Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Inactive Obama Leads Stock Market Indices Lower

Stock-Markets / Financial Markets 2009 Feb 05, 2009 - 03:55 AM GMT

By: PaddyPowerTrader

Stock-Markets Best Financial Markets Analysis ArticleThe Dow Jones fell below 8,000 again yesterday after dodgy earnings from Kraft, Sara-Lee and Costco (are people really that cash strapped that they are cutting back on basics?) and expectations of uber weak January retail and chain stores sales numbers. Tech bellwether Cisco warned on revenues overnight.


Markets are greedy beasts; the avarice for fresh news is insatiable and they abhor a vacuum. So the distinct lack of any new tangible information on the US macroeconomic policy front is now becoming an issue. Earlier hopes for a swift delivery of solutions from the Obama administration have dimmed further pressuring stocks which continue to face the headwinds of dire earnings, no guidance and woeful economic data.

Today's Market Moving Stories

  • Lots of chat on the wires overnight from various US policymakers. US Senator Dodd (Chair of the Banking Committee) stated that the creation of a systematic risk regulator, possibly the Fed, would be considered to strengthen and centralise financial oversight. Fairly priceless coming from a man who spent his career being sponsored by Fannie Mae and Freddie Mac to prevent just such a thing happening! Influential Senator Shebly meanwhile said in a candid moment that that the TARP had drifted rudderless and wasted millions (I'd say billions) of taxpayers money. US Treasury Secretary Tim Geithner has promised to give a comprehensive outline of the NEW program for financial recovery later this week.
  • Warren Buffet's Berkshire Hathaway has invested CHF 3bn in Swiss Re after their horror show results this morning and may be prepared to put in CHF 2bn more to strengthen the company's capital base. Now while the Sage extracted his customary pound of flesh, a 12% coupon and the right to exchange into equity in 3 years at CHF 25, Buffet has a pretty poor record when it comes to investing in financials. Think Goldman Sachs etc! And what of Bank of America?! Down 40% on the week to below the key 5 bucks mark for the first time since 1990. They look increasingly like going the way of Citibank. Yes nationalisation of America's biggest bank beckons which would wipe out the common stock holder. A report in the WSJ implies strongly that BoA wanted to exit the Merrill Lynch deal last December but had their arm unceremoniously twisted by Bernanke and Paulson.
  • Other European financials reporting this morning made for all too familiar grim reading. Deutsche Bank's results were awful and they look VERY capital light i.e. their leverage ratio is still 28: 1, so either they have to continue to de-leverage or raise extra equity / capital. Spain's Santander and Denmark's Danske (who own NIB in Ireland which was a big drag) also spectacularly missed targets, the latter by a country mile. Prudential came in with numbers that can only be described as diabolical and not even on the same page as analysts expectations and Swedish bank SEB is planning a rights issue (good luck).
  • Tullow Oil, in a drilling update, said that an upgrade for their Kingfisher field is a possibility. With the US foods sector under pressure Irish stocks Kerry, Greencore and Glanbia all of whom have significant investments in this market may feel a chill.
  • On a lighter note, some career opportunities .

The Irish Banks Saga
The Irish Times reports that the Irish Cabinet has already signed off on legislation allowing the National Pension Reserve Fund to be used to help recapitalise the country's banks. The recapitalisation will most likely in the form of preference shares being injected into the banks, which will bear annual interest of 8%. Separately the directors and top executives in AIB and Bank of Ireland are facing large cuts in pay as a condition of the bank recapitalisation. The Irish PM, the Taoiseach, told the Dáil yesterday that he expected the upper limit on pay for the highest earners at both banks to be cut by at least 25%.

Davy Stockbrokers have cut their estimates for three of the four Irish banks (BoI, AIB and Anglo). They now only expect Irish Life & Permanent to make a profit in 2009/10.

Shipping News
Once again there's a huge amount of discussion surrounding the Baltic Dry Freight index. This rose by 15% yesterday to 1316 points, having rallied the best part of 50% so far this year. It's worth putting that in context though - it was down 94% from peak (July last year) to trough (December). It's now down ‘only' 90%.

There are some positives worth considering. The bottoming out of the index is important. It's a hard push to say that the index is recovering but at least it isn't falling any more. The other big issue is one of constituents, capesize prices, have rallied more sharply than any other Baltic constituent, up almost 8 times from the low to around $15k per day. This could be an indication that demand is starting to increase again from China after the slowdown because of the Olympics.

Data And Earnings Today
We have two interest rate decisions from Europe today. Markets expect the Bank of England to cut rates by another 50 basis point at noon to a new record low of 1%. In contrast, at 12.45, the dangerously inflexible ECB is universally expected to cowardly hold fire and hide in their blinkered bunker until next month in the face of imminent deflation.

This would be the first month since last summer that the two central banks have chosen a different policy path in direction. That said, I think that it is only a matter of time before policymakers on both sides of the Channel end up lending money essentially for free as events as always will yet again trip up the incompetent ECB who still just don't get it. Watch out for some interest questions at the ECB's press conference on the rumbling idea of Quantitative Easing at 13.30.

Earnings today from Kellogg (expected EPS $0.50), MasterCard ($1.62), Unilever, Hartford Financial ($1.30), News Corp ($0.19) and Burger King ($0.37).

And Finally… Another Masterpiece Rant

Disclosures = None

By The Mole
PaddyPowerTrader.com

The Mole is a man in the know. I don’t trade for a living, but instead work for a well-known Irish institution, heading a desk that regularly trades over €100 million a day. I aim to provide top quality, up-to-date and relevant market news and data, so that traders can make more informed decisions”.

© 2009 Copyright PaddyPowerTrader - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PaddyPowerTrader Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in