This market commentary is not intended to provide investment or any other advice and should not be relied upon in making any investment decision.  It is for informational purposes only and is not a solicitation, offer or recommendation to buy any security. It does not purport to be a complete description or analysis of the securities, companies or markets referred herein although Gerald L. Ray & Associates, its clients, officers and director may have from time to time positions in the security mentioned.  The securities identified may not be suitable for all investors and there is always the potential for loss.

Joe Ray

11/19/08 - Washington Grandstand - Joe Ray
Today's route compliments of Washington. The auto hearings create uncertainty as they grandstand before the inevitable loan. Paulson told us Thursday that he is going golfing until Jan 20 and financial stocks extend their pounding as the TARP is no longer the TARP. Attempts to soothe markets by Victor Pandit at Citi and Met Life are met with more selling. The closing lows are taken out. I suspect a more downside will be met with a rally but we now have to look to 2003 for help.

11/12/08 - Crunch Time... Again - Joe Ray
This is our third return to these levels and unfortunately, the financials and the the Nasdaq closed today at new lows. We need a catalyst that will allow us to move forward from these levels. Paulson's floundering with the TARP, which will no longer be used to buy mortgages as originally conceived, only serves to increase the uncertainty and raise more questions with fewer answers. The next two days will let us know if 8200 on the Dow and 1500 on the Nasdaq represent a floor or a new lower ceiling.

11/10/08 - Clarity - Joe Ray
To move forward, we will need economic clarity. We lack just how bad the recession will be, and how long until the progress is stable. I suspect we will drift until we have more clarity. The biggest problem is the financials: many of which are approaching new lows again. Look at Goldman Sachs, Morgan Stanley and Citigroup to stabilize soon if this market has a chance to rally.

11/5/08 - Election Reflection - Joe Ray
So the elections held little in the way of surprises; the run-up prior has given way to the economic reality that time and money will be needed before the recovery takes hold. The morning was an attempt to establish what are the Obama names-Infrastructure, healthcare, nat gas, but nothing is really working today. I would like to see the 9200-9400 area hold before we tackle 10000 but a retest of 9000 does not seem out of the question.

10/31/08 - Treat for a Change - Joe Ray
While the October market was dreadful, we ended it with a strong week and the likelihood that the lows have been seen for a while. The next leg up will be fueled by Europe cutting rates. The election, which has mostly factored in an Obama victory will likely not kill a rally unless the Dems take 60 seats in the Senate. Anything less partisan will likely extend a rally. There is a thought amongst many that frankly there is no money for any more programs no matter how hard the Dems try, so the likely first days of the Liberal agenda will focus on things like abortion, judges and other non-economic matters. The auto companies also will have to be addressed as Bush basically said today that is the next president's problem. Interestingly, the markets are freeing up and the end of the world economically may be no more than a moderate recession. Let's hope. The key will be unemployment. The fact that the government has never been this involved economically will help initially, hopefully they will stand back when things get going again, but that is a question for another day.

10/29/08 - The Fed Gets It, Finally - Joe Ray
The Fed is now at 1% and is printing money like crazy. The markets are still crazy as well but 7800 looks to be the hold number. It is possible with today's reversal at the end on some disinformation about GE that 9400 may be temporary resistance. If the ECB and Japan cut as well then we can climb further. If they do not we are likely stuck here for awhile. We remain way under the 200 moving average so over time we can drift higher. It will come quicker with the help of the ECB and Japan.

10/27/08 - Last 15 Minutes - Joe Ray
The last 15 minutes of each day have been used to kill hope and rallies. For the 4th day in a row, the last 15 minutes turned a small gain into a decent loss and new lows were challenged again. I suspect the new lows may not hold given the call for capitulation, although I suspect a rally is likely sooner rather than later. The problem is what level and when.

10/24/08 - Apocalypse When? - Joe Ray
Everyone thought it was today. The crescendo of a tradeable bottom with overseas markets down 10% and our futures looking like the market may not even open. Well, again the market fools everyone opening down 400 (a common occurrence these days) and battling back and then stablizing most of the day to be down, but not out. Everyone wants the bell to sound and a dramatic signal, but now as the market continues to trade over the 10/10 bottom, it remains possible that we slowly digest the recession with numerous retests as we slowly build a base. Not what the masses want in this microwave society but it's a way to a bottom that is not really being discussed.

10/21/08 - Putting Two Together - Joe Ray
It has been 3 weeks since we have had 2 up days in a row. Yesterday's rally again provided no follow-through as earnings, which were about as expected, failed to inspire confidence. Tonight, the normally cautious Apple will provide its normally cautious guidance and many think it will be taken negatively. The signs of stabilization in the bond markets are a big positive but stocks are beginning to worry about earnings. Stocks will rally when we discount what we already know: the fourth quarter will be poor at best. Unfortunately, these late day low volume swoons continue to hurt as investors are choosing to step aside rather than risk the volatility. Perhaps if we can put a couple of days together, but we clearly need more time.

10/16/08 - Hold 'Em - Joe Ray
Monday's rally is a memory and we are left with losses in 11 out of 12 days and the hope that we can hold Friday's lows. The numbers are 7800 on the Dow and 839 on the S&P500. The reasons for the rout seem to get flakier and flakier. The reality is that liquidation and liquidity seems to be the playbook for institutions like mutual and hedge funds and the consumer. The companies have reported numbers that are not a disaster but the outlook is cloudy to say the least. Until we get some visibility or some optimism, it will be hard to get any traction.

10/14/08 - No Follow-Through - Joe Ray
Yesterday's amazing reversal was enough for a strong opening but failed to hold as investors realize that a recession is still more likely than not. Pepsi's guide down of earnings was a reminder that the most stable of companies are not immune. The equity injection in banks will help but Libor's failure to move down aggressively also hurt the chance to put back to back strong days together. Tonight, we hear from Intel and that will be important for technology and the NASDAQ. Sideways action here is okay as we garner strength for a move back to 10,000. I suspect however that volatility will remain high and there will be plenty of people looking for the exits all the way up.

10/7/08 - Max Pain? - Joe Ray
Congress, the Fed and the Treasury are doing a lot but the markets haven't responded at all. We are at new 5 year lows and many individual stocks are trading at book value or less than 10x earnings. By traditional measures, we should be near a bottom both in time of this fall and in pullback, but these are untraditional times. Tomorrow will be interesting with Bankamerica doing a secondary and stocks closing near there lows. If the market opens down and rallies hard, that is positive, and if we stop responding to bad news that will be a sign as well. The struggles are continuing, however, and the earnings estimates remain too high based on Alcoa, Bankamerica and others who have already reported. We need to see the earnings revisions and then we need to ignore them by not battering the stocks on something that is obvious. We need to reset expectations and look at quality companies as long term investments. We will at some point but it is hard to say when.

10/3/08 - Bailout Passes - Joe Ray
The bailout bill passes and the market's response is muted. There is still uncertainty as to how this will work or if it will work. There is also the realization that there is still a ton of problems out there, including a slew of poor earnings beginning next week. The bill, however, does represent a step and I personally think it will be nowhere near $700 billion, as commerce could begin to flow more freely. A lot of the big disasters like Lehman, Bear, AIG and Wachovia are out of the way so this may be a little bit like shutting the door after the animals are out. I suspect providing insurance on commercial paper could have averted the commercial paper disaster and that the mark to market rules could have affected Bear and Lehman, but who knows. We will likely see negative GDP this quarter but hopefully stabilization could occur in housing sooner rather than later and we can begin to move forward.

9/30/08 - Trainwreck - Joe Ray
Stocks are killed when the House fails to pass the Rescue Bill. Sure it was improperly sold to Main Street and it was not perfect, but Congress needed to show action. We will get it now but Congress always needs to see the bodies before they do something. They bowed to a vocal minority in an election year and looked bad. The fallout of the failed first attempt may be ironically positive for the stock market, who got its cathartic panic. I remain concerned at things like Libor and Swaps which show ridiculously tight credit. So what now? The remaining banks will make a ton of money sometime in the next 3 years. Those include Citi, Bankamerica, Wells, JP Morgan US Trust and Goldman. The credit agencies should be shunned and ignored or disbanded. They cost us billions through first their reckless inaction, then their reckless action. Recession is likely, so companies who need little capital should do relatively well. The markets could stabilize from here and the recovery could be measured. But the blame will likely be spread far and wide, appropriately so.

9/29/08 - Today It's Wachovia - Joe Ray
Congress cost us Washington Mutual and the delay has now cost Wachovia, a decent bank who made a poor acquistion in Golden Financial. The mark to market rules are what really cost them as the marks taken by JP Morgan in the WAMU deal were so low that no marginal bank can now survive. Citi joins the Govvy club along with BankAmerica and JP. Soon the market will realize this, although a capital raise, is likely. The positive is that we are nearing the end as most big banks are accounted for and the bailout plan should pass today. I suspect we see some relief later this week but the actions of the last 2 weeks are surreal.

9/26/08 - Waiting - Joe Ray
Washington Mutual fails and Congress talks about protecting the taxpayer from a process that will likely make them money. We need liquidity now as banks are not lending (see Sonic's statement that GE will give them no new money) and Congress now wants to protect us. What a joke? Remember when Bear Stearns was a renegade firm or Fannie and Freddie were crooked? Congress has no clue but will we likely get something.

9/22/08 - Politics - Joe Ray
The excitement of Paulson's plan to help the banks and lubricate the financial system gave way today to the reality that the practical solution will be impacted by the political drama of an election year. Thanks to Barney Frank, the government may be owners of banks as well as owners of mortgage products as Democrats want warrants if these assets are put to the government. I suspect this could chill Wall Street's interest in the plan to a great degree, enough perhaps that other options will continue to be explored. The theory that banks need to be punished and the taxpayer/homeowner saved runs somewhat counter to the belief that many people bought homes they simply could not afford, even if a bank was willing to approve the loan. The stock market is down on a weaker dollar, higher oil and feels a lot like the poor market of the early summer with many of the same problems. There is so much going on that the markets cannot take a long term view and calm, which would have been the best part of the bailout. Politics reign for now, which will only benefit the politicians but not the markets.

9/17/08 - The Blame Game - Joe Ray
So how did we get here? Who is to blame? Is it Greenspan who left the punchbowl out too long and allowed rates to stay too low too long? Is it Chairman Bernanke who waited too long to lower rates last summer and who even now seems unable to persuade other inexperienced Fed members who are, as Bill Gross said live, "on another planet" as it pertains to inflation? Clearly, SEC Chairman Cox was wrong to eliminate the ban on short-selling without having the other rules in place. Perhaps Paulson who seemingly arbitrarily lets Lehman die and tries to make a profit for the government on AIG could be more clear and consistent in what is defined systemic risk? The ratings agencies who see fit to downgrade AIG while they are IN NEGOTIATIONS with the government cost you and me at least 50 billion directly. The head of Standard and Poor's says today they may have to look at how they do business. Congress? Fannie? Freddie? Greedy executives? If the Great Generation led us through World War II, the next generation will be forced to undo the excesses of today.

The irony of today's loss are manifold. First, the construction of new houses is at a multi-year low which is great news as is the surge in Mortgage applications due to lower rates. Housing prices are declining much more slowly and the problem entities that we know of are few. Fannie, Freddie, AIG, Lehman and Bear all gone, as is Merrill. Guys like Wachovia, Citi Morgan and Goldman should muddle through and later thrive if cooler heads prevail, leaving only a few problems like UBS and Washington Mutual to settle. However, cooler heads must prevail and soon, as many on Wall Street are exhausted and weary.

