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Market Close

A sideways trading day with no conviction in either direction. However at the end of the day there were more nervous holders who sold off before the day ended.

The day started with more write downs, this time from Morgan Stanley (MS) who announced their losses have now added up to $9.4 Billion. And have in an attempt to get much needed cash they have accepted a $5 Billion Dollar investment from China. There is much discussion about the recent investments by foreign countries into our financial institutions. A discussion that perhaps we will tackle on another post, but for now the American financial institutions are hurting for cash.

And another sign of the dire need for liquidity in the banks came today in the results of the $20 Billion credit facility auction that the Fed’s had put into place. Now mind you this, the government had set aside $20 Billion, and they ended up with 93 bids for money, I said 93. And the amount of money banks were knocking on the door asking for amounted to $61.6 Billion Dollars, three times as much as was being made available. I hope you see the significance of this, this is no small event. It means that banks went begging for $61.1 Billion dollars in order to maintain liquidity. Do you know what happens when a bank does not have liquidity? It means a bank will close and not be able to provide money to account holders and provide lending. Every time you read that liquidity is being added to the financial system you must be aware of the significance of the event.

Sallie Mae (SLM) had some dire news today about it’s health going forward and they got cut at the knees. In a very unusual event during the conference call today, the CEO said that next month the analysts will need to "pass through a metal detector" before entering the meeting. Not the kind of things you want to hear from the CEO of a financial company. The "reading between the lines" is that they will have some very bad news in the future and is why they got cut down substantially today.

Standard & Poors today cut the outlook on the bond insurers, MBIA (MBI) and Ambac (ABK) by lowering the outlook to ‘negative’.

In the nightly commentary to be posted later tonight, I will go over the charts which I was unable to do last night due to a network outage. And we will present a chart that does not get talked about very much.

After hours Oracle (ORCL) had nice earnings and tomorrow we will need to see if it sells off on the news or not. If we see a lot of selling on their upside earnings then we have additional reasons to be concerned about the markets.

See you later tonight…