This was one of those days all you had to do to find a winner was throw a dart. Dow was up 213, advancers over decliners almost 4-1 & NAZ was up 47. What was perceived as good retail sales numbers for May brought out buyers in droves. The sales figures were better than expected (beating lowered expectations), but not exceptional. Stores with higher priced merchandise did not do well, instead the discount types (like Wal-Mart) led the way up. Wal-Mart, (WMT), Macys (M) & COSTCO (COST) helped the lead the charge, each gaining 4%. Meanwhile, oil is back in the news. Oil rose 5.49 to 127.79 on a weaker dollar. Oil bears can not take command of oil!
Earlier in the day, a FED official said banks continue to face tough times. He predicted there will be more need for banks to raise added capital which means divs may get punished. An analyst from Goldman Sachs said Wachovia (WB) will halve the div. Wachovia was even as was Bank of America (BAC) on this strong rally day. Enjoy today's rally!
Thursday, June 5, 2008
Favorable job report lifts stocks
A favorable job report lifted stocks. Dow is up 140, advancers ahead of decliners almost 3-1 & NAZ was up 34. The Labor Dept reported applications for unemployment benefits fell 18K to 357K last week, a better than expected showing. However the 4 week average for people receiving unemployment benefits remains at the highest level in 4 years. The home foreclosure rate remains gloomy. The proportion of mortgages which were foreclosed in Q1 rose to .99%, up from .83% in the prior year. The delinquency rate jumped to 6.35% in Q1, versus 5.82% in the prior year. Both rates were the highest since 1979. Retailers reported May sales above expectations although discounters still had the best performances. 13 beat expectations & 7 missed. Wal-Mart had a 4% gain for same store sales while Target (TGT) which is more upscale suffered a 0.7% decline in same store sales. Retail sales were helped by tax rebates reaching consumers in May. Oil came back rising over 1 getting it above 123.
Verizon Wireless will buy Alltel for 28B. Verizon Wireless is 55% owned by Verizon (VZ), a Dow stock & up 1.96, while Alltel was bought by TGP Capital 7 months ago. Big stock purchases help bring out buyers for all stocks. Not too much should be read into today's rally while Dow is still sloshing around 12½K.
Verizon Wireless will buy Alltel for 28B. Verizon Wireless is 55% owned by Verizon (VZ), a Dow stock & up 1.96, while Alltel was bought by TGP Capital 7 months ago. Big stock purchases help bring out buyers for all stocks. Not too much should be read into today's rally while Dow is still sloshing around 12½K.
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!
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!
Lehman uncertainty confuses markets
Lehman (LEH) uncertainty is confusing the markets. They are little changed while trying to figure out what the future holds for Lehman & how that will impact markets. In this confusing situation, something the markets do not like, Lehman is looking for outside capital probably from Korea. Grrr! We are in a new world where the US is not always at the center. Oil fell below 124 from concerns that the slowing economy will reduce demand. At other times, that news brings out buyers in droves. The Labor Dept reported mixed numbers for Q1 on worker productivity & wages. A private report by ADP Employer Services reported that private sector jobs increased by 40K last month, a good sign for the gov's upcoming labor report on Fri.
Time for a comparison of the 2 banks shown in the widget on the right. Bank of America (BAC), in the Dow, is at a 6 year low as is the case with most of the big name, famous banks. US Bancorp (USB) has been kicking around the 30-34 range for the last year, while major banks have taken a beating. Both are members of the S&P Dividend Aristocrat list (track records of over 30 years of year over year higher divs in their cases). USB is kind of a boring bank with a modest longer term stock track record. But today, boring records look pretty good:
Time for a comparison of the 2 banks shown in the widget on the right. Bank of America (BAC), in the Dow, is at a 6 year low as is the case with most of the big name, famous banks. US Bancorp (USB) has been kicking around the 30-34 range for the last year, while major banks have taken a beating. Both are members of the S&P Dividend Aristocrat list (track records of over 30 years of year over year higher divs in their cases). USB is kind of a boring bank with a modest longer term stock track record. But today, boring records look pretty good:
Tuesday, June 3, 2008
Stocks tumble on Lehman worries
Stocks tumbled on worries that Lehman (LEH) was in trouble which might require borrowing from the FED. These are just rumors, but that's good enough to cause a sell-off late in the day. Dow was down 100 (down 235 in 2 days), decliners over advancers 3-2 & NAZ was down 11. Lehman, down 3.22, got the major attention late in the day with major worries about their financial health. If worries play out in the ugliest fashion, this could be another Bear Stearns situation requiring FED help to prop up the markets. Another new credit crunch worry is about credit cards. There is nervousness that aggressive use of credit cards will lead to more credit crunch problems down the road. Consumers are borrowing more while delinquencies are on the rise. MasterCard (MA) was down 12.60, but VISA (V) took the worries better, up 1.49. Meanwhile oil dropped 3.45 to 124.31. The FED's prediction what there will be no more rate cuts this year caused the dollar to rise against other currencies, a negative for oil. Energies were weak & even MLPs, recently strong, pulled back a point to 294.
