Wednesday, June 4, 2008

Mixed messages confuse markets

Mixed messages confused markets today. Dow was essentially even & decliners were slightly ahead of advancers but NAZ had a pretty good day, up 22. Lehman gossip seems to be retreating in importance. Bloomberg TV had on a former director from Lehman who spoke favorably about them. He said they have a far different story than Bear Stearns (i.e. better positioned to handle today's problems) & the chairman will be a good person to solve their problems. Oil pulled back below 123, but not much help today. Chairman Bernanke's speech got a lot of attention, at least read the summary comments attached. He said the US isn't facing the severe inflation problems as in the late 70's, but they are watching inflation problems with greater interest. The Dow had a nice gain before his speech but sold off to only break even after the speech.

Some of the major new lows today were: BAC & PFE (both in the Dow), WM, ABK, MBI, EK (also in the Dow), RF, KEY, etc. Ambak & MBIA (ABK & MBI) are facing large problems as Moody's is finally ready to downgrade their AAA bond rating grade. They are fighting the idea, since it's embarrassing to have a bond insurer with less than AAA rating (who do you trust then?). The loan foreclosure problems took an interesting turn as Ed McMahon was found fighting foreclosure on his mansion. You know this has become a big problem!

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