9/15/08 - Arbitrary and Capricious - Joe Ray
We need time and the government wants closure. These goals are not consistent with an orderly return to the financial markets. Criticism of Greenspan (who seems to get a pass by many), Paulson and Bernanke are justified as they have been too loose, too arbitrary and too slow to respond to the troubles that have been brewing for almost 2 years. The Fed is easy to blame. Greenspan was too easy for too long and Bernanke never realized what the problems of last summer would bring. Heck, guys like Fisher and Lacker wanted to raise rates only a month ago. Unreal. Paulson is a harder case. He inherited this mess but he killed Bear Stearns in a way that seems at best arbitrary and at worst vindictive, not allowing them to go to the discount window. He also failed to push deleveraging in the spring as hard as needed. The result is that Lehman is bankrupt, Merrill is gone to Bank of America while we await the fate of AIG. AIG is really important here and we need a positive resolution that means not everyone has to liquidate all at one time. We also need simple things like the return of the "uptick" rule and a repeal of the recent "mark to market" rule. The next few days will be difficult as we have a new low, AIG, earnings from Morgan Stanley and Goldman and a Fed meeting. All I can say is wow.

9/10/08 - Add Now Lehman - Joe Ray
Yesterday the hope that the bailout of Fannie and Freddie brought was replaced by the fear and uncertainty that Lehman was turning into Near Stearns. There are a few differences however and today the market tried to rally and at least managed to tread water. One critical difference is that Lehman can access the discount window and the government has likely strong-armed the investment banks to keep doing business with Lehman. In Bear's case, the problem was thought to be less widespread. I believe there were many even within government who thought Bear was a bad actor and should fail. There is no other reason I can think of that would deny them access to the discount window on a Thursay and then open it up to all investment banks the next week. There remains a few hurdles. Lehman is one, so is AIG and Washington Mutual. Wachovia and Citi likely muddle through. Option expiry this week and Icahn is stirring the pot at Imclone. Lots to look at these days.

9/8/08 - Bailout - Joe Ray
So the government bites the bullet and puts Fannie Mae and Freddie Mac in receivership. Bill Gross, the world's biggest bond buyer at his PIMCO firm, who on CNBC Friday said they would not buy any more Fannie or Freddie paper caused the Treasury to blink and the bailout was on. GSE Bondholders are now whole while the equity holders suffer. I am suprised that the preferred shareholders suffered but they could recover something down the road. The socialization of mortgages means that this administration punts the whole topic and the next one will have to deal with it. I have no idea how that will play out but the banks get a reprieve and the bond markets gains a lot of liquidity.

Stocks tried to rally big but the economy's challenges have not really changed in the short term. Tech is suffering and so are a lot of other growth industries. Technicals are weak but early cyclical stocks like financials and homebuilders are trying to make a stand. With one other problem off the table, when will stocks begin to make a recovery? Apparently, not just yet.

9/3/08 - Commodities Break and Politics - Joe Ray
The story of the last few days is the commodity stocks which have been slaughtered some as much as 25%. Hardest hit seems to be coal, which would seem to be a play on falling oil prices, perhaps an Obama victory, and steel, which seems to signal an economic world slowdown. Interestingly, financials act decent and housing and retail is solid, if not strong. The action of these groups is very significant and constructive. Volume remains light and deal flow is limited to small acquistions generally for cash.

The first hint of politics seems to be sifting into the market as Obama has widened his lead over McCain as energy and defense stocks lag. I have traditionally tried to avoid political statements but I will say that the media's focus away from issues and into the candidate's families personal lives seems misguided and at a minimum overemphasized given the geopolitical and economic issues to be decided.

8/28/08 - Catch-Up - Joe Ray
I haven't written much lately. This is primarily due to the fact this market has drifted sideways on no volume in what is traditionally vacation week for the big wigs in New York. There are a couple of things that have stood out in recent days though. First, oil prices cannot mount a sustained rally back above $120 even in the face of a hurricane in the Gulf. Second, financials are perceived as toxic by commentators yet the charts show substantial basing, if not recovery. I suppose the third quarter will be tough but the markets seem to signal that deal flow has improved. Real losses, not paper ones, look contained for now. Third, I will refrain from making political statements but it is beyond me how candidates could even consider a tax hike now. I also think the Fed's rhetoric about raising rates is just as ridiculous given where we are in an economic cycle. I suspect rates are flat through the end of the year, at least. As for taxes, if a Democratic president and a Democratic Congress raise rates and the economy responds as all economies would, then 2010 will be a tough year for them.

8/20/08 - Still Fannie and Freddie - Joe Ray
Multi-decade lows for Fannie and Freddie but the ray of sunshine shows that some big banks like JP Morgan and Bankamerica are up slightly. The existence of Fannie and Freddie as quasi-public entities may be coming to an end. If that is the case, it would serve the Treasury well to move quickly and concisely, something they have not done recently. The market is on hold until after Labor Day, although the resilience of the banks provide some hope.

8/18/08 - Rehashed Fannie/Freddie - Joe Ray
A Barron's article which shows the vulnerablity of the common stock of Fannie Mae and Freddie Mac helped to hit the financials again. The simple fact remains that this market will go nowhere unless the financials decide to play. It could be that we are in the process of retesting July lows. If true, given the relative lack of newsflow, we could be in for a rough week or two until the market gets back to work post-Labor Day. The volume remains light and the visibility of earnings remains poor, but I am not convinced things have gotten materially worse in the last few days.

8/12/08 - Financial Downgrades - Joe Ray
They decided to downgrade Goldman at UBS and later JP Morgan gets a downgrade as their 10-q revealed that mortgage and writedown issues continue. Financials fall and the market does as well despite oil down another dollar, even as the war in Georgia persists. Oil looks really shaky given its inability to rally but financials have only fallen to levels that keep hope of higher prices alive. It will be interesting to see if bulls can make a stand in the next few days.

8/7/08 - Resiliency? - Joe Ray
AIG writes down everything under the sun and Citi generously helps support the state of New York in a settlement involving auction rate securities (ARS). In addtion, more people are out of work and Wal-mart is slow. Despite the individual hits to the stocks involved, the market is down but not too bad. Oil cannot muster more than up $1. Days like this can be as encouraging for the bulls as the big up days, because they could have really slammed us and they did not. That said, earnings need to remain okay and unemployment needs to stabilize if the rally is to continue.

8/4/08 - It's the Economy - Joe Ray
Coming back from vacation, it is clear that the economy is now the issue. Investors are worried about earnings and while the pullback in oil helps, it has not shown up at the pump in a significant way. The other problem in the oil pullback is that there is now no leadership group in stocks. July and August are notoriously slow months and this month is set up for a long one. The market will likely vacillate in search of leadership. Inerestingly, despite the tough days last week, financials seem to hang tough. This is something worth keeping an eye on.

7/28/08 - Retest - Joe Ray
Retesting bottoms are so common for this market, to not do so would be highly unlikely. Oil seems to have found a level at about $125 and the good news in big banks will give way to worry, lack of real news and small bank failures. The anecdoctal evidence that banks are not lending is hardly suprising but it is worrisome. Earnings have been okay but the outlook remains cloudy with companies having no reason to be too aggressive on guidance. Biotech remains a bright spot as Amgen had good trial results, Celgene's solid quarter and the Genetech offer from Roche but little else looks good. Again, the financials remain key to this market and this week is off to a poor start.

7/18/08 - Citi Saves the Day - Joe Ray
Google and Microsoft had decent earnings but failed to impress Wall Street but almost miraclously Citigroup showed sequential improvement even after Merrill disappointed. There is even a deal in generics today as Teva pays $7.5 billion in stock and cash for Barr Labs. An interesting note is that a number of deals seem to be in cash which shows you 2 things. First, companies are flush with cash. Companies are also relunctant to to use their stock at these levels. Bankamerica will determine Monday if the rally in financials will last.

7/16/08 - Finally - Joe Ray
The long awaited rally has occurred with a huge day Wednesday followed by a solid day so far today. The catalysts were a decent quarter by Wells Fargo and a $13 decline in oil over 3 days. For the rally to continue , we need asliver of hope from Merrill or Citi , preferable both. It should be interesting given the news will likely not be great. The question is will it be better than feared.

7/14/08 - Not Yet - Joe Ray
Despite the government's willingness with some conditions to invest in Fannie Mae and Freddie Mac and a huge deal for Budweiser, stocks are still down and financials still sink. The worries today are regional banks fueled by the failure of IndyMac and the rumors of failure at WAMU and National City. Stocks are oversold but can get more so. Earnings really begin in earnest tomorrow so it will be interesting to see what will rally the stocks. Will it be earnings, outlook or deals? As an aside, I will be shocked if European companies do not continue to look at American companies to buy.

7/11/08 - Getting Close - Joe Ray
It seems to me that we are getting close. The Fannie and Freddie panic and the idea that the Fed would take them over seems as overdone as their recent sell-off. There are a lot of reasons why a short term bottom could be as early as next week. First, the banks begin to report and even if writeoffs are large, at least they will be quanitified. Second, the technicals seem to suggest the selling is getting exhausted. Third, the Lehman Fannie Freddie situation could clarify itself and lastly the stocks that have been winners like the oils and ag stocks have quit going up. They seem to be shooting the generals or more simply they are taking profits where they can. Lets hope we are getting closer to a significant rally.

7/9/08 - The Ugly Twins - Joe Ray
There is no conviction for a rally and despite oil continuing to take a break, financials (this time, the ugly twins, Fannie Mae and Freddie Mac) take the brunt of the punishing. In a lot of ways things are beginning to improve in some areas but visiblity is low and confidence is poor. Congress, Paulson and Bernanke also lack leadership in the area of housing, so we drift lower. Quite simply, there is no way Fannie and Freddie go bankrupt if the governement is willing to salvage Bear Stearns. However, the way out is cloudy at best. This is how bottoms are formed but it is really hard to have conviction.

7/3/08 - Big Bear - Joe Ray
The indices are now down over 20% from their highs so we are now officially in a bear market. It is approaching 9 months in duration if you consider it begin in October 2007. The financials have been decimated and it appears there is still no let-up. There are pockets of strength but energy and materials are now being killed. The furious destruction of these former winners may mean we are getting closer to the end of this bear. It is common to shoot the generals in the end and with some materials stocks down 15% in 2 days , this may qualify. The next week should be intense despite the lack of players for the holidays. Have a great fourth.

6/26/08 - Tell Us Something We Don't Know - Joe Ray
Big down day as the market seemed upset that the Fed did not talk tougher about inflation (they were never going to raise rates, IMO) and some downgrades of Citigroup and GM at Goldman Sachs. Downgrades, really. Downgrade stocks already at multi-year lows when everyone else has already downgraded. Nice work. Where was the research when Citi was 50 and GM at 35? Yeah, that is what I thought. Given this is near the end of the quarter, this smacks of something bigger as it relates to bonds and derivitives but, of course, that would be illegal. Also today, the head of OPEC was talking his book, suggesting oil could hit $170. The market is approaching its March bottom and there will be a big effort to crack it. There is a chance, given many of the problems are known, that we could rebound ...unless something new surfaces.

6/25/08 - Jawboning - Joe Ray
The Fed kept rates unchanged and used the statement to say the risks to inflation were heightened, unemployment was on the rise and growth was slow. Not really anything to hang your hat on. For the strong dollar/inflation crowd, this statement was not firm enough. Those who believe there are still systemic problems in financials, there will be no help there either. I suspect given the election, we could have the Fed on hold through the end of the year. Financials, housing and oil remain the key and a slowdown abroad may end up being our way out.

