We started the day with Citi (C) reporting terrible earnings and things just went downhill from there. Today the volume was higher than average, with decliners outpacing advancers. This continues to follow the pattern we’ve been seeing: low volume up days, high volume down days. Most sectors were down by at least 1%, and gold and oil continued their respective climbs higher. Momo plays and rumors were the name of the game today.
Some earnings of note:
Sonic (SONC) beat by a penny, beat on revenues and guidance was for revenues to be in-line with estimates. Robbins & Myers (RBN) beat by .21 and on revenues. Werner Enterprises (WERN) also beat by a penny, but missed on revenues. Genentech (DNA) reported revenue in-line and beat by a penny.
Just a note that Buffet has cut his stake in both Union Pacific (by 3.1M shares) and Norfolk Southern (by 2.6M shares).
Fed Chairman Bernanke said today that “part of the reason that we have some confidence in inflation remaining well controlled is we expect to see the economy growing more slowly at the end of this year…” He said the Fed was prepared to reverse the rate reduction if inflation grew stronger than expected. So he’s worried about inflation and wants to see the economy grow more slowly? Then he should not cut rates at the end of this month. After all, he said the rate cut was to stimulate the economy.
The last item tonight is about the bail-out fund being created by Citigroup, Bank of America, and JP Morgan Chase. Treasury Secretary Henry Paulson has been involved in the discussions. The fund is to be called the Master Liquidity Enhancement Conduit and will be used to buy distressed securities from SIVs (structured investment vehicles). Then they would have the capital to pay off their commercial paper and save themselves from big losses.
Before I say anything more about this “bail-out” fund, I want to get more information. The information put out today has some holes in it, and I can’t believe they are saying what I think they are saying. The “creativity” here is too much for a rational, capitalistic mind to grasp at first glance. I’m just going to have to put on the back burner any more analysis of this cockamamie story, until I hear more about it’s structure.
