Simple Questions With Not-So-Simple Answers

July 22, 2008

Are you like me? My brain is in overdrive. There is so much to talk about, I dont know where to begin.

What a time to be covering these markets. Every day is a new roller coaster ride! You just dont know what to expect and thats a classic reason why you shouldnt invest in the short-term. Look at the market. When I started the day, the futures were pointing to a much lower opening. Roughly 2% on the Nasdaq and oil was higher. Now the markets have turned even stocks like Wachovia, which had a horrible quarter but did the right thing by cutting the dividend and announcing further job cuts, is higher on the day. How about oil? Down $3 dollars. Now at a little less than $128 a barrel. Talk about a seat change. Wow!!!!

So the thing that really got me going this morning was the release of the American Express numbers. I interviewed the companys chairman just about a month ago and, while he had been guiding down expectations over the past couple of months, clearly it was not enough. The deterioration of the high-end consumer was enough to send this stock in a tailspin and the fact that they suspended 2008 guidance makes me nervous.

Have you noticed something? Call me crazy, but when I used to trade, only tech companies reported after the bell so that the market could properly adjust for the volatility of the earnings. Tech companys earnings were more difficult to project and the swings could be wild. Now, you have financial companies and health care companies following suit. Think about the past week. We have had Merrill report after the bell, then Merck and Schering-Plough and today Washington Mutual. I am leaving others out, but this just shows you what is going on. Investor psyche is so fragile and companies are so concerned about how they disseminate the news that they are choosing to move their earnings releases to after the bell. This is very telling!

Another thing that I cant help but think about is credit scores. Personal finance experts always warn you about keeping your credit score in the best of conditions so that you can qualify for debt or a mortgage when you need it. In this environment, that advice doesnt seem to be working. How many people do you know who have applied for a home loan at multiple banks and been denied? I met with some friends over the weekend who told me stories about people with tens of millions of dollars of assets tied up in homes or illiquid instruments that cannot refinance their homes or get a home equity loan even though the appraised value is there.

Also, personal finance experts tell you not to keep too high a balance on your credit cards depending on the size of the line because it could affect your credit score. Is that hurting consumers? Or is it irrelevant because no one can get access to lines of credit at this time? I am not telling you to do anything to hurt your credit score and would not advise keeping 10 credit cards but Im simply wondering whether the way we measure the health of the consumer will change given the current environment. In New York, investment bankers are not getting the loans they want to buy apartments even tough they have excellent credit scores because the vast majority of their income is based on bonuses. Just one example of how the pendulum has shifted.

Finally, Im wondering if those high end private jet flyers will start initiating private plane pools as opposed to car pools to cut down on costs and make the experience more fuel efficient. Why not? If you pay hourly for a 4 to 6 seater why not bring a couple extra execs along for the ride, split the cost, cuts the companies executive expenses and in the process you learn a little bit about the guy youre flying with. Just a thought!

Imagine Thain, Blankfein and Mack in one plane

Or better yet Icahn, Yang and Ballmer.

Source: http://glickreport.blogs.foxbusiness.com