6/23/08 - Crunch Time OT - Joe Ray
The rumors that more capital is needed in financials continue while oil stays around $136 no matter what the Saudis say. The same levels apply. The longer we hang around here the more likely we take out the lows. On a more positive note, there were at least a couple of deals this weekend but Agriculture and Waste have been strong. A bank deal or a pharmaceutical deal would serve the market much better.

6/19/08 - Crunch Time - Joe Ray
Same story. Housing and oil remain the big issues. Today, China said they will increase the price of gas to consumers which should curb demand there some. This looks to be a response to pressure from the United States after Paulson's visit. Oil seems unable to get past $140 but also fails to pull back, so we shall see. Hosuing sticks and the consumer is beginning to struggle. As a result, banks are back to thier lows. Citigroup says consumer crit (defaults) are on the rise so it will be interesting if this is only a retest or if we are seeing one last shakeout before the stocks recover. This will eventually be a key for the market as a whole. We are in the middle of the muck and it is really hard to speculate where we go from here. Look at levels like $140 oil, $135 on the SKF (bank index) and 12000 on the Dow.

6/6/08 - Oil, Oil, Oil - Joe Ray
Oil is up arecord $11 to a record $138.36. There is really nothing to say until this reverses. This feels panicky and toppy but who knows. Banks were weak but so was most any other sector. The volume is a typical summer Friday: light, so it is hard to tell if today's 300 point drop is more important than yesterday's 200 point rise on similar volume. All in all, ugh.

6/3/08 - Economic Worries - Joe Ray
Down for the second straight day on economic concerns, today's morning rally dissapated as GM auto sales are down a whopping 30 percent and Lehman may have to issue more stock. Financials need to hold around here. Interesting call by well known hedge fund guy Doug Kass about buying financials but that remains the minority position. Again the financials and housing remain the key.

5/30/08 - Quiet Friday - Joe Ray
A quiet end to a volatile month. Oil continues to take center stage as the market cannot take oil prices down again after the $4 drop yesterday. Dell's decent quarter helps the NASDAQ but financials cannot hold an early morning rally. This weekend there is the ASCO conference which is important for biotech but the new rules involving the release of studies early has taken away some of the impact. Tech still looks pretty strong. The questions continue to revolve around oil and financials and the answers are still aways away.

5/28/08 - Retest - Joe Ray
The financial stocks look determined to retest lows set earlier this year and despite some respite in oil prices, stocks cannot gain traction. I suspect the lethargy of summer has begun and as we discussed I do not suspect much sustained interest in any direction. The theme still seems to be recession and high oil prices but the leaders are drifting so it is difficult to do much, which normally means it is best to stay selective.

5/23/08 - All About Oil Again - Joe Ray
The worst week in 3 months and its all about oil at 132. Look at the price of oil and financials to see where the market is going. One interesting fact is that oil stocks are down but a long weekend and profit-taking may be the culprit. It will interesting to see if there are any deals over the weekend given the difficult lending environment.

5/20/08 - Stating the Obvious - Joe Ray
Eli Harari founded Sandisk. He is a straight shooter. He tends to be cautious. Yesterday, he stated what should be obvious to my 11 year old. He said that higher gas prices will impact the consumer and that as a result April was "a little soft". A revelation? Certainly not. A market mover? No question. The Nasdaq reversed nearly 2% and the Dow and Nasdaq are weak today. Can a smallish $7 billion company effect such extended downturn? I suspect that we were just due for a pullback but the failure of the financials and new highs everday in oil is increasingly worrisome. If this continues the economy will be more than "a little soft".

5/16/08 - Update - Joe Ray
Sorry for the lack of posts this week. To recap, the market seems to have an upward bias but oil continues to hit new highs and housing and employment continue to deteriorate. The week's early leaders were tech and small cap, bullish signs but financials seem stalled and oil stocks are reasserting again which is not the best sign. ASCO or the American Society of Clinical Oncology conference failed to provide any excitement in the biotech stocks. Look to oil and the financials to see if we digest this run-up or pull back hard. Also, semiconductors are important here. Have a good weekend.

5/7/08 - Financials , Oil Again - Joe Ray
The financials lead us down as Fannie's awful quarter sinks in. Oil hits new highs again on a build. It is a freightrain with no brake, it seems. I suspect we pull back now given a relatively weak sister, AIG, could provide further worries. Oil has to be contained at some point. It is amazing that margin requirements remain unaffected for oil and other commodities like corn. Tough day.

5/5/08 - Ballmer's inflexibilty, Yang's hubris and Oil - Joe Ray
If this was the old Johnny Carson Karnack skit, the answer would be name 3 things that caused the market to be down today. All in all, I suspect this day could have been uglier than it is but of all the things that went on over the weekend with Microsoft and Yahoo, I am suprised that Microsoft is only even. The reality is that Microsoft needs to do something with the web. I personally would have like to have seen them join forces with Yahoo but spin the company off to current Microsoft and Yahoo shareholders. Unfortunately, Yang has founder's disease. By that, I mean that a founder of a company has a hard time letting go and thinks it is worth more than it is. I suspect Semel would have taken $33 in a heartbeat and saved his legacy as a manager. Yang's legacy as we sit here today will be a tarnished founder instead of a guy who did the smart thing. Ballmer's situation is different. While you can admire his discipline, the reality is that Microsoft .net needs help and with cashflow at Microsoft at over $1 billion a month, they could easily afford Yahoo. The idea of spinning it off also helps with any issues of dilution. I suspect Microsoft could return but I imagine the price will be lower. The market looks tired but healthy as of today.

4/30/08 - Fed Almost Done? - Joe Ray
The market tone has been good. Led by financials and tech while there was some rotation out of commodities. The Fed with an opportunity to not do any and stand up for a beleaguered but recovering dollar instead did what was easy and lowered rates a quarter point. The market's reaction was to turn a 150 gain into a small loss. Again, I do not look at this move as overly important. The Fed is likely done. What I think is important is that the Fed failed to take leadership again when given the opportunity. Bernanke has proven to be a reactive and somewhat indecisive Chair not a leader of investment policy so the dollar recovery, while coming, will be prolonged just as his failure to act decisively last summer created a more protracted credit crisis. We have what we have, so I suspect some pullback this week and next until we see additional dollar and commodity price stabilization.

4/24/08 - New Leadership - Joe Ray
A big significant move in the dollar based on reasonable employment figures and okay Durable goods has lead to a rally in financials and tech and a decline in the formerly on fire ag/gold/commodity stocks. If this move is for real and oil pulls back, this market could really take off to December levels. We need to wait and see but outside of banks, earnings have been okay up about 7% if you take out the financials. This could be a hectic and potentially profitable few weeks coming up.

4/18/08 - Sighs of Relief - Joe Ray
Citi and Merrill, big offenders with bad managers with big write-offs. Both will survive now and can move forward and the market can exhale, which we did this week. It is hard to see how they will not try to at least reverse the downtrend and attck the 50 moving average. A really great week for the market IMO and a hope that the financials have bottomed for good.

4/17/08 - Earnings Volatility - Joe Ray
Decent earnings at JP Morgan lead to a big rally yesterday and IBM's number last night suggested today may follow through with more strength. However, a big (albeit expected) writedown at Merrill and softness at Nokia as lead to a slow, down day. Financials are hanging okay though $115 oil is a killer. We have Citigroup Friday morning which should dictate a lot as should Google after hours. Google has struggled recently and lack of transparency could hurt as business slows. It is options also this week so anything can happen. Hold on to your hats.

4/14/08 - More Writeoffs - Joe Ray
Wachovia had their large writeoff and got $7 billion in financing. Financials are getting hit, although I am not sure that we are worse off now than before as companies continue to be able to raise money. The issue will be dilution and what the eventual earnings power will be but first, we need to get through recession-like earnings. Oil stays up and a few defensive plays but the rally of early April is giving way to the largesse of poor earnings as exhibited by GE's Friday disaster. I mistakenly put Citi earnings as Tuesday but they are actually Friday. IBM on Tuesday will be important as will Merrill Thursday. Looks like a long week ahead.

4/11/08 - GE Disappoints - Joe Ray
GE has a big miss and the markets rally comes to ahalt. They blame financial services and some softening in Healthcare (a suprise) and industrial demand in the US (no suprise there). I assume we await Citigroup on Tuesday and JP Morgan later next week. We are now at the point where we know earning will suffer but not sure how much. I suspect next week can be tough but if companies can somehow show there is alight at the end of the tunnel then the market can move forward.

4/7/08 - Financing Comeback - Joe Ray
Financing Markets appear to be return to some sort of normal condition. Norvatis takes advantage of the weak dollar and buys Alcon while there is talk that Washington Mutual will get some financing. Also Citigroup sold some notes at a reasonable price while raising about $150 million on an asset sale. The more we see of this the better and if the WAMU deal goes through I think this is very good for weaker financials. The market was up early and has pulled back some. While we are approaching an overbought short-term, the environment is less foreboding. I am a little concerned that the earnings or lack of visibility could cause some short term weakness but as it relates to returning to "business as usual", things have improved.

4/4/08 - Strong Stand - Joe Ray
A solid effort today in the wake a jobs report that showed job losses of 80,000 in March. Financials are even while the Nasdaq is up led by biotech and some technology. The bond markets have settled somewhat this week. I taked to a trader today who said that the mortgage has regained much of its liquidity. She was worried about auction and auction rate preferred securities which were sold as money markets and are not. Again, it is about liquidity, not the creditworthiness of the instruments. Let's see if this becomes a problem or if the write-offs become just numbers as the companies continue to work toward normal conditions.

3/31/08 - Adios - Joe Ray
Goodbye to the rugged first quarter. Volume is anemic and interest in the markets are low. Lots of money coming out of the market while the deleveraging of the U.S. continues. I suspect relative quiet barring unforseen problems not already addressed in the banking system until we get earnings in the next 2 weeks.

3/27/08 - Other ideas - Joe Ray
We are almost about to end one of the roughest quarters since 2001 and 1987. The Fed continues in its hodge-podge idea du jour way to salvage the economy, the investment banks and the housing market. When optimism grows as it did earlier this week with a decent Lehman quarter and the Bear Stearns rescue, other problems crop up within days. Bernanke still lacks any sort of broad vision and is merely putting out fires one at a time. That said, there is hope that this is unwinding as time is probably the greatest healer here. There are still plenty of bullets left to use although I suspect they will not be anytime soon.

Little ideas that would help include 1) the suspension of the mark to market rule for 1-2 years on investment securities allowing banks and investment banks to avoid the flooding/firesale of securities they face daily 2) The reinstatement of the uptick rule which would help a weary stock market which plays into a failing consumer 3) raise margin requirements on all stocks as well as oil and gold.

The big gun is that The Fed could purchase many of these secuirities directly, but this is more controversal, although it would solve this crisis in short order - at taxpayer expense which is increasingly likely in some form or fashion anyway. Instead, it appears we will continue to get a rifle approach when a big blast is more appropriate.

3/24/08 - Greed and Need - Joe Ray
Bear Stearns needed help and JP Morgan offered it in the form of a $2 bid. Loansharking does not make you popoular anywhere and Wall Street is no expception so JP Morgan was forced to raise the bid again to $10. The bid still represents a fraction of Bear Stearns year-end 2007 book value of $84 and assuming there is truth to the fact that Bear Stearns actually made money in the first quarter of $1 a share, still an amazingly attractive deal for JP. The fear that paralyzed Wall Street appears to be over for now and the bargain hunting appears to have begun. If Lehman can allay fears during its call Thursday, we can start to repair the damage longer term.

3/20/08 - Incredible - Joe Ray
An incredible week from Bear Stearns to the Fed to the move in financials. They remain the key. Next week I will post Gerald's insights on the Stealing of Bear Stearns by JP Morgan. Until then enjoy the long weekend.

