Today the market rose to close the week up, with the Dow Jones Industrial Average back over 7,200. It was up 53.92 points on the day (+0.75%), ending at 7,223.98. For the week the Dow bounced back nearly 600 points over the prior week’s close of 6,626.94, recovering all the losses of the prior week and well over its close at 7,062.93 of two weeks ago. That is a rise of over 9% for the week, and a net rise for March of 2.28%.
Though this is welcome news, having a “two-week high” is nothing to really get complacent about. World Bank President Robert Zoellick warned of all economic stimuli giving the world economy a “sugar high” speaking in London before the start of the G20 Summit.
Another bit of good news for the “buy American” crowd was that the U.S. trade deficit fell 9.7% to $36 billion for the month of January. This was down $2 billion compared with expectations. Adjusted for inflation, the real trade deficit was $41 billion. However, this news must be couched in the fact that all global trade is significantly down for the year. And in the long run, it could hurt many industries and international relationships that rely upon global trade for their success.
Many elements of the world economy are still shaking out after the downturn. European powers are considering protectionism. They are still in a great deal of insecurity over their eastern European debt obligations. Austria, which had extensive dealings with eastern Europe after the fall of the Iron Curtain, now finds itself in a greatly insecure position.
China is trying to avoid having its trade deficit with the U.S. shrink, and is mulling over the security of U.S. Treasury bonds. Meanwhile, the U.S. has dispatched a Navy destroyer, the USS Chung-Hoon, to protect a maritime surveillance ship, the Impeccable, off the Chinese coast. Along with the other issues, a prognosis of uncertainty is developing between the U.S., the present pre-eminent world power, and China, the developing powerhouse of Asia.
So while the news for the week is extremely good for the short term, there remains a great deal of uncertainty for the coming year ahead.
Showing posts with label Wall Street. Show all posts
Showing posts with label Wall Street. Show all posts
Friday, March 13, 2009
Thursday, March 12, 2009
Financial Crisis, 12 Mar 2009: Dow 7,170.06, +239.66 (+3.46%)
For the third straight day, the Dow Jones has ended higher. For the first time this month, the Dow closed above the 7,000 mark at 7,160.06.
A Dimmed Light Shines Brighter
General Electric, even though it was downgraded by Standard & Poor’s from AAA to AA+, jumped up $1.08 a share, up 12.72%, to $9.57. Investors had worried the downgrade would have been even worse.
If Not a Bottom, a Ledge
Meanwhile other aspects of the economy looked to be settling according to the U.S. Department of Commerce. Retail spending in February, though still down slightly by 0.1%, was not as bad off as some forecast. Excluding automotive industry, it was actually up 0.7%. Overall retail spending in January, even including the automotive market, was actually up 1.8%. Unemployment remains a chief worry to the sustainability of the consumer spending rate.
The present week has been a welcome relief to a market that has seemed nearly in free-fall since October of last year. While prospects are still too murky to determine if this is a bottom to the crevasse, it is possibly at least a ledge that the market has landed safely upon.
Madoff Guilty
Today also marks the day that Bernie Madoff pled guilty to running a massive corrupt investment scheme that lost billions. “I operated a Ponzi scheme,” he told the U.S. District Court judge.
Go to G20
The leaders of the G20 are preparing to meet this week. The U.S. is proposing two major initiatives:
Stay tuned for the news from the G20 summit later this month.
A Dimmed Light Shines Brighter
General Electric, even though it was downgraded by Standard & Poor’s from AAA to AA+, jumped up $1.08 a share, up 12.72%, to $9.57. Investors had worried the downgrade would have been even worse.
If Not a Bottom, a Ledge
Meanwhile other aspects of the economy looked to be settling according to the U.S. Department of Commerce. Retail spending in February, though still down slightly by 0.1%, was not as bad off as some forecast. Excluding automotive industry, it was actually up 0.7%. Overall retail spending in January, even including the automotive market, was actually up 1.8%. Unemployment remains a chief worry to the sustainability of the consumer spending rate.
The present week has been a welcome relief to a market that has seemed nearly in free-fall since October of last year. While prospects are still too murky to determine if this is a bottom to the crevasse, it is possibly at least a ledge that the market has landed safely upon.
