Weekly Market Update -Jan 19th

More volatility in the markets this week -the market has been dropping non-stop since December 26th. with the DOW losing over 1500 points. After what looked like a good start on Monday, the DOW was down big on Tuesday and another 307 points on Thursday, mostly on bad news from the Financial sector.

Citigroup, Merrill Lynch, and Washington Mutual all reported bad quarterly numbers as expected, and now the bond insurers (MBIA and Ambac) are getting everyone's attention! MBIA, the world's biggest bond insurer, raised a billion dollars with a note offering last week but had to pay 14% interest, and shortly thereafter the note value dropped to less than .90c on the dollar! Ambac cut it's dividend this week and is looking to raise a billion dollars as well. Look at the stock charts for these two companies -both have lost about 80% of their value (MBIA video).

It is widely expected that the Fed will cut rates again at the end of the month by .50 points, and some even think they will cut by .75 points. (Of course this won't really fix the problems.)

Oil continues to pull back from it's $100 high, as Gold also retreated from it's $900+ level, while the Dollar showed some strength this week.

Next week we can expect more of the same volatile action as earnings reports continue to come in. Don't try to be a hero and pick a bottom in this market; there are no signs that this market wants to go back up at this point. Any up-trend we get will probably be short lived.

News Stories
Citigroup Posts Record Loss on $18 Billion Writedown
Merrill Posts Record Loss on $16.7 Billion Writedown
WaMu takes a big hit
MBIA, Ambac Tumble, Default Risk Soars After Losses
Ambac troubles deepen
The next banking crisis on the way
Inflation Rate Is Worst in 17 Years
Sorry -not much good news to report!
Stocks and Indexes mentioned in this blog are for educational and illustration purposes only.