Today's New York Times has an excellent article on the difficulty that small businesses are still having in getting loans. While the capital markets have freed up, and as a result larger firms are able to tap the capital markets for bonds and commercial paper, small businesses cannot do that. For very small businesses, the main sources of credit -- home equity loans and credit cards -- are drying up. Now it looks like one of the biggest lenders to slightly larger firms, CIT Group (CIT) is on the brink of failure. The length and depth of the recession has made many small businesses less credit worthy, and banks are being extremely cautious. This looks like it could be another reason that the labor market is going to stay weak for some time to come. The graph below shows the change in employment levels by firm ...

Naturally, at the focus of renewed market pessimism is a struggling financial: CIT Group. (NYSE:CIT) The company — a hundred-year-old staple of small/medium business lending — is no stranger to walking the credit tightrope. They narrowly averted fiscal meltdown late last year with $2.3 billion in TARP bucks… then again in July by goosing bondholders with a $3 billion a debt-to-equity deal. Back then we joked, “Look for this crisis to repeat in a couple weeks.” We were wrong… it took a couple months.

So with some historic irony, one year and two weeks after Lehman Bros. bit the dust, another debt-burdened, credit-reliant, potentially “too big to fail” institution is looking to either stick its bondholders with a raw deal or enter sudden bankruptcy. We won’t pretend to know exactly how this one will end, but the market has certainly voiced its opinion:

...

US stocks ended slightly lower on Wednesday even as the IMF noted that the world economy was recovering from the crisis faster than expected.  However, the agency cautioned that the improvements were in part due to stimulus measures taken by governments and central banks, and being driven by higher growth in Asia.  Revised second quarter GDP indicated the economy shrank at a 0.7% annual rate, compared to the initially reported 1% contraction and better than the expected 1.2% drop.

On Wednesday, the Dow ended down 29.92, or 0.3%, at 9,712.28 after falling nearly 134 points at one stage.  The S&P 500 index fell 3.53, or 0.3%, to 1,057.08.  The Nasdaq fell 1.62, or 0.1%, to 2,122.42.  US stocks by and large closed lower as profit taking affected major indexes on the final trading day of what had been a strong third quarter for the market.  Sentiment was essentially dampened

...

US stocks ended slightly lower on Wednesday even as the IMF noted that the world economy was recovering from the crisis faster than expected.  However, the agency cautioned that the improvements were in part due to stimulus measures taken by governments and central banks, and being driven by higher growth in Asia.  Revised second quarter GDP indicated the economy shrank at a 0.7% annual rate, compared to the initially reported 1% contraction and better than the expected 1.2% drop.

On Wednesday, the Dow ended down 29.92, or 0.3%, at 9,712.28 after falling nearly 134 points at one stage.  The S&P 500 index fell 3.53, or 0.3%, to 1,057.08.  The Nasdaq fell 1.62, or 0.1%, to 2,122.42.  US stocks by and large closed lower as profit taking affected major indexes on the final trading day of what had been a strong third quarter for the market.  Sentiment was essentially dampened

...

Companies featured in this edition of the newsletter: ACTC, CVM, CUR, DKAM, FMTI, ICLK, IMUC, IWEB, OMCM, ONEZ, SIHI, TAGS

Markets took pause from their four week run this week, as some less than encouraging economic reports coupled with profit taking led to slight declines in all of the major indices. All told, the Dow ended the week down 0.5%, surrendering 48 points to close at 9321, bringing its YTD gains to 6.2%. The Nasdaq was off 0.7%, closing at 1985, up a healthy 25.9% on the year, while the S&P 500 and Russell 2000 were down 0.6% and 1.5% respectively, paring their yearly gains to 11.2% and 12.9%.

Disappointing economic data relating to inventories and consumer sentiment soured the mood for much of the week, as worse than expected declines in retail sales, consumer sentiment, and business and wholesale inventories gave investors cause for concern. Retail sales

...

Snap-on Incorporated (SNA) reported dismal second quarter 2009 results due to the turbulent European economy and spreading impact of the global recession. EPS for the reported quarter plunged 43.5% year over year to 65 cents, weaker than the Zacks Consensus Estimate of 73 cents. Net sales (excluding financial services revenue) declined 23% to $590 million; excluding foreign currency translation, it plummeted 16.4%.  Total revenue fell 21.5% to $615.6 million. However, on a sequential basis, EPS increased 8.3%, whereas net sales were up marginally by 0.8% (excluding foreign currency translation), showing some signs of improvement. Operating earnings fell 37.1% year over year to $70.3 million, whereas on a sequential basis operating earnings increased 9.3% driven by cost reduction initiatives. Snap-on expects third quarter 2009 sales and earnings to decline year over year. Commercial & Industrial Group segment sales fell 33.9% to $256.4 million; ...

CIT dodges bullet, others report super-sized earnings… are banks really on the mend? Greg Guenther with a safe way to play the volatile biotech sector… California finally plugs its budget gap… with taxes, debt and accounting fraud… Chris Mayer on a rising dilemma for miners of the world… Plus, even the dead can’t dodge the recession… backyard burials booming…

You can rest easy today… the financial crisis is over.

CIT Group, the new epicenter of systemic financial risk, got thrown a lifeline this week from its bondholders. As we reported Friday, the company needed $3 billion — fast — in order to stay afloat. It was rightfully denied a government bailout, but was able to strike a last-minute deal with holders of its debt. Of course, the market rejoiced… the S&P 500 rose 1.1% yesterday largely on the news. But again, we’re calling the market’s

...

Continued optimism and new signs that the economy is showing signs of resilience pushed stocks higher Monday with the major indexes recording broad based gains and the S&P 500 index zooming off to its highest level since November.  Just a little over a week ago, weak unemployment numbers, weaker-than-expected retail sales and disappointing confidence data had investors worrying and talks of a second stimulus package started to gain ground.  However, impressive earnings numbers, robust outlook from companies and a number of analyst upgrades have boosted investor confidence as they have appeared increasingly eager to participate in riskier bets.   

On Monday stocks hit their highest levels since November 5, as all ten industry groups on the S&P500 moved higher during the session, led by consumer, commodity and industrial stocks.  The gains were led by basic materials (+2.4%), industrial (+1.9%) and oil and gas (+1.5%).  The DJIA added 1.2% or 104

...

CIT Rescue Shows Credit Isn’t Dead

by The Investment U Research Team

We may not be out of the woods yet in terms of the global economic picture, but the news from CIT Group (NYSE: CIT) is a big indicator that things are getting (slightly) better.

CIT announced that it would take a $3 billion loan from their bondholders to save the company from bankruptcy. Shares had plummeted 80% in a crash last week that was eerily similar to Lehman Brothers and Bear Stearns.

Rescues like this are a part of normal market where at some point there are buyers for assets. When assets can fall well below their value without buyers stepping in – as we’ve seen over the past six months – its unusual and mean the markets aren’t

...

• CIT Group (