The Ticker
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The Global Bounce
Continue reading… 1 CommentTake a look at how global markets are faring over the last few days, according to Investment Postcards:
The bounce may not last, but it's great to see a few good sessions as we close out October. A few green days could easily reverse, but the concerted gain across the globe is a sign that markets are at least starting to take notice of global rescue measures initiated recently to prop up the banking system.
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Explaining a Volatile Week in Stocks
Continue reading… 2 CommentsSo far, it looks like we're holding above 9,000 on the Dow today, although I'll be the first to admit it doesn't mean much before the closing bell given the huge swings we've been seeing this week, especially late in the day.
Witness Wednesday: Even after the Fed cut rates by a half-point, stocks sank in the final few minutes of trade after an erroneous report that General Electric would miss earnings.
A quick explanation from Barron's:
Wednesday's trading session featured a wild and wooly finish, as the Dow Jones Industrial Average plunged from a nearly 300-point advance in the final minutes of the trading session to a loss of 74 points—apparently fueled by a misspoken news item from Dow Jones Newswires in the final minutes of the session suggesting a new—and downbeat—earnings forecast from General Electric (GE). The report, leveraged off some comments GE chief executive Jeffrey Immelt made at a business conference in Spain, was repudiated by the company, and the newswire eventually reprinted a clarification. (The Dow Jones Newswire, like Barron's, is a product of News Corp.)
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Carlos Slim: Still Not Buying
Continue reading… 2 CommentsMexican billionaire Carlos Slim, the world's second-richest man, who made a fortune buying during bad times, is hedging his bets when it comes to moving back into stocks.
He told CNBC in this video that the coming months will still be challenging and called the current economic problems "the worst I have seen in my life."
Slim is also coy about when he might move back in, saying his funds that cut back on stocks when prices are high still hold low percentages of equities. As for the success of the global financial bailout, he says government efforts are still moving too slowly.
Contrast Slim with Warren Buffett, who is very publicly snapping up U.S. stocks. The Motley Fool recently took a quick look at billionaire investing styles. Link is here.
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What Matters to Stocks (Hint: It's Not the Fed)
Continue reading… 1 CommentYesterday's big rally in stocks left everyone scrambling for a reason behind the record gain, and lots of journalists and analysts wound up giving the credit to the prospect of a half-point rate cut by the Federal Reserve.
Well, today we got it, and stocks sold off. So what happened? The truth is the Fed's decision to cut rates for the second time in a month was already old news to traders. The effective federal funds rate has already fallen below 1 percent several times in recent weeks, so lowering the official target was really just confirming what the market already knows.
So what really matters for stocks today and in the coming weeks?
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Meet Your 2020 Treasury Secretary
Continue reading… 0 CommentsHenry Paulson and Neel Kashkari make up the latest crop of Government Sach's alum to run Washington, so if you're looking for a quick reference guide to better know your future financial overlord, Clusterstock lists Goldman Sachs's newest partners:
GOLDMAN PARTNERSHIP MEMO
October 29, 2008 Goldman Sachs Announces the Partner Class of 2008
We are pleased to announce that the following individuals have been invited to become partners as of November 29, 2008, the start of our next fiscal year. These appointments recognize the contributions and potential of some of the firm's most valued senior professionals.
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Bjork Worries for Iceland
Continue reading… 1 CommentFinancial crisis soul-searching is coming from some unexpected corners lately:
Bjork, Iceland's rockingest pixie, blames big companies for bringing financial and environmental ruin to her beloved home, and she's making a tough argument for diversifying at a time when Iceland's economy is in tatters (it hiked interest rates to 18 percent today, as its currency plunges).
Writing in the Times of London, the artist, activist, and Matthew Barney consort calls on her homeland to turn away from overtures to build out its aluminum industry in favor of home-grown businesses. Her arguments sound sensible:
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Dow Jumps 889 Points on Bad News
Continue reading… 0 CommentsHey, a good day!
