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MV Weather Report: Storm Front from Europe?

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Rain or shine, we review the day's biggest stock stories.

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The focus of today's trading was Europe: Market participants are starting to wonder if Eastern Europe is going to collapse. Milton Freedman famously stated that the euro wouldn't make it through its first recession - and investors are starting to pay attention.

The US markets closed unchanged, just like our friends overseas. Washington also dominated the headlines as traders tried to interpret the stimulus plan, the bank bailout plan, and the recently announced foreclosures plan. A popular thought in Minyanville: The market may be waiting to see how bad assets are going to be valued.

A decision by the government on mark-to-market accounting would ease a lot of uncertaintym whoch could lead to a nice rally in bank stocks. Notice that the larger US banks (Wells Fargo (WFC), Bank of America (BAC), JP Morgan (JPM), and Citigroup (C)) are all trading near their 52-week lows.

The flip side: What will be the next shoe to drop? According to Bennet Sedacca, it will be money-market funds.

"As I mentioned in my article yesterday, they're one of the problem children. Many funds have put up 'gates' and restricted withdrawals. A few have broken the buck. Some are even being subsidized buy companies that may be doomed for failure (Legg Mason (LM) and Suntrust (STI) come immediately to mind)."

Bulls and bears will be battling for position again tomorrow as Hoofy and his crew try to defend the 741 low again. Early morning trading will be shaped by economic data: the Producer Price Index, initial jobless claims, and continuing claims are due at 8:30 a.m.; leading indicators and the Philadelphia Fed are due out at 10 a.m..

Minyans that like small caps may be interested in some of the ideas laid out by Dave Dispennette on the Buzz today:

"Two stocks that don't have options trading on them that I also like into earnings are NCI (NCIT) who provide network engineering, information assurance, systems development and integration and systems management. The second is Cryolife (CRY) who develop biomaterials and implantable products and provide transplant preservation and distribution services.

"Innerworkings (INWK), Riskmetrics (RMG) and HMS Holdings (HMSY) round out earnings plays for week after the close tomorrow and Friday morning and could be bought ahead of announcements on weakness, as week winds down. I've already added RMG and have an eye on HMSY."


There are obviously a lot of unknowns in the market right now. Wait-and-see may be the best strategy for now.

Have a good night, Minyans!
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No positions in stocks mentioned.

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