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Here's what I see this Monday morning:
1) U.S. dollar finally showing some strength on weakness overseas, Hong Kong at a 6 week low, about 12% from historic high.
2) Jitters in tech land. All those momentum traders piling into techs in the last couple months are nervous. Today, Credit Suisse decreased its weighting in technology to 20% from 40% in their global equity strategy, saying it was an over-owned sector, the leadership is narrowing, and the revenue estimates may be too high.
3) How big will subprime write-downs eventually be? Nobody knows, but Deutsche Bank's Mike Mayo estimated they could write down as much as $60-$70 billion by the end of the year. With $43 billion already known, he estimates there could be another $25 billion coming from banks and brokers like Merrill Lynch, UBS, Barclays, HSBC, and Bank of America. And it may not end there. That would be about half of the eventual losses of $100-$130 m that banks and brokers might have, Mayo says.
4) Blackstone reported a loss on charges related to its IPO. They also noted lack of financing is hurting the LBO business. Earnings and revenues were below expectations.
5) Constellation buying the wine business of Fortune Brands for $885 million, that includes the well-regarded Clos du Bois brand, as well as Wild Horse and Geyser Peak.
4) While the Dow Jones Utility Average [.DJUSU
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] has been performing well recently (less than 2% from their historic highs), one trader noted this morning that the gap between the yield on utilities (which pay the biggest average dividends after financial and telecommunications companies in the S&P 500), and the S&P is the smallest since at least 1995. The Dow Utilities currently yields an average of 2.8%, the S&P 1.8%.
Questions? Comments?
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