US stocks slide again, with the selloff picking up steam in the afternoon, and at this point, the bulls are hoping that all this is is a correction.
DJIA slides 104 (1%) to 9908, its first close below 10000 since Nov. 4. S&P 500 loses 9 (0.9%) to 1057, Nasdaq Comp falls 15 (0.7%) to 2126. Dow’s down about 7.5% since Jan. 14. S&P’s down about 8%.
Watch the 1044 area on the S&P, it’s a big technical support, and a little way’s below that the market will hit that 10% correction. They hold there, it’s just a correction. They don’t, and well, it isn’t just a correction.
Yes, Eduardo called the Saints, and I called the Colts. So there you have it. Elsewhere in the world, Toyota’s problems are extending to the Prius, and G7 ministers discover that it’s cold in Canada, but it doesn’t seem like they came to many other hard conclusions.
- “Another Lehman/AIG-type situation lurks somewhere on the European continent, and again our purported G7 (or even G20) leaders are slow to see the risk,” former IMF chief economist Simon Johnson says. “And this time, given that they already used almost all their fiscal bullets, it will be considerably more difficult for governments to respond effectively when they do wake up.”
- Between last week’s jobs report, auto sales data and declining oil and copper prices, deflationary pressures still weigh on the economy, James Hamilton writes at Econbrowser.
- AOL takes another step toward selling its ICQ instant messaging service, Kara Swisher reports.
- No one’s really talking about it, but renewed pickup in credit losses looms as concern, John Hussman cautions. “Credit spreads widened again last week, and we’re keeping a keen eye on those, as well as indications of delinquencies and foreclosures, which may become a renewed source of concern.”
- Lagging labor markets are “inconvenient, but common,” Jeff Frankel says. GDP went from negative in 1H09, to positive in 3Q and strongly positive in 4Q, suggesting the end of the recession may’ve occurred in the middle of last year.
- Advertisers are increasingly underwhelmed by TV advertising. So are viewers - Betty White aside, last night’s Super Bowl ads were a bunch of duds.
- IPad hasn’t even been released yet, but Apple’s (AAPL) supposedly considering price cuts if the device doesn’t perform as well as expected, John Paczkowski reports.
- Lloyd Blankfein’s $9M bonus is “a great move” by Goldman Sachs (GS), not only from PR perspective, but also from internal point of view, Reuters blogger Felix Salmon says.
- Former Merrill Lynch CEO John Thain returns to head embattled CIT Group, uniting two prominent causalities of the credit crisis.
- Man, what we would do to be on Bourbon Street right now.
I caught all of about five minutes of that show that was on after the Super Bowl, “Undercover Boss,” but it took only about two minutes for me to realize what a public service that show could have done, had it been on four or five years ago. Done correctly, it could have prevented the entire housing implosion and credit crisis.
The show’s premise is actual bosses of actual companies pose as new hires and meander around, sniffing out all the inefficiencies and waste going on under their noses. Great idea, right? On last night’s premiere, Waste Management’s president, Lawrence O’Donnell, went undercover to discover what was really going on at his company.
But, boy, just imagine the shenanigans that could’ve been uncovered had the show been on five years ago:
- The president of a big mortgage company, posing as a “new hire,” sits in as one of his loan officers approves a 26-year old waiter for a $700,000 home loan:
“We didn’t even check his W-2. We didn’t even check his pay stubs. We didn’t even ask him for pay stubs. There’s absolutely no way we can say if this kid can pay the loan, for even a month. I’m the president of the company, these are the kinds of things I should know about.”
We’re sure he was just trying to sound strong, but Tim Geithner’s response to questions about the credit rating of the U.S. has the stink of historical notoriety written all over it. When asked by ABC News if the U.S. would lose its triple-A credit rating, he said bluntly “Absolutely not. That will never happen to this country.”
Frankly, we don’t need to hear bluster from the Treasury Secretary, because at this point in the crisis, it is painfully obvious that a great number of things that “could never happen” have indeed happened, and sitting there and arrogantly saying they can’t is just the wrong approach.
What he should have said was “that will never happen, because we are dedicated to maintaining the good faith and credit of the United States. In times of grave peril, the United States has always been a beacon of light and a refuge, and we are dedicated to doing absolutely everything within our power to keep it that way.” Or something like that.
“That will never happen.” It took all of about five seconds for me to think of Irving Fisher’s “permanently high plateau” comment, just before the stock market crashed in 1929, a crash that, incidentally, took the market something like 25 years from which to recover.
US stocks bouncing around the break-even level after Friday’s dramatic session, with consumer discretionaries leading the gains after Hasboro’s (HAS) better-than-expected 4Q report.
With stocks flirting between positive and negative territory, it’s worth debating how long this recent correction will last. In particular, traders are keeping an eye on the S&P 500, which was down more than 9% from its late-January high through its intraday low on Friday, when a sharp late-day rally kicked in as buyers made early bets that a traditional 10% correction was nearly complete.
Based on its closing level, the S&P came into Monday’s action off 7.3%. But technicians are still on guard against a so-called “re-test” of the recent lows to complete the 10% pullback, which would take the broad index to 1035.
Also keep in mind the index tested and reversed off some key support levels on Friday, according to Kevin Lane, director of quantitative research at Fusion Analytics. “Weekly momentum indicators are losing momentum and are close to flashing some sell signals,” he says. But until near-term support is broken near 1026, “it is hard to get too negative.” Bottom line, “the trend is up and remains intact and only a move below the 1026 level would be viewed as a negative,” Lane adds.
