George Chamberlin's Money in the Morning

I can't remember any other day in the financial markets that have had as many moving parts as today. Stocks are lower in early trading after the Dow Industrials gained 144 points yesterday, making it three sessions in a row to the upside. However, below the surface there are a number of things at work. Let’s count them:

1. A bombshell announcement from Warren Buffett just before the start of trading today saying he -- through his company Berkshire Hathaway -- is investing $5 billion into preferred shares of Bank of America. And a sweet deal it is. The preferred stock will pay Buffett an annual dividend of 6 percent and he also gets warrants to purchase up to 700 million shares of Bank of America stock at a price of just above $7 a share during the next 10 years. Shares of BAC are up more than a buck in early trading today at $8.16. In other words, Buffett, if the deal were completed now, could exercise the warrants and pocket a cool $700 million in one day.

2. Initial claims for jobless benefits rose by 5,000 in the past week to 417,000. The number was pushed up by the 45,000 Verizon workers who went on strike a couple of weeks ago, making them eligible for jobless benefits.

3. Speaking of jobs, Steve Jobs has stepped down as Apple CEO. He has been on a medical leave of absence for months and has suggested interim CEO Tim Cook be given the position on a permanent basis. Jobs will stay on as chairman. Apple stock is down less than 2 percent on the news.

4. Gold continues to fall. It is down another $30 to $1,717 an ounce this morning after plunging more than $100 yesterday, bringing the fall in the past three days to more than $200. It is fun to watch all the gold bugs scatter around explaining that this is just a temporary drop that is creating a great buying opportunity. The trading exchanges have raised the margin requirements, meaning traders cannot leverage their purchases as much as in the past.

5. Anticipation is running high ahead of Ben Bernanke's big talk tomorrow morning -- 7 a.m. Pacific time -- at the Fed meeting in Jackson Hole. It was a year ago at this event that Bernanke unveiled QE2 and some believe he will offer some other stimulus plan at this meeting. The Fed head rarely delivers on such anticipation so get ready for more platitudes: there are signs of growth, inflation is low, and the Fed is ready to act if necessary. The lack of action by the Fed could probably result in a stock rally, as investors applaud a lack of more government spending. Any stimulus plan would be viewed as evidence the economy is in big trouble.


A new survey from JustAnswer -- a "go-to website for people who need a quick answer from an expert" -- finds San Diego ranks number 74 out of 18,000 cities based on the number of people who paid to get information from the service. More than 9,000 inquiries were generated from folks in San Diego in June. Topping the list was Littleton, Colo.


There is growing evidence the Obama administration will launch a program to allow millions of homeowners with government-backed securities to refinance their loans at today's lower mortgage interest rates. Supporters say such a move would strengthen the economy, increase consumer spending and allow upside-down owners to stay in their homes. Critics say such a move would hurt private lenders and harm investors who are in government-backed securities. Fannie Mae announced this morning the average rate on a 30-year fixed rate loan ticked up to 4.22 percent in the past week.


Looks like Heath Bell's days as a Padre are over. Reports suggest the ace reliever could be wearing a San Francisco Giants uniform for the rest of the season. Others suggest he could wind up in Arizona. The Padres have until tomorrow to trade Bell, lose him through waivers, or keep him on the team. No matter what, it’s not likely to end well.

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