THE FINAL NUMBERS - MIXED CLOSE TO END WEEK
NEWS: The closing numbers do not tell the true story. Even though all three major indices finished near the unchanged line, it was far from a boring trading session. More talk of Lehman up for sale and a possible government intervention over the weekend had the financials higher at one point and down several percent hours later. When the week ended, the Dow was off 11 points or 0.1%. The S&P 500 added 2 points or 0.2% and the NASDAQ also closed with a small gain of 3 points. Commodities closed the day higher, but lower for the week. Oil gained 31 cent to close at $101.18; this was after it broke below the $100 level for the first time since April. Gold gained $19 to close at $764.60/ounce.
THE BOTTOMLINE: This market is not only volatile due to a number of extraordinary factors, but it is also is swayed minute by minute with news hitting the wires. Today the Dow was up 100, down 100, and closed the day unchanged. The violent moves up and down were brought on my speculation of what will become of Lehman. As of now it appears something will happen this weekend that will either involve the government or a purchased by a peer.
McCALLS CALL - POTENTIALWINNERS OF LAST BAILOUT
NEWS: When the Fannie and Freddie bailout was announced last weekend it should not have come as a big surprise to anyone watching the market. And the precipitous drop of the shares of both was also expected if the government stepped in. That is why I have been quoted several times on national television to stay away from the two GSEs. But now that it is over, who could be longer-term beneficiaries?
THE BOTTOMLINE: Three sectors that could experience a bounce due to the bailout of Fannie and Freddie.
1 - Real Estate: With mortgage rates falling 7% in one day, it should help drive up demand for new home purchases and in the end make the homes and land worth more. My play here is St Joe Company (NYSE: JOE). The company is one of the largest land owners in Florida and has lots of land along the Gulf of Mexico coast. This could be bad due to hurricanes, but good if we drill offshore because I believe the energy companies will want to buy up the coastline.
2 - Consumer: If mortgage rates drop and the housing market finds a bottom it will give consumers a small boost, but psychologically a big boost. This will bode well for True Religion Apparel (NASDAQ: TRLG), known for their high-end jeans. They also now have their own stores going up around the US and have one of the strongest charts in the sector.
3 - Financial: Of course the financials will get a boost if the government continues to bail them out and there may be yet another this weekend. Instead of playing one of the money centers, I have chosen to go with an online brokerage firm that I actually use for clients, TD Ameritrade Holdings (NASDAQ: AMTD). The stock has held up very well in this market and has increased trading volume the last few months over last year. The volatility may not be good for you, but more trading helps the online brokers.
