Today's Market Moving News - Merrill & Oil Face Reality
(Stocks in this article: NYSE: MER, NYSE: BA, Nasdaq: PFCB, Nasdaq: AMZN, Nasdaq: BRCM, NYSE: MCO, NYSE: WLP, Nasdaq: NDAQ, Nasdaq: PFCB, NYSE: OXY, NYSE: GSK, NYSE: PTR, Nasdaq: GOOG)
This morning Merrill Lynch and the energy market face their respective realities. Merrill (NYSE: MER), which had telegraphed its mortgage-backed securities meltdown months prior, today raised investor concern to a new level as it announced write-downs would be $2.5 billion more than previously reported. In fact, Merrill's total loss from CDO, asset-backed securities, mortgage market participation and leveraged lending to corporate takeovers amounted to $7.9 billion.
Merrill's miscue tops Citigroup's (NYSE: C) Q3 writedown of $6.5 billion and sets a new record for such misevaluation of risk. MER shares are down about 2.5% in premarket trading and seem assured to blow back the clouded tone to financial sector trading, at least for the short-term. We now understand what Merrill's equity analyst may have known when Merrill first warned months ago. That same week, the analyst downgraded the shares of many of Merrill's peers. The thinking at Merrill HQ must have been that others would share in this turmoil. Also, since a great portion of the writedown came on CDO market ills, we can now better envision the panicked meeting that may have occurred before the Fed cut the discount rate and changed its overall tone in August.
Oil prices have receded from last week's hurried rise to $90. It seems oil traders have come to their senses after Turkish/Iraqi tension have been somewhat defused. The neighbors recently agreed to work together to solve the PKK terrorist problem, though massive Turkish troops still threaten the troubled border. As risk increased for a potentially destabilizing war, and one that would occur on the critical (read to the U.S.) western border, concerns appropriately rose. However, traders woke up this week, looked around, and found bearish overtones abound for oil. With the likelihood of economic growth moderation or even recession, a very warm fall eroding heating demand and an anticipated bearish inventory report this morning when the EIA notes its weekly data, oil seems destined to retest $80, let alone the $85 point it currently teases.
At 10:00 AM, oil may find yet another reason to dip, as September Existing Home Sales data reaches the market. Bloomberg's consensus of economists is looking for the critical used homes market to post an annual sales run rate of 5.3 million, compared to 5.5 million reported in August. Last week's drastic drop in housing starts has attached a bearish tone to expectations.
The Mortgage Bankers Association today reported its weekly Purchase Applications Report for last week. Seasonally adjusted results showed new applications for mortgages decreased 3.1% from the week just prior, while refinancing activity improved 4.0%. Yesterday, Countrywide Financial (NYSE: CFC) announced plans to help mortgage borrowers of $16 billion in ARMS debt to refinance into better terms, and the government is working to encourage lenders to help qualified borrowers avoid foreclosure.
While Google (Nasdaq: GOOG) was able to surmount lofty market expectations, Amazon.com (Nasdaq: AMZN) found the going a little more difficult. Despite beating analysts' consensus forecast, AMZN shares are down some 10% in the premarket. This says something for the level of expectations set for the technology sector, and may add pressure to trading today.
Warren Buffet warned investors to be wary of the Chinese market bubble. The famed value investor recently sold a stake in Petrochina (NYSE: PTR).
Catch the entire day's earnings schedule at TheStreet.com's page.
This morning Merrill Lynch and the energy market face their respective realities. Merrill (NYSE: MER), which had telegraphed its mortgage-backed securities meltdown months prior, today raised investor concern to a new level as it announced write-downs would be $2.5 billion more than previously reported. In fact, Merrill's total loss from CDO, asset-backed securities, mortgage market participation and leveraged lending to corporate takeovers amounted to $7.9 billion.
Merrill's miscue tops Citigroup's (NYSE: C) Q3 writedown of $6.5 billion and sets a new record for such misevaluation of risk. MER shares are down about 2.5% in premarket trading and seem assured to blow back the clouded tone to financial sector trading, at least for the short-term. We now understand what Merrill's equity analyst may have known when Merrill first warned months ago. That same week, the analyst downgraded the shares of many of Merrill's peers. The thinking at Merrill HQ must have been that others would share in this turmoil. Also, since a great portion of the writedown came on CDO market ills, we can now better envision the panicked meeting that may have occurred before the Fed cut the discount rate and changed its overall tone in August.
