Thursday: Confessed mega-swindler Bernie Madoff pleaded guilty to fraud. Warren Buffett slipped from the "World's Richest Billionaire" slot. Apple flew in the face of grim retail prognostication and said it'd preview new iPhone software next week. It was reported that U.S. mortgage rates slipped last week; and Standard & Poor's downgraded General Electric* from its triple-A rating to AA-plus — but GE's shares soared on a better-than-expected outlook. CNBC heard from experts who warned that AIG is a "boil" that "needs to be lanced" and called a market bottom — of sorts.
Calling a Bottom...at S&P 600
Phil Orlando of Federated Investors said S&P 600 still makes a lot of sense to him. He believes there will be another inflection point as the end of the year approaches, but that means there are still a couple of negative quarters to go. He was encouraged by the latest retail sales numbers, which were driven by aggressive price-cutting ("70 percent off is the new 20 percent off") and pent-up demand.
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We Need Mark-to-Market Changes (and Consumer Cyclicals)
Peter Canelo of Argus Institutional Partners said mark-to-market must be modified before any real effort can be made to rid the system of toxic assets. Employment may not stabilize until next year. He's not waiting for additional recovery to buy stocks, because the market is so badly oversold. We are now up 500 points from the bottom, and he sees another 1000 points in this rally. Retailers and financials are looking better.
Fannie and Freddie are Back; AIG Still Gone
Dave Bahoric of Trade the News advised investors to look for "rays of light" as the new economy develops. The job market is actually now reconfiguing itself. AT&T is hiring 3,000 people as it expands its broadband capabilities. We see rallies when we see less of Treasury Secretary Geithner trying to explain things. Problems still need to be solved; Fannie and Freddie are back; AIG "is still a boil that needs to be lanced."
No Comeback 'til Jobless Claims Improve
Anthony Chan of JPMorgan Private Wealth Management said weekly initial jobless claims will have to drop below 600,000 before he's convinced any sort of recovery is under way. (This week: 654,000.) The savings rate continues to move higher, which means the consumer sector continues to tank; stabilization is good, but it is essential to get consumers spending again. The good news is that recovery will happen, because there's so much now in the pipeline that has not yet been realized by the economy.
Madoff & Co.:
CNBC Investment Tools:
CNBC's Companies in the News:
Bank of America
*General Electric is the parent company of CNBC.