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Author: Subject: Business Votes on Inaugural - Dow Off 332

Maximum Peach





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  posted on 1/20/2009 at 05:41 PM
So much for the honeymoon...

quote:
U.S. Stocks Slide in Dow Average’s Worst Inauguration Day Drop

By Elizabeth Stanton

Jan. 20 (Bloomberg) -- U.S. stocks sank, sending the Dow Jones Industrial Average to its worst Inauguration Day decline, as speculation banks must raise more capital sent financial shares to an almost 14-year low.

State Street Corp., the largest money manager for institutions, tumbled 59 percent after unrealized bond losses almost doubled. Wells Fargo & Co. and Bank of America Corp. slumped more than 23 percent on an analyst’s prediction that they’ll need to take steps to shore up their balance sheets. The Dow’s 4 percent slide was the most on an Inauguration Day in the measure’s 112-year history, according to data compiled by Bloomberg and the Stock Trader’s Almanac.

“All the banks are going to have to recapitalize,” said Greg Woodard, portfolio strategist at Manning & Napier Advisors Inc., which manages $16 billion in Fairport, New York. “That’s not done. That’s in front of them, and we don’t want to try to get in front of that trade.”

The S&P 500 plunged 5.3 percent to 805.22. The S&P 500 Financials Index fell 17 percent to below its lowest closing level since March 1995 as concern European banks need more capital also weighed on the group. The Dow average slid 332.13 points to 7,949.09. Both the Dow and S&P 500 retreated to two- month lows.

The S&P 500 is off to its worst start to a year, shattering the biggest rally since World War II, as analysts cut earnings estimates by a record 83 percentage points and companies signal worse to come.

The S&P 500 is down 11 percent in the first 12 trading days of 2009, exceeding last year’s 9.2 percent drop, according to data compiled by Bloomberg going back to 1928. The decline helped erase more than two-thirds of a 24 percent rally since Nov. 20 as optimism that government spending would revive the economy evaporated.


http://www.bloomberg.com/apps/news?pid=20601087&sid=aOYw.awwsNSg&re fer=home

 

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Zen Peach



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  posted on 1/20/2009 at 05:52 PM
Plus Pelosi says she will go against Obama's tax cuts for businesses and more......of course.

 

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Maximum Peach



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  posted on 1/20/2009 at 05:53 PM
I hope we see some serious head butting between President Obama and Pelosi...
 

Peach Extraordinaire



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  posted on 1/20/2009 at 06:18 PM
I was listening to a Chicago financial show this morning on my way to the gym at 5:30. They said the market would take a hit today due to instability in European markets, it had nothing to do with the inauguration.

 

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Maximum Peach



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  posted on 1/20/2009 at 06:24 PM
Yeah, I saw the European news early this morning, concerning British banks primarily. But we often shrug off Asia and Europe and often have a good day, especially when there's something positive in the news. I read it that BO enthusiasm wasn't enough to overcome more bad financial sector news. Hope meets reality, reality wins again.

 

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Zen Peach



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  posted on 1/20/2009 at 06:35 PM
It's earnings season for some of the big banks, and their numbers suck. That's what was behind the drop....Nothing Obama said could have prevented it, but why the bank stocks got clocked so bad TODAY does seem a little coincidental.

http://finance.yahoo.com/news/Stocks-tumble-on-fresh-apf-14109207.html

 

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Zen Peach



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  posted on 1/20/2009 at 06:36 PM
quote:
I hope we see some serious head butting between President Obama and Pelosi...


That would be a good sign. A better sign would be her giving in to him.

 

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Zen Peach



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  posted on 1/20/2009 at 06:38 PM
Yes in this case the drop had nothing to do with the inauguration since it was in no way a surprise and the Markets were obviously ready for the changeover. Sometimes a cigar is just a cigar.

 

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Ultimate Peach



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  posted on 1/20/2009 at 06:40 PM
Obama is as "Wall Street friendly" as they come---remember he voted for the $700 billion dollar bailout of the Wall Street Thugs. I'm sure today's plunge had nothing to do with him. The things that the Wall Street folks don't like about Obama are: that he was a community organizer, believes in workers rights (he supports the Employee Free Choice Act), stood with union picket lines and actually gives a damn about someone other than just stockholders, millionaires and billionaires, unlike the previous administration.

[Edited on 1/21/2009 by woodsdweller]

 

Maximum Peach



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  posted on 1/20/2009 at 06:44 PM
quote:
quote:
Yeah, I saw the European news early this morning, concerning British banks primarily. But we often shrug off Asia and Europe and often have a good day, especially when there's something positive in the news. I read it that BO enthusiasm wasn't enough to overcome more bad financial sector news. Hope meets reality, reality wins again.


I think you are making a huge stretch to compare todays stock market drop with the inauguration.

