Inventories Help Hold Confidence

mcdonalds salesMarkets replenished about half of yesterday's losses today as wholesale inventory levels gave investors some confidence. 3M also saw some movement as Citigroup upgraded it to a buy. The market was able to fight its way out of the red with about an hour left of trading left, which as I have said before, can be very easy with such low holiday volume.

Citi is hoping to soon payback TARP funds and follow suit of other banks in hopes to relieve themselves of the strict employee payment limits the government has on banks who choose to accept their help. It amazes me how just months ago, almost all banks were under fire as the country wondered if there were any that could survive. Now, magically, after just a few months later, a few accounting changes later, and about 5000 points on the DOW later, everything is fine and dandy. I find it very hard to believe that banks are actually out of the woods. Sure, they have enjoyed a recovering stock price, but they continue to have billions worth of loans that will be on the chopping block in 2010 for both residential and commercial real estate.

So how will Citi come up with $20 billion so quickly to payback the government. You've got it, from you and I! Citi would like to payback the debt with a $20 billion stock offering that would open up to investors. Such a plan would have been useless back when the stock was under a $1. However, back at $3.86, this can easily be done. Some investors worry that the bank will have enough cash reserves after they pay the $20 billion back. If not, they just will continue not to issue loans as they currently are doing.

Free Credit Report and Score!

McDonald's saw sales drop this quarter as they reported this week, which to me, is a bit scary. When we reach a point in this recession where McDonald's begins to see sales drop, watch out. McDonald's has been that light in the Dow, however, they too are now beginning to feel the heat of the recession. I mean, who can't afford a $1 McDouble?

Oil is continuing to struggle as inventory levels remain high. With this being the winter season and still oil is falling, I don't see it being much of a good 2010 for oil, especially when summer rolls along. There are many pitfalls that could easily hit the economy next year, and all it takes is that "black swan", to send us spiraling again. Happy Trading.


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