Not as bad as thought sparks a small rally

Bank of America, now the biggest U.S. consumer bank and home lender, said second-quarter profit fell less than analysts estimated. BofA said net income declined 41% to $3.41 billion from $5.76 billion a year earlier. That beat estimates.

We still have Wachovia and WaMu earnings ahead of us this week, but four of the nation's five biggest banks have now reported better-than-estimated results, sparking a rally in financial shares.
These are some at risk institutions: Downey Financial, Corus Bankshares, Doral Financial, FirstFed of Santa Monica, Oriental Financial, BankUnited Financial, BFC Financial, First BanCorp, Flagstar Bancorp of Troy, Mich., Santander BanCorp of Puerto Rico, and Washington Mutual Inc. (WM) of Seattle. Read more at http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080721/REG/278316415

The 10-yr bond is up to 4.09%. We have $56 billion in Treasury supply this week (2-yr, 5-yr, and 20-yr Treasury Inflation Protected Securities), but the only data today is Leading Economic Indicators at 7AM PST, expected to show a decrease of 0.1%.

Tomorrow brings the July Richmond manufacturing index, the May house price index, and on Wednesday we'll see the Fed's beige book follow on Wednesday. Thursday brings both weekly initial unemployment claims and June existing home sales. Lastly, Friday brings June durable goods orders, the final-July US consumer confidence report, and June new home sales.

Ready for Next Week, News and the S&P 500

July 16 DJIA hourly bounce off of support

Up 279.74 2.52%
high 11,244.17 Low 10,918.33 Close 11,239.28

We had a little respite on the blood letting in the market. Don't fall in love with this rally as the blood letting will continue this week.

We stopped right on previous resistance before we hit the bottom and dependant on news we could settle around 11,100 and maybe retest the 10,820 area again. If we break through this support it doesn't look good for the markets.

Thursday, July 17, 2008
Before: AOS, AMFI, APH, BK, BAX, BBT, BLK, CHB, CIT, KO, CCE, CMA, CAL, COT (?), CY, DHR, FCS, FCF, FHN, F (?), GPC, HOG, HNI, HBAN, ITW, IIIN, IGT, IONA (?), JCI, JPM, KNL, MMR (?), MEG, MEI, MTG, NAFC, EDU, NXY, NOK, NVS, NUE, ORB, PNC, PPG, RS, SWY (?), SCHL (?), SON, SPWR, AMTD, TXT, UMPQ, UTX, USAK (?), WSO
During: HTLD (?)
After: ACTS (?), AMD, ATR, ARNA, AVCT, BRO, CLMS, COF, CIM (?), CBST, CYT, ESLR, EXAR (?), FBC, GILD, GOOG, IBM, ICUI, INFA, IUSA (?), LCRD (?), LEG, MER, MSFT, NVEC (?), PNFP (?), PMCS, RUSHA, SPP (?), SWKS, SYK, SRDX (?), SYMM (?), TPX, CHIP (?), WERN, WIT, ZION

July 16 S&P 500 daily

Market news for this week

Wednesday, July 16, 20088:30a.m. Jun Consumer Price Index: Previous: +0.6%. 8:30a.m. Jun CPI, Ex-Food & Energy: Previous: +0.2%. 9:00a.m. May Treasury International Capital Flows: Previous: $60.6B. 9:15a.m. Jun Industrial Production: Previous: -0.2%. 9:15a.m. Jun Capacity Utilization: Previous: 79.4%.10:20a.m. Crude Inventories 1:00p.m.Jul NAHB Housing Market Index: Previous: 18. 2:00p.m.

FOMC MinutesThursday, July 17, 20088:30a.m. Initial Jobless Claims For Jul 12 Week: 8:30a.m. Jun Housing Starts: Previous: -3.3%. 10:00a.m. Jul Philadelphia Fed Business Index: Previous: -17.6. 10:00a.m. DJ-BTMU Business Barometer For Jun 28:

Friday, July 18, 2008There are no economic indicators scheduled for today.

Treasury could buy Fanniew Mae and Freddie Mac

Treasuries gained as stocks fell, led by financial companies, highlighting rising concern that problems for the U.S. banking system may be worsening. U.S. stocks fell, sending financial shares to their lowest level since October 1998, on heightened concern that bank failures will spread. Washington Mutual Inc. posted its biggest drop ever and National City Corp. tumbled to a 24-year low after last week's collapse of IndyMac Bancorp Inc. spurred speculation that more regional banks may be short of capital.

Treasuries initially declined, pushing the yield on the 10- year note to the highest in almost two weeks, after Treasury Secretary Henry Paulson put a plan before Congress to provide support to Fannie and Freddie, the government-sponsored enterprises that purchase or finance almost half of the $12 trillion of U.S. mortgages.

There are some that feel that the U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac is an unmitigated disaster and the largest U.S. mortgage lenders are basically insolvent. Some bet that Fannie Mae shares will keep tumbling. Fannie Mae's market value is now about $10 billion, down from $38.9 billion at the end of 2007. Freddie Mac's market value has shrunk to about $5 billion from $22 billion at the end of last year.

July 11, Dow tumbles S&P Bounces Hard

Fannie Mae, and Freddie Mac are kicking the market when it is down. Fortunately Big Brother Ben stepped in, gave them both a life saving IV (opened the lending window) before they entered the suicide list.

The dow took it the hardest as it dipped down below 11,000 for the first time in two years which traded down more than 250 points in the session, briefly moved into positive territory in the afternoon before ending down more than 125 points. Now that it has been tested, next week we will probably thrash it.

The Dow is down 21.6% from the record closing high of 14,164.53 it reached in October. The S&P 500 is down 20.8 % and the Nasdaq is off 21.7 %.

The fiery convergence of the Housing crisis, subprime crisis, capital availability, lending requirements got another dose of gasoline, literally as oil, continued its ascent, rising to a trading record of $147.27 amid tensions between the West and Iran. Light, sweet crude for August delivery settled up $3.43 at $145.08, slightly below a record close of $145.29 a barrel set more than a week earlier.

Have a great weekend.