Morning in the Markets & News – 7/24/2009
By Mark Pason, at 8:05 am on July 24th, 2009S&P 500 Futuers up +2 to 970.90
Futures are pointing higher as Wall Street digests earnings misses from Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) Overall market sentiment seems positive though, with doom and gloom starting to be replaced with optimism. The S&P 500 has gained back 50% of the losses it suffered after Lehman went down. This is the highest close since Election Day and the most impressive rally since the Great Depression. So much for a quiet summer. In Europe, we are seeing the longest rally since 2006. The only negative news seems to be the the shrinking British economy. This is the largest yearly decline since the Officer for National Statistics started keeping records in 1955.
Bloomberg reports that Goldman Sachs’ $1.1bb payment to Uncle Sam was a very good P.R. move for venerable Wall Street firm. The payment is about 10% of the $11bb Goldman set aside for compensation. Politicians and critics are warning that obscene pay packages will lead to unwise risk taking, the kind that got us into this mess in the first place. One way Goldman keeps printing money is by High Frequency Trading, which is the new buzz term on the Street. Meanwhile, buy-and-hold is far from dead as Warren Buffett’s Goldman Sachs investment is looking to be a home run.
Schlumberg reported a Q2 profit decline of 57%. The oilfield-services firm reported $0.68 EPS vs. an expected EPS of $0.64. Eriscsson (NASDAQ:ERIC) saw it’s net income drop by 56%.
Washington: The Federal Reserve’s balance sheet trimmed down for the first time since September 2008. The GAO, a government watchdog group, criticizes the Administration’s mortgage plan. Sen. Max Baucus, House Minority Leader John Boehner and House Majority Leader Steny Hoyer are backing a plan to reverse the decision by Chrysler and General Motors to close over 3,000 auto dealerships. Meanwhile, President Obama is about to unveil a $4bb school improvement plan. On the state level, the New York Times is reporting that sixteen states are paying unemployment claims with borrowed money. With more claims coming in, the situation is slowly getting dire, especially for those claims which require review.
What would a day be without news on CIT Group? The 100 year-old firm is telling America that its not seeking bankruptcy but would restructure intead. To the surprise of no one, the Oracle of Omaha made a bid to buy pieces of the company, but CIT politely refused.
A new book out next month about Bernie Madoff reveals some great tidbits about the Ponzi scheming jailbird. He reportedly wore two gold Rolexes, so he always knew the time in London. That should have told investors something right away about the man’s basic math skills.
The best sign that things are coming back to normal: The New York Yankees are winning again and sitting pretty in first place.
