Thursday, March 6, 2008
Credit problems sink markets
More ugly credit news is sinking the markets again, although not as badly as might be expected. Dow is down 101, decliners over advancers better than 3-1 & NAZ off 7. Thornburg Mortgage (TMA) & investment management firm Carlyle Capital missed margin calls, indicating the end is very near for them. $B of loans will have to be written off by others. Home foreclosures were at a record last quarter according to Mortgage Bankers Assoc. The proportion of mortgage foreclosures nationwide reached a record high 0.83% in Q4 surpassing the previous high of 0.78% in the prior quarter. As expected, financials led today's decline. Oil prices reached 106 following yesterday's surprise announcement of lower inventories. However, retailers reported mixed results for Feb which can be interpreted good news.
Wednesday, March 5, 2008
Stocks higher on late day rally
Stocks rallied in the closing minutes to end up. Dow was up 41, advancers over decliners 3-2 & NAZ was up 12 in what was a choppy day. The FED issued a report that the economy has weakened this year, pretty much what I have been talking about. At midday, the big news was Ambac (ABK), the troubled bond insurer, down 2.02, said they will raise $1½B to get over their troubled times. The AP story below talks about trying to hold back downgrades for their debt from AAA to AA (of huge importance to a bond insurer):
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Standard & Poor's and Moody's said Wednesday that Ambac's plan to raise $1.5 billion would be enough to avert a downgrade. Both said the offering represented an important part of the company's overall plan to strengthen its credit profile.
But competitor Fitch Ratings, the only major ratings agency to downgrade the New York-based bond insurer, was less optimistic. If Ambac successfully raises the capital, it would likely affirm the insurer's "AA" rating, said Thomas Abruzzo, a managing director at Fitch and head of the financial guaranty team. But Fitch said it doesn't believe it will be possible to regain a "AAA" rating until its subprime risk can be contained.
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That's not all, oil surged an eye-popping $5 to 104 from a surprise drop in crude oil reserves. In addition, the Euro rose to $1.53 (another record). Financials had a very tough day but overall, the markets digested this news very well. Let's see what tomorrow brings.
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Standard & Poor's and Moody's said Wednesday that Ambac's plan to raise $1.5 billion would be enough to avert a downgrade. Both said the offering represented an important part of the company's overall plan to strengthen its credit profile.
But competitor Fitch Ratings, the only major ratings agency to downgrade the New York-based bond insurer, was less optimistic. If Ambac successfully raises the capital, it would likely affirm the insurer's "AA" rating, said Thomas Abruzzo, a managing director at Fitch and head of the financial guaranty team. But Fitch said it doesn't believe it will be possible to regain a "AAA" rating until its subprime risk can be contained.
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That's not all, oil surged an eye-popping $5 to 104 from a surprise drop in crude oil reserves. In addition, the Euro rose to $1.53 (another record). Financials had a very tough day but overall, the markets digested this news very well. Let's see what tomorrow brings.
Service sector report sends stocks higher
A favorable report on the service sector sent stocks higher in a broad advance. Dow is up 91, advancers ahead of decliners better than 2-1 & NAZ is up 21. Institute for Supply Management said its new service sector index registered was 49.3 in Feb, up from 44.6 in Jan (a 6 year low). However a number below 50 indicates a contraction, but at least Feb was less bad than Jan. The Commerce Department reported new orders for manufactured goods in Jan fell 2½% from the previous month marking deterioration from the 2% increase in Dec. This was also the biggest decline in five months.
On the retail front, BJ's (BJ) was up 2.86 on good earnings. Jan numbers were very good & they raised earnings guidance for 2008. I think my friend helped, she gave them a lot of business over the weekend.
On the retail front, BJ's (BJ) was up 2.86 on good earnings. Jan numbers were very good & they raised earnings guidance for 2008. I think my friend helped, she gave them a lot of business over the weekend.
Tuesday, March 4, 2008
After late day rally, Dow closes down
After Dow tumbled to almost 12K (down 200), it rallied in the PM. Bargain hunters brought Dow back to "only" a 45 point loss. The tricky part is trying to assess the concept of "feeding the ducks," i.e. are savvy investors selling into rallies? Decliners led advancers 2-1 while NAZ squeaked out a gain. Oil remained near 102 & the effects of it's record price is starting to weigh heavily on the markets.
Citigroup (C), a Dow stock, was down 99¢ to the lowest level in 9 years on worries it needs to raise even more money. Can you spell, uh-oh? This is after raising $12½B just a few weeks ago. After losing a key officer, Google (GOOG) was down 12 to a 52 week low, first time they've had to deal with that. Ambac (ABI) was up 78¢ as it moves towards a deal to raise capital aimed at keeping their AAA credit rating not to mention surviving. Mortgage mess has become an even larger worry & may be a key driver in the markets for the next few days.
