Jobless claims fell 21K to 509K in the latest week, sort of a hopeful sign. But over 4MM are receiving unemployment checks, the highest number in 26 years. This is the kind of news which feeds into dreary retail sales figures.
•Unemployment Benefits Claimed by 4.09 Million Americans, Most in 26 Years
Retail sales for Nov are being reported & expectations are grim. Wal-Mart (WMT), a Dow stock, beat expectations with a 3.4% increase for same store sales but others, especially retailers with mall stores, suffered huge declines. BlackFriday was a better day, but results were poor for the rest of the weekend.
Wal-Mart Stores' November same-store sales rise- AP
Retailers post steep sales declines in November- AP
DuPont (DD) & Merck (MRK), 2 Dow stocks, came out with gloomy outlooks.
DuPont warns of quarterly loss, to cut 2,500 jobs- Reuters
Merck 2009 profit outlook misses estimates- AP
Oil is settling back to lower levels, in the 46s (4 year low). Expectations are prices will slip further to 40 on expectations of lower demand caused by the worldwide economic meltdown.
Oil hits near 4-year low on weak economic news- AP
Based on the continuation of gloomy stories, Dow futures in pre trading are down 100. Meanwhile the CEOs of the Big 3 are back in DC begging for $B in help. Today could be another glum day.
Thursday, December 4, 2008
Wednesday, December 3, 2008
Late day rally lifts markets
Go figgah! In a day filled with plenty of negative stories, Dow remained fairly close to the break even for much of the day. In the last 2 hours buyers returned to give the Dow a gain of 172, advancers over decliners 2-1 & NAZ up 42.
S&P 500 FINANCIALS INDEX had a good day, but is still close to recent lows.
Value 160.75 .... Change up 8.51 .... % Change up 5.6%
The Alerian MLP Index was up a weak 1.68, the Dow Jones REIT Index had a stronger gain of 6 to 126 & the VIX dropped 2.26 to 60.72. SPDR Lehman High Yield Bond (JNK), an ETF which gives the general trends in the high yield or junk bond market, was even (with a yield of 16.1%). Oil was flat.
Macro economic news continues dreary. The Big 3 autos are center stage. They are pleading for help & probably will get some. The failure of any or all would be a brutal jolt to a very fragile economy which is struggling for sound footing so it can recover. Congress has to play hardball with many worrying about a future request for even more aid. Details of the rescue package have to be worked out & the clock is ticking since General Motors (GM) said they are desperate.
The bulls have the recent track record of the markets in their favor while the bears point to the possibility of hedge fund redemptions, etc. Fortress Investment Group (FIG) fell 25% to a record low of 1.87 after announcing it was halting redemptions from one of its major hedge funds. Investors had requested redemptions of $3½B by yearend. Fortress stock is down 88% since going public in Feb 07.
Fortress Halts Drawbridge Global Fund Withdrawals (Update3)
However, over the short term markets have been down only once in the last 9 trading sessions (terrible Mon). Forced redemptions & added tax loss selling remain very dark clouds overhanging the markets.
S&P 500 FINANCIALS INDEX had a good day, but is still close to recent lows.
Value 160.75 .... Change up 8.51 .... % Change up 5.6%
The Alerian MLP Index was up a weak 1.68, the Dow Jones REIT Index had a stronger gain of 6 to 126 & the VIX dropped 2.26 to 60.72. SPDR Lehman High Yield Bond (JNK), an ETF which gives the general trends in the high yield or junk bond market, was even (with a yield of 16.1%). Oil was flat.
Macro economic news continues dreary. The Big 3 autos are center stage. They are pleading for help & probably will get some. The failure of any or all would be a brutal jolt to a very fragile economy which is struggling for sound footing so it can recover. Congress has to play hardball with many worrying about a future request for even more aid. Details of the rescue package have to be worked out & the clock is ticking since General Motors (GM) said they are desperate.
The bulls have the recent track record of the markets in their favor while the bears point to the possibility of hedge fund redemptions, etc. Fortress Investment Group (FIG) fell 25% to a record low of 1.87 after announcing it was halting redemptions from one of its major hedge funds. Investors had requested redemptions of $3½B by yearend. Fortress stock is down 88% since going public in Feb 07.
Fortress Halts Drawbridge Global Fund Withdrawals (Update3)
However, over the short term markets have been down only once in the last 9 trading sessions (terrible Mon). Forced redemptions & added tax loss selling remain very dark clouds overhanging the markets.
Stocks bounce back
Markets are adjusting well to gloomy news. After a weak start, buyers returned carrying the Dow to plus 54. The 8K floor for Dow has been holding pretty well. Just prior to the Columbus Day rally, the Dow dropped to almost 8K & that floor has basically held. We're into tax loss selling season, that hasn't been responsible for additional declines. The bulls would point to this analysis as a positive sign.
