Traders,
The market looked weak, then strong, then sold off. The fly-by with jet fighters in New York did create an intraday (abet short) panic (brilliant communication). The Swine Flu has also spread and the World Health Organization (WHO) has raised their alert level (because it doesn’t look like the virus can be contained), one report says that there may be more that have the Swine Flu, but it is under-reported because of the it may not be tested for an just thought as being a cold or common flu – there is a 24-48 hour testing lag. Which would seem to make sense, as the CDC reports only ONE person in Ohio to have it. The question (beyond the health risk) is how does it affect the economic situation?
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Citi and B of A – need more….
The rumors had been out (leak or not) that Citi and B of A were not coming up with “A”s on the Stress Test and the information circulating meant that they were in need of more capital. One of the concerns that have been making the rounds is the default increase on commercial paper (with a heighten sense after General Growth filed bankruptcy).
The market looked weak, then strong, then sold off. The fly-by with jet fighters in New York did create an intraday (abet short) panic (brilliant communication). The Swine Flu has also spread and the World Health Organization (WHO) has raised their alert level (because it doesn’t look like the virus can be contained), one report says that there may be more that have the Swine Flu, but it is under-reported because of the it may not be tested for an just thought as being a cold or common flu – there is a 24-48 hour testing lag. Which would seem to make sense, as the CDC reports only ONE person in Ohio to have it. The question (beyond the health risk) is how does it affect the economic situation?
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Citi and B of A – need more….
The rumors had been out (leak or not) that Citi and B of A were not coming up with “A”s on the Stress Test and the information circulating meant that they were in need of more capital. One of the concerns that have been making the rounds is the default increase on commercial paper (with a heighten sense after General Growth filed bankruptcy). Collectively Citi and B of A have received almost $100 billion from the government bailout and CEO Lewis (B of A) is under fire for keeping information about the Merrill takeover from shareholders. He reported that Paulson (former Sec. Treasury) as well as Bernanke pressured him in to keeping silent about Merrill’s expanded losses back by the threat of not receiving government money. Of course none of this was written down so it is turning into a “He Said – He Said” issue. Shareholder’s are scheduled to vote tomorrow (possibly replacing him). CEO Pandit (Citi) isn’t much better, he hugely profited by selling his hedge fund to Citi, before becoming the CEO – and a short while after becoming the CEO his fund collapsed. His job as well is in jeopardy.
But the “Big Two” are not the only ones – it would seem that some of the regional’s also need some capital – including Sun Trust and Fifth Third.
Citi and B of A are getting hit in the pre-market – and are pulling the financial sector down. The administration has done its best to keep the results secret – until the release – but that has not stopped the rumor mill.
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Earning season comes to an end…
We are in the closing stages of the earning season, the story seems to be lowering forecast – with few surprises.Pfizer - beats estimates (54 cents a share) – they look to have a little problem in the pipe line but nothing to curtail growth for the long haul. The whole pharmaceutical sector is getting a boost (even if they don’t make anti-virus) from the swine flu scare.
U.S. Steel – miss and report a loss that was more than twice estimates. Moody’s downgrades over $1 billion of the company’s debt to junk status.
Baidu – beat estimates as China’s largest internet search engine is gaining market share.
Office Depot – best estimates and has been taking the fight toe-to-toe with Staples (that has been having problems).
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Futures Pre-market
The futures are off in the pre-market from the swine flu alert raised coupled with Citi and B of A stress test result rumors. Expect some downside pressure at the opening if the spread remains.
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Support / Resistance
Testing the numbers?
INDU 8000 (Surprise – we will be testing 8000 again this morning – based on futures in the pre-market. Where do we close?)
NDX 1325 / 1350 / 1375 (The NDX has stretched further than the other indices through resistances – it is seeing a slight pull back this morning – testing 1350 is a possibility at the opening.)
SPX 835 / 875 (We are seeing weakness in the futures – the 835 level seems to be key – do we stay above it?)
RUT 450 / 480 (We are seeing some downside pressure, but well above the 450 level for now.)
