If you went to a restaurant for lunch five days a week, but every other time you went there, you either had a bad meal, poor service, the bill was too high or you noticed bugs in the place, how soon would you be looking for other places to eat, bringing your own lunch or skipping the meal altogether?
In many ways, recent experience in the US stock markets has been analogous to the restaurant scenario and many investors are pondering complete withdrawal. Many already have. Some, like fund managers, broker/dealers, traders and the like have no choice; their livelihoods depend on trading. Their ranks, too, have been recently thinned. After today's complete rout, even more will be hitting the streets.
Dow 8,200.14, -248.42 (2.94%)
NASDAQ 1,489.64, -56.82 (3.67%)
S&P 500 842.62, -29.17 (3.35%)
NYSE Composite 5,328.74, -210.10 (3.79%)
Driving the action today were a number of completely expected developments and economic news on retail trade that was absolutely off the chart.
The day began with those retail trade figures that showed December sales slowing by 2.7% from November (remember this was the height of Christmas season) and 9.8% from a year ago. Expect more store closures and retail bankruptcies to follow on soon.
Other news concerned more banking woes - no kidding! - as Deutsche Bank recorded losses of 4.8 billion Euros in the 4th quarter of '08 and British giant HSBC is reportedly in need of a $30 billion cash infusion. Meanwhile, Citigroup is about as dead as a bank can be, having sold off its brokerage unit, Smith Barney, to Morgan Stanley for a paltry amount between $2 and $3 billion. Inasmuch as Morgan Stanley is getting a horde of brokers and a complete trading operation, the price is indicative of just how deep problems in the financial arena are, that adding over a trillion dollars in active accounts is valued so cheaply.
The biggest banks have gone bust. That's now certain. More carnage will follow as the deflationary environment expands, assimilating every aspect of the world's economies.
Each of the Dow's 30 components suffered losses on Wednesday, led by Citigroup, which lost 23%, down 1.37 to 4.53, below the statutory level at which many funds can hold the security. More than half a billion shares of the financial behemoth changed hands during the session.
Falling issues overwhelmed those few rising, 5617-999. New lows expanded even more beyond new highs, 178-15. Volume continues to be subdued.
NYSE Volume 1,417,663,000
NASDAQ Volume 1,948,551,000
The commodity slump continues apace. Oil dropped another 50 cents, to $37.39. Gold hit a 1-month low, losing $11.90, to $808.80. Silver was down 21 cents, to $10.48.
There isn't likely to be a respite from the string of bad news and poor economic reports over the next few days. PPI and CPI are due out Thursday and Friday, and also on Friday, capacity utilization and industrial production figures are released. with only the inauguration of President Barack Obama to break the spell, corporate earnings will garner most of the headlines by the end of next week.
Through the first week of February, earnings will dominate the news and there's a very real chance of stocks breaking down below the November 20 lows. The Dow is within 750 points, other indices are in similar ranges.
Anyone for lunch?
Wednesday, January 14, 2009
Tuesday, January 13, 2009
Balance of Trade Improves; Bernanke on Idiot Tour
Tuesday's split decision (NASDAQ and S&P up; Dow and Comp. down) continued to prove that volatility - along with traders - has departed the scene. Along with the wild swings that typified trading during the height of the crisis (Sept.-Nov.), also gone from the market are (in no particular order): a bunch of banks and financial firms which were losing billions of dollars, trillions of dollars in general, numerous hedge funds, speculators, analysts, traders and a monstrous number of small investors which have fled from pension and retirement funds, 401k's and mutual funds in general.
It's kinda quiet on Wall Street these days, despite the headlines about stimulus, recession, Mad Money, Madoff Money, etc.
The NASDAQ traded in a 30-point range on Tuesday. The Dow's full range, top to bottom, was less than 150 points. Fear has succumbed to complacency, stagnation and apathy. Big money isn't chasing stocks any more. In fact, big money has become smaller and small investors have been removed from the equation. The stock markets have gone from free lunch to eating each other's lunch to no lunch and maybe no dinner either. It's the equivalent of Rosie O'Donnell morphing into Lindsay Lohan (pardon the unappealing mental imagery there).
