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Recap of Last Week’s Market

By Steve Romasko

In the face of a short trading week with light volume, continuing trends advanced and investor response remained indifferent—in other words, investors conceded little ground to the relatively poor economic news as the results no longer carry the ‘shock value’ of the past.

Throughout the week, oil prices continued their slide on the front-month contract, settling at 37.71, the Fed announced new emergency plans and a wave of reports displayed a continually weakening economy. Particularly, (1) initial jobless number spike to a high of 586,000, (2) durable goods orders fell 1% in the month of November , (3) November existing home sales plummeted 8.6% from October, (4) new home sales hit a 17-year low of only 407,000 units and (5) personal income and spending dropped 0.2% and 0.6%.

Perhaps the most interesting piece of news this week was the continually weakening consumer’s effect on GDP data— on top of retailers resounding poor holiday sales (MasterCard Spending Pulse down 4% from 1-Nov to 24-Dec), consumers stripped 2.8% off real GDP growth—causing an economic contraction of 0.5% for the third quarter. With worsening consumer conditions, a continuing global slowdown and a lack of investment spending (evident in inventory data) significant economic contraction should emerge in the fourth quarter GDP data.

In corporate news, GMAC won bank-holding approval—simultaneously becoming eligible for TARP funds, and pulling GM further from the brink of bankruptcy as credit will be extended to GM through GMAC. This provided broad support for the auto sector and markets as investors vacillated earlier in the week of what consequences a GM bankruptcy would do to capital markets. This approval will not necessarily fix the troubled auto-sector in regard to long-term viability but it establishes more flexibility as Detroit and an incoming administration assess all possible solutions. 

Next Weeks Outlook

By Ryan Wheeler

Say “Good Bye” to a depressing 2008 and “Hello” to 2009. This year has undeniably been one of the worst years most people have ever seen, and hopefully ever will. Unless we have an unprecedented rise in the market in the beginning of the week, the market will end 2008 down about 40% for the year, making fund prospectus design a challenge in attempt to hide the ugly chart that they used to highlight.  This short trading week will close out 2008 with minimal economic data and little news expected. The lack of volume could result in unjustified volatility if any news does hit, creating a false picture of the market perception.

If you have any interest in retail stocks, you might want to spend a few minutes walking around Macy’s or JCPenny. It is a sad scene that has typically been full of bargain shoppers taking advantage of discounts. The discounts are present, but the shoppers are not. This should not be a huge surprise to the market, but more of a reassurance that the sell-off in retailers was justified. Consumer Confidence, Initial Jobless Claims and a handful of manufacturing surveys will be released on Tuesday and will certainly show further economic weakness.

The oil market’s only positive news in the past few months, intended supply cuts and tension in the middle east, should help push oil prices a bit higher after a 75% decline from its peak earlier this year.  I laugh to myself every time I think about the news stories back in April and May about the massive inflow of investor funds into commodities in an effort to gain exposure to the asset class that was producing such high returns. It is kind of ironic that all everyone was talking about at the time was the housing “bubble” and meanwhile they could not wait to jump into the next example of one. I am not saying that I called the drop in oil, but I am smart enough to know that you don’t just put a ton of money into something that has just seen a 50%-90% increase in price and expect it to just keep going at that pace. Typical investment public. Don’t get me started on “Green Funds”.

 On a lighter note, the decision by the Fed to give GMAC the title of a “bank” may continue to drive some movement in GM, as the market reacts to GM’s reduced stake in its finance arm. GM rose 12% on Friday in reaction to the news and could continue that move on Monday. As I have said before, the Federal Reserve is turning every company that asks into a bank in order to allow access to emergency funding. At this rate, becoming a bank holding company looks to be like a bad fashion trend that everyone hopes will disappear quickly. The only problem is that this fashion trend comes with contracts and financial regulation that are not easily broken.

Maybe the best thing to do for yourself this week is relax, spend time with family, and go see Marley and Me (score points with your significant other). This is one week that is not really worth wasting your energy on. Au revoir,  2008. See you on the flip side.     

Recap of Last Week

By Steve Romasko

All eyes were on the Federal Reserve this week as they met on Monday and Tuesday to discuss further policy action in order to stem the economic crisis. From the meeting, the FOMC cut the target rate from 1.00% to a first-ever ‘range’ of 0.00-0.25%—effectively eliminating a major policy tool. However, the Fed made it clear that aggressive action will stay the course, and they will do everything possible to stimulate the credit market and the economy— perhaps by buying long-term treasury securities.

