Friday, May 30, 2008

Markets mixed

Quiet week brought quiet trading. The Dow did little during the week ending just a few points below its start on Tues. Today Dow was just under water with advancers slightly ahead of decliners but NAZ was up 14 helped by the good earnings report from Dell (DELL), up 1.25. Economic news continued on the gloomy side with mixed earnings reports. The best part of the earnings reports comes from overseas & domestic business is soft at best.

Today oil was up a 73¢ to 127.35 in a week where large price swings have become common. The Treasury bond yield is back up over 4%, a level not seen since the end of last year. Some of the money from selling Treasuries has been used to buy junk bond funds to get their higher yields (a good 650 basis points above today's Treasury yield). The MLP index pull back from 300 to the 292 area where it settled. It rallied from the 265 a couple of months, nice move up, but still in the low end of trading range for the last 10 months. REITs, another group with high yields, were sluggish during the week. They still offer nice yields for the brave.

Ho-Hum day

There is little change in what's turning out to be a ho-hum day. The only spec of life is NAZ, up 9, largely propelled by the good earnings news last night from Dell (DELL). The Commerce Dept reported consumer spending edged up 0.2% last month & that was due to inflation. Personal incomes also rose 0.2%, due to tax rebate checks sent out. Both numbers were half the prior month's numbers but in line with expectations. Consumer confidence fell to a 28 year low of 59.8 down from 62.6 in the prior month. Consumers are depressed with inflation expectations of 5.2% for next year & 3.4% for the next 5 years. Oil rebounded to 127 & gas reached another record, above 3.96.

Dell is having a great day after reporting earnings last night is up 1.73. Tiffany (TIF), up 1.62, reported 19% increase in Q1 profits from higher overseas business. Despite higher domestic business, same store sales were only even in the US & they are projecting modest growth in the US for the rest of the year. Today should be a quiet semi-vacation day for the markets.

Thursday, May 29, 2008

Lower oil sends stocks higher

Oil prices tumbled, closing at 126.74, down 4.29 as the Energy Dept said yesterday's reported drop in supplies was due to temporary factors (i.e. unloading tankers along the Gulf Coast). This is the kind of news the markets needed. Stocks were up for the 3rd straight day, Dow rose 52, advancers ahead of decliners 3-2 & NAZ was up 21. However, stocks sold off in the PM, losing about ½ their earlier gains & volume continues to dribble at 1.2B. Higher GDP growth, revised earlier in the day, also helped. Financials, after recent weakness making them greatly oversold, were strong.

After the close, Dell (DELL) reported excellent earnings. Sales topped $16B & earnings of 38¢ beat forecasts by 4¢. The stock was little changed during the day & in after hours trading. There was another interesting story about the FED making bank loans available as part of it's effort to provide aid during the ongoing credit crisis. Master Card (MA) gave an optimistic forecast for their business for 2008. Some good news, but the economy is still hurting.

Stocks advance

Stocks up a little on generally tough news. Dow is up 30, advancers ahead of decliners 3-2 & NAZ is up 15. The revised figures for Q1 GDP showed growth at an annual rate of 0.9% vs the original estimate of 0.6%. That's better but not quite as good as some were hoping for. The economy is limping along, not in a recession. Oil was up to over 132 on a government report that inventory supplies fell sharply, inventories were down 8.8MM barrels vs an expected increase. Gas prices hit another record, $3.95 (check the prices using the button in my right column). There have been 22 straight days of record prices.

Sears Holding (SHLD), reported a 56MM loss in Q1, down 2.76. The loss per share was 43¢ vs a 1.43 profit last year. Same store sales for Sears & K-Mart stores were each down sharply. Sears expects sales & margins to be under pressure for the rest of the year. Costo (COST) reported a 32% increase in profits for their Q3 (the last quarter). Earnings were 67¢, beating estimates by 2¢. Discount retailers & warehouses, like WalMart, have been doing better in the slow growth economy.

Wednesday, May 28, 2008

Markets higher

Markets were higher, but not with a lot of strength & conviction. Dow was up 45, advancers ahead of decliners by 25% but NAZ was up just 5. Volume continues at just 1.2B. The durable goods report helped stocks, but oil continues high. Oil rebounded to 131 on more worries about Nigeria supplies. Oil rebounded from a 3 dollar loss earlier in the day to close up 2.18 at 131.03. Markets are mostly trading on financials & oils, the drama continues with no end in sight.

Regional banks got a lot of attention, on the negative side. Regions (RF), Fifth Third (FITB), Key (KEY), etc. took big hits on gloomy forecasts. The entire banking sector was affected although buying late in the day trimmed losses. American International Group (AIG,), in the Dow, was down to an 11 year low on worries about their credit worthiness.

Bloomberg TV reported about an Alabama county which may have to declare bankruptcy. The idea is JP Morgan bankers (among others) convinced them to issue very sophisticated debt to finance the sewer system. It looks like they didn't know what they were doing & are now in so far over their heads they may have to go under. Meanwhile banks & friends received very nice fees. Given the problems with sub-prime loans, this kind of story may play out elsewhere. For the market's sake, I hope not.

Markets little changed

Markets were little changed after orders for durable goods were reported. Dow & NAZ were down slightly & decliners were a little ahead of advancers. Orders for durable goods fell only 0.5%, one-third estimates. The decline was from autos & aircraft orders. However excluding transportations, orders rose 2½%, the largest gain in 9 months helped by a 28% gain in electrical equipment & appliance orders. Oil continued it's decline pulling back below 127. Banks sold off, check Bank of America (BAC) in the right column.

