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  Tuesday, 28 Oct 2008 | 5:32 PM ET

Regulation Topic Number One At Market Conference

Posted By: Bob Pisani

At the Securities Industry and Financial Markets Association Annual Meeting, New York.

How nerve-wracking have the market closes become? Plenty! At the Securities Industry and Financial Markets Association conference, in the middle of a debate with CEOs from four of the largest financial firms in the country, an entire room full of securities professionals began nervously checking their BlackBerrys at 3:58 to see how the market was closing.

The room glowed with the cool white of BlackBerrys against black suits, and when everyone saw that the Dow was closing up over 800 points, they began nudging their neighbors to show their screens.

Regulation, but not too much regulation! Please!

Regulation was topic number one at this conference, nowhere more so than on a panel with four financial industry leaders: William Dwyer, President of Independent Advisor Services, Chet Helck, President of Raymond James Financials, William Johnstone, President of Davidson Companies, and Ronald Kruszewski, Chairman of Stifel, Nicolaus.

All four sounded similar themes:

1) We cannot--and do not--have efficient regulators with multiple regulators. Several participants noted that they were regulated by the Fed, by FINRA, by state regulators, and by states attorneys general, who had become "effective regulators." All sought a regulator that was capable of measuring the true risk in the market.

2) There is a real risk that the regulatory burden will be so severe it will stifle innovation in the industry; one participant worried about a "lynching of the financial services industry", another about a "rush to regulate everything."

    • Treasury May Expand Rescue Plan to Private Banks

3) Ways must be found to effectively limit leverage, that regulators were not even close to keeping up with the development of financial products.

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  Tuesday, 28 Oct 2008 | 3:55 PM ET

International Regulation?  Everyone Agrees, But Devil is in the Details

Posted By: Bob Pisani

At the Securities Industry and Financial Markets Association Annual Meeting, New York.

NYSE CEO Duncan Niederauer and NASDAQ CEO Robert Greifeld are often at odds, but they delivered very similar remarks in back-to-back speeches at the securities industry conference this afternoon.

Their theme: the financial markets are so intertwined that the only effective regulation has to be global.

Greifeld in particular emphasized that reforms could not be considered in a merely national context, and that dramatically different levels of regulation had created a "national arbitrage" where various securities were created in one country where regulation was different than other countries, but then sold everywhere around the world.

This theme was echoed by Niederauer. While both talked about the need for additional regulation, Niederauer said he was not interested in "son of Sarbanes-Oxley," the 2002 law enacted in the wake of the corporate and accounting scandals that introduced new (and many argue overly onerous) accounting and other standards to U.S. corporations.

Many, including Niederauer, feel that law has put the U.S. at a competitive disadvantage internationally and that many companies have chosen to list in London, where regulations are more relaxed, than in New York.

During the Q & A, I asked Greifeld how this regulation could be accomplished in practice. For example, while international regulation of banking laws might seem desirable, I noted that no one I had spoken to at this conference was in favor of allowing regulators in Brussels to regulate U.S. banks.

Greifeld agreed, but said that each country would have to give up something to achieve the goal.

Odds 'n ends:

--When all else fails, blame the media. Niederauer drew the only round of laughter and applause in the two rather somber speeches when he told of a CNBC appearance during the height of the market chaos a few weeks ago where Maria and Dylan asked him if there was any truth to the rumors that the NYSE might close at any time. No, he said, the NYSE was not closing at any time, but then he went on to suggest that it might be good if CNBC might close for a few days.

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  Tuesday, 28 Oct 2008 | 1:44 PM ET

Dow Up As Investors Shrug Off Grim News

Posted By: Bob Pisani

This is Mary Thompson, I am filling in for Bob Pisani today at the NYSE.

Another day, another 300 plus point swing in the Dow. The good news today, the action so far has been pretty much to the upside. Investors shrugging off the lowest ever reading on consumer confidence and the 20th straight monthly decline in home prices, as measured by the Case-Schiller Index.

