More new shorts were added in Nasdaq stocks in the end of March, but they declined on NYSE names.» Read More
As oil hits new record highs for the fifth straight day, these costs trickle down to its distillates such as gasoline and diesel fuels, and to the consumer.
Oil for April delivery hit a new intraday high of $109.72 and a new record close of $108.75, and some analysts are predicting $115 - $120 per barrel costs in anticipation of the summer driving season. Last week oil broke through the inflation adjusted high of $103.76 hit in 1980, when oil traded at $38 per barrel in 1980 dollars.
The cost of one gallon of gas hit a new record high with a national average of $3.2272 a gallon up 27 cents in a month, according to AAA and OPIS \(Oil Price Information Service\). The previous record of $3.2265 was hit last May at the start of summer driving season.
The Energy Information Administration \(EIA\) has stated that national average may hit $3.50 per gallon this Spring, and possibly even $4 per gallon. The EIA current weekly average stands at $3.225 per gallon for retail gas, and $3.819 per gallon for diesel as of 3/10/08.
Some energy plays in ETFs that have done well this year:
Pure play oil ETFs are the US Oil Fund and the PowerShares DB Oil Fund are both up over 13% in 2008 and over 71% and 50% respectively over the last 12 months.
The PowerShares DB Energy Fund composed of energy futures contracts including Light Sweet Crude, Heating Oil, Brent Crude, RBOB Gasoline and Natural Gas is up almost 14% in 2008, and over 55% in the last 12 months.
The RJ CRB tracks prices of 19 commodity futures, including oil, gas, natural gas, heating oil, gold, aluminum, nickel, silver, copper, wheat, cotton, soybeans, sugar, frozen orange juice, cocoa, corn, coffee, live cattle and lean hogs is up almost 16% year-to-date.
Stocks shot up Tuesday after a liquidity announcement from the Federal Reserve.
The Dow Jones Industrial Average jumped more than 250 points, or 2 percent, right at the opening bell. This ranks as the Dow's seventh biggest opening ; the blue-chip index has opened more than 200 points higher only 10 times since it was created in 1896.
The Fed, in conjunction with other central banks, announced plans to expand its securities-lending program to $200 billion and, for the first time, include primary dealers such as investment banks. It's also adding non-agency private AAA mortgages to the program, instead of just agency-backed mortgages.
"This is big," Art Cashin, director of floor operations at UBS, told CNBC. "The [Fed] helicopter is up in the air ... and it's about to rain down money on lots of places." Cashin attributed the market's reaction to short covering.
Fed-funds futures backed away from expectations for a rate cut of three-quarters of a percentage point at the Fed's next meeting, March 18, favoring instead a cut of half a percentage point.
Financials led the way higher with sharp gains in banks including Citigroup , Lehman Brothers , Bear Stearns, Washington Mutual and Wachovia .
Shares of Thornburg Mortgage nearly doubled after the Fed announcement. Earlier, the "jumbo" lender, which provides loans for expensive homes, reported a $676.6 million writedown for adjustable-rate mortgages, 58 percent higher than it projected four days earlier.
Fannie Maeand Freddie Mac also rose sharply.
Meanwhile, the U.S. trade gap expanded in January amid soaring prices for imports such as crude oil. The trade deficit widened to $58.2 billion from $57.9 billion in December, the Commerce Department reported.
Crude oil set a record for a fifth straight day, topping $109 a barrel .
Asian markets bounced back, with both Japan and South Korea closing up more than 1 percent. European shares rose to session highs in afternoon trading after the U.S. Fed announcement.
Deputy Treasury Secretary Robert Kimmitt told CNBC Europe that the fundamentals of the world's biggest economy are sound, although it still faces "headwinds" because of the falling housing market, tightening credit markets and rising prices for commodities.
In reference to the weakening dollar, Kimmitt said, "We believe that currency rates should be set in open, competitive markets based on underlying fundamentals, and we think the long-term fundamentals of the U.S. economy are sound," Kimmitt told "Squawk Box Europe."