Coca Cola (KO), a Dow stock & member of the S&P500 Dividend Aristocrat list, gave an optimistic forecast about business, down 16¢. Masco (MAS), another member of the S&P500 elite list is in danger of being removed from the list. They will have to increase the div by at least 1 penny in H2 to remain. But they may not be able to because of their guidance for lower earnings for 2008, not able to cover the present div. The weak housing market is hurting their business badly, i.e. kitchens, bathroom, paints, etc.

Tuesday, May 27, 2008

Lower oil sends stocks higher

Stocks rose on low volume. Dow was up 68, advancers 3-2 over decliners & NAZ had a very good day, up 36. While economic news remains pretty dreary, lower oil prices may have brought out the buyers, again on lowwww volume. On a holiday shortened week, a lot of action is not expected. Today's rally was broadly based. Financials (like banks), REIT's, tech & even junk bond funds did well. However, energy related stocks pulled back including the MLPs. In just 3 days the MLP index has pulled back 9 (3%) in sympathy with energy stocks even though they have different fundamentals. Oil dropped 3.85 to the low 128s, bringing a sigh of relief to many investors. If there was any reason behind the decline, it's of talk about American consumers limiting car driving over the holiday weekend. Retail gas prices continue to rise, but they are a lagging indicator.

For those with a sweet tooth, Hershey (HSY) rose 3.42 on buyout rumors (although it's tough to find a printed story). Rumors are fun especially when they taste good! The rest of the week should be fairly quiet (assuming no bombshells).

Home sales surprise sends stocks higher

Home sales surprise sent stocks higher. Dow is up 41, advancers ahead of decliners almost 3-2 & NAZ is up 21. Not too great, but the bulls will take it. The Commerce Dept reported home sales rose 3.3% in Apr, a pleasant surprise helping lift stocks. However, home sales remain their 17 year lows. Prices for homes dropped 14% in Q1, the highest rate in 20 years. Fannie Mae (FNM) & Freddie Mac (FRE) were each down more than 1% on the news. Oil slipped back to under 130 from concerns that higher priced gas will reduce demand for gas in the US. According to AAA (check their button under More Good Blogs on the right), gas at the pump was 3.94 yesterday.

May consumer confidence fell to a 16 year low of 57.2 in Apr. This represents the 5th straight month of declines. Let's see if the gloomy economic news brings out the bears.

Monday, May 26, 2008

Asian markets rebound

Asian markets are rebounding on Tues (their time) after mixed markets in Europe. Leading markets higher are Taiwan, Shanghai, Hong Kong & Tokyo, but their gains are less than 1% each. However oil is also strong, at 133, on news that rebels in Nigeria claim to have blown a portion of a Royal Dutch Shell pipeline.

Indonesia raised the price of oil in it's local market, even though it's below market rates, causing local problems. They can afford a "cheap oil price" being an oil exporter. Asian airlines are asking for fuel surcharges to help them cope with higher oil prices. Oil at 133 is bleeding into many economies in ways we are just learning about. Not good for the markets!

Asian markets tumbled on Mon

Asian markets pulled back sharply in their Mon trading. Shanghai, Hong Kong & Tokyo led the way down with declines of 2-3%. European markets were less negative, mostly mixed. High oil prices are getting thru to a lot around the world. Plus the background of the credit crisis doesn't help.

Sunday, May 25, 2008

Asian markets sharply lower

Asian markets are down 1-2+% in Mon trading. Yes, they're open. Asian Markets are following the decline in US on Fri. Oil, dominating the news as in the US, is up 32¢ to 132.51 courtesy of Asia-CNBC programming. There will be another trading day completed tomorrow before US trading resumes on Tues.

On the right side of my blog under More Good Blogs, a button for AAA Fuel Gauge Report has been added making it easier to keep track of the rising price of gas at the pumps.

Last week was one tough week again, one of the worst in recent years. Dow was down 500 with banks, airlines, retailers,etc. leading the way down. Even MLPs pulled back in the last couple of days. But junk bond funds with yields over 10%, a good 600+ points over the Treasury bond, held about even. This will be another volatile week.

Friday, May 23, 2008

Stocks down on economic worries

Stocks are down on more economic worries. Dow is down 146, decliners over advancers about 5-2 & NAZ is down 20. Volume is coming in under 1B when1½B has become common in better days. High priced oil keeps dominating the economic news. Oil remains at 132, & this negative news bleeds into the rest of economy. High prices on gas are just beginning to be felt. Airline fares are going up as the talk of bankruptcies are being heard. MLPs are taking a hit. Their index hugged 286 tightly for a couple of weeks then advanced over 300 a couple of days ago. In 2 days it's back to 294. Even boring pipelines are feeling the effects of the anticipated economic slowdown.

Anheuser-Busch (BUD), 2nd largest brewer in the world, up 4.12, is attracting the interest of the largest brewer & buyout rumors are being talked about. Buyers of stock usually help the markets, but not today with high oil prices. The markets need more stock buyers, but it looks like the bears have the upper hand & may be successful in taking the Dow down, back to 12K & lower.

Ugly day in markets again

Ugly days are becoming a habit. The Dow, which just last week was pushing 13K, is now at 12½K & heading for 12K. Lower home sales & the fallout from high oil prices is sending stocks lower. Dow is down 110, decliners over advancers better than 3-1 & NAZ was down 24. Home sales fell 1% in Apr, the 8th decline in that last 9 months, & the median home price fell 8%. At the current sales rate, there is a record 10.7 months supply of homes which brings dreary forecasts from analysts. Oil prices are roaring back to the 133s on supply concerns. Now there are reports China is hungry for diesel oil to help cover the problems it's having with a lack of coal for power plants. AAA reported price for gas at the pumps is up to 3.88. Prices may get near $4 during the Memorial Day weekend.