Bond traders reacted to this news by piling into long-term Treasuries—notably, the yield on the 10-yr note fell 49bps to 2.08%, while the 30-yr bill returned 2.52%, down 52basis points from the week prior. The seemingly relentless resolve of Bernanke & Co. to stimulate the economy on an infinite basis sent shorts heading for the exits and caused markets to rally 5.1% on Tuesday. However, the market gave back roughly 3.5% of Tuesday’s gains on Wednesday and Thursday, as economic reports were poor and investors returned to the notion that there’s no short-term panacea to fix the economy overnight.

Regarding economics—Industrial production declined 0.6% in November, housing starts declined 18.9% (the largest since March 1984), building permits hit a low and initial jobless claims – while  better than  consensus – are at a 26-year high.

Negativity continued, following the economic reports, as corporations announced their own vulnerabilities to the current environment. Goldman Sachs recorded its first loss as a publicly-traded company; sharing the poor-earnings spotlight with Morgan Stanley as both firms came in significantly worse than expected. In other news, Standard & Poor’s placed GE’s triple-A credit rating on negative outlook and Best Buy, while beating estimates, acknowledged a noticeable shift in consumer behavior.

Meanwhile, in an effort to stem a further decline in the price of oil, OPEC met this week and vowed to cut production 2.2 million barrels per day. Under normal circumstances, prices would rise following a cut as supply was reduced—but these times are anything but normal. Following the announcement, oil prices traded up briefly then plunged under $40 per barrel (settling ~$33bbl for the week) as oil markets compared OPECs situation to that of one trying to catch a falling knife. In their situation, slumping demand will far outstrip their ability and pace to which they can cut supply. This is evident in countries that rely heavily on the sale of commodities to manage their economies—notably Russia. It seems oil production is now a double-edged sword as oil-producing nations who found themselves with immense bargaining power when crude sat at $147bbl, now find themselves (and their profitability) at the mercy of the dependent countries’ demand, or in this case, lack thereof. Although this is poor for some, falling oil is positive for consumers and most businesses as it frees cash, and potentially encourages spending—however, with unemployment swiftly rising and tight credit, this extra cash will not be spent, instead, it will be put toward cash reserves.

In currency markets the US Dollar had a tough week (which is a surprise as falling oil usually leads to a rising dollar) as increasing US debt and roughly zero incentive to hold the dollar weighed heavily on the currency—largely a result of the Fed’s ‘quantitative easing’ which is driving down yields and flooding the market with supply.

The highly-debated decision over the bailout of Detroit came to an end this Friday as the Bush Administration threw the industry a lifeline, after a failure in Congress, citing that the unintended consequences from an automakers’ failure will pose a systemic risk to the already crippled economy. Under the terms of the deal, GM and Chrysler are going to receive $13.4 billion, of the remaining TARP money, up front and the other $4 billion in February pending the release of the 2^nd half of the TARP funds. The loans were given on the precondition that Detroit will make a viable effort to restructure the companies as well as their plans and operations by March 31 in order to become a long-term profitable industry. Also, in an effort to further boost the industry, Canada pledged $3.3 billion this weekend to the automakers with the possibility of more funds in the future. In both instances, the clock is ticking and it will be interesting to see how the events play out; as problems that took decades to build must be unwound and replaced with feasibility in four months—in short, easier said than done.

Happy Holidays!

Next Week’s Outlook

By Ryan Wheeler

The holiday week should produce very light trading as investors look to take their minds off of a bad year and focus on family and friends. Early-week economic data could shake things up, producing a swing that could really just be the result of the low volume.  

The earning calendar is very thin as odd fiscal year names report F1Q09 earnings. The most significant names to report are Walgreens (WAG), expected to report a gain of $0.46, and Micron Technology (MU), expected to report a loss of $0.43. The Walgreens estimate could prove to be a little optimistic. With an empty CEO chair and no guidance, and deteriorating front-end and pharmacy sales, I would not rule out a miss. Micron’s loss estimate is due to depressed DRAM and NAND pricing over the last year, reducing earnings sequentially. Investors will be looking for clue in the call about balance sheet strength and MU’s involvement in Taiwan consolidation efforts, according to Morgan Stanley.

