Another Fed Rate Cut?
Hat tip to the BoSox for sweeping the Rockies, we stand corrected.
Verizon & Humana beat the number, Kellogs beat by a penny, but gave lowered forward guidance. Crude topping $93 and headed for our $100 target.
Greenspun on the money... Alan Greenspan said $100 oil would not be all bad as it would help the U.S. to break its oil dependence.
Greenspan also said he expects more weakness in the real dollar rate, especially against China's Yuan.
More to come... UBS AG confirmed to investors that its Q3 loss will be in line with a profit warning issued earlier this month.
Also, further write downs due to the U.S. mortgage securities the bank still holds are possible.
Fleck thinks that last weeks roughing up in semi's and debt insurance woes, may be a harbinger of things to come.
"I don't see how the four horseflies: Apple, Amazon, Google and RIMM, and the other handful of momentum stocks can carry the market higher by themselves.
The dead fish, the fools who listen to them and the computers that wind up buying the back-tested version of what other folks do, all have feasted on tech.
There are more dark-matter downgrades to come and that some of the insurers of credit may find themselves in serious trouble as credits go bad.
If the insurers get into trouble, then all of the credits they insure obviously will worsen.
There is an absolute mountain of paper that trades where it does only because it has insurance.
Sort of like the paper that traded where it did because it was supposedly AAA, and that rating turned out to be worthless.
Any AAA, AA, A or whatever rating that's based on insurance may not be worth the paper it's written on.
Memo to nonbelievers: The problem is spreading, it has not been discounted and it has not been contained."
Confidence down... According to a Bloomberg/Los Angeles Times poll taken Oct. 19-22:
Almost two-thirds of Americans said a recession is likely in the next year, and a majority said the economy is already faltering.
Main engine out... The housing market accounts for as much as 23% of U.S. GDP and 80% of all new job growth since 2001.
David Burritt, Caterpillar's CFO: "We don't expect big improvements in North America any time soon.
The worst U.S. housing recession in at least 16 years will lead to a 12% decline in North American machinery and engine sales this year."
Profit down on financials... Profit of SP500 Index members may have fallen for the first time in more than five years in Q3.
breaking a 20-quarter streak of gains exceeding 10%, according to data compiled by Bloomberg.
The 301 companies in the Sp500 that had reported through Oct. 26 posted an average profit decline of 0.8%.
Counting analysts' estimates for companies that haven't reported, average earnings may have fallen 1.6% in the quarter, according to the data.
Excluding financial companies, earnings of SP500 companies through Oct. 26 rose 11%.
Office 15% Off... Office Depot the world's 2nd largest office supplies chain... stock fell 15% today.
In July, OD said that Q2 profit dropped as a slowdown in home sales and higher fuel costs caused small businesses and consumers to visit its stores less and buy fewer items.
The company also said in July that the SEC began an informal inquiry into its contacts with financial analysts. Q3 earnings were scheduled for tomorrow before the bell.
The company said in a statement today that it is postponing and will release the new announcement date later. The retailer's audit committee is investigating whether discounts from suppliers were booked at the right time.
Another cut? Friday: "We expect a rise to 2250-60 NDX in anticipation of a Oct 31st rate cut. What will the Fed do? And how will the market react?"
The likely rationale if the Fed cuts: a desire to prevent the worst case...
in which renewed market tumult, rising oil prices and falling home values drive the U.S. economy into recession.
The Fed, though, may combine such a move with an open-ended statement that doesn't promise further cuts.
Former Fed Head Lyle Gramley, now at Stanford Group Co. "The Fed ought to have a cooler head."
Gramley is among a minority of economists who expect the Fed to stand pat. He says policy makers may not have enough evidence of a weaker economy to support another rate reduction now.
Historical reference... When LTCM failed in 1998 stocks slumped and credit costs rose.
After trimming rates a quarter percentage point in September 1998, the central bank had to follow with similar reductions in October and November after the first cut failed to stabilize financial markets.
No cut on Oct 31st means BIG disappointment. Cut?? Initial glee, but then we could see a redux of Jan 31, 2001 rather than the 1998 scenario.
Between June 99 and May 00, the Fed raised to 6.5%, then held for 7 months. During which the Dot.com implosion began the stock market slide in Mar 2000.
In a surprise meeting 01/03/01 the Fed cut 50 bps, the markets rocketed to the upside for 4 weeks.
At the regularly schedule meeting on 01/31/01; The Fed cut another 50 bps. The market initially jumped up then closed down that day.
Looking at a chart it appears after raising, then holding, the 2nd cut reinforced lower economic expectations and a weaker dollar, which sent the market into a 3 year tail spin.
An economic-risk index compiled by Citigroup suggests that credit costs are rising after dropping in the aftermath of the initial 50 bps September rate cut.
From Fleck: "If you think of the return to sanity as a positive development, there's reason to be encouraged by Investors Intelligence's report, which recorded the most lopsided sentiment reading in many years.
Last week, bulls stood at 62% and bears at about 19%. For anyone who's been around the stock market for any length of time, that is a clear warning sign."
Will history repeat itself? Or will we see a Santa rally to close out the year? Hat tip to Bloomberg & MSN.
