Friday, February 29, 2008

Negative news sinks stocks

The negative news I have been talking about all week caught up with the stock market. On Jan 31, Dow closed at 12,650. Today the Dow was down 315 to 12266, or down 400 points for the month! NAZ was down a whopping 60 & NYSE decliners were ahead of advancers better than 6-1, a red kind of day. I don't focus on NAZ stocks, but their leaders have taken a beating lately. Take a look at Dell (DELL), Microsoft (MSFT), Apple (AAPL ), Starbucks(SBUX), Google (GOOG), etc. The corp & economic scenario is getting ugly & housing, mortgage, loan, commodity prices, etc. problems don't look like they're going away soon.

The stock market plunge helped send Treasury prices higher. The yield on the 10 year Treasury dropped 15 basis points today to 3.52%. In the Treasury market that movement is considered enormous & is fueled by the classical "flight to safety." Gold is at record levels over 970 an ounce, spelling uh-oh for stocks going forward.

Stocks decline on negative economic news

Stocks sold off big on negative economic news. Dow is down 217, decliners over advancers 5-1 & NAZ is down 40. Consumer spending was weak. For the last 2 months, consumer spending was similar to late 2001 & the 2 months following Hurricane Katrina. Recession fears are key drivers in today's markets. This is really a part of a stream of negative news in recent weeks. The 100+ oil prices may be hitting the pumps soon with growing talk of $4 gas. Gloomy news will probably be with us well into the March.

American International Group (AIG), a Dow company, is down 3.37 on a negative report which includes a $5B+ loss in Q4. Dell's (DELL) earnings from last night are another major drag on the markets. Starting Feb at 12.4K, Dow has largely been in negative territory. The recent rally put it in the black, but now it's slipping back to near it's starting point.

Thursday, February 28, 2008

Bank worries & job data sinks stocks

Worries about higher unemployment claims & bank failures sent stocks lower. Dow was down 112, decliners ahead of advancers 2-1 & NAZ dropped 22 bringing the 4 day winning streak to an end. Negative news got the better of investors. Dell (DELL) reported earnings after the close. Earnings were lower than expected & their outlook is gloomy to say the least. In after hours trading, the stock was down 4% or 77¢. If that wasn't enough, oil surged to a new record $102.59 a barrel. Some say technical factors are causing the last leg up for oil indicating the up move can not be sustained. True or not, the price increase still hurts.

According to AP, Ben Bernanke, the FED Chair, said:
Federal Reserve Chairman Ben Bernanke said in testimony to Congress that while large U.S. banks will likely recover from the recent credit crisis, other banks are at risk of failing. Three small U.S. banks have already failed since the summer, when the lending industry started losing billions of dollars as mortgage defaults soared.

"Implying that some banks may fail stirs concerns for any investor who's familiar with financial and economic history," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "Investors have been very edgy about credit market conditions and banks' financial conditions. Very edgy. And this doesn't remove that edginess."

No wonder stocks sank today.

Markets decline on weak economic data

Weak economic data brought out sellers sending stock prices lower. Dow is down 61, decliners over advancers 2-1 & NAZ is down 4. Fourth qtr GDP rose at only a 0.6% annual rate, below expectations. The Labor Dept reported unemployment claims rose 19K last week. The dollar keeps falling sending the Euro, among other currencies, to a record level over $1.51. The weak dollar is tricky to evaluate, but it sends an general signal of a weak economy. One negative for the stock market is foreigners owning US stocks see their investments decline in their home currency.

Freddie Mac (FRE) reported a larger than expected loss of $2.5B in Q4 due to mortgage defaults. However FNM & FRE are up over $1 each, boosted by yesterday's news about removing limits on mortgage lending. Sprint Nextel (S), down 64¢, reported a whopper loss of $29B. Business is weak because they're losing customers. Thornburg Mortgage (TMA), a major mortgage lender, fell 1.69 on news it's getting margin calls. This stock has been at low levels for months, following the initial wave of negative mortgage news last year. So far, the stock market has done very well this week considering the flood of ugly news releases.