Dow 8,448.56, -25.41 (0.30%)
NASDAQ 1,546.46, +7.67 (0.50%)
S&P 500 871.79, +1.53 (0.18%)
NYSE Composite 5,538.84, -12.19 (0.22%)
There was a little bit of stunningly good news today that barely received notice. It was that the US Balance of Trade - which has been out of balance for so long that people just expect it to stay that way - actually contracted in November, 2008, to -$40.4 billion.
Owing to the general slowdown in international trade, exports decreased, but so did imports, especially oil (mostly due to price reductions) and goods from China. Overall, the decline in the balance of trade was $16.3 billion from October to November. At that pace, which is likely to be unsustainable, but nice to think about anyway, the US could actually have a positive trade balance by the middle of February. Golly! Maybe this recession isn't such a bad thing after all.
Of course, leave it to Ben Bernanke to throw cold water on rutting hogs. In a speech at the London School of Economics (a place whose students and staff might know a little about economics, so why invite "Helicopter Ben" to speak? - Bernanke offered such nuggets of wisdom as the government and/or the Fed continuing to bail out financial firms with taxpayer money, to the disparagement of the rest of the economy, and having the Fed underwriting everything from student loans and auto loans to credit cards and loans guaranteed by the Small Business Administration.
This is indeed splendid news. The Fed is armed with cash and ready to cover all debts, inflating at will. Ben assured the questioners that the unwinding of the debt incurred by the Fed - obviously some length down the road - will be handled smoothly. Here's hoping that Bernanke's efforts to constrain inflation later on will be better than his panicked attitude on the way down.
For now, however, Ben is hell-bent on reflating the economy, despite the fact that most of the assets which have declined in value - from McMansions to stocks to college degrees - were over-inflated to begin with. Fear not. With people like Ben Bernanke at the helm, our economic ship is sure to continue sinking.
On the markets, advancing issues finished ahead of decliners by a slim margin, 3485-3071. However, new lows continued to expand their edge over new highs, to 118-12, suggesting that the mini-dip we've been in since the beginning of last week is not about to end soon. But, stocks should get a little bit of a boost from the Obama inauguration a week from today, and, being that there are only three trading days before that event (Martin Luther King, Jr. Day is Monday, Jan. 19 and the markets are closed), stocks may avoid falling off the cliff and into the abyss before then.
Volume was once more less than expected, though, as I mentioned yesterday, expectations should be lowered in our new environment.
NYSE Volume 5,623,885,500
NASDAQ Volume 1,965,575,750
Like stocks, commodities were little changed. Oil gained a mere 19 cents, closing at $37.78. Gold dropped 30 cents, to $820.70. Silver dipped 7 cents to $10.68 (buy some!), but the real news was in natural gas futures, which saw the March futures contract on the NYMEX fall to $5.13 per mmbtu., the lowest level in nearly a year. Though it may not be immediately reflected in prices paid by consumers in winter heating bills, the trend is no doubt a friend to anyone who uses natural gas for heat. Energy, including everything from heating oil to gas for cars and trucks, has been the sleeper winner of the recession.
People may lose their jobs and their homes, but at least they aren't likely to freeze to death - at least not in America. we should be happy that our natural gas supply is not under the thumb of the Russians, who have cut delivery through the Ukraine to a host of eastern European nations since last week.
It's kinda quiet on Wall Street these days, despite the headlines about stimulus, recession, Mad Money, Madoff Money, etc.
The NASDAQ traded in a 30-point range on Tuesday. The Dow's full range, top to bottom, was less than 150 points. Fear has succumbed to complacency, stagnation and apathy. Big money isn't chasing stocks any more. In fact, big money has become smaller and small investors have been removed from the equation. The stock markets have gone from free lunch to eating each other's lunch to no lunch and maybe no dinner either. It's the equivalent of Rosie O'Donnell morphing into Lindsay Lohan (pardon the unappealing mental imagery there).
