Took the words right out of my mouth. And what Greenspan said was that we were heading in to a possible stagflation. But that the likelihood of a recession is 50/50 at best. Which may be diminished or hightened according to the effect of lowering the discount rate and what effect that will have on our position in terms of potentially devaluation of the dollar.
Took the words right out of my mouth. And what Greenspan said was that we were heading in to a possible stagflation. But that the likelihood of a recession is 50/50 at best. Which may be diminished or hightened according to the effect of lowering the discount rate and what effect that will have on our position in terms of potentially devaluation of the dollar.
Market
Commentary
Economic worries cast a pall over
the market on Monday. The three major indexes spent the morning down modestly,
but selling accelerated late in the session, leading stocks to their lowest
levels since the last week of November.
The Dow Jones Industrial Average
tumbled 172.65, or 1.3%, to 13167.20. The Nasdaq Composite Index fell 61.28, or
2.3%, to 2574.46. The S&P 500 shed 22.05, or 1.5%, to 1445.90. Stocks picked
right up where they left off last week, when the Dow fell 2% amid signs of
bubbling inflation pressures, along with still-struggling credit markets. The
blue-chip average has shed about 560 points, or 4.1%, in just the past
week.
"There's a bit of this
inflation-slash-stagflation fear continuing to wave through the markets," said
Jim Paulsen, chief investment strategist at Wells Capital Management. "Growth is
still weakening, but the Fed is neutered. The market is left in this helpless
position."
The Fed has cut a full percentage
point from its target for the federal funds rate -- an overnight bank lending
rate that affects other borrowing costs throughout the economy -- since credit
problems began this summer, without having much impact on credit availability,
noted Peter Boockvar, equity strategist at Miller Tabak. Now Wall Street is
worried the Fed will not be inclined to cut rates much more, given last week's
reports of higher wholesale and consumer price
inflation.
A warning from Moody's that it could
lower bond-insurer credit ratings because of subprime losses served as a
reminder of credit woes. So too did news that the National Association of Home
Builders' index of builder sentiment held steady at 19 this month, matching its
level in October and November, the lowest reading since the index's launch in
1985.
This week is also dotted with fiscal
fourth-quarter earnings reports from big brokerage houses, and it remains to be
seen how badly the credit crunch will bruise them. Tomorrow brings numbers from
Goldman Sachs, and Morgan Stanley and Bear Stearns report on Wednesday and
Thursday, respectively. "Some are going to be good, and some are going to be
scary," said Phil Dow, director of equity strategy at RBC Dain
Rauscher.
Former Fed Chairman Alan Greenspan
lent his voice to the doom and gloom, too, warning on Sunday in televised
interviews of the specter of stagflation -- or a combination of higher inflation
and a weaker economy -- and said there was a 50-50 chance of a
He may not have had much impact on
stocks, however. "That might catch some market-moving action overseas, but I
think fewer professional investors here in the
Mr. Pavlik thinks recession fears
continue to damage stocks, but doesn't necessarily think the
Such worries eclipsed a flurry of
fresh deal news -- a relative rarity of late. Ingersoll-Rand is to buy Trane in
a cash-and-stock deal valued at approximately $10.1 billion, creating one of the
world's largest makers of air conditioners and other climate control systems.
Related Cos., the closely-held real-estate developer, will get a cash infusion
of $1.4 billion from Goldman Sachs, the investment arm of
Market
Commentary
Economic worries cast a pall over
the market on Monday. The three major indexes spent the morning down modestly,
but selling accelerated late in the session, leading stocks to their lowest
levels since the last week of November.
The Dow Jones Industrial Average
tumbled 172.65, or 1.3%, to 13167.20. The Nasdaq Composite Index fell 61.28, or
2.3%, to 2574.46. The S&P 500 shed 22.05, or 1.5%, to 1445.90. Stocks picked
right up where they left off last week, when the Dow fell 2% amid signs of
bubbling inflation pressures, along with still-struggling credit markets. The
blue-chip average has shed about 560 points, or 4.1%, in just the past
week.
"There's a bit of this
inflation-slash-stagflation fear continuing to wave through the markets," said
Jim Paulsen, chief investment strategist at Wells Capital Management. "Growth is
still weakening, but the Fed is neutered. The market is left in this helpless
position."
The Fed has cut a full percentage
point from its target for the federal funds rate -- an overnight bank lending
rate that affects other borrowing costs throughout the economy -- since credit
problems began this summer, without having much impact on credit availability,
noted Peter Boockvar, equity strategist at Miller Tabak. Now Wall Street is
worried the Fed will not be inclined to cut rates much more, given last week's
reports of higher wholesale and consumer price
inflation.
A warning from Moody's that it could
lower bond-insurer credit ratings because of subprime losses served as a
reminder of credit woes. So too did news that the National Association of Home
Builders' index of builder sentiment held steady at 19 this month, matching its
level in October and November, the lowest reading since the index's launch in
1985.
This week is also dotted with fiscal
fourth-quarter earnings reports from big brokerage houses, and it remains to be
seen how badly the credit crunch will bruise them. Tomorrow brings numbers from
Goldman Sachs, and Morgan Stanley and Bear Stearns report on Wednesday and
Thursday, respectively. "Some are going to be good, and some are going to be
scary," said Phil Dow, director of equity strategy at RBC Dain
Rauscher.