Why the apparent good mood? Overnight the yen pulled back, the Asian markets rallied and the European markets closed broadly higher as well. Still, traders aren't counting their winnings yet, as the final hour of trading continues to provide the days excitement with wild swings and reversals. We will see if today is any different. Traders noting that many mutual funds close out their year on October 31st, so today is the last day they can get a trade executed and cleared for the year, so that might provide some fireworks close to 4:00 p.m. EST.

The chatter today is focused on this big short squeeze overseas. Shares of Volkswagen jumping over 30 percent as shorts rushed to cover their positions after rival automaker Porsche moved to increase its holding it the maker of the Beetle. Shares of European banks are under pressure on concerns about their exposure to this trade, as were shares of Morgan Stanley and Goldman Sachs. Morgan said it has no exposure to Volkswagen and people inside Goldman Sachs told CNBC's David Faber the firm has no significant losses tied to VW.

    • McCain and Obama Battle Over Florida

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  Tuesday, 28 Oct 2008 | 12:13 PM ET

Paulson's Fill-In At Markets Conference Talks About Bailout

Posted By: Bob Pisani

At the Securities Industry and Financial Markets Association Annual Meeting, New York.

Though Acting Under Secretary for Domestic Finance Anthony Ryan was a fill-in for no-show Hank Paulson, and although he left fairly quickly after his speech, he did make a number of important points:

1) He said that the debt and mortgage-backed securities of Fannie Mae and Freddie Mac, both existing and to be issued, was guaranteed by the government. However, as Deutsche Bank noted, this support rests on the Treasury plan which only provides capital and credit until the end of 2009. Traders are still awaiting some future statement that the guarantee will be explicity and permanent;

2) Regarding the capital purchase program, he noted that the $125 billion in capital that is supposed to be delivered to nine major institutions would be delivered TODAY;

3) Regarding the TARP program, he noted that Treasury would continue to increase the auction size of its bills and coupon securities programs, and that Treasury is considering the re-introduction of the three year note, beginning in November 2008.

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  Tuesday, 28 Oct 2008 | 11:14 AM ET

Securities and Financials Conference A Somber Affair

Posted By: Bob Pisani

At the Securities Industry and Financial Markets Association Conference, New York. The atmosphere at the annual meeting of the securities industry is, to be polite, somewhat somber, one is tempted to say "funereal."

Consider:

1) The meeting is normally held in tony Boca Raton, Florida, where golf outings are traditionally as big a part of the conference as the speeches. This year it is being held at the Marriott in midtown New York on a cold, drizzly morning.

2) The cocktail party last night, normally a bright, cheerful affair, was closed to the press;

3) Last year's entertainment at the dinner party was Hootie and the Blowfish; this year it's the Boys and Girls Choir of Harlem Alumni.

There's ample reason for this somberness:

1) The country is largely blaming Wall Street for the recent economic woes;

2) Layoffs on Wall Street are increasing and will pick up notably in the coming months; SIFMA President Tim Ryan, in an internal memo to staff last week, announced that SIFMA itself will be "implementing a reduction in force" beginning at the end of this week.

  • Home Prices Plunge in August
  • US New-Home Sales Take Surprise Climb; Prices Fall
  • Yes, New Home Sales Rise, But Watch Out For The Spin
  • Home Prices Fall Further
  • In other words, not only is the industry shrinking, but the lobbying arm of the industry itself is shrinking.

    3) The industry is trying to figure out how to go along with the current tidal wave of demand for more regulation without having it cripple the entire industry.

    SIFMA Chairwoman Blythe Masters, Head of Global Commodities at JP Morgan Chase, delivered a well-received speech in which she said that the two main goals of the organization were:

    1) Rebuilding the reputation of the securities industry, and

    2) Acknowledging accountability.

    Addressing the regulatory issue, she argued for:

    1) A Financial Market Stability Regulator that would have access to all information and the power to have prompt corrective action.

    2) Consideration of the establishment of a Federal Insurance Charter and a Federal Insurance Regulator.

