#1 Intel (INTC) was "ok" but in this environment "ok" is categorized as "end of the world". They came out with a bombshell, stating they had some concerns about the US in 2008. This was a bombshell to the 25 people in the country working at Fox Business News who still think everything is fine (and the market is only going down because Democrats look headed for the White House), but otherwise it's not much of news. But we can still sell this same old news, down 15% after hours. Why not? There are times good news is bad news, average news is bad news, and bad news is bad news. This is one of those times.
#2 US Banncorp (USB), which I see Guy Adami tout every night on "Fast Money" (Eric Bolling, come back!) looks very solid. I don't follow the banks that closely (other than to shun them) but this is apparently the 7th largest bank in America. They are deciding not to buy back shares to maintain capital - which is a decision most banks don't even have an option of mulling so they must be doing something right.
#3 California Pizza Kitchen (CPKI) which is just another random restaurant stock, so I wanted to keep an eye on it's earnings... down 20% in after hours after cutting back estimates for 2008. Along with retailers, it appears we will be losing most of our restaurants as well, based on stock price action. Folks we are not going to have any place to spend our money in 2 years after all the retailers AND restaurants (save Walmart, Target, Best Buy, McDonald's, and Costco close). CPKI is now down below $10. Six months ago? $25. Ouch.
#4 Forest Labs (FRX) is a healthcare stock (do I need to go any further - of course it did not fall), drug development company with solid earnings. Ironic to see this sector (safe haven) perform so well, considering all the drugs coming off patent in this group, and very good odds for a Democratic President in the fall, but none of that matters as fear takes over the market and people can't cut back on drugs.
#5 State Street (STT) - this is a financial company that is probably most like fund holding Blackrock (BLK). However it is not as much of a pure play on asset management. Earnings dropped nearly 30% based on mortgages. I don't follow it closely but I assume they are holding some mortgage backed securities (these cockroaches are everywhere). Let's see what Blackrock has to say Thursday. BLK has a great CEO so I doubt they would hold this junk but nothing would surprise me anymore - heck, little towns in Norway have been discovered to have subprime exposure.
Tomorrow AM aside from Intel fallout we have JP Morgan (JPM) and Wells Fargo (WFC) earnings - supposedly 2 of the better run banks in America. One fact lost in Citigroup's (C) mega billions mortgage writeoff is the $4 BILLION extra in provisions for write offs in their CONSUMER loans divisions.
- "We had losses in our U.S. consumer business, up over $4 billion, and these numbers completely overwhelmed record performance in many, many of our other large businesses," Chief Executive Vikram Pandit said on a conference call.
- Analysts, noting that Citigroup's bread-and-butter consumer business provides more than one-third of the firm's recent profits, said keeping that side of the company strong -- and its capital reserves healthy -- is a must if the bank has any hope of riding out current turmoil in the markets and the economy.
- "The reserve build signals that tougher times are ahead in the U.S. consumer channel, which has accounted for 30%-40% of Citi's recent profits," Goldman Sachs analyst William Tanona wrote in a research report.
I did have to say I was bemused to see early AM a headline on CNBC: "Citibank's kitchen sink quarter". I believe I saw that headline in August... and October. They can just keep using the same graphic.... every 3 months. And eventually it will be the kitchen sink. But not yet.
Anyhow, another day where nothing much is working outside of Altria (MO), healthcare, utilities, gold, and coal stocks for some odd reason. Even safety stocks like McDonald's, Pepsi etc are beginning to falter. Just a tough environment and stock selection in any sector outside of "safety" sectors is meaningless. They are all being sold.
With the Intel news it appears now we are destined to break August 2007 lows tomorrow AM on the S&P 500. It closed at 1380, and below 1370 we break new ground. With all the "quant" computers in NYC set to sell concurrently the minute that happens, tomorrow should be another "interesting" day. By interesting I mean painful. Next would come March 2007 lows = 1360. Next comes a lot of thin air. But an early morning painful heavy selloff, could set up conditions finally for a trade-able bottom as people throw up their hands and just give up. Let's see if the Plunge Protection Team comes up with a solution in premarket tomorrow.
Oh yeh... almost forgot; the useless CPI will be out tomorrow. As if a "hot" (i.e. high) figure will stop the Fed from cutting... but another thing to hand wring over :)