Tough times will be continued in tomorrow's markets!
Tough times will be continued in tomorrow's markets!
FED Chairman says economy will improve in 2008
Ben Bernanke, Chairman of the FED, in a speech in Spain signaled future interest rate cuts are unlikely largely because of an improving economy later in the year. The markets are mixed, not sure how to take the message. Oil prices are kicking around the 126s, a little better but still a huge problem for economies around the the world. An early measure of how high oil prices are affecting the rest of the economy, General Motors, (GM), a Dow stock, up 31¢, announced in reaction to slumping sales of pickups SUVs brought on by high oil prices, they are closing 4 truck SUV plants. Instead, GM will build a small Chevrolet car at an Ohio plant in mid-2010 the Chevy Volt electric vehicle in Detroit. More announcements are coming of companies redirecting capital investments following high oil prices.
Lehman Brothers, (LEH), has been under a cloud since the early days of the credit crunch, almost a year ago as shown in the chart. They are evaluating options, including raising $3-4B in additional capital because of a loss which may be worse than the expected $300MM.
This news follows the downgrades for major financials which took the markets by surprise, times continue tough for financials.
Lehman Brothers, (LEH), has been under a cloud since the early days of the credit crunch, almost a year ago as shown in the chart. They are evaluating options, including raising $3-4B in additional capital because of a loss which may be worse than the expected $300MM.
This news follows the downgrades for major financials which took the markets by surprise, times continue tough for financials.
Monday, June 2, 2008
Ugly day for markets
This was another ugly day for the markets. A rally in the last hour reduced losses, but this was still a down day. Dow was down 134, decliners over advancers 2-1 & NAZ had an especially tough day, down 31. The biggest negative news, among many negatives, was the S&P downgrade of major financials including: Merrill Lynch (MER), Morgan Stanley (MS), Lehman(LEH) along with banks such as JP Morgan (JPM) & Bank of America (BAC). After a period of massive write-offs, S&P is not convinced the worst is over (i.e. more losses are ahead). All of these sold off 1-2%. In addition Washington Mutual (WM) & Wachovia (WB) after having very rough years dismissed their CEO's. The Sec of Commerce, Henry Paulson, in a speech given in Asia said it may be months before the (credit mess) turmoil ends. On the upside, MLPs did well, up 2. They benefited from favorable speculation at the beginning of hurricane season (which already produced it's first tropical storm closing 2 refineries in Mexico).
Oil was hanging around 128, at one point nearing 129 but closing at 127.64 up 29¢. These are times to test the best of investors. But they know this time should be used to study companies in preparation for future buying opportunities!
Oil was hanging around 128, at one point nearing 129 but closing at 127.64 up 29¢. These are times to test the best of investors. But they know this time should be used to study companies in preparation for future buying opportunities!
Weak economic data sinks stocks
Weak economic data sent stocks sharply lower. Dow is down 146, decliners ahead of advancers 2-1 & NAZ is down 32. The culprits are the same, economic data showing a slow if not recession economy. Construction spending declined in Apr as home building continued its multi year slide. The Commerce Dept reported that construction fell 0.4% in Apr after a 0.6% in the prior month. Meanwhile a key index showed an unexpected increase in May, the Institute for Supply Management's index of manufacturing activity edged up to 49.6 in May compared to an April reading of 48.6. However even with the increase, the index remained just below 50, the dividing line which indicates whether manufacturing is in a recession. Oil continues to hang around 127-8 while gas prices at the pump are just under $4 (check the AAA button in the blog's right column for yesterday's numbers).
Financials, i.e. banks, are taking a beating today after Wachovia (WB), down 67¢, announced the chairman who gave them a whopper loss last year is out. WB made the mistake of buying a big California mortgage business a few months before the bottom fell out of that market. He admitted in their annual, that the timing was not good. As with other banks, Bank of America (BAC), a Dow stock, is down 50¢, to the lowest price in over 6 years. These are rough times for banks following gloomy US economy news.
Financials, i.e. banks, are taking a beating today after Wachovia (WB), down 67¢, announced the chairman who gave them a whopper loss last year is out. WB made the mistake of buying a big California mortgage business a few months before the bottom fell out of that market. He admitted in their annual, that the timing was not good. As with other banks, Bank of America (BAC), a Dow stock, is down 50¢, to the lowest price in over 6 years. These are rough times for banks following gloomy US economy news.
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