Dow 8,448.56, -25.41 (0.30%)
NASDAQ 1,546.46, +7.67 (0.50%)
S&P 500 871.79, +1.53 (0.18%)
NYSE Composite 5,538.84, -12.19 (0.22%)
There was a little bit of stunningly good news today that barely received notice. It was that the US Balance of Trade - which has been out of balance for so long that people just expect it to stay that way - actually contracted in November, 2008, to -$40.4 billion.
Owing to the general slowdown in international trade, exports decreased, but so did imports, especially oil (mostly due to price reductions) and goods from China. Overall, the decline in the balance of trade was $16.3 billion from October to November. At that pace, which is likely to be unsustainable, but nice to think about anyway, the US could actually have a positive trade balance by the middle of February. Golly! Maybe this recession isn't such a bad thing after all.
Of course, leave it to Ben Bernanke to throw cold water on rutting hogs. In a speech at the London School of Economics (a place whose students and staff might know a little about economics, so why invite "Helicopter Ben" to speak? - Bernanke offered such nuggets of wisdom as the government and/or the Fed continuing to bail out financial firms with taxpayer money, to the disparagement of the rest of the economy, and having the Fed underwriting everything from student loans and auto loans to credit cards and loans guaranteed by the Small Business Administration.
This is indeed splendid news. The Fed is armed with cash and ready to cover all debts, inflating at will. Ben assured the questioners that the unwinding of the debt incurred by the Fed - obviously some length down the road - will be handled smoothly. Here's hoping that Bernanke's efforts to constrain inflation later on will be better than his panicked attitude on the way down.
For now, however, Ben is hell-bent on reflating the economy, despite the fact that most of the assets which have declined in value - from McMansions to stocks to college degrees - were over-inflated to begin with. Fear not. With people like Ben Bernanke at the helm, our economic ship is sure to continue sinking.
On the markets, advancing issues finished ahead of decliners by a slim margin, 3485-3071. However, new lows continued to expand their edge over new highs, to 118-12, suggesting that the mini-dip we've been in since the beginning of last week is not about to end soon. But, stocks should get a little bit of a boost from the Obama inauguration a week from today, and, being that there are only three trading days before that event (Martin Luther King, Jr. Day is Monday, Jan. 19 and the markets are closed), stocks may avoid falling off the cliff and into the abyss before then.
Volume was once more less than expected, though, as I mentioned yesterday, expectations should be lowered in our new environment.
NYSE Volume 5,623,885,500
NASDAQ Volume 1,965,575,750
Like stocks, commodities were little changed. Oil gained a mere 19 cents, closing at $37.78. Gold dropped 30 cents, to $820.70. Silver dipped 7 cents to $10.68 (buy some!), but the real news was in natural gas futures, which saw the March futures contract on the NYMEX fall to $5.13 per mmbtu., the lowest level in nearly a year. Though it may not be immediately reflected in prices paid by consumers in winter heating bills, the trend is no doubt a friend to anyone who uses natural gas for heat. Energy, including everything from heating oil to gas for cars and trucks, has been the sleeper winner of the recession.
People may lose their jobs and their homes, but at least they aren't likely to freeze to death - at least not in America. we should be happy that our natural gas supply is not under the thumb of the Russians, who have cut delivery through the Ukraine to a host of eastern European nations since last week.
Monday, January 12, 2009
Stocks Down Again on Low Volume; Alcoa Losses Mount
Just as last week ended badly for US equity investors, Monday ushered in another round of depressing results.
Another week, another lost dollar. It's just the way it goes when you kill the golden goose, as the financial institutions, regulators and slimy government interlopers killed the Wall Street money machine.
That Wall Street is dead is almost an unmistakable fact. That people haven't noticed should be perhaps of more concern.