3/14/08 - Bear Raid - Joe Ray
Bear Stearns suffered from an old fashioned bank run made possible by a jittery market with an assist in all probability by some other investment bank who failed to be a counterpart to an ordinary transaction. JPMorgan will keep it afloat for 28 days then Bear will be gone-it may take a month, it might be Monday. The question is are their others, Lehman or someone else. Fear is really high and with Carlyle done and Bear on its way out, has there been enough casualties to end the war and then we can move forward.

3/12/08 - Fed Action- Joe Ray
The Fed's decision to allow banks and dealers to put AAA paper to the Fed is an overdue start. The fact that is coordinated with other central banks helps as does the fact that it allows some of these dealers to reduce bloated inventory. It is obvious that the Fed needs to do more although the dollar and oil make further rate cuts difficult (although a one half point cut next week is possible). The Fed could buy Fannie and Freddie paper directly which would be great and could use the hammer of lowering reserve requirements. In both cases, these tools would really buoy markets that they may want contained. It is clear that the Fed is also in the "teach a lesson" camp and progress will be painful and measured despite yesterday's euphoria.

3/10/08 - Waiting for Volume - Joe Ray
Drip, drip, drip. The news is awful and the rumors are rampant. A very tough time. The one thing we are missing from at least a tradeable bottom is massive selling volume. The selling is far to orderly although it is relentless. Normally we could use a quick 300 down or more on super heavy volume which later reverses. We need to stop with the even slightly positive openings which only beget more selling. Getting closer but with the Fed and host of reports in the next week, it is hard to see when the rebound will occur.

3/6/08 - Deleveraging - Joe Ray
It is getting harder to understand and explain. Liquidity and paralysis is killing us in a way that is worse than defaults and forclosures never did. The case for government assistance grows daily and yet the adminstration is no where to be found. I am as laissez faire as the next guy but that assumes capital markets are functioning, which they are not. A new closing low in both the Nasdaq and the S&P 500 suggests the next stop could be another 2-3% lower. Huge employment number tomorrow. The saving grace is the negativity is huge and a bounce off the lows could be possible. Look at the financials for the tell.

3/4/08 - Afternoon Rally - Joe Ray
A tough day that started with comments made about Citigroup's liquidity (denied by the company) and margin declines at Intel turned somewhat brighter after the AMBAC deal moved closer to fruition and John Chambers of Cisco saying problems in the US were manageable. I still see problems with a leaderless Fed and financials still need to show signs of a bottom but a rally is a rally. Biotech had a nice day today with DNA CELG and GENZ all up.

2/29/08 - AIG and Munis - Joe Ray
AIG suprised themselves saying things continue to be tough and further writedowns are likely. The muni market appears in disarray as the attempt to help the insurers are bogged down. It is a mess and Bernanke comments yesterday that "Banks will fail" do not help. Bernanke has proven he does not understand markets and sadly Treasury Secretary Paulsen is either hamstrung by the administration or is willing to let laissez faire capitalism and Darwinism rule. Stocks have no chance in this environment especially when inflation numbers stink. It is good it is a Friday.

2/28/08 - Ben Giveth and Taketh Away - Joe Ray
After somewhat dovish testimony in from of the House yesterday where Ben Bernanke implied a rate cut was likely, today in his Senate testimony, the Fed Head said that inflation was making his job difficult, small banks could fail and housing is still a big problem. Bernanke has shown consistency in policy will not be a hallmark of his tenure given the erratic nature of his rate cuts to date. It appears that his ability to dissect and disseminate info to Congress is erratic as well. Some tech has hung in and oil and oil stocks are out of sight. Banks are down thanks to Ben. It probably could have been worse but I suspect the difficult environment continues. Lots of chatter that Yahoo may finally talk to Microsoft. Good. Do a deal Jerry Yang, the market will thank you.

2/25/08 - AAA Day - Joe Ray
Back after a little R&R. Today, S&P said MBIA had done enough to keep its AAA rating and AMBAC could keep its AAA if its recapitalization goes through. This is necessary to keep the mortgage and mini markets moving comfortably. Interesting that the financials generally rallied from being down but really did not gain. Biotech was up big today as Celgene was profiled in Barron's and the FDA surprising approved Avastin in breast cancer despite so-so trial results. I doubt this signals anew FDA and probably results from political pressure. Breast cancer advocates are among the best funded and orgainized in the healthcare industry. It is a good thing to see some action by the FDA however. We shall see if this rally can go on tomorrow. This week or next, the AMBAC deal could be done so watch closely.

2/14/08 - No Confidence - Joe Ray
Retail sales were a little better yesterday so we rally. Bernanke made sure that the "feel good" was short as he reinterated what we already know about the economy getting worse and tight credit availability. I assume that more cuts are on the table and naturally no one at the testimony will ask him how he was so wrong last summer when he failed to aggressively cut rates in August. The street lacks confidence in Ben as much as he lacks confidence in today's economy. Unfortunately, the Street and I were quicker to realize the deficiencies.

2/12/08 - Respite - Joe Ray
A rough week last week and we seem a ways away from help on certain CDO instruments. AIG and auditors disagree on how to value them yesterday and Buffet tries to buy the good stuff from AMBAC FGIC and other guarantors. I suspect a rally will be contained until there is better clarity but I will take the respite.

2/5/08 - Freeze - Joe Ray
Ugly day today. The ISM Service number and Jeff Lacker both spoke of recession and the market ran with it. I would also suggest their are two other issues. First, there remains a number of fixed income markets that remain virtually frozen. Deals cannot get done so the situation does not improve as quickly as it could. Second when we failed to hold yesterday in any meaningful way, we essentially talked ourselves into a retest of the lows set last week at around 11800-12000. It's now too textbook not to expect it over the next week or so.

2/4/08 - Deals That Make Sense - Joe Ray
In a world where not much makes sense, a Microsoft deal for Yahoo does. Microsoft needs help on the net and Yahoo has great content but has been unable to monetize that value. Google cannot be allowed to grow uninterrupted so a combination could work well. Of course this was apparent 2-3 years ago but at least Ballmer pulled the trigger when Yahoo's valuation was low. In a market that has been beaten up recently there are a number of other transactions that make a ton of sense if the banks have a willingness to lend and the companies enough guts to jump.

These are just so easy. In healthcare, try a Schering Merck hookup after the Vytorin debacle or Lilly with Amylin who they already pay hundreds of millions to develop their version of inhaled insulin or Wyeth buying Amgen ahead of Denosamab given that they already partner Enbrel with them.

In financials, how about JPMorgan finally getting their brokerage arm with a purchase of Bear or Lehman. In tech, how about Intel buying Sandisk to get best of breed NAND technology or Dell buying EMC like they should have done years ago. Valuations are attractive but financing is hard however with luck cash rich suitors who really do not need financing like Microsoft can make important strategic purchases at compelling prices if they are only willing to act.

1/30/08 - Catch Up - Joe Ray
So now we have a point and a quarter interest rate cut in a week and a steepening yield curve which could help liquify the banks. The Fed played catch up this week and seems to be getting pretty close. Sadly, it would have been a lot less painful if they were awake last summer and fall. The market should be okay for a while and we can get back to trading on fundamentals. Financials should continue to come back. I would like to see some deals that have already been announced close and perhaps some new M&A deals. New deals would be a great sign going forward.

1/28/08 - Waiting - Joe Ray
The Fed needs to cut 50 bp. The market took the poor housing number to heart as further evidence that the Fed will do the right thing. It remains to be seen if they finally "get it". Earnings are beginning and they are okay but guidance is elusive at best. The market needs the Fed and so does the consumer.

1/23/08 - If Bernanke Woke up - We Are Getting Close - Joe Ray
A 75 basis point rate cut and the market stays down. Interestingly, financials homebuilders and retail was up. The belief may be that Ben Bernanke woke up. We will see next week when he has the ability to cut another 50 bps according to futures. The generals of tech are being shot this morning thanks to cautious guidance by Apple. Google nears 500 and RIMM down 10% today. They say a coup ends with the slaughter of the generals. Today may be such a day. If the financials can carry on we can hope for a better market soon.

1/17/08 - No Confidence is Justified - Joe Ray
The lack of confidence that is being shown today in Ben Bernanke's ability to handle this economy is justified. If you listened to him in front of Congress today, you would understand that neither he nor our elected officials realize what they are doing. Ben is now talking a stimulus package after failing to reduce rates quickly enough. It is like selling someone a fire extinguisher after their house burns down. Too little, too late. I still believe the market can rally but until the Fed takes action, it is impossible to fight the Fed and the Fed is no help to stocks or the economy.

1/15/08 - Citi, Bernanke in the Clouds - Joe Ray
It must be nice to be above it all. Bernanke says last week that further cuts will likely be needed but apparently it is easier to wait 3 weeks and let a few more people lose their houses than interrupt the the golf game of certain Fed members and cut rates now. Citi also seems willing to wait. New CEO Vikram Pandit can wait to cut costs and wait until Citi Day to give us an idea of the strategic outlook for Citi. He can't wait to cut the dividend though and he is more than willing to dilute shareholders without firmly giving them an idea has to how much they have been diluted.

There are differences though. Pandit's problems were not of his own making while Bernanke 's relunctance to take aggressive action in August and is seemingly oblivious ness currently makes him the worst Chairman since William Miller's less than glorious 18 month run in 1978-9.

1/8/08 - Unhappy Returns- Joe Ray
I have returned after some time off. The market has crystalized the perception is recession is likely and the Fed has given them no reason to think otherwise. This market has no confidence in Bernanke and with good reason. He has failed. He has failed to alleviate the concerns over housing and the banks. He has failed to provide liquidity where it was needed and most importantly, he has failed to instill any confidence that he is anything but an academic with no clue. Markets ended the year tough and have started tougher. Only things like Coke, Pepsi and healthcare have a chance until we get a sense where we are headed economically.

12/21/07 - A Farewell to 2007- Joe Ray
I am about to take my first significant break in a number of years so I am saying farewell to 2008 which should be an interesting one given the election, the economy and the Fed.

The biggest disappointment to me in 2007 was Bernanke's inability as early as summer to realize the economy was in trouble. I thought he figured it out after the 50 point rate cut in September but clearly he has taken the foot off the gas and that will be a mistake. He is too cute, too academic and his brethren like Poole and Lacker are dumber than he is.

On the other hand, this market remains resilient despite the strains on the financial system. Corporate America is smart and getting smarter in general and seems better able to weather shifts in the economy.

For 2008, we need to watch the financials closely as well as fiscal policy which will be in the news in an election year. I wish you all a healthy and happy holidays.

12/19/07 - Santa Claus is Coming? - Joe Ray
Trying to rally a bit but options make it hard to give it any significance. Morgan Stanley has a weak quarter while Goldman is cautious. Are the financials problems beginning to be baked in. It seems a rally is possible but I would be cautious still.

12/14/07 - Fed Up - Joe Ray
The Fed only gave us 25 basis points when 50 was needed and a day later they gave us a plan to help liquidity. The reality is they gave us an aspirin when we needed surgery. The market gets it and is down but I doubt Bernanke does. Inflation from agriculture (thanks to the ethanol legislation) and oil is scaring up thoughts of stagflation which I really do not buy. One positive note is the act of Citigroup assuming control of $49 billion in SIVs seems to be looked upon positively. There really is not much good there right now since the Fed is not looked upon as a backstop. It will be interesting to see if Santa Claus shows up before the end of the year.

