After rising last week, the markets started off poorly today. The S&P was down 1.8% while the DOW was down .7%. There was plenty of negative news starting with Toyota's forecast of losing money this year. If Toyota can't earn a profit, how can GM, Chrysler or Ford. Next came the Wall Street Journal article discussing the commercial real estate markets. Leaders of this industry have been petitioning the Government to provide a life line of $200mm to refinance the maturing debt coming due in 2009 and 2010. Commercial real estate properties are heading lower as the over levered industry faces declining rents and a scarcity of lenders. Met Life took a dive as investors fret about the $36 billion of commercial real estate they own. Finally, Walgreen's, the cream of the drug store industry, reported lower than consensus earnings as their sales slowed down. The management expects a weak 2009 and is curtailing new store expansion next year.
The trend of bad news continues and earnings reports for the next few months should be just as dismal. The weak will get weaker and the strong will survive and pick up market share. Although the VIX fear index continues to fall, the Dow still had over a 100 point swing today. Volatility is here for a while as the uncertainly prevails. Investors are praying for a Christmas and New Year's rally but so far it has not arrived. Hope is usually not the best form of investing.
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