The BEA will release the final revision of GDP on Tuesday, along with Personal Income and Outlays on Wednesday. Economists are looking for a Q/Q decrease of 0.5% in Real GDP (adjusted for Inflation). This report will show investors how the slowdown in spending truly effected production in the US for the third quarter.  Economists expect a flat Q/Q Personal Income report and a decrease in consumer spending of 0.7%, according to Bloomberg. With unemployment at 6.7%, and rising by the day, it is not surprising that Personal Income is looking close to falling into a downward trend. Consumer spending, obviously being highly correlated to income, is also being affected by uncertainty about job security. Consumers would rather put their money into a government insured CD or risk-free treasury security than buy anything else at this point.

Also on the economic calendar are Durable Goods Orders and housing data. Estimates for Durable Goods show a decrease of 3% M/M. A decrease of this magnitude illustrates the reason for weak economic sentiment in the near term. New home sales are expected to decrease to 420k for the month of November, 35% lower than a year ago. I am not sure if this decrease is the full amount we need to get the supply low enough, but it should be close. Existing home sales should come in around 4.9M vs 4.89M last month. Supply of existing homes is still around 10-months, still too high in my opinion. I think we need to get down to the 8-9 range before we start seeing home prices recover.

Further coverage of the Madoff scandal will give people something to talk about this week, again. The FBI has reported that they are shifting agents from Terror cases to Wall Street cases to look for more frauds. Personally, I think that the only reason the FBI is getting involved is because some big-wig at the FBI or a Senator lost their hat to Madoff and are using all resources to figure out what happened. Obviously this is a serious matter that includes major fraud, but let’s allow the SEC and the US Attorney’s Office handle investment fraud investigations and keep the FBI looking for the next nut-job that is going to blow up a building somewhere. That is just my view though.

I hope you all have a great Holiday. Take some time to focus on family and forget the market. Enjoy your week.

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NOTE: This week’s report is appearing late and in shortened form as a result of of the Holidays. It will return to its original form next Sunday.

Recap of last week

By Steve Romasko

Despite the amount of horrid headlines that surfaces on newspapers this week, equities managed to finish the week on a positive note with the S&P 500 giving a 0.4% gain. Wall Street got off to a good start on Monday, following President-Elect Barack Obama’s comments over the weekend—where he supported the need for a massive stimulus package when he takes office to jumpstart the economy and put fiscal prudence on the back burner. The stimulus, as it seems, will be put toward an infrastructure plan, and will potentially create 2.5 million jobs— something not seen since the Reagan era, which led to the development of the US highway system. The market took the announcement as a sign of the incoming administration’s willingness to do whatever it takes to solve the current crisis and rallied as such—closing up 3.8% for the day.

 However, this particularly good news was overshadowed by a wave of poor earnings guidance, economics, and emerging scams. Tribune filed for Chapter 11; 3M, FedEx, Texas Instruments, Kroger, and Electronic Arts to name a few issued downward earnings guidance—suggesting that the crisis has officially spread from a few concentrated sectors to the broad market. Onward, economics were poor with Jobless Claims touching a 26-year high, 573,000, and continuing claims hit 4.43 million; November retail sales fell 1.8% in October—the 3-month trend to month-end November is down 4.7% from 3-month-end August. As a sign of current times, yields on the 1-3 month Tbills turned briefly negative—meaning that some investors actually were ready to pay the government to hold their money.

 Topping off the week, two fraudulent schemes emerged—Illinois governor Rod Blagojevich was indicted on allegations charging him of attempting to sell Obama’s Senate seat; as well as the uncovering of a $50 billion Ponzi scheme, where Bernard Madoff was arrested on count of fraud. The week, then, closed on Capitol Hill, where the Senate denied financing to a flailing auto industry. In the face of this market crashing, doomsday news, investors did the exact opposite expected, and accepted the news by rallying—suggesting that the news has been priced in and the negative developments take us one step closer to the ongoing bottoming process and trader sentiment has improved—however, critics to this view point to the poor fundamentals and the continued flight to safety evident in T-Bills. The upcoming week, as always, should not disappoint.

Next Week’s Outlook

By Ryan Wheeler

This week will certainly be one to remember. The plate of issues is loaded with Economic data and political drama that could tip the markets in either direction with ease. Fed policy, CPI, an OPEC meeting, and a possible TARP-funded loan to the Auto makers will undoubtedly cause waves on the street.

