Page Perry's Market Monitor - December 19 , 2008
There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
• On Monday, the Dow Jones Industrial Average fell 65 points.
• On Tuesday, the Dow Jones Industrial Average advanced 360 points.
• On Wednesday, the Dow Jones Industrial Average dropped 100 points.
• On Thursday, the Dow Jones Industrial Average tumbled 219 points.
• On Friday, the Dow Jones Industrial Average fell 26 points and closed the week at 8579.
• The creation of jobs remains the biggest problem facing the Obama administration. Unfortunately, this problem is expected to grow larger after the first of the year when the retail sector is expected to eliminate thousands of jobs.
• In a recent survey conducted by the Business Roundtable, 60% of CEO’s said that they planned to cut jobs in the next six months.
• Electrolux has announced it will lay off 3,000 employees.
• Electronic Arts is closing nine facilities and cutting 1,000 jobs.
• Newell Rubbermaid plans to eliminate 800 to 1000 jobs.
• Sovereign Bancorp will eliminate 1,000 jobs.
• Bristol-Myers announced plans to cut another 10% of its workforce.
• Eastman Chemical plans to slash costs by $100 million primarily by cutting jobs.
• Woolworths which filed for bankruptcy protection earlier this year may be forced to close early next year. If so, 27,000 jobs could be lost.
• Omnicon announced that it would cut 3,000 jobs worldwide.
• Libor (the London interbank offered rate) fell to its lowest level since September of 2004.
• Toyota halted plans to begin producing cars at its new Mississippi plant in 2010.
• Air travel over the holidays is expected to be 9% lower than last year due to the struggling economy.
• Chrysler announced that it was closing all 30 of its plants from December 19, 2008 until January 19, 2009. GM and Ford are taking similar actions.
• GM and Chrysler received a $13.4 billion loan from the government.
• A recent USA TODAY/Gallup Poll found that 60% of the people polled believed that the U.S. was in the worst economic crisis of their lifetime. Moreover 79% of those polled worried that the country would experience a depression.
• The Fed cut the federal funds rate from 1% to a range of 0% to .25%.
• Morgan Stanley reported a fourth quarter loss of $2.36 billion.
• Hedge Fund Research reported that 344 hedge funds were liquidated in the third quarter of 2008.
• Redemption requests at hedge funds have increased so much in recent weeks that at least 75 funds are limiting redemptions.
• Personal savings in the U.S. rose 1.3% in the third quarter.
• Morningstar’s Ibbotson Associates reported that, as of October 31, 2008, long-term corporate bonds were down 18% this year.
• USA TODAY reports that at least one in seven homeowners in the U.S. now owe more on their home than the home is worth. Moreover, Moody’s Economy.com projects that home prices will drop another 10% on average.
• The business press has been flooded in recent days with articles regarding the $50 billion “Ponzi Scheme” involving Bernard Madoff. This disaster is just another example of the devastation suffered by investors as a result of securities law deregulation and lax securities enforcement.
Page Perry’s Market Monitor is published periodically to give investors an overview of certain recent developments impacting the economy and/or the investment markets.
