Monday, August 20, 2007

Morning Note...

Futures slightly up this morning on the back of Friday’s strength and Asia’s rebound.  Very little news as the markets continue to digest Friday’s Fed action.  Most agree that it seems to have been a very precise cut that specifically targeted troubled banks and perhaps supports the current markets rather than propels them.  In other words, the Fed’s action was not necessarily bullish, but rather reduces downside risk for the markets.  Further, had the Fed Funds rate been cut, the markets may not have reacted kindly to what could have been interpreted as a panic move.  In the current scenario, however, Bernanke has done something useful in the near-term while also buying time until Sept 18th’s Fed meeting.  He has tipped his hand slightly, and should he cut the Fed Funds rate then, the reaction will surely be more orderly and controlled.   

WSJ reports that CITI’s sale of $1.5B if bonds later today relative to GE’s plastics division will be closely watched to properly gauge the health of the credit markets.  

Lowe’s reported good earnings.  The Nasdaq announced exploration of alternatives to divest its 30% stake in LSE.  CFC begins lay-offs.  NY Times reports TRB deal could be in jeopardy. 

Barron’s reports BSC, CFC, and CIT may seek mergers with healthier banks.  Barron’s also reports stocks picked by CNBC's Jim Cramer have underperformed the Dow by 10% and the S&P 500 by 4% over the past two years, according to an analysis by Barron's, and over the past six months, Cramer's picks have been flat or down in relation to the market.  

Announced Deals: 

Rockbay News: TOG CN cut to mkt perform at BMO – new entity needs few months to prove itself,  DJO receives accreditation from Accreditation Commission for Health Care, UBS stake in CON GY falls to 1.36% from 3%, CON GY CFO calls VDO acq accretive,  Ruediger Grube names to Chrysler board, FINL hires Bain to integrate GCO, EQT started with Buy rating at DBAB – sees sum of the parts worth more than the “whole,” CNX amends dividend policy – increase in dividend expected Sept 30,

Vito’s Trivia:  Any guesses as to which recently deceased actor, entertainer & producer took part in the first open-mouthed kiss in cinematic history?  (1953)

Yesterday’s Answer:   Cashin said this on Friday morning on CNBC:  “Capitulation is when the fear of losing money finally outweighs the fear of looking stupid.”