Grumpy Editor

Stock market slips: ‘China fears’ or simply profit taking?

Sensitivity of the stock market these days, since the Dow Jones Industrial Average recently moved above 13000, was illustrated when wire and broadcast reports throughout yesterday mentioned stocks slip "on China fears” or “worries over China’s economic outlook,” sending the market tumbling 68.94 points to 13170.19,” observed Grumpy Editor.

So what were those worries over China that sent the Dow lower for the second time in 10 sessions?  

The “China fears” stemmed from a comment Monday in far-off Perth, Australia, from Ian Ashby, president of iron ore operations of Melbourne, Australia-based BHP Billiton, Ltd., the world’s largest mining firm (and listed on the New York Stock Exchange).  He said his company was seeing signs of "flattening" iron ore demand from China.

But then, Ashby went on to say iron ore demand would ''grow strongly'' in the next decade and consumption would advance more than 3 percent globally over the next eight years. 

And what about the softening in China demand?

That would not happen until after 2025, said Ashby.

Yet, what investors heard triggered concern, said news reports, sending the Dow averages lower.

In the past, a drop in the Dow from a series of major gains would be attributed simply to profit taking.

 

Lengthy Medicare paragraph features a load of ( )s

If you think some newspaper paragraphs run too long, just try to follow what’s going on with this Medicare provision, as pointed out in the Wall Street Journal, urges Grumpy Editor. 

As unearthed by WSJ writer Joe Palazzolo in Friday’s WSJ:

"In the case of a plan for which there are average per capita monthly savings described in section 1395w–24 (b)(3)(C) or 1395w–24 (b)(4)(C) of this title, as the case may be, the amount specified in this subparagraph is the amount of the monthly rebate computed under section 1395w–24 (b)(1)(C)(i) of this title for that plan and year (as reduced by the amount of any credit provided under section 1395w–24 (b)(1)(C)(iv) [2] of this title)."

Clear enough?

Nothing simple with many government texts.

Makes one think the writers get paid by the word --- or symbol.

Palazzolo also points out the Dodd-Frank financial law runs 2,300 pages while President Barrack Obama’s health-care law fills more than 900 pages.

Perhaps, in efforts to keep word volume shorter, more former tabloid newspaper staffers --- brought up to “write tight” --- should be called on to assist with authoring legislation.

 

WSJ notes ‘quiet’ market before Dow skids 204 points

A Wall Street Journal story sensed a change in direction:  The stock market has been “Quiet…Too Quiet,” as indicated with the headline on the front page of yesterday’s Money & Investing section, notes Grumpy Editor. 

The triple-byline story pointed out the Dow Jones Industrial Average through yesterday reached its 45^th consecutive trading day without a triple-digit decline. 

That marked the longest such streak in six years. 

Coincidence, or otherwise, such as more economic fears about Greece, rising oil prices and even U.S. elections, were cited as sending the market tumbling soon after most readers finished the story. 

The Dow Jones averages closed at 12759.15, off 203.66 points, marking the worst percentage drop since Nov. 23. 

Dealogic, with offices in New York and around the world, came up with figures used in the Journal’s story.  (The data firm describes itself as “a platform used by global and regional investment banks worldwide to help optimize their performance and improve competitiveness.”) 

It pointed out that New York Stock Exchange average daily composite trading volume and the number of U.S.-listed initial public offerings so far in 2012 were below the like year-ago period, while the Chicago Board Options Exchange or CBOE volatility index was near its lowest level in six months.

 

U.S. population grows, wolf enters California, radio talk show replays, Kodak stock sinks, among year-end events

Catching up on some year-end events that Grumpy Editor feels some folks (and editors) may have missed --- 

+ The Census Bureau’s projected U.S. population going into 2012:  312,780,968.  The agency also calculated one birth is expected every eight seconds and one death every 12 seconds in the U.S. 

One would think that with more people contributing to the federal pot, taxes would be lowered much like a going-away office party in which the more participants involved mean less contributions per person toward an outlay for a gift. 

+ A dopey year-end Verizon Wireless move to yank $2 a month for online or telephone payments from each customer lasted a day before the pickpocket idea was shelved.  The “convenience fee” plan immediately triggered a lot of grumbling and complaints from users of Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodaphone Group Plc. 

It followed the bad PR Bank of America received two months earlier when it attempted to impose a $5 monthly fee for debit card use. 

+ Associated Press got excited when a lone gray wolf crossed into California from Oregon.  That warranted an eleven-paragraph report, noting the animal --- wearing a global positioning system collar since February --- had wandered more than 300 miles from its original location.  Last gray wolf spotted in California was killed in 1924. 

+ Radio listeners during the holidays heard much of “best of” (the upscale name for repeats) talk shows.  What talk show hosts and their syndicators seem to forget is that radio is hailed for immediacy.  Year-end airing of such things as preparing for Thanksgiving dinners and other “upcoming” events that have long passed is just plain stupid. 