Madoff Guilty
Today also marks the day that Bernie Madoff pled guilty to running a massive corrupt investment scheme that lost billions. “I operated a Ponzi scheme,” he told the U.S. District Court judge.
Go to G20
The leaders of the G20 are preparing to meet this week. The U.S. is proposing two major initiatives:
- Push for a 2-year stimulus plan from all G20 nations equal to 2% of that nation’s GDP. The U.S. stimulus plan signed by President Obama is already equivalent to 3% of GDP.
- Expand the IMF’s emergency fund for developing nations from $50 billion to $500 billion. The U.S. would contribute $100 billion to that fund and would seek other nations to underwrite the other $400 billion in necessary funds.
Stay tuned for the news from the G20 summit later this month.
Wednesday, March 11, 2009
Financial Crisis, 11 Mar 2009: Dow 6,929.68, +3.19 (+0.05%)
Today the market flirted with the 7,000 mark, crested it, and then spent the day in up-and-down trading. A late-in-the-afternoon rally almost brought the Dow to a close at the 7,000 mark, before a final tumble to close just 3 points higher than the previous day.
The intraday low was 6,867.55, meaning that the present support for this level is not firmly established. With the Dow plunging and rising hundreds of points per day, we will likely see a great deal of volatility yet to come.
The general trend for the day was a rapid peak in the AM, followed by a long steady decline. The reversal of that trend to the end-of-the-day rally somewhat mirrors the experience of 6 March 2009, when the market hit new recent lows.
The good news is that at 6,929.68, the Dow has recovered 7.6% from the low of 6,440.08. The unknown propositions are whether it will be able to remain above that point, and whether we have reached a valley, or a bump on the downward slope.
The airline industry, for one, sees that there may be some fair weather flying ahead. Delta, for one, saw “revenue trends stabilizing and not getting worse.” BofA-Merrill Lynch even upgraded JetBlue.
The issue about whether we’ve reached bottom requires everyone to consider “capitulation.” When some people simply abandon their positions in the market and take their losses. Mark Hulbert of MarketWatch is not convinced we’ve reached a point of capitulation yet, and warns that to be too overly bullish at present may be mistaking a bear market rally for the real McCoy of a reversal of a down trend.
The intraday low was 6,867.55, meaning that the present support for this level is not firmly established. With the Dow plunging and rising hundreds of points per day, we will likely see a great deal of volatility yet to come.
The general trend for the day was a rapid peak in the AM, followed by a long steady decline. The reversal of that trend to the end-of-the-day rally somewhat mirrors the experience of 6 March 2009, when the market hit new recent lows.
The good news is that at 6,929.68, the Dow has recovered 7.6% from the low of 6,440.08. The unknown propositions are whether it will be able to remain above that point, and whether we have reached a valley, or a bump on the downward slope.
The airline industry, for one, sees that there may be some fair weather flying ahead. Delta, for one, saw “revenue trends stabilizing and not getting worse.” BofA-Merrill Lynch even upgraded JetBlue.
The issue about whether we’ve reached bottom requires everyone to consider “capitulation.” When some people simply abandon their positions in the market and take their losses. Mark Hulbert of MarketWatch is not convinced we’ve reached a point of capitulation yet, and warns that to be too overly bullish at present may be mistaking a bear market rally for the real McCoy of a reversal of a down trend.
Financial Crisis, 10 Mar 2009: Dow 6,926.49, +379.44 (+5.8%)
Yesterday the Dow Jones Industrial Average (DJI) roared back up 379.44 points to close at 6,926.49, up 5.8% on the day. This raised the Dow to close to its February close, just above 7,000.
The good news in perspective shows how far the market has yet to recover. It was still down over 2,000 points on the calendar year 2009, which it began over 9,000. For the full twelve month proceeding period, it is far off the 13,000+ value it held back in May 2008. It is estimated by Stephen Schwarzman of Blackstone Group LP that 40-45% of the world’s wealth has been destroyed by the downturn.
Yet for Wall Street and for those dependent on their portfolio, 10 March 2009 was a welcome relief.
The market cited the reason for the significant uptick was surprising news from Citibank, which internally shared a memo it had made a profit in the first two months of 2009. That message leaked to the market, and there was a definite bounce.
