Earnings season gathers steam this week, with Apple among those slated to release results Tuesday.» Read More
Natexis Bleichroder's John Roque says tomorrow's market action will tell the tale of Tuesday's big run up. Is the market bottoming, as many traders were quick to say as the Dow and financial stocks rocketed?
The Dow has given up more than half of yesterday's gain, but much of this is due to the commodity route. The dollar has been rallying two days, giving some hope to those who believe that the dollar's seven year decline is coming to and end.
Tuesday's rally is being eyed suspiciously as the market moves lower and lower and credit worries abound. Some of the financial stocks are losing faith after their big move up, and the spiral down in commodities is dragging energy and materials shares lower.
It’s the time of the day for the shorts to press their case. Remember, sell the rally is the only consistent trading methodology that has worked in the past six months. It’s natural we should see some pressure today.
So what matters here is the answer to one question: can we trust a rally? We haven't been able to so far; you can bet some money will try sell into it, as they have for months. So skepticism is in order.
There are reports this morning that Fannie Mae has won the capital relief some have asked for. At 9 am OFHEO (Office of Federal Housing Enterprise Oversight--Fannie's regulator) has scheduled a conference call to discuss alleviating some of the capital constraints on Fannie and Freddie.
Buyers came back to Wall Street in a big way Tuesday, igniting a sharp rally and new debate about whether stocks have bottomed.
Decoupling, recoupling or just plain old late in the global economic cycle -- take your pick. There are myriad ways of describing China's dependence on U.S. growth.
The Fed commentary, on top of the positive Lehman and Goldman numbers, are helping move stocks to the highs of the day. The Fed has: 1) Reduced the growth forecast, and increased the inflation forecast. 2) Talked less on credit problems.
Morgan Stanley's financial analyst team put out a long report on the state of financials this morning. The title is: "Looking for a Bottom." They are not bullish, they're just less bearish. They argue it's time to reduce short positions on large cap banks, for example, and are less bearish toward other financial sectors.
Bear Stearns is moving up again, up 58 percent to $7.62. There is no way to explain this move up other than there are some people who believe that the terms of the deal will be improved or there will be a white knight to make a counter bid.
Good reports from Lehman and Goldman, and housing starts are above expectations. Core PPI up 0.5 percent is higher than the 0.3 percent expected, but that is being pushed aside in favor of the more bullish housing starts data.
Stocks held their own Monday, even after the shocking demise of Bear Stearns. But the market no doubt benefited from the view of many investors that the Fed will deliver a hefty rate cut when it meets Tuesday.
There are two events occurring today: 1) The finanical services industry is systematically unwinding. Firms that are involved in financial execution are getting hammered midday: Interactive Brokers down 25 percent, ETrade down 12 percent, TradeStation down 12 percent.
H&R Block up 5 percent as Wilbur Ross has agreed to acquire Option One's Servicing Business for $1.1 Billion from H&R Block. He is not buying the mortgages, merely the right to service them. Another HMO lowers its outlook. Coventry lowered its 2008 forecast, citing the impact of flu on costs.
To everyone who called me or emailed me over the weekend saying, "How could this happen? How could Bear Stearns go from $57 to $2 in two days?" I would offer the comment of one astute trader, who said, "When you are levered 30 times and have no access to finance it doesn't take a huge move on $400 billion in assets and $260 billion of debt to wipe out the equity."
The big story of the week is the Fed's meeting Tuesday, but that meeting and all Fed activity takes on a new level of urgency after the central bank helped J.P. Morgan engineer a lifeline to keep Bear Stearns liquid.
Bear Stearns is not the only one making changes to their calendar. Credit card giant Visa, which was scheduled to price its mammoth IPO Wednesday night for trading Thursday, is moving the offering up to price Tuesday night for trading trade on Wednesday.
The trading pattern remains the same: the market does not move up unless there is some outside piece of news. Today it is the better than expected CPI. Yesterday it was comments from Standard and Poor's and hopes for a government rescue of the mortgage market.
Consumer inflation data is the big headline to watch Friday.