Wednesday, February 27, 2008

Markets little changed

Markets were little changed. After the Dow spent much of the day in the black, it pulled back in the afternoon to little change. Dow & NAZ were each up 9 but decliners were a slightly ahead of advancers. Testimony before a congressional committe that the FED is ready for more interest rate cuts to help the economy was seen as a bullish sign, but that wore off later in the day. Bernanke, FED Chair, said the FED is more concerned about the weak economy than rising prices. Fannie Mae (FNM) & Freddie Mac (FRE) had been up sharply on the removal of lids for mortgage lending. However, that entusiasm also slipped after midday resulting in little price changes. The Alerian MLP index pulled back 3.63 to 292.52 (shown in the graph on the right), near the bottom of the recent trading range. 2 prominent companies had unit offerings today causing some of the decline. But selling in others could come from nervousness about the economy.

Commodities continue strong. Oil reached 102 but slipped back to close just under 100. Gold closed at 961 an ounce, up12 & another record. Agricultural commodites, i.e. corn, wheat & soybeans are at record leveles & these price increases will reach everybody. Tomorrow we'll see if more enthusiasm can overcome negative news stories.

FED signals another rate cut

Ben Bernanke, head of the FED, signaled another rate cut to help the economy. Dow is up 55, advancers ahead of decliners 3-2 & NAZ is up 14. Not bad considering the negative news releases. The Commerce Dept reported new home sales fell 2.8% in Jan. Fannie Mae (FNM) & Freddie Mac (FRE), after initial declines, rose on news that they will lift an investment cap to release billions for new mortgages. Earlier FNM released an ugly earnings report, they lost $3.6B in the last qtr & are looking for 2008 to be another tough year. Toll Bros (TOL) reported a major loss & this year started off weak for the third year in a row. That ties with today's announcement that new home sales fell for the third month in a row.

News about the economy continues gloomy, but that's not stopping buying today.

Tuesday, February 26, 2008

Stagflation worries

Stagflation may be returning (discussed in the attached article). 30 years ago, the US economy had the unusual combination of high inflation while the economy declined and unemployment rates were at extraordinary levels. Conditions aren't quite the same today, but commodity prices keep going up. Besides oil & gold, among others, agricultural commodities (corn, wheat & soybeans) are at record levels.

In the very early Wed markets, Japan & Australia are up following the lead from NY markets.

Staglation worries

Stagflation may be returning (discussed in the attached article). 30 years ago, the US economy had the unusual combination of high inflation while the economy declined and unemployment rates were at extraordinary levels. Conditions aren't quite the same today, but commodity prices keep going up. Besides oil & gold, among others, agricultural commodities (corn, wheat & soybeans) are at record levels.

In the very early markets, Japan & Australia are up following the lead from NY markets.

Stocks up 3 days straight

Stocks were higher for the third straight day. Dow was up 114, advancers over decliners 2-1 & NAZ up 17. Sounds good, but the gains mystify many traders after the large number of negative announcements. Today was attributed to the IBM (IBM) announcement about the share buyback. Oil closed at 100.85 as traders ignored a sluggish US economy needing less oil. Gold was up again, to 949. This was one of those days when bulls took command & never let go. The markets are getting technically "overbought" signaling a pullback is coming.

Google (GOOG) declined 22 on reports about a slowdown for click through ads, another indication that the US economy is going into headwinds. I may be partial to Google for hosting my blog, but they are down almost 300 points from the high just a few months ago.

IBM buyback lifts stocks

IBM's (IBM) announcement raising slightly the low end of it's earnings forecast for 2008 & a continuation of it's large stock buyback brought out buyers. IBM, a DOW stock, is up 3.95, Dow ahead 132, advancers ahead of decliners 2-1 & NAZ is up 25. The advance is a major achievement in the face of plenty of gloomy news.

The Conference Board reported that consumer confidence plunged in Feb to 75 (Jan number was 87), lowest level in 4 years. Home prices had a record decline last year. Wholesale prices jumped 1% in Jan. The market generally worries about such an increase fearing it will make the FED less aggressive in cutting interest rates. Target (TGT) reported sluggish sales in Q4, but ahead of expectations sending the stock up 1.89. Google (GOOG) is down 33 on news that paid click growth is turning sluggish, not what investors want to hear from a growth stock. All this adds up to a lot of gloomy news, but since writing this piece Dow is up another 35. Today will be a day when buyers rule.