JPMorgan (JPM), a Dow stock, down 57¢, on news of layoffs to make room for Bear Stearns people. There are indications of more layoffs to help it get thru the credit crisis. Banks are weak on the news (check BAC on the right). Bloomberg News reported that the Attorney General of CT is investigating Moody's to see if there is any connection between their AAA rating screw up, computer glitches, investment bankers, etc. He said the rating agencies are cooperating with the investigation. This could be another tough day in the markets going into the long weekend.

Thursday, May 22, 2008

Quiet day for stocks

Following 2 very rough days, today was quiet for stocks. Dow was up 24, advancers about 20% ahead of decliners but NAZ, up 16, had a good day. Oil continues to dominate the news after reaching another record, this one at 135. It closed below 131 in NY as traders cashed in recent profits. But short term forces remain in place, the bulls are in charge of the market. There are signals already that record prices at the pump will bring less driving. The Memorial Day holiday weekend driving will give early signals. The home prices index reported the largest, 3.1%, decline in history (since 1991).

Moody's (MCO) dropped another 2.40. In the last 2 days, the stock has been punished, down 20%, caused by sloppy handling of AAA bond ratings issued by their computers. It's unclear how much damage this mistake has caused or how it may impact bond values going forward. After breaking 13K last year, the Dow have been pretty much living under that level this year. This sideways market may continue, at best, for some time.

Oversold rally

Markets are up on an oversold rally. After declining over 400 in 2 days, Dow is up 43, advancers ahead of decliners almost 2-1 & NAZ is up 15. Oil continues to dominate the news as it reached 135 in overseas trading, here it's trading in the 133s. Gas at the pump rose to 3.83 according to AAA. Higher prices are bleeding into the the US economy as well as the rest of the world which imports oil. Ford (F), down 43¢, had risen on an optimistic forecast about returning to profitability, now says they will not break into the black by next year. More such announcements are to be expected.

UBS (UBS) announced a huge rights offering aimed at raising more than $15B. They will sell shares to stockholders via a rights offering priced at a 31% discount to the market. This move to increase equity on the balance sheet follows selling $22B of low grade mortgages to Blackrock for only $15B.

Wednesday, May 21, 2008

Oil Prices & FED Slam Stocks

Record oil prices & notes from the recent FED meeting slammed stocks hard. They've had the worst 2 days since Bear Stearns. Dow tumbled 227, decliners ahead of advancers about 5-2 (although not as bad as might be expected for a rough day) & NAZ was down 44. Oil is trying to prove that the sky is the limit. The new contract, for July, rose 4.77 to 133.73. Just a couple of months ago we were talking about 100, then 110 oil. The upward move helped MLPs which closed just above 300, a magic barrier for them even though they will be hurt if anything (i.e. lower traffic in the pipelines) by higher oil prices. The damage this will do to the economy is getting thru to investors. Just one measure of the damage, American Airlines (AMR) on June 15 will start charging $15 to check each bag loaded on a plane to help them pay for higher gas prices.

You want more glum news? The FED is looking at slow growth & higher unemployment for the rest of the year. The decision for the last rate cut was a close call for some members. More cuts do not appear to be in the cards, although the rates are already at very low levels. Financials got hammered. In addition to the usual worries, there is talk about write-offs on balance sheets which are not showing up in the income statement. The last 2 days have been brutal in the markets & the rest of the week could also be ugly!

Oil passes 130 sending stocks lower

Oil finally passed 130, sending stocks lower. Dow is down 90, but advancers are ahead of decliners almost 3-2 & NAZ is down 5. Jun oil closed out yesterday at 129.07, today the July contract is the near term contract trading at 129.35. Just last week, I mentioned some traders were buying calls for oil with strike prices of 125 & 130. Those guys are happy campers today! The Energy Dept report said oil inventories fell by more than 5MM barrels, analysts had expected a modest increase. Gas at the pump inched up to almost 3.81 yesterday. High price oil is hurting airlines, transportations, housing, credit card business, & on & on. But energy stocks are doing well & that enthusiasm is bleeding over into the MLP sector as that index is now over 300.

Meanwhile Hewlett-Packard (HPQ), a Dow stock, is down 95¢ after yesterday's earnings & conference call. Time Warner (TWX) has finally decided to split off it's cable unit which will result in a $9B div, everybody is guessing what they will use that money for. Oil prices swings are going to dominate news influencing the markets for awhile. Financials, like BAC shown on the right table, continue very weak.

Tuesday, May 20, 2008

129 oil & inflation news sinks stocks

Record high oil prices & more bad news on the inflation front sank stocks. Dow declined 199, decliners ahead of advancers 2-1 & NAZ was down 24. Oil reached 129.60 before backing off a little to 129. 07 up 2.02. Once again, Dow was not able to hold 13K. Meanwhile energy stocks were strong helping the MLP index (driven by different forces than oil prices) get within a hair from its magic 300 barrier. Oil near 130, with gas at the pump hitting another record of 3.80, are getting the better of investors. The wholesale inflation news in the morning didn't help markets.

There's not much to say as gloomy economics numbers weigh investors down, here are comments from analysts given to CNBC. In today's Dow, courtesy of, only Exxon (XON) & Chevron (CVX) posted gains today. Right now oil is on offense & seems to be winning!

Higher oil send stocks lower

Higher oil prices, inflation news & poor earnings from HD & TGT sent stocks lower. Dow is down 181 (far below the 13K barrier), decliners over advancers 2-1 & NAZ is down 31. Oil is over 129, trying to work its way up to 130. The latest concern is that suppliers said they can't increase production before the Sep meeting. AAA reported that gas at the pump reached another record, $3.80 yesterday. The Labor Dept reported wholesale inflation was 0.2% in Apr. Excluding food & oil, inflation was 0.4% (double expectations).