Boeing was the only Dow decliner after the defense giant said that it will formally protest a $35 billion Air Force contract awarded to European Aeronautic Defense and Space and Northrop Grumman. Shars of European rival EADS were sharply lower after it reported a wider than expected loss for last year.
WellPoint tumbled after the health insurer cut its full-year guidance and a slew of analysts downgraded the stock.
Rivals Aetna , Humana and Unitedhealth Group also skidded.
Amgen shares slipped amid concerns that the company's anemia drugs for cancer chemotherapy may lose FDA approval. A panel of outside experts is slated to convene on Thursday.
Chip maker Texas Instruments after the closing bell slashed its first-quarter earnings outlook , citing weaker-than-expected chip demand. TI, which makes chips for everything from cell phones to televisions, now expects earnings per share between 41 cents to 45 cents, down from its prior range of 43 cents to 49 cents.
Elsewhere in tech land, Google shares rose after the Internet giant received approval from European regulators for its $3.1 billion purchase of online-ad company DoubleClick.
General Electric advanced following news that Chairman Jeffrey Immelt plans to squelch rumors of a sale of NBC Universal , parent of CNBC, with a message in GE's annual report. There had been rampant speculation that GE might sell the media division after the Beijing Olympics in August.
"Should we sell NBCU? The answer is no!" Mr. Immelt wrote in to investors in the annual report, set to be released Wednesday. "I just don’t see it happening. Not before the Olympics, not after the Olympics. It doesn’t make sense."
Kroger, the largest U.S. grocery chain, reported early Tuesday that its earnings fell 16 percent due to a year-earlier tax benefit and other one-time items, though per-share earnings beat analysts' consensus forecast by a penny. Net income dropped to $322.9 million, or 48 cents a share, from $384.8 million, or 54 cents a share, a year earlier.
TUESDAY: Mississippi primary
WEDNESDAY: Weekly crude inventories; Treasury budget; Bill Gates on Capitol Hill
THURSDAY: Import prices; retail sales; weekly jobless claims; business inventories
FRIDAY: CPI, consumer sentiment
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The Dow futures surged this morning on the news of a liquidity injection from the Fed. On the open, the Dow jumped ~275 points. This is the 7th highest point move on the open in history. Here are the top 10 opens of the Dow prior to today's move:
Last week, the dollar fell to new lows. Looking back at the past 30 years, the dollar seem to be moving in pattern with its historical cycles. The chart below shows the Trade-Weighted US Dollar Index on a 12 month moving average. While on the downtrend, the dollar is still higher than it was in the mid 90's and the late 70's. Those periods followed with significant rises in the dollar. So should we be concerned?
For the week ending Friday, March 07, 2008 the US Markets all ended the week down close to 3% or greater. The Dow closed below 12,000, the NASDAQ breached its 52-week low, and the S&P 500 closed below 1300 for the first time since September 11, 2006. In contrast commodities continue to hit new record highs, and the US dollar fell to record lows on a weak economy. Bernanke hinted at further rate cuts, the ECB held rates steady, and jobs unexpectedly fell, heightening fears that the US economy has hit a recession. Many economists are no longer questioning a recession, but how long it will last.
Next week, the markets will watch for Retail Sales on Thursday and earnings from some of the smaller retailers, while inflation watchers await the CPI report on Friday, seen rising again in February. If consumer prices rise beyond comfort levels, the spectre of stagflation, price inflation amidst weak economic growth, will again rear its head.
- The Fed announced emergency measures to improve liquidity by increasing the size of its auctions which should "address heightened liquidity pressures in term funding markets."
- Nonfarm Payrolls reported a loss of 63,000 jobs in February compared to a revised loss of 22,000 jobs a month ago, the steepest decline in 5 years, since March 2003, suggesting that the housing and credit crunch is spreading.
