Markets were down but pared losses in the rally after 3PM followed by a slight down-tick in the closing minutes. Dow ended down 128, decliners over advancers 7-3 (not as bad as might be expected under the circumstances) & NAZ pulled back 18. NYSE had 773 new lows with volume at a medium 1.5B. Here are the leading new lows in volume:
FRE
FNM
LEH
BAC
C
WB
WFC
JPM
AIG
MER
RAD
NCC
MS
SOV
M
USB
This is petty much a Who's Who for the financials. Oil also contributed to the extremely volatile day. Oil reached 127 before pulling back to "only" 144.42. The VIX, measuring volatility, closed at 27.59 (i.e. VERY high). In the last 6 weeks it's been above 20 indicating volatile markets.
Fannie Mae & Freddie Mac recovered after calmer heads prevailed. Henry Paulson, Treasury Sec, said regulators want to keep Fannie Mae and Freddie Mac in their present form. A congressman on Bloomberg TV, who's on the committee regulating FNM & FRE, just said their mortgage continues & is healthy, i.e. there is no need the panic about their existence. He basically said relax & have a good weekend. Since then, the 2 stocks rallied from their depressed states (FNM was down 3 & FRE down .72), bringing on a recovery in the Dow from about -250 to near break even followed by the sell-off in closing mins. Lehman (LEH) which is viewed as shaky by the many shorts, rebounded more than a point from its low today.
When about all leading financials reach new lows & market indices reach new lows, short term direction is easy to forecast.
Friday, July 11, 2008
Fannie Mae & Freedie Mac sink markets
Markets plunge again, this is getting to be a familiar story. Dow is down 196, decliners over advancers 4-1 & NAZ is down 38. Markets are very nervous about a cloudy future for Fannie Mae (FNM) & Freddie Mac (FRE) as their stocks are approaching zero. This is not what unsettled credit markets want to hear. Stories about FNM & FRE are abundant, here is another one. Oil reaches another record at 147, back to the sky's the limit for oil.
General Electric (GE) profits slipped a penny per share, but met lowered expectations good enough for a 23¢ gain. Citigroup (C) is selling their German business for almost $8B. The main company story revolves around increasing worries about the future for Lehman (LEH). Since the credit crunch began a year ago, they have been operating under a dark & darker cloud as the chart below shows (note very heavy volume in the last few months):
They are one of the largest investment houses, but the stock is selling at a 9 year low! In the middle of trying to sort out how to keep FNM & FRE alive & well, bailing out LEH, if necessary, will have to share center stage. These are worries markets don't need or appreciate today.
General Electric (GE) profits slipped a penny per share, but met lowered expectations good enough for a 23¢ gain. Citigroup (C) is selling their German business for almost $8B. The main company story revolves around increasing worries about the future for Lehman (LEH). Since the credit crunch began a year ago, they have been operating under a dark & darker cloud as the chart below shows (note very heavy volume in the last few months):
They are one of the largest investment houses, but the stock is selling at a 9 year low! In the middle of trying to sort out how to keep FNM & FRE alive & well, bailing out LEH, if necessary, will have to share center stage. These are worries markets don't need or appreciate today.
Thursday, July 10, 2008
Markets gain even with increased worries
After meandering up & down, the markets ended up thanx to a rally in the last hour. Dow gained 81, but advancers were only slightly ahead of decliners & NAZ was up a solid 23. The S&P 500 index gained 8 to 1253, still in gloomy territory. Volume on the NYSE was 1.4B, in line with recent figures but there were 456 new lows. Good vibrations from the Dow purchase, I think, helped bring back buyers in the PM. The late day rally was also helped by oil up 5.60 to 141.65. Tensions in the Mideast were heightened with Iran firing another missile. The Fannie Mae (FNM) & Freddie Mac (FRE) saga is dragging thru congress. Among solutions they're tossing around is nationalizing the companies, sort of taking them private. Everybody understands that these GSEs can not fail, but they also realize that the mortgage mess is clobbering them. Political considerations in an election year also have to be factored into any outcome.
