Wednesday - June 17, 2009

Screenshot from http://finance.yahoo.com/

Three days in a row the market has dropped. S&P500 is down -3.75% since last Friday. Volume is not bad. Investors seemed to be rushing to cash out from the earlier rally as they realize that the fundamentals to lead the market higher are lacking.
Fedex (FDX) announced it's latest quarter results which are better than expected; however, they issued gloomy outlook. They expect that their first two fiscal quarters in 2010 will be extremely difficult. I see transportation as a second messenger in signaling how the economy is doing. When businesses are good, the need for transportation increases.
President Obama released his plan for financial regulation. Analysts say that the regulation could hurt banks' profits and their competitiveness. The proposed regulation demands that, among other things, an increase in capital, which lowers the banks' leverage and potential profits. However, it might take 2-3 years for negotiation before the plan turns into law. How far the changes would be remains an open question. My view is that whether there is regulation or not, banking is the biggest player in the game of economy, just like in the board game - Monopoly.


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