Monday, February 25, 2008

S&P reaffirms AAA credit ratings for Ambac & MBIA

S&P reaffirms AAA credit rating for Ambac (ABK) & MBIA (MBI), sending stocks sharply higher in late day trading. Dow was up 189, advancers over decliners 3-1 & S&P was up 24. Each of these bond insurers was up 15% on the late day news, not to mention nice gains for most stocks. This was a sense of relief rally for the market but tomorrow is another day.

I'd like to add more but having computer problems, should be fixed by tomorrow.

Up stock market

After a sluggish start in the first half hour, stocks finally got going. Dow is up 61, advancers over decliners 2-1 & NAZ is up 7. The housing news while bad, was not as bad as some feared. They decided to grab stocks at bargain levels. VISA is planning to have a $19B public offering, the largest in history. Plus rumors about Ambac (ABK) getting a bail out from a group of banks was encouraging.

The housing news was not all that great. A large supply of unsold houses remains & mortgages are tougher to get after all the problems with sub prime loans. An offset is the economic stimulus package which should help later in the year. The VISA offering is encouraging that there are buyers for stocks, but it might divert purchases away from stocks trading in the markets. Lowes (LOW) reported an earnings decline from the prior year qtr ending Feb 1 & painted a gloomy forecast for this year which they call "challenging" in a slumping housing market. The stock market has had low volume recently which makes each announcement that much more important.

Friday, February 22, 2008

Late day rally sends stocks higher

On a no news kind of day, stocks drifted remaining down 100 until the last ½ hour. Then a rumor popped about a bailout plan for troubled Ambac (ABK), such a plan could be announced in the next couple of business days. ABK provides insurance for many bonds, a loss of AAA rating would be devastating to those bonds (and others). Ambac's continued strong financial health is extremely important to many companies with debt, not to mention banks, etc. holding a lot of bonds. After the late day rally, Dow ended up 98 (200 point rally), advancers over decliners almost 3-2 & NAZ eaked out a 3 point advance. The latter is less dependant on the news showing the sluggish economy continues to weigh heavily on the markets. The VIX (volatility index) declined 1 today, but at 24 it remains in high territory. The sharp rally at day's end demonstrates what can happen when the index is this high.

Down day for stocks

Stocks are having another pullback. Dow is down 71, decliners ahead of advancers 3-2 & NAZ down 21. No special news, just a feeling of a weak economy so buyers have started on a long weekend. The Alerian MLP index has slipped back to 290, the low end of it's trading range for the last 8 months. The market is looking for reasons to go up but can't find them & the MLP index suggests more declines are ahead..

Weak manufacturing numbers just released are convincing a lot that the economy is already in a recession. I heard an analyst this morning saying that he's looking for a further pullback of 5-10% in the markets which would set up a buying opportunity.

Intuit (INTU) is down 3.62 on weak earnings announced last night. Today's corrected AP story tells of another significant company lowering it's goals for 2008. Not good.

Thursday, February 21, 2008

Declining markets again

Another day of declining markets. Dow was down 43, decliners ahead of advancers 5-2 & NAZ was down 27. The usual suspects were among the many problems. Markets were disappointed that the regional manufacturing index declined (mentioned in the prior blog), a clear sign of trouble in the economy. While oil pulled back to 98, this still represents a difficult price for the economy to digest. The Treasury bond rallied with its yield declining to 3.78% & gold hit new highs at 944, showing the effects of flight to safety.

Starbucks (SBUX) is laying off 600, another indicator that the economy is in a slowdown period if not recession. There is wide agreement that the FED will cut the interest rate by 50 basis points at the next meeting in March. Now there is more recognition that cutting interest rates will do just so much good in helping the struggling economy.

Markets mixed

Markets were little changed although advancers beat decliners by 40%, economic data continues weak. The AP story says it well:

The Philadelphia Federal Reserve's February manufacturing index was much lower than expected. Meanwhile, the Conference Board's gauge of leading economic indicators for January, used to predict which direction the economy is headed, posted its fourth straight drop.
Investors had hoped the data would upbeat enough to reassure them that the economy isn't falling into recession, yet still show enough weakness to motivate the Federal Reserve to implement further rate cuts when it meets March 18.

JC Penney (JCP) reported earnings ahead of analysts forecasts, good enough to send the stock up 1.77. However sales were weak, same store sales fell 2.3% in the qtr as demand for higher priced items fell. In this kind of environment, commodities are doing well. Oil, at near record levels, pulled back to 99 but gold reached another record, 944. The Treasury bond is down in recent weeks sending the yield up to 3.82% (40 basis points higher than last month).