Other good news included Rep. Barney Frank, Chairman of the House Financial Services Committee, saying that the “uptick” rule, which curbs short selling, may be reimposed by the Securities and Exchange Commission. While in prior days many free market philosophies would have seen this as government interference, in today’s market active involvement of watchdogs is seen as a healthy thing for all parties.
The good news in perspective shows how far the market has yet to recover. It was still down over 2,000 points on the calendar year 2009, which it began over 9,000. For the full twelve month proceeding period, it is far off the 13,000+ value it held back in May 2008. It is estimated by Stephen Schwarzman of Blackstone Group LP that 40-45% of the world’s wealth has been destroyed by the downturn.
Yet for Wall Street and for those dependent on their portfolio, 10 March 2009 was a welcome relief.
The market cited the reason for the significant uptick was surprising news from Citibank, which internally shared a memo it had made a profit in the first two months of 2009. That message leaked to the market, and there was a definite bounce.
Other good news included Rep. Barney Frank, Chairman of the House Financial Services Committee, saying that the “uptick” rule, which curbs short selling, may be reimposed by the Securities and Exchange Commission. While in prior days many free market philosophies would have seen this as government interference, in today’s market active involvement of watchdogs is seen as a healthy thing for all parties.
Friday, March 6, 2009
Financial Crisis, 6 Mar 2009: Dow 6,626.94, +32.50 (+0.49%)
The Tao of Dow
The week ended on a massive rally. An brisk morning start began Wall Street’s day 50 points higher than the prior evening’s close, and a quick surge led the Dow Jones Industrial Average (DJIA) to an early intraday high of 6,755.17.
However, the swift exuberance was extinguished shortly after 9:45 AM, and the rest of the day was a rocky decline, dipping below the 6,500 level before before 3:00 pm. The intraday low of 6,470.11 was hit right around 3:24 pm. Then, something sparked in the market, and the last half-hour was filled with a massive upsurge to close at 6,626.94. For the day, the Dow was up +32.50 (+0.49%).
It was the silver lining to a terrible week. Had the last half-hour not occurred, the market would have been down over 400 points on the week. As it was, it was “only” down a little over 300 points, from 6,932.23 Monday’s opening to Friday’s close at 6,626.94. This is net drop of 4.4% for the week as a whole. Except for one thing.
The prior week’s Friday close was 7,062.93. Given a Friday-to-Friday analysis, the week was down just shy of 436, or –6.17%.
The market had held up reasonably well for the first half of the week, cresting the 6,950 point twice in the week (Monday and Wednesday). Yet resistance collapsed on Thursday and Friday with the terrible economic news of more job losses and talks of insolvency for General Motors.
Unemployment Rate Crests 8.0%
As reported by Madlen Reed of the Associated Press, the U.S. government’s Bureau of Labor Statistics released figures that the economy has been shedding well over 600,000 jobs each month for the past quarter:
One can read the Bureau’s report directly online. The release of the Employment Situation begins grimly:
Otherwise, key opportunities will pass for small businesses and individuals too, causing markets to shut down completely.
The stimulus bill, ideally, is geared to address joblessness immediately. Without a change in the current economy, joblessness will rise to well over 10-12% in the span of the next quarter or two, causing even more chaos.
Rent and Torn
While everyone is focused presently upon the home buyers fiasco, increasing unemployment can also lead to massive disruptions to renters also. Property management companies are being hit as people have to leave their present rentals as jobs dry up, or they may decide to room together to save rent, Many newly completed apartment complexes or recently purchased properties are finding they are already underwater and priced out of the present market.
The UK is seeing a rapid decline in rental values over the past year, upwards of 11.7% in areas around London, and 14.3% around Manchester, as the economy tightens and more home owners put unsold properties out for let.
New York City is likewise seeing a decline in rentals, too. Given various incentives being offered by landlords, rates have been calculated to have dropped upwards of 10-15%, as reported by the New York Times on 30 January 2009.
The word “recession” has been used so far, though the use of the term “depression” is now starting to be considered, such as by this article in the Salt Lake Tribune. We would have to reach an unemployment rate of 10% and be in this crisis for three years before it formally qualifies according to technical definitions. The old joke cited by Amity Shlaes indicates the key difference: “A recession is when you lose your job. A depression is when I lose mine.”
