Horizon National (FHN). They did not increase the dividend last year & probably are facing a cut this year due to their expose in mortgages. The others have track records of higher divs year over year for 25-50+ years. Check this list for buying ideas.

Thursday, January 10, 2008

Merrill Lynch will post major loss

Bloomberg TV said New York Times is reporting that Merrill Lynch (MER) will post a $15B loss resulting from sub prime losses. Asian trading is already affected, banks are lower. Dow futures are down 63, Fri is shaping up as a difficult day in NY.

Stocks up, Bank of America to buy Countrywide

There were a bunch of big stories. Stocks rallied sharply late in the day on news that Bank of America (BAC) was in advance talks (whatever that means) to buy Countrywide (CFC), the troubled mortgage lender. BAC was up 56¢ & CFC rallied to $7.97 (although down $1 from it's high). The Dow rose, but gains were reduced to 117 by the close. Advancers beat decliners 2-1, not that good all considered. Airlines were up very big on stories about possible mergers. However, after the close, American Express (AXP), a Dow stock, warned about lower profits in Q4 & gave a cautious outlook for 2008. The stock fell $3. Gold rose to 890, another record and the VIX (volatility index) is over 23 (above 20 indicates high volatility). I think AXP's negative announcement this afternoon will weigh on the markets tomorrow.

Fed ready to cut interest rates

Fed Chairman Bernanke pledged to cut interest rates again to prevent housing & credit problems from plunging the country into a recession. He made clear the central bank was prepared to act aggressively to rescue a weakening economy, "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks." Dow's up 70 & advancers are barely ahead of decliners. The words sound good, but problems will continue. Dec retail sales reports have been poor, Jan doesn't look to be much better.

Stocks slide some more

Stocks are down a little on warnings from another bank. Dow & NAZ are a little lower but the decliners are ahead of advancers almost 3-2. Capital One (COP), the bank with those obnoxious commercials about knowing where your credit card is, is down $2.35 after it said bad loans last year cost it almost $2B. Economic worries rule the market. Oil is back down at 93. It's recent decline from 100 is due to worries about slowing economic activity & warm weather in the east.

I've added some buttons in the right sidebar. There are 2 for linking directly to my site & a Yahoo search button towards the bottom. Hope you enjoy them.

Wednesday, January 9, 2008

Nasdaq ends 8 day losing streak

NAZ was up 34 ending it's 8 day losing steak. Stocks had a strong recovery largely in the last hour of trading. Dow ended up gaining 146 but the internals weren't great, only about 2-1 advancers over decliners. The oversold stocks I watch participated in the rally. Alcoa (AA) , up 25¢, reported excellent earnings beating estimates. Top economists from Merrill Lynch & Goldman Sachs - said the recession is already here, largely based on the report released last Fri showing a sharp jump in the unemployment rate for Dec combined with little growth.

This is what is called a technical rally, sellers gave up or maybe just covered short positions. Gold is above 880 & the Treasury bond yield is 3.79%. Tomorrow will show how much strength this rally had behind it, Alcoa earnings might help!

Soggy rebound for stocks

Stocks recovered a little, but just barely. Dow is up 55 & NAZ up 7, don't get too excited. Advancers equal decliners & gold is at record levels (some of the money from selling stocks is used to buy gold). Countrywide (CFC) remains in the news. They try to reassure investors, but the stock slipped to another new low @ $5. Washington Mutual (WM) is on the list of biggest decliners, down 13% to $11.13. This kind of news caused banks to be weak after yesterday's drubbing. MLPs hang there, the index is even today.

The outlook for the economy remains gloomy. Goldman Sachs issued a report predicting a recession in 2008 which will bring substantially lower interest rates from the FED.

Tuesday, January 8, 2008

Asian markets lower, following NY

Asian markets are down less than 1% each. Major news stories are the sell off in NY stock markets, a proxy fight to take over China Eastern Airlines & the NH primary elections. China computer maker, Lenova, is down over 10% on concerns of a slowdown in the US market. Australia banks said they do not expect to be hurt badly by the US sub prime mess or a possible failure of Countrywide (CFC). Gold is at a new record, 888.