Guest hosts should be used to keep the focus on current events in a fast-moving world.  It’s an opportunity, too, to develop fresh fill-in talent at microphones. 

+ The stock of once-booming Eastman Kodak Co. closed 2011 at 65 cents a share, compared to the year’s high of $5.85.  The struggling image and printing company’s stock sold for about $30 a share on the New York Stock Exchange as recently as mid-2007.  Its last dividend was in December, 2008. 

Three Kodak directors resigned in December as the company works on shoring up an eroding cash position.

Year-end observations conclude tomorrow.

 

Dow gets jitters around the 12000 level during 2011

Inquiring minds are wondering what’s going on with the stock market's continuous ups and downs this year when the Dow Jones Industrial Average reaches the sensitive 12000 mark after 198.67 points were erased yesterday to close at 11,997.70, once again dipping below 12000 --- then today making another sharp U-turn, observes Grumpy Editor. 

Today's gain, once again putting the Dow above 12000, was helped by a strong consumer sentiment report.

The reason for yesterday's drop: Stocks declined in the final minutes of trading after Germany rejected some of the EU summit draft measures and comments that dashed hopes that the central banks would raise its bond purchases of debt-ridden European nations.

The Dow today zipped across the 12000 line again, up 186.56 points to 12184.26. 

With such a ping-pong market, some eyebrow-raising business editors wondered if other factors are at work here.

With three weeks of trading left in 2011, there’s always the chance of a year-end Santa Claus rally, with the Dow again crossing deep into 12000 territory.

It should be pointed out that the Dow rose above 12000 points for the first time on Oct. 19, 2006.  That’s when the average made it to 12012.

But in 2011 it has been a zig-zag route.

Among times the Dow crossed the 12000 line this year:

UP --- The Dow on Feb. 1 closed up 148 points to 12040, getting above 12000 for the first time since 2008.

DOWN --- Dow dipped below 12000 on June 10, at 11952, off 172.  (This was down from April 29 when the average, at 12810, was poised to crack the 13000 level.)

UP then DOWN --- After an up period, the Dow plunged 266 points on Aug. 2, closing below 12000 again, at 11867.

DOWN then UP --- The Dow on Oct. 22 soared 340 points to 12209. 

DOWN then UP --- After a period below 12000, the Dow on Nov. 30 ascended 490 points to 12045

Stay tuned. 

 

Grumpy Editor lists FOMC’s meeting dates for 2012

Investors, market observers, economists and business writers --- in a period with uncertainty in financial markets --- will be paying close attention to the periodic Federal Open Market Committee meetings during 2012, reminds Grumpy Editor.

Wording in statements following each meeting during the year will be put under the microscope, as clues will be sought from FOMC’s 12 members headed by Chairman Ben S. Bernanke.

Any change in the federal funds rate triggers a chain of events that affect short-term interest rates, long-term interest rates, foreign exchange rates, the amount of money and credit, and, ultimately, a range of economic variables.

That includes employment, output, prices of goods and services plus, of course, the stock market direction.

While business and financial stories in coming months will mention upcoming Fed action, many writers are fuzzy in pinpointing actual dates of FOMC meetings in advance.  Sometimes they come close with “next week” or “next month.”

So, as a guide, Grumpy Editor lists the dates of the 2012 scheduled meetings, including four two-day sessions:

 

January	24-25
March	13
April	24-25
June	19-20
July	31
September	12
October	23-24
December	11

 

Following the meetings (or at the end of two-day gatherings), statements are released to media around 2:15 p.m., Eastern time.

 

General Electric tops stock list with members of Congress

Among investments in publicly-held companies by members of Congress, General Electric Co., the multi-national conglomerate ranked as the nation’s sixth largest firm by Fortune magazine, is the favorite, notes Grumpy Editor.

Seventy five lawmakers held GE stock --- worth at least $3.6 million --- last year, according to Washington, D.C.-based Center for Responsive Politics, which compiled the information based on 2010 financial disclosures. 

Just yesterday, The Weekly Standard reported GE “filed a whopping 57,000-page federal tax return earlier this year but didn't pay taxes on $14 billion in profits.”  The publication pointed out the electronically-filed return “would have been 19 feet high if printed out and stacked.”

Nine billion dollars of GE's profits came from overseas, outside the jurisdiction of U.S. tax law. The company wasn't taxed on $5 billion in U.S. profits because it utilized numerous deductions and tax credits, including tax breaks for investments in low-income housing, green energy, research and development, as well as depreciation of property.

Meanwhile, with President Barack Obama in Indonesia yesterday, the White House announced that GE is signing a contract to sell 50 of its CFM56 engines to the airline Garuda Indonesia for $1.3 billion.