Home Depot (HD), a Dow stock, reported lower earnings for Q1, sending the stock down 1.32. Even though earnings declined from last year, they beat lowered expectations. Same store sales were down 6½% from last year & they cautioned that the housing market remains tough. Target (TGT) reported earnings were down 8%, but beat lowered expectations. This is getting to sound like a broken record. Sames store sales were down 0.7% in what is described as a challenging environment. Their net credit card write-offs increased to an annualized rate of 7.6%, up from 6% last year ago. Expect more dreary news for awhile.

Monday, May 19, 2008

Mixed finish again

Mixed finish again for stocks. Stocks started the day on a good footing, with Dow gaining more than 150, but pulled back largely in the last hour. Dow ended up only 41, decliners slightly ahead of advancers while NAZ pulled back 13. The day started a good thought that a 2nd month of increases for leading economic indicators suggested a better than expected economy. Later, comments from San Disk (SNDK), down 2.42, hurt stocks, especially tech stocks on NAZ. SNDK gave a a negative outlook for the economy & said their sales were sluggish in Apr.

Dow closed above 13K, but just barely. Bulls were hoping for a higher close, near its high for the day, which would have been the highest close for the year. Oil continues at 127.05. Oil continues strong, aided by disasters in China. First they had the worst winter in half a century followed by the recent earthquake which is said to have done major damage to their hydroelectric plants. Oil bulls are betting this will lead to more oil purchases from China.

Microsoft talks lifts stocks

Microsoft (MSFT) talks with Yahoo (YHOO) sends stocks higher. Dow was up 129, advancers 3-2 over decliners & NAZ was up 17. The best reason for optimism is Microsoft's talking to Yahoo, markets like to hear when buyers want to buy. Economic news continues drab. The Conference Board reported the index of leading economic indicators rose 0.1% last month. Even though a down tick had been expected, this number still shows a weak economy. Bulls like a positive number which signals to them the US is not in a recession. Oil prices keeps marching forward, this time nearing 127. AAA reports gas at the pump rose to 3.79, with gas in a few key metro areas topping $4.

Lowe's (LOW) reported profits fell 18% in Q1, sending the stock down 63¢. Their 41¢ slightly beat 40¢ analysts were looking for, once again a key stock beats low expectations. Their comparable store sales were down 8.4%, worse than 6% they predicted. Going forward, they say that challenging economic conditions will continue to hurt. Home Depot (HD), a Dow stock, reports soon.

Last week, Dow, REITs & MLPs were up while junk bonds funds pulled back a little from their recent gains. Dow wants to close above 13K & the MLP index is edging to the 300 level, it's only a point away.

Friday, May 16, 2008

Little changed again

After a sell off in the morning, markets rallied in the PM to little change again on light volume of only 1.1B. Dow, NAZ & S&P500 were essentially even with advancers only slightly ahead of decliners. Today was options expiration making markets even more unpredictable. Most of the S&P500 have reported earnings for Q1. Excluding the financials, earnings beat forecasts by 10%. Sounds good except that those forecasts were guided down by managements. Oil had another big day, closing at 126.64, up 2.52.

Treasury Sec Paulson said markets are "considerably calmer" now & the economy should rebound in the second half of the year. Markets responded by rallying almost 100 points in the PM but Dow remains just under 13K. Next week, 13K will be tested again.

Higher oil sinks stocks

Higher oil prices sink stocks as oil exceeds 127 for the first time. Dow was down 82, decliners ahead of advancers 3-2 & NAZ was down 27. But there was good news from the housing sector. The Commerce Dept reported housing construction was up last month due to increased starts for apartments. Single family housing continues weak. Oil hit 127.82, another record, while AAA reported gas at the pump was $3.78 yesterday. Other commodities which had been weak in recent days were strong today. Meanwhile, consumer sentiment reached a low not seen since 1982, falling 3 points to 59.5.

The Yahoo (YHOO) drama keeps playing out, but the stock is little changed today. Master limited partnerships keep hanging in there. Their index bottomed at 262 at the end of Mar, since then it's rebounded nicely to 296 where it has been for 2 weeks. Last year at this time it was far above 300 but this year it is struggling to break the 300 ceiling:

Chart for  (^AMZ)

Thursday, May 15, 2008

Stocks up on mixed economic data

Stocks rose on mixed economic data. Dow was up 94, advancers ahead of decliners 5-2 & NAZ up a strong 37 helped by the excitement of a fight over Yahoo's (YHOO) future. Dow closed at a sensitive point, 7 below the magic 13K line. After breaking that barrier a few weeks ago, it has not been able to follow thru. In the coming sessions, it will be tested!

After hours, Kohl (KSS) reported down earnings but they beat lowered expectations. Their guidance going forward was cautious, sending the stock down 1.11 in after hours trading. Nordstrom (JWN) reported the same kind of story, up 86¢ in after hours trading. Earnings were down, but beat the lower bar set by analysts. On the positive side CBS will buy CNET (CNET) at a nice premium, CNET rose 3.46.

Stocks remain mixed

Stocks continue mixed. Dow & NAZ are up slightly while decliners are slightly ahead of advancers. Oil continues to slosh around 125, as macro news remains grim. Blackstone (BX) reported a loss in very tough times, down slightly. The loss relates to lower carrying value for their investments. They went public last year at 27 which doesn't look good at today's price of 19.39, maybe the smart guys weren't so smart. JC Penney (JCP) reported a profit decline of 50% & predicted "difficult" conditions for the rest of 2008, but the stock was up 40¢ as profits beat lower expectations.