Dow Down Day

Dow pulled back again, down 238, mostly in the last couple of hours. Late in the day, the CEO of ATT (T), down 1.87, said they're seeing a slowdown in consumer business, a company which doesn't have many complaints. That may have sparked the late day sell off. NAZ pulled back 59. I don't mention as much about them, but they're down 8% this year in just 5 trading sessions. Tech is selling off big on the expectation of a major slowdown in the US economy which would impact the world, including countries selling (exporting to) the US.

It's difficult to keep track of bank write offs lately, there have been a bunch usually involving billions. The big news story in that field is Countrywide (CFC), down 2.17 to 5.47, another new low (click on their name for more). Last Aug, Bank of America (BAC) invested $2B in a new preferred stock. Also, CFC also got a $12B emergency loan to bail them out. All that looks ugly today.

Meanwhile a little bit of good news, the MLP Index advanced .66 & Coca Cola, one of my stocks, had a 26¢ gain which was cut back late in the day. For those owning gold, it was up 18 to 880.

Dow struggles

After starting the day up 75, Dow pulled back & is struggling to break even. This has been a rough day for news. Avon (AVP), up 40 cents, is laying off 2400. KB Homes (KBH), down 1.33, reported a 9.99 per share loss in the fourth quarter. In addition, Countrywide, after very ugly press, is at a new low below 6. As the biggest holder of mortgages, their problems affect many banks. The National Association of Realtors index tracking pending U.S. home sales fell 2.6% in Nov, a larger than expected decline. This report followed last week's disappointing readings on employment & manufacturing. Negative news spurs a flight to safety, Treasury bond yield is 3.85% & gold is around record levels of 865.

One ray of hope in the stock market, the Alerian MLP Index is up 2.75 (almost 1%). Those boring pipelines around the country look good. Go figgah!

Monday, January 7, 2008

Awaiting Q4 earnings, stocks mixed

Little was decided by day's end on Wall Street. Dow & NAZ hardly changed with advancers about equal to decliners. Oversold stocks from the last few days (banks, REITs, etc.) rallied a little, but that's to be expected. The MLP index which had a nice one week rally, pulled back a point. Investors feel more confident about a rate cut at the month's end FED meeting but there is still plenty to worry about in an economy with major problems. Asian markets are watching the US closely.

Stocks back down, awaiting Alcoa earnings

Dow slipped back down, after being up almost 100. Alcoa (AA), down 2, will be the first Dow company to report earnings & they are expected to be down from last year. Decliners are slightly ahead of advancers with 409 new lows.

Mixed Monday for stocks

Stocks are mixed, there's not a lot of conviction one way or the other. New 52 week lows at NYSE were 351 including Countrywide (CFC) under 8. Some beaten down stocks from last week found a few buyers, but buying appears only technical. MLP index is down 1, however the few I watch are up.

On Sun, US forces almost fired on an Iranian boat. While nothing happened, it raises concerns about oil supplies from the region. Oil pulled back to 95, due to a possible US slowdown & warmer weather.

The administration is working to combat the severe housing crisis with no simple solution, Treasury Secretary Paulson said in speech "the country was facing an unprecedented wave of 1.8 million subprime mortgages which are scheduled to reset to sharply higher rates over the next two years." This raised the possibility of a market failure & was the reason the administration brokered a deal to freeze certain subprime mortgage rates for five years allowing time for the housing market to recover. Paulson said there is no single or simple solution to undo excesses of the last few years.

Meanwhile Citigroup (C) said it's restructuring plan appears to be taking longer than expected due to the extent of the problems. It expects to cut it's workforce by 5-10%. Citigroup is one of the biggest victims of the credit crunch caused by the subprime-mortgage crisis.

Sunday, January 6, 2008

Asian markets tumble in morning trading

Asian markets are fell 2-3% in their early hours (Sun night our time). Hong Kong, Japan, Australia are down, Shanghai is about even. They are worried about the US economy going into a recession, a big source of sales for their companies. Already, they are pricing in a 50 basis point cut at the FED's month end meeting. Worries about a recession sent lower oil lower prices to 97. Dow futures in the US are up 28, but actions in the Asian markets suggest a lower opening in NY.

