Financials Lead Push Higher

The bulls are trying to make a stand as the stock market climbs off the unchanged mark. The financial sector has recovered to a gain of 0.3% after being down as much as 0.7%, which is helping the overall market advance.

Only consumer discretionary (-0.4%) and utilities (-0.03%) remain in the red.

Meanwhile crude oil retreats to a loss of 1.0%, after being up 1.3%. Oil was down as much as 1.5% in overnight trade.

Bear Stearns art

Airlines Outperforming

Stocks are posting solid gains near session highs. The reversal in crude prices is boosting the Amex Airline Index (+3.2%) and the Dow Jones Transportation Average (+1.0%).

Crude oil is currently trading with a loss of 2.3% at $128.01 per barrel. The sharp and unexpected 8.8 million drop in crude inventories was due to temporary delays in crude off-loadings on the Gulf Coast, according to the Department of Energy.

Oil Rebounds

Stocks continue to push lower as selling pressure intensifies. All three of the major indices are now in negative territory, trading just above the morning's worst levels.

The drop in stock prices follows a rebound in oil prices. Crude had fallen below $126 per barrel in early electronic trading, but is now showing a 0.5% gain and trading at $129.50 per barrel.

Oil's rebound has prompted buyers to enter the energy sector (+0.2%), which had been the worst performing economic sector this morning. Now, financials (-1.6%) are underperforming the other sectors.

Oil Dips, Stocks Lift

Stocks have climbed off their session low and are now back into positive ground. Technology (+0.8%) remains the best performing economic sector this session.

San Francisco Fed President Yellen stated that the Fed's rate policy and the fiscal stimulus will lift the economy, while total and core inflation will moderate in the next couple of years. Yellen also stated the financial markets are still far from normal.

Crude prices have fallen back below $130 per barrel.

T. Boone Pickens on CNBC Discussing Peak Oil

Opening Bell 23.5.08

Broad-based selling pressure has suddenly intensified as every economic sector has pushed lower. Oil prices have accelerated and are now trading more than 2.1% higher at roughly $133.60 per barrel.

April existing home sales totaled 4.89 million units, which is down 1.0% from the 4.94 million units sold during March. Economists were expecting April sales to total 4.85 million units, representing a 1.6% decline.

Oil Rises to a Record After Pickens Says Prices May Reach $150

May 20 (Bloomberg) -- Crude oil rose above $129 a barrel in New York for the first time after billionaire hedge-fund manager Boone Pickens said oil will reach $150 a barrel this year because supply isn't keeping up with demand.
Producers are ``running out of oil,'' Pickens, the founder and chairman of Dallas-based BP Capital LLC, said on CNBC today, reiterating comments he made to Bloomberg News on April 29. Goldman Sachs Group Inc. and Deutsche Bank AG also said in the past month that prices would rise.
``It's not just Boone Pickens; just about every big global bank has raised its price forecast in recent weeks,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``When prices last fell below $20 in 2001 there was a surplus. That's no longer the case. There's now a deficit.''
Crude oil for June delivery rose $2.15, or 1.7 percent, to $129.20 a barrel at 12:55 p.m. on the New York Mercantile Exchange after reaching a record $129.60. Prices have doubled from a year ago. A strengthening of the euro against the dollar added to the gains.

Carl Icahn's going after the Yahoo board...

Billionaire investor Carl Icahn is launching a proxy contest to unseat Yahoo Inc.'s board of directors, according to a person close to the matter -- a move aimed at pressuring the Internet company to reach out to Microsoft Corp. to re-start sale discussions.Mr. Icahn plans to nominate 10 directors to replace Yahoo's board before a deadline Thursday, the person said. Mr. Icahn's nominees will include former Viacom Inc. Chief Executive Frank Biondi, who has worked with Mr. Icahn on other proxy fights.Some major Yahoo shareholders have expressed disappointment that the Sunnyvale, Calif., company didn't reach a deal to sell to Microsoft, which withdrew its unsolicited offer May 3. Some shareholders have contacted Mr. Icahn to urge him to take action, said people close to the matter. Reuters previously reported Mr. Icahn's decision to proceed with a proxy effort.

Opening Bell: 15.5.08

G.E. May Sell Appliance Division (NYT) Pretty soon they're just going to be turbines, medical imaging systems, lending, water desalination plants and lightbulbs. And aircraft leasing. And a bunch of other stuff. But still, what's GE without its iconic appliances business. You know, nothing like a good GE fridge to keep the lettuce crisp. Granted, it's not the hottest business. And consumers gravitate to more tony brands these days. Word is that the company could take in $5 billion for the unit, a nice little pad of butter during this economy.