Last night I went to a discussion about the credit crisis. The conclusions didn't sound good. There are 4MM homes underwater, i.e. the mortgage is larger than the value of the house & that number is expected to grow. The FED's activity bringing lower interest rates may look good in the short run, but in the long run produced the mess we are in. There still may be $2T (as in trillion) of loans which have to be worked out. This mess hurts everybody, not just home builders. For example, state & city tax revenues will take a hit. A few bad houses can harm the entire neighborhood, remember the Bronx years ago? All agreed that the rescue of Bear-Stearns was a mistake. 20 years ago Drexel Burnham was huge, but after they failed life went on.

Wednesday, May 14, 2008

Stocks slip in late day trading

Stocks had a nice gain, but pulled back in the last couple of hours. Volume continues to drag along, under 1.2B today. Dow was up 66 & advancers ahead of decliners 3-2 but NAZ was essentially even. At 2PM, the Dow was within spitting distance of 13K, but went downhill after that. The VIX, volatility index, slipped to 17.58, staying under the important level of 20. Commodities which have had a great year suffered their 3rd straight daily decline. Oil pulled back to 124.22, but remains in the stratosphere.

Freddie Mac (FRE) had a big news story, not so pretty. Even though the news was not that pretty, the stock rose 2.29. An analyst called that like putting lipstick on a pig. Deere had a brutal day, falling 8.94. They had an excellent report but warned of cost pressures going forward. Big economic problems which need to be solved continue in the US economy.

Stocks gain on inflation news

Stocks gained on what was viewed as favorable inflation news. Dow was up 125, advancers ahead of decliners 5-2 & NAZ up 27. Inflation news from the Labor Dept, while mixed, was viewed as favorable. Consumer prices rose .2% in Apr vs .3% in Mar sending the markets higher. However energy was flat while food increased .9%, highest rate in 18 years. Fuel prices were flat because of a drop (huh!) in gas prices, which has to do with they way they compute seasonal factors. Markets call the report good, I think of it as mixed at best. The number of home foreclosures in the US rose 65% last month over the prior year. Housing continues with its ugly messages. Oil pulled back to 124+ after reaching almost 127. Gas at the pump topped 3.75 yesterday according to AAA.

Freddie Mac (FRE) reported a big loss in Q1, but was up almost 10% on this news as it came in better than forecasts. FRE beat estimates because of a change in how it accounts for the value of derivatives, complex financial instruments used to hedge against swings in interest rates. OK! They also announced a 5½B sale of stock & relaxed requirements by the federal regulator allowing FRE to play a larger role with the added capital in the battered mortgage market.

Tuesday, May 13, 2008

Markets mixed up again!

Markets were mixed on all kinds of news. Dow slipped 44 while NAZ & S&P500 were essentially even & advancers slightly beat decliners on only 1.2B volume, light again. The VIX (volatility index) was below 18, below the high levels which had been prevailing. But when it comes down quickly, market pressures follow. Financials were down, typically more than 1%, helping drag Dow lower. MBIA (MBI) & Ambak (ABK) declined 5-7% on more worries that their AAA ratings were in danger. These are 2 large bond insurers, a decline in their ratings could be felt in all entire bond markets.

WalMart (WMT), a Dow stock & member of the S&P 500 Dividend Aristocrat list, was down 1.37 on fairly good earnings but a cautious outlook for this qtr. There are a lot of cautious attitudes for US businesses these days!

Bank of America

Bank of America, A Dow stock & member of the S&P500 Dividend Aristocrat list, gave insights into its business at an investment conference. Their business outlook is gloomy but they remain on track to acquire Countrywide (CFC) in Q3. The stock is down 62¢, near the low end of its trading range in the last 5 years:

Chart for Bank of America Corporation (BAC)

Retail sales decline sends stocks lower

Stocks slipped on reports of lower retail sales & comments by Ben Bernanke, Chairman of the FED. Dow was down 68, decliners over advancers about 3-2 & NAZ was down 9. Retail sales were down 2.2% in Apr, in line with expectation but the 2nd decline in 3 months. The decline was caused by lower auto sales. Without autos, sales rose .5%, better than expectations. But consumers were holding back on big ticket autos. Comments by Bernanke explained their financial moves in recent weeks. Much of it is technical, however while conditions have improved, he admitted things are still not "normal." The housing market remains in a severe recession. Home prices dropped 7.7% in Q1, the sharpest drop since they began keeping statistics in 1982, markets are selling off on this announcement

Hewlett-Packard (HPQ), a Dow stock, agreed to buy Electronic Data Systems for 25, a modest premium to it's price. HPQ is down 2.81 while EDS is up 37¢. Buyout news can help stocks (i.e. tech stocks), but not today.

Monday, May 12, 2008

Oil lower, stocks up

Lower oil prices sent stocks higher today. Dow rose 130, advancers ahead of decliners 5-2 & NAZ had a very good day, up 43. All this activity on just over 1B in volume on NYSE, very low. New highs were about equal to new lows at 70. Much of the enthusiasm for stocks came from lower oil prices. After reaching a new record above 126, it pulled back to 124.23 down 1.73. Selling came from it being oversold & the earthquake in China caused selling on the theory that devastation will bring lower demand from China & its surging economy. NAZ had an excellent day helped by the new BlackBarry from RIMM, up 9.20. James Dimon, head of JP Morgan Chase (JPM), a Dow stock, said the US recession is just beginning even if the credit crisis is perhaps 75% over.

Hank Greenberg, former head of AIG urged a delay in the annual meeting because it was in "crisis." AIG, largest insurance company in the world & a Dow stock, was down 1.91 to 38.37, a 10 year low. This story may play out bigger in future markets.