The president of Bank of America (BAC), a Dow stock & member of the S&P 500 Dividend Aristocrat list, said their div was fine & they would not need outside financing. For the brave, they have an 11½% yield, but they have to buy from a seller who says, "I'm out of here!" Everybody is anxious for GE's Q2 report tomorrow, which will undoubtedly be a big influence on trading.
The president of Bank of America (BAC), a Dow stock & member of the S&P 500 Dividend Aristocrat list, said their div was fine & they would not need outside financing. For the brave, they have an 11½% yield, but they have to buy from a seller who says, "I'm out of here!" Everybody is anxious for GE's Q2 report tomorrow, which will undoubtedly be a big influence on trading.
Markets up a little
Stocks are undecided today, but markets are gaining. Dow is up 49, advancers are a little ahead of decliners & NAZ is up 19. A lot is going on! Financing issues for Fannie Mae (FNM) & Freddie Mac (FRE) are front & center. These gov sponsored enterprises (GSE) have tons of debt to finance their assets, mortgages. Their stocks are trading at 17 year lows, FNM 13.67 & FRE at 8. These declines are just after Treasury Secretary, Henry Paulson, said the market can't expect the government to bail out troubled financial companies. Their future has now became clouded so gov is getting involved, both administration & congress. This is becoming a huge mess which could bleed to others in the financial community.
Oil is back up, this time 1.80 to almost 138 on supply worries (what's new?). The picture for jobless claims improved but labor conditions continue weak. Home foreclosures in June rose 53% from last year as the housing depression continues. Gloomy economic news keeps coming.
Dow (DOW) will buy Rohm & Haas (ROH) for $15B, ROH is up 29 on the news because of the 74% premium. At other times, this is the kind of news that spreads to the entire market. Not today. First Industrial Realty (FR), highlighted in my right column, had its biggest gainer day on Tues (like all REITs) followed by the biggest daily decline in history yesterday. REITs are a nice place to park money during this turmoil, 8+% yields are common & many should be fairly secure. But high volatility in markets is becoming routine, not good for the short term.
Oil is back up, this time 1.80 to almost 138 on supply worries (what's new?). The picture for jobless claims improved but labor conditions continue weak. Home foreclosures in June rose 53% from last year as the housing depression continues. Gloomy economic news keeps coming.
Dow (DOW) will buy Rohm & Haas (ROH) for $15B, ROH is up 29 on the news because of the 74% premium. At other times, this is the kind of news that spreads to the entire market. Not today. First Industrial Realty (FR), highlighted in my right column, had its biggest gainer day on Tues (like all REITs) followed by the biggest daily decline in history yesterday. REITs are a nice place to park money during this turmoil, 8+% yields are common & many should be fairly secure. But high volatility in markets is becoming routine, not good for the short term.
Wednesday, July 9, 2008
Dow plunges 236
After a nice rally late yesterday, Dow plunged 236 today (mostly in the PM). Advancers were ahead of decliners 2-1 & NAZ pulled back 59. S&P 500 dropped 29 to 1244, by all kinds of measures this index is bleeding badly! Volume on NYSE was 1.4B, below recent 1.6B on select days, but not exceptional. Even with the rally yesterday, NYSE had 215 new lows. Oil was about even after evaluating the weekly inventory report versus Iran flexing its military muscles (firing long range rockets!). Inventories fell almost 6MM barrels, better than forecasts, but that did not carry the day. The Alerian MLP index rose 4 to 269, but off its best levels. First Industrial Realty (FR), an REIT highlighted in my right column, rose 2.90 yesterday (1 point at the close). That gain was pretty much wiped out today.
Alcoa (AA), the first Dow stock to report earnings, reported down earnings yesterday but they beat forecasts. 24 hours later the realization that their news was not that great may have brought on PM selling.
These are getting to be brutal times with no end in sight. General Electric (GE), reports on Fri. Keep in mind, they have a lot of exposure to finance issues. Their earnings & guidance may signal more bleeding is ahead!
