Has anything changed?
We've had a nice stock market rally these last two days while oil dropped significantly in price -- that's a good thing, but is it sustainable?
Not a chance!
Absolutely nothing has changed from a few days ago aside from the fact the markets were SEVERELY oversold and any inkling of half-way decent news was used as a buying opportunity for traders -- a very common, short-term, Bear Market Rally
Talk of new US Oil drilling and using our Strategic Petroleum Reserves did the trick for clobbering those who were long oil, but I expect this pullback to be temporary in nature also. Until we actually get more oil supply in the global pipelines and improve the dollar's purchasing power, oil (over the longer term) will continue to climb.
Peter Schiff on Fox Bulls and Bears Yesterday
News of the day:
Merrill Lynch Posts $4.7 Billion Loss As Write-Downs Climb
Merrill Lynch & Co.'s (MER) profits fell $4.65 billion in the second quarter, the bank's fourth consecutive quarterly loss and a much deeper one than analysts expected, as write-downs on troubled assets continued to pile up.
The investment bank wrote off another $9.75 billion in value of complex securities, bad hedges with shaky bond insurers, mortgage-related assets and high risk loans. That brought Merrill's total write-downs in the year-old credit crisis to about $40 billion, among the worst on Wall Street.
Moody's Investors Service, which responded Thursday by downgrading Merrill's credit ratings, thinks the bank could see another $10 billion in write-downs in quarters to come.
Loan Losses Weigh on JPMorgan; Income Falls 53%
JPMorgan Chase said Thursday that its second-quarter income dropped 53 percent, as credit card and home loan losses spread to borrowers with the strongest credit histories.
Skip to next paragraph The bank set aside an additional $1.3 billion to cover future loan losses as the housing market and the economy worsen. JPMorgan marked down the value of unsold buyout loans and complex mortgage investments by about $1.1 billion. And it said it would take about a $540 million charge to cover the first wave of losses and litigation costs related to its acquisition of Bear Stearns in March.
Single-family building dips to slowest in 17 years
A beat-the-deadline rush to file permits for apartment construction in New York City lifted housing starts to unexpectedly high levels in June, but it was no cause for rejoicing. Construction of single-family homes nationwide fell to the slowest pace in 17 years.
Wachovia Inspected by States Over Auction-Rate Sales
Wachovia Corp.'s securities division was inspected by a team of regulators from more than five states who delivered subpoenas today as part of a probe into the company's sales of auction-rate bonds.
Investigators searched the unit's St. Louis headquarters to seek information about sales practices, internal evaluations of the auction-rate securities market and marketing strategies, Missouri's Securities Division said in a statement. More than a dozen subpoenas were issued to Wachovia executives and agents.
As much as $218 billion of auction-rate bonds sold by student-loan providers, municipalities and closed-end mutual funds remain frozen after firms abandoned their role as buyers of last resort in February. Regulators in Massachusetts last month sued UBS AG for fraud, claiming it told investors the bonds were safe and liquid.
U.S. Initial Jobless Claims Rose 18,000 to 366,000 Last Week
The number of Americans filing first-time claims for unemployment benefits rose last week, reflecting a weakening labor market.
Initial jobless claims gained 18,000 to 366,000 in the week ended July 12, the Labor Department said today in Washington.
The biggest U.S. housing recession in a generation, tightening credit and slowing consumer spending are inhibiting economic growth. A softening labor market means consumer spending may retrench, threatening to extend the slump.
``The labor market remains soft and we're going to see the unemployment rate move higher,'' said Gus Faucher, director of macroeconomics at Moody's Economy.com in West Chester, Pennsylvania. ``With the way the labor market is going, we're still likely to see claims move up. Consumers are concerned.''
US inflation rises at fastest rate in 26 years
US inflation soared at its fastest rate in 26 years during June, placing more pressure on American households already struggling with record food and fuel costs.
The cost of living rose by 1.1 per cent, the biggest increase in inflation since 1982, while core inflation which excludes food and fuel costs rose by 0.3 per cent – above analysts’ expectations.
Phila. Fed survey: Manufacturers passing price increases to customers
according to the Philadelphia Federal Reserve's monthly Business Outlook Survey released Thursday, which said area manufacturers are reporting pricing pressures from higher energy and raw material costs. Sixty-one percent of Philadelphia manufacturers who were surveyed indicated they had increased base prices since the beginning of the year.
Of the remaining 38 percent, 29 percent have tacked on surcharges, and 9 percent have existing price escalation clauses covering cost increases, according to the Philadelphia Fed's report. The respondents also indicated that a large percentage of their suppliers have instituted surcharges covering recent cost increases. The firms are seeing the bulk of the surcharges for transportation, commodities, and energy costs.
Bottom line: Nothing has changed except the temporary opening of a pressure release valve -- buying some time.
Have a great evening