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Gold 900+ (We are seeing a pull back, but the futures are still above 900)
Silver 12+ (We saw a pull back after it looked like it was going to break 13)
OIL 50? (We are below 50 again this morning )
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Conclusion
The Stress Test and the Swine Flu are the big market factors. Of course the Obama first 100 days special (with a stream of people grading Obama’s first 100 days) – a T.V. special, please. Obama is a smart guy, great orator, and with some of the best intentions. Now doubt he has brought “Hope” and optimism. All very important, my biggest criticism (while I don’t agree with some of his policies) is that he has failed to convert his popularity to action.
Testing the numbers?
INDU 8000 (Surprise – we will be testing 8000 again this morning – based on futures in the pre-market. Where do we close?)
NDX 1325 / 1350 / 1375 (The NDX has stretched further than the other indices through resistances – it is seeing a slight pull back this morning – testing 1350 is a possibility at the opening.)
SPX 835 / 875 (We are seeing weakness in the futures – the 835 level seems to be key – do we stay above it?)
RUT 450 / 480 (We are seeing some downside pressure, but well above the 450 level for now.)
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Gold 900+ (We are seeing a pull back, but the futures are still above 900)
Silver 12+ (We saw a pull back after it looked like it was going to break 13)
OIL 50? (We are below 50 again this morning )
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Conclusion
The Stress Test and the Swine Flu are the big market factors. Of course the Obama first 100 days special (with a stream of people grading Obama’s first 100 days) – a T.V. special, please. Obama is a smart guy, great orator, and with some of the best intentions. Now doubt he has brought “Hope” and optimism. All very important, my biggest criticism (while I don’t agree with some of his policies) is that he has failed to convert his popularity to action.
His visit to Europe, while popular, came back with nothing. He was unable to convert his popularity into policy by getting Europe or other nations onboard with his economic policies that he has (via other channels) pushing forth with monetary easing. I would of thought he could of arrived in Europe and close the deal.
On the domestic front he has created (just like Bush) more partisanship, which is disappointing. He may not like the Republicans – but he continues to push them away. While it was important to release the “Justice Department” information on the previous administrations torture information – his timing sucked. He is trying to pass a Budget, fill a cabinet, pass stimulus, and probably reload the TARP – why stick a fork in the eye of the Republican party and sling mud at them? I am not saying they don’t deserve it, but how about wait and pass your agenda before you start beating them up?
His National Health Care seems to take top spot on the agenda and he is already getting some push back from some Democrats – because there are many opinions on how to move forward.
My grades would be as follows:Presentation and Speech: A+
Economic Policy: C-
Bi-partisanship: D
Foreign Policy: Incomplete
Health Care: C
Budget: D-
Congressional Control: D
Celebrity Grade: A+
Over All Grade: C
He sure doesn’t have an easy job with this economy, foreign policy issues, health care, etc. Whether I agree with him or not – he is a very slow starter – proof being that after the first 100 days he still has not filled his cabinet positions. I think he needs to capitalize on his popularity now (both domestically and internationally) - because people can only listen to rhetoric for so long before that start wanting to see action.
Also the Obama celebrity campaign (from DVDs, commemorative plates, Obama coins, talk shows, etc.) needs to end, HE WON! Now it is time to step up and Lead! Now we have a T.V. special? It is turning into a variety show – the sad thing is it will be praise and not constructive criticism, which is probably needed. I am not talking about anti-Obama views – but rather what he SHOULD be doing.
We only have one president, we need (both parties) to work together and get through this. Unfortunately the Bush Hate runs deep (rightly or wrongly) and it doesn’t seem like they are all able to play in the sandbox.
Over All Grade: C
He sure doesn’t have an easy job with this economy, foreign policy issues, health care, etc. Whether I agree with him or not – he is a very slow starter – proof being that after the first 100 days he still has not filled his cabinet positions. I think he needs to capitalize on his popularity now (both domestically and internationally) - because people can only listen to rhetoric for so long before that start wanting to see action.
Also the Obama celebrity campaign (from DVDs, commemorative plates, Obama coins, talk shows, etc.) needs to end, HE WON! Now it is time to step up and Lead! Now we have a T.V. special? It is turning into a variety show – the sad thing is it will be praise and not constructive criticism, which is probably needed. I am not talking about anti-Obama views – but rather what he SHOULD be doing.
We only have one president, we need (both parties) to work together and get through this. Unfortunately the Bush Hate runs deep (rightly or wrongly) and it doesn’t seem like they are all able to play in the sandbox.
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