Monday, December 8, 2008

Worldwide rally for stocks

Around the world stock markets rallied on expectations of big gov spending plans (not to mention a partial auto company bailout package). S&P 500, up 27 today, has been strong in the last couple of weeks, rising 20% from its recent low. Dow is up 260 (but 100 below the peak seBlogger: VerySmartInvesting - Edit Post "Worldwide rally for stocks"t an hour ago), advancers ahead of decliners 4-1 & NAZ is up 53. Dow stocks such as General Motors (GM) & Alcoa (AA) soared 15%. However, Dow stock 3M (MMM) dropped 2.86 on a layoff announcement & gloomy forecast for 2009:
The Alerian MLP Index is up 5 (3% is modest all considered), the Dow Jones REIT Index is up a more impressive 7 & Lehman High Yield Bond ETF (JNK) is up only pennies. VIX pulled back only 1, it should have down more given the size of the rally.

The proposed stimulus package brought back buyers to depressed oil (but still down 100 from the peak set a few months ago):

CLF09.NYM..Crude Oil Jan 09...43.87 ..Up 3.06
.......(7.5%)



Over half the mortgages modified to help borrowers are back in receivership as the mortgage & housing crisis shows no sign of letting up.

Majority of Modified U.S. Mortgages Fail Within Six Months, Regulator Says


Citadel, a major hedge fund manager, is pulling back sharply. I know it's hard to feel sorry for hedge fund guys, but this does not sound good for managers of huge amounts of money in the stock market. Hedge funds are selling into these recent rallies.

Citadel to Shut Tokyo Office, Cut Asian Investments, Eliminate 50% of Jobs


Any stimulus package will take time to work its way into the economy. Just passing a package won't happen until Feb at the earliest. Spending & hiring will take additional time. Last year reminded us the tax refunds take 3 months (at best) to work their way into the system. Meanwhile, the Tribune company, an enormous media player, is on the brink of bankruptcy. They were hurt by declining readers & a big reduction in advertising. Let's see if the rally holds in the PM.

1 comment:

Anonymous said...

Last week was a rally. However, stock market opened lower today, headed lower. We have a minor correction today.