Barclays Profit Falls After $3.3 Billion Writedown (Bloomberg)Another writedown to add to the tally. This time it's $3.3 billion from Barclay's -- no surprise that profit fell in the quarter. And this might not be the end of the story: They could do a raise, and there's a sense that we haven't seen the last of the writedowns. Shares dipped a couple percent on the day.

Opening Bell: 9.5.08

Citigroup considers $400bn asset sale (FT) Citigroup plans to sell 1/5th of its assets, or $400bn worth of goods, as part of a major cost cutting initiative, according to FT. Evidently, the company feels it has "legacy" lines that need to be flensed. I love the use of the word legacy to basically rationalize any flailing operations. Something not doing well? Oh, it's a legacy business, might as well strip it out of your models. All that being said, don't expect CEO Vikram Pandit to announce a breakup of the business --- just a $400 billion sale, that's all.

AIG forced to raise $12.5bn after record quarterly loss

The crisis at American International Group deepened yesterday after $15bn in credit-related writedowns plunged the US insurer into a record quarterly loss, and prompted it to raise $12.5bn to bolster its weakened balance sheet.

Opening Bell: 6.5.08

UBS To Sell Mortgage Assets, Cut Jobs As First-Quarter Loss Nearly $11 Billion (WSJ) More of the same at UBS: Another $11 billion lost. Another $2600 raised. And also a big sale of $15 billion worth of subprime assets, which had a nominal value of $22 billion. Nominal being the operative word there. Though it seems that if every asset that nominally priced at $22 could be sold for $15, it's not the worst gap there is. Or maybe it is the worst.

Goldman: Oil ‘Superspike’ Going To $200 The two things that have always been key circuit-breakers of high oil prices have been a) demand destruction – essentially, when pain at the pump forces consumers reduce their fuel consumption, cooling off prices – and b) a global increase in supply, driven by producers looking to exploit lofty prices that ease as they flood the market with more oil. Guess what? For the first time ever, neither seems to be happening. Which is exactly why oil popped above $120 a barrel yesterday, occasioning the resurfacing of the dire prognostications of one Mr. Arjun N. Murti. Here, his predictions for the turbulent months to come.

S&P futures vs fair value: -6.2. Nasdaq futures vs fair value: -7.8. Stock futures are off their worst levels, but continue to point to a lower start to the trading day. Microsoft (MSFT) may be in preliminary talks with Time Warner (TWX) related to buying AOL, according to the Times of London. Yesterday, Microsoft withdrew its offer to buy Yahoo! (YHOO), although Yahoo CEO Jerry Yang has said he is willing to continue talks, according to Reuters.

Yahoo Shares Set To Plummet

Microsoft (MSFT: 29.24 -0.16 -0.54%) has decided to withdraw its bid for Yahoo (YHOO: 28.67 +1.8552 +6.92%) as the price of $37 per share that Yang and the Yahoo board wanted was higher than the latest revised offer of $33 per share that Microsoft has made. This will probably lead to a blood bath in Yahoo shares on Monday as arbitragers who had bought the shares and expecting to sell them at $31+ will now have to exit their positions in a hurry. Since Yahoo is also traded on the Tokyo stock exchange, the first round of sales will happen there as the market opens on Monday. Even traders who opened positions in the US markets will be short selling on the Tokyo exchange to square their positions. After that, the next round of shorts will come in the pre-market session in the US, and finally when the US exchanges actually open, most of the action may already have taken place.
This could of course be just a negotiating tactic for Microsoft. Yahoo shareholders who see their shares plummet after Yahoo refused Microsoft’s offer will file lawsuits and put pressure on the Yahoo management. Furthermore, with share prices plummeting, Microsoft will be able to buy shares on the open market and possibly launch a hostile takeover at an even lower price. And then they’ll have many options if they still want Yahoo, use shareholder pressure/lawsuits to replace the board, or buy a big enough stake on the open market that allows them to replace the board themselves. In the meantime, the biggest winner will be Google (GOOG: 581.29 -11.79 -1.99%) who can take advantage of the distractions of these two companies to forge ahead with its own business.

Jack Schwager

http://www.fxcmexpo.com/video/jackschwager.htm

Risk Junkies, Unite!

The Fed decision? So passé. Not to be outdone, the Bank of England today is heralding a new era of overpriced risk in the market relative to its fundamentals. Think of it as the unstoppable force against the immovable object. In the summer, the price of risk clocked in at an unsustainable low. These days, it’s just the opposite. By now, we assume you’ve already ravenously devoured today’s superexciting “semi-annual financial stability report” out from the B of E. But did you know this?: Embedded in its bone-dry contents are a coded message, exhorting the risk addicts of Europe who breathlessly thronged to the market this time last year (and have since scattered to parts unknown, probably Spain) to get their sweet cheeks back to Old Blighty.