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Market Insider with Patti Domm Trader Talk with Bob Pisani


  Tuesday, 6 Jan 2009 | 9:28 AM ET

Stocks Clearly In An Uptrend

Posted By: Bob Pisani

Have we exhausted all the sellers? Don't let yesterday's modest declines fool you: stocks are clearly in an uptrend. There were very few sellers yesterday, and breadth was 2-1 positive on the NYSE. After a 3-day rally bought stocks into short-term overbought territory, what we SHOULD HAVE SEEN was a sell-into-the rally drop of 200-400 points on the Dow with heavier volume.

That we didn't see it is a good sign. This is what is called a "consolidation phase," and while it does not guarantee the rally will continue, it is an encouraging sign.

Lowry notes that since the Nov. 20 market low, the DJI has turned in a gain of 18.5%, while the S&P 500 has risen by 23.3% and NASDAQ by 23.7%. These are very solid gains; so to the question, "Do you think the market can rally?," the answer is, "It already has."

What's lacking? More demand. We need buyers to get a little more enthusiastic; without it, we are at best consigned to move sideways, which for many is the likeliest course for the next few months.


1) Since the end of October, gold has steadily risen, while oil has almost steadily declined. Little wonder that the major commodity indices (Goldman Sachs Commodity Index and Dow-Jones-AIG Commodity Index) are rebalancing, where the weighting for oil and copper is increasing, while the weighting for gold is decreasing.

Copper and oil have both hit 4-week highs this morning As copper has moved up, Rio Tinto is up 8 percent, Rio Doce up 5 percent. Many commodity-based stocks, including Mittal Steel ,Cemex , and Freeport McMoran, a re trading up this morning

2) Dow Chemical said it will pursue legal action against Petrochemical Industries Company of Kuwait, which terminated its agreement to create a joint venture with Dow.

Continental,American and United reported December traffic, the good news is that the percentage of seats filled increased, the bad news is that traffic decreased. This is due to airlines reducing the amount of flights they are flying.

Fertilizer giant Mosaic reported earnings well above expectations, and noted that sales weakened significantly at the end of last quarter, and said it expects crop nutrient sales to remain weak through the quarter.

Micron up 3 percent as DRAM prices have been rising recently; the Korean Times says that Samsung plans to cut its investment in semiconductor chips by more than half in 2009.



CNBC's Names in the News:


Dow Chemical


Questions? Comments? tradertalk@cnbc.com

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  Monday, 5 Jan 2009 | 4:04 PM ET

Santa Clause Rally: Call It A Success

Posted By: Bob Pisani

The Santa Claus rally, whereby stocks tend to rise in the last five trading days of the year and the first two of the new one, is now over, and by any stretch this has been a successful run.

In the last seven days, the S&P 500 has risen 7.4 percent, surpassing the modern “best” of 7.2 percent in 1974. Jeff Hirsch at the Stock Trader’s Almanac tells me that we have to go all the way back to 1932, when the S&P rose 7.5 percent, to beat the gains we have seen at the end of this year.

There have been many positives in the past week and a half:

1) No selling into rallies (today's down move is very modest)
2) New lows fade
3) Volatility trend has been down
4) Sector rotation: less defensive names have outperformed

The last point is the most important. Look at how energy, consumer discretionary, and material stocks--all groups associated with expanding economies--have outperformed more defense groups like consumer staples and healthcare:

Sectors (last 7 days)

Energy up 13.2%
Cons. disc. up 9.8%
Materials up 7.8%
Consumer staples up 4.4%
Healthcare up 3.8%

Bears, of course, argue this is a bear market rally, an oversold jolt, and they may be right. But the tone is much different than a month ago.

    • Obama Says Stimulus Plan Will Be Approved Quickly



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  Monday, 5 Jan 2009 | 11:12 AM ET

Markets Liking Bigger Stimulus Tax Cuts

Posted By: Bob Pisani

Markets are off their lows on discussion about the fiscal stimulus bill. The stimulus bill will be heavier on tax cuts than expected.

Traders are happy that the package is tilting more toward tax cuts, which the Street believes will bring the biggest bang for the buck (there is also support for infrastructure). The talk is of:

--individual tax credits
--writeoffs for company losses
--tax credits for hiring new people

The numbers are all over the place, but $400-$500 billion of an expected $850 billion program is likely. Poor economic numbers near-term are already anticipated by the market, but what about deeper 2009 cuts to estimates?

Those deeper cuts are not factored in, and we are seeing that today. Today's weak points in the Dow--JP Morgan,Verizon and AT&T--are due to downgrades from Bernstein (for AT&T and Verizon) and--for JP Morgan--lowered numbers for 2009 and 2010 from Mike Mayo at Deutsche Bank.