Interesting story about Merrill Lynch. After billions & billions of losses, their bonuses will cut (only) 50%. In the first 9 months of 2008, wages were 3% lower than the prior year.
•Merrill Lynch Is Said to Reduce Year-End Bonuses by 50% as Revenue Slumps
Interesting story about Merrill Lynch. After billions & billions of losses, their bonuses will cut (only) 50%. In the first 9 months of 2008, wages were 3% lower than the prior year.
•Merrill Lynch Is Said to Reduce Year-End Bonuses by 50% as Revenue Slumps
Tuesday, December 2, 2008
Stocks lower out of the gate
Markets opened weaker, Dow dropped 123.
The news on unemployment is getting worse. 250K jobs were lost last month, worse than expected. The report comes from ADP, not official gov figures, but a gloomy sign for the gov report on Fri which is expected to show an unemployment rate of 6.8%.
•Payrolls in U.S. Shrank 250,000 in November, More Than Forecast, ADP Says
US auto sales fell sharply last month & continues weak, auto companies are begging for emergency loans in the next few weeks. Foreign companies also have lower sales. Toyota (TM), billed as the largest auto company in the world, is cutting management bonuses, closing plants for 2 days at the end of the month & will cut production next month. These cuts are necessary because sales in Japan are down, 23% in Nov alone.
Toyota to Cut Bonuses Amid Reports of Output CutsGloomy unemployment news & worries about auto makers can be a drag on the markets today.
Rebound Tuesday
Markets recovered some of the losses from Mon. Dow rose 270, advancers ahead of decliners 3-1 (mild all considered) while NAZ gained 52. S&P 500 FINANCIALS INDEX jumped 11 to 152, the Alerian MLP Index was up only pennies at 163, the Dow Jones REIT Index rose 14 to still a very depressed 120. The VIX (fear index) dropped 5½ to 63, remaining in the stratosphere.
Oil keeps falling to lowest levels in 3 years:
CLF09.NYM Crude Oil Jan 09 .... 47.60 .... down 1.68 (3.4%)
If there was any rationale behind the gains, aside of recovering from Mon's losses, Ford (F) announced it did not really need an auto bailout to survive (at least for a few years) & the General Electric (GE) announcement that they would continue the div next year.
News at the macro economic level continues gloomy.
•Treasury 30-Year Yield Falls to Record on Speculation Fed Will Buy Debt
•GM, Ford, Toyota November U.S. Sales Tumble More Than 30% Amid Recession
Yields on the Treasury 10 year bond are 2.69%, a record low yield due to increased demand for the bonds especially if the Treasury starts buying bonds. No surprise about Nov auto sales with the 13th consecutive month of lower sales (year over year). By way of perspective, after averaging 17MM annual sales in this decade, they have dropped to an annual rate in the 10s. Toyota is feeling the pain with a sales decline of 32% in Nov to the lowest level in 8 years. Even with Ford's announcement, GM maintains it needs money THIS MONTH or else. There are no shortage of problems, more bleeding is coming.
Oil keeps falling to lowest levels in 3 years:
CLF09.NYM Crude Oil Jan 09 .... 47.60 .... down 1.68 (3.4%)
If there was any rationale behind the gains, aside of recovering from Mon's losses, Ford (F) announced it did not really need an auto bailout to survive (at least for a few years) & the General Electric (GE) announcement that they would continue the div next year.
News at the macro economic level continues gloomy.
•Treasury 30-Year Yield Falls to Record on Speculation Fed Will Buy Debt
•GM, Ford, Toyota November U.S. Sales Tumble More Than 30% Amid Recession
Yields on the Treasury 10 year bond are 2.69%, a record low yield due to increased demand for the bonds especially if the Treasury starts buying bonds. No surprise about Nov auto sales with the 13th consecutive month of lower sales (year over year). By way of perspective, after averaging 17MM annual sales in this decade, they have dropped to an annual rate in the 10s. Toyota is feeling the pain with a sales decline of 32% in Nov to the lowest level in 8 years. Even with Ford's announcement, GM maintains it needs money THIS MONTH or else. There are no shortage of problems, more bleeding is coming.
Markets try to recover
Stocks bounced back slightly on the opening, but the optimism faded. Dow was up 75 then settled back which was followed by a second wind carrying it to a triple digit gain. There was bargain hunting for MLPs, REITS & financials. Meanwhile VIX slipped 1½ to 67.
The recession is predicted to be one of the worst in history. Already most of Europe along with many Asian countries economies already have recession conditions.
•Recession in U.S. May Be Longest Since World War II as Job Losses Increase
Corp news continues very glum. General Electric (GE), a Dow stock & one of the few remaining companies with the elite rating of AAA for its debt, said Q4 earnings are coming in at the low end of estimates. GE, also an S&P 500 Dividend Aristocrat, reaffirmed it will continue the div in 2009 (forget about increasing it as it has done in the past). The pain they feel is another indication of how bad the recession is biting.
