4.11.08

4.11.08

          It was a bad week all the way around for the market. Earnings season is in full bloom and is, as expected, not reporting anything very good. Oil and gasoline prices are making new highs much to the consternation of the American working class. The Airlines were in a funk because the FAA had been doing a sloppy job of overseeing their compliance with safety inspections. Some Congressmen took the FAA to task for it so they in turn decided to force the Airlines to play catch-up and many of the planes had to sit on the ground for days waiting to be inspected before they could fly again.

        On Thursday Wal-Mart and Costco both reported good earnings. Both sell gasoline at many of their stores helping to increase sales. More so though the improvement was due to shoppers who came over from higher priced stores looking to save money. It is interesting to go to a Walgreen’s Drug Store and see all the people who are there to buy milk, bread, eggs and other food items because of the cheaper prices. Remember when Drug Stores use to sell drugs and Food Stores use to sell food.

         Friday was a terrible day because General Electric came in with a worst than expected earnings report. GE has always been reliable to hit their bogy, but didn’t this time. It caused the market to go down all day and to close at or near its low. The one redeeming fact was that it was on light volume, indicating that it was just the day traders and not any of the big boys joining in. 

         After rallying 6.6% in the prior week, the S&P financial sector dropped 4.6% this week. A lot of financial companies will be starting to report this coming week. And the word on the street is that it won’t be anything to write home about.

         The financial sector tried to keep the rally going early in the week after a report that savings & loan Washington Mutual was on the verge of getting a $5 billion capital infusion from a private equity firm. As it turned out, WaMu raised $7 billion, only it did so in a dilutive offering at a price that was well below where its stock had been trading. That combination knocked the wind out of its stock and helped deflate buying interest in the entire sector.

                        We are still 100% in Cash and holding.

Till next time

MTA Staff