Two Ways To Play: Rate Cuts Won't Hotwire Economic Engine
Strengthen your portfolio in good times and bad.
Central Banks Pump, But Libor Still Jumps
From Bloomberg: LIBOR, or the London Interbank Offered Rate, climbed 7 basis points today to 4.82%. It's evidence that the cash injections and interest-rate cuts by 10 major central banks are failing to jumpstart the credit markets. In Tokyo, the rate jumped to the highest since 1998 even after the Bank of Japan pumped $30 BILLION into the banking system.
One analyst said fear of counterparty risk is so great that the only banks prepared to lend are the central banks. See Professor Lance Lewis' related Minyan Mailbag: The Gold Disconnect.
From the Bull Pen: Harmony Gold (HMY) is trading higher in the pre-market. Those bullish can set a near term sell stop below $9.50.
From the Bear Cave: Stocks are reaching oversold conditions, so bears are content to sit on the sidelines for now. But the effects of this global credit crunch may be long and severe, and Caterpillar (CAT) near $60 may be a downside option.
GE Profits Falls on Finance
General Electric (GE) reported results for the third quarter. Profits fell 12% to $0.45 a share, down from $0.50 a year earlier. Revenue rose to $47.2 billion from $42.5 billion last year and the company said it will meet its revised profit forecast for 2008.
Because of concerns demand for its products will wane and its finance arm, GE Capital, may not have adequate resources, the stock has lost nearly 50% this year. For more, see Minyan Peter's recent Minyan Mailbag.
From the Bull Pen: Bulls looking for a quick upside trade can look elsewhere. United Technologies (UTX) might be an option near $45. Sell stops can be set below that level.
From the Bear Cave: The global excesses will take time to play out. Bears can consider a downside play in GE on a rally back towards $25.
For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.
Quick Check Around the World
Asian trading closed with the Hang Seng -7.19%, Nikkei -9.62%, Sensex -7.07%, Taiwan -1.45% and Shanghai -3.56%.
Glancing towards Europe, we see the CAC -8.07%, DAX -8.85%, FTSE -7.43%
As of 8:20 a.m. EST, S&P Futures are trading -28 to 884, and Nasdaq futures are -20 to 1252.
A Look At Commodities
Commodities are mixed. Crude oil is -3.78 to 82.81, Gold is +23.6 to 910.40. Silver is -0.260 to 11.610, and copper is +5.75 to 242.40.
The dollar index is up +0.368 to 81.528.
On the Radar
September Import Price Index: -3.0% vs -2.8% consensus; year over year +14.5% vs +12.2% consensus
August Trade Balance: -$59.1billion vs -$59.0 billion consensus, revised to -$61.3 billion from -$62.2 billion
Good luck today.
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