Economists who have made extreme projections about the near term strategy of monetary policy will see the dealers hand on Tuesday when the FOMC announces the results of their meeting. According to Bloomberg, 74% of economists surveyed estimate that the Fed will cut it’s target lending rate between banks by 75bp to .25%. At this point, it is unclear how the market will react to any Fed action. Investors seem to be losing confidence in the Fed’s ability to control the stability of the financial system, and the closer they get to a 0% rate, the closer they get to losing another weapon in their policy arsenal.

The Consumer Price Index(CPI) will be released on Tuesday and is expected to show a decrease for the second month in a row. Economists are starting to become more concerned about deflation as the slowdown in the economy is bringing prices down an increasing rate. This weeks CPI report will either counter or multiply the reaction to the FOMC announcement on Tuesday.   

Oil will be in the spotlight this week on account of OPEC’s delayed meeting to discuss the need for possible supply cuts. The meeting that was scheduled for two weeks ago was delayed in order to evaluate the effects of previous supply actions and the amount of demand changes on prices. OPEC has indicated that they would like to see oil prices rise back to the $75 range. The result of this meeting could be major cuts in production that would result in a rise in oil futures. You can pretty much count on production cuts; the question is how much they will cut.

Other than pressure from economic reports, tax loss selling will be another pressure on beaten down stocks over the next few weeks. Investors who have taken extreme hits in their portfolios will look to offset gains by realizing losses. This will not be as sever as past years due to the scarcity of gains, but it will still be a factor. I hope you all are those people. Enjoy your week.

Recap of Last Week

By Steve Romasko

Despite the short trading week due to the Thanksgiving holiday, the market managed to spark a 12% rally, largely driven by government action. The week opened with the announced rescue of Citigroup, Obama’s new economic team and an $800 billion plan from the Federal Reserve.

The financial sector displayed the biggest gains, surging 31% respectively. The move was led by the weekend announcement by the government to provide Citigroup with a guarantee on roughly $300 billion worth of assets listed as troubled. The plan, then, went on to provide Citi with an additional $20 billion of TARP funds in exchange for preferred shares by the bank. Traders saw four silver- linings to Citi’s cloud. (1) Citigroup will not be allowed to fail. (2) Common shareholders were not wiped out. (3) Core assets were not forcibly divested at depressed prices to raise capital and (4) if necessary, other distressed financials would most-likely be eligible for comparable guarantees.

Following Citigroup’s announcement, came the Federal Reserve. Along with the Treasury Department, the Federal Reserve announced the creation of a new $200 billion facility in an initiative to provide liquidity in the securities markets that aid auto loans, student loans, credit card loans, and small business loans. Along with this measure came an additional $600 billion that will be put toward the obligations of the GSEs and securities backed by Fannie & Freddie, as well as Ginnie Mae. This action was taken in an effort to lower mortgage rates; as this would improve the housing market by giving consumers an ‘incentive to buy’ which consequently, would eventually clear the housing glut.

The latter attempt proved true as mortgage rates did fall week-over-week (30-yr rates fell from 6.04 to 5.97) and improved the overall attitude of the market. However, many traders remained skeptical about the sustainability of the rally. As in the past, rallies following government intervention were corrected downward, continuing the bear market trend. Skepticism is evident in increasing o/n and 3-month Libor rates, as well as the plunging yield on the 10-yr note (2.91%). If investors were convicted of the success of the new initiatives, then Libor rates should have come down (as banks become more willing to lend) and yields should have risen (as investors become less risk-averse). Since this was not the case, take it as a short-lived bear market rally to the upside and move on.

On the economic front, investors were unreceptive to the data as they expected the reports to come on below consensus.Q3 GDP was revised downward to -0.5% from -0.3%, durable orders fell 6.2%, and existing home sales and new home sales fell 3.1% and 5.3%, respectively. Personal spending fell 1% and, although marginally improved from last week, unemployment data still showed a +500,000 reading.

In stock action, Citigroup soared 111% on the week, erasing all of the +60% loss from the prior week, General Motors (GM) in a boost of confidence jumped 71% and Goldman Sachs road the financial sector wave—finishing up 48%.

