Before the Bell: Merrill's Losing Streak; African Oil Issues
Nigerian oil output could drop a third by 2015.
Merrill Lynch (MER) posted its third straight quarterly loss of -$2.20 per share, $0.21 worse than consensus estimates of -$1.99. According to the WSJ, the company recorded another $9 billion in writedowns on mortgage-related assets and other securities. Merrill's revenue, including the writedowns, dropped 90% to $825 million. CEO John Thain said that, despite the loss, the company remains well-capitalized with over $82 billion in its excess liquidity pool. "In addition, our global franchise is positioned strongly for the future." For context, read Minyanville Editor Andrew Jeffery's column More Merrill Writedowns.
From the Bull Pen: Although the losses look grim, bulls interpret the numbers positively for the financials and can look to the upside in Goldman Sachs (GS); sell-stops below $162.
From the Bear Cave: Bears can use the Ultrashort Financial ETF (SKF), which tracks twice the inverse of the D.J. U.S. Financials Index. Sell-stops below $100.
Another Nigerian Nightmare
According to FT, energy advisers to Nigeria President Umaru Yar'Adua warned that the country is at risk of losing a third of its oil output unless it finds ways to boost investment in joint ventures with foreign companies. Their report finds funding issues present a danger to the reform process as well as "the continued well-being of the industry as a whole." Even if funding levels are maintained at current levels, "total oil and gas production will decline by 30% from its current level by 2015." Amongst the biggest obstacles is the failure of the government to pay its share of costs. Shell recently said these issues were putting the company's joint venture with the government at risk. See Professor Adam Michael's Trends Affecting Oil Price.
From the Bull Pen: Bulls see $100 as being cheap and can use the oil ETF (USO) with sell-stops in the near-term below $90.
From the Bear Cave: Those bearish can use the Ultrashort oil and gas ETF (DUG), which tracks twice the inverse of the D.J. oil and gas index; sell-stops can be set below $30.
For more ideas, check out Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed with the Hang Seng +1.59%, Nikkei +1.92%, Sensex +1.46%, Taiwan +0.27% and Shanghai -2.09%.
A quick check of European bourses has the CAC -0.26%, DAX -0.05%, FTSE -0.84%, ATX +1.00%, Swiss Mkt. -0.48% and Stockholm -0.61%.
A Look At Commodities
Commodities are mixed. Crude oil is down -0.38 to 114.55. Gold is lower -2.3 to 942.80. Silver is higher +0.050 to 18.375, and copper is up +1.45 to 400.25.
The dollar index is up +0.242 to 71.650.
On the Radar
Initial Jobless Claims: 372 k vs. 357 k prior.
Continuing Claims: 2984 k vs. 2940 k prior.
10:00 Leading Indicators: 0.1% cons.
10:00 Philadelphia Fed: -15.0 cons.
Click here for the full trading radar.
Good luck and have a great day!
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