Market News

08:30 am : S&P futures vs fair value: +31.0. Nasdaq futures vs fair value: +39.8. The futures market has spiked to fresh morning highs, now indicating a sharply higher start for stocks. The now bullish disposition is the direct result of the Fed, in an unscheduled meeting, recently cutting the discount window rate by 50 basis points, to 5.75% from 6.25%. The Fed noted that "market conditions have deteriorated" and "downside risks have increased appreciably"” since it last met on August 7.
Assurance that banks will now have available funding and the Fed saying this change will remain in place until it determines market liquidity has improved materially has lit a fire under stocks, especially throughout an influential Financial sector which is pacing pre-market gains and providing significant leadership.
 
Briefing.com
08:00 am : S&P futures vs fair value: +5.9. Nasdaq futures vs fair value: +2.3. After trading sharply lower earlier amid more negative developments regarding the subprime fallout, both the S&P 500 and Nasdaq 100 futures are trading back above fair value to suggest a positive start for stocks. Early indications began to improve after China said it is stepping up efforts to prevent asset bubbles.
Absent any notable M&A activity for awhile now, as private equity continues to encounter difficulties raising money for acquisitions, reports that Warren Buffett's Berkshire Hathaway (BRK.A) could use some of its nearly $50 bln of cash to buy parts of Countrywide Financial (CFC) is also contributing to the positive disposition.
 
Paulson says global economy strong: report
Tue Aug 21, 2007 9:40AM EDT
WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said on Tuesday the global economy is strong and liquidity will return to normal in financial markets once investors reprice risk.

"Credit is being repriced, reassessed across our capital markets," Paulson told CNBC television.

"As the Fed addresses liquidity this makes it possible, this makes it easier, for the market to focus on risk and pricing risk," he said. "This will play out over time and liquidity will return to normal when the market has a better understanding, investors have a better understanding, of the risk-return trade off."

Paulson said strong economies in the United States and around the world will help buffer against shocks from a credit crisis that began with a wave of subprime mortgage delinquencies.

"We have the benefit of having a very strong economy to absorb some of the losses along the way," he said.

However, turmoil in capital markets will likely take a toll on economic growth, Paulson said.

"Economic growth will be less than it ordinarily would have been," he said.

http://www.reuters.com/article/businessNews/idUSWBT00742620070821?feedType=RSS&feedName=businessNews
 
Last edited:
08:00 am : S&P futures vs fair value: +7.5. Nasdaq futures vs fair value: +8.5. Early indications are pointing to a modestly higher open for equities. With very little in the way of M&A activity over the last few weeks, reports that TD Ameritrade (AMTD) and E*Trade Financial (ETFC) are in merger talks has renewed confidence about liquidity, valuations, and further industry consolidation in an influential sector that has been crushed by fears of a credit crunch.
Investors are also embracing some semblance of stabilization in equities over the last couple of days, after several weeks of volatility, and a growing sense that the Fed will still have to cut interest rates, perhaps even before the September 18 FOMC meeting.
 
Briefing.com
09:00 am : S&P futures vs fair value: +9.3. Nasdaq futures vs fair value: +11.0. A bullish pre-market bias persists as the futures market retraces its best levels of the morning. After closing in record territory just over a month ago, the Dow and S&P 500 still trading 6.5% and 6.8%, respectively, off those highs continue to suggest stocks remain oversold on a short-term basis. The Nasdaq, which is thought by many to be the most immune among the majors to the subprime fallout, is down 7.3% from its 6 1/2-year high reached on July 19; and fittingly outperforming this morning.
With so many investors seeking safe havens of late, as evidenced by the yield on the 10-year note plunging nearly 30 basis points in less than two weeks to 4.59% yesterday, some unwinding in that flight-to-quality trade further underscores the market's improved underlying tone and prospects of owning stocks at current levels. The 10-year note is down 13 ticks, lifting its yield to 4.64%.
 
08:35 am : S&P futures vs fair value: +9.1. Nasdaq futures vs fair value: +6.5. The futures market still points to a strong start for stocks; but realization that not every piece of news this morning is encouraging has taken some steam out of early buying efforts.
Ford Motor (F) has noted that current economic conditions in the U.S. are a headwind for its turnaround plan. The sale of Home Depot's (HD) supply unit is in jeopardy of not closing today as scheduled. Moody's (MCO) has placed a number of homebuilders (e.g. CTX, LEN, PHM) under review for a possible downgrade and several retailers have issued disappointing guidance.
Separately, investors are sifting through today's only scheduled economic report. Initial claims fell 2K to 322K, relatively in line with economists' forecasts of 320K and still reflective of tight labor conditions. The response in stocks and bonds has been relatively muted as both markets remain more fixated on underlying credit issues.
 
