Tuesday, August 21, 2007

Pre Market Update

The markets across Asia and Europe ae mixed. China raised interest rates but the Shanghai composite continues upwards.

US stock index futures climb on speculation of a Fed rate cut. Rumors of Warren Buffett buying Countrywide are also helping. CFC is up by a fair amount this morning. I believe this will be a $50 stock before the end of the decade.

Several retailers are reporting earnings today. Wall Street will be keeping a close eye on TGT SKS SPLS BJ AEO DKS. Staples has reported inline profits though the forecast is on the low side. BJs club reported earnings above expectations.

I expect plenty of market volatility today. A big pullback will not surprise me. I expect more downside action today. The credit crunch is still alive and subprime related problems are popping up everyday like in the case of German state owned bank Landesbank Sachsen Girozentrale. Nobody can tell exactly where the next blowup will occur. Subprime contagion is not just limited to the financial sector but to any company in general that is sitting on investments that could potentially be linked to subprime. The case of money market fund Sentinel blowing up adds to investor worries. The Fed can artificially pump the market up but for how long remains to be seen.

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