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What's Going On: Chrysler, Apple, Gold...


Taking a look at some of the things moving the market ahead of the bell...

  • Credit-market tremors tend to lead to stock market losses. Today, we have jitters over difficulties with financing for the Alliance Boots and Chrysler buy-outs, two of the biggest private equity-backed deals in the markets. This is intensifying fears about a possible credit crunch and we come in with the markets down sharply. When investors go on a massive buyers' strike, coupled with the potential supply of leveraged loans and high-yield bonds in the pipeline, plus the knock-on effects of the subprime mortgage mess... well, let's just say the underwriters are nervous.

  • Day four for gap openings! Even with Apple's (AAPL) stunning new earnings news (shares were up 9% in after hours), the market prefers to focus on the potential credit crunch that lies ahead.

  • The carry trade is unwinding and the dollar is stronger; it's all suggesting that risk appetite is beginning to fade. What lies beneath, no one really knows, as the carry trade and derivative trades are years in the making. Unwinds can be fast, furious, and quite painful for those stuck.

  • There has been violent moves in crude oil. With this morning's news of more unrest in Nigeria, crude is up 1.20%. Yesterday, a gunman shot an American scholar in Port Harcourt.

  • Yesterday's DOE report showed crude oil inventories down 1.1 mln brls, while distillate inventories rose 1.5 mln brls, well above expectations. The reports were slightly bearish, but the Nigerian news is more important today.

  • Gold fell off sharply yesterday, but in euros, it held fairly steady and is just below the psychological level of EUR500. Any moves above this level should spark a rally. In U.S. dollar terms, gold needs to get above $688 to spark a good rally.

  • An interesting study was posted in the Financial Times this morning:

    "A fascinating stat-ette from Eddy Elfenbein at Crossing Wall Street. A few days back, Elfenbein noted that since the beginning of 2006 the S&P 500 has massively outperformed on a Wednesday compared to the other days of the week. On a cumulative basis, the returns have been:

    Monday 1.40%
    Tuesday -0.36%
    Wednesday 18.72%
    Thursday 4.36%
    Friday -0.61%

    That means that Hump Day, as it is known in some circles, is responsible for over three quarters of the S&P's return."
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No positions in stocks mentioned.

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