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Apple Bruised by the Economy
Tweet Share on Facebook September 30, 2008 Comment (5)Apple (AAPL) isn't immune to worries about consumer spending. With its shares off more than a third over the last month, and yesterday's 18 percent drop on this week's spate of new analyst downgrades, it looks like most parts of the business are feeling the pinch.
Here's a rundown of the latest analyst opinion:
Morgan Stanley: PC shipments show a shift to cheaper sub-$1,000 computers, away from Mac's higher price point. Some 70 percent of Mac sales are above $1,500. Lower iPhone and Mac orders were also a problem. Morgan cut its rating to equal weight from overweight.
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Swedish-Style Bailout More Likely
Tweet Share on Facebook September 30, 2008 CommentOpponents of the stalled $700 billion bailout plan keep tossing out charges of "creeping socialism" as a legitimate reason to block the bill. (We're looking your way, Senator Bunning.)
Merrill Lynch says the pain caused in the credit markets could mean more government intervention, even a Swedish-style bank takeover.
This from Michael Hartnett, Merrill's emerging markets equity strategist:
The Good Looking Swedish Model
The failure of TARP legislation worsens the short-term credit situation. But in so doing it increases the likelihood of a Swedish-style recapitalization of the banking sector in the US. This chemotherapeutic event marked the September 1992 equity low in Sweden. In stark contrast, the Japanese preference for the morphine of a "Price Keeping Operation (PKO)" at exactly the same time condemned Japanese equities to a multi-year bearish trading range.
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Bailout Rejected
Tweet Share on Facebook September 29, 2008 Comment (16)"Idiots, idiots, idiots. You just guaranteed a recession."
That's Jeff Saut, chief investment strategist at Raymond James, who, like many market watchers, is furious at Congress's latest failure to pass the proposed $700 billion bailout for the financial sector. The House of Representatives rejected the measure 228 to 205.
Credit markets seized up, and stocks plunged on the news of the worst possible outcome today for an already dysfunctional Wall Street.
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The Economy: Getting Weaker
Tweet Share on Facebook September 26, 2008 CommentSunny pundits were chanting a special number over the past few months: 3.3 percent.
That's how fast the economy grew in the second quarter from a year ago. Except it didn't. Today, revisions to the data show gross domestic product grew more slowly, at an annualized 2.8 percent rate. Upward momentum is welcome, but there are lots of worrying signs. Gross private investment fell 11.5 percent, accelerating from a 5.8 percent decline in the first quarter. The biggest revision was consumption—1.7 percent from 1.2 percent—which bodes poorly for the current pace of consumer spending.
A couple of points from Bank of New York currency strategist Michael Woolfolk:
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Top 10 Bank Failures: WaMu Heads the List
Tweet Share on Facebook September 26, 2008 Comment (6)Here's a list of the top 10 bank failures of all time from Reuters. WaMu is No. 1.
1. Washington Mutual of Henderson, Nev., and Park City, Utah: Seized September 25 with $307 billion in assets as of June 30.
2. Continental Illinois of Chicago: Collapsed in 1984 with $40.0 billion in assets.
3. First RepublicBank Corp. of Dallas: Failed in 1988 with $32.5 billion in assets.
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Washington Mutual: Not the Last Domino
Tweet Share on Facebook September 26, 2008 CommentWhat sort of week would it be without a massive failure in the financial system?
Washington Mutual's failure, seizure by the government, and subsequent $1.9 billion fire sale to JPMorgan Chase & Co. could hardly come at a worse time.
As Congress, the White House, and regulators continue to dither over the proposed $700 billion bailout, the decline and fall of another of America's most storied lenders is a road map for how this crisis will continue to unfold until some sort of relief is offered up (though a bailout still won't stop the damage in its tracks).
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Bush: Rescue Plan Will Pass
Tweet Share on Facebook September 26, 2008 Comment (2)Here are a few highlights from President Bush's brief speech this morning. (Below is pretty much the entire thing; it was less than five minutes long):
We need a rescue plan.
We've got a big problem.
We also need to move quickly.
There is no disagreement that something substantial must be done.
The legislative process is sometimes not very pretty, but we are going to get a package passed.
Not pretty and hardly reassuring. The speech does nothing to comfort markets. They're lower today, with bank stocks leading the way down.
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A Bailout Deal Gets Done
Tweet Share on Facebook September 25, 2008 Comment (4)After a nearly weeklong deliberation, Congress has reportedly reached an agreement on the $700 billion financial sector bailout.
Early reports say the bailout will come in installments, starting with $250 billion available immediately and an additonal $100 billion block to follow if needed, the WSJ is reporting.
The Journal quotes Republican Sen. Bob Corker of Tennessee as saying, "I believe that we will pass this legislation before the markets open on Monday."
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Fortress Likes Financials
Tweet Share on Facebook September 25, 2008 Comment (2)Private-equity firm Fortress Investment Group (FIG) says it won't pay a third-quarter dividend so it can invest in...the financial sector.
"Given the significant dislocations in the world's financial markets, we see tremendous opportunities for the firm to invest capital and to grow and diversify our business. In particular, we are focused on potential investments in banks, insurance companies and other asset-management businesses," CEO and Chairman Wesley Edens said.
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Bailout Video Roundup!
Tweet Share on Facebook September 24, 2008 Comment (1)