In light of an extremely volatile month, with the S&P being up as much as 4% to down 23.5%, the market managed to considerably rebound off the lows in the last week of trading and finish down ONLY 7.5% for November.Despite the short trading week due to the Thanksgiving holiday, the market managed to spark a 12% rally, largely driven by government action. The week opened with the announced rescue of Citigroup, Obama’s new economic team and an $800 billion plan from the Federal Reserve.

The financial sector displayed the biggest gains, surging 31% respectively. The move was led by the weekend announcement by the government to provide Citigroup with a guarantee on roughly $300 billion worth of assets listed as troubled. The plan, then, went on to provide Citi with an additional $20 billion of TARP funds in exchange for preferred shares by the bank. Traders saw four silver- linings to Citi’s cloud. (1) Citigroup will not be allowed to fail. (2) Common shareholders were not wiped out. (3) Core assets were not forcibly divested at depressed prices to raise capital and (4) if necessary, other distressed financials would most-likely be eligible for comparable guarantees.

Following Citigroup’s announcement, came the Federal Reserve. Along with the Treasury Department, the Federal Reserve announced the creation of a new $200 billion facility in an initiative to provide liquidity in the securities markets that aid auto loans, student loans, credit card loans, and small business loans. Along with this measure came an additional $600 billion that will be put toward the obligations of the GSEs and securities backed by Fannie & Freddie, as well as Ginnie Mae. This action was taken in an effort to lower mortgage rates; as this would improve the housing market by giving consumers an ‘incentive to buy’ which consequently, would eventually clear the housing glut.

The latter attempt proved true as mortgage rates did fall week-over-week (30-yr rates fell from 6.04 to 5.97) and improved the overall attitude of the market. However, many traders remained skeptical about the sustainability of the rally. As in the past, rallies following government intervention were corrected downward, continuing the bear market trend. Skepticism is evident in increasing o/n and 3-month Libor rates, as well as the plunging yield on the 10-yr note (2.91%). If investors were convicted of the success of the new initiatives, then Libor rates should have come down (as banks become more willing to lend) and yields should have risen (as investors become less risk-averse). Since this was not the case, take it as a short-lived bear market rally to the upside and move on.

On the economic front, investors were unreceptive to the data as they expected the reports to come on below consensus.Q3 GDP was revised downward to -0.5% from -0.3%, durable orders fell 6.2%, and existing home sales and new home sales fell 3.1% and 5.3%, respectively. Personal spending fell 1% and, although marginally improved from last week, unemployment data still showed a +500,000 reading.

In stock action, Citigroup soared 111% on the week, erasing all of the +60% loss from the prior week, General Motors (GM) in a boost of confidence jumped 71% and Goldman Sachs road the financial sector wave—finishing up 48%.

In light of an extremely volatile month, with the S&P being up as much as 4% to down 23.5%, the market managed to considerably rebound off the lows in the last week of trading and finish down ONLY 7.5% for November.

Outlook for Next Week

By Ryan Wheeler

After a week of mixed emotions stemming from mixed news and big families, this week could bring more of the same uncertainty in the financial markets. Investors will be looking for reassuring signs to support last week’s rally and could be disappointed with the line-up of economic indicators due this week. There will also be more talk about the auto makers in congress this week about whether or not to save the failing giants.

The tug-of-war between corporate bonds and risky equities will be fueled by further questions about the security of coupons and principle as talks of renegotiated terms on GM’s unsecured debt could start a new trend in the High Yield market. Spreads in the high yield bond market remain at extremes and are attractive for investors with an appetite for high risk. The result of GM’s offer to PIMCO and other large bond holders to accept a reduced principle will certainly move spreads as investors make moves in reaction to the news. Holders of distressed bonds might see this situation as an indicator of some of the solutions companies might take to reduce debt at investors’ expense.

On the economic calendar, the employment situation for November will be measured by unemployment, non-farm payrolls, average wages and the average hourly work week. Unemployment is expected to raise 20bp to 6.7% due to further layoffs in most industries. While a 20bp increase is generally significant, investors seem to have developed a stronger stomach for depressing economic numbers. Any number relatively close to 6.7% should not jolt investors into panic selling. The Fed’s Beige Book issued on Wednesday will show the state of local economies and could give clues about the action of the FOMC at their next meeting in two weeks. Across the ocean, the BOE and ECB monetary policy committees will announce any decisions they make during their meetings to jumpstart growth in their jurisdictions. The markets will look at these announcements as indications of the Fed’s move after the coordinated rate cuts last month.

