Yesterday was just another bad day in the market. The highlight was Secretary Paulson scrapped the idea of the Tarp buying distressed assets in favor of supporting consumer loans such as credit cards, auto loans, and student loans. Stocks did not take that as a positive move but showed lack of decisiveness or lack of money to fix the impending problems in our economy. The next bit of news was Best Buy cutting its earnings forecast. The number one retailer is saying the holiday season is definitely going to be weak and likely worse than analysts were predicting. Finally, GE fell under the FDIC umbrella as they received insurance for $139 billion of their debt.
The day progressively felt worse right into the close as each bit of key news took the market lower. After the close, Intel, a leading technology company, cut its forecast. At that point we believed today was set up for another moment of capitulation. Asian markets were down 5% which matched the U.S. declines but Europe is about flat. This morning Walmart announced its third quarter numbers which beat estimates but it trimmed full year expectations based on the strengthening of the dollar. The market probably won't be as disturbed with this lower forecast as business is clearly better than most companies.
Today should be interesting as volume in stocks wasn't huge in the last few days but the trend in prices was clearly lower. We expect to see a big down moment with high volume as we saw on October 10th. It may not happen today but it is coming again. The recession is becoming longer and deeper than most people initially thought and stocks are just adjusting to that fact. Great companies will survive the downtrend and blossom in years to come as they pick up market share or lead the consolidation phase.
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