The banks - especially Citigroup, JP Morgan Chase, Goldman Sachs and Morgan Stanley (the last two recently having changed their status overnight from investment banks to bank holding companies) - are essentially insolvent. They leveraged their assets so far beyond the pale that US taxpayers have had to pony up cash to salvage what's left of them. Their reserves are maybe 1/50th of their lending, and their balance sheets, when the slime from level 2 and level 3 investments are included, are severely underwater.
Most people in the US and around the world do not understand the massive fraud that is being played out right in front of their eyes. Most of the banks which received TARP funds in the first round (about $350 billion) never lent a penny of the money, but rather used it to bolster their severely-damaged books. Obviously, it wasn't enough, as just today outgoing President Bush sent over a request for the remainder of the money (another $350 billion) to congress. As usual, congress will comply, adding some caveats in hopes that the banks will actually tell somebody, anybody, what they're doing with all that dough.
Don't hold your breath.
Dow 8,473.97, -125.21 (1.46%)
NASDAQ 1,538.79, -32.80 (2.09%)
S&P 500 870.26, -20.09 (2.26%)
NYSE Composite 5,551.03, -151.34 (2.65%
All major indices suffered losses, extending into the 4th straight down day, and the 5th out of 7 in 2009. Decliners led advancers by about 3-1, 5001-1383. New lows were ahead of new highs again, as usual, ad nauseum, 104-15. That gap is expanding, an ominous sign. Volume was pathetic, another signal that all is not well. Not only are investors sitting on the sidelines, many are just plain GONE, vanished, kaput. The level of declines since October have thinned the herd. At least those who have strayed may find greener pastures in foreign, or smaller, local markets. If they're smart, they'll invest in their own local economies instead of playing fat cat with the big boys.
NYSE Volume 1,305,193,000
NASDAQ Volume 1,785,911,000
The lower volume profile thus needs to be understood as a permanent fixture in the new, scorched earth market.
After markets closed, Alcoa (AA) kicked off earnings season by announcing a loss of $1.49 per share for the 4th quarter of 2008. The aluminum giant shed $1.19 billion during the quarter. With this first earnings call in hand, investors are bracing for one of the worst reporting periods on record.
While stocks were winding their way back down - all major indices are down for the year - commodities weren't exactly picking up the slack. Oil plummeted $3.24, to $37.59. Gold slumped $34.00, to $821.00. Silver dipped 57 cents, to $10.75. the ounce. Could be time to begin stocking up on silver bars.
Another week, another lost dollar. It's just the way it goes when you kill the golden goose, as the financial institutions, regulators and slimy government interlopers killed the Wall Street money machine.
That Wall Street is dead is almost an unmistakable fact. That people haven't noticed should be perhaps of more concern.
The banks - especially Citigroup, JP Morgan Chase, Goldman Sachs and Morgan Stanley (the last two recently having changed their status overnight from investment banks to bank holding companies) - are essentially insolvent. They leveraged their assets so far beyond the pale that US taxpayers have had to pony up cash to salvage what's left of them. Their reserves are maybe 1/50th of their lending, and their balance sheets, when the slime from level 2 and level 3 investments are included, are severely underwater.
Most people in the US and around the world do not understand the massive fraud that is being played out right in front of their eyes. Most of the banks which received TARP funds in the first round (about $350 billion) never lent a penny of the money, but rather used it to bolster their severely-damaged books. Obviously, it wasn't enough, as just today outgoing President Bush sent over a request for the remainder of the money (another $350 billion) to congress. As usual, congress will comply, adding some caveats in hopes that the banks will actually tell somebody, anybody, what they're doing with all that dough.
Don't hold your breath.
Dow 8,473.97, -125.21 (1.46%)
NASDAQ 1,538.79, -32.80 (2.09%)
S&P 500 870.26, -20.09 (2.26%)
NYSE Composite 5,551.03, -151.34 (2.65%
All major indices suffered losses, extending into the 4th straight down day, and the 5th out of 7 in 2009. Decliners led advancers by about 3-1, 5001-1383. New lows were ahead of new highs again, as usual, ad nauseum, 104-15. That gap is expanding, an ominous sign. Volume was pathetic, another signal that all is not well. Not only are investors sitting on the sidelines, many are just plain GONE, vanished, kaput. The level of declines since October have thinned the herd. At least those who have strayed may find greener pastures in foreign, or smaller, local markets. If they're smart, they'll invest in their own local economies instead of playing fat cat with the big boys.