Alcoa (AA), the first Dow stock to report earnings, reported down earnings yesterday but they beat forecasts. 24 hours later the realization that their news was not that great may have brought on PM selling.
These are getting to be brutal times with no end in sight. General Electric (GE), reports on Fri. Keep in mind, they have a lot of exposure to finance issues. Their earnings & guidance may signal more bleeding is ahead!
Dreary markets return
Dreary markets returned after a 2 hour rally yesterday PM. Dow is down 12, decliners are slightly ahead of advancers & NAZ declined 12. Financials, real estate, etc. led the rally but traders are cashing in now. Fannie Mae (FNM) & Freddie Mac (FRE) rose from 15 year lows yesterday on word that they are decent financial shape. Today those gains have been lost. Higher prices for oil makes markets nervous. Oil is up 1½ as Iran launched missiles following Israel's recent military exercise. The Alerian MLP index, up a big 5 & up from yesterday's 262 low, is trading in line with oil moves these days. The World Bank gave a gloomy assessment on the world economy, not encouraging words for the markets.
Bank of America (BAC), member of the S&P 500 Dividend Aristocrat list, may need $12B in outside financing putting the current div at risk. Last year on July 26, they proudly announced a large increase in the div. This year's press release may be glum.
Bank of America (BAC), member of the S&P 500 Dividend Aristocrat list, may need $12B in outside financing putting the current div at risk. Last year on July 26, they proudly announced a large increase in the div. This year's press release may be glum.
Tuesday, July 8, 2008
Asian markets advance
Asian markets rebounded nicely following gains in the US & also helped by lower oil prices. All markets are up 1-3+% in their morning sessions. Shanghai is up about 10% from its recent lows a couple of days ago, Hong Kong has rebounded after a 15 week decline & Tokyo reversed its 3 week decline mirroring declines in the US:
Banks are up nicely (typically 3-4%) after selling off recently. The airlines also have strong gains of 4-5% after heavy selling caused by high priced oil. Oil is little changed, above 136.
Banks are up nicely (typically 3-4%) after selling off recently. The airlines also have strong gains of 4-5% after heavy selling caused by high priced oil. Oil is little changed, above 136.
Late day rally sends stocks higher!!
Yes stocks can go up!! In the last 2 hours stocks did just that. Dow was up 152, advancers over decliners 2-1 (not all that great a ratio) & NAZ went up over 2% or 51 points. S&P 500 at 1273, is just over the 1270 line some have drawn as significant. Financials, real estate & drugs, among others, found buyers for oversold stocks. Low priced Bank of America (a Dow stock) rose 2 to 23½. Of course just a couple of months ago it was hard to imagine BAC going down to "only 23½." The markets were EXTREMELY oversold, plenty of reasons for nibblers to get excited. One a key item giving them courage was the drop in oil today, down 5.33 to 136. Not participating in the rally were energy stocks, typically down 2-4% along with oil. The Alerian MLP index following oil, fell 4 to 265 but earlier in the day was hovering at the 262 low from a few months ago. These represent pipeline companies, a little different than oil stocks, but they seem to be greatly affected by swings in oil prices.
Alcoa, the first Dow stock to report earnings, said Q2 profits were 66¢, below last year (81¢) but beat forecasts, the same story we have been hearing. General Electric (GE) reports at week's end. Bloomberg TV had an excellent interview with Michael Steinhardt. He has a superb track record over the last 30 years & called the market's top correctly last year. He is gloomy about going forward it the markets, check out his thoughts on my attachment.
Alcoa, the first Dow stock to report earnings, said Q2 profits were 66¢, below last year (81¢) but beat forecasts, the same story we have been hearing. General Electric (GE) reports at week's end. Bloomberg TV had an excellent interview with Michael Steinhardt. He has a superb track record over the last 30 years & called the market's top correctly last year. He is gloomy about going forward it the markets, check out his thoughts on my attachment.
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