GO
Loading...

Enter multiple symbols separated by commas

Market Insider with Patti Domm Trader Talk with Bob Pisani

More

  Thursday, 6 Nov 2008 | 11:34 AM ET

Wall Street Still Searching For A Bottom

Posted By: Bob Pisani

Most traders believe there is going to be at least one other retest of of the October lows of about 840 on the S&P 500, but when and how do we know if that bottom might hold? A number of traders are looking for simple, classic technical signals.

Here's one: retesting lows on improving internals. A number of traders noted that when we hit the lows on the S&P 500 in the middle of October, new 52-week lows spiked to levels never seen. But when we got close again to another low on the S&P, on October 24th, new lows had dropped off dramatically.

So, for example, if we go back to 840 on the S&P, and new lows are again at fairly low levels, that would be a good sign that we might hold there.

The "next leg down" argument. Bears argue that we will hit the old lows, and pass them. The bear argument is the "next leg down." The next down leg is a dramatic spike in auto loan and credit card delinquencies.

The bulls argue that this information has been widely telegraphed on the Street already. Regardless, this argues for a retest sooner than later.

_____________________________
New from CNBC.com:

- The Dow 30 at a Glance


Questions? Comments? tradertalk@cnbc.com

»Read more
  Thursday, 6 Nov 2008 | 9:16 AM ET

Econ, Earnings Numbers End Up Worse Than Expected

Posted By: Bob Pisani

The Bank of England pulled off a stunner by cutting interest rates 150 basis points to 3 percent. The European Central Bank cut by 50 basis point and the Swiss cut rates by 50 basis points.

The most important fact about the economic and earnings data in the past couple weeks is that it has generally been worse than the already lowered numbers predicted. We have seen this again this morning, with the exception of the Productivity number.

Retail sales. Last week analysts began furiously cutting estimates on October same store sales. Today, with a few exceptions (Like teen retailers Bucket and Hott Topic), retail sales are below expectations.

Limited,for example, was expected to have sales down 6.2 percent, but it came in down 9 percent.

A few even reported double-digit declines: Abercrombie (down 20 percent), Gap(down 16 percent), Talbots(down 13.9 percent), Nordstrom (down 15.7 percent).

Even discounters were not exempt. Costco saw sales DECLINE 4.3 percent, where a gain of 1 percent was expected, and Targetwas down 4.8 percent, below expectations.

Wal-Martdid see sales up 2.4 percent , better than the expected 1.6 percent gain. U.S. comparable store sales for the four-week November period are expected to be between one and three percent.

Company earnings/guidance disappoints as well. After the close, several companies confirmed that business slowed significantly in September and October.

1) Overseas, downbeat earnings reports from Toyota, Axa, and Adidas. Toyota was talking about the biggest profit drop in 18 years, and noted the recent strength of the yen was also eroding overseas profits.

2) Cisco saw a 9 percent decrease in October orders year over year. On the conference call, CEO John Chambers said he is now anticipating a decrease in revenue of 5 to 10 percent in the current (second) quarter. Chambers said it was the most difficult time in his career.

3) As if car makers didn't have enough problems, rental car company Hertzreported earnings well below expectations ($0.33 vs. $0.52 expected). Demand for rentals is down, pricing is down, and prices for the used cars are down. The company said it will not meet its guidance and is suspending its guidance. Down 10 percent pre-open.

4) News Corp down 11 percent after the close cut its full year outlook on the strength of the dollar and as advertising revenues continued to decline in the television industry.

    • Jobless Claims Take Small Drop; Productivity Falls

_____________________________
New from CNBC.com:

- The Dow 30 at a Glance

_____________________________

_______________________________________
CNBC's Names in the News:

Yahoo

Toyota

_______________________________________


Questions? Comments? tradertalk@cnbc.com

»Read more
  Wednesday, 5 Nov 2008 | 4:07 PM ET

Global Economic Slowdown Anything But Over

Posted By: Bob Pisani

Here is your little kick-in-the-pants reminder that the global economy is in bad shape and not getting better any time soon. And it doesn't give a damn that every single person on Wall Street (and at CNBC) is exhausted and wants a few days off.

I can make excuses for the selloff, if you want: 1) the volume is light, 2) there has been no concerted wave of selling, just buyers walking away, and 3) we have had a rally for the last week and a half and can't expect to go too far.

The selloff was fairly uniform: most stocks were down 3 to 7 percent. The initial decline was led by commodity stocks, led by ArcelorMittal, which announced they were cutting steel production. Then late day financials led the selloff with Citiand Bank of America leading the Dow down.

The economic news has not only been bad, it has been worse than expected (ISM Services & Manufacturing, for example), and the news for the rest of the week (October retail sales, initial jobless claims, and nonfarm payrolls) stand a good chance of being worse than the already lowered numbers.

In other words, we are RIGHT NOW in the thick of what is likely to be at least several months of just plain lousy numbers.

The bulls believe that we can start talking about a turnaround in the second half of 2009. Why so soon? Because bulls argue that the tidal wave of global financial aid is going to be a lot bigger help than some people think--that the aid donors will overshoot on the generous side and prime the pump in a big way.