Citigroup (C), a Dow stock, was down 99¢ to the lowest level in 9 years on worries it needs to raise even more money. Can you spell, uh-oh? This is after raising $12½B just a few weeks ago. After losing a key officer, Google (GOOG) was down 12 to a 52 week low, first time they've had to deal with that. Ambac (ABI) was up 78¢ as it moves towards a deal to raise capital aimed at keeping their AAA credit rating not to mention surviving. Mortgage mess has become an even larger worry & may be a key driver in the markets for the next few days.
Stocks down again
Stocks continue their declining ways. Dow is down 134, decliners over advancers 2-1 & NAZ down 24. It looks like Dow will be testing lows of 11½K from Jan. From the present level this would suggest another 5% drop just for testing. Ben Bernanke, FED Chairman, in a speech in FL said more needs to be done to to prevent home foreclosures. Banks are leading today's market decline.
Staples (SPLS), down 56¢, reported lower earnings & reduced forecast for 2008. The markets keep drifting down based on these company reports, expect more of the same.
Staples (SPLS), down 56¢, reported lower earnings & reduced forecast for 2008. The markets keep drifting down based on these company reports, expect more of the same.
Monday, March 3, 2008
Late day rally saves stocks
Stocks were trading at a loss for most of the day following the down markets overseas. However in the last hour, a rally brought the Dow up from down 100 to essentially break even although decliners beat advancers almost 3-2. Economic data remains weak. Oil closed at 102.45 & gold is at 984. The Treasury long bond was even holding the yield at 3.53%. One of the little noted items from last week was nibblers were attracted to junk bond funds which typically yield 11%, a good 750 basis points above the Treasury rate. After these bond funds have been punished badly in recent months, nibblers saw value.
The 3 US automakers reported lower sales in Feb. Especially hard hit were luxury & sports vehicles, a reaction to higher priced gas. Oil set another record at 103.95. Higher oil prices result from, among other things, the weak dollar. Exporters are paid with dollars which are slipping in value against other currencies. The Euro hit a new high, over $1.52. The dollar remains weak & I think one of the drivers for Dow being 2K below its all-time high just a few months ago.
The 3 US automakers reported lower sales in Feb. Especially hard hit were luxury & sports vehicles, a reaction to higher priced gas. Oil set another record at 103.95. Higher oil prices result from, among other things, the weak dollar. Exporters are paid with dollars which are slipping in value against other currencies. The Euro hit a new high, over $1.52. The dollar remains weak & I think one of the drivers for Dow being 2K below its all-time high just a few months ago.
Stocks slip slightly
Stocks pulled back but only slightly. They did not continue major declines overseas. But markets still face ugly news. Oil reached a new record at 103.95 propelled with possible military action by Ecuador, Bolivia & Venezuela. Confusing situations can be expected to push oil prices up. US manufacturing declined in Feb to the weakest level in 5 years. The Commerce Dept reported construction spendin in Jan fell to the lowest level in 14 years. And gold pushes to record prices around 980, thousand dollar gold is no longer only a wishful dream.
A lessor followed story is Thornburg Mortgage (TMA), one of the biggest mortgage companies, down over 50% today to 3.96. It's hardly necessary to state the obvious. they're facing margin calls on their mortgages which could sink them. Such a failure would adversely affect many major financials, they are weak today. This PM we'll see if all the negative news brings out more bears.
A lessor followed story is Thornburg Mortgage (TMA), one of the biggest mortgage companies, down over 50% today to 3.96. It's hardly necessary to state the obvious. they're facing margin calls on their mortgages which could sink them. Such a failure would adversely affect many major financials, they are weak today. This PM we'll see if all the negative news brings out more bears.
Sunday, March 2, 2008
Asia markets tumble
The Fri market decline continues Mon morning in Asia. Japanese stocks are down 4% before breaking for their lunch period. Japan is following the Fri lead from NY & the yen is up to 103 to the dollar making exports to US more expensive. Just a couple of months ago, that rate was around 114. Korea, Taiwan, & Australia are down around 3% & Shanghai is down only 1%. Additionally, Shanghai is off more than 30% from it's highs set a few months ago. Hong Kong just opened down 3½%. Gold is up to 980. Venezuela is mobilizing tanks sending them to the Columbia border, a bullish signal for oil currently at 101. These are early signals that Mon will be another tough day for NY markets.
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