Tough start for 2008

The new year got off to a rough start in the stock market in the last three days, just about every stock sold off. Banks were weak & REITs had a major sell off. However Treasury bonds had a major rally as yields fell 40 points on substantially higher bond prices. Junk bond funds found nibblers, they inched up with yields 7 points above the 3.85% Treasury rate tempting bargain hunters.

Meanwhile, regular stocks sold off. Many in the S&P Dividend Aristocrat list saw significant selling. Even MLPs which have been strong in recent days slipped back on Fri.

Worries about an economic recession are key behind the decline. The next FED meeting is at the end of Jan when another rate cut is widely expected, the betting is whether it will be 25 or 50 basis points. Even if there is an early rate cut, the effect may only be temporary. Fundamentals remain: credit crunch, sub prime loan mess, sluggish retail sales, the worst housing market in years, not to mention the weak dollar. The time when stock prices are declining should be used for homework, uncovering hidden values in stocks. Many in the groups followed here will survive & do well in a subsequent recovery. Meanwhile, another friend, Blanca, has a good idea - get a good night's sleep every night.

Friday, January 4, 2008

Stocks have worst for a new year in 100 years!

Dow was down 256, decliners outnumbered advancers more than 3-1 & NAZ fell 98. This is the worst start for stocks since 1904. The only Dow stock gaining was my Coca COLA (KO), up 12¢. At 12.8K, the Dow is flirting with the it's recent lows. Next week they will be tested & I feel new lows for recent times will be set. The yield on the long Treasury is 3.85%, down 40 basis points in less than 2 weeks. This is where frightened money has gone.

The story remains the same, worries about the US slipping into a recession (a major worry in Asian stock markets). A lot of signs are pointing to that: bad bank loans, sub prime issues, soft retail sales, high oil prices, etc. Watch for retail sales numbers to be reported next week, odds are good they won't make investors happy.

Stocks down after weak jobs report

Stocks fell sharply after a disappointing jobs report. Dow was down 160, decliners outnumbered advancers about 5-1, 490 new 52 week lows & NAZ dropped 65 . These declines followed down markets overseas. Weak job growth & higher unemployment rates disappointed investors. Dow is below 13K, it will probably test the lows in recent months. The Treasury bond has been very strong sending it's yield to 3.84%. Just a few weeks ago the yield was 40 basis points higher but investors bid up it's price. Gold is at a record, around $870. Frightened money flows to treasuries & gold.

Of the ones I watch closely, banks & REIT's pulled back. Even the MLPs backed up from recent strength, remaining in their 310-290 trading range. This market looks very weak, i.e. not too many friends out there.

Thursday, January 3, 2008

Mixed day

Today was a mixed day, not a lot decided by the end of the day. Among groups I watch closely, banks & REITs pulled back while the MLP index rose. The latter may be helped by the cold temps giving them more business moving oil & gas thru their pipelines. Walgreens, a long time favorite of mine & a member of the S&P Dividend Aristocrats, fell over 2 as Dec sales were under analyst's forecasts. I think they are a great company, made one purchase at a local store recently, only wish they had a higher yield (market's helping on that score).

There is a lot of data on whether a down first day (or 2 days) of the year is an indicator for the year. As expected, it's easy to come up with results to support any theory. I'm still looking for a bumpy first month, probably longer, while Dow remains near 13K.

Stocks up on favorable economic reports

Reports that the economy added jobs last month & Nov factory orders rose 1.5%, best showing in 4 months, sent stocks up. Dow rose 90, advance/decline ratio was almost 2-1 & NAZ was up 13. Dow continues slightly above 13K, a level with good support in recent months.

In other news, State Street (STT) was up over $5. The president resigned (I wonder how big a pay package he got to resign) as they will take a charge of $279MM based on expected lawsuits over "weak performance of certain fixed-income strategies managed by the investment division." The market views the president's departure more important than the financial hit they're taking.