12/11/07 - Bernanke Fiddles - Joe Ray
Berrnanke's Fed cuts a quarter point on both the discount and the Funds rate. The discount rate is way too high given the risks in the housing and asset backed markets. Bernanke should get it but doesn't. I think it is safe to say he is unaggressive and complacent. It is possible to say he has no clue or leadership ability. The Federal Reserve needs to take a leadership role and be creative as it relates to mess we have in certain financial markets. They haven't and likely are now too late to do so. Fortunately, overseas funds can prevent disaster but the cost will be domestic assets in foreign hands. Bernanke has failed and the Market's Christmas will suffer at least temporarily.

12/5/07 - FDA is Toxic - Joe Ray
A bit of a reflex rally as the talk of a 50 basis point cut by the Fed next week is really grabbing hold. A couple of noteworthy things about today.

One, Fannie Mae cut its dividend 30% and raised 7 billion in special stock but the stock is up. At a price, there is a demand for financial assets and while some home builders may not make it, my guess is the system will. Capital seems available and balance sheets will be rebuilt. Profitability will come later.

Two, Dick Pazdur, the head of the FDA oncology area, is poison. If you own stocks that need his approval for a new drug forget about it. His idea that drugs can do no harm and that every single result must conform to archaic standards kills portfolios and lives. Today, like Dendreon, Regeneron, Pfizer and others faced Panzur's ODAC panel and despite less than robust survival data (despite great data on disease progression) got a 5-4 no vote for Avastin in breast cancer. Despite broad industry support, Pazdur's group votes no. I love biotech and I know Big Pharma needs biotech companies but the risks the current FDA brings makes it a very tough area for investment -- much tougher than it should be.

12/3/07 - More Concerns - Joe Ray
The government will bail you out if you are this or your loan was that. Far too complex, probably unworkable, probably won't happen as advertised.

No follow-through on last week's better tone, We probably wait for the Fed. In seemed they were getting religion last week on comments by Bernanke and Vice Chair Kohn, now investors seem uncertain. I suspect its fits and starts until the Fed talks or until a more workable system is unveiled.

Should be lots of interest in Biotech and Pharma as many large companies have investor meetings this week and ASH (the annual coference for Hematologists) starts this weekend. Names like Pfizer, Bristol, Amgen and Celgene should all have news.

11/28/07 - It's Here - Joe Ray
We rally big off the bottoms. Why? Simply because we are at a level where sophisticated buyers will buy financial stocks. Freddie Mac sells $6 billion in stock while Abu Dhabi buys $7.5 billion in Citigroup preferreds. You can argue that the coupons were high but the reality is that we have found levels where financials make sense to some. Can this market head back down? It will likely at some point want to test the bottoms and if the Fed listens to guys like St. Louis Fed Pres. Poole who is clueless rather than Vice Chairman Kohn who understands the severity of the what is going on then this rally will not hold. I am however thinking a cut is very likely and 50 bp is possible in 2 weeks. We will have to see but VP Kohn's acknowledgement that there may be more work for the Fed to do is a great place to start.

11/26/07 - Nothing Working - Joe Ray
We need the Fed now. More subprime mess mainly because there is no bond trading at all other than a flight to treasuries. How Bernanke and Paulsen get a passing grade from anyone will be beyond me. The Fed's recent minutes which discussed neutrality looks ridiculous now with the 10 year at less than 4% vs a 4.5% discount rate. Wake up boys! Sentiment is beyond awful but so are the headlines, it will be interesting to see when enough will be enough for a rally.

11/21/07 - No Rally Redux - Joe Ray
We rally 80% of the time on the day before thanksgining and the Friday after. Well, Friday needs to be a hell of a half day. No real news other than GMAC has a plan that they may or may not be able to execute. We are scaring the August lows which is interesting from a "we need to make a stand" perspective. The financials will creep first should we rally so keep an eye out there. Have a good thanksgiving next week is important.

11/19/07 - No Bounce - Joe Ray
A bounce into Thanksgiving now seemed too easy to call. Big oversold position, banks coming clean, seasonal factors. Well no dance today and fixed income markets are non-existant. A poorly timed sell rating on Citi by Goldman with a $33 target is late and silly but that is where we are at and the results are another tough day. There was at least one deal as Celgene offers to buy Pharmion. I actually touted this for Celgene over ayear ago at lower prices. They waited and paid up. The deal is okay now but would have been a slam dunk a year ago. Yahoo gets and upgrade at Merrill and is down. Retail and financials are awful. Maybe tomorrow, but we are running out of time for this week given most big players will be gone by Wednesday.

11/16/07 - What to Believe - Joe Ray
Hard to know what to believe. Jaime Dimon and Jimmy Cayne booth suggest things are improving in bonds, yet there are stories about money markets having to be propped up, Fannie Mae having accounting issues, Wells Fargo's head shouting recession to counter that plus some. The Fed also gives us no help as governors and Bernanke seem to think things are peachy. To me, that is the biggest danger here. Caution is likely but I suspect a rally could still occur. The question becomes whether we need to go down and fail the retest at 1438 on the S&P 500. Again that is only 1% away so I think we are getting closer to an opportunity for better days although given options today I doubt today is that day.

11/12/07 - Failed Rally Part I - Joe Ray
Our first failed rally attempt and the go-gos still getting hit hard. I suspect more rally attempts are in the cards for what will surely be a volatile week. The E-trade news is troublesome but the SIV fund news for JPMorgan and Citi is a big positive. Hints also that John Thain of the NYSE could head Citi is also a plus in my book. Maybe better luck tomorrow.

11/7/07 - Panic - Joe Ray
No one will ever use the dollar again. All banks will go under. New York and Cuomo will investigate the mortgage business. The Fed is on hold. GM is worthless. Pick the reason and add some panic and the market gets whacked. I sense we are getting close as we violated the Oct lows which many suggested had to be retested. I assume they could scare us tomorrow with AIG Cisco or "Bernanke is the reason" but I have a sense that we are nearing a relief rally at least.

11/5/07 - Citi Woes - Joe Ray
Well, Chuck Prince got the axe but the large potential for write-offs were enough to scare investors away from the seemingly good news. Prince was a lawyer, not a banker. He was late to most parties and that cost Citi. New management will help but Citi is a portfolio of companies and not all make sense. This should be addressed. Another issue facing not all Citi but all the financials is the Fed's new talk tough policy. No way given the real estate market is the Fed anywhere near done but they talk like they are. Investors have thought the Fed will be there if they begin to doubt this it is clearly not good. Despite the headaches, I believe a year end rally is still attainable. It could start relatively soon if we can get further clarity on write downs.

11/2/07 - Tumultuous Week - Joe Ray
Sorry for the lack of entries, this week has been quite unusual with family demands. The market has been tumultuous as well. The Fed lowers rates a quarter point but includes language which suggests they were unlikely to lower them again soon yet 24 hours later, they inject 41 billion into the system as reports of Citigroup and Merrill struggling surface. Incredible that they do not just cut 50 bps to try to get ahead of the curve but Bernanke remains unimpressive at best. The financials which this market needs are having an awful week as yields on some banks approach 6%. A great entry point if you believe they muddle through. Aside from financials, oil is at all time highs near $95. This has been a strange quarter. If you had been given the numbers before hand , you still could not pick the way the stocks have moved. UnderArmour great quarter down on inventory concerns. Sandisk great quarter, now on perceived competitive issues, the list goes on and on. I still feel a rally is possible but the Fed is a worry. Next big hope is that Chuck Prince gets fired as CEO of Citigroup as early as this weekend.

10/26/07 - Countrywide, Microsoft Lead Rally - Joe Ray
Financials rally a bit after a huge loss by Countrywide is countered with a somewhat dubious statement that they will make money in 4Q. Microsoft has a great quarter and its clean which means everyone can understand it. I suspect we can rally after atough couple of weeks into the Fed meeting Tuesday then I guess it is wait and see. I think they cut and I am not unconvinced that it is only 50bps but the dollar could prevent more than a quarter point. Should make for an interesting week.

10/23/07 - Shiny Apple - Joe Ray
The best part of this week is that financials are done talking. Most have reported so we now enter the time when growth names like Biotech and Tech cvan wow us with big growth rates. So far, Google and Apple have been solid but Amazon who has run up tremendously barely beat numbers. I suspect Wednesday morning could see a breather but it shapes up to be an okay week if everyone comes through.

10/19/07 - Really Tough - Joe Ray
Record quarters from Cat, Sandisk, Honeywell and Schlumberger, all down big. Oil touches $90. Fear that there is just a ton of problems in the system are rampant. Does a soft dollar make it impossible for the Fed to step in? I hope not. I think we need another 50 bp now and we can worry about the dollar later, but not all will agree. Options control the day and there are no buyers today. We will get a better idea on Monday as to when and if buyers will return. Until then, enjoy the weather.

10/17/07 - Still Tough Out There - Joe Ray
JP Morgan was not a disaster. Intel and Yahoo beat but mortgages are still a big problem and Chuck Prince still has a job. The market will likely make it 3 straight big downs despite earnings that I would call reasonable. The fear is that the mortgage, subprime now SIV (that is Structured Investment Vehicle) mess is no where close to being resolved and the Fed's ability or desire to cut rates is in doubt. There is the fact that this is also option week so I suspect things will remain volatile through the week and into Monday.

10/15/07 - Citi Flops, Market Drops - Joe Ray
A tough quarter by Citigroup and Prince shows himself in the call to be as clueless as ever. Gotta think the end is near for him. The market suffers as today the belief is that there is much more problems with loans and the consumer is on thin ice. Not sure what to believe but what I know is this is options and earnings this week so I expect volatility. Many more names to report with Intel manana. Biogen puts itself up for sell. I wonder who is desperate enough to pay 10x sales for a mediocre company. I suspect someone. More as the week unfolds.

10/11/07 - Big Intraday Reversal Means Further Upside - Joe Ray
Stocks hit new highs today but reversed over 100 points on rumors of a bombing somewhere, programs, Hillary etc. So far about an hour later and nothing really has surfaced. These kind of big reversals without real news generally result in further upside. It really just test the water as to conviction and it also gives short hedge funds achance to cover. I still imagine slower momentum into earnings but a one day reversal on vague rumors is not the end to this market.

10/9/07 - Earnings to Begin - Joe Ray
Alcoa kicks off third quarter earnings tonight. Expectations seem to be that results should be okay at most companies. The weak dollar will help but I believe sales growth will be questionable at some companies. The market seems to have lots of momentum rallying again today even though the Fed minutes seem to show some skepticism that further rate cuts are imminent. This will be a tricky market because it is increasingly unclear what it wants. More cuts and weak growth or no cuts and better growth? Brokers continue to rally but banks have not yet done so. The next 3 weeks should be interesting as we see the effects of earnings.

10/5/07 - Employment Lifts Stocks - Joe Ray
As much as we love rate cuts, better employment caused stocks to rally big today. An October rate cut which seemed assured just a week ago is given only a 40% chance by the bond market. I am not convinced that one and done is what the Fed has in mind as housing is still lousy, but I will take a market which is setting new highs everywhere except the Nasdaq. Next week should be interesting as earnings begin to trickle. Expectations are now high so I expect some consolidation or pullback over the next week or two although I do believe the potential is still there to go higher.

10/3/07 - Financials Still Playing - Joe Ray
The pullback of the last 2 days is interesting in that the financials still continue to move up slowly. Goldman is within a couple of points of its all-time high and big banks seem to be basing. I think the last few days represent a respite rather than anything major. The Fed is on schedule to cut rates a quarter at the end of the month. Earnings will be soon and preannouncements should be forthcoming. We the exception of Citigroup than have been rather uninteresting so far. Again if the Fed will cut rates and earnings are okay, this rally can still move forward. The declining dollar should bode well for large multi-national stocks although sales growth could slow. Should be an interesting quarter which will begin next week.