In the meantime, the economic news flow will be awful, particularly the December sales figures. Consider:

1) Vehicle sales for December (out today) will be awful: Goldman Sachs expects GM's to be down 42 percent, Ford down 31 pecent, Chrysler down 45 percent.

2) Retail comp store sales for December will be out Thursday; bookseller Borders reported this morning that sales during the holiday season fell 11.7 percent.

    • Obama Targets Tax Cuts of More than $300 Billion
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  Monday, 5 Jan 2009 | 10:05 AM ET

Watching Santa Rally's Last Day

Posted By: Bob Pisani

We begin the "real" New Year with stocks at a 6-week high, and the S&P 500 24 percent above its November 20 low. Now let's see if we can change leadership: health care and consumer stocks have generally outperformed in the past few weeks, though recently industrial stocks have improved. A shift toward less defensive names would be a welcome development.

Stock traders believe the best use of the stimulus money would be tax cuts, so traders have cheered reports that the stimulus bill will be heavier on tax cuts than was expected. The dollar is rallying.


1) This is the last day of the Santa Claus rally (last five trading days of the old year, first two of the new), and so far it is a big success. The S&P 500 has rallied 8 percent in that period, well above the 1.4 percent average rally. So far, it is the best Santa Claus rally since 1974, when the S&P rallied 7.4 percent.

2) Walgreen December same store sales up 4.9 percent, an impressive number. However, the big gains appear to have come from pharmacy same-store sales, which were up 8.5 percent. This is still impressive, given the general weakness that has been showing up in pharmacy sales nationwide.

Separately, Rite Aid said same store sales were down 0.2 percent in December.

3) In an interview with FT, Pfizer's CEO said he would be "open to opportunities" to acquire a larger rival, though the real goal was to grow revenues. deal could drive a new round of consolidation in the industry.

4) Apple up 3 percent pre-open as CEO Steve Jobs has said he is suffering from a hormone imbalance that is robbing him of proteins. This is squelching the cancer rumors.

5) AT&T and Verizon downgraded at Bernstein. They sharply cut our expectations for both companies, and project slower wireless growth, negative enterprise growth, and significantly worse Wireline TelCo performance over the coming year.

6) Goldman Sachs raised Barnes & Noble to Neutral from sell based on valuation, and speculation Borders was in big trouble. Are book sales improving? No, however Amazon had a good season, and the Kindle is popular.

Separately, Borders reported that sales during the holiday season fell 11.7 percent.

7) December vehicle sales are out today, but the expected awful numbers have been eclipsed by the GMAC bailout and the closing of loans to GM and Chrysler. Goldman expects GM's to be down 42 percent, Ford down 31 pecent, Chrysler down 45 percent.


Questions? Comments? tradertalk@cnbc.com

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  Friday, 2 Jan 2009 | 5:01 PM ET

Best First Day Of Year Stock Trading Since 2003

Posted By: Bob Pisani

This post is from CNBC producer Robert Hum.

Stocks rallied strongly with their best first trading day of a new year since 2003. Despite a disappointing ISM Manufacturing number earlier this morning, the advance was broad-based (better than 5 to 1 advancing to declining stocks at the NYSE), though on light volume.

With gains in 5 of the past 6 days, the Dow has now climbed over 7% since its close on December 23 and closed over the 9,000 mark for the first time since November 5th.

As the Dow snapped 4 straight weeks of declines this week, traders hope that the optimism can continue into 2009’s first full week of trading next week. There may be headwinds though, as another gloomy jobs report along with a poor round of retail and auto sales numbers are likely in store for the markets.

Also keep an eye out if the pre-holiday volatility returns to the marketplace. With traders returning to the desk following the holiday weeks, volume should once again pick up, and investors should get a better sense of the market sentiment in the new year.

For the week: Dow up 6.1%, S&P up 6.8%, Nasdaq up 6.7%.


Questions? Comments? tradertalk@cnbc.com

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  Friday, 2 Jan 2009 | 1:25 PM ET

Markets On Rebound For 2009?

Posted By: Bob Pisani

This post is from CNBC producer Robert Hum.

Markets around the world are starting off 2009 in a celebratory mood after a dismal 2008. Energy and material stocks lead U.S. markets higher in early morning trading. This despite weaker energy and commodity prices amid the dollar’s gains today. Retailers are rallying for the third day in a row, ahead of likely more gloomy retail sales numbers next week.