Yet for many in the United States today, the symptoms already clearly indicate the condition. Such patients cannot afford to wait for the formal diagnosis. And for millions this is not an easy joke to laugh off.
The week ended on a massive rally. An brisk morning start began Wall Street’s day 50 points higher than the prior evening’s close, and a quick surge led the Dow Jones Industrial Average (DJIA) to an early intraday high of 6,755.17.
However, the swift exuberance was extinguished shortly after 9:45 AM, and the rest of the day was a rocky decline, dipping below the 6,500 level before before 3:00 pm. The intraday low of 6,470.11 was hit right around 3:24 pm. Then, something sparked in the market, and the last half-hour was filled with a massive upsurge to close at 6,626.94. For the day, the Dow was up +32.50 (+0.49%).
It was the silver lining to a terrible week. Had the last half-hour not occurred, the market would have been down over 400 points on the week. As it was, it was “only” down a little over 300 points, from 6,932.23 Monday’s opening to Friday’s close at 6,626.94. This is net drop of 4.4% for the week as a whole. Except for one thing.
The prior week’s Friday close was 7,062.93. Given a Friday-to-Friday analysis, the week was down just shy of 436, or –6.17%.
The market had held up reasonably well for the first half of the week, cresting the 6,950 point twice in the week (Monday and Wednesday). Yet resistance collapsed on Thursday and Friday with the terrible economic news of more job losses and talks of insolvency for General Motors.
Unemployment Rate Crests 8.0%
As reported by Madlen Reed of the Associated Press, the U.S. government’s Bureau of Labor Statistics released figures that the economy has been shedding well over 600,000 jobs each month for the past quarter:
| Month | Job Losses | Jobless % |
| December 2008 | 681,000 | 7.2% |
| January 2009 | 655,000 | 7.6% |
| February 2009 | 651,000 | 8.1% |
One can read the Bureau’s report directly online. The release of the Employment Situation begins grimly:
Nonfarm payroll employment continued to fall sharply in February (-651,000), and the unemployment rate rose from 7.6 to 8.1 percent… Payroll employment has declined by 2.6 million in the past 4 months. In February, job losses were large and widespread across nearly all major industry sectors…As major corporations continue to have unstaunched losses, and as Wall Street melts, the possibility is for small corporations and individuals to move into market segments to compete — if, and this is a big if — they are able to free their own capital or to raise funds from other sources, and if market conditions and regulations allow them to enter business unfettered.
The number of unemployed persons increased by 851,000 to 12.5 million in February, and the unemployment rate rose to 8.1 percent. Over the past 12 months, the number of unemployed persons has increased by about 5.0 million, and the unemployment rate has risen by 3.3 percentage points.
Among the unemployed, the number of job losers and persons who completed temporary jobs increased by 716,000 to 7.7 million in February. This measure has grown by 3.8 million in the last 12 months.
The number of long-term unemployed (those jobless for 27 weeks or more) increased by 270,000 to 2.9 million in February. Over the past 12 months, the number of long-term unemployed was up by 1.6 million.
Otherwise, key opportunities will pass for small businesses and individuals too, causing markets to shut down completely.
The stimulus bill, ideally, is geared to address joblessness immediately. Without a change in the current economy, joblessness will rise to well over 10-12% in the span of the next quarter or two, causing even more chaos.
Rent and Torn
While everyone is focused presently upon the home buyers fiasco, increasing unemployment can also lead to massive disruptions to renters also. Property management companies are being hit as people have to leave their present rentals as jobs dry up, or they may decide to room together to save rent, Many newly completed apartment complexes or recently purchased properties are finding they are already underwater and priced out of the present market.
The UK is seeing a rapid decline in rental values over the past year, upwards of 11.7% in areas around London, and 14.3% around Manchester, as the economy tightens and more home owners put unsold properties out for let.
New York City is likewise seeing a decline in rentals, too. Given various incentives being offered by landlords, rates have been calculated to have dropped upwards of 10-15%, as reported by the New York Times on 30 January 2009.
The word “recession” has been used so far, though the use of the term “depression” is now starting to be considered, such as by this article in the Salt Lake Tribune. We would have to reach an unemployment rate of 10% and be in this crisis for three years before it formally qualifies according to technical definitions. The old joke cited by Amity Shlaes indicates the key difference: “A recession is when you lose your job. A depression is when I lose mine.”