Wednesday, February 20, 2008

Afternoon rally takes stock higher

Stocks rallied in the afternoon giving Dow a gain of 90, advancers ahead of decliners by 40% & NAZ up 20. Early pessimism gave way to optimism. Hewlett-Packard (HPQ) was up 3.49 on its favorable earnings announced after yesterday's close. This kind of news helped bring buyers back into the market. Oil reached a new record at 101, one of the many indicators that all is not well in the economy. Lingering bad loan problems keep nagging at investor's minds. Below, is a quote from one of today's AP stories:

The Financial Times reported that KKR Financial Holdings LLC, a listed affiliate of U.S. private equity group Kohlberg Kravis Roberts & Co., has delayed repayment of billions of dollars of commercial paper for the second time. Commercial paper are short-term bonds companies sell to quickly raise cash; demand for commercial paper began drying up last year, choking the credit markets.
KKR Financial fell 28 cents to $14.25.

The FED released minutes of its recent meeting when they cut the interest rate by 50 basis points to 3%. It contained something to make about anybody happy. Another way to put it is they're trying to figure out what's going on in financial markets, like the rest of us. They want to help the economy during a slowdown period, but also have to keep an eye on inflation rate. Doing a balancing act is always tricky.

Economic worries send stock prices lower

Economic worries weighed on the markets today. Today's inflation numbers & weak housing numbers caused investors to pull back fearing the FED will not be as aggressive in cutting interest rates. The tension always exists between stimulating growth versus fighting inflation. Oil pulled back 1 to 99, largely on worries about the economy slowing. Dow is down 76, decliners over advancers 2-1 & NAZ down 9. On Bloomberg TV, I hear more analysts talking about recession. There seems to be a sense we are in one already & we haven't seen the bottom for loan problems in the credit crunch.

Hewlett-Packard (HPQ), a Dow company, rose after yesterday's earnings announcement, up 3.24. Junk bond funds have been selling off in recent days on fears that a recession will cause more bonds to default. With yields over 11%, this decline gives an even larger spread of their yields over the Treasury bond yield of 3.87%. REITs have also been pulling back. Even MLPs have generally slipped. Their index, after falling below 300 early this year, has not been able to return to that level. While off the low of 275, at 293 it remains near the bottom of a trading range for 8 months.

Tuesday, February 19, 2008

Stocks pull back on higher oil prices

Stocks declined in the last 90 mins, giving back all their gains from the early morning. Dow was down 11 while NAZ pulled back 15. A big driver later in the day was oil hitting 100 again. In just 14 trading days, it has rallied 14 points (dollars). There are plenty of worries driving the prices up, one of the biggest is a possible cut in production by OPEC. Higher gas prices will hurt most industrial economies. However, oil companies had a very good day in the market. Today was the first day Chevron (CVX) & Bank of America (BAC) were included in the Dow.

After the close Hewlett-Packard (HPQ), a Dow company, reported very good earnings. The market liked the report, bidding up the shares 6% in after hours trading. Google (GOOG) another tech company close to my heart, dropped 21 on their negative forward guidance earlier today. It will be interesting to see if the Asian markets opening in a couple of hours will pay more attention to the declining US markets or be more influenced by the HPQ report.

Walmart news send stocks higher

Walmart (WMT) earnings along with higher overseas stock markets sent stocks higher. Dow is up 85, advancers over decliners 2-1 & NAZ is up 12. Walmart's story is similar to that others, intl sales up 19% (it now accounts for about a quarter of company's sales) while domestic sales were up only 5%. They are proud of topping $100B in sales. The last time I looked, the stock was up only 0.33.

Meanwhile oil is back above 98, always plenty to worry about oil supplies. Gold is near 930 (those buyers are not buying stocks). Google (GOOG), down 14, issued a warning about revenues, business isn't as rosy as it once was. They will audit their blogging clients to phase out those who aren't doing well. The near term affect could negatively affect their revenues.

Let's see what PM trading brings.