The bears find this laughable. Their position is that we will soon challenge the October lows--perhaps before the end of the year, but I often hear January mentioned as a good month to hit new lows.

January, because 1) it is supposed to be an up month and because it will be down it will break the bulls' heart (as it did this year) and 2) by then the next leg of the problem (credit card and auto loan defaults) will have manifested itself and it will be clear that these problems are deeper and more widespread than obvious now.

What this means is that even bulls and bears agree that it will be tough to significantly move the markets forward for the rest of the year. Most stock traders think we will remain somewhere in the range we have been in recently--850 to 1,000 on the S&P 500.

I know only a few brave souls who think we will end the year at 1,200; I know several who think we could be at 800.

_____________________________
New from CNBC.com:

- The Dow 30 at a Glance


Questions? Comments? tradertalk@cnbc.com

»Read more
  Wednesday, 5 Nov 2008 | 2:44 PM ET

Get Ready—Same Store Retail Sales Will Be Awful

Posted By: Bob Pisani

Hold your nose: tomorrow's October retail same-store sales will be awful. I know everyone thinks the Downer of the Week will be nonfarm payrolls on Friday, but before that brace yourself for double-digit declines in some retail same-store sales.

Last week, analysts finally woke up and began aggressively cutting same store sales. As always, they have been late and the stock market has moved ahead of them.

While discounters will probably post positive comps (with Wal-Martup 1.6 percent), and drug stores should post low single-digit gains, the rest of the retail biz is a mess: there should be notable declines in department stores (with double-digit declines expected at JC Penney, Dillards, Nordstrom, and Saks), Apparel (with most down mid-single digits) and even teen retailers (Abercrombie estimated down 14 percent, for example).

There's even talk that overall year-over-year same store sales could be negative, which would be the first time that has happened since 2000.

    • Private Sector Cuts Jobs; Planned Layoffs Jump

_____________________________
New from CNBC.com:

- The Dow 30 at a Glance


Questions? Comments? tradertalk@cnbc.com

»Read more
  Wednesday, 5 Nov 2008 | 1:13 PM ET

Obama "Bounce": Why It's Not Bouncing

Posted By: Bob Pisani

Those of you who thought the "Obama bounce" would triumph over "the economy" or "profit taking" today must be rather unhappy.

The average stock is down about 2.5 percent midday, with particularly weakness in some commodity and energy names. ArcelorMittal's announcement they would be cutting steel production is weighing on steel, iron ore, and coal companies.

But it doesn't stop there: financials and pharma have been weak, and recently tech stocks have also moved down. House Speaker Nancy Pelosi, not surprisingly, threw her support behind an economic stimulus bill midday as well.

Stocks have had a nice run in the past 7 trading days—the S&P is up about 15 percent from its lows last week. Many beaten up groups like REITs, retail, restaurants and hotels have had nice moves up.

What the market is saying here is, not so fast. There is a ceiling on a market rally due to the horrible economic numbers. Most traders believe it is highly unlikely the S&P will close the year out near 1,200. The majority think we are likely to be slightly higher from current levels.

    • Private Sector Cuts Jobs; Planned Layoffs Jump

As for the Obama bounce: most stocks that were supposed to benefit from his election (solar, hospitals, infrastructure) are also down today, in many cases just as much as stocks that were supposed to be hurt by his election (defense, pharma, big oil, tobacco).

_____________________________
New from CNBC.com:

- The Dow 30 at a Glance


Questions? Comments? tradertalk@cnbc.com

»Read more
  Wednesday, 5 Nov 2008 | 9:15 AM ET

California Prop Defeat "Hurting" Alternative Energy Stocks

Posted By: Bob Pisani

Futures are down, but don't read this as a refutation of President-elect Obama. The S&P 500 has moved 11 percent in the past week, and many traders went home short on simple profit-taking.

Germany passed a $64 billion economic stimulus package today, which includes funding for infrastructure projects. Italy is working a plan as well. Expect the U.S. to follow. Libor down 18 straight days, near 2.5 percent. The ADP report on private jobs showed a bigger loss than expected. Commodities are mixed, gold is flat but gold stocks like Goldcorp and Yamana are weaker.

Elsewhere:

1) Obama is a big backer of alternative energy, but alternative energy stocks like Clean Energy,Suntech Power, Yingli Green, and Evergreen Solarare trading down this morning.

That's because California voted down Proposition 7, forcing California's electric utilities to get 50 percent of their power from alternative energy by 2025, which would have been an increase of the current goal of getting 20 percent by the end of 2010. Another proposition would have offered rebates for cars that offered alternative fuels; it too failed to pass.

2) ArcelorMittal, the world's largest steelmaker, down 17 percent, is cutting production as prices fall. That has implications for coal stocks, as any pullback in steel production will reduce demand for coking coal. U.S. Steel down 6 percent as well.

3) Time Warnerup 3 percent, they beat however they lowered full year profit forecasts by a few cents, perhaps less than expected.

4) Libor may be going down, but mortgage rates remain stubbornly high, with 30-year fixed rate mortgages going to 6.47 percent last week, close to the highs we saw last summer. This is hurting the purchase market and killing the refinance business.