My wife had the day off. The maket dropped. She is working tomorrow. If the market rebounds, I will now know why.
You caught me Otie - I'm just tossing a little chum in to see what can be stirred up. Been 6+ hours and more than enough kumbaya for me.

But let's track this wife work/not work thing. If it pans out, lots of folks would appreciate the help for their 401k's.

 

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Peach Master



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  posted on 1/20/2009 at 06:52 PM
quote:
Yeah, I saw the European news early this morning, concerning British banks primarily. But we often shrug off Asia and Europe and often have a good day, especially when there's something positive in the news. I read it that BO enthusiasm wasn't enough to overcome more bad financial sector news. Hope meets reality, reality wins again.

You got me a bit Fujirich, I did get stirred just a little, everyone can read today's drop how they want I guess, I read it as wealthy Republicans pouting and acting like angry kids, selling off to cause this drop to ruin Folks' big day...sound a little farfetched ? well You know my screen name.. ........Peace All............joe

[Edited on 1/21/2009 by crazyjoe]

 

Zen Peach



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  posted on 1/20/2009 at 07:49 PM
I just wish the market would go ahead and bottom out so we can start the climb back up. I don't care who gets the credit....time to get it turned around.

 

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Zen Peach



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  posted on 1/20/2009 at 07:58 PM
Privatization might not be such a bad idea now, Ann. If people were allowed to direct a percentage of their taxes into the S&P 500 a ton of money would start to flow back in.

Up she goes!

 

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Zen Peach



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  posted on 1/20/2009 at 09:06 PM
I've got no problem with that as long as the people behind this last massive fiasco are no longer calling the shots. I'm tired of the rich getting richer on the backs of the working man. Eff their half million dollar retreats with the $500 a day dog kennels!

 

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Ultimate Peach



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  posted on 1/20/2009 at 09:33 PM
Be it the inaugural or OTF's wife, working for a bank that's got relatively fewer problems than most, I can tell you the battering banks are taking is acknowledgment that this economy is in the tank for an extended period. Most of my customers are saying it will be late 2010 before they see a GLIMMER of hope. That's two more full years at least of this. That means business and personal loan delinquencies are going to go up, hence the need for more capital, and, if there's a bank capital shortage, the credit crunch will deepen and prolong this mess.

Batten down folks.

 

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Zen Peach



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  posted on 1/20/2009 at 09:39 PM
quote:
quote:
I hope we see some serious head butting between President Obama and Pelosi...


That would be a good sign. A better sign would be her giving in to him.


IMO Pelosi is one of the biggest roadblocks to the economic recovery

 

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Universal Peach



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  posted on 1/21/2009 at 08:16 AM
Here's a short snippet from this weeks edition of the The Week magazine. Note the second to the last paragraph in which it's stated that banks are sitting on a mountain of cash. If this is true, is it possible their hording this cash for when the real **** storm hits due to more and more foreclosures, deliquencies, etc.? Anyway, I thought this article is quite telling given the banks are indeed, not loaning out the bailout money we've provided them...


More money for troubled banks

President-elect Barack Obama this week asked Congress to release another $350 billion in financial-rescue funds, but he met resistance from lawmakers highly critical of how the entire $700 billion rescue program has been managed. “People feel they got burned,” said Democratic Sen. Kent Conrad of North Dakota, who complained that banks were allowed to “hoard” the funds rather than lend them to businesses and consumers. Democratic lawmakers demanded details on where the first $350 billion installment wound up, and also said they wanted a significant portion of the remaining money to be used to prevent home foreclosures. Republicans complained that billions of the first installment were used to bail out Detroit automakers.

Obama said he shares concerns over the Bush administration’s management of the bailout, known formally as the Troubled Assets Relief Program. But he said that given the fragility of the financial system, the Treasury Department needed the “potential ammunition” to fight off another financial panic. Despite law­makers’ complaints, the Democratic-controlled Congress is likely to approve the request.

Congress is right to be skeptical, said Investor’s Business Daily in an editorial. If taxpayers must rescue financial firms, “shouldn’t they at least know where their money is going?” It’s encouraging that Obama has promised to be more forthcoming about who’s getting the money and how it is to be used. But Congress shouldn’t take his word for it. Give him the funds—with plenty of strings attached.

The strings should be tied to the banks, not the White House, said David Smick in The Washington Post. “Our banks are sitting on mountains of capital,” with $800 billion in total excess cash reserves; in normal times, those reserves rarely exceed $7 billion. “These are hardly noble institutions,” despite Treasury Secretary Hank Paulson’s kid-glove treatment of them. Obama can signal a major change in tone by using his “bully pulpit” to browbeat the banks into actually lending out their bailout bucks.

The last thing our troubled economy needs is to have the government micromanaging the private sector, said Dick Morris in Realclearpolitics.com. Before releasing the remaining $350 billion, Congress should ensure that the government will not use its “leverage” to turn banks into wards of the state. Congress does need to approve the bailout money to help stave off a depression. But by placing strict limits on government muscle-flexing, Congress “has a historic opportunity to demonstrate its preference for the free-enterprise system over socialism.”