Friday, February 15, 2008

Dow down after late day buying

Late day buying pulled the Dow back to near break even. Dow was down 28, decliners over advancers almost 3-2 & NAZ down 10. Sort of a mixed day with a downward bias. However, buying in the last 30 mins reduced the loss for the day. Today is options expiration, making it difficult to figure out what was really happening with stock price movements. Countrywide (CFC), down 8¢, reported that delinquencies rose again, another uh-oh. They have a ton of problems, hope they don't get in the way of their acquisition by Bank of America (CFC).

Bloomberg TV had a quick analysis about AIG, a Dow stock & the biggest insurer. This week, they have been announcing the magnitude of their insurance losses related to covering bond losses by clients. Their story involving billions has been changing daily, like they don't know what they are doing. There are also rumors that Bear Stearns may be taken over during the long weekend. Amid all the problems with financials, some see opportunities.

Stocks decline on weak manufacturing report

Stocks are down again, this time on a weak manufacturing report & a significant drop in consumer sentiment. Dow is down 76, decliners over advancers 5-2 & NAZ is down another 22. The nation's industrial output had a weak Jan. Consumer confidence dropped to only 69.6. The bond insurer FGIC plans to split into 2 companies. On this news ABK & MBI are down about 6%. This ongoing story has serious ramifications for the entire credit market which backs up into the stock market. BestBuy (BBY), where I got my computer about 10 days ago, reduced guidance, stock's down 1.77. Campbell Soup (CPB) reported lower profits in qtr ending Jan 27, up 1.85 off it's 52 week low.

Better news, Abercrombie & Fitch (ANF) reported profits increased 9% and good guidance for 2008 but the stock's down 0.38. Today is shaping up as another down day, the last 2 could wipe out most of the gains from the prior 3 days setting a negative tone over the long weekend.

Thursday, February 14, 2008

Stocks down on Bernanke's comments

Stocks pulled back on light volume after testimony by the FED Chairman. His somber comments suggested rate cuts were to be expected because of the lingering housing & bad loans crises. Dow slipped 175 (ending the 3 day winning streak), decliners over advancers better than 3-1 and NAZ declined 41. The Treasury bond has been falling recently, sending it's yield up to 3.82%.

Ambac (ABK) & MBIA (MBI) rallied today as congress is trying to figure solutions to their huge problems. They insure bonds, both munis & corporate debt. They have AAA rated debt which is interwoven with their ability to insure bonds, called into question given the enormous losses in recent weeks. They are expected to work out solutions to help with the muni debt, but the corporate debt problems drag on. If they can not come up with satisfactory solutions, the ramifications would be severe to the markets. Watch for developments.

Dow ending 3 day streak

Itg looks like the 3 day winning streak will end today. Dow is down 86, decliners over advancers 3-1 and NAZ dropped 25. FED's Chairman Bernanke testified in Congress that the economy will grow at "sluggish" rate before recovering later this year. After 3 up days, this is not what markets were looking for. Gold prices fell to 900 & the yield on the Treasury bond is 3.76%, up sharply from just a few weeks ago when it was under 3.50% but down from 5 1/4% last summer.

Liz Claiborne (LIZ) led decliners dropping 15% to 19 on a negative forecast. At best, retail sales remain soggy.

Wednesday, February 13, 2008

3 day winning streak

The market's on a 3 day winning streak, longest in this short year. The Dow is up 400 points in 3 days but volume has been lagging behind indicating a lack of conviction. Today Dow was up 178, advancers over decliners 2-1 & NAZ was up a big 54 points. The rise in retail sales for Jan was probably the single biggest reason for today's gains. The President signed the economic stimulus package hoping the $168B will help the economy. Tomorrow, the Fed Chairman will testify on the economy & the slump it's in before a congressional committee.

Yahoo (YHOO) will fight the takeover attempt from Microsoft (MSFT) by forming an alliance with News Corp (NWS). The stocks were little changed on the news largely because details still have to be announced. The buyout offer has stimulated buying other stocks today in NAZ

Good retail sales news

Higher than expected retail sales brought out buyers today. The Commerce Dept reported an increase of 0.3% for Jan retail sales following lower sales in Dec & an expected decline in Jan. Buyers are back in force: Dow is up 86, advancers are ahead of decliners 3-2 & NAZ is up 29. The market was also encouraged by government actions announced yesterday to help homeowners with problems making mortgage payments. The plan, however, will only help "qualified" homeowners. Oil remains above 92, Venezuela is making more threats.

