I generally avoid watching more than a few minutes of Jim Cramer. He seemed to have drunk more coffee than usual last night. I did not understand his argument why the government's bailout of Citigroup was not a bailout. Apparently, he thought that it was not a bailout since the shareholders were not torched by the government. I certainly agree, however, with his statement that Paulson's sacrifice of the Fannie and Freddie preferred shareholders made the current crisis even more severe since it cut off the main pipeline for raising capital by all financial institutions, namely selling preferred shares.
Fitch downgraded the the senior debt rating of Prudential to A- from A.Yahoo! Finance I generally follow any news relating to my bond positions and I have holdings in both short term and long term debt of Prudential. This downgrade will not impact my decision to add some to the long bond side of my current holding.
GE and Emerson Electric (EMR) both announced disappointing guidance. GE lowered its guidance for the 4th quarter to between $.50 to $.52 from an earlier estimate of $.50 to $.56. MarketWatch Yahoo! Finance Emerson said orders declined up to 10% in October.Reuters Citigroup cut Emerson to hold from buy and cut MMM to sell.MarketWatch Part of the problem for these multinationals is the strengthening dollar. I have a very small position in Emerson, a larger position in GE, and I have sold out of MMM.
Citigroup also cut its price target for Bank of America to $22 from $38 and highlights the possibility of another dividend cut. MarketWatch I would anticipate another dividend cut. The banks are simply proving to me once again that they will find innumerable ways to shoot themselves in the foot and their ingenuity in finding new ways even comes close to rivaling Vanderbilt football's creativity in how to lose.