- ISM Manufacturing Index depicted a contracting factory sector with a reading of 48.3 for February from 50.7 in January, the lowest level since April 2003.
The Housing Crisis and Mortgages: For the first time since World War II, Americans have less than 50% equity in their homes due to plunging real estate prices and rising mortgages.
- Mortgage Bankers Association (MBA) announced that foreclosures rose to record highs in the 4th quarter of 2007 spurred by failing subprime loans.
- Thornburg Mortgage disclosed that it had "substantial doubt" about its survival, and failed to meet creditors' demands for a margin call of about $610 million. Thornburg shares lost more than 80% this week.
- The bond insurer Ambac Financial raised almost $1.5 billion in capital, in majority by selling stock, in order to maintain its debt ‘AAA’ ratings with credit rating agencies Moody’s and S&P.
- The Commerce Department’s nonresidential construction spending report showed a monthly decline of 1.7% in January, the steepest drop in 14 years.
Sectors & Indexes: Only the S&P Utilities Sector managed a slightly positive gain for the week, led by Exelon up 4.2% on the week, and only 6 Dow components were positive for the week (see detail below)
- Crude Oil for April delivery continued to hit record highs with a record close of $105.47 per barrel on Thursday and a new intraday high of $106.54 hit on Friday.
*Oil surpassed the inflation adjusted value of $103.76 per barrel from 1980 when oil was $38 a barrel. OPEC decided to maintain production levels, lower weekly inventories and conflicts between oil producers in Venezuela and Colombia all contributed to oil's rise.
*The Department of Energy EIA data shows the national average for a gallon of gas at $3.162 as of 3/3, and AAA and Oil Price Information Services sites the national average at $3.189 per gallon.
- Natural Gas for April delivery hit a new record high of $10 rising 4.30% for the week and settling at $9.769
- Gold for April delivery continued its record setting pace, though falling short of the $1000 mark hitting an intraday high of $995.2 as investors look to gold as a defensive play against a weakening economy.
- Silver for May delivery jumped above $20 an ounce for the first time, reaching an all-time high of $21.32 an ounce on Thursday.
Dollar Woes: The dollar sank to new lows against the euro, pound, yen, and Swiss franc, though it rallied off its lows by Friday afternoon
- The euro rose to an all-time high against the dollar on Friday with the cost of one euro hitting $1.5462
- The Japanese yen strengthened to new highs against the dollar breaking below the 102-yen level for the first time since January 21 2005, with the dollar only purchasing 101.45 yen at its low on Friday.
- The dollar tumbled to a new all-time low against the Swiss Franc with the US dollar only purchasing 1.0137 Swiss Franc at its lowest point.
**The CurrencyShares Swiss Franc ETF was up 1.39% this week, and almost 11% in 2008.
- The British Pound rose to $2.0215 per pound on Friday, after breaching the $2.00 level for the first time this year on Thursday.
**Though gaining against the dollar, the pound has also suffered against he euro losing 3.59% this year on continued fears of the UK economy entering recession.
