The word of the day is "volume", and the lack thereof. The volume has fallen way off in the past two days as market sentiment has once again turned negative. The ‘pumping’ of the markets has worn itself out rather quickly it would appear as the retail investors have placed their bets and are now watching the roulette wheel slowly stop spinning and they are afraid it will not land on their color. Looks like the ball may land on "RED".

With the horrible economic data that we received today (consumer confidence and the home price data) the money flow into equities has yet again tapered off as fear is growing again. I can’t stress how significant the consumer confidence data from this morning is. If you want to know how the average person in the United States is spending their money, or not in this case, all you have to do is look to the confidence data, which has done a fairly good job over the years of predicting recessions. And today’s data reveals that consumer spending is (and will be) down huge. The idea of buying retail stocks because the "bad news is already baked in" is not true. Earnings estimates from retail stores has only begun to reflect the curtailment in consumer spending.

Home price declines continues on a steep and slippery slope downward. Tomorrow we will get new home sales data. I suspect that the new home sales data may actually show a slight up tick because the home builders are desperately trying to unload inventory that they have been paying taxes on for months and are selling them are nearly break even prices just to unload them. But an up tick in new homes data is actually bad for the overall market as it takes what few buyers there are out there away from existing home sellers. Which will continue to bring the overall prices down further. Should the new home sales data actually be lower than boy oh boy the market is really screwed then. Either way, existing home sales data is more important to the general health of the housing market then data from new home builders. But tomorrows data will be interesting nonetheless.

I have a request for technical analysis of a stock which will be at the bottom of tonight’s commentary.

I think the best way to sum up how the overall market is doing tonight is to provide you with some news bites off the wires. These are all from tonight, after the market closed today.

• From Merril Lynch: The consumer confidence numbers "imply deep consumer recession," said David Rosenberg at Merrill. "The headwinds blowing against the US consumer suggest that consumers are on the verge of the worst downturn since the 1970s." Adds: Fed rate cuts "and $300 rebate checks from Uncle Sam are proving no match for rocketing pump prices, intensifying real estate deflation, the worst financial crisis in decades and a deteriorating economic and employment backdrop." He also feels that consumer stocks are "not even priced for an average recession".

• Lynn Franco, director of the Conference Board consumer research center: "Consumers’ confidence in the state of the economy continues to fade and the index remains at a five-year low." Adds: "Looking ahead, consumers’ outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon. The expectations index, in fact, is now at a 35-year low, levels not seen since the (1973) oil embargo and Watergate."

• ACCORDING TO THE ABX INDEX -  SUBPRIME MORTGAGE DEFAULTS ROSE IN FEB - WIRES
  - According to analysts at Wachovia, in Feb about 33% of loan balances backing 20 sub prime bonds created in H1 of 2006 were in default (+2.2 percentage points from Jan)
  - In Jan the default rate rose also by 2.2 percentage points m/m

• MORGAN STANLEY HAS SHELVED THE SALE OF ITS 34.3% STAKE IN CHINA INTERNATIONAL CAPITAL CORP IN ITS CURRENT FORM - SOUTH CHINA MORNING POST
  - The move follows weak bidding interest.

• Japan - Exports to the United States have fallen to -6.0% y/y , the 6th consecutive decline

• THE FINANCIAL TIMES  NOTES THAT BANKS ARE STILL HOARDING CASH, DESPITE RECENT ACTIONS FROM CENTRAL BANKS
  - Banks’ borrowing costs in the US, Eurozone and UK rose again even after the Fed’s recent moves

• ACCORDING TO MERRILL, WACHOVIA WILL PROBABLY HALVE ITS DIVIDEND LATER IN 2008 OR DURING H1 OF 2009 DUE TO INCREASES IN LOAN LOSS PROVISIONS.

• DATA FROM THE RECENT FEDERAL RESERVE ‘TAF’ AUCTION: NUMBER OF BANKS REQUESTING FUNDS WAS 88, UP FROM 82 DURING THE LAST TAF AUCTION. AMOUNT OF MONEY BEING REQUESTED FROM THE FED WAS $88.86 BILLION US DOLLARS, THE FEDERAL RESERVE WAS ONLY OFFERING $50 BILLION.

• OPPENHEIMER REVISES EPS ESTS FOR BAC, C, JPM AND WACHOVIA:

BANK OF AMERICA’S Q1 EPS EST CUT TO $0.35 FROM $0.92;

REVISES CITIGROUP’S Q1 LOSS EST TO -$1.15 FROM -$0.28

JPM Q1 EPS est cut to $0.70 from $0.86

WB Q1 EPS est cut to $0.55 from $0.78

Overall , Oppenheimer said that it is confident that this will not be its last reduction in earnings forecasts in 2008 for the US financial sector

• GARTNER CUT ITS 2008 GLOBAL PC SHIPMENTS FORECAST; WARNS OF ADDED REDUCTIONS TO ITS FORECAST - WSJ

 

Chart for Partner Communications (PTNR)