Verizon & Humana beat the number, Kellogs beat by a penny, but gave lowered forward guidance. Crude topping $93 and headed for our $100 target.
Greenspun on the money... Alan Greenspan said $100 oil would not be all bad as it would help the U.S. to break its oil dependence.
Greenspan also said he expects more weakness in the real dollar rate, especially against China's Yuan.
More to come... UBS AG confirmed to investors that its Q3 loss will be in line with a profit warning issued earlier this month.
Also, further write downs due to the U.S. mortgage securities the bank still holds are possible.
Fleck thinks that last weeks roughing up in semi's and debt insurance woes, may be a harbinger of things to come.
"I don't see how the four horseflies: Apple, Amazon, Google and RIMM, and the other handful of momentum stocks can carry the market higher by themselves.
The dead fish, the fools who listen to them and the computers that wind up buying the back-tested version of what other folks do, all have feasted on tech.
There are more dark-matter downgrades to come and that some of the insurers of credit may find themselves in serious trouble as credits go bad.
If the insurers get into trouble, then all of the credits they insure obviously will worsen.
There is an absolute mountain of paper that trades where it does only because it has insurance.
Sort of like the paper that traded where it did because it was supposedly AAA, and that rating turned out to be worthless.
Any AAA, AA, A or whatever rating that's based on insurance may not be worth the paper it's written on.
Memo to nonbelievers: The problem is spreading, it has not been discounted and it has not been contained."
Confidence down... According to a Bloomberg/Los Angeles Times poll taken Oct. 19-22:
Almost two-thirds of Americans said a recession is likely in the next year, and a majority said the economy is already faltering.
Main engine out... The housing market accounts for as much as 23% of U.S. GDP and 80% of all new job growth since 2001.
David Burritt, Caterpillar's CFO: "We don't expect big improvements in North America any time soon.
The worst U.S. housing recession in at least 16 years will lead to a 12% decline in North American machinery and engine sales this year."
Profit down on financials... Profit of SP500 Index members may have fallen for the first time in more than five years in Q3.
breaking a 20-quarter streak of gains exceeding 10%, according to data compiled by Bloomberg.
The 301 companies in the Sp500 that had reported through Oct. 26 posted an average profit decline of 0.8%.
Counting analysts' estimates for companies that haven't reported, average earnings may have fallen 1.6% in the quarter, according to the data.
Excluding financial companies, earnings of SP500 companies through Oct. 26 rose 11%.
Office 15% Off... Office Depot the world's 2nd largest office supplies chain... stock fell 15% today.
In July, OD said that Q2 profit dropped as a slowdown in home sales and higher fuel costs caused small businesses and consumers to visit its stores less and buy fewer items.
The company also said in July that the SEC began an informal inquiry into its contacts with financial analysts. Q3 earnings were scheduled for tomorrow before the bell.
The company said in a statement today that it is postponing and will release the new announcement date later. The retailer's audit committee is investigating whether discounts from suppliers were booked at the right time.
Another cut? Friday: "We expect a rise to 2250-60 NDX in anticipation of a Oct 31st rate cut. What will the Fed do? And how will the market react?"
The likely rationale if the Fed cuts: a desire to prevent the worst case...
in which renewed market tumult, rising oil prices and falling home values drive the U.S. economy into recession.
The Fed, though, may combine such a move with an open-ended statement that doesn't promise further cuts.
Former Fed Head Lyle Gramley, now at Stanford Group Co. "The Fed ought to have a cooler head."
Gramley is among a minority of economists who expect the Fed to stand pat. He says policy makers may not have enough evidence of a weaker economy to support another rate reduction now.
Historical reference... When LTCM failed in 1998 stocks slumped and credit costs rose.
After trimming rates a quarter percentage point in September 1998, the central bank had to follow with similar reductions in October and November after the first cut failed to stabilize financial markets.
No cut on Oct 31st means BIG disappointment. Cut?? Initial glee, but then we could see a redux of Jan 31, 2001 rather than the 1998 scenario.
Between June 99 and May 00, the Fed raised to 6.5%, then held for 7 months. During which the Dot.com implosion began the stock market slide in Mar 2000.
In a surprise meeting 01/03/01 the Fed cut 50 bps, the markets rocketed to the upside for 4 weeks.
At the regularly schedule meeting on 01/31/01; The Fed cut another 50 bps. The market initially jumped up then closed down that day.
Looking at a chart it appears after raising, then holding, the 2nd cut reinforced lower economic expectations and a weaker dollar, which sent the market into a 3 year tail spin.
An economic-risk index compiled by Citigroup suggests that credit costs are rising after dropping in the aftermath of the initial 50 bps September rate cut.
From Fleck: "If you think of the return to sanity as a positive development, there's reason to be encouraged by Investors Intelligence's report, which recorded the most lopsided sentiment reading in many years.
Last week, bulls stood at 62% and bears at about 19%. For anyone who's been around the stock market for any length of time, that is a clear warning sign."
Will history repeat itself? Or will we see a Santa rally to close out the year? Hat tip to Bloomberg & MSN.
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