      • US Consumer Confidence Plunges to a Record Low

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    General Motors

    Google

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      Monday, 27 Oct 2008 | 4:37 PM ET

    Why Traders Ready To Throw Screens Against The Wall

    Posted By: Bob Pisani

    This was the kind of close that makes traders want to rip their screens off their table and throw them against the wall. For the record, here's what happened:

    1) there was a very sudden, rapid spike in selling about 4 minutes prior to the close. This appeared to be a liquidation, particularly in certain commodity stocks like Schlumberger, which went from $45 to $43 in literally a few minutes, and in financials. Citigroupwent from $12 to $11.73, a 12-year low.

    2) prior to about 3:56 ET, the volume was below average for what we have seen for the past two months. For example, we were on track to do about 5 billion shares for trading in all NYSE-listed stocks, but there have been many days where volume was 8-10 billion shares. We ended with 5.5 b shares, a significant spike considering it came in a few minutes.

    3) the problem throughout the day was different: there was no aggression on the part of buyers, even though selling pressure was light (up until about 3:56).

      • Merrill Lynch Advisors Are "Insulted" By Retention Packages

    Bottom line: despite the fact that government programs like the Corporate Paper Funding Facility and the capital infusion into banks has now become real, buyers are still not motivated—and little bomblets of liquidation still lurk out there.

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      Monday, 27 Oct 2008 | 1:30 PM ET

    The Good News On A Volatile Day

    Posted By: Bob Pisani

    It's been another volatile day: S&P futures have swung in a 60-point range from the high to low pre-open, but has regained all of its losses and is now near the highs for the day.

    While trading has been choppy, particularly given the weakness in Asia, there is good news:

    1) New home sales are encouraging. Sales in September were higher than expected, more importantly the inventory to sales ratio dropped to 10.4 months supply, which while high historically is well below the prior number of 11.4. Also, median home prices year-over-year are down 9.1 percent, the lowest levels since Sept. 2004.

    Hmm...lower prices, higher sales...good sign. We need more data to establish a clear trend. But consider that there is a huge supply of cheap foreclosed properties that many felt would pull demand from the new home sales market. Didn't happen last month.

    2) The fed programs have arrived! We have the Corporate Paper Funding Facility, announcements of capital infusions into banks, and throw in a rate cut from the Fed this week...and there is hope that the long-talked of "backstop" will finally start becoming more real.

    Tell-me-something-I-don't know department: Standard and Poor's put out a note on Christmas retail sales this morning...the data is interesting. In the last 10 years, holiday sales have increased an average of 4.4 percent a year, with the worst year being 2001, when sales were only up 1 percent; but the conclusion is not: --they anticipate that retail sales will be flat to down 2. Flat to down 2 percent? Given what we have seen recently, that would be a victory!

      • As Recession Looms, What to Expect from Tech

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      Monday, 27 Oct 2008 | 9:12 AM ET

    Banks Seeking—And Getting—Capital Infusion

    Posted By: Bob Pisani

    Hong Kong dropped 12 percent to its lowest level in 5 years, S&P futures have swung in a 60 point range this morning, though they are well off their lows.

    Metal and energy commodities are again down 2 to 5 percent, as are many commodity stocks like BHP Billiton, Total, and British Petroleum. European bank stocks like Deutsche Bank, AXA,HBC are down about 10 percent pre-open.

    The Commercial Paper Funding Facility (CPFF) kicks in today. That, combined with announcements of capital infusions, means that programs are finally starting to kick in.

    In fact, Assistant Treasury Secretary David Nason said on our air that $125 billion in stock purchases will occur this week after the signing of bank deals.

    Elsewhere:

    1) Announcements regarding capital infusions are coming fast and furious now. SunTrust Bank cut its dividend to $0.54 from $0.77, and will be selling $3.58 billion in preferred stock and warrants to the Treasury.

    Fifth Thirdis trading up as they announced last night they too plan to seek a $3.4 b capital injection from Treasury.

    It appears that about 20 regional banks will be getting capital infusions from the Treasury Department, on top of the nine large banks that will receive about $125 billion.

    2) Earnings:

    Arch Coal, like many companies, reported earnings above expectations but has guided lower for the rest of the year, to $2.30-2.50 versus prior guidance $2.50-2.85 (estimates $2.69).