European shares are up 2% despite some bleak economic reports out of the U.K. today. A survey performed by the country’s largest mortgage lender showed home prices plunged 16% in the fourth quarter from a year ago. That was the sharpest decline in at least 25 years.

Additionally, the Bank of England reported that new home mortgage approvals fell to 27,000 in November, its lowest level since at least 1999. With signs that the country’s recession is worsening, expectations grow higher that the Bank of England will announce another large interest rate cut of 75 basis points or more next week.


Sam Zell’s Equity Group Investments raised its stake in Starwood Hotels to 8.1% from 7.7%. According to a SEC filing, it also signed a confidentiality agreement to facilitate information sharing between the hotel chain and the investment group in exchange for “limitations on its ability to effect a change in control of the company.”

GMAC will issue 5 million preferred shares, which pay an 8% interest rate, to the federal government in exchange for the $5 billion capital infusion it received. GM shares lead the Dow today with its 10% gain.

The Semiconductor Industry Association (SIA) reported that global semiconductor sales dropped nearly 10% year-over-year in November. Sales in the Americas plunged 20% and European sales fell 14% during that period.

Done deals: Bank of America completed its merger with Merrill Lynch. The acquisition moves BofA ahead of JPMorgan Chase and Citigroup to become the biggest bank in the U.S. with $2.7 billion in assets. Additionally, Wells Fargo closed its deal to acquire Wachovia, and PNC Financial completed its purchase of National City.


Questions? Comments? tradertalk@cnbc.com

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  Wednesday, 31 Dec 2008 | 6:07 PM ET

How the S&P 500 Sectors Ended '08

Posted By: Bob Pisani

This post was written by CNBC producer Robert Hum.

An end-of-year rally today (albeit on fairly light volume once again) pushed the S&P 500 into positive territory to end the month. December’s 0.8% gain snaps three straight monthly declines for the index, but it was just the fourth month this year in which it posted a monthly gain. In the final hour, the Dow too flirted with finishing the month with a gain. However, it ended off its highs of the day, and posted its fourth straight monthly loss, with a decline of 0.6% in December.

With gains over 4% during the past 5 days, the Dow and S&P’s strong finish to the year still can’t overshadow their horrendous 2008. Down 33.8% on the year, the Dow had its worst showing since 1931 and the S&P, which was down 38.5%, had its poorest performance since 1937.

Here’s how the 10 S&P 500 sectors ended the year:

Financials -56.95%
Materials -47.05%
Tech -43.68%
Industrials -41.52%
Energy -35.93%
Cons. Discretionary -34.72%
Telecom -33.61%
Utilities -31.55%
Healthcare -24.48%
Cons. Staples -17.66%

Out with the Old, In with the New:

Three financials depart the S&P 500 following today’s trading, and as expected, volume in these companies spiked at the close with the index’s rebalancing. Merrill Lynch, Wachovia, and National City will be replaced by SCANA , Owens-Illinois , and FLIR Systems — all three of which have market caps under $5 billion. The three departing financials are each being acquired in pending deals that should close in early in the New Year.

Happy New Year to all!


Questions? Comments? tradertalk@cnbc.com

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  Wednesday, 31 Dec 2008 | 12:21 PM ET

Santa Rally Can't Undo S&P's '1931' Slide

Posted By: Bob Pisani

Bob Pisani is out today. CNBC Producer Robert Hum wrote this blog.

Who said there’s no Santa Claus? The markets appear to be showing a bit of a Santa rally so far this year. Since the close on Dec. 23, the S&P 500 has rallied 3.5%. According to the Stock Trader’s Almanac, since 1950, the S&P has averaged a 1.5% gain during the last 5 days of December and first 2 days of January. However, despite this year’s Santa Claus rally, the S&P is still down 39%, its worst decline since 1931.

The markets have opened slightly higher on their final day of trading this year. Industrials, techs and retailers lead the way, while some of the big financials are showing some early weakness.

Weekly jobless claims fell 94,000 — much more than expected, but many attribute the steep drop to seasonal factors. Despite the decline in claims, its current level of 492,000 is 45% higher than it was at the same time last year. Continuing claims also rose to 4.51 million, its highest level since 1982.

In other news:

The Wall Street Journal reports that the Netherlands-based chemical maker LyondellBasell is weighing bankruptcy options.

Last year, Basell acquired Lyondell Chemical for $12.7 billion, a 20% premium, creating a large debt burden for the new company. Furthermore, as with many other chemical companies in the past year, LyondellBasell was plagued by high raw material costs as commodity prices peaked earlier this summer, and is now faced with slumping demand in sales during the current economic downturn.