Market Stats:The Dow ended down -372.70 or -3.04% for the week, and negative on Friday
-The Dow is Negative YTD down -10.34%
-The Dow is off by -2,270.84 or -16.03% from the market peak on October 9th of 14,164.53
The NASDAQ ended down -58.99 or -2.60% for the week and negative on Friday
-The NASDAQ is Negative YTD down -16.58%
-The NASDAQ is off by -646.63 or -22.62% from the market peak on October 31 of 2,859.12
The S&P 500 ended down -37.26 or -2.80% for the week, and negative on Friday
-Friday the S&P 500 closed at 1,293.37 down -10.97 or -0.84%
-The S&P is Negative YTD down -11.92%
-The S&P is off by -271.78 or -17.36% from the market peak on October 9th of 1,565.15
S&P Sector Performance for the week ending Friday, March 7, 2008:
S&P 500 Utilities Sector (.GSPU) Up 0.12 or 0.06%
S&P 500 Consumer Staples Sector (.GSPS) Down -1.43 or -0.51%
S&P 500 Telecomm Services Sector (.GSPTS) Down -1.54 or -1.12%
S&P 500 Information Technology Sector (.GSPT) Down -4.17 or -1.21%
S&P 500 Industrials Sector (.GSPI) Down -7.47 or -2.28%
S&P 500 Health Care Sector (.GSPHC) Down -12.11 or -3.19%
S&P 500 Consumer Discretionary Sector (.GSPD) Down -7.86 or -3.20%
S&P 500 Materials Sector (.GSPM) Down -8.20 or -3.23%
S&P 500 Energy Sector (.GSPE) Down -19.13 or -3.34%
S&P 500 Financials Sector (.GSPF) Down -20.54 or -5.95%
S&P Top 10 Performers for the week ending Friday, March 7, 2008:
Big Lots Inc (BIG) Up 3.91 or 23.20%
National Semiconductor Corp (NSM) Up 1.78 or 10.81%
Dillards Inc (DDS) Up 1.58 or 10.68%
Tyson Foods Inc (TSN) Up 1.40 or 9.72%
Ciena Corp (CIEN) Up 1.97 or 7.63%
SUPERVALU Inc (SVU) Up 1.80 or 6.86%
Clear Channel Communications Inc (CCU) Up 2.14 or 6.69%
Kroger Co (KR) Up 1.41 or 5.81%
BMC Software Inc (BMC) Up 1.55 or 4.80%
Applied Materials Inc (AMAT) Up 0.92 or 4.80%
S&P 10 Worst Performers for the week ending Friday, March 7, 2008:
Washington Mutual Inc (WM) Down -4.09 or -27.64%
CIT Group Inc (CIT) Down -5.30 or -23.85%
Freddie Mac (FRE) Down -5.53 or -21.96%
Countrywide Financial Corp (CFC) Down -1.24 or -19.65%
Fannie Mae (FNM) Down -4.88 or -17.65%
Novell Inc (NOVL) Down -1.26 or -16.91%
King Pharmaceuticals Inc (KG) Down -1.70 or -16.04%
Lennar Corp (LEN) Down -2.90 or -15.58%
Ambac Financial Group Inc (ABK) Down -1.64 or -14.72%
Circuit City Stores Inc (CC) Down -0.58 or -13.12%
Dow Top Performers for the week ending Friday, March 7, 2008:
Microsoft Corp (MSFT) Up 0.67 or 2.46%
Coca-Cola Co (KO) Up 0.39 or 0.67%
Wal-Mart Stores Inc (WMT) Up 0.31 or 0.63%
AT&T Inc (T) Up 0.18 or 0.52%
Intel Corp (INTC) Up 0.10 or 0.50%
International Business Machines Corp (IBM) Up 0.08 or 0.07%
Procter & Gamble Co (PG) Down -0.38 or -0.57%
Johnson and Johnson (JNJ) Down -0.45 or -0.73%
Hewlett-Packard Co (HPQ) Down -0.46 or -0.96%
ALCOA Inc (AA) Down -0.54 or -1.45%
Dow Worst Performers for the week ending Friday, March 7, 2008:
Citigroup Inc (C) Down -2.80 or -11.81%
American International Group Inc (AIG) Down -3.98 or -8.49%
JPMorgan Chase and Co (JPM) Down -3.09 or -7.60%
Bank of America (BAC) Down -3.00 or -7.55%
The Boeing Co (BA) Down -6.19 or -7.48%
Merck & Co Inc (MRK) Down -2.55 or -5.76%
General Motors Corp (GM) Down -1.32 or -5.67%
Exxon Mobil Corp (XOM) Down -4.52 or -5.19%
The Walt Disney Co (DIS) Down -1.65 or -5.09%
United Technologies Corp (UTX) Down -3.02 or -4.28%
Pfizer Inc (PFE) Down -0.93 or -4.17%
Key Earnings next week:
Monday: Texas Instruments (TXN), Blackstone (BX), Six Flags (SIX), Foot Locker (FL)
Tuesday: Dick’s Sporting Goods (DKS), Liz Claiborne (LIZ), Take-Two Interactive (TTWO)
Wednesday: Flotek Energy (FTK), Gymboree Corp. (GYMB), Men’s Wearhouse (MW)
Thursday: Noven Pharmaceuticals (NOVN), Aeropostale (ARO), Dillard's (DDS)
Economic Data next week:
Monday: Wholesale Inventories
Tuesday: Trade Balance
Wednesday: Crude Inventories, Treasury Budget
Thursday: Retail Sales, Jobless Claims (Initial), Business Inventories
Friday: CPI, Core CPI
The European Central Bank holds rates steady on Thursday and Bernanke suggests further rate cuts in the US, all sending the US dollar lower, and the euro and pound higher. According to Reuters, Bernanke indicated in his testimony before congress that he was more concerned about US economic growth than inflation, which erodes confidence in U.S. assets and the demand for dollars to buy them.