My Cocla Cola (KO) had a very nice report with record sales & earnings, but down 0.44. However, North American sales were only up 1% & Europe up 2%. Most of the growth came from Asia, Africa & South America. Also in North America, Mexico is a major market suggesting that US unit sales declined a little. They are a member of the S&P Dividend Aristocrats, with 45 consecutive years of higher dividends. This year should extend that record.

Can't help but notice that Uno the Beagle won the Westminster Dog Show. My dog would have been proud of the first Beagle to win.

Tuesday, February 12, 2008

Up day for stocks

Stocks rose today on news that Warren Buffett's company, Berkshire Hathaway (BRK-A), will offer secondary insurance on municipal bonds. It should be remembered that he is talking about "good" paper, not risky sub-prime loans. PIMCO, the largest holder of bonds, said they are buying bank debt of Citigroup (C), Bank of America (BAC), etc. because their yield premium of 265 basis points is just too attractive. I think this type of reasoning can be applied to junk bonds with yields of over 700 basis points over the Treasury rate at 3.68%.

Dow was up 133, banks & REITs among others did well. Advancers were over decliners about 3-2 but NAZ was flat, maybe a signal for tomorrow. Masco (MAS) reported disappointing earnings & a gloomy forecast for 2008, down 2.39 (11%). That is a "big picture" story since they sell home builders & people remodeling homes.

Buffet's offer sends stocks higher

Warren Buffet encouraged buyers today with an offer from Berkshire Hathaway (BRK-A) for up to $800MM secondary insurance on municipal bonds. Markets liked this news. Dow is up 155 (pulling back 40 in the last couple of mins), advancers lead decliners 3-1 & NAZ is up 10. In addition, 6 major mortgage lenders will holdup on foreclosure procedures for 30 days on mortgage loans in trouble for qualified homeowners. This sounds good although many marginal homeowners will be excluded from this arrangement. The plan was proposed by the president & the Secretary of Commerce coordinated administration thoughts with the 6 lenders. Good news but problems continue.

GM (GM), a Dow company, reported a whopper loss, up .33. GM hopes more job cuts will restore profits. Masco, MAS, a favorite of mine & a major supplier for bathrooms & kitchens in homes, gave a very gloomy forecast for 2008, down 2.25. Autos & especially housing are facing tough times.

New Rules of Investing from Yahoo may be useful in these volatile times.

Monday, February 11, 2008

Up Monday for stocks

Stocks started the week up, first time in awhile. Dow was up 57, however advancers were only slightly ahead of decliners & NAZ was up 15. This was a fairly good day despite the unpleasant news about AIG having major worries about bad debts, down 5.94. There are still plenty of problems with the economy: bad loans, slow retail sales & housing in the worst slump in many years. There were 119 new 52 week lows including: AIG, MS, UBS, ALL, ING, HIB, CNA, HBC, AXA & WSH (most of this list are insurers & banks).

However, Dow will get 2 new companies next week, Chevron (CVX) & Bank of America (BAC). They will replace Honeywell (HON) & Altria (MO), formerly Philip Morris. Giving up MO will hurt, while not glamorous it has been one of the best performers in this decade when it started at 19.

Stocks lower on AIG worries

Stocks slipped largely on worries about about American International Group (AIG), a Dow stock, down 5.58. Also, declining markets overseas didn't give confidence to US investors. AIG, a large insurer, looks like it's going to take a major hit related to bad loans at banks. Yahoo (YHOO) is getting ready to turn down the buyout offer from Microsoft (MSFT). This kind of negative news will keep buyers away today.

Friday, February 8, 2008

Stocks slip ending one bad week!

Stocks were down today, ending a very bad week (Dow & NAZ down over 4%). Today Dow was down 64, decliners over advancers 3-2 but NAZ was up 12. The afternoon saw the lowest prices, traders did not want to hold positions over the weekend. I was surprised that good news about the economic package did not translate into buying. Worries about a recession & more bank problems (i.e. mortgage-backed bonds) were key today, banks & REITs were weak.

Bank of America (BAC) is a favorite of mine. At the low, the stock went below 34 just a few weeks ago & then rebounded 12 points. That's a lot of correction in a very short time. In the last week, the stock has pulled back 4 to 42. The markets are not in good shape when one of the country's leading banks goes thru this kind performance. VIX, the volatility index, is at 28, a very high number telling us that more very big bounces are ahead. Next week, recession & bank loan problems may be the main worries in the stock market.

