Archive for the ‘The Stock Market’ Category
Jobless claims announced this morning grew to 407,000 (week-end 3/29) vs. the consensus estimate of 365,000 and prior period claims of 366,000. The markets already show signs of weakness on the heels of the news, as investors typically put significant weight on employment data when evaluating the health of the economy.
Tags: The Stock Market
Chairman Bernanke is set to speak in Florida on long term plan to mitigate mortgage foreclosures. More to follow.
Inflation as measured by the Consumer Price Index (CPI) came in at 0.4% growth, above market expectations for a 0.3% rise in prices.
I’m only reporting the overall CPI number here, as this includes both energy and food prices. The “core” CPI number excludes these items, but I believe this distorts the impact to consumers (hey, we all have to eat and most of us have to drive to get to work).
Housing Starts
Furthermore, housing starts came in slightly under expectations at 1,012 K for January vs. consensus estimates of 1,015 K. A thousand more, a thousand less - it doesn’t matter. The bottom line is that we are continuing to see a weak market for housing due to the collapse of the credit markets. Unfortunately, this will probably continue for some time.
Investors are waiting for key inflation and housing numbers due out at 8:30 EST today. Per Briefing.com, Consumer Price Index (CPI) data is expected to show prices increasing 0.3% in January vs. 0.4% in December. In addition, housing starts are expected to come in at a tepid 1,015K vs. 1,004K in December. Futures are already trading lower in anticipation of the news - we’ll stay glued to the stock market news wire and provide the actuals as soon as they are released.
Tags: stock market news
The stock market news wire is humming this morning on an announcement that Citigroup (NYSE: C) has barred investors in its CSO Partners hedge fund from withdrawing their investments. According to the Wall Street Journal, investors in the fund attempted to withdraw almost 1/3 of fund assets due to fear concerning mortgage backed securities. However, the fund has refused, explaining that they would have to sell valuable securities at huge discounts (which would hurt all investors).
So, is that Really so Bad?
True, the fund did make disproportionately large investments in leveraged securities (even breaking trading policies set within the firm). However, the fund was down only about 11% in 2007, and the previous manager has since been replaced. If you are a diversified institution this fund should only be a small percentage of your portfolio. Therefore, a loss of 11% is not so bad given the amount of risk involved (whether or not all information is truly available about the underlying securities).
Further, according to various sources, CSO is a corporate debt fund, not a fund focused on mortgage backed securities. By keeping investors from redeeming assets, Citigroup is essentially preventing them from making a knee jerk reaction that will guarantee all investors lose money.
Where There’s Smoke, is There Fire?
However, uncertainty drives the market and institutional fund managers are under pressure to “not do worse” than market benchmarks. This will lead many to head for the door as soon as they can. Their argument will undoubtedly be the proverbial: “where there’s smoke there’s fire”. Given the current market situation, I guess I can’t say I blame them.
Tags: citigroup, stock market news
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