NYSE Volume 1,305,193,000
NASDAQ Volume 1,785,911,000
The lower volume profile thus needs to be understood as a permanent fixture in the new, scorched earth market.
After markets closed, Alcoa (AA) kicked off earnings season by announcing a loss of $1.49 per share for the 4th quarter of 2008. The aluminum giant shed $1.19 billion during the quarter. With this first earnings call in hand, investors are bracing for one of the worst reporting periods on record.
While stocks were winding their way back down - all major indices are down for the year - commodities weren't exactly picking up the slack. Oil plummeted $3.24, to $37.59. Gold slumped $34.00, to $821.00. Silver dipped 57 cents, to $10.75. the ounce. Could be time to begin stocking up on silver bars.
Friday, January 9, 2009
It Always Ends Badly
The trouble with suffering through deep recessions is that there's seldom any respite from the continuing flow of bad news, nor is there relief from the severity of the crushing blows delivered daily to the economy and to investors.
This first full week of January provided a little bit of a glimpse of what the rest of the year is going to look like, and it isn't pretty. After going straight up on Friday of last week, the markets went straight down through the week, ending with a loud thud on Friday that sent all the major indices into negative territory for the year. Lest we not forget, the January Barometer - which has proven to be 91% accurate - says, in a nutshell, as goes January, so goes the year. 2009 is not shaping up to be very good at all.
I've actually been quite amused by the number of supposedly "smart" people who are still encouraging people to hold onto their 401k funds, keep them in stocks, "because they always rebound" and other such nonsense. Stocks are sure to bounce off their lows, but they're probably not even close to their absolute bottoms yet. The number of bankruptcies by listed companies in 2009 is going to astound even these "experts," especially the ones who said recovery will begin in the second half of the year.
Anyone currently accumulating either cash, gold, silver or all of the above will be rewarded handsomely at the end of this corrective period, whenever that is... 2010, 2011 or later.
What sank the indices on Friday was no surprise announcement. The Bureau of Labor Statistics, that august group of number massagers, pronounced on Friday morning that the US had shed another 524,000 jobs in December, and that's almost surely off by at least 100,000. The number ADP applied to December job losses on Wednesday was 693,000, and that's more believable, though the stock pushers will gladly take the "official" government number as gospel (or at least that's what they'll tell their clients), being that it's 1/3 smaller than reality.
Dow 8,599.18, -143.28 (1.64%)
NASDAQ 1,571.59, -45.42 (2.81%)
S&P 500 890.35, -19.38 (2.13%)
NYSE Composite 5,703.69, -133.45 (2.29%)
Again, the numbers surely should have surprised exactly nobody, yet the markets responded in the usual pattern of lost hope and near-desperation. They sold in the morning and sold more in the late afternoon.
Declining issues outweighed advancers by a large margin, 4714-1871, though the 5-2 ratio is hardly demonstrative of the market's true weakness. For that, two other readily-available indicators are more poignant: The new highs-new lows ratio and overall volume. New lows outnumbered new highs, 90-30, and while that margin is not great, the persistence of its one-sidedness is remarkable. As for volume, it gets weaker by the day. More and more investors are pulling out of positions and redemptions from funds are still running, at a slower pace than 3 months ago, but that's only because the overall fund balances and holders are smaller.
NYSE Volume 1,158,510,000
NASDAQ Volume 1,946,649,000
Volumes were absolutely pathetic, and they're likely to get even smaller as more players head for the benches. Obviously, those who didn't exit positions on Wednesday, did so on Friday.