 

Peach Extraordinaire



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  posted on 1/21/2009 at 09:09 AM
quote:
I was listening to a Chicago financial show this morning on my way to the gym at 5:30. They said the market would take a hit today due to instability in European markets, it had nothing to do with the inauguration.


Lowering expectations AGAIN? The Dow typically jumps on inauguration day regardless of who is being sworn in. This is just another example of business' lack of faith in the BarryO way. We're going to be hearing a lot of this sort of dismissive rhetoric from the left in the months and years to come. That is when they're not still blaming Bush.

 

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  posted on 1/21/2009 at 09:27 AM
quote:
The strings should be tied to the banks, not the White House, said David Smick in The Washington Post. “Our banks are sitting on mountains of capital,” with $800 billion in total excess cash reserves; in normal times, those reserves rarely exceed $7 billion. “These are hardly noble institutions,” despite Treasury Secretary Hank Paulson’s kid-glove treatment of them. Obama can signal a major change in tone by using his “bully pulpit” to browbeat the banks into actually lending out their bailout bucks.

The last thing our troubled economy needs is to have the government micromanaging the private sector, said Dick Morris in Realclearpolitics.com. Before releasing the remaining $350 billion, Congress should ensure that the government will not use its “leverage” to turn banks into wards of the state. Congress does need to approve the bailout money to help stave off a depression. But by placing strict limits on government muscle-flexing, Congress “has a historic opportunity to demonstrate its preference for the free-enterprise system over socialism.”


Those two paragraphs seem to contradict each other. One calls for strings and the other for no strings. Who is right, Morris or Smirk?

 

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Zen Peach



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  posted on 1/21/2009 at 09:31 AM
quote:
State Street Corp., the largest money manager for institutions, tumbled 59 percent after unrealized bond losses almost doubled.


There you go. If you don't know how big State Street is, look them up.

 

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Zen Peach



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  posted on 1/21/2009 at 09:35 AM
Like that will happen.... it's easier to say the dow 'typically goes up'.......

 

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  posted on 1/21/2009 at 09:35 AM
quote:
That's two more full years at least of this. That means business and personal loan delinquencies are going to go up, hence the need for more capital, and, if there's a bank capital shortage, the credit crunch will deepen and prolong this mess.


What is the market solution for this? The implications? The 'true conservative' approach?

 

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Maximum Peach



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  posted on 1/21/2009 at 09:36 AM
quote:
Those two paragraphs seem to contradict each other. One calls for strings and the other for no strings. Who is right, Morris or Smirk?
Others here have much more knowledge of the banking sector than I do, but there does seem to be a contradictory situation going on. On the one hand, cash has been fire-hosed into these institutions through gov't bailouts, but at the same time many own vast holdings whose worth still isn't determined. So are they net positive or negative? Seems like no one is sure, but at least this week the market is betting on the down side.

 

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Sublime Peach



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  posted on 1/21/2009 at 09:47 AM
quote:
Seems like no one is sure, but at least this week the market is betting on the down side.


What is the market solution for this? The implications? The 'true conservative' approach?

I would say the 'true conservative' way is private investment in endeavors that would employ large numbers of people. With the current rate of monthly job losses of 500K, we will have 6 million more unemployed by the end of the year. How likely is private investment in endeavors employing millions of people? Supply side economics works only if it is a two way street. That model is broken, it is safe to say. Or, make the argument that it is not.

 

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Maximum Peach



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  posted on 1/21/2009 at 10:00 AM
quote:
quote:
Seems like no one is sure, but at least this week the market is betting on the down side.


What is the market solution for this? The implications? The 'true conservative' approach?

I would say the 'true conservative' way is private investment in endeavors that would employ large numbers of people. With the current rate of monthly job losses of 500K, we will have 6 million more unemployed by the end of the year. How likely is private investment in endeavors employing millions of people? Supply side economics works only if it is a two way street. That model is broken, it is safe to say. Or, make the argument that it is not.
You're mixing a couple of different things together here Goliath. Stability of the banks is one issue, health of the business environment and a positive outlook for them (resulting in job security and job creation) is something else. Connected, but not the same.

I'm not enough of a banking expert to offer opinions on exactly what stabilizes them. It seems that until the full accounting of their holdings is obvious, investors will remain wary. If investors flee, as they are now, the only one left to prop them up is government. The question remains unanswered if government can cover all their losses, or how much should be covered. My opinion is that many should probably fail, but you can't let the whole banking industry collapse. Where's the right balance? I dunno... I don't think anyone really does right now.

 

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Obamacare: To insure the uninsured, we first make the insured

uninsured and then make them pay more to be insured again,

so the original uninsured can be insured for free.

 
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