But that was enough to lift GE’s stock --- heading downward in the past week --- which fell lower yesterday, along with the market, to close at $15.64 off 31 cents on the day.

Other popular investments by members of Congress last year, as tallied by Center for Responsive Politics:

Procter & Gamble Co. ranked No. 2, behind GE, with stock worth at least $8.7 million held by 62 lawmakers.

Bank of America Corp. was third with 57 investors holding at least $2.8 million worth.

Tied for fourth place were Microsoft Corp. and Cisco Systems Inc. stocks each held by 56 members of Congress.  Microsoft holdings were worth at least $3.2 million.  Cisco stock was figured to be at least $1.3 million.

Pfizer Inc. was popular with 51 members holding at least $2 million worth.

Stock investments by some members of Congress came under a cloud this week after a Nov. 13 "60 Minutes" report on CBS.

A segment pointed out it is legal for elected officials in Washington to conduct insider trading --- buying and selling stocks based on privileged information received before it goes public.

 

McGraw-Hill also takes stock hit --- via its S&P subsidiary

Only a few business stories in the past few days mention that Standard & Poor’s, which triggered the recent downward movement in stocks with its Friday downgrade of the U.S. government’s credit rating, is a major component of New York Stock Exchange-listed McGraw-Hill Companies, notes Grumpy Editor. 

However, the parent company is keeping its distance from the S&P part of the family. 

McGraw-Hill’s Web site points out its S&P subsidiary’s “rating decision-making process is separate, fire-walled and independent from the rest of our business.” 

And McGraw-Hill, with about 21,000 employees and more than 280 offices in 40 countries, this week underscores that, emphasizing the parent company had no involvement or knowledge of S&P’s U.S. credit rating downgrade. 

McGraw-Hill stock itself isn’t immune from taking a major hit from  the collateral damage. 

Trading around $44 a share a week ago, it closed on the NYSE yesterday at $35.35, down $2.21 or 5.88 percent for the day. 

Aside from S&P, McGraw-Hill’s leading brands include McGraw-Hill Education, Platts energy information services and J.D. Power and Associates. 

Among its media operations:  Aviation Week and McGraw-Hill Broadcasting Group composed of four ABC-affiliated television stations:  KMGH, Denver; WRTV, Indianapolis; KGTV, San Diego and KERO, Bakersfield, Calif.

 

NYSE specialist provides clue on when to sell stocks

Traders consider the president’s approaching televised appearances as a signal to sell, informed a specialist on the New York Stock Exchange trading floor on CNBC yesterday just before President Barack Obama’s latest in a series of TV speeches, observed Grumpy Editor. 

Sure enough, the Dow Jones Industrial Average, already down 400 points at the start of Obama’s speech carried on broadcast and cable TV networks, dropped another 100 points at the conclusion of his comments about 12 minutes later. 

When the market closed about two hours after that, the Dow Jones Industrial Average had plunged 634.76 points or 5.55 percent for the day, ending the day at 10,809.85. 

That put the Dow below the psychologically-significant 11,000 level.

Rather than encouraging words, in efforts to stem the Dow’s plunge, the president blamed the first downgrade in the nation’s credit rating on political gridlock in Washington. 

He said he hopes the downgrade will give Washington lawmakers a new sense of urgency to tackle long-term deficit spending, adding he did not believe reductions could be carried out with spending cuts alone. 

Obama then went into recycling recent repeated talking points, including the need for tax reform, paying fair share, jobs to combat the “slow pace of recovery” and the need to raise taxes on wealthier Americans.

"Markets will rise and fall, but this is the United States of America,” Obama declared.  “No matter what some agency may say, we have always been and always will be a triple-A country.” 

“Our problems are imminently solvable,” he said.

For many investors, however, that was not enough.

 

Financial writers overlook BofA’s zig-zag stock action

It’s rather rare that a New York Stock Exchange-listed company is spotlighted under good news, then bad news within 24 hours in The Wall Street Journal, but that was achieved by Bank of America, the nation’s largest bank by assets, notes Grumpy Editor.

The zig-zag action illustrated how fidgety investors are these days. 

BofA’s quick up-and-down movement was missed by financial writers who focused on the market’s blue chips ending June with a win, boosted by a nearly 480-point gain last week that saw the Dow Jones Industrials end the second quarter up 0.8 percent. 

On June 30 in the Journal’s “Stocks in the News” feature, which lists four news-making stocks in both “The Good News” and “The Bad News” categories, BofA made it under the former with a 32-cent gain, up 2.96 percent to $11.14 following word that it reached an $8.5 billion settlement with holders of soured mortgage-backed securities. 

Then the next day, BofA was among the four featured news makers in “The Bad News” category, slipping 18 cents or 1.62 percent to $10.96. 

That made BofA the worst performer among the Dow Jones Industrials on that day. 

The drop was attributed to investors taking a second look at the soured mortgage securities settlement.