9/28/07 - End of Quarter Rollercoaster - Joe Ray
The third quarter roller coaster ends today. Many mutual funds' fiscal years do too, and typically we are down. Economic news was okay as confidence as reported seems better than some hoped. Housing is awful though and guys like Bill Poole at the St. Louis fed still talk inflation over recession. I would not put too much stock in him as he voted for the rate cut despite his rhetoric. A down day but the quarter was pretty good given what happened in subprime and private equity and the fact that financials continue to struggle. I still think financials are needed for the market to move forward and I think there is still time before we worry about the 2008 elections. Earnings soon so stay tuned.

9/27/07 - Hard to Knock - Joe Ray
There has been some disappointment in this post-Fed rally. Financials still lag save Goldman and there continues to be more and more talk of recession. Yet stocks (or at least the averages) nudge up. Consumer non-durables lead but tech especially large cap tech looks good. Oil prices have dipped a bit and it is hard to get real excited here but if financials were to rally we could really have something. One other interesting note is that Futures now predict a 94% chance of a rate cut next month. Also the GM strike was settled, the real question was that a strike or just a long weekend?

9/21/07 - Options Rally - Joe Ray
This is options week so the trading is erratic. Yesterday was a little tough but today we rally. Financials are still slow to participate which makes this week's rally after the Fed cut even more remarkable. A poorly thought out downgrade from Merrill on a host of banks may be to blame. Whatever the reason, the Fed has turned on the faucet and the banks and brokers will evetually profit. Housing remains an issue as does aweak dollar and oil and ..., which all means there is still a lot to worry about and still a chance to profit. Actually, I think we can be okay through the end of the year, however the politics of fiscal and tax policy will make early 2008 potentially tough.

9/18/07 - THEY GOT IT! - Joe Ray
Bernanke and crew wake up and give us 50 bps on both the Fed Funds and Discount rate. Typical dollar worries but this is what needed to happen. Financials ramping and Lehman's number was reasonable. Goldman and Bear Stearns on Thursday. The market gods smile, at least for today.

9/17/07 - Big Week? - Joe Ray
Was out all last week for the Bear Stearns healthcare conference and the Jewish New Year. A positive week overall but the real directional week is this week where we have earnings from Brokers, a Fed Meeting and options expiration. Volatility is a given. The brokers need at least a decent showing. Financials again need some leadership for this market to move forward. The Fed has to do something. As a Bernanke non-believer (yes, I am officially in that camp), I suspect no more than 25bp is likely and a similar cut of the discount rate would be a bonus. Good luck with the added volatility that the options provide. As for the Bear Stearns Healthcare Conference, I will espouse on a lot of the interesting developments there later this week.

9/7/07 - The Hammer- Joe Ray
So the Fed got hit in the head. Their refusal to acknowledge a weak economy has manifested itself with a number so telling even they will be forced to acknowledge rate cuts are necessary. A 4000 job loss number when 150000 job gains is a healthy economy showed up to quiet those have been saying there is no need to cut rates. Of course, the Fed will wait to the 18th of September and may only cut a quarter but the cuts are coming. Bernanke gets a big fat F in my book for handling this crisis. When he lowered the discount rate, he should have lowered the funds rate. That is so obvious now. Even then, it was easy to argue that a Federal Reserve that has any sort of foresight could have justifiably cut rates in May. I do not buy the argument that an earlier cut would have just represented a bailout to the "rich". The idea in my mind is that what's done is done and an earlier cut would have reduced the magnitude of the problems that would have happened anyway. Rate cuts can still help but now they need to be aggressive, perhaps more aggressive than this inexperienced wishy washy Fed will be willing to go, and that is the potential danger here.

9/4/07 - Is This What We Want? - Joe Ray
Another big rally lead by all the right groups. The question should this continue will be whether the rally is so large that the Fed will refuse to act due to the exuberance of the stock market. As a result, while I am not complaining, some sideways action would be welcome. Otherwise, I believe we will see the Fed do nothing on mid-September which could lead to a rough couple of weeks.

8/31/07 - Lip Service - Joe Ray
Lip service from Bernanke that the Fed is on guard for further deterioration in housing and the economy and President Bush's rather narrow reaction to the "housing crisis" was enough to rally stocks for the second straight day. Really, I think both responses were tepid but I think the market believes at least today that the damage is addressable and that waiting until the Fed meeting in three weeks will not kill the economy. I still believe the biggest risk to the market is a do nothing Fed but, we shall see. For now, all is okay so have a good long weekend.

8/29/07 - See-Saw - Joe Ray
Down almost 300 yesterday as there was no way the Fed would ease based on 3 week old minutes. Today, the Fed will ease based on a letter from Bernanke to Fritz Schumer. Its all about the Fed. A few things of interest. First, safe tech(Dell Microsoft, Intel, IBM) and Hot tech (Apple, EMC and Sandisk) are strong. Biotech looks good because it is not tied to the economy. Oil was strong. Financials , still the barometer longer term were mixed but rallied late. In the really earning our money department, CIBC analyst downgrades Bear Stearns down $70 from its high. Its close to a buy in my book. Nice work wish I could make my living always being late.

8/27/07 - Financials and Housing - Joe Ray
Awful housing starts reverse Friday's up move in better than expected home sales. Can there really be any doubt that it is bad out there. Meanwhile, Bernanke and the Fed fiddle so financials are down. Bernanke speaks this week but I am not optimistic that he understands yet what he needs to do. Could be a rocky week but they will all be until the easing has begun in earnest.

8/23/07 - Countrywide and Hope - Joe Ray
Bank of America's $2 billion injection into Countrywide, the nation's largest pure play mortgage company provided motivation to open up big but there was again worry that the problems are big and still unclear in housing. We are down at lunch. Financials are struggling especially money centers which is a bit odd. My guess is that there remains a mistrust that the Fed will lower rates soon and given what is going on it is understandable. Bernanke continues to be disappointing to me and others who believe cuts in the funds rate not just the discount rate is imperative. On aside note, Amgen which has had a tough year, is up on rumors of all sorts including a Soros stake and interest from Pfizer or a big Euro company.

8/21/07 - R&R - Joe Ray
Sorry, it has been awhile. I took a well needed recharge and the markets went haywire. The bottom line of all this is that the Fed must realize that liquidity will be needed not just once but consistently and that rates must head lower. The future of the stock market will be encapsulated in the financials. Watch them closely. Again, my fear is that Bernanke is new and looks like he can be pushed around by the likes of inflation idiots Lacker and Poole. I hope I am wrong.

8/13/07 - All's Quiet - Joe Ray
Goldman bails out another hedge fund but the markets take it in stride. The Fed continues to inject liquidity in the system without lowering rates. I would still like to see a rate cut but this may be a start. Volatility has slowed which could be good if it means that forced liquidations by funds are no longer necessary to meet redemptions. I will be out the remainder of the week and I hope the relative calm continues.

8/9/07 - Panic - Joe Ray
Worries that subprime and liquidity concerns are world wide issues thanks to a blowup at a French bank. We could not even muster a rally on the close. I am sure tomorrow will be tough, at least early. If you have money, opportunities are coming but caution will rule a bit longer. The weird thing is that we are up on the week. I am out Friday. Be careful but be calm.

8/8/07 - Big Win - Joe Ray
Huge win for the bulls today. Financials were on a tear. Whether it was Bear Stearns ability to raise $2.5 Billion in a bond financing or Cisco saying things look good, I am not sure nor does it really matter. Even at 2 PM CDT when the market went from up 100 to down slightly due to rumors that a big broker may announce lower earnings (which is surly likely but expected) or President Bush saying that is unlikely to increase the portfolio limits at Fannie Mae and Freddie Mac, the bulls rallied back hard. Impressive action which may mean we can rally a bit more barring bad news.

8/6/07 - Huge Reversal - Joe Ray
We turned around Friday, almost exactly and the financials lead the way. Despite attempts to reverse the early morning buying, the market held together with the help of oil down $3. Then in an unusual move, S&P who created turmoil on Friday by downgrading Bear Stearns credit outlook took the uncommon , almost unheard of step saying that the market's reaction was overdone. Well, game over for today . +286.

Tomorrow is the Fed and anyone who speculated rate cut will be disappointed. I am not sure about a substantial change in rhetoric even so I would not be surprised by a down reaction. However, I am becoming that my long time call for a rate cut is getting closer.

7/27/07 - Big Fade - Joe Ray
They tried to rally them but failed miserable at the close. The silver lining if there is one is that financials did not lead down and most indices are about at the lows of June wher there may be some support. Next week will be big and we need to see some stabilization soon. Ignore this for a couple of days and see you on Monday.

7/24/07 - Financials Must Stabilize - Joe Ray
Earnings have been okay. Tech has been at least in-line while multi-nationals are beating thanks to the weak dollar. Financials beat as well but today is another downer as Countrywide says they are seeing delinquencies in non-sub-prime mortgages. Again until financials reach a bottom it will be really hard for this market to move forward.

7/20/07 - Clarity on Financials - Joe Ray
We need someone to believe. Citigroup joins BankAmerica and JP Morgan in beating numbers and the financials get pounded.These companies are smart and resilient but noone believes yet and it is not bad enough yet for Bernanke to do what he should and lower rates. So for now, we wait and hope someone believes enough is enough soon. It would be nice if these companies would show some backbone and announce buybacks but they mat won't more clarity too.

7/18/07 - Inflation, Earnings and a Bear in the Woodshed - Joe Ray
Well, it was fun while it lasted. Decent earnings the first part of the week has given way to concerns about inflation, financing of hedge funds and mortgages. Financials are being taken to the woodshed thanks to comments from Bear Stearns that some hedge funds it manages are near worthless. JP Morgan despite near record earnings that beat consensus, gave cautious comments that financing of private equity transactions are facing more scrutiny (This is a good thing, BTW). Earnings at Pfizer were poor but I am not sure why anyone is surprised. They need pipeline and so far have not been very aggressive to get it. As a corollary, biotech is up as the need for Big Pharma to obtain a pipeline of new products is obvious. Bernanke scares everyone with inflation talk but then comments how tenuous housing and the consumer are. Again, not really anything has changed since the bull market of yesterday. Watch for the financials to stabilize soon though as JP Morgan shows they can still make money in this market.

7/10/07 - Watch Financials - Joe Ray
After a tough day yesterday, stocks improved. One thought was rumors that Bear Stearns was able to collateralize some subprime loans held in a fund they managed. Another rumor was that a public sub-prime lender was to receive a capital infusion. Whether true or not, the financials must start to do better for the market to move forward. Transports also seem to be bottoming despite oil near highs. If these two groups move forward, so will the market.

7/9/07 - Why Buybacks? - Joe Ray
Deal flow has slowed. Is it summer or interest rates? I am not sure, probably a little of both. One thing that continues to go on abated is the enormous share buybacks at some of our largest companies. Conoco to buy back $15 billion and JNJ to buy back $10 billion. Both announced today. Why the buybacks? Is this a better use of funds than acquistions or dividend increases? One reason these companies look to buybacks is that it makes these huge companies that are having trouble growing look like they are growing as EPS goes up due to lower share count even if earnings themselves are stagnant. They are also easy to do, much easier than integrating an acquisition. They are considered more tax-friendly than dividend increases although I like the latter in many respects. Maybe there are no properties worth buying that are accretive to earnings. This may certainly be true as it relates to Conoco and the high oil prices. In JNJ's case however, when growth has been so difficult, it seems like management is either lazy or paralyzed. If a stock is at 14x earnings, I'm not sure dilution is a huge worry, future growth and a potential remedy seems more troublesome.

