Morning Watch, May 12
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May 12, 2008
Shares of MBI continue to fall this morning in pre-market trading after the bond insurer reported a huge quarterly loss. MBI lost $2.41 billion in the first quarter with unrealized losses on insured derivatives coming in at $3.58 billion. MBI has been hit hard during the past seven months, falling from a high near $70 to its closing price Friday at $9.43. The stock looks to open lower by 10 percent Monday, putting the stock near $8.40 a share.
HBC shares are seeing gains in pre-market trading after Europe''s largest bank reported a profit during the first quarter. HBC did announce that it took a write-down of $3.2 billion, yet was still able to see gains. HBC also stated that it is increasingly likely that the U.S. will enter a recession in 2008. HBC shares are up nearly 3 percent in pre-market trading with the stock in the middle of its trading range this past week at $86.25.
FDX shares continue to fall Monday morning after declining three percent on Friday. The delivery company warned that its fourth-quarter profits would be hurt by rising fuel costs and weak volume. FDX shares are off another three percent in pre-market trading Monday at a price near $87.50.
Oil prices are off slightly Monday morning with futures down $1.50 a barrel to $124.50. Crude prices have been hitting record highs on a daily basis, but strength in the dollar has allowed prices to fall slightly. Nonetheless, record highs at the pumps have hurt sentiment and are part of the problem the U.S. economy is facing. Speaking of the economy, there will be many important reports this week, including data on retail sales, consumer prices and housing starts. Many Fed speeches are on tap as well.
Some key earnings reports are also on tap this week including retailing giant Wal-Mart ( WMT) on Tuesday and Hewlett-Packard ( HPQ) on Thursday. Overall, the major market indices are in the middle of their trading range with the bulls and bears continuing to play a game of tug-o-war.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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