Briefing.com: The market took on a positive bias at the start (CFC injection by BofA) but that was it on the upside as the market quickly began to slip. Fed commentary regarding another size drop in outstanding Commercial Paper raised liquidity questions again in this segment which put the technically overextended market on on the defensive with a steady slide noted into midday. While we did see a minor midday bounce as the S&P 500 held on a retest of support at its 200 sma at 1555 noted earlier, we have recently seen the market slip to a minor new session low (1453.91). Short term supports are at 1452 and 1450 and we could see a stabilization/bounce in this area (currently underway?). However, the strong run off the low (up as much as 7.4% off Aug low to today's high), the extended short term technical posture and today's more aggressive pattern off the high than seen the last few days (click for chart) raises the possibility that the first thrust off the Aug low may now be complete. A bounce that stalls near a retrace of the 1472-1453 decline bolsters this argument.
 
Briefing.com: Countrywide CEO Angelo Mozilo said in an interview on CNBC that there is still a tremendous liquidity problem and that he thinks the housing slump will lead the economy into a recession. While the Fed's move to cut the discount rate last Friday temporarily reduced the downside risk to the stock market, the founder of the nation's largest mortgage lender (CFC) talking about a significant decline in economic activity gave sellers an added excuse to take some money off the table.
 
I'm kind of surprised, given what the Countrywide CEO said about the economy that the markets held up as well as they did today.

Briefing.com: Countrywide CEO Angelo Mozilo said in an interview on CNBC that there is still a tremendous liquidity problem and that he thinks the housing slump will lead the economy into a recession. While the Fed's move to cut the discount rate last Friday temporarily reduced the downside risk to the stock market, the founder of the nation's largest mortgage lender (CFC) talking about a significant decline in economic activity gave sellers an added excuse to take some money off the table.
 
Asian stocks may rise on eased credit concerns
By Moming Zhou, MarketWatch
Last Update: 5:46 PM ET Aug 23, 2007

Asian stocks are expected to open higher on Friday after a capital injection into the largest mortgage lender in the U.S. alleviated concerns that credit-market troubles will slow economic growth.
>
> "Despite U.S. markets falling, Asian ADRs were up sharply, pointing to another good day for regional stocks," said Marc Chandler, an analyst at Brown Brothers Harriman.
(source link)
 
8:38am ET
[BRIEFING.COM] S&P futures vs fair value: +1.1. Nasdaq futures vs fair value: -1.2. The futures market has gotten a boost from the July Durables Orders data, which were much stronger than expected with orders up 5.9% (consensus +1.4%) and orders, ex-transportation, up 3.7% (consensus +0.6%). Non-defense capital goods shipments, excluding aircraft, which is a proxy for busines investment, jumped 0.5%. The Durables Orders report is known to be volatile, but the July data fly in the face of concerns about a credit crunch derailing the economy. The market, though, isn't likely to be convinced of the July strength until it can see some confirmation in the August report.
 
10:05 am : There wasn't a lot of conviction in the early-going, but mercifully, there wasn't a lot of volatility either
Separately, it was just reported that July New Home Sales actually rose 2.8% to an annualized rate of 870K (consensus 825K). The early response has been favorable as this was indeed a positive surprise.
Combined with the durables data earlier, the market has gotten an encouraging dose of economic news today. What it does with that remains to be seen. It is bullish in its own right, but the notion that it might prevent the Fed from cutting rates could serve as a roadblock to a rally effort.DJ30 +35.77 NASDAQ +6.12 SP500 +5.86 NASDAQ Dec/Adv/Vol 1270/1089/112 mln NYSE Dec/Adv/Vol 1143/1217/42 mln
 
08:30 am : S&P futures vs fair value: -3.4. Nasdaq futures vs fair value: -5.6. The S&P 500 and Nasdaq 100 futures are retracing their morning lows below fair value, suggesting equities will open on an even weaker note. Aside from Friday's low-volume rally inviting some early consolidation, the market is also showing some consternation heading into today's only scheduled economic report. At 10:00 ET, existing home sales will hit the wires and be closely watched following the surprisingly strong new home sales data that contributed to stocks closing out last week's action on a high note. Economists are expecting a slight decline to an annualized rate of 5.70 mln units, which would be the slowest reading since October 2002.
 
http://www.bloomberg.com/apps/news?pid=20601087&sid=adg_MIit7pLc&refer=home

U.S. Existing Home Sales Fell 0.2% in July to 5.75 Mln Rate

By Shobhana Chandra
Aug. 27 (Bloomberg) -- Sales of previously owned homes in the U.S. fell in July for a fifth consecutive month, adding to the inventory of unsold properties and showing the housing slump that triggered a collapse in credit markets will drag on.
Purchases declined 0.2 percent, less than forecast, to an annual rate of 5.75 million, from 5.76 million in June, the National Association of Realtors said today in Washington. That was the slowest pace since November 2002. Sales dropped 9 percent compared with a year earlier.
 
Back
Top