Stocks take a rest

Stocks are taking a rest today after a volatile week. Approval of the economic stimulus package did not excite the markets. Earnings reports keep coming but are giving mixed signals. Tiffany (TIF), up 2.59, reported good earnings & is optimistic about 2008. However, Alcatel-Lucent (ALU) reported a large loss for Q4 & indicated the outlook for 2008 is uncertain leading it to end the div, down 0.21 (3%). Weyeraeuhouser (WY), down 2.31, reported lower earnings from the weak housing market & gave a gloomy outlook. Analysts are trying to figure out if we are in a recession already. Maybe!

MLPs rebounded significantly from their lows a couple of weeks ago. The Alerian Index dropped from over 300 to a low of 275. This week it snapped back to 300 but retreated 296 in the last couple of days. There's nothing wrong with the pipeline business, but this is the tough market we're in. Some of their yields are over 10%, unfortunately there is a fair amount of tax hassle with their distributions. I still like them.

Thursday, February 7, 2008

Senate approves tax/economic package

The Senate just approved the tax/economic $151B package for the US economy. The President will sign & rebate checks should be sent to tax payers starting in May. Presently, early Dow futures are down 8 but this should be a big plus for markets tomorrow.

Stocks all over the place, but settle up

Stocks bounced all over the place today but ended up. Dow was up 46, advancers over decliners 3-2 & NAZ was up 14. Today 100 stocks recorded new 52 week lows. Economic news keeps coming in gloomy. Retailers reported disappointing sales & home sales are in the dumps.

The Senate is still debating the economic package with tax cuts. The idea was it would be approved by the 15th, don't bet on it! If all goes well, the rebates are supposed to reach tax payers by May. Tomorrow can be another wild day, but may end the week with dreary results.

Time for a plug for the S&P Dividend Aristocrats, a group of 56 companies in the S&P 500 Index with minimum 25 year track records of higher dividends year over year. Many go back 30, 40 or even 50 years. Look to these long term winners for investment ideas. I remain very cautious about the future with all the difficulties the economy faces.

Stocks slip slightly

Stocks were down fractionally, however 79 hit new lows. In the conference call following the earnings release yesterday, Cisco (CSCO) cut forecasts for sales growth rate from 15% to 10% in Q1, down .40. The Labor Dept reported jobless claims were down 22K, but below forecast numbers. D.R.Horton (DHI), largest home builder in the US, reported a Q1 loss due to write downs on inventory (homes) & property. In pre trading news, Walmart (WMT), among others, had gloomy news about retail sales. Because of it's immense size, sluggish sales in Jan for WMT sends a gloomy signal for the economy which affects business around the world.

Speaking of around the world, China is having a rough new year. They're coping with severe winter weather causing power shortages. 78% of their power comes from coal & they are having major problems with coal shortages. One estimate is that weather has already cost the economy $8B. At least they were able to ship the new Toshiba laptop I just bought.

Wednesday, February 6, 2008

Stocks down again

After a strong opening & rally at midday, stocks pulled back in the afternoon closing at the lows. Dow dropped 65, decliners over advancers almost 2-1 & NAZ dropped 31. Dow is back to 12.2K, down 2K (14%) from it's high just a few months ago & high volatility continues. Gloomy thoughts prevail. Macy's (M), down 1.16, is cutting 2300 jobs. Cisco (CSCO) reported after the close. Traders liked the report bidding up shares 78¢ after hours.

A common theme continues in these reports. Good news comes from overseas businesses but domestic business is weak, at best. Housing continues in the dumps. Toll Brothers (TOL) reported it's 7th consecutive quarterly decline. Their houses are high priced, this report indicates sluggishness in the economy is affecting affluent. Meanwhile, the VIX measuring volatility is back up to 29 (very high) & gold is near 900.

Stocks recover

Stocks recovered after yesterday's sharp sell-off. Dow is up 99, advancers over decliners 2-1 & NAZ is up 21. Today's up market may have been helped by Disney (DIS), a Dow stock, & Time Warner (TWX). Disney is up 2 on news of favorable earnings & Time Warner's report was well received, up .62, on efforts to remake the company. Today's rebound may be from buying by short sellers, big problems in the US economy continue.

