Closing Bell: Obama Takes The Wheel, Butt Better Seated In The Backseat Of Larry Sinclair’s Limo

March 30th, 2009 Posted By Pat Dollard.

Yeah … THAT worked out well.

Obama … Best seated in the backseat of a limo … pants down around his ankles.

WSJ:

GM, Banks Lead Stock Drop

By PETER A. MCKAY and ROB CURRAN
Stocks fell sharply as turmoil in the auto industry and depleted hope for financial and economic stability eroded much of the market’s March gains.

Over the weekend, the Obama administration forced out the chief executive of General Motors after the administration’s auto task force determined neither GM nor Chrysler put forward viable plans to restructure and survive. Monday, the administration was reported to be pushing bankruptcy as the lead option for the auto makers. Chrysler is closely held.

Sunday, Treasury Secretary Timothy Geithner signaled some banks are still ailing and will need further government aid.

At 3:10 p.m, the Dow Jones Industrial Average was down about 294 points as all of its components declined. GM shares fell more than 30% and its banking components were all sharply lower.

Strategist Bill King, of M. Ramsey King Securities in Burr Ridge, Ill., said investors are skeptical that the government can engineer a turnaround for the car makers. “These guys have no experience running factories and getting their fingernails dirty,” said Mr. King. “But at the same time, you have them running bigger and bigger chunks of the economy.”

The S&P 500 fell 3.8%. Industrial, energy and other economically sensitive sectors dropped as investors unwound bets that such companies could benefit from a recovery in the economy. Recent data on housing and durables orders had led some to argue that the economy is stabilizing, but a draft communique from the G20 suggested the global economic slowdown could last through the end of 2010.

“Some confidence was coming back into the market recently,” said William Lefkowitz, chief derivatives strategist at vFinance Investments. “Now, it’s a 50-50 market, half negative half positive.”

Shares of parts makers including Lear and Goodyear Tire & Rubber declined sharply. Alcoa, the aluminum maker, was down 14%, and U.S. Steel plunged 13%. Caterpillar, the maker of heavy equipment, declined 9%. Crane maker Manitowoc warned it would miss estimates because of a drastic slowdown in construction projects. Its shares dropped more than 33%.

The Nasdaq Composite Index declined 3.1% as tech stocks sank nearly across the board.

The return of broad economic unease to trading floors also triggered selling in commodities. The front-month crude-oil futures contract dropped 8% to settle at $48.41, the lowest mark in about two weeks. Crude is still up more than 8% for the month.

Financial stocks were also a drag on the market. Mr. Geithner said Sunday on the ABC News program “This Week” that “some banks are going to need some large amounts of assistance.” Bank stocks had soared after Mr. Geithner earlier this month unveiled the government’s plan to partner with private firms to buy toxic assets from banks, thereby freeing up their balance sheets to make loans.

Some traders had questioned the recent rally in banking stocks, noting banks’ credit spreads hadn’t improved. On March 9, the annual cost of protecting $10 million of Citigroup’s senior bonds against default for five years was $621,000, according to MarkIt. Three weeks later, the same protection cost $630,000. Thay lack of “confirmation” unnerved institutional investors.

“When we see that kind of inconsistency, [it] makes us a little more skeptical than usual,” said equity trading strategist Craig Peckham.

The selling followed a weeks-long rally in which markets had rebounded on hopes that the economy may be beginning to moderate. The Dow industrials climbed 19% above the bear-market lows of early March and notched a third straight week of gains last week.

But traders had pointed to a number of obstacles for stocks. Companies will start reporting first-quarter results in the coming weeks and many are bracing for bad news. Last week, some banking executives said that after a strong start to the year, March had been more difficult.

Investors are also looking ahead to the outcome of this week’s G20 summit and a report on U.S. employment during March due for release Friday. Accounting overseers are also expected to issue new guidance on mark-to-market rules this week.

“We simply do not believe that the market has completely priced in the prospect of further earnings weakness or that it will, without interruption, look through this weakness to recovery,” Morgan Stanley strategist Jason Todd wrote in a note to clients.