_____________________________
New from CNBC.com:

- The Dow 30 at a Glance


Questions? Comments? tradertalk@cnbc.com

»Read more
  Wednesday, 5 Nov 2008 | 8:53 AM ET

Is Infrastructure The Next Big Play?

Posted By: Bob Pisani

One of the first orders of business for the new president will be a long, hard look at the budget. The budget deficit will be about $500 billion when Obama is sworn into office, but with the $700 billion TARP plan it should go to $1 trillion quickly.

With all that, you would think a second stimulus plan would be unthinkable, but with the support of Fed Chairman Bernanke traders are already acting like it's likely the lame duck Congress will enact another one shortly.

The numbers go as high as $300 billion. For what? Number One on everyone's list is infrastructure improvement. Why? Because few investments give as big a direct bang for the buck as spending on roads and bridges.

In the past couple days, traders have been nibbling on infrastructure plays like Cemex, Martin Marietta, Eagle Materials,Vulcan Materials, and Texas Industries.

But only nibbling. So why aren't infrastructure stocks rallying? Because, aside from the prospects for a government stimulus plan, the outlook for construction is ABYSMAL!

Even if there was a sizeable stimulus plan, it would take months—six months or more—to get money on the ground.

That's just far enough away to see AT LEAST another two quarters of terrible earnings. Remember, residential construction has been in a recession for a year already, but non-residential construction has just begun to slow down.

  • Can He Jump-Start Confidence?
  • Is Obama the New Reagan?
  • The New Investment World
  • It's not all bad news. I've noted that many companies have seen surprisingly strong earnings this quarter because they have been able to raise prices (Archer Daniels Midland) or been helped by lower energy costs (Alcoa, others).

    Higher prices and lower energy costs will help some construction companies, but don't kid yourself: they're living for the stimulus.

    _____________________________
    New from CNBC.com:

    - The Dow 30 at a Glance


    Questions? Comments? tradertalk@cnbc.com

    »Read more
      Tuesday, 4 Nov 2008 | 4:04 PM ET

    Stocks "Steady" Because Of Election? Maybe Not

    Posted By: Bob Pisani

    Stocks traded higher on relief that the presidential elections were finally over, but perhaps more importantly stocks were steady because the market has calmed down considerably in the last four days.

    The CBOE Volatility Index (VIX) declined for the fourth day, and is nearly 50 percent below its high of 89 on October 24th. LIBOR rates continue to drop, down for the 17th straight day to the lowest levels since June.

    Commodities and energy stocks rallied, the dollar was weaker. Commodity and energy stocks were again the market leaders. Volume was light.

    _____________________________
    New from CNBC.com:

    - The Dow 30 at a Glance

    _____________________________

    Questions? Comments? tradertalk@cnbc.com

    »Read more
      Tuesday, 4 Nov 2008 | 9:17 AM ET

    At Least A Perception Of Stability

    Posted By: Bob Pisani

    U.S. futures are up 21 points pre-open. Europe has rallied in anticipation of rate cuts on Thursday from the ECB and the Bank of England. The Bank of Australia cut rates 25 basis points more than expected.

    Japan is up 6 percent today, is now 30 percent off the multi-year lows it hit last Tuesday. Some of this can be passed off as the perception of an Obama bounce, and to a certain extent that makes sense. Now that the election is near over, one more uncertainty will be removed.

    But there is a more likely explanation. Every day the macro picture has improved ever so slightly...it is baby steps, to be sure, but it is happening.

    Libor rates continue to drop, down for the 17th straight day to the lowest levels since June. Commodities are rallying, the dollar is weaker. I am not saying the economic news is better; I'm saying there is a perception that there is more stability.

    Elsewhere:

    1) Archer Daniels Midland up 15 percent pre-open, beat by a wide margin on both top and bottom line. The key here was much higher prices.

    2) Mastercard up 10 percent pre-open as they too beat on the top and bottom line, despite concerns that a credit card crunch was looming.

    _____________________________
    New from CNBC.com:

    - The Dow 30 at a Glance

    _______________________________________
    CNBC's Names in the News:

    Goldman Sachs

    JP Morgan

    _______________________________________


    Questions? Comments? tradertalk@cnbc.com

    »Read more
      Monday, 3 Nov 2008 | 3:59 PM ET

    Stability Does NOT Mean A Rally

    Posted By: Bob Pisani

    The markets are showing signs of stabilizing. For the third day, stocks moved in a much narrower range and internals showed signs of improvement:

    1) New lows drop dramatically

    2) VIX decline continues

    3) Libor rates down 15 days in row

    4) elections ending

    What we need to see now:

    --consistent decline in selling pressure

    --more real buying interest

    --more stability in credit--no good to have lower LIBOR if no one is lending!

    Stability does not mean a rally—even bulls expect a trading range. For example, consumer discretionary, materials and energy were the biggest gainers last week, but traders did some old-fashioned profit taking today as those groups were among the biggest decliners.

    _____________________________
    New from CNBC.com:

    - The Dow 30 at a Glance


    Questions? Comments? tradertalk@cnbc.com

    »Read more

    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.

    Wall Street