February 7, 2008

1) Rumors are rampant that Delta is going to merge with Northwest. What would the new combination be called? Southeast? This is leading to speculation of a United-Continental merger.

2) Technology has now taken up the downside charge in the market, leaving the banks behind. Apple has dropped from $202 to $122 in three months and is approaching value stock levels.

3) Goldman Sachs put out a report today predicting that there will be $200 billion in real estate losses this year. The bulk of these losses will be borne by the insurance industry.  There was then a long procession of experts in the press proclaiming that they weren't seeing it. The Fed cuts will cause dividends to spike in the second half. Vacancy rates have been low. There has been little construction the last two years. However, investors who overpaid for properties at the top of the bubble will be punished. Conditions vary from city to city, with New York looking great and Detroit terrible. Detroit alone could account for the bulk of this predicted loss.

4) Cisco gave cautious guidance. The stock dropped 15% to $19 overnight where it is a screaming buy. It recovered during the day. Such is the manic depressive nature of the markets now.

5) A quiet day in the markets at last. It will give back offices a chance to settle the enormous numbers of uncleared trades. Whew!

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