Commodities made marginal moves, which is understandable, especially considering the amount of debate over President-elect Obama's thinly-outlined recovery plan, announced Thursday, and rounded beaten up and down since. Oil dropped 93 cents, closing at $40.83. Gold struggled to gain just 50 cents, closing at $855.00, though silver stood apart, gaining 22 cents to finish at $11.32 (lest I remind anyone for the umpteenth time that silver is my #1 pick for 2009).
The coming days and weeks do not bode well for investors of any stripe, unless you're super smart and super short this market. The entire nation is sluggish and on hold until the 20th of January, when the new administration officially takes over. 10 days and counting.
This first full week of January provided a little bit of a glimpse of what the rest of the year is going to look like, and it isn't pretty. After going straight up on Friday of last week, the markets went straight down through the week, ending with a loud thud on Friday that sent all the major indices into negative territory for the year. Lest we not forget, the January Barometer - which has proven to be 91% accurate - says, in a nutshell, as goes January, so goes the year. 2009 is not shaping up to be very good at all.
I've actually been quite amused by the number of supposedly "smart" people who are still encouraging people to hold onto their 401k funds, keep them in stocks, "because they always rebound" and other such nonsense. Stocks are sure to bounce off their lows, but they're probably not even close to their absolute bottoms yet. The number of bankruptcies by listed companies in 2009 is going to astound even these "experts," especially the ones who said recovery will begin in the second half of the year.
Anyone currently accumulating either cash, gold, silver or all of the above will be rewarded handsomely at the end of this corrective period, whenever that is... 2010, 2011 or later.
What sank the indices on Friday was no surprise announcement. The Bureau of Labor Statistics, that august group of number massagers, pronounced on Friday morning that the US had shed another 524,000 jobs in December, and that's almost surely off by at least 100,000. The number ADP applied to December job losses on Wednesday was 693,000, and that's more believable, though the stock pushers will gladly take the "official" government number as gospel (or at least that's what they'll tell their clients), being that it's 1/3 smaller than reality.
Dow 8,599.18, -143.28 (1.64%)
NASDAQ 1,571.59, -45.42 (2.81%)
S&P 500 890.35, -19.38 (2.13%)
NYSE Composite 5,703.69, -133.45 (2.29%)
Again, the numbers surely should have surprised exactly nobody, yet the markets responded in the usual pattern of lost hope and near-desperation. They sold in the morning and sold more in the late afternoon.
Declining issues outweighed advancers by a large margin, 4714-1871, though the 5-2 ratio is hardly demonstrative of the market's true weakness. For that, two other readily-available indicators are more poignant: The new highs-new lows ratio and overall volume. New lows outnumbered new highs, 90-30, and while that margin is not great, the persistence of its one-sidedness is remarkable. As for volume, it gets weaker by the day. More and more investors are pulling out of positions and redemptions from funds are still running, at a slower pace than 3 months ago, but that's only because the overall fund balances and holders are smaller.
NYSE Volume 1,158,510,000
NASDAQ Volume 1,946,649,000
Volumes were absolutely pathetic, and they're likely to get even smaller as more players head for the benches. Obviously, those who didn't exit positions on Wednesday, did so on Friday.
Commodities made marginal moves, which is understandable, especially considering the amount of debate over President-elect Obama's thinly-outlined recovery plan, announced Thursday, and rounded beaten up and down since. Oil dropped 93 cents, closing at $40.83. Gold struggled to gain just 50 cents, closing at $855.00, though silver stood apart, gaining 22 cents to finish at $11.32 (lest I remind anyone for the umpteenth time that silver is my #1 pick for 2009).
The coming days and weeks do not bode well for investors of any stripe, unless you're super smart and super short this market. The entire nation is sluggish and on hold until the 20th of January, when the new administration officially takes over. 10 days and counting.
Thursday, January 8, 2009
Retail Slump, Obama Pump, Pain All Around
Stocks ended the day mixed, amid poor retail results and fear of huge job losses continuing through Spring. The overhanging fear of the government's Friday's Nonfarm Payroll report showing a second consecutive month of more than 500,000 job losses in December was palpable. Nevertheless, stocks rallied off mid-day lows for gains in all indices save the Dow.