Stocks higher on strong dollar

Stocks rose on the strength the dollar. Dow was up 97, advancers ahead of decliners 2-1 & NAZ was up 29. The rising dollar eased some inflation worries bringing out buyers for stocks. The worry is that a weak dollar can lead to higher inflation. Of course changes in the values for the dollar are minor, but that theory sounds good. The yen is still around 103 to the dollar while the Euro is in the 1.54s, little changed from values in the last couple of weeks. Oil went over 126 then pulled back but it still is in the 125s, hardly a significant change. Last week was an exceptional week for oil as it rose 10.

Research in Motion (RIMM) rose to a new all-time high following the announcement of the Bold, its first major new BlackBerry model in over a year. The stock is up almost 8 to 140 helping give the NAZ a nice lift.

A lot of macro economic reports will be released this week which could bring more volatility. The VIX, volatility index, had been living over 20 (extremely high territory) for about 8 months. Now it has pulled back to under 19. That should be helpful to the market unless it kicks back up over 20.

Friday, May 9, 2008

Rough day

This was a rough day. Having problems with the computer & stocks are down. However the markets took disappointing news fairly well, all considered. Dow was down 120, but NAZ was only down 10 while decliners were only slightly ahead of advancers. Volume was very low, near 1B. Markets were hammered by the 2 big worries, enormous financial institution problems & surging oil prices. AIG, the largest insurance company, reported a large, ugly loss requiring it to raise $B more in capital. Oil keeps surging, all kinds of worries trigger buyers. Markets need a break over the weekend to digest & evaluate this news.

One ray of good news, Carl Icahn may get his wish to buy Circuit City (CC), up 30¢. Small relative to the macro problems out there, but a ray of hope.

Citigroup, AIG, oil prices send stocks lower

Today is a gloomy day with news to match. Citigroup (C) & Amer Intl Group (AIG), 2 Dow stocks, & higher oil prices sent stocks lower, although too badly. Dow is down 118 & NAZ is down 13, but internals aren't so bad as decliners outnumber advancers 3-2. Citigroup plans to get rid of ½T (as in trillion) of non core or legacy assets. Bloomberg News said this would mean writing off $400B. Citi claims this will help them grow 9% per annum going forward, the stock is down a little. AIG's ugly loss & need for more capital was reported last night, they're down 3.43. Their 20 year chart is shown:

Chart for American International Group, Inc. (AIG)

Oil keeps marching up reaching 126 while prices at the pump are above 3.67. Worries center around supplies from Venezuela, oil that is sold to the US. Demand for oil continues strong while supply sources from Nigeria, Mideast, Venezuela, etc. are always iffy. I think the Citi announcement is more worrisome. Banking/financial sectors may have additional very ugly stories to be told.

Thursday, May 8, 2008

Modest gains for stocks

Stocks gained a little today, as usual on light volume of 1.2B. Dow was up 52, advancers ahead of decliners almost 3-2 & NAZ was up 13. Banks were weak as in the last few days. Dow remains below 13K & S&P 500 at 1397 is still below 1400 but some consider today's action "positive" for the S&P index. After the close, American Int'l Group (AIG), a Dow company, reported an ugly loss. The loss was almost 8B & they plan to seek additional investments of 12B. The per share loss at 3.09 far exceeded 76¢ analysts had been forecasting. Directors saw fit to boost the div from 20¢ annual rate to 22¢, OK! In after hours trading, the stock was up 28¢.

Crude oil closed above 124 while gold rose 11 to 880. There was additional talk about the retail sales numbers reported today. They agree the numbers were good but not great, this happens when comparisons are made against low standards. The US economy is still struggling.

Here is an interesting discussion about what might happen if Bank America's takeover of Countrywide is amended, as some expect. They are talking about a deal like the JP Morgan- BearStearns arrangement, where the FEDS provide guarantees. All this is speculative, but fun to think about.

Markets little changed

After yesterday's big decline, markets are essentially even. Oil is approaching 124, pausing a bit after the recent run-up. AAA reported gas prices reached another record, over 3.64. The number of newly laid off workers seeking unemployment benefits dropped more than expected last week. The Labor Dept reported applications for unemployment benefits fell to 365K, a decline of 18K from the prior week. Economists had been looking for a decrease of 5K. The number remains high, 400K is considered a solid signal about being in a recession.

Retailers reported sales for last month. Rising oil prices, lower prices for homes & worries about jobs are slowing consumer spending. The best performing ones were Wal-Mart (WMT), a Dow stock, & Costco (COST) but Target (TGT) issued a soft sales report. 19 retailers beat estimates while 9 missed. Discounting is needed to bring in new sales. Toyota ( (TM) reported a 27% decline in profits due to the stronger yen & weaker sales in the US, the first profit decline in 7 years. The stock is down 4.61 as they said things are tough (in the US market). Thornburg (TMA), the troubled major mortgage company, looks like the end is near with a stock price of 85¢. At least lenders have had time to work out plans for dealing with its mortgages.

Wednesday, May 7, 2008

Not a pretty day.

This was not a pretty day as stocks sold off starting about 11AM, ending at their lows. Dow dropped 206, decliners over advancers almost 3-1 & NAZ pulled back 45. The 13K level for the Dow was broken severely, closing at 12.8K & the 1400 did not hold for the S&P 500. Today's economic news was pretty much in line with expectations but fear of the unknown, especially for financials took hold. Banks, financials & REITs pulled back in this market. Even MLPs which had been strong in the last couple of days pulled back almost 2. They just transport oil & gas, a different business than the oil producers, but they are buffeted by oil markets. One exception to good economic news was consumers increased borrowings in Mar at a faster rate than expected. The 7.2% rate was considerably above the 3.1% rate in Feb. While recent data gave hints about declines in the economy being less severe than originally thought, this suggests a weaker economy was forcing consumers to increase borrowings for spending.

