Love this selloff

This is the news today...a replay from Oct - Nov
Stocks Tumble as Bank Worries Escalate
Stocks fell sharply Wednesday as worries about more credit losses in the banking sector and the earnings season overall took a toll on stocks.

The Dow Jones Industrial Average was down nearly 300 points in morning trading, following a five-day losing streak that shaved 7 percent from the blue-chip average.

The S&P 500 and Nasdaq managed to scrape a gain in the last session, but volatility and uncertainty remained. Investors are worried about earnings, questions surrounding the status of Treasury Secretary nominee Timothy Geithner's former housekeeper and the incoming Obama administration.


Major U.S. Indexes.DJIA8185.65-262.91-3.11%1,171,073,000.NCOMP1490.56-55.90-3.61%593,648,800.SPX841.73-30.06-3.45%3,465,038,700

Indeed, the CBOE volatility index, or VIX, was up 10 percent at about 48.

Economic data offered the market no pick-me-up: Retail sales dropped by 2.7 percent in December, much larger than the 1.4-percent decline expected. November was also revised to show a sharper decline than previously expected.

Meanwhile, import and export prices fell for a fifth straight month in December as costs for oil and even many nonpetroleum products declined. However, the decline was smaller than expected. And business inventories shrunk more than expected in November, suggesting that businesses are liquidating supplies to better match demand, though falling prices have also dented the value of inventories. (The inventories numbers aren't inflation-adjusted.)

Still to come, the Federal Reserve issues its beige-book report of economic conditions from around the country this afternoon.

Financials led the decline amid worries about more fallout in the sector.

Citigroup [C 4.59 -1.31 (-22.21%) ] shares fell below $5, a critical mark where some institutional investors may choose to dump the stock, as analysts speculated that that the company's decision to shed its Smith Barney brokerage unit was the precursor to a complete breakup of the company and that its going to need a lot more capital.

"You'd think the news on banks is baked in, but there's still a lot of headwinds," Rich Parker, head of trading at Stanford Group, told Reuters.

Plus, Parker said, the write-downs are "starting to really scare people outside of the banking area as well."

Meanwhile, Citigroup, like JPMorgan [JPM 25.92 -0.43 (-1.63%) ], bumped up its earnings and now plans to report on Friday. JPMorgan reports Thursday, a week ahead of schedule.

JPMorgan shed about 5 percent, while Bank of America [BAC 10.26 -0.39 (-3.66%) ] lost 3 percent.


By the way the beige book report:
Fed: Economy Starts`09 Weaker; Outlook Dim
The U.S. economy started the new year on weaker footing as recession-shocked Americans retrenched further, forcing retailers to ring up fewer sales and factories to cut back production.

The Federal Reserve's new snapshot of business conditions nationwide, released Wednesday, suggested the country's economic picture has darkened over the last two months.

The outlook appears equally dim. "Overall economic activity continued to weaken across almost all of the Federal Reserve's districts," the report concluded.

To help brace the economy, Fed Chairman Ben Bernanke and his colleagues have signaled that they will leave a key interest rate at record-low levels for some time.

In an unprecedented move last month, the Fed ratcheted down its rate to hover between zero and 0.25 percent.

The Fed will keep rates in that range at its next meeting on Jan. 27-28 and probably for much -- if not all -- of this year, economists predict. The Fed also has pledged to use other unconventional tools to revive the economy.

The recession, which just entered its second year, is already the longest in a quarter-century and appears likely to be the longest downturn since World War II.

Most retailers reported "generally negative" holiday sales and are cautious about sales prospects in the months ahead, according to the Fed report based on information collected between late November and Jan. 5.

"Many retailers in the Philadelphia, Atlanta, Kansas City and Dallas districts expected continued weakness or sluggish sales," the report said.

"Expectations were mixed in the Cleveland district, and retailers in the Boston district were watchful." Consumer spending -- which includes retail sales -- is a major shaper of national economic activity.

But job cuts, sinking home values and cracked nest eggs have made American consumers wary of spending.

In a separate report Wednesday, the Commerce Department said retail sales tumbled 2.7 percent in December, marking a record six straight months in which sales have declined. For all of 2008, sales dipped 0.1 percent, the first annual drop on government records going back to 1992.

At factories, "activity continued to fall" in most Fed districts, with "declines reported across a wide range of industries," the Fed reported. Many manufacturers expected more cutbacks in the future.

"Boston, Philadelphia, Cleveland, Minneapolis, Chicago and Kansas City mentioned reductions in capital spending or plans to reduce capital spending in 2009," according to the report. Activity in the services sector of the economy also declined in most Fed regions.


Added to UYG today at 4.25