How Much Life Is There In The Rally?
What a week: Dow up 8.2 percent, S&P up 9.9 percent, NASDAQ up 10.2 percent through Thursday...the best week since November, and only the third weekly advance in the last 15 weeks!
Japan's Nikkei up 5 percent, Hong Kong up 4 percent, on hopes that U.S. banks can survive without nationalization...Citigroup Chairman Dick Parsons said that Citi would not need any more government money, that it has more than enough capital and that he did not think nationalization was likely.
Citi up 10 percent, Bank of America up 6 percent, insurers up 4 to 6 percent pre-open.
Bonds under some pressure on comments from the Chinese premier.
1) One day after our parent General Electric lost its AAA rating from Standard and Poor's, Fitch cut Berkshire Hathaway's AAA rating, also to AA+.
The reason? "Fitch believes that AAA ratings are not appropriate at the holding company level for financial-oriented enterprises given significant market volatility..."
Talk about broad-brush ratings! Regarding Berkshire, Fitch believes that the exposure to large, concentrated equity investments, and its exposure to equity and credit markets through derivative contracts, is "inconsistent with the stability required at the AAA level."
2) Copper up 3 percent as Chinese Premier Wen Jiabao said additional stimulus measures could be adopted at any time. The big commodities names trading up mid-single digits.
3) Las Vegas Sands up 15 percent on positive comments from Bernstein: "the current share price underestimates the probability that the company can use its existing assets and competitive position to survive."
4) Will somebody buy stocks? AMG Data reports that U.S. equity funds saw outflows of $8.4 billion for the week ending on Wednesday; we have seen net outflows for months now. Very hard to get a consistent rally with outflows.
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