It’s Beginning to Look a Lot Like Christmas?

It’s Beginning to Look a Lot Like Christmas?




Are You Confident?

While I have been accused in the past of having the trait of negativity, I have always called it pragmatism and realism. Just try and call them like I see them. Just wanted to get that out there. In any event, we had the report Tuesday morning for consumer confidence, and the survey says…..they aren’t.

The Conference Board announced the October reading fell to 38, well below the expected number of 52, and one of the lowest, if not the lowest reading since this number has been reported. I was listening to a talking head on the radio who said that it is not what the consumer says, but what they do. These can sometimes be different. They are now unfortunately the same.

Very Positive News From The Commercial Paper Market

It looks like there might be a thaw in the credit markets with the Fed getting involved buying corporate commercial paper. On Monday there were 1,511 issues sold with maturities over 80 days with an aggregate value of $67.1 billion. The Fed bought about $60 billion of the total. This end of the CP market has pretty much been frozen since the Lehman bankruptcy.. Last week there were 340 issues brought to market with an aggregate value of $6.7 billion. There was over $232 billion of CP sold of all maturities. (Source: Bloomberg)

Trading In Financials

As this article is written on Tuesday morning at about 10:35 AM, the stock market is nevertheless in rally mode after an extremely strong rally in Hong Kong over night. The rally weakened some after the consumer confidence number, but is nevertheless hanging on.

What peaks my interest is the way that the financials are trading, particularly Goldman Sachs and Morgan Stanley, both on no particular news. Goldman is down over $8 to $84 and change, while Morgan is down over $2.50 , make that $3.00 at $10 and change. Other financial are not particularly strong either. This kind of trading, with an increase in quantity during the slide down definitely produces watching. Both are trading at or near yearly lows.

During the slide in these two stocks, the overall market has taken a hit, and looks like it is headed back into negative territory (10:42 AM EST).

(3:23 PM) Whoops. Bad call at 10:42. This is the monster rally I talked about Tuesday morning that would ultimately come. The yellow caution flag needs to keep out, as this is probably a vicious bounce within what remains a bear market, unless of course the anecdotal evidence begins to show an improvement in bank lending and in the prospects for improved corporate earnings.

The commentary on the radio is that investors are attracted by the most attractive valuations in 20 years (unlike the investors selling at these valuations yesterday), but these valuations will only be attractive if we can believe in the E in the P/E ratios. 




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