Oil still flirts with $100. Banks & REIT's at low levels keep drifting down. The MLP index is on fire, up 2, but remains in the broad six month range of 290-310.

Wednesday, January 2, 2008

Worst opening day since 1983

Today was the worst opening day since 1983. Dow dropped 220 & NAZ was down 43, although decliners were ahead of advancers "only" 3-2, not so bad. The big news was oil touched $100, but pulled back a little in the afternoon. The manufacturing index falling back to 47.7%, down 3 points probably hurt more, saying the economy has problems. Banks led the way down. NYSE had 243 new lows, however 59 reached new highs. The MLPs were up slighty as pipeline businesses are looking good with more cold weather. Dow is just above 13K. It's held that level pretty well in the recent past, this time should put it to the test again. Prepare for a rocky road ahead!

Oil hits $100

The AP is reporting oil reached $100 per barrel, not a great surprise but a major psychological number. Dow is down 213 with declines leading advancers almost 2-1. As I'm writing, the Dow falls more. The NYSE most active list is dominated by banks, all selling off, although Washington Mutual (WM) and Countrywide (CFC) are up slightly. This is shaping up as a rough day.

Stocks begin 2008 lower

2008 starts with declining markets. Dow was down 128 while NAZ slipped 24 continuing overseas market declines. The manufacturing index fell 3 points in Nov, increasing worries about a looming recession. Decliners were ahead of advancers by 40%, all things considered not so bad. The usual suspects sold off: banking, housing, REIT's, etc. However MLPs moved up, maybe boring pipelines may look sexy as oil nears $100 on fears about supply problems from Nigeria.

Tuesday, January 1, 2008

2007 Review

REITs (real estate trusts), a favorite of mine, started out at record levels but pulled back during the year. Uncertainty about interest rates, not to mention the mortgage mess, did them in. Their yields are much higher at today's lower prices, some are at or near the 10% levels not seen since the early part of this decade. High yields at a time when rates (at least short rates) are declining should catch the eyes of very smart investors.

Junk bonds, a long time favorite of mine, pulled back. Uncertainty was a key word in 2007 hitting them hard. Investors became disenchanted after supporting them nicely in recent years. The selloff sent yields to 10-11% in junk bond closed end funds, around 7 points (700 basis) points above the Treasury bond yield. While my views may be prejudiced, this spread is too high, worthy of checking out by value investors.

Master limited partnerships are a class of investment I first learned about around mid year. These investments are not well understood by some but are getting more attention because of their excellent track records. The Alerian MLP index is 301, up from a starting value of 100 on 12/31/96. In addition, MLPs generally pay nice distributions (many over 6%). There is a lot to learn plus tax hassle because these are partnerships, but the track record should speak for itself. Last year the index went up with the market, reaching 342 after mid year followed by a sharp selloff at the end of July. Since then it has remained in the 290-310 range. While offering excellent investment opportunities, there is a lot to learn about these partnerships. Fortunately there are a few good primers (available for free on the web) that taught me a lot.

One of my favorite groups is S&P Dividend Aristocrats. S&P screened stocks with minimum track records of higher dividends annually for 25 years to be in this group. In the S&P 500, 56 made it. 2007 was a mixed year for them. Two I like, Masco (MAS) & Stanley Works (SWK), pulled back as they felt the effects of the slumping housing market. Caterpillar (CAT) had a great year reaching the high 80's, but pulled back to 72 after management guidance reduced earnings forecasts. There is also Coca Cola (KO), a long term investment in my IRA, which rose to it's highest level in 7 years. The group is excellent for long term investment, but selectivity, as elsewhere, is needed.

Watch out for January. Traditionally it is a very good month benefiting from the end of tax loss selling & fresh money going into pension funds for the new year. Those conditions are in place, but I have a feeling that problems in the economy (loan losses, mortgage mess, housing slump, weak retail sales, etc.) will be the stock market's most important issue.

Time to wish everybody: HAPPY NEW YEAR!!!

My friend Misty wants everybody to have a great 2008.