Oil prices have receded from last week's hurried rise to $90. It seems oil traders have come to their senses after Turkish/Iraqi tension have been somewhat defused. The neighbors recently agreed to work together to solve the PKK terrorist problem, though massive Turkish troops still threaten the troubled border. As risk increased for a potentially destabilizing war, and one that would occur on the critical (read to the U.S.) western border, concerns appropriately rose. However, traders woke up this week, looked around, and found bearish overtones abound for oil. With the likelihood of economic growth moderation or even recession, a very warm fall eroding heating demand and an anticipated bearish inventory report this morning when the EIA notes its weekly data, oil seems destined to retest $80, let alone the $85 point it currently teases.
At 10:00 AM, oil may find yet another reason to dip, as September Existing Home Sales data reaches the market. Bloomberg's consensus of economists is looking for the critical used homes market to post an annual sales run rate of 5.3 million, compared to 5.5 million reported in August. Last week's drastic drop in housing starts has attached a bearish tone to expectations.
The Mortgage Bankers Association today reported its weekly Purchase Applications Report for last week. Seasonally adjusted results showed new applications for mortgages decreased 3.1% from the week just prior, while refinancing activity improved 4.0%. Yesterday, Countrywide Financial (NYSE: CFC) announced plans to help mortgage borrowers of $16 billion in ARMS debt to refinance into better terms, and the government is working to encourage lenders to help qualified borrowers avoid foreclosure.
While Google (Nasdaq: GOOG) was able to surmount lofty market expectations, Amazon.com (Nasdaq: AMZN) found the going a little more difficult. Despite beating analysts' consensus forecast, AMZN shares are down some 10% in the premarket. This says something for the level of expectations set for the technology sector, and may add pressure to trading today.
Warren Buffet warned investors to be wary of the Chinese market bubble. The famed value investor recently sold a stake in Petrochina (NYSE: PTR).
Catch the entire day's earnings schedule at TheStreet.com's page.
Market-Moving News
- Bloomberg: Merrill Lynch (NYSE: MER) Write-Downs Increased Another $2.5 Bil, to $7.9 Bil
- AP/Yahoo!: Merrill Down in Premarket As Details Reach Investors
- Platts: Oil Drifts Lower Ahead of Bearish Inventory Expectations, Housing Report, Iraq Tension Defused
- CNN Money: Asian Shares Give Back Gains
- Financial Times: Earnings Lift Europe
- ECONOMIC REPORT Pending 10:00 AM: September Existing Home Sales (Bloomberg Consensus 5.3 mil Vs. August 5.5 mil)
- Mortgage Bankers Association: Refinance Applications Increase in Latest Weekly Tally
- Bloomberg: Buffet Warns About China Bubble
- Financial Times: Russia to Control Food Prices
- CNBC: Euro Zone Manufacturing Slows
- DailyFx: Will Fed Do the Unexpected
- TheStreet.com Earnings Calendar
- AP/Yahoo!: Boeing (NYSE: BA) Profit Soars 61%
- TheStreet.com: Broadcom (Nasdaq: BRCM) Shares Slip After Reporting In Line
- MarketWatch: Moody's (NYSE: MCO) Profit Slips
- AP/Yahoo!: Wellpoint (NYSE: WLP) Profit Rises
- AP/Yahoo!: Nasdaq (Nasdaq: NDAQ) Profit Surges on LSE Stake Sale
- AP/Yahoo!: P.F. Chang's (Nasdaq: PFCB) Profit Falls, Cuts Guidance
- AP/Yahoo!: Occidental (NYSE: OXY) Beats Forecasts
- TheStreet.com: Amazon (Nasdaq: AMZN) Misses Whisper, Shares Give Back Gains
- CNBC: GlaxoSmithKline (NYSE: GSK) Earnings Fall, Looks to Cost Savings Plan
- BBC: Serious Business for NATO to Discuss
- Economist: Larijani Resigns, Raising Questions in Iran
- Economist: The Geopolitical Week Ahead
- Iran Daily: Tales from the Dark Side
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posted by The Greek | 9:31 AM
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