After the close, News Corp (NWS) reported favorable earnings, sending the stock up about 10¢ after hours. This is one of those companies that can't get no respect. Dominating today's news was oil, up 1.94 to 123.78. Traders in futures are speculating with calls for 125 &130 for oil. Oil may dominate thinking for the balance of the week.

Stocks little changed

Stocks were little changed on more weak economic data. Dow was down 16, decliners slightly ahead of advancers & NAZ was essentially even. The Pending Home Sales Index fell to 83 in March, down 1% from a downwardly revised reading of 83.8 in Feb & down 20% from the prior year. However, the rate of decline was in line with estimates. The Labor Dept reported that labor productivity in Q1 was up 2.2%, higher than analyst estimates of 1½% & this figure was below 2.8% in the prior qtr. Higher productivity is a sign inflation pressures could be easing.

Oil remains the biggest news story of the day as it remains near 122 after approaching 123 on worries about supplies from Nigeria & the dollar which has weakened in the last couple of days. The price of gas at the pump is near 3.62 according to AAA.

Tuesday, May 6, 2008

Oil soars & stocks go higher

Oil reached new record levels, nearing 123 but settled up 1.87 at 121.86. Despite the strong commodities markets (gold is back at 876), stocks had a good day. Dow was up 51, advancers ahead of decliners almost 2-1 & NAZ up 19. FNM, DHI, UBS & WB all had negative financial reports but the markets ignored them. Dow is back over 13K & S&P500 is solidly above the important 1400 level although NYSE volume continues to drag along at 1¼B. Energy was strong on higher oil prices & financials did well. In energy, MLPs after sticking around 293 for a couple of weeks picked up another 2 today to 297. Because this is the time of the year MLPs go ex-distribution, a "real" figure ignoring that effect would be a little higher.

After hours, Disney (DIS), a Dow company, & Cisco (CSCO) had excellent reports sending each up about 57¢ in after hours trading. This activity should be a good omen for trading tomorrow.

Negative housing news sinks stocks again

Another ugly day of negative housing & mortgage problems is sinking stocks. Dow is down 45, decliners over advancers 2-1 while NAZ is essentially even. There are so many problems, tough to decide where to begin. Fannie Mae (FNM), a government-sponsored company & largest holder of mortgages, reported a $2+B loss. They are cutting the div & seeking $6B in outside financing. But the stock is taking the news well, little changed after falling sharply on the opening. They give a very gloomy outlook for housing & mortgages for the rest of 2008. UBS (UBS), the Swiss bank, was down 91¢ on news about laying off 5½K staff after writing down billions in mortgages & loans. They claim the mortgage market is recovering because they feel good about selling $22B in mortgages to BlackRock (BLK), down 3.06, for (only) $15B.

D.R. Horton (DHI), the nation's largest home builder, reported a 1.3B loss in Q2 (quarter just ended) as revenue plunged 40% from the prior year's qtr. Much of their loss was related to write down of assets. Analysts had been forecasting a loss of 39¢ vs the $4.14 loss. Their backlog of homes under contract declined to 2.1B down from 4.8B in the prior year.

Meanwhile oil reached another record, going over 122. Commodities have gotten a new breath of life after last week's fall as the dollar weakens again. In just a few days, the value of the Euro declined to about 1.53 and is now nearing 1.55 after a recent high of 1.60+. Economists are talking about further weakening in the dollar, not good for stocks. Some of the strength in commodities will mean money is taken out of stocks.

Monday, May 5, 2008

Stocks lower as Microsoft pulls Yahoo bid

Stocks pulled back on news that Microsoft (MSFT) pulled its bid for Yahoo (YHOO). Dow was down 89 (to 12,969), decliners ahead of advancers 3-2 & NAZ slipped 13. Volume continues to drag along, today at only 1.1B. MLPs had a good day. Their index had stalled at 293 in the last 2 weeks, but closed above 294.

On NYSE new highs vs low lows doesn't look good:

new highs 53
new low 62

IP, a former Dow stock, was one of the leading new low stocks.

When a major deal like Yahoo does not go thru, a lot of speculators get nervous about betting on the next deal. Speaking of the next deal, it appears likely that Bank of America (BAC) will readjust it's price downward for troubled Countrywide (CFC) sending that stock down 62¢ (10%).

Commodities are back in action on a weaker dollar. Oil went above the important 120 level, but closed at 119.98 up 3.66. Gold rebounded from it's lows around 850 in recent days to 872.80 up 16.70. There are no major news developments this week, so the markets will be on their own.n Good luck!

Dow slips below 13K

Dow was not able to hold 13K this AM. Dow was down 88 taking it below 13K, internals weren't too bad with decliners ahead of advancers by only 40% & NAZ was down 8. The breakup of the Yahoo (YHOO) purchase by Micrososft (MSFT) didn't help stocks. In addition, oil reached another record, above 120, on supply concerns primarily from Nigeria. Helping the market is a report by the Institute for Supply Management that non-manufacturing index rose to 52.0 in Apr from 49.6 in the prior month. This was the biggest improvement in 7 months, economists had expected 49.1 for April. The reading supports thinking that the U.S. economy is not as disappointing as many initially thought.