7/6/07 - Hard to tell what they want? - Joe Ray
Stronger growth and better employment means no rate cut. Weaker numbers could mean the Fed moves sooner rather than later. Given the decent move over the holiday week, it appears that the market prefers good economics. Given some concerns over earnings , this make sense. Financials continue to languish some as a cut would clearly be in their best interests. This is one group that could move post earnings if they can show that the sub-prime problem is muted. Until then, growthier names like retail and tech look to be out front.

7/2/07 - Bond Yields fall, Stock Rally - Joe Ray
Bonds closed up strongly today with the 10 year back below 5%. Stocks have recoupled with interest rates it seems as earnings alone seem unlikely to pull us through the summer. Financials were a little better and there was some merger activity but I still suspect a choppy summer ahead. Despite "Sicko", healthcare had a nice showing and the 500k new iPhone users seem content. All in all, a decent start to the third quarter.

6/29/07 - Subprime Worries and the Fed - Joe Ray
The Fed choose not to raise rates yesterday and the language was somewhat less hawkish. Stocks rallied on these hopes only to suffer after investors began to worry about the economy and subprime. I still believe that the bulk the problems involving subprime lenders will be contained and that financials are cheap here, but the market is waiting for a sign. Someone ought to say something or do a buyback or something given many of these stocks are now less than 10x earnings. As you know, I have been hopeful that the Fed will lower rates and a believer that the economy is less than robust. There is becoming more apparent but the downward earnings revisions are just beginning so I suspect a choppy next month or two. I suspect deal flow could be contained in many cases and the market could narrow. Oil needs to come in as well. Not the best place to be but manageable right now unless the rout of the financials gets worse.

6/27/07 - Fed Watch and Another Brick in the Wall - Joe Ray
I go away and it falls apart. Worries about subprime has led to a weak week. Tomorrow we have the Fed. I hope they are beginning to understand that this economy is far from robust and how we need rates to head down but I fear we are not there yet. The new worry is political. Raising the 15% cap gains tax on certain investments is being discussed and congress is likely to allow generic biologic drugs sooner rather than later. I think it is safe to say that the government is no longer Wall Street friendly which is a new brick in the Wall of Worry.

6/20/07 - Oil and Bonds - Joe Ray
While I am out , you need only look at oil prices and bond yields to see if the market can hold here. Both are approaching new highs which is bad for stocks. Unfortunately, I suspect they will be reluctant to give up gains as well as the fact that Bonds reflect more than just fundamentals. Be careful, I suspect a volatile week could be in store.

6/18/07 - Slow Weekend - Joe Ray
Not much in the way of actual deals this weekend although the rumor mill still is in full swing with Alcoa among the potential bait. The market opened up but is hugging around even as is the bond market. I still worry about housing and believe that the call for higher rates is way off. Bond yields have crept up and have become more attractive in my mind given my belief that the rise in yields is temporary. I will be out Thursday Jun 21-Jun 26 so make note.

6/13/07 - Goldilocks Returns - Joe Ray
A strong beige book with little inflation and a better bond market has created a rally. This market continues to find believers. Oil remains strong but so does industrials and with the better bond market, some growth names like Biotechs and Tech are having a better day. Still, a ton of ecomonics this week headlined by the PPI and CPI (Thursday and Friday) as well as option expiration on Friday, so keep your eyes open and your head up.

6/12/07 - It's About Bonds, Still - Joe Ray
With the ten year now near 5.2%, this market is facing the difficult headwind of bonds. Dealmaking dried up this reason and liquidity issues were cited in at least one deal facing difficulty. Higher yields will not kill this market but it can certainly hurt it. Watch the financials and the bonds closely here.

6/8/07 - Return to Normalcy - Joe Ray
A rough week ends positively as the bonds stabilize, National Semi reports a good number and rumors abound that US Steel will be taken out. I do not think this is more than cosolidation, but after a tough week, I will take it. It will be interesting to see if higher rates deter takeovers or will the fear of even higher rates accelerate the deal timetable.

6/6/07 - Rates Rule - Joe Ray
The market has been down strong as rates hikes overseas and a long bond approaching 5% has caused the rates to be lowered crowd to hide. I believe that rates can and should be lower. Europe, who has its own unique set of problems, looks to put its economy in the commode. It remains to be seen whether Bernanke will follow suit given the housing issues but clearly he remains on pause for now. I expect the rally into summer to slow and expect a quiet market until fall when rate cuts could be a focus again.

6/4/07 - It's Just Easier To Be Private - Joe Ray
Companies continue to look at ways to go private. LBOs, private equity, hedge funds. In today's world where liquidity remains rampant, the need for financing through stock is just a headache. Public companies are burdened by regulation more than ever and the need for money for many cash rich companies is lower than ever. This will likely be unchanged for awhile and the trend toward privatization will continue.

ASCO was a dud for most companies. Perceived losers look to be Genentech who failed to add any sizzle to established drugs Herceptin and Avastin, Regeneron, whose VEG-trap was inferior to Avastin. Winners included Celgene whose Revlimid gets better and better and Onyxx.

5/31/07 - Month Closes at Highs - Joe Ray
A nice close. Tech played some today with a big convention generating a lot of new product interest. ASCO (a giant marketing extraganza for Clinical Oncologists) will highlight new drugs this weekend and often helps biotech. Summer is filled with these types of events which often showcase the future. With the market at new highs, it is a good time to assess the future as well as the present for your holdings.

5/25/07 - Housing? What to believe? - Joe Ray
Today's strong home sales caused the market to go down. Some of us who think a Federal Reserve ease should be imminent saw that the strong sales would likely give them a reason to stay on the sidelines a while longer. Oddly, if you look further at the starts number, the prices paid was way down. In other words, sellers are having to discount. Also today's new home starts were awful which, again, point to an ease. For now, sadly, we wait but the danger to me is that the Fed waits too long, not acts too fast.

5/23/07 - Slowing Down - Joe Ray
The market pulled back to about even after Greenspan commented that he expected a sharp correction in China. Greenspan's record as a strategist is poor, so if anything this may be a bit comforting. Not much moving big today. Alcoa up as the hunter could become the prey. Celgene, a favorite, also had big news yesterday that the market shrugged off. Its compound for Psoriasis looked good in Phase II. The drug could be 3-4 years off but could be another billion dollar deal. Another underappreciated part of the story. Not much else except decent numbers for Medtronic.

5/21/07 - A Tech Deal and the Rally Continues - Joe Ray
AllTel goes private for $27.5 billion and Wall Street is numb. There continues to be just tons of money and the ability to finance large deals seems endless. On the opposite end, Blackstone, a giant hedge fund is monetizing itself selling about 5 billion to the Street. Meanwhile, a Chinese company looks to aggressively buy mining companies. There is reason to be concerned that it is a little hot in here as the market shrugs off things like an interest rate hike in China that would have hurt us bad 3 months ago. You can still ride the wave but be careful.

5/18/07 - Microsoft no longer Mr. Softee? - Joe Ray
For the better part of the last decade, Microsoft has been a passive acquirer. An odd deal here or there. Most of their time has been spent dealing with anti-trust regulators here and in Europe. They have used their enormous cashflow of nearly a billion dollars a month to buy back shares. Well today, Microsoft may be changing its spots as it has aggressively overpaid for Web-advertising firm aQuantive for $6 billion, a 85% premium over its previous day's price. This expensive acquisition could potential portend a number of larger deals that may represent Microsoft's first real counter-attack against Google. If true, money could return to tech sooner rather than later.

5/17/07 - Fly in the ointment? - Joe Ray
A couple of weeks ago, I suggested that biotech needed to be revalued upward after MedImmune received a very generous bid. MedImmune while a profitable biotech with a decent pipeline was no standout and the fact that Icahn and others extracted a 50% premium from AstraZeneca was outstanding. I expected a quick upward valuation of most smaller bios especially after Dendreon was to receive May 15 approval for the first novel cancer vaccine which kept late stage prostate cancer patients alive an additional 4 months without Chemotherapy. Wrong.

Despite a 17-0 vote on safety and a 13-4 panel vote on substantial efficacy, the FDA issued an approvable letter for Provenge, Dendreon's vaccine asking for more data on efficacy and pointing out that the trial missed an endpoint called time to disease progression by less than 1% despite the irrefutable evidence that patients lived longer, there was no safety issues and that every patient would die within 18 months regardless.

It is rare that panel votes are ignored but there are politics involved. Andrew Von Eschenbach, is a new FDA head. He has spoke of the FDA "building bridges not barriers" and work with companies to speed up drug development. Nice rhetoric. Unfortunately, he is dealing with the same old FDA bureaucracy. ODAC (the Oncology Dug Advisory Committee) is run by a guy named Richard Padzur. He is a bureaucrat in the worst sense of the word. Since Provenge was a vaccine, the preliminary hearing was not heard by Padzur's committee but by a panel of experts in vaccines (the CTGTAC) were responsible for hearing Provenge. It is pretty clear that Padzur was upset and stepped in and Von Eschenbach let it happen. Why? Hard to say. Even Dendreon is uncertain what is next.

Given Provenge was be an entirely new frontier, it is hard to make a general assessment about bios in general until you look at how ODAC treated Amgen/JNJ and their multi-billion dollar drugs Aranesp and Procrit. Holding a hearing on safety, Padzur's ODAC severely restricted use on this drugs based on trials that showed some cardiac incidents. The issues however was that these trials overdosed the patients. Rather than making Amgen run new trials, they restrict use of these drugs justify the denial of Procrit and Aranesp to cancer patients by saying essentially "transfusions are not that bad". Amgen now has a real road to hoe and the stock will likely be moribund in the near future. Bios clearly now will face some difficulty getting new drugs approved given the "new FDA". It remains amazing that one of the few industries where America was a leader will soon move overseas should this bureaucratic mess continue.

5/8/07 - Where is the money coming from? - Joe Ray
It's been hard to write consistently because it is hard to say something new. Stocks are up. Overseas markets have been huge and money seems everywhere despite concerns about mortgages and the consumer. Where is the fuel for this market? The answer lies with overseas companies, oil producing governments and domestic companies with fat coffers who are looking for returns. The weak dollar has afforded the overseas companies to buy US entities at a discount. They have concentrated on hard goods companies, commodities and larger vehicles who have seen better performance than their small cap counterparts. While naysayers can say this can dry up at anytime, our thought is that these conditions can last for a while and will provide a nice safety net for stocks this summer. So enjoy... for now.

5/1/07 - Rally Continues - Joe Ray
The rally in stocks, especially large companies, is amazing given the price of oil and the spectre of an economic slowdown. There were a number of layoffs announced today and it is becoming increasingly likely that the people who that rates were moving higher are strong. The economy is tenuous at best and hopefully the Fed will change to more accommodative language next meeting and consider lowering rates the meeting after that. Banks are becoming increasingly attractive in this scenario and while we have been there for awhile the market is moving that direction. We continue to see a pretty good market as we head into the summer months.

4/24/07 - Biotech revalued? - Joe Ray
The purchase of Medimmune by AstraZeneca for $15.6 billion may have changed the way Biotechs are to be valued. The price tag set a new high watermark as the stock was valued at about 12-13 x 2008 sales well above the traditional 7-9x. The price also represented about 50x 2008 earnings. Clearly, large cap pharma needs product pipeline as Amgen, Pfizer, Norvatis and others have need for products. If this price is paid in another deal, I would expect a 10% plus reevaluation of companies like Celgene, Cephalon and others who are already profitable. Companies like Vertex and Regeneron who have late stage candidates should be able to negotiate better royalty rates on the second generation compounds and rest of world rights i.e. money they get from licensing out the U.S. Biotech and specialty pharma should be good place to be for the foreseeable future.

