Al, Al, He's Our Man, If He Can't Save Us, No One Can.
Bill Fleckenstein's Market Wrap
06:00 PM 12|11|2001
[Editor's Note: The Rap will be on holiday from December 15 through January 1. It resumes publication on Wednesday, January 2.]
Knit One, Purl Two, Ease Twenty-Five The world was rather quiet last night, but our futures had a slight bid nevertheless, which translated to a rally right out of the blocks as the casino opened for business. As was the case yesterday, the Nasdaq showed considerably more strength than the other indices, up about 1% in the early going, while the S&P and the Dow were up about 0.25%. Once again, the lead sled dog was -- yes, you guessed it -- the mighty, mighty Sox, up 2.5%, while the other speculative plaything, the biotech index, was taking a breather after yesterday. Other than this upward if not earth-shattering bias, there is little to report about the early-going action. Suffice to say that people took up their knitting as they marked time in front of the good news from Easy Al & Company.
Merck Lowers Its Cholesterol 10% The early-morning lethargy essentially extended all day, until we got to the magic moment when the financial markets received their edict from the merry pranksters at the Fed. That produced a rally and a tiny sell-off, followed by one more rally that took us to the highs of the day, at which point the Nasdaq was up almost 2%. And then, Merck released the bad news that next year's earnings would be flat to this year's, which was good for about a 10% hit. The ensuing sell-off in the last couple hours took the wind out of the punters' sails, and we basically closed on the low. The box scores will show, however, that the Nasdaq managed to stay green, as did the Nasdaq 100, the bank stock index, and the mighty, mighty Sox. So in essence, it was the health care issues that took it on the chin, causing the minor weakness in the Dow and S&P. I guess that today's market action would have to be deemed a draw. Maybe we'll learn more when we see what they want to do tomorrow.
Away from stocks, the metals were mixed, with silver up almost 1% and gold down one thin dime. Fixed income was firmer, with the 10-year up almost half a buck. Oil was weaker once again. The dollar was mixed, down against the euro and stronger against the yen.
Perp Apprehended At Wall & Broad On the front page of today's Wall Street Journal, there was a synopsis of the Credit Suisse First Boston story, culminating in the announcement that it has agreed to pay a $100 million fine to settle its two IPO investigations. (Registration required for a two-week trial.) That's a bird of a feather with the point I was making yesterday about how the pendulum has begun to swing in the direction of reform. This yet again proves that with a lag and after the horse is out of the barn, rule changes do appear to be on the way.
Floss Your Financials Twice A Day In the here's hoping department, Harvey Pitt has an article on the Journal's editorial page called "How to Prevent Future Enrons." In it, Mr. Pitt outlines a lot of the causes that I have championed, such as making financial statements clearer and creating more accountability. What is unclear from the article is whether these are merely suggestions or whether some of these good ideas will be turned into rules. One can only hope for the latter, but please forgive me if I am somewhat skeptical at the moment. That said, and to reprise my thoughts from yesterday, there will be more pressure to clean up the financial markets as the spillage of bad news intensifies. As one can see from the Credit Suisse First Boston experience, the heat only tends to get turned up after the good times are gone. The good times have gone! |