Another big acquisition may be in trouble. Analysts are talking about Bank of America (BAC) revising downward the terms for Countrywide (CFC) causing CFC to drop 1. One analyst reduced his target price from 7 to 2, uh-oh! Troubled CFC has a $95B mortgage portfolio, many loans will be be subject to downward revisions. The market is taking today's news pretty well, but delays & problems with acquisitions remains a negative for the markets.

Sunday, May 4, 2008

Junk bond funds

Junk bonds still can't get no respect, but they have rebounded from the depths in the last month. Many are up 10% from bottom levels as nibblers have been attracted to their high interest rates while other rates have fallen. Junk bond funds still offer yields of 10-11% at a time when other yields are only 3, 4 or even 5%. Their yield spread over the Treasury bond is 700 basis points. Junk bond funds deserve more respect in today's troubled markets!

Friday, May 2, 2008

After early gains, stocks hold modest gains

Stocks pulled back after gaining more than 100 points early in the trading day to settle with only modest gains. Dow was up 48, advancers 40% above decliners while NAZ pulled back a couple of points. Dow is at a level not seen since Jan 3, but volume continues light at only 1.27B. Commodities rose, reversing their recent declines. Oil was up 3.80 to 116.32 & gold was up 5 to 853. Bank of America, a Dow stock, was up 40¢ after there were doubts it would guarantee the debt of Countrywide (CFC) assuming the acquisition goes thru in the next qtr.

Microsoft (MSFT) may be upping the price several dollars for Yahoo. In the tech sector, Sun's (JAVA) announced loss yesterday was very significant, causing the stock to drop 3.69 (23%). Google (GOOG) was down 12, indicating the serious nature of Sun's loss & how it affected other tech stocks. Overall, the stock market is considered "overbought" at these levels, but the Dow remained over 13K for a second day. Next week, the drama will play out.

Stocks up a little

Stocks rose on a favorable gov report & the FED's rate cut. Dow was up 38 (but down from a 100+ gain at the start of trading), advancers ahead of decliners 2-1 but NAZ was down 7 points, negatively affected by Sun's (JAVA) loss reported yesterday. The Labor Dept reported employers cut fewer than expected jobs, 20K, in Apr which kept the unemployment rate at 5.0%, a favorable sign for the markets. Expectations were for the number to be 75K. Gas prices pulled back yesterday, but only .1¢ to 3.622 as reported by AAA. The revised hope is that gas will top out at only 3.70 rather than 4.00.

Sun's loss is hurting tech stocks. Sun is down 3.41 & leading the tech sector down. They are also guiding for a flat Q4 (this one) & will have to lay off up to 2½K staff. The message is similar to a stream of macro gov reports which have become common.

Last month was a very good month for the markets. Dow gained more than 500. MLPs were up more than 10% to 293 from their lows of 262 in late Mar. But they've been stuck in the 292 area for a couple of weeks. REITs rebounded a little from their lows, buyers attracted by high yields. Lower Treasury yields have prompted brave investors to go after junk bond funds, up 10% last month. Buyers were attracted to yields near 11%.

Thursday, May 1, 2008

Higher stocks on optimism about US economy

Stocks had a broad based advance based on increasing optimism about the US economy. Dow was up 190, advancers ahead of decliners better than 2-1 & NAZ was very strong, up 68. Averages closed at or near their highs with Dow breaking the important 13K level & S&P500 closing solidly above 1400. The breadth of the market was good, but still not as good as those days with ratios of 5+ to 1. Volume continues at so-so levels, today at 1.4B. The Kuwait Sovereign Fund (with a lot of oil money) gave a solid vote of confidence to the US economy by buying additional shares in Citigroup (C), up 1.04, & Merrill Lynch (MER), up 2.56. Also, little noticed, the Bank of England announced they felt the worst of the credit crisis was over. Banks (up 4%) & technology did quite well in today's broad based advance. This advance was fueled by investors taking money out of commodities to invest in stocks. Oil is back down to 112.52 (from 120 last week) while gold slipped to 850 (remember 1000?). The dollar has been very strong in the last couple of weeks, i.e. the Euro fell from a recent high of 1.60 to 1.54.

On the tech front, Research in Motion (RIMM), Apple (AAPL) & Google (GOOG) each had an excellent day. But after the close Sun (JAVA), 4th largest computer maker, reported a loss. They were up 67¢ during trading hours, but pulled back 1.77 after hours. Now that Dow & S&P500 reached important levels, bulls will have to decide if they can carry the averages higher or take time for a pause.

Why gas is so cheap in US

Attached is a good story about why gas in the US is so cheap courtesy of

Stocks begin May with gains

Stocks started May by gaining, even if only modestly. Dow was up 25, advancers ahead of decliners 3-2 & NAZ was up 24. The big news was that Exxon (XON), a Dow stock, reported record earnings for Q1, but slipped 3.51 because earnings were below expectations. Too bad! The reason they gave was lower margins. The Commerce Dept said jobless claims rose 35K to 380K last week, economists had been looking for a decline. The 380K number is approaching 400K which is considered worrisome because it's viewed as one sign of a recession. The Dept also reported that consumer spending was up .4% in Mar (double the estimates), but much of the gains were due to higher prices. In addition, construction spending fell 1.1%, the 23rd straight monthly decline. This news follows the 0.6% increase in GDP reported yesterday, very gloomy.

Home Depot (HD), another Dow stock, up 75¢, will close 15 underperforming stores (less that 1% of it's total). Housing market keeps taking it's toll. Kodak (EK), another Dow stock, reported a narrower loss on slightly higher sales, but the stock pulled back 1.13. The digital business was up 10% but that loses money while the film business slipped 13% but continues to make money.

We'll see if the markets can get used to a period without rate cuts. Early tax rebates are hitting the economy, but there are worries that won't be enough to help today's struggling economy.