Tuesday, February 5, 2008

Dow plunges 370

Stocks had one of their worst days in some time. Dow dropped 370, decliners over advancers 4-1 & NAZ fell 73. It's not too often we see 3% declines in the averages. The service sector suffered a major contraction in Jan, the first such in 5 years raising ugly fears about recession. This report was viewed as a collapse of the service sector. Not well noticed was the severe winter weather in China cutting into their economy. The US imports about $1B every day from China. Today's performance has the making of one tough week!

Monday, February 4, 2008

Stocks decline

After the best week in almost 5 years, stocks pulled back. Encouraging news from the Commerce Dept could not bring out the bulls or maybe it was traders cashing in short term profits. Dow was down 108, decliners over advancers 3-2 and NAZ declined 30. NAZ has plenty of problems. Two of the biggest stocks, Microsoft (MSFT) & Google (GOOG), were weak. MSFT was down 26¢ while GOOG slipped 20 putting it under 500, down 1/3 from it's high of 737 just a few weeks ago. The market is still trying to figure out how the Yahoo acquisition would play out (assuming it goes thru).

The President's budget was another mouthful to digest. The deficits in the next 2 years would each be over $400B, essentially at record levels. The budgets include the proposed economic stimulus package with related tax cuts. The large size of the deficits has to put approval of the tax package at risk. Gloomy news will keep markets on defense over the next few days.

Stocks turn cautious

Cautious behavior today takes control of stocks. After a very good week, Dow is down 74, decliners ahead of advancers 4-3 & NAZ dropped 19. The Commerce Dept reported factory orders gained 2.3% in Dec, the biggest gain since July. But that failed to inspire buying. The market is still chewing over the effects of Microsoft (MSFT) buying Yahoo (YHOO). I'm sure Google (GOOG) would like to argue, but it's hard for them to get much sympathy considering their size.

President Bush announced a $3.1 trillion budget. However, the economic stimulus package with tax cuts is working it's way thru the Senate. They promised it would be approved by Feb 15, that's next week. In the meantime, it looks like last week the market had a rally in a trading range.

This is coming from my new computer. The back lighting for the screen on the other went, I figured time to try new Windows.

Friday, February 1, 2008

Stocks gain, 2 weeks in a row

This is the Dow's 2nd straight weekly gain, maybe something's in the wind. Dow was up 92, advancers over decliners almost 4-1 & NAZ up 23 propelled by Microsoft's (MSFT) proposed acquisition of Yahoo (YHOO). Even with those gains, high flyer Google (GOOG) pulled back 48 after a disappointing earnings announcement yesterday, threatened competition from MSFT-YHOO & the idea of their investing almost $5B in TV airwaves next Feb when US switches to high definition TV broadcasting. But this was a strong & impressive day, almost everything I own went up. Wow!!

Before we get too excited, the following is copied from an AP press release just minutes ago:

The first blow came from the Labor Department's worrisome employment report for January. The economy lost 17,000 jobs, marking the first contraction of the labor market in more than four years. The news confounded economists, who were expecting 70,000 new jobs, according to Thomson/IFR. The unemployment rate fell to 4.9 percent from 5 percent in December, though the move came as the labor pool shrank.
The Commerce Department added to the fray, reporting that construction spending dropped 1.1 percent in December -- the most in 15 months and twice what analysts expected.
And rating agency Moody's Investors Service warned on a conference call Friday that it expects to downgrade some bond insurers this month. A top rating is crucial for bond insurers to draw new business and for investors to feel secure about the bonds these companies already insure.

Maybe all is not well. At least dull Feb got off to a good start.

Microsoft to buy Yahoo

Before trading, Microsoft (MSFT) announced plans to buy Yahoo (YHOO) for $31 per share. Microsoft is down 1.50 while Yahoo is up 8.51 to 27.59. This will be tricky because they have to integrate 2 different cultures plus government approval will be needed. Oddly, the major injured party is Google (GOOG). Google is down 51 following last night's disappointing earnings announcement.

The Dow started the day up 100 on the news but has pulled back to near flat on worries that Moodys will downgrade bond insurers. The two majors, AMBAC & MBIA, carry the elite rating of AAA. The leading winner in recent days has been gold at 930, another record.