Oil will certainly react to OPEC’s decision to wait another two weeks until they decide whether or not to cut production to support prices. OPEC stated that they believe $75 a barrel is a “fair price” for oil and investors who are heavily weighted in drillers will undoubtedly agree as their investments have tanked as oil prices have dropped. It is not likely that oil will get back to $75 in the near term due to increasing destruction of consumer demand, but OPEC’s moves will help drillers plan for the intermediate term. Expect movement in both up and down stream energy names this week.

Retailers will report on Black Friday results this week and the market will listen closely. Estimated results from research firm ShopperTrak RCT Corp have indicated a 3% increase compared to 8.3% last year. Investors are surly expecting weakened demand on Main Street this year, but the severity of the weakness is still up in the air. The start to the busiest shopping season of the year will help gauge how retailers’ earnings will fair in the 4^th quarter and investors will attempt to position themselves early to take advantage or avoid loss when those results come out in January.

At this point the Fed seems to be running out of firms to bail out. Just about every large-cap bank has seen some sort of aid from the US government in the last few months, leaving the Fed no choice but to look for other industries to save. This week will not paint the whole picture for the future of the US economy, but it will speak loudly to the extent the government is willing to go to support the current corporate landscape. Wall Street will look at the government’s action as a measure of the thickness of their safety net that, up until now, has seemed infinite. This week might be a wake up call. After a week of mixed emotions stemming from mixed news and big families, this week could bring more of the same uncertainty in the financial markets. Investors will be looking for reassuring signs to support last week’s rally and could be disappointed with the line-up of economic indicators due this week. There will also be more talk about the auto makers in congress this week about whether or not to save the failing giants.

The tug-of-war between corporate bonds and risky equities will be fueled by further questions about the security of coupons and principle as talks of renegotiated terms on GM’s unsecured debt could start a new trend in the High Yield market. Spreads in the high yield bond market remain at extremes and are attractive for investors with an appetite for high risk. The result of GM’s offer to PIMCO and other large bond holders to accept a reduced principle will certainly move spreads as investors make moves in reaction to the news. Holders of distressed bonds might see this situation as an indicator of some of the solutions companies might take to reduce debt at investors’ expense.

On the economic calendar, the employment situation for November will be measured by unemployment, non-farm payrolls, average wages and the average hourly work week. Unemployment is expected to raise 20bp to 6.7% due to further layoffs in most industries. While a 20bp increase is generally significant, investors seem to have developed a stronger stomach for depressing economic numbers. Any number relatively close to 6.7% should not jolt investors into panic selling. The Fed’s Beige Book issued on Wednesday will show the state of local economies and could give clues about the action of the FOMC at their next meeting in two weeks. Across the ocean, the BOE and ECB monetary policy committees will announce any decisions they make during their meetings to jumpstart growth in their jurisdictions. The markets will look at these announcements as indications of the Fed’s move after the coordinated rate cuts last month.

Oil will certainly react to OPEC’s decision to wait another two weeks until they decide whether or not to cut production to support prices. OPEC stated that they believe $75 a barrel is a “fair price” for oil and investors who are heavily weighted in drillers will undoubtedly agree as their investments have tanked as oil prices have dropped. It is not likely that oil will get back to $75 in the near term due to increasing destruction of consumer demand, but OPEC’s moves will help drillers plan for the intermediate term. Expect movement in both up and down stream energy names this week.

Retailers will report on Black Friday results this week and the market will listen closely. Estimated results from research firm ShopperTrak RCT Corp have indicated a 3% increase compared to 8.3% last year. Investors are surly expecting weakened demand on Main Street this year, but the severity of the weakness is still up in the air. The start to the busiest shopping season of the year will help gauge how retailers’ earnings will fair in the 4^th quarter and investors will attempt to position themselves early to take advantage or avoid loss when those results come out in January.

At this point the Fed seems to be running out of firms to bail out. Just about every large-cap bank has seen some sort of aid from the US government in the last few months, leaving the Fed no choice but to look for other industries to save. This week will not paint the whole picture for the future of the US economy, but it will speak loudly to the extent the government is willing to go to support the current corporate landscape. Wall Street will look at the government’s action as a measure of the thickness of their safety net that, up until now, has seemed infinite. This week might be a wake up call.