Trading up 20%, Puget Energy is the NYSE’s biggest gainer today. The Washington State electricity provider received approval from state regulators to be sold to an investor group led by Australian bank Macquarie. The deal, which was announced back in October, has a price tag of $7.4 billion or $30 per share.

Yesterday after the close, the Fed confirmed that it would begin purchasing mortgage-backed securities backed by Freddie Mac , Fannie Mae , and Ginnie Mae beginning early next month. As it announced last month, the Fed intends to buy $500 billion dollars in mortgage-backed securities by the middle of 2009 to help lower mortgage rates and increase lending.

CNBC's Names in the News:


General Motors




Questions? Comments? tradertalk@cnbc.com

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  Tuesday, 30 Dec 2008 | 6:00 PM ET

Market Gave Us Good News Today

Posted By: Bob Pisani

Another light volume, low volatility day, closing near the highs. Good news, considering that the consumer confidence and home price news was dismal.

Goldman Sachs had a particularly good day, up almost 6 percent, though on light volume.

GMAC was the big story of the day: as a result of a successful debt for equity swap and an infusion from the Treasury Department, the probability of insolvency has been greatly diminished.

The is big for GM : GMAC is involved in financing about 35 percent of all GM cars sold.

GMAC immediately announced it was resuming auto financing for a broader spectrum of customers, and GM immediately said they were offering new financing programs, which includes 0% financing for five years.

The GMAC publicly traded 7.25 percent note rose 21 percent, and now yields 16.5 percent. That's high, but it's half the yield of just a few days ago.

2008: No one got out alive. You know it's a bad year when the best performer among major country indices is Mexico, which was down 24 percent.

But that's the way it was. While the U.S. was down about 40 percent on the year, other countries with heavier exposure to commodities (like Russia, down 73 percent) were hurt much more. Emerging market countries like China (down 65 percent) also saw notable drops.

Here's the grim statistics for 2008. All stats are percentage declines.

North & Latin American Indices
Argentina -49
Brazil -41
U.S. -40
Canada -35
Mexico -24

European Indices
Russia -73
Netherlands -53
France -43
Germany 40
U.K. -32

Asian Indices
China -65
Hong Kong -49
Australia -44
Japan -42
South Korea -41

Best-Performing Dow Components (only 2 positive on year!)
Wal-Mart +15
McDonald's +4
Johnson & Johnson -12
Home Depot -16
ExxonMobil -16

Worst-Performing Dow Components
General Motors -85
Citigroup -77
Alcoa -71
Bank of America -69
American Express -66


Questions? Comments? tradertalk@cnbc.com

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  Tuesday, 30 Dec 2008 | 3:32 PM ET

GMAC: 1st Small Victory in Overall Lending Story

Posted By: Bob Pisani

Has GMAC turned the corner? This is a big day for GMAC and a big day for the automotive industry. Consider:

1) GMAC has successfully completed a complicated debt for equity swap. The company has increased its capital, and lowered its debt, thus greatly reducing the risk of insolvency.

2) The government has given them $5 billion under the TARP program, and an additional $1 billion to GM so they can participate in a rights offering to support GMAC's reorganization as a bank holding company.

3) GMAC will soon be operating as a federally chartered bank. They can have their debt temporarily guaranteed by the FDIC, and get access to the Fed's discount window for short-term loans.

As a result:

1) GMAC immediately announced it was resuming auto financing for a broader spectrum of customers.

2) GM immediately said they were offering new financing programs, which includes 0% financing for five years.

Nobody's expecting miracles, and we already know December's car sales will be dismal. Goldman expects GM's to be down 42 percent, Ford down 31 pecent, Chrysler down 45 percent.

But the market will be looking past this toward the new low-cost loans the company will be offering. Mark Laneve, GM's VP of sales, was just on our air saying the program would have a positive effect on sales.

This is another piece in the giant puzzle of how to jumpstart lending.


What's up with oil? Demand is trumping supply. Those of you wondering why oil keeps sinking despite new geopolitical tensions in the Mideast should bear in mind that not much oil goes through Gaza.

Most energy traders I have spoken with remain bearish on energy fundamentals: for the moment, crude oil has no reason to go up. They note that demand continues to drop, so events on the supply side (OPEC cuts, Middle East problems) have little effect on prices.

Questions? Comments? tradertalk@cnbc.com

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About Trader Talk with Bob Pisani

  • Direct from the floor of the NYSE, Trader Talk with Bob Pisani provides a dynamic look at the reasons for the day’s actions on Wall Street. If you want to go beyond the latest numbers— Bob will tell you why the market does what it does and what it means for the next day’s trading.


  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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