2 Wall Street firms differ wildly on confidence index
Two big Wall Street firms last week came to dramatically different conclusions about the Conference Board’s Consumer Confidence Index, which in March fell to its lowest level since 1973.
JPMorgan issued an “alert” to clients with a reminder that new lows in sentiment almost always signal a rising stock market over the following six months.
At about the same time, Merrill Lynch notified clients that the reading suggests that a “recession could be deep and prolonged.”
A day for sports, not stocks
On Monday afternoon, traders and other financial-district denizens will slip away from their day jobs and onto a boat docked off the corner of Wall Street and South Street.
The Yankee Clipper, a food and booze cruise to Yankee Stadium in the Bronx, has made the rounds from New York’s financial district to home games since 1996. And it’s not the only connection between the world of stocks and sports.
According to a calculation by Standard & Poor’s analyst Howard Silverblatt, stocks have performed 47 percent better when the Yankees lose their opening game. The home opener is Monday.
Since 1929, the S&P 500 has risen an average of 9.15 percent for the year when they lose versus 6.25 percent when they win.
Rumors rule on Street
When rumors about the impending demise of Bear Stearns & Co. began to circulate in mid-March, the company released a statement. “There is absolutely no truth to the rumors of liquidity problems,” it said on March 10, a claim proved false just a week later, when the government stepped in to help save the investment bank.
Three-quarters of companies have a hard-line policy of refusing to comment on rumors, according to a survey by Thomson Financial. Fourteen percent of companies said they did respond to rumors, but only when they were incorrect and hurting the stock price.
Homebuilders’ stock among biggest busts
The U.S. homebuilding bubble now ranks among the biggest busts of all time. So says the Leuthold Group. Shares of U.S. homebuilders dropped 75 percent in the past 30 months, as home values deflated across the country, according to the research firm. That’s about on par with the bursting of the tech bubble earlier this decade, when the Nasdaq dropped 77 percent between 2000 and 2002.
The granddaddy of bubbles was the 89 percent drop in the Dow industrials from 1929 to 1932, which ushered in the Great Depression.
The Associated Press
