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Circuit City Bows Out
Tweet Share on Facebook November 10, 2008 Comment (21)Today's bankruptcy filing at Circuit City comes as no real shock. The ailing consumer electronics giant already announced it was closing 155 stores (or about 20 percent of its total) in a last-ditch effort to stay solvent. Creditors agreed to float the chain a $1.1 billion loan to keep remaining locations open through the holiday season. But it does raise questions about how retailers will fare during the next few vital weeks, especially sector leader Best Buy.
RBC Capital says the liquidation could pressure Best Buy this holiday season, but will be a positive in the long run:
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Obama's Speech: What It Means for Investors
Tweet Share on Facebook November 7, 2008 Comment (19)"I do not underestimate the enormity of the task that lies ahead."
Barack Obama's first postelection speech on the economy included that line amid discussion of plans for a stimulus package and an auto sector bailout, but the president-elect made it clear the Bush administration remains in charge until next year. The speech conveyed a sense of urgency to act in the face of the worst financial crisis in decades.
So, does it matter on Wall Street?
Investors want two things from the new president: Market stability and clarity on taxes. They got a nugget of information on both.
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Energy: It's a Value Trap
Tweet Share on Facebook November 7, 2008 Comment (1)Since we're talking value investing today with Columbia University's value guru Bruce Greenwald it's a good time to point out one of the big risks associated with buying shares in out-of-favor companies: The value trap.
"Value trap" is the name given to a stock that has fallen heavily, but is still going lower as fundamentals in the businesses weaken further. They're just the sort of stocks that tend to go down hard and stay down longer even when they look cheap. Today, Merrill Lynch sent out its monthly list of value trap industries, and as of today that list includes the beaten-down energy sector.
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Obama Makes Economy Job No. 1
Tweet Share on Facebook November 6, 2008 Comment (3)Meet the Obama Economy. It's not pretty, especially for stocks.
Already, the S&P has had its worst two-day drop since October 1987, shedding more than 100 points on nothing but bad news from economic data. The Dow is down almost 10 percent during that period too.
When Barack Obama speaks Friday after meeting with his economic advisers in Chicago (see the impressive list here and note there's a couple of Treasury Secretary candidates attending though Politico says no appointments will be announced), there's a good chance stock could continue their post-election slump.
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The Fed Hires Bear Stearns
Tweet Share on Facebook November 6, 2008 CommentAs I've followed this year's financial crisis, one of the questions I repeatedly toss out to folks in the business is this: If we're headed for a tighter regulatory environment, is there enough readily available brain power out there that the government can hire in order to get a quick handle on how to organize and regulate the new banking sector, including the hugely complex derivatives markets that caused the credit crisis? Well, it looks like the New York Fed has one answer.
From Schaeffer’s Daily Market Blog:
Michael Alix, who served as chief risk officer at Bear Stearns from 2006 through 2008. (Yes, his expertise is risk management, an area in which Bear clearly did not excel.) The Fed tapped Alix to serve as a senior vice president in the Bank Supervision Group, but declined to comment on his hire. His appointment was effective November 3, but -- as you can imagine -- the NY Fed ensured that very little publicity accompanied the start of his tenure.
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Signs of the Global Slowdown
Tweet Share on Facebook November 6, 2008 Comment (2)American investors may spend this week focusing on the U.S. election, but it’s worth noting today’s alarming signs that weakness in the economy continues to spread around the globe.
A few points:
1) ArcelorMittal, the world’s largest steel producer and a Wall Street darling over the last few years as it snatched up billions worth of new capacity by buying up rivals, has slashed its 2009 output and investment forecasts because of the credit crisis. Its shares are off double-digits for a second straight day this morning, and have dropped from $100 a share to around $20 in just the last six months. Raw materials and steel were at the core of any argument that the global building boom will hold up even as the U.S. slows. If you’re looking for a sign that global demand is in real trouble, this is it.
2) European rate cuts today are large, but probably a little late. The European Central Bank cut rates half a point to 3.25 percent, about what was expected though a larger move was on the table. Meanwhile, the Bank of England surprised markets by slashing its interest rate by a big 1.5 percent to 3 percent, and cited slow consumer spending and tight credit conditions. Larger moves would’ve spooked markets, but rates could come down further. Both are still higher than the Fed funds rate of 2 percent, and the tone of commentary around the cuts argues for slower growth and hints at the possibility of deflation.
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President Obama and Markets
Tweet Share on Facebook November 5, 2008 Comment (2)Stocks are off a bit today following a pre-election rally. Attention is turning to how Sen. Barack Obama's historic victory and the large (though possibly not filibusterproof) Democratic majority will handle its transition into managing what remains a very tough economic environment.
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Election-Day Winner: Solar Stocks
Tweet Share on Facebook November 4, 2008 Comment (1)Are alternative energy stocks gearing up for a big post-election gain?
If the Claymore/MAC Global Solar Index ETF (TAN) is any measure, the possibility of an Obama victory has investors excited about alternative energy. It's up almost 14 percent today.
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Wall Street Bailout: Not for Bonuses
Tweet Share on Facebook November 4, 2008 Comment (1)Public pressure to make sure banks are using taxpayer money to rebuild the financial system and not line their pockets may be working.
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Obama or McCain: Stocks May Not Care Who Wins
Tweet Share on Facebook November 4, 2008 Comment (2)Election Day is turning out to be a good one for stocks, but the postelection direction for shares will most likely be less about who wins and more about continued improvement in the market's weak spots.