    Verizon beat estimates by a small amount thanks to strong wireless sales, despite worries that a slower U.S. economy would hurt spending by consumers and business customers.

    3) CenturyTel Inc. agreed to buy bigger local-telephone operator Embarq for $5.82 billion. Embarq shareholders will get 1.37 CenturyTel share for each Embarq common share they own, valuing Embarq at $40.42 a share based on Friday's closing prices, a 36% premium. Embarq, you might recall, was a SprintNextel spin-off.

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      Thursday, 23 Oct 2008 | 4:35 PM ET

    The Seesaw Day That Was

    Posted By: Bob Pisani

    This post is from CNBC producer Robert Hum.

    It was another seesaw day for the markets today. The Dow traded in a 552-point range, but climbed back and re-approached its session high in the last hour of trading. In the end, the Dow posted just its fourth gain of the month, finishing up 172 points on the day.

    Some of Wednesday’s beaten up groups – energy, utilities, and telecom, rebounded nicely and posted some strong gains, while materials and financials continued to see some weakness. Housing stocks were particularly weak all day, falling 15%-20% following bleak reports given by Pulte Homes and Rylandlast night.

    After the bell, Microsoft announced that its Q1 earnings & revenues beat estimates. However, just like many of the other companies that reported this morning, the company’s Q2 EPS guidance of $0.51-$0.53 fell short of the street’s expectation of $0.55 on the prospects of a more drawn out economic slowdown.

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    Microsoft

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      Thursday, 23 Oct 2008 | 9:34 AM ET

    Commodities Still Under Pressure

    Posted By: Bob Pisani

    S&P futures moved about 40 points off their highs of the morning, before posting a slight rebound off the lows late in the morning. They are finishing the morning session only down slightly.

    Commodity stocks continue to be under pressure pre-open (down 4%-6%), as many of the commodities are weak this morning. Among them: platinum is down 7%, copper is down 5%, and gold is down 4%. The dollar is showing strength again, with the dollar index up for the seventh day in a row.

    It’s another busy earnings morning today. While several companies beat estimates in the past quarter, one thing trend was clear: companies were cautious to pessimistic on the upcoming quarter.

    Some of the earnings highlights:

    1) UPSbeat estimates despite lower U.S. domestic volume, which fell 3.4% in the quarter. Its international operations, which posted a 7% INCREASE in volume, along with strength in its supply chain division, helped the company’s results. With greater concerns over the U.S. economy and consumer spending, the company is guiding towards the low-end of its previously-announced $3.50-$3.70 range for the full year. Analysts are expecting full-year results of $3.57. The CEO also remarked that a U.S. economic recovery may not happen until 2010.

    2) Dow Chemicalbeat estimates ($0.60 vs. $0.57 est.), as it was helped tremendously by its 22% increase in prices which offset volume declines. While the company didn’t provide guidance, it warned of a “global recession through most of 2009.”

    3) Potash is up 4% pre-open following its earnings beat. Higher prices helped its Q3 results to beat both analysts’ estimates and the company’s own expectations. Despite the stock’s rise in the pre-open, keep in mind the stock is down 72% from its June high, as concerns over slower global demand have significantly plagued the company. While Potash expects strong demand to continue in the long term, it does see some risk in the near term, and guides to the low end of its previous $12-$13 EPS guidance for the full year – which may come in just slightly below the analysts’ estimate of $12.55.

    4) While Black & Deckeralso beat estimates for the past quarter, it sees weaker consumer confidence and slowing global economies in the next quarter. Its guides significantly below analysts’ estimates ($0.70-$0.90 vs. $1.13 est.).

    Ahead of its full earnings report next week, Sony slashed its operating profit forecast by more than half for the year. The company noted it’s not only being hurt by poor sales but also but volatile currency markets. Remember, over half of Sony’s revenues are generated outside of Japan (in Europe and the U.S.)

    In other news:

    The Wall Street Journal reports that Goldman Sachs intends to lay off 10% of its staff (about 3,250 job cuts) in the ongoing staff reductions across Wall Street financial firm.

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    Amazon

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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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