4/19/07 - Healthcare Leads - Joe Ray
Remember when drug stocks were hot and Amgen was a darling, while for today at least the mid-1990s have returned thanks to a study that showed that Aranesp, Amgen's leading drug does not increase the risk of death. Also helping to lead the charge is a great quarter from Schering and solid numbers from Merck. Consolidation thoughts are also in the air with Norvatis, Amgen and Pfizer all looked at as suitors with Bristol, Celgene and Medimmune as targets. Healthcare still looks exciting to us even after a nice run.

4/17/07 - Low expectations - Joe Ray
The market has been concerned about slower economics, sub-prime mortgages and earnings growth that likely will only be 4-5% for the first quarter. Yet, the low expecations as old stalwarts like Citigroup, GE, Coke and JNJ have allowed the market to rally. I expect this could continue as large cap growth has not had solid sponsorship for a long time. This type of leadership should make for a decent run barring external events.

4/12/07 - Who shall lead? - Joe Ray
A pretty decent day with strange leadership. Oils and rails up big, supporting a strong economy. Drugs and consumer non-durables are up as well which generally are defensive. Biotech up big on rumors that Norvatis will spend its $5 billion it will get from Gerber on medium sized biotechs. Glaxo and Pfizer also have growth issues and would look at bios on the same day where Medimmune, amid sized profitable biotech puts itself up for sale. I believe consolidation will remain strong as slower growth will make companies look outside for growth and will help cover up slower earnings growth. So we look to stay invested and look for opportunities.

4/9/07 - Solid Employment, Solid Market - Joe Ray
Positive employment numbers on Good Friday continue to bolster a decent market, which still would rather see a decent economy than a weak one looking for a rate cut. There remains enormous chatter that a huge private equity deal is in the works. First it was Alcoa and now Dow Chemical saying they are not for sale. Biotech x Amgen remains really strong as Deodreon leads the way. Citigroup will discuss its cost cuts and layoffs Wednesday, unfortunately Prince, the CEO, is not laying himself off. Earnings begin Tuesday with Alcoa and visibility will be iffy I believe, so enjoy this run now as the next 2 weeks could be exciting.

4/2/07 - Financials Failing - Joe Ray
Despite a recommendation of Merrill from Goldman Sachs, there is no interest in financials. It can be assumed that when financials do better, then the market is beginning to look beyond the earnings, sub-prime and oil mess we find ourselves in. A short week this week will not spark much interest either. There were a couple of big venture deals totaling almost $60 billion. At some point that money will return to the market but for now the market remains quiet.

3/30/07 - Quarter-End - Joe Ray
The first quarter is ending and we are unable to rally due to the endless questions on the economy, housing, Iran , Oil, whatever. This market will be faced with earnings soon and I suspect that visibility will be murky at best. There will be opportunites created now that will be useful later in the year but the key word right now may be patience. We could use a break in Iran in the short term and a deal or two would not hurt either.

3/28/07 - Jawboning - Joe Ray
Let's hope Bernanke is just playing the game. If he really thinks inflation is a problem given the problems in real estate, housing and sub-prime, then we will be in trouble. If rate hikes are even a remote possiblity, then we are in trouble. I personally do not think he is doing anything but his job, but the cuts cannot come soon enough for me. Given Bernanke is new to the job, there is some risk, thus the markets tough reaction.

3/26/07 - When Bad News is Good News - Joe Ray
New Home numbers were poor and the market was down big early but as the afternoon went on, investors began to realize that poor housing is exactly what this market (or should I say the Fed) needs. The Fed will need an excuse to lower rates and the sub-prime collapse seems to contained and too esoteric to me. Poor housing, everyone understands that. So I say good news, poor housing and again another small step to Fed easing later this year.

On the stock front, not much - a small medical deal as Biosite gets bought and some data out of the Cardiology convention that was good for Abbott Labs. UTX gets an upgrade and so does Time Warner, otherwise not much. Still amazed how the market gave no notice to Revlimid's approval in Europe-the market is missing the size of the opportunity for Celgene there.

3/22/07 - Fed Friendly? - Joe Ray
To many, the Federal Reserve took the first step toward an eventual rate cut by acknowledging the housing/sub-prime crisis and discussing the moderating economy. The market rallied but further gains may be difficult short term as approach earnings season. A couple of things to note about stocks of interest. Sandisk, hated by the street, had a major deal with Hynix, which I believe validates their technology. Up only 3% yesterday, I believe there is more to go. Celgene, a biotech fav, could get preliminary approval in Europe for Revlimid as early as tomorrow morning. Motorola has a disaster as it has no follow-up to RAZR. Thanks to Icahn, however, no one will give away the stock. I expect some retracement this morning after yesterday's pop.

3/20/07 - Spring Break - Joe Ray
Spring Break is a time where my family gets to enjoy the outdoors and each other. This year was no different. For the stock market, spring is a time when the market pauses wondering just where we are economically. The early returns and the fears that sub -prime mortgages would collapse caused last week to be difficult early but over the last few days, it seems apparent that for many players a difficult sub-prime mortgage market may represent an opportunity rather than a big problem. The health of financial stocks will be a big tell going forward. Meanwhile, there is still a lot of capital around given private equity bids for Affiliated Computer and Triad Hospitals. So not much has changed although we continue to hope the Fed will show willingness to ease in coming meetings.

3/12/07 - Quiet Ahead of Expiration - Joe Ray
The market is up a bit ahead of option expiration on Friday. The weekend had a few deals but really pretty quiet. Amgen still struggling due to label changes for their biggest drug, Aranesp. Most other stocks quiet although Sandisk continues to recover nicely. Goldman Sachs and Texas Instruments with earnings this week. I am out the remainder of the week for spring break. Hope the quiet continues.

3/8/07 - Cooler Heads - Joe Ray
The rally of Tuesday gave way to a fade of yesterday and today's rally looks a bit soft but the body language of the market (if there is such a thing) suggests that some rationality has returned. Sub-prime while an issue is a small part of the market and financials are doing a bit better. Asia also is stabilizing and there are signs that tech is not dead witness semis and telecom. This market has more work to do but maybe we are going to move forward from here.

3/5/07 - Stocks approach a Bounce Level - Joe Ray
Another tough day but it seems that the downside momentum is waning. The question is, when is the first bounce? If Asian markets are okay tonight, Tuesday is not out of the question. The road has been tough but the scenario where the Fed cuts sooner rather than later (a premise espoused up here) may be getting closer. No deals this week, so even the comapnies are a bit gun-shy. The next few days are important to provide stability.

3/2/07 - Retest - Joe Ray
We suggested a retest of the lows was likely and here we are. 1380 on the S&P 500 and 2359 on the Nasdaq. We could even retest again Monday but it would be good to hold these numbers at least for today. We are getting pretty oversold so by mid-week we could get a reprieve from the selling.

2/28/07 - Early Retest Success - Joe Ray
200 down is no way to start the morning but a successful retest is surely a good way to end the day. The belief that this big days have to be retest and the subsequent positive afternoon today should help provide some stability. I still believe there will be another struggle or 2 but today is about perfect technically. One fundamental issue is the lingering questions Amgen faces for Aranesp, its biggest drug in cancer. The stock is cheap and should base soon but a 20% decline in 2 weeks is brutal and we are looking at the fundamentals closely.

2/27/07 - What They Wanted? - Joe Ray
The market is down 500 and the gains for 2007 have evaporated as the market struggles with the prospects that recession could be real. Market followers have repeatedly stated we haven't had a 2% down day in forever so now we have one. Market participants have stated that we have not considered a stalling economy and we are. What if China retreats or slow? The big questions that have hung over this market are going to be answered sooner rather than later and the prospects that the Fed will lower not raise rates will move to the forefront soon.

2/26/07 - Wall of Sub-Prime Worry - Joe Ray
Stocks were up originally thanks in large part to our friends in private equity who are willing and able to pay $42 billion for TXU. Other names like Dow Chemical, Texas Industries and Alcoa have all been associated with buyouts in recent days. To counter balance this positive we have Barron's and Greenspan and virtually every publication warning that sub-prime lending is a disaster. Right now, investors are cautious and higher oil and gold will make it harder for the Fed to come to the rescue if needed. Watch this storyline in the days ahead. Until then, financials will be shaky even if cheap and safety like non-durables and drugs should get the safe money.

2/23/07 - Watch Gold - Joe Ray
Pretty quiet day but as Gold reaches $700, it has entered the radar under "Things To Worry About". Oil is also up to $61 so rising commodity prices could mean the Fed is on hold longer than the mortgage (and stock) market would like. Individual names are pretty quiet although Amgen continues to struggle with some adverse trial results of their largest selling drug, Aranesp in the head and neck cancer setting. Hopwfully a deal or two will help Monday.

2/21/07 - CPI Worries Cannot Shake Market - Joe Ray
Despite a higher than expected reading on the CPI, the market continues to hang in there. There is just so much deal flow and talk of potential deals that it is amazing. Whole Foods to buy Wild Oats is the deal of the day but what is amazing is that this is one of many this week. Companies are wash in cash and the economy is steady. Deals will continue as companies will look to get them done before the 2008 political uncertainty. It looks like we survived the relatively tough months of January and February so the spring should be exciting, especially with the Fed in the background.

2/16/07 - Microsoft reigns in Vista, Fed gets in Line - Joe Ray
Two days of testimony before the House and Senate Financial Services (formerly Banking) Committee and it is clear that Bernanke seems generally well liked for his willingness to answer questions and his relative clarity. Wednesday's testimony showed that there really is little thought of a further rate hike at this point despite the question boilerplate that the Fed will be vigilant as regards to inflation. The better question after today's tame CPI and awful housing starts (Weather or inventory?) is will the Fed be willing to reduce rates when it becomes necessary. Given the newness of most of the Fed governors and Bernanke himself, it remains to be seen.

In other news, Steve Ballmer warned that Vista is not a runaway hit and loads of speculation on which company is Private equities next victim. No market Monday so have a nice weekend.

2/13/07 - A Bit of a Rebound - Joe Ray
It has been a tough week or so. On Thursday, Fed governors to yak about inflation implying that further rate hikes could be needed. On Friday, mortgage delinquencies hit multi-year highs. I cannot imagine the Fed being dumb enough to ignore the warnings of housing and raise rates. Perhaps Bernanke, who is scheduled to speak Thursday and Friday, will provide some clarity. On the corporate scene, commodity companies continue to be in play. This time Alcoa may be taken over. Big deal if true at over $40 billion. Bear Stearns did an interesting piece on Southwest as a LBO target with a $23 target. It would surprise me but $23 is a nice number. Semis still a struggle but we may see a day or 2 of a bounce prior to Bernanke and options on Friday.

2/7/07 - Cisco Delivers - Joe Ray
Cisco has a great quarter and provides clearer visibility than virtually any tech company out there. Since Cisco is involved at the heart of the network, one should feel better about capital spending in technology than the market is suggesting. Yet the market, while up, still has a decent bit of skepticism to it. This ultimately is healthy and seasonals may be at fault. Again, February is a decent time to accumulate quality names. I will be out of the office until Monday so no comments until then.

2/5/07 - February Still - Joe Ray
February is a month that is often hard to gauge. This can be a quiet month that is difficult for tech and other growth companies as investors use cash for taxes and remain uncertain about the year economically. I suspect this February will be no different and investors will slowly be able to accumulate stocks thoughout the month. Earnings are fine up about 10% but confidence is low going forward which will provide the opportunity as the quarter progresses. Cisco t