US stocks slip, even as the dollar does the same, after a sharply weaker report on housing starts adds another brick to the wall of worry over the recovery.
DJIA slips 11 to 10426, S&P 500 eases less than 1 to 1109.80, Nasdaq Comp drops 11 (0.5%) to 2193. Volume’s low, as it has been just about every day this month. Gold hits another record, crude briefly touches $80/barrel. Stocks drop early, but slowly strengthen, with the blue chips finishing off just a fraction.
Housing starts fell nearly 11% in October, a big surprise to the market and casts some doubt on the strength of the recovery. Seems like we’ve been hearing that more and more lately. CPI comes in mainly in line with expectations. Fed’s Bullard suggests central bank may keep rates flat until 2012.
Keep in mind, too, that the S&P 500 is right around the 50% retracement from its October 2007 to its March low. Among technicians, this is a big deal. With very little in the way of broad participation, as they say, this market is being driven by insiders and technicals (and of course the Fed’s easy money policies.)
Today on Tomorrow’s News Today, we discus the housing starts that didn’t start, the small-business confab down in Washington, and the odds that interest rates won’t be moving until 2012. A well-spent three minutes, trust me.
That AIG bailout just keeps coming back to haunt, well, everybody, but lately it’s taking down the folks who engineered it in the first place.
A government audit released earlier this week shows the NY Fed caved in to demands by AIG creditors that they be paid in full for complex and risky securities they insured with AIG. WSJ has the details:
The audit, which was conducted by the special inspector general for the Troubled Asset Relief Program, faulted the New York Fed for not using its leverage as the regulator of some of these banks to get them to accept lower prices for more than $60 billion in credit-market bets, which were tied to souring mortgage-linked securities that had fallen in value.
The banks that were paid off in full included Goldman Sachs Group Inc., Merrill Lynch and large French banks Société Générale and Calyon, the investment bank unit of Credit Agricole Group, which were represented by the French bank regulator in negotiations with the New York Fed last November, the report said.
Not surprisingly, outrage has followed the report.
“There was absolutely no reason to pay 100%,” on the dollar, Yves Smith writes at naked capitalism.
“It’s simply embarrassing and pathetic,” Barry Ritholtz notes at The Big Picture.
Are you surprised? The rally still hasn't lost steam
The eight-month-old rally still hasn’t lost steam, even as unemployment hits a fresh high and skeptics keep calling for a vast sell-off.
Whenever stocks start losing ground and the run-up looks like it may come to an end, investors step in and use the dips as buying opportunities, which LA Times’ Money & Co blogger Tom Petruno describes as a classic bull-market mentality. “You don’t sell the dips, you buy them,” he says.
Still, there’s one other factor that keeps pushing the market higher: fear. Portfolio managers are scared about reducing equity exposure for the fear that this rally will keep going and leave them behind, he says.
“After the horrors of 2008, a money manager who doesn’t keep up with the market’s comeback this year is facing his or her greatest risk of all: the risk of unemployment,” Petruno says.
The Dow’s up more than 60% off the early-March lows, yet still remains about 36% off the all-time high set in Oct. 2007.
Posted by Steven Russolilloon November 18, 2009 Economy /
3 Comments
Byrne's moves shouldn't come as a shock, fella
Sifting through SEC filings can be a long, tedious process. But when Overstock.com (OSTK) discloses something, the online retailer always seems to find a new way to surprise investors.
Overstock certainly lived up to expectations with its unorthodox 10-Q filed late Monday, which began with a quote from German philosopher Friedrich Nietzsche:
All things are subject to interpretation; whichever interpretation prevails at a given time is a function of power and not truth.
OSTK, which is already under investigation for accounting issues, then announced in the filing that it fired its outside auditor, Grant Thornton, over a dispute related to the financial reporting of an overpayment to a business partner.
Grant Thornton lasted less than a year as Overstock’s auditor, as it replaced PricewaterhouseCoopers in March. NYT’s Floyd Norris has the details related to a dispute over when the company books revenue:
See? It says it right here: 'Don't raise until 2012.'
Which do you think will happen first in 2012: the world will end, or the Fed will raise interest rates?
St. Louis Fed President James Bullard set the market on its ear when he suggested the Fed may not raise interest rates until 2012, if the FOMC follows the pattern it’s set in past recessions. Newswires’ Michael Derby summed it up like this:
“The advance materials for Bullard’s speech summarize the official’s view by saying ‘assuming that the most recent recession ended this past summer, and assuming that the FOMC would behave in the same way that it’s behaved in the past, this could mean the FOMC would not start increasing rates until early 2012.’ Such a view would be one of the most dovish rate policy outlooks currently out there.
“To be sure, this is a highly conditional statement and the official goes on to say the Fed is mindful of keeping policy too easy. He also says markets should focus on the totality of Fed policy and not overemphasize the interest rate part of the equation. Bullard’s 2012 musing is only a projection, not a promise. He’s also not a voter on the FOMC, though he will be next year.
“The problem is, Bullard’s remarks on rate policy come at a time where financial markets are singularly focused on the question of when the Fed will raise rates. In recent weeks key Fed officials have addressed that very topic in speeches and have said the zero percent interest rate policy now in place will likely stay there for some time. Bullard’s outlook on rates matches the spirit of his fellow central bankers.”
The exact timing isn’t so important as is the broad policy. Taking Bullard’s comments along with other Fed officials paint a picture of a central bank that has no intention of raising rates to anything approaching even a neutral level.
I’ve been avoiding this post, because really, it’s low-hanging fruit. But I see this thing every day, and I just can’t take it anymore. I’ve got to get this off my chest.
Every morning I walk by this absolutely gigantic Microsoft for Windows 7 ad, tethered across two sides of a building on the corner of 42nd St. and 8th Ave. outside the bus station in midtown. They’ve actually changed it three times now, but they’re all part of the “I’m a PC, and Windows 7 was my idea” campaign.
The ads, and related commercials, are well produced, light-hearted, and I guess they make the company seem more “human.” But what they really do is substantiate every point their detractors have been throwing at them for years. What company does that?
Has there ever been a more jaw-droppingly tone-deaf ad campaign? I have no advertising experience, apart from having seen every episode of “Mad Men,” but, I mean, would Mercedes runs ads saying their customers retooled the engine of the new E-class? Of course they wouldn’t, they’d look like idiots.
In one ad, a girl in a coffeeshop says it was her idea to make the operating system less prone to, you know, ha ha, crash. In another, a woman sitting on porch says it was her idea to make the system less prone to, you know, smile widely, allow your personal information to get ripped off.
You mean, not one person who draws a paycheck from Microsoft noticed those little issues?
After a generally flat session yesterday, the greenback is under some stiff pressure again this morning, with the US dollar index down 0.6% and below 75.00 again.
True to recent form, that weakness is giving a strong bid to gold and oil, and casting a modestly positive tone toward US stock futures so far. European equities markets all posting gains. October CPI and housing starts due at 8:30 a.m. ET.
S&P futures up 2.40; DJ futures up 21. Ten-year lower, yield at 3.35%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
The bridge that collapsed on Interstate 5 bridge over the Skagit River in Washington was listed as “functionally obsolete” and “fracture critical,” which means the whole sha-bang could come tumbling down if one major part fails. Click here to read the details from USAToday. This sort of thing shouldn’t be happening in a modern, developed nation. Barry LePatn […]