•GE Profit This Quarter Will Be at Low End of Forecast; Dividend Maintained
Sears (SHLD) and Staples (SPLS) reported bleak results & outlooks. However, Sears expanded its stock buyback program.
Sears suffers 3Q loss on weak US, Kmart sales- AP
Staples 3Q profit drops 43 percent on charges- AP
The auto makers will be begging for $25B in aid from congress this week. This time the head of Ford said he will be driving to DC, versus taking a private jet last time. Maybe the others will also try driving.
The recession is predicted to be one of the worst in history. Already most of Europe along with many Asian countries economies already have recession conditions.
•Recession in U.S. May Be Longest Since World War II as Job Losses Increase
Corp news continues very glum. General Electric (GE), a Dow stock & one of the few remaining companies with the elite rating of AAA for its debt, said Q4 earnings are coming in at the low end of estimates. GE, also an S&P 500 Dividend Aristocrat, reaffirmed it will continue the div in 2009 (forget about increasing it as it has done in the past). The pain they feel is another indication of how bad the recession is biting.
•GE Profit This Quarter Will Be at Low End of Forecast; Dividend Maintained
Sears (SHLD) and Staples (SPLS) reported bleak results & outlooks. However, Sears expanded its stock buyback program.
Sears suffers 3Q loss on weak US, Kmart sales- AP
Staples 3Q profit drops 43 percent on charges- AP
The auto makers will be begging for $25B in aid from congress this week. This time the head of Ford said he will be driving to DC, versus taking a private jet last time. Maybe the others will also try driving.
Monday, December 1, 2008
Dow has 4th worst day
It's hard to believe that the Dow has had 3 worse days than down 680 (& all in the last few months), putting today in 4th place. Dow was down about 430 going into the final hour when it dropped another 250. Heavy selling at the end of the day is always a bad sign. The recession feeling, not to mention auto maker worries, brought on sellers in droves. Damage was widespread. The Alerian MLP Index dropped 11, the Dow Jones REIT Index dropped an eye popping 25 (over 20%) while the VIX (better known as the fear index) shot up 13 to 68½. There will be more bleeding.
Oil slipped on global recession worries & even save haven gold pulled back 2.
CLF09.NYM Crude Oil Jan 09 48.08 down 1.20 (2.4%)
GCZ08.CMX Gold Dec 08 ... 772.30 down 2.30 (0.3%)
Meanwhile Treasury securities rose dramatically. The 10 year Treasury now yields only 2.72% & the 90 day Treasury bill yields only 2 basis points (annualized). To buy that Treasury bill, it costs $1000 less a nickel in order to receive the full $1000 in 90 days. Frightened money is seeking safety in Treasuries. When they begin to grasp the significance of future enormous budget deficits, it will have to seek another investment. These are unusually troubling times.
Oil slipped on global recession worries & even save haven gold pulled back 2.
CLF09.NYM Crude Oil Jan 09 48.08 down 1.20 (2.4%)
GCZ08.CMX Gold Dec 08 ... 772.30 down 2.30 (0.3%)
Meanwhile Treasury securities rose dramatically. The 10 year Treasury now yields only 2.72% & the 90 day Treasury bill yields only 2 basis points (annualized). To buy that Treasury bill, it costs $1000 less a nickel in order to receive the full $1000 in 90 days. Frightened money is seeking safety in Treasuries. When they begin to grasp the significance of future enormous budget deficits, it will have to seek another investment. These are unusually troubling times.
Economic worries sink stocks
Last week's stock market euphoria evaporated. markets are giving back gains from the enormous rally on global recession fears. China, 4th largest economy in the world is slowing badly. Exports are down, many of the exports go to US retailers. They are hoping to stimulate the home economy to prop up business. Any plans they have are not clear, they must be making it up as they go along. Japan, the 2nd largest economy in the world is already in a deep recession.
Dow is down 400, decliners over advancers 7-1 & NAZ dropped 80 in what is turning into an ugly market environment. The Alerian MLP Index & Dow Jones REIT Index are down 10 or so. Financials are getting their fair share of selling, down 5-10% on these fears. I noticed last night, the REIT Index had been flattish for the the past year while the rest of the markets were getting hammered. Then it ran into Sep when it fell off a cliff, dropping 60% in 3 months. Grrr!
Dow Jones REIT Index --- 1 year
Just some of the news reported below are enough to give anybody the jitters. It sure looks, like, sounds like & feels like a recession. In addition, the big 3 auto companies were told by congress last month to come back with a better prepared presentation for congressional help. Economic worries abound!
- Manufacturing index drops to 26-year low- AP
- Oct. construction spending down 1.2%, more than expected- AP
- Holiday season off to modest start as shoppers focus on bargains- AP
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