Dow 8,742.46, -27.24 (0.31%)
NASDAQ 1,617.01, +17.95 (1.12%)
S&P 500 909.73, +3.08 (0.34%)
NYSE Composite 5,837.14, +38.09 (0.66%)
Retail sales for December were released by a variety of major chains, and the results, fully expected, showed mass declines, despite 50-7-% markdowns throughout the important holiday season. Among the highlights for same-store sales:
Well, as apples go, that's a bunch of bruised, rotting fruit.
Shortly after 11:00 am, President-elect Barack Obama issued a terse pre-inaugural speech on his proposed American Recovery and Reinvestment Plan (ARRP). Obama outlined plans to jump-start four major areas of interest: health care, education, energy and infrastructure. The ideas put forward included retrofitting federal buildings with smart or green-tech energy solutions, providing computers and technology to schools, money for road, bridge and building projects that are shovel-ready and in need of funding and computerization of medical records, to name just a few.
The ARRP also is proposed to include incentives to business, plus a $1000 tax break for "95% of middle class taxpayers." Obama directed his speech primarily to legislators in congress, urging them to put aside partisanship and special interests in favor of "what's good for America." The speech was short - about 15 minutes - and lacking in specifics, though one cannot fault the President-elect on that account, since he is not yet officially our head of state.
Markets, which had recovered from earlier declines, fell back into or further into the red. The Dow, in particular, remained underwater, sinking roughly 100 points by the end of the speech. It is entirely possible that Wall Street may not like what Obama is proposing, because he may actually take on the players, CEOs, regulators, crooks and criminals who caused the economic issues we are currently enduring. If Obama is true to his word, Wall Street firms will be forced to commit to more accountability and scrutiny than has existed for the past 20 years.
If the election of Barack Obama was a truly historic event, then his proposals may prove to be the kind of stimulus which at least limits the pain of the economic downturn and shortens its duration. That's about as much as we can hope for from a new president inheriting a set of economic conditions that are the worst in at least 80 years.
Change is surely in the wind, and Wall Street, already dead, may be setting up for the burial ritual in which financial firms and companies overloaded with debt are quickly dispatched, destroyed in value and liquidated. That is the message coming from Washington. Wall Street and the investment community would be wise to heed the headwinds blowing from the Potomac to the Hudson.
Obama's plan - depending on how badly congress distorts the original intent - is likely to be good for Main Street and ranging from neutral to bad for Wall Street. Tough luck for those who refuse to change, upgrade and grow into the 21st century.
There is still plenty of excess, overhang and waste that has yet to be discounted in the stocks which constitute the major indices, though all indications are that investors will seek more transparency and accountability from publicly-traded firms. The discounting mechanism that is the stock exchange should manage to squeeze out the remaining overvaluations.
On the day, advancing issues outflanked decliners, 4002-2574. New lows remained stubbornly ahead of hew highs, 87-27.
Volume remains light, likely a permanent feature in the new paradigm of the US stock markets until the economy begins to recover, at least. Many participants are sitting on the sidelines or seeking safer havens for their money. The associated rise in the number of bond issuance offers a clue to just how fearful or dissuaded investors have become,
NYSE Volume 1,196,486,000
NASDAQ Volume 2,011,787,000
Commodities were also mixed. Oil dipped 93 cents, to $41.70. Gold gained $12.80 to $854.50. Silver dropped a penny, closing at $11.10.
The upcoming Nonfarms Payroll report, due to be released at 8:30 Friday morning, may have already been discounted on Wednesday, when private payroll firm ADP announced their figure of 693,000 jobs lost in December. Thus, it's a 50-50 proposition on whether stocks will rally or sell-off tomorrow. ADP seems to have taken some of the sting out of the government report. Investor reaction should be more measured than normal.