Yet for many in the United States today, the symptoms already clearly indicate the condition. Such patients cannot afford to wait for the formal diagnosis. And for millions this is not an easy joke to laugh off.
Friday, February 27, 2009
Financial Crisis, 25 Feb 2009: Dow 7,062.93, -119.15 (-1.66%)
Today began and ended badly, with a bit of modest hope in the middle.
At the opening bell, the Dow opened far below the close of the prior day, at 7,099.49. Within the first hour, it had sunk to an intraday low of 7,033.62. The rest of the morning was an uphill struggle. By noon the index climbed to 7,180, but met resistance which it was unable to overcome.
The rest of the afternoon was filled with Wall Street digesting the most recent proposal for the U.S. government to salvage ailing Citicorp, along with news of the worst annualized quarterly dip in GDP for the past 25 years: a drop of 6.2% in the fourth quarter of 2008.
During the afternoon, the market eroded. From the intraday high of 7,195.46, prices tumbled first after the 2:00 pm bell, then after the 3:00 pm bell, and finally, in the minutes before the closing 4:00 pm bell, until the market closed at 7,062.62, thus setting a new annual low.
In all, the U.S. market has already lost 18%-20% of its value since the beginning of the year.
Market Index Performance
27 February 2009
DJIA
Day: -119.15, –1.66%
Week: –4.1%
February: 11.7%
Year-to-Date: –19.5%
S&P500
Day:
Week: –4.5%
February: 11%
Year-to-Date: –18.6%
NASDAQ Composite Index (COMPX)
Day: –13.63; –0.98%
Week: –4.4%
February: 6.7%
Year-to-Date: –12.6%
Wilshire 5000
Day: –145.50, –1.91% (7,473.97)
Week: –4.96% (from 7,863.89)
February: –10.42% (from 8,343.79)
Year-to-Date: –20.2% (from 9,364.50)
Sources:
At the opening bell, the Dow opened far below the close of the prior day, at 7,099.49. Within the first hour, it had sunk to an intraday low of 7,033.62. The rest of the morning was an uphill struggle. By noon the index climbed to 7,180, but met resistance which it was unable to overcome.
The rest of the afternoon was filled with Wall Street digesting the most recent proposal for the U.S. government to salvage ailing Citicorp, along with news of the worst annualized quarterly dip in GDP for the past 25 years: a drop of 6.2% in the fourth quarter of 2008.
During the afternoon, the market eroded. From the intraday high of 7,195.46, prices tumbled first after the 2:00 pm bell, then after the 3:00 pm bell, and finally, in the minutes before the closing 4:00 pm bell, until the market closed at 7,062.62, thus setting a new annual low.
In all, the U.S. market has already lost 18%-20% of its value since the beginning of the year.
Market Index Performance
27 February 2009
DJIA
Day: -119.15, –1.66%
Week: –4.1%
February: 11.7%
Year-to-Date: –19.5%
S&P500
Day:
Week: –4.5%
February: 11%
Year-to-Date: –18.6%
NASDAQ Composite Index (COMPX)
Day: –13.63; –0.98%
Week: –4.4%
February: 6.7%
Year-to-Date: –12.6%
Wilshire 5000
Day: –145.50, –1.91% (7,473.97)
Week: –4.96% (from 7,863.89)
February: –10.42% (from 8,343.79)
Year-to-Date: –20.2% (from 9,364.50)
Sources:
Thursday, February 26, 2009
Financial Crisis, 25 Feb 2009: Dow 7,181.78, -88.81 (-1.22%)
Once again the Dow closed down below 7,200. It was up for most of the day, peaking in the morning hours above 7,400 (7,204.31 to be precise), before cascading down the rest of the day.
This is the fourth day this week the Dow sunk below 7,200, and the second day this week it closed below that point. Based on the trend established after declining from the highs over 9,000 around early January, the Dow seems poised to fall to 7,000.
Tomorrow may prove a crucial test of support above that number.
This is the fourth day this week the Dow sunk below 7,200, and the second day this week it closed below that point. Based on the trend established after declining from the highs over 9,000 around early January, the Dow seems poised to fall to 7,000.
Tomorrow may prove a crucial test of support above that number.
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