The US Dollar is at new lows against the Euro, at its lowest point Thursday it cost $1.5365 to buy a Euro , and also hit a lifetime low against the Swiss Franc , down almost 10% in 2008 alone.
Forbes just released its annual list of the world's wealthiest individuals, with Warren Buffett climbing to the number one spot . Here is the list of largest companies by Market Cap on the S&P 500. Ironically, Warren's company, Berkshire Hathaway is not even in the S&P 500. If it were on the list, it would only rank 12th with a $148 billion market cap.
Patti Domm wrote in her latest Market Insider post , "Water is the commodity that nobody can live without." While there has been much focus on soaring Energy, Metals and Agricultural commodities, could water be the next big thing? While results YTD are mixed, here is a set of water related securities that you may want to consider when looking at the short and longer term demands for H20.
Water Utilities (sorted by Market Cap):
Other small water utilities include Consolidated Water Co Ltd , Southwest Water Company , Middlesex Water Company and Connecticut Water Service, Inc.
Water Infrastructure and Machinery (sorted by Market Cap):
As the credit crunch continues, the mortgage mess is spilling over from the sub-prime to the prime markets. As Steve Liesman pointed out this morning on Squawk box, the AAA rated ABX Index is at an all time low. The ABX Indexes, by Markit and CDS IndexCo, measure the performance of mortgage-backed securities, or a basket of home equity by degree of risk, AAA being the highest quality issues.
Lack of liquidity in the market is driving the decline. Banks cannot sell mortgage bonds, even those of high quality, and therefore have no capital to sell new mortgages and cannot offset the increased risk of having more debt on their books. Mortgage rates, in turn, have recently gone up despite decreasing interest rates. The spread between the 30-year fixed mortgage and the 10-year treasury has hit an all time high.
The "new" Super Tuesday is here with 370 national convention delegates at stake. After today's primaries, slightly more than 600 delegates remain with Wyoming and Mississippi, and Pennsylvania, the biggest state left, with 158 delegates up for grabs in its primary on April 22nd. According to AP Press tally, Obama has 1,386 delegates to Clinton's 1,276, and 2,025 are needed to secure the Democratic nomination.
Polls are showing that tight races are still seen in both Texas and Ohio, and some are showing that Clinton may have at least halted Obama's momentum, and that in Ohio her lead is stronger.
The Intrade prediction markets are showing that Hillary Clinton will likely win Ohio, but not the Democratic nomination. Obama is also favored in Texas, though by a slimmer margin, according to the Intrade markets.
The Obama contract for the Democratic nomination has been fairly steady since February 20th, and Super Tuesday, and is currently predicting an almost 82.70% probability that Obama will get the nomination vs. a 22.30% probability for Clinton , which has also been fairly constant.