The renewed anxiety in equity markets Monday pushed many investors into bonds. The 10-year Treasury note rose 14/32, pushing its yield down to 2.71%. The Chicago Board Options Exchange’s Volatility Index, which uses options prices to gauge investors’ level of nervousness about upcoming market swings, leapt more than 12% on Monday.

FOX:

Auto Fears Grip Wall Street; Dow Falls 300

by Matt Egan

Fears about the future of the U.S. auto industry and more concerns about banks blanketed Wall Street on Monday as the Dow plunged 300 points, giving back a chunk of last week’s huge gains.

Today’s Markets

As of 2:55 p.m. EDT, the Dow Jones Industrial Average slid 313.82 points, or 4.04%, to 7463.32, the S&P 500 lost 33.33 points, or 4.08%, to 782.50 and the Nasdaq Composite sank 54.32 points, or 3.52%, to 1490.88. The consumer-friendly FOX 50 fell 24.47 points, or 4%, to 587.94.

“People are looking at the distinct possibility that one or both [auto makers] will cease to exist,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research. “That’s enough to spook the markets.”

The markets were also under significant pressure from banking stocks like Citigroup (C: 2.35, -0.29, -10.98%) as traders fret about the potential for more government aid.

Nearly all 30 components of the Dow were in the red, led by double-digit dives from General Motors (GM: 2.705, -0.915, -25.28%), Bank of America (BAC: 6.08, -1.27, -17.28%) and Alcoa (AA: 6.69, -1.11, -14.23%). On the other hand, Johnson & Johnson (JNJ: 53.08, 0.29, 0.55%) and IBM (IBM: 94.6, 0.496, 0.53%) flirted with positive territory.

The ugly start to the week comes after the Dow surged nearly 500 points last week, capping its first three-week win streak since May. Amid new government rescues and rare signs of hope for the economy, the beaten-down Dow soared 17.34% over that span, its best three-week gain since Sept. 1982.

“You had a very significant rally over a very short period of time. That rally met a point of resistance,” said Sparks, pointing to the S&P’s 80-day moving average. “We were overbought to some degree.”

Auto Fears Hover

Shares of General Motors (GM: 2.705, -0.915, -25.28%) took a double-digit dive after the U.S. said GM and Chrysler’s restructuring plans do not go far enough to make the auto makers viable. The government, which did not rule out bankruptcy, is giving GM 60 days to reach new concessions with the union and bondholders.

The U.S. also pushed out GM CEO Rick Wagoner, who had led the auto maker since 2000 and will be replaced by Fritz Henderson, GM’s chief operating officer.

“The government is taking a more heavy-handed approached. The market never sees that to be good,” said Frank Davis, director of sales and trading at LEK Securities.

The White House said it is prepared to withhold any additional aid if Chrysler, which is owned by private equity firm Cerberus Capital Management, is unable to finalize a partnership with Italian auto maker Fiat by April 30. Chrysler said Monday it reached an agreement on a framework for a global alliance with Fiat that has the blessing of the U.S.

Bankruptcy on the Horizon?

GM said Monday afternoon it will take whatever steps are necessary to successfully restructure the company, including court-supervised process. But there was growing skepticism amongst traders about the ability of the auto makers to quickly reorganize and worries about potential ripple effects stemming from bankruptcy filings.

“This will be devastating in the short term; to many lives, to the stock market, to our economic performance. But in the long term, our country will benefit from more productive and innovative companies which no doubt will spring up to take the place of GM, Ford and Chrysler,” Dan Greenhaus, equity analyst at Miller Tabak, wrote in a note.

Banks, Energy Dive

Meanwhile, financial stocks tumbled 6% as a sector and banks like Morgan Stanley (MS: 22.12, -2.28, -9.34%) , Citigroup (C: 2.35, -0.29, -10.98%) and Bank of America (BAC: 6.08, -1.27, -17.28%) fell even harder after Treasury Secretary Timothy Geithner said on ABC’s “This Week” that some banks are going to need “large amounts” of additional government aid to stay afloat.

Energy stocks were under almost as much as pressure as banks as names like Valero (VLO: 17.7399, -1.3312, -6.98%) and ConocoPhilips (COP: 39.08, -1.3012, -3.22%) tanked after crude oil plunged below $50 per barrel. Slammed by a stronger dollar, crude oil tumbled $3.93per barrel to $48.45. Gold was also under pressure, falling $3.60 per ounce to $921.70.

