$20 billion of Damage, Resumption of Trading Expected Wednesday

George Brooks |

Investor’s first read - an edge before the market opens

NOTE: TRADING IN BONDS AND STOCKS IS SUSPENDED AGAIN TODAY.
TRADING WILL ALSO BE SUSPENDED ON THE CBOE TODAY.
NYSE ARCA, THE NYSE’S ELECTRONIC MARKET WILL TAKE OVER FOR NYSE-LISTED STOCKS WEDNESDAY IF THE NYSE EURONEXT EXCHANGE CANNOT OPEN.
REPORTEDLY, THE CONTINGENCY PLAN, ARCA, WIL BE TESTED THIS MORNING.
THE FLOOR OF THE NYSE WAS NOT FLOODED AS ORIGINALLY REPORTED AND ELECTRICITY PROVIDED BY A BACKUP SYSTEM. THE PROBLEM WITH OPENING IS DUE TO CONNECTIVITY BEYOND THE EXCHANGE AS WELL AS EMPLOYEES GETTING TO WORK.
WEDNESDAY IS THE LAST TRADING DAY OF THE MONTH, WHICH HAS IMPORTANCE FOR MONEY MANAGERS WHO NEED TO MAKE MONTH-END ADJUSTMENTS TO PORTFOLIOS.
DJIA: 13,107.21 Friday’s close
S&P 500: 1411.91
Nasdaq Comp.: 2987.95
Russell 2000: 813.25
(Tuesday, October 30, 2012 (8:45 a.m.)
Today marks the first time weather has prevented trading in U.S. stocks for two straight days. A 21-inch blizzard closed the NYSE for two days on March 12 and 13 in 1888.
CONCLUSION: Early estimates indicate 8 million households are without power.
Damage by Sandy is currently estimated at $20 billion.
According to an S&P study, hurricanes haven’t adversely impacted the stock market. S&P notes that on average the stock market appreciated 3.9% in the three months after hurricanes and 5.9% six month after.
I would have to see the raw numbers on that one ! It depends on the market’s cycle when the hurricane hit, where it hit and how much of an impact it had.
The broad message here would be the market marches to a drumbeat of other factors, weather not being a significant one of them.
The employment reports are expected to be released on schedule. It will impact individual stocks and millions of people who have sustained property damage and can’t get to work.
TODAY: Stock-index futures are trading before the open, but without any meaningful consequence for stocks.
This week will produce a lot of economic reports that will shed some light on the economy, not the least of which are the ADP Employment report at 8:15 Thursday and Employment Situation report Friday at 8:30. The latter includes the Unemployment Rate which last month came in at 7.8%. It had political significance last month. Critics of its viability will be watching closely.
ECONOMY: Big week for reports, especially employment related reports Wednesday and Friday.
MONDAY:
Personal Income 8:30) – Rose 0.1% in August after a like gain in July
Dallas Fed Manufacturing Svy (10:30) – Rose in September to a minus 0.9 from minus 1.6 in August.
TUESDAY:
S&P Case-Shiller Home Price Ix (9:00) –rose 0.4% in July. Year-on-year gain was 1.1% from 0.5%.
Consumer Confidence (10:00) – jumped 9 points to 70.3
WEDNESDAY:
Chicago PMI (9:45) – Dropped 3.3 points in September to 49.7. New orders dropped 7.4 points to 47.4.
THURSDAY:
ADP Employment (8:15) – ADP Private payrolls increased 162,000.
Jobless Claims (8:30) – Dropped 23,000 in the October 20 week after a revised increase of 46,000 the prior week after a drop of 27,000 the week before.
Productivity/Costs 8:30) – Revised up in Q2 to a 2.2% annual rate vs. a 0.5% drop in Q1.
ISM Manufacturing Ix (10:00)- Rebounded in September to 51.5 from 49.5 in August, New orders also increased to 52.3 from47.1.
Construction Spending (10:00) – Dropped 0.6% in August after a 0.4% drop in July
FRIDAY:
Employment Situation (8:30) – Nonfarm payrolls increased 114,000 in September after a 142,000 rise in August. Workweek was up to 34.5 hours from 34.4. Unemployment rate dropped to 7.8%
Factory Orders (10:00) – Dropped 5.2% in August due to a temporary drop in aircraft orders.
FACEBOOK (FB - $21.94): FB spent the last 3 days consolidating Wednesday’s 5-point spurt in response to better than expected earnings. Stock should get some buying around 21.60. This correction is orderly suggesting buyers are allowing sellers to exit but at slightly lower prices throughout each day.
I don’t own, nor have I ever owned FB. Generally, I don’t recommend or comment on individual stocks. I started covering FB technically after its IPO because on May 21, I felt at $34 it was very vulnerable in face of all the misunderstanding and hype. I warned of a drop to $24-26, which it did shortly thereafter. Following a rally back into the 30s, FB dropped into the low 20s where on August 2, I forecast a low of $16.88. On September 4, it hit $17.55, its low since its IPO at $38.
George Brooks
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The writer of Investor’s first read, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.

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