Dow 8,742.46, -27.24 (0.31%)
NASDAQ 1,617.01, +17.95 (1.12%)
S&P 500 909.73, +3.08 (0.34%)
NYSE Composite 5,837.14, +38.09 (0.66%)
Retail sales for December were released by a variety of major chains, and the results, fully expected, showed mass declines, despite 50-7-% markdowns throughout the important holiday season. Among the highlights for same-store sales:
- Wal-Mart was the only company reporting an increase in same-store sales, +1.2%
- Costco -4%
- Sears -7.3%
- Macy's -4%
- Saks Fifth Avenue -19.8%
- Limited Brands -10%
- Gap -14%
- Abercrombie & Fitch -24%
- Williams-Sonoma -24%
- Dillard's -5%
- Target -4.1%
- Kohl's -1.4%
- JC Penny's -8.1%
Well, as apples go, that's a bunch of bruised, rotting fruit.
Shortly after 11:00 am, President-elect Barack Obama issued a terse pre-inaugural speech on his proposed American Recovery and Reinvestment Plan (ARRP). Obama outlined plans to jump-start four major areas of interest: health care, education, energy and infrastructure. The ideas put forward included retrofitting federal buildings with smart or green-tech energy solutions, providing computers and technology to schools, money for road, bridge and building projects that are shovel-ready and in need of funding and computerization of medical records, to name just a few.
The ARRP also is proposed to include incentives to business, plus a $1000 tax break for "95% of middle class taxpayers." Obama directed his speech primarily to legislators in congress, urging them to put aside partisanship and special interests in favor of "what's good for America." The speech was short - about 15 minutes - and lacking in specifics, though one cannot fault the President-elect on that account, since he is not yet officially our head of state.
Markets, which had recovered from earlier declines, fell back into or further into the red. The Dow, in particular, remained underwater, sinking roughly 100 points by the end of the speech. It is entirely possible that Wall Street may not like what Obama is proposing, because he may actually take on the players, CEOs, regulators, crooks and criminals who caused the economic issues we are currently enduring. If Obama is true to his word, Wall Street firms will be forced to commit to more accountability and scrutiny than has existed for the past 20 years.
If the election of Barack Obama was a truly historic event, then his proposals may prove to be the kind of stimulus which at least limits the pain of the economic downturn and shortens its duration. That's about as much as we can hope for from a new president inheriting a set of economic conditions that are the worst in at least 80 years.
Change is surely in the wind, and Wall Street, already dead, may be setting up for the burial ritual in which financial firms and companies overloaded with debt are quickly dispatched, destroyed in value and liquidated. That is the message coming from Washington. Wall Street and the investment community would be wise to heed the headwinds blowing from the Potomac to the Hudson.
Obama's plan - depending on how badly congress distorts the original intent - is likely to be good for Main Street and ranging from neutral to bad for Wall Street. Tough luck for those who refuse to change, upgrade and grow into the 21st century.
There is still plenty of excess, overhang and waste that has yet to be discounted in the stocks which constitute the major indices, though all indications are that investors will seek more transparency and accountability from publicly-traded firms. The discounting mechanism that is the stock exchange should manage to squeeze out the remaining overvaluations.
On the day, advancing issues outflanked decliners, 4002-2574. New lows remained stubbornly ahead of hew highs, 87-27.
Volume remains light, likely a permanent feature in the new paradigm of the US stock markets until the economy begins to recover, at least. Many participants are sitting on the sidelines or seeking safer havens for their money. The associated rise in the number of bond issuance offers a clue to just how fearful or dissuaded investors have become,
NYSE Volume 1,196,486,000
NASDAQ Volume 2,011,787,000
Commodities were also mixed. Oil dipped 93 cents, to $41.70. Gold gained $12.80 to $854.50. Silver dropped a penny, closing at $11.10.
The upcoming Nonfarms Payroll report, due to be released at 8:30 Friday morning, may have already been discounted on Wednesday, when private payroll firm ADP announced their figure of 693,000 jobs lost in December. Thus, it's a 50-50 proposition on whether stocks will rally or sell-off tomorrow. ADP seems to have taken some of the sting out of the government report. Investor reaction should be more measured than normal.
Subscribe to:
Posts (Atom)
Posts