Fears about the length and depth of the 16-month recession were also evident as shares of basic material companies like aluminum maker Alcoa (AA: 6.69, -1.11, -14.23%) and U.S. Steel (X: 21.5, -2.788, -11.48%) plunged.

At the same time, the start of earnings season looms large over Wall Street as expectations are for many companies to report steep drops in profit due to the recession.

Corporate Movers

Lincoln National (LNC: 6.49, -3.87, -37.36%) lost nearly half of its market value after the life insurer voluntarily withdrew its bid to receive U.S. aid. Lincoln also reached a reinsurance deal with a Goldman Sachs (GS: 100.66, -7.47, -6.91%) unit in an effort to boost its capital.

General Growth Properties (GGP: 0.55, -0.1199, -17.9%), the second-largest U.S. mall owner, failed to reach support for a nine-month reprieve from bondholders, raising fears of a bankruptcy filing. The company said it remains in talks with some bondholders.

Eli Lilly (LLY: 32.84, -0.91, -2.7%) CEO John Lechleiter told The Wall Street Journal he is still “hungry” following the drug maker’s buyout of ImClone and is eyeing a takeover worth $5 billion to $15 billion. However, Lechleiter ruled out a megadeal like Pfizer’s (PFE: 13.7, -0.33, -2.35%) $68 billion deal takeover of Wyeth (WYE: 43.02, -0.07, -0.16%).

Sara Lee (SLE: 8.13, -0.11, -1.33%) said it may sell its international household and personal care business after receiving some interest from potential bidders. The company didn’t say who might be interested.

Fifth Third Bancorp (FITB: 2.48, 0.13, 5.53%) avoided the financial selloff as the bank reached a deal to sell 51% of its payment processing unit to private equity firm Advent International for $561 million. Fifth Third will spin off the business into a joint venture worth $2.35 billion and give the unit $1.25 billion in loans.

Global Markets

European stocks tanked, suffering their worst one-day losses in several weeks. London’s FTSE 100 dropped 3.49% to 3762.91, Germany’s DAX slid 5.1% to 3989.23 and Paris’ CAC 40 fell 4.27% to 2719.34.

In Asia, Tokyo’s Nikkei 225 plunged 4.53% to 8236.08, Hong Kong’s Hang Seng tumbled 4.7% to 13456.33 and China’s Shanghai Composite fell 0.7% to 2358.04.

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9 Responses to “Closing Bell: Obama Takes The Wheel, Butt Better Seated In The Backseat Of Larry Sinclair’s Limo

  1. MinneSoCold

    More “Change you can believe in”

  2. Paslode

    Not to be a prick, but I quit caring about ‘The Street’ and is mystical powers long ago. Anymore all it is, is a Smoke and Mirrors parlor trick were people get sucked back in because ‘Things are looking UP’, then the someone sells alot of shares, takes the profit and Joe Blow is left holding the empty bag.

    And I feel it is especially true at present time with someone or something trying to make our Chicken George in the white House look better than he is…..it is artificial stimulation.

    I ain’t saying I am right, it is just my opinion.

    • Boss-man says it’s daily news … gotta cover it.

      Besides, today was very “telling”, if not highly expected in reaction to the Obama bullshit.

      A man who NEVER held a fucking job in his life now has full control over an industry that has been one of the main arteries of this nation’s (and by that the world’s) lifeblood.

      We are bleeding to death …

    • GRIZZ

      From a hemmoroid

    • Paslode

      FTR-I am not complaining about posting it, the need to post it or the importance of it. Just thinking out loud :mrgreen: I just have an issue with mythical beings such as ‘The Street’ and ‘The Law’ being treat as living entities.

  3. GRIZZ

    Hemorrhoid.Sorry.

  4. American Woman

    His plan sure is working :roll: and we will be the ones to suffer the consequenses.

    Hey what happened to ol Larry?? And speaking of gay lovers, what ever happened to the murdered gay choir boy from obongos church? no investigation….hmmm :shock: weird.

  5. Ivan the Kafir

    1. Save your own money.
    2. Make what you can’t buy or afford to buy.
    3. Do without if you can’t afford it.

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