Taking Stock Of Wall Street 2008-10-17

30 October, 2010

On last Friday, the market started lower than the previous close and then gradually crawled up to a high, only to settle back to a lower level than where it started.

GLOBAL PICTURE

Asian markets were mixed: Japanese Nikkei and Chinese Shanghai went UP while Hong Kong’s Hang Seng and Indian BSE were DOWN.

European markets all closed UP in positive territory by 2%-4%.

Netherland government is infusing $13.4 bln into the Dutch bank ING Groep NV (ING).

US ECONOMIC DATA

University of Michigan’s Consumer Confidence for October – went down to 57.5. The consensus forecast was for 65.0. In September, it was 70.3.

Expectation figures for unemployment rise were cat 64%, compared to 45% in September.

These figures show a reversal of positive trend in consumer confidence that started with August readings.

Construction Starts for September – New home starts were down by -6.3% to 817,000. It was far below the expected 880,000 and established a new 17-year low.

Permits fell by 8.3% to 786,000 from 840,000 another new low- in 27 years.

Privately owned housing completions rose by 11.7% to 1,097,000. But, compared to September 2007, this shows a plunge by 20.4%.

GOVERNMENTAL ACTIONS

President Bush told the U.S. Chamber of Commerce: the present actions will take some time to take effect to ease the tight credit situation.

The Fed insisted the Credit Default Swap (CDS) market should have a central clearinghouse to make for the $55 trillion market transparent and liquid. They have been talking to NYSE Euronext (NYX) and CME -Citadel combine, institutions who have shown interest in running such a venture.

New York’s Attorney General’s office wants AIG (AIG) to rescind some of the recent golden parachute payments given to some of the company’s officials.

MARKETS

Crude oil was UP by $2.00 (2.86%) to $72.04.

Gold fell by -$16.80 (-2.09%) to $787.70

CBOE Volatility (VIX) was70.73, just 2.72 up from yesterday.

STOCK MARKET INDICES

Dow went DOWN by -127.04 (-1.41%) to 8,852.22

S&P 500 DOWN by -5.88 (-0.62%) to 940.50

Nasdaq DOWN by -6.42(-0.37%) to 1,711.29

NYSE

Daily Volume: 1.72 bln

A/D Ratio: 1782 stocks advanced against 1413 declined

52-week Hi/Lo: 19 stocks climbed to new Highs while 138 went down to novel Lows

Nasdaq

Daily Volume: 2.73 bln

A/D Ratio: 1282 stocks advanced against 1609 declined

52-week Hi/Lo: 2 stocks climbed to new Highs while 126 went down to current Lows

MARKET NEWS

Worldspace Inc (WRSP), satellite radio broadcaster, has filed for bankruptcy protection.

Nike Inc (NKE) is suing Wal-Mart Stores (WMT), alleging the retailer is selling shoes that too closely resemble Nike’s patented technology and design.

Advanced Micro Devices (AMD) intends to spin off its operations into two divisions: (1) for manufacturing microprocessors (2) for designing and marketing them.

M&A NEWS

General Motors (GM) and Cerebrus Capital Management appear to be back to the table for talks on Chrysler. Earlier talks were centered on a swap: GM’s GMAC for Cerebrus’s Chrysler.

COMPANY RESULTS

* Companies that exceeded market’s expectations on quarterly earnings:

Honeywell (HON), Schlumberger (SLB), Capital One Financial (COF), Gilead Sciences (GILD), IBM (IBM) and Google (GOOG)

* Those that missed the forecasts:

Sony Ericsson Mobile Communications {(SNE), (ERIC)}

ANALYSTS’ RATINGS

* The company stocks upgraded include:

Advance Auto Parts Inc (AAP), Badger Meter Inc (BMI) Bank of New York Mellon Corp (BK), Foot Locker Inc (FL), Gilead Sciences Inc (GILD),

Highland Distressed Opportunities Inc (HCD), Juniper Networks Inc (JNPR), LSI Industries Inc (LYTS) Masco Corp (MAS), Merck & Co Inc (MRK),

Neustar Inc (NSR), Taleo Corp (TLEO), TECO Energy Inc (TE), Tempur-Pedic International Inc (TPX), United Therapeutics Corp (UTHR),

Watsco Inc (WSO), Winnebago Industries Inc (WGO) and Wyeth (WYE).

* The stocks downgraded are:

Amcore Financial Inc (AMFI), Avis Budget Group (CAR), Canadian National Railway Co (CNI), Canadian Pacific Railway Ltd (CP),

Chicago Bridge & Iron Co NV (CBI), Dynamics Research Corp (DRCO), Evergreen Solar Inc (ESLR), Freeport-McMoRan Copper & Gold Inc (FCX),

Lundin Mining Corp (LMC), Luxottica Group SpA (LUX), Macrovision Solutions Corp (MVSN), NGP Capital Resources Co (NGPC),

Sunpower Corp (SPWRA), Textron Inc (TXT) and Zions Bancorp (ZION).

HOW Mighty TRUST BANKS HAVE IN EACH OTHER’S CREDIT WORTHINESS?

(Federal benchmark rate 1.5%)

The overnight Libor rate DOWN to 1.67%

Three-month Libor rate DOWN to 4.42

FED TALK

Chicago Regional Fed’s President, Charles Evans spoke at Marian University in Wisconsin:

  • The economic outlook for production, spending and labor markets up to 2009,
  • Further headway can only come from a reversal in when the housing and financial markets.
  • The modern 6.1 percent unemployment rate points to the possibility of a recession.
  • Government’s recent $700 billion financial bailout package was needed to aid reduce risks to the economy by easing credit availability.

POINTERS TO THE FUTURE

Warren Buffett wrote in Recent York Times that he is fearful when others are greedy and is greedy when others are troubled. With all respect to America’s Oracle, it is not easy for an average Joe to be able to follow his dictums because very few can even afford the $100,000+ price of his A share or even the $4000 price of his B share. Not to speak of debt, unemployment and foreclosures.

OPEC is to meet again on October 24 to devise strategies to hold the minimum oil price levels at $70 per barrel.

Friday’s market statistics included closed positions due to expiration of October options. So, we will have to wait for the next week’s statistics starting tomorrow before making judgments on market direction.

WEEKLY SCORECARD

The weekly bearish dawdle in markets is unabated, though rallying attempts are seen on isolated days:

Dow -4.7%

S&P 500 -4.6%

Nasdaq -3.7%