| Market Summary |
Wall Street picked up the pace on Monday and jumped higher as financial shares boosted the market. The Dow Jones Industrial Average added over 180 points to finish at 8,325.10. Broader stock indicators also performed relatively well. The Standard and Poor’s 500 Index added 21.92 points and the Nasdaq added 37.18 points. The session started off a little shaky, but by mid-afternoon stocks began making solid advances. Positive comments from banking analysts Meredith Whitney regarding Goldman Sachs (GS: Charts, News, Offers) and Bank of America (BAC: Charts, News, Offers) contributed to the session’s momentum. Investors still prevented the market from surging ahead of earnings reports due out this week. Johnson & Johnson (JNJ: Charts, News, Offers), Google (GOOG: Charts, News, Offers), IBM (IBM: Charts, News, Offers), and General Electric (GE: Charts, News, Offers) are just some of the big companies slated to report their second-quarter results this week. In other news, the federal budget deficit increased last month and now has surpassed the $1 trillion mark. U.S. light crude oil for August delivery fell 42 cents to $59.47 a barrel on the New York Mercantile Exchange. The dollar was mostly lower against other major currencies and gold prices rose.
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| Market News |
CIT Bonds Fall on Concern It Won’t Meet Debt Payments
CIT Group Inc. (CIT: Charts, News, Offers) bonds plunged on concern that the century-old lender, which has been unable to persuade the government to back its debt sales, won’t be able to meet its credit obligations. CIT’s $1 billion of floating-rate notes maturing in August plummeted 17.875 cents to 76.5 cents on the dollar as of 1:19 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The stock declined 29 cents, or 19 percent, to $1.24 in New York Stock Exchange composite trading. A CIT collapse would put 760 manufacturing clients at risk of failure and "precipitate a crisis" for as many as 300,000 retailers, the New York-based lender said in internal documents obtained by Bloomberg News that make the case for its importance to the U.S. economy. (Source: Bloomberg) Click here to read the full article
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Judge grants delay in UBS tax case
A federal judge in Miami agreed Monday to postpone an internationally watched trial in order to give the Justice Department and Swiss banking giant UBS (UBS: Charts, News, Offers) time to seek a settlement of Washington's demands for the identities of 52,000 wealthy U.S. clients suspected of tax evasion. U.S. District Judge Alan Gold granted the delay until Aug. 3 that both sides in the case requested Sunday, on the eve of a key evidentiary hearing that had been scheduled for Monday. The request marked the first time the parties had publicly acknowledged settlement talks in a case that has strained U.S.-Swiss relations, cracked Switzerland's reputation for banking secrecy and shaken the private banking industry. (Source: USA Today) Click here to read the full article
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Investor values Facebook common stock at $6.5 billion
Russia's Digital Sky Technologies said it will pay $14.77 a share for Facebook common stock, boosting its stake to as much as 3.5 percent and valuing the world's largest online social network at about $6.5 billion. While that is below the $10 billion valuation set by Digital Sky's May investment in Facebook, which was for preferred shares, investors have been valuing the social network's common stock at less than $5 billion in secondary markets in recent weeks. Digital Sky, a Russian investment firm, bought $200 million worth of preferred shares in Facebook in May and said it would buy another $100 million worth of common shares from Facebook employees and ex-employees. (Source: Reuters) Click here to read the full article
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| Market Analysis |
Bears: Exit Stage Left
A notable phenomenon of this past year of living dangerously in financial markets has been the triumph of the ultrabears: deeply pessimistic commentators and economists, such as Nouriel Roubini, who previously had only niche followings and have been propelled to rock-star status. Million-dollar book deals, speeches at Davos, celebrities and statesmen lapping up your predictions of woe, gorgeous babes clustering around you--it's nice work if you can get it. Am I jealous? Absolutely. More important, what does this runaway bull market in doom-mongering tell us about current investment prospects? To any contrarians worth their salt, it suggests that sentiment has reached extremes, as it did in the dotcom mania of the '90s. Back then, the talk was of "Dow 30,000" and the coming digital paradise. Now we hear confident forecasts of gold at $3,000, the collapse of the dollar, and the end of capitalism itself. (Source: Newsweek) Click here to read the full article
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Why creating jobs is so hard
Vice President Joe Biden recently acknowledged the administration's misreading of the weak economy. In view of his comments, I would like to update readers on my three-baseball-game analogy (introduced Nov. 3, 2008, in "Economy sinks as we save bankers") and note where we are now: Although we've managed to put the financial crisis behind us, the reality of the economic crisis is slowly becoming clearer to more and more people. (Source: MSN Money) Click here to read the full article
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The Real AIG Controversy
Don’t lose sight of the real scandal in the latest AIG (AIG: Charts, News, Offers) bonus controversy-the fact that the US Treasury under former secretary Henry Paulson used your money to make whole Wall Street firms who had bet against AIG, 100% whole, 100 cents on the dollar. The news breaking now is that AIG is forking over another round of bonuses and that the administration’s newly appointed pay czar can’t do a thing about the payouts, up to $450 mn in bonuses for employees in AIG’s financial products unit. AIG is asking the White House’s new pay czar whether it’s okay to pay $235 mn out of that $450 mn in bonuses for workers at its financial products unit. (Source: Fox Business) Click here to read the full article
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