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.
Tuesday, February 12, 2008
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.
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.
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.
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.
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.
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.
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