FirstAlert: 6:20-8 P.M. Investrend / Bestcalls
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Ben's Banks (By Philip Holmes) -- Stocks ended lower on Wednesday after a late attempt at a rally following testimony by Ben Bernanke before the House Financial Services Committee. The Fed chairman sought to reassure lawmakers, and the world at large, that he and other leaders have a true plan to solve the financial crisis. The market sought to digest some new details on how the Fed aims to deal with the financial crisis. As Greg Robb of MarketWatch put it, Bernanke tried to convince everyone that regulators aren't "grasping at straws," saying, "We're not making it up." Robb reminds us all of how, since the Paulson days, there was, "The sense that Washington was reacting to events rather than shaping them has grown..." You'll recall how Paulson first planned to take toxic assets of bank balance sheets, (by buying them for more than the market value), then switched to the current TARP method of buying preferred stock in exchange for capital. Robb tells us that Bernanke tried to reassure lawmakers that he had a plan and that, "While the federal government may acquire large minority positions in the nation's largest banks, it has no plans to run the institutions and zero out shareholders." For one thing, the Fed envisions that a stress test will be applied, and will be finished no later than the end of April. As the New York Times' Jack Healy reports, "Nineteen major banks worth more than $100 billion will face a mandatory stress test to judge whether they have enough capital to survive another steep drop in housing prices or a sharp increase in unemployment rates." The banks that fail "would have six months to raise money from the private sector, or would receive additional capital injections from the government in the form of securities that could be converted into common stock at a 10 percent discount to the price before February 9." One big sticking point are the so-called "baseline" expectations of the economy's performance. According to the Times, the Fed envisions that unemployment will rise to 8.4% in 2009, economic growth will contract two percent and home prices will fall 14 percent. The Fed sees as a worse-case scenario that home prices would drop another 22 percent in 2009, gross domestic product would contract 3.3 percent and unemployment spike to 8.9 in 2009 and 10.3 percent in 2010. This has the Times' Paul Krugman worried: "And color me baffled at what they consider an adverse case for housing prices. They consider a fall of housing prices, as measured by the Case-Shiller 10-city index, of 27 percent from 4th-quarter 2008 levels to be as bad as it could get. But the CS-10 were around 30 percent overvalued relative to rents or overall consumer prices in 2008 Q4 - so their worst case is for housing prices to fall to historical norms, with no overshooting."
The Investrend Earnings Calendar features Bare Escentuals (NASDAQ: BARE), expected at $0.25; Biovail (NYSE: BVF), expected at $0.32; Commscope (NYSE: CTV), expected at $0.53; Ensco International (NYSE: ESV), expected at $2.06.
The Investrend Economics Calendar lists Durable Goods Orders for January (8:30 a.m.), Weekly Initial Jobless Claims (8:30 a.m.), New Home Sales for January (10 a.m.).
The Investrend Events Calendar showcases DV, CECO, ACM, GPX at Robert W. Baird & Co Business Solutions Conference; FSLR at Canaccord Adams Sustainability Conference; HPQ, MFE, EXPE, NVDA at Goldman Sachs Technology and Internet Conference; JPM Investor Day; N, DMAN, CNQR, KNXA at Pacific Crest Securities Emerging Technology Summit; V, MSFT, TXN, CA at Goldman Sachs Symposium; YHOO, MCO, MDP, MHP at Jefferies & Co. Internet & Media Conference.
The Investrend Money Index is an indicator of the depth of market direction or indirection. While not always including the same stocks, the NYSE/NASDAQ 50 Most Actives indicate the direction in which the mass of money is flowing. Last session's trading showed 26 advancers versus 24 decliners. Advancers were led by Fifth Third Bancorp (NASDAQ: FITB) up 33.79%, Huntington Bancshares Incorpora (NASDAQ: HBAN) up 17.73%, Regions Financial Cp (NYSE: RF) up 14.29%, Bk Of America Cp (NYSE: BAC) up 9.09%, Capital One Financia (NYSE: COF) up 8.49%, Applied Materials, Inc. (NASDAQ: AMAT) up 8.12%, U.S. Oil Fund Etf (NYSE: USO) up 6.38%, Powershares Db Crude (NYSE: DXO) up 6.31%. There were no significant decliners.
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Investrend Website of the Day: http://www.bestcrosswords.com
Quote of the Day: "If you pay peanuts, you get monkeys." James Goldsmith
Today is: Levi Strauss Day, National Chili Day, Liberation Day in Kuwait.
Happy Birthday: Wenceslaus, Christopher Marlowe, Victor Hugo, Levi Strauss, Buffalo Bill, William Frawley, Robert Alda, Jackie Gleason, Theodore Sturgeon, Tony Randall, Tom Kennedy, Fats Domino, Johnny Cash, Robert Novak, Michael Bolton, Greg Germann.
Today in History: Valentinian I was proclaimed Roman Emperor in 364. The Bank of England issued in 1797 the first one-pound and two-pound notes. U.S. President Abraham Lincoln signed the National Currency Act into law in 1863. In New York City, the first pneumatic-subway opened in 1870. In 1919, an act of the U.S. Congress established most of the Grand Canyon as a United States National Park. United Kingdom Prime Minister Winston Churchill announced in 1952 that his nation had an atomic bomb.
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