It's not clear what caused the absolutely giant rally today, and I'll knock on wood rather than second-guess the tape for what tomorrow might bring. Whatever the reason, the Dow is up 889 points—almost 11 percent—for its second-best day ever, and the Nasdaq jumps almost 9 percent.
Beaten-up names like Home Depot (it rose 14 percent) and Boeing (up more than 15 percent), which made progress in its ongoing machinists strike, had great days.
At the same time, all the economic news was pretty dismal:
Consumer confidence hit its all-time low.
Home prices dropped for a 25th straight month.
Markets might be up today ahead of tomorrow's expected rate cut from the Federal Reserve, but whether expectations of a 50-basis-point cut are already priced in remain to be seen. Expect tomorrow afternoon to be another tense few hours.
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Did I Hear This Right?
Continue reading… 5 CommentsOn CNBC a few minutes ago, Morgan Stanley strategist David Darst said we could get the Dow to jump 2,000 points if the government would just issue a bond for massive infrastructure projects at 5 to 6 percent yield. And Rich Bernstein of Merrill Lynch agreed with him!
So that's where we are now: Two of Wall Street's most respected strategists just said the way to get markets working again is massive public-works projects. Pretty depressing stuff...
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Foreign Stocks Fall Harder
Continue reading… 2 CommentsFloyd Norris is blogging on today's global market meltdown and adds this little tidbit to the mix: Global markets are worse off than America.
October Blues: Here are some October performances, through a few minutes ago. In each case, I took a major index from the country in question. All figures are in U.S. dollars.
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FIX IT!
Continue reading… 0 CommentsCan Oscar Rogers start screaming in other languages?
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PNC Buys National City and Hits the TARP
Continue reading… 9 CommentsAfter weeks of speculation as its share price headed toward the floor, Cleveland-based regional bank National City goes to PNC Financial Services.
The deal creates the country's fifth-largest bank by deposits.
The deal:
PNC will pay $5.58 billion in stock and cash for National City and get $7.7 billion through the government's bailout plan. The deal values National City at about $2.23 a share, or about 19 percent below yesterday's closing price (it traded around $23 a year ago). PNC says its Tier 1 capital ration will be about 10 percent, and the combined firm will be well above regulatory standards for a "well-capitalized" bank.Why this is good:
A couple of reasons: First, National City was probably the biggest regional at risk as the credit crisis spreads. Second, the use of the Troubled Asset Relief Program (TARP) funds is encouraging. It's a positive sign that banks are using the government's lending offer to get markets moving again.And lastly, a quick note to National City's press team who just yesterday chided me for saying that the bank was up for sale: We won't be running that correction.
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Earnings Update: Lost Luxury Edition
Continue reading… 1 CommentThe good life takes another hit today, as swimming pools and travel plans face cooling profits because of worried consumers. In today's earnings, two names, hotelier Starwood Hotels and pool supplier Pool Corp., are cutting their outlooks.
Starwood Hotels warned profits will fall in both 2008 and 2009 because of travel spending slumps in the face of the global financial crisis. The chain, which runs the tony W, St. Regis, and Le Meridien brands, plus the Sheraton and Westin names, has been trimming expenses and shutting sales centers.
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Economy Hits Amazon Ahead of the Holidays
Continue reading… 0 CommentsAmazon.com had a respectable quarter, but lower guidance is hurting the company's shares today. Industry-leading sales and market-share growth mean it's still the king of online retail, but even that won't help when shoppers simply start to spend less—almost $1 billion less in 2008 for Amazon.
For 2008, Amazon expects revenue between $18.46 billion and $19.46 billion. The top end of its previous estimate range was $20.1 billion. Wall Street had been hoping for $19.5 billion. Amazon shares were off almost 6 percent at midday.
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Third-Quarter Fallout: Job Cut Edition
Continue reading… 1 CommentWe're wrapping up another terrible day on Wall Street, and this time it's bad news from companies, not credit markets, that's stoking the fire under sellers. This week, earnings haven't been good, and we're finally seeing the fallout from the credit crunch and the slowing economy appear in the form of mounting job losses.
So far this week:
Merck: 7,200 jobs, or 11 percent of its workforce. Even so, the drug maker is still scaling back earnings and profit forecasts as it struggles to replace blockbusters like Fosamax and fend off competition from generic rivals. Shares fell almost 5 percent.
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Kerkorian and Adelson's Vegas Billionaire Blues
Continue reading… 1 CommentGaming's hot streak is over, as the slumping U.S. economy kills Las Vegas traffic. The downturn is going global, too; Macau, the Asian island that was expected to overshadow its desertbound brother, is slowing.
Unsurprisingly, outsized names are being dragged down along with their iconic casino profits.
Kirk Kerkorian, the world's 41st richest person on Forbes's list this year, is falling fast after a handful of big, bad bets in the auto sector.
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5 Things Smaller Than Wachovia's $23.7 Billion Loss
Continue reading… 1 CommentWow, that's a bad quarter. Wachovia says losses hit nearly $24 billion in the third quarter, including a $19 billion goodwill impairment charge as it tries to clear the pipes before merging with Wells Fargo.
Here's a look at what that loss is bigger than:
1. Wells Fargo's $15 billion buyout offer.
2. Citigroup's spurned $2.16 billion offer for Wachovia's assets. (Citigroup was also going to assume $42 billion or so in Wachovia losses.)
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Kohl's: A Retailer(!) Worth a Look
Continue reading… 0 CommentsBefore we start, the answer is yes. We are in a recession, consumer spending is falling, and the shares of retailers have been beaten to a pulp in this downturn. So why take a look at any of them?
Well, contrarian bets are fun, for one. Second, buying up the best names in the most challenged sectors before a market turns can equal outsized returns. And third, for Kohl's specifically, the negative tone among retail analysts toward the stock took a bit of a turn this week.
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Kedrosky: Earnings Falling Fast
Continue reading… 0 CommentsEven before the credit crisis really slammed stocks, everyone knew earnings expectations were too high, but Paul Kedrosky at Infectious Greed says the sharp drop in earnings forecasts for 2009 is pretty amazing.
He says estimates are "coming down faster than in any six-month period I've seen, and there are more cuts coming," and points to this slide from John Maudlin for 2009 estimates on the S&P 500:
March 20 $81.52 April 9 $72.60 June 25 $70.13 August 29 $64.66 September 10 $58.57 October 14 $48.52 That drop is pretty amazing, and the big decline between September and October really shows just how surprised Wall Street was at the severity of the credit crunch. What it means is that investors hoping for a rally in stocks are still on the wrong side of profit expectations. Shares may be beaten down enough to keep further declines from setting in, and credit may be a bit better, but ongoing lowering of basic expectations for the health of American companies should still keep investors on edge.
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Markets Start to Heal
Continue reading… 0 CommentsThe first creaking step has been taken on the road back to normalcy on Wall Street. Various measures of market risk are now heading in the right direction. Here's a quick look:
Treasuries: Rates on three-month T-bills are above 1.25 percent—a big move from last month, when flight to safety demand pushed yields on treasuries into negative territory (when treasury prices go up, yields go down). Now, that security-at-all-costs mentality is softening as investors move back into the rest of the market.
Libor: The overnight Libor interbank lending rate is below 4 percent for the first time since September 26.That means banks are tip-toeing back into the basic lending habits they gave up on at the height of the credit crisis. For a nice history of Libor, see this post from Money Morning.
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Stock Losses So Far: $15 Trillion
Continue reading… 1 CommentJeremy Gaunt at Reuters examines the damage to the MSCI All-Country World Stock index since the end of last October, when most world markets peaked.
The Losses: $15 trillion, or about 21 times the $700 billion bank bailout package and more than the annual gross domestic product of the United States.
The Speed: It took four years for markets to build that $15 trillion worth of value, but just one to give it all back, including about one third of the declines during the market free fall between mid-September and mid-November.