Former Fed Chairman Alan Greenspan
lent his voice to the doom and gloom, too, warning on Sunday in televised
interviews of the specter of stagflation -- or a combination of higher inflation
and a weaker economy -- and said there was a 50-50 chance of a
He may not have had much impact on
stocks, however. "That might catch some market-moving action overseas, but I
think fewer professional investors here in the
Mr. Pavlik thinks recession fears
continue to damage stocks, but doesn't necessarily think the
Such worries eclipsed a flurry of
fresh deal news -- a relative rarity of late. Ingersoll-Rand is to buy Trane in
a cash-and-stock deal valued at approximately $10.1 billion, creating one of the
world's largest makers of air conditioners and other climate control systems.
Related Cos., the closely-held real-estate developer, will get a cash infusion
of $1.4 billion from Goldman Sachs, the investment arm of
Doreen Mogavero, president and CEO
of Mogavero, Lee, thinks stocks might drift lower for a while, with the Dow
approaching the 12800 mark -- roughly the level at which the index will be in
what technical analysts call a correction, or a 10% drop from its recent high.
"Then you get to a critical point, and you have to see what kind of news is
around," she said. Retailers might do better than expected, she added,
benefiting from last-minute holiday shopping.
Moody's Investors Service warned
late Friday that AAA ratings of four leading bond insurers could be downgraded
after the agency re-evaluated the companies' exposure to potential subprime
mortgage losses. The AAA ratings of Financial Guaranty Insurance Company, which
is partly held by Blackstone, and XL Capital Assurance, a unit of Security
Capital, were placed on review for possible downgrade. The AAA ratings of MBIA
and CIFG Guaranty were affirmed, but the rating outlooks changed to
negative.
Monday morning, Citigroup downgraded
ratings of Capital One, Radian Group, Countrywide Financial and MGIC Investment.
Capital One fell 3.2%, MGIC slipped, Countrywide fell 2.6%, and Radian added
1.3% in afternoon trade. Moody's affirmed Radian's credit rating, possibly
contributing to its gain.
"We expect consumer lenders and
insurers to face further credit challenges as home prices decline 3% to 5% in
each of the next two years, mortgage rates reset and the macro economy slows,"
Citi analysts wrote. "Moreover, tightening lending standards and underwriting
practices should initially compound the problems, making it generally more
difficult for consumer lenders to grow out of the
downturn."
Before the opening bell, the New
York Fed said its regional manufacturing index fell sharply to 10.31 this month
from 27.37 in November; Wall Street analysts, on average, expected an index
reading of 20.0. Separately, the Commerce Department said the
Heating-oil futures rose after a
winter spell hit parts of the
In other deal news, Plains
Exploration is going to sell units to Occidental Petroleum for $1.75 billion and
buy back $1 billion in shares. And Ford Motor Co. is nearing a decision on the
sale of Jaguar and Land Rover, and
Doreen Mogavero, president and CEO
of Mogavero, Lee, thinks stocks might drift lower for a while, with the Dow
approaching the 12800 mark -- roughly the level at which the index will be in
what technical analysts call a correction, or a 10% drop from its recent high.
"Then you get to a critical point, and you have to see what kind of news is
around," she said. Retailers might do better than expected, she added,
benefiting from last-minute holiday shopping.
Moody's Investors Service warned
late Friday that AAA ratings of four leading bond insurers could be downgraded
after the agency re-evaluated the companies' exposure to potential subprime
mortgage losses. The AAA ratings of Financial Guaranty Insurance Company, which
is partly held by Blackstone, and XL Capital Assurance, a unit of Security
Capital, were placed on review for possible downgrade. The AAA ratings of MBIA
and CIFG Guaranty were affirmed, but the rating outlooks changed to
negative.
Monday morning, Citigroup downgraded
ratings of Capital One, Radian Group, Countrywide Financial and MGIC Investment.
Capital One fell 3.2%, MGIC slipped, Countrywide fell 2.6%, and Radian added
1.3% in afternoon trade. Moody's affirmed Radian's credit rating, possibly
contributing to its gain.
"We expect consumer lenders and
insurers to face further credit challenges as home prices decline 3% to 5% in
each of the next two years, mortgage rates reset and the macro economy slows,"
Citi analysts wrote. "Moreover, tightening lending standards and underwriting
practices should initially compound the problems, making it generally more
difficult for consumer lenders to grow out of the
downturn."
Before the opening bell, the New
York Fed said its regional manufacturing index fell sharply to 10.31 this month
from 27.37 in November; Wall Street analysts, on average, expected an index
reading of 20.0. Separately, the Commerce Department said the
Heating-oil futures rose after a
winter spell hit parts of the
In other deal news, Plains
Exploration is going to sell units to Occidental Petroleum for $1.75 billion and
buy back $1 billion in shares. And Ford Motor Co. is nearing a decision on the
sale of Jaguar and Land Rover, and
Ever seen the movie Boiler Room?
Ever seen the movie Boiler Room?
Ah - nevermind then... your quote was almost dead on to one of my fav scenes from the flick. Great movie if you havent seen it...
Ah - nevermind then... your quote was almost dead on to one of my fav scenes from the flick. Great movie if you havent seen it...
One of the greatest of all time.... nothing better than Ben Afflecks speech the new recruits...
One of the greatest of all time.... nothing better than Ben Afflecks speech the new recruits...
Yeah, but you can't make as much on the in-game usually
Side note, it's easier to put money into the stock market than matchbook, so that's a plus
Yeah, but you can't make as much on the in-game usually
Side note, it's easier to put money into the stock market than matchbook, so that's a plus
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