Bulls and bears playing it pretty close to the vest premarket, with US stock futures suggesting a flat to slightly higher open when regular trading gets underway.
Stocks mostly weak in Asia overnight, mixed in Europe. Torrent of 4Q earnings reports begins to ease, though DJIA components Coke and Disney both report results tomorrow.
Modest week for economic data, with December wholesale trade numbers tomorrow; Dec trade deficit Wednesday; January retail sales Thursday; and Reuters/Univ of Michigan prelim Feb consumer sentiment Friday.
US dollar index slightly higher at 80.38. S&P futures up 2; 10-yr lower, yield at 3.58%.
So the Greek plan got an approving vote from the European Commission, but it’s getting a slightly less enthusiastic response from the Greek people, upon which the plan’s austerity measures will fall.
DIMITRIS DAMIANIDIS is a high school teacher and a strong supporter of Greece’s socialist government. But that won’t deter him from going on strike with hundreds of thousands of other public sector workers next week to fight for the 28,000-euro pension that he expects to receive annually after he turns 60 next year.
“Why should I as a worker pay for the errors in policies?” he asked, in response to reports that the embattled Greek state will cut his pay and, by extension, retirement benefits. “The worker can’t be the scapegoat. So we have to defend ourselves.”
As Mr. Damianidis and others on the state payroll prepare to stop work on Wednesday, fear is building that the country’s new government may lack the nerve to cut public wages and pension payments, which make up 51 percent of its budget.
There’s a reason they call them “entitlements,” and in Europe, as here, they have been sacrosanct. But membership in the eurozone, as well as the bond vigilantes, may force some very uncomfortable decisions to be made. What’s unfolding in Greece right now, and could very easily move into the so-called periphery countries, is the exact reason why nobody in this country is willing to address the imbalances in our nation’s Social Security and Medicare accounts. And don’t even talk about the states’ pension plans. Because doing so will really, really up-end the apple cart.
Of course, not doing so eventually leaves you where the Greeks are. There are, in the end, no gimmicks. A government that spends more than it takes in will run into trouble. There is no substitute for fiscal responsibility. You can fool the voters, the bond market, even your trading partners for a while. But the United States is coasting off its reputation right now, and that will not last forever.
It wasn't "panic" that put us out of work, friend.
Most business folks in America aren’t good at gauging demand for their own products, and that’s part of the reason why the unemployment situation is so bad right now.
Do you buy that argument? We don’t either, and say “baloney” (it’s a family blog) to anyone who suggests that companies “panicked” or “overreacted” and fired too many workers during the recession.
We submit corporate America’s pronounced return to profitability as Exhibit A in evidence that companies did not go off half-cocked and cut too many jobs. And to suggest otherwise is to assert that labor is somehow at the top of the list when business men and women decide it’s time to cut costs. Of course it isn’t.
Seeking to tap into growing anti-establishment discord among voters, the Republican Party is actively seeking candidates who have never before held elected office.
Bruce O’Donoghue owns a company that makes traffic-light systems; he is challenging Florida Democratic Rep. Alan Grayson. Jon Runyan, a former player for the Philadelphia Eagles and San Diego Chargers, is running in southern New Jersey.
Mind you, nothing about trying to figure out just what it is that’s got the electorate so cranky. Just figure out a way to capitalize off it. I guess we’ll have to wait until these rookies get into office to learn if they’ve got a clue, or if they’re just a bunch of muppets.
This is the most craven, worst political pandering there is, and it shows how the Republicans flat-out do not care about the nation’s problems. They just want power back. And don’t think the Democrats are above this little game. The whole anti-establishment wave started with Barack Obama, who was a little green to be running for president, but who cared? The kids liked him. Back to the Journal:
Running political newcomers is a proven strategy when the political tide swings drastically toward one side, and at times when voters have soured on Washington in general. In 1994, when Republicans won a majority of House seats after four decades in the minority, 55% of the party’s 73 freshmen lawmakers had never held political office. Similarly in 2006, when Democrats took control, 45% of their new lawmakers had never held office before.
Chris Russell, campaign consultant for Mr. Runyan, called 2010 a good year to be running as an outsider. “I don’t want to overstate it, but people hate politicians,” he said.
No, it’s not politicians necessarily. It’s the parties. And if these “outsiders” are just the new cogs in the same old machine, expect another year, or two or three, of nothing getting done.
Boy, that was one ugly slide into the close. Banks lead the way. We're on the verge of correction territory; keep an eye on 1044 on the S&P.February 8, 2010 2:46
Looks like this day may not be such a waste after all. DJIA staring at its first close under 10000 since Nov. 4. Currently down 66 at 9946.February 8, 2010 1:28
This day's got stalemate written all over it. Good thing Wall St. isn't near Bourbon St. or we'd be getting nothing done. DJIA down 1.February 8, 2010 10:39
Stocks are bouncing around here this morning, but mainly bouncing lower. It's worth debating where this correction will ground out.February 8, 2010 8:01
Former Treasury Secretary Henry Paulson gives the ultimate insider’s view on the steps taken to prevent the global credit crisis from bringing down the financial system 1 1/2 years ago. And in his book on the subject, he apparently tells of the liquidity problems facing one of the bluest of the blue chip corporations in [...]
