Top 10 News Items 1/19-1/22: Obama Declares War on Wall Street, Chinese Regulators Tell BAnks to Pare Lending, Rep. Brown Wins Kennedy's Seat in Mass.
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Here is a recap of the top news items from this week on Wall Street:
1. On the same day Goldman Sachs (NYSE: GS) reported record profits, President Obama dropped a bomb on Wall Street. Obama is proposing limits on the size and scope of the nation's largest banks to put an end to "risky practices that contributed significantly to the financial crisis." Specifically, Obama wants to stop banks from being able to book proprietary trading operations on their financial statements. Exact details on what "proprietary trading" would be have yet to be released. Traders are not liking Obama's assault on the stock market. Following the news, the Dow sold off more than 500 points.
2. In addition to Obama's crusade against Wall Street on Wednesday, traders also responded to news from China that bank regulators there are telling some banks to pare lending after a record 9.6 trillion renminbi, or U.S. $1.4 trillion, in new loans in 2009. Regulators said China will continue to control the pace and demand of the credit supply. He said regulators will pay close attention to loans for local governments and real estate.
3. Republicans won an extremely key seat in the Senate this week when Scott Brown took Ted Kennedy's chair in Massachusetts. The state's move from blue to red is so important as Democrats are no longer filibuster-proof with the loss of the 60th vote. The news sparked fresh speculation about the outcome of the massive healthcare reform bill. Pharma stocks fell while managed care stocks benefited.
4. Goldman Sachs (NYSE: GS) reported blow out, coincidentally, on the same day that Obama declared his "War on Wall Street". Analysts had been looking for quarterly EPS of $5.20, but Goldman reported a whopping $8.20. Despite the huge beat, traders sold the news. The stock finished this week about 8% lower than Friday of last week.
5. All eyes were on the bank earnings this week. Results came in about inline to somewhat weaker-than-expected. Bank of America (NYSE: BAC) reported a $0.60 loss, JPMorgan (NYSE: JPM) beat on the bottom line, but missed on the sales number, Wells Fargo (NYSE: WFC) announced a surprise profit for Q4, Morgan Stanley (NYSE: MS) missed amid soft trading results and Citigroup (NYSE: C) showed continued progress, but still reported a large quarter loss.
6. Kraft (NYSE: KFT) and Cadbury (NYSE: CBY) finally agreed to a deal this week. Shares of Cadbury jumped 6% on Tuesday, but sold-off every other day this week. Warren Buffett, who is the largest shareholder in Kraft, openly said he doesn't like the deal.
7. In the company's first major acquisition in eight years, Tyco International Ltd. (NYSE: TYC) announced on Tuesday an agreement to purchase Brink's Home Security Holding Inc. (NYSE: CFL), now operating as Broadview Securities, for $2 billion. The terms of the deal will allow shareholders of Tyco to either receive $42.50 per share in cash or a combination of $12.75 in cash and $29.75 in shares of Tyco.
8. Elsewhere on the earnings front: IBM (NYSE: IBM), GE (NYSE: GE), Google (Nasdaq: GOOG), McDonald's (NYSE: MCD) and Kimberly Clark (NYSE: KMB).
9. Late in the week, uncertainty began swirling around Fed Chairman Ben Bernanke's confirmation for a second term. With about 19 days left before his term ends, some market pundits are already considering Vice Chairman Donald Kohn.
10. After almost falling below 17 two weeks ago, the VIX surged sharply this week. It started the week around 18 and surged nearly 10 points to close just under 28 on Friday. Notably, the VIX jumped 22% on Friday.
1. On the same day Goldman Sachs (NYSE: GS) reported record profits, President Obama dropped a bomb on Wall Street. Obama is proposing limits on the size and scope of the nation's largest banks to put an end to "risky practices that contributed significantly to the financial crisis." Specifically, Obama wants to stop banks from being able to book proprietary trading operations on their financial statements. Exact details on what "proprietary trading" would be have yet to be released. Traders are not liking Obama's assault on the stock market. Following the news, the Dow sold off more than 500 points.
2. In addition to Obama's crusade against Wall Street on Wednesday, traders also responded to news from China that bank regulators there are telling some banks to pare lending after a record 9.6 trillion renminbi, or U.S. $1.4 trillion, in new loans in 2009. Regulators said China will continue to control the pace and demand of the credit supply. He said regulators will pay close attention to loans for local governments and real estate.
3. Republicans won an extremely key seat in the Senate this week when Scott Brown took Ted Kennedy's chair in Massachusetts. The state's move from blue to red is so important as Democrats are no longer filibuster-proof with the loss of the 60th vote. The news sparked fresh speculation about the outcome of the massive healthcare reform bill. Pharma stocks fell while managed care stocks benefited.
4. Goldman Sachs (NYSE: GS) reported blow out, coincidentally, on the same day that Obama declared his "War on Wall Street". Analysts had been looking for quarterly EPS of $5.20, but Goldman reported a whopping $8.20. Despite the huge beat, traders sold the news. The stock finished this week about 8% lower than Friday of last week.
5. All eyes were on the bank earnings this week. Results came in about inline to somewhat weaker-than-expected. Bank of America (NYSE: BAC) reported a $0.60 loss, JPMorgan (NYSE: JPM) beat on the bottom line, but missed on the sales number, Wells Fargo (NYSE: WFC) announced a surprise profit for Q4, Morgan Stanley (NYSE: MS) missed amid soft trading results and Citigroup (NYSE: C) showed continued progress, but still reported a large quarter loss.
6. Kraft (NYSE: KFT) and Cadbury (NYSE: CBY) finally agreed to a deal this week. Shares of Cadbury jumped 6% on Tuesday, but sold-off every other day this week. Warren Buffett, who is the largest shareholder in Kraft, openly said he doesn't like the deal.
7. In the company's first major acquisition in eight years, Tyco International Ltd. (NYSE: TYC) announced on Tuesday an agreement to purchase Brink's Home Security Holding Inc. (NYSE: CFL), now operating as Broadview Securities, for $2 billion. The terms of the deal will allow shareholders of Tyco to either receive $42.50 per share in cash or a combination of $12.75 in cash and $29.75 in shares of Tyco.
8. Elsewhere on the earnings front: IBM (NYSE: IBM), GE (NYSE: GE), Google (Nasdaq: GOOG), McDonald's (NYSE: MCD) and Kimberly Clark (NYSE: KMB).
9. Late in the week, uncertainty began swirling around Fed Chairman Ben Bernanke's confirmation for a second term. With about 19 days left before his term ends, some market pundits are already considering Vice Chairman Donald Kohn.
10. After almost falling below 17 two weeks ago, the VIX surged sharply this week. It started the week around 18 and surged nearly 10 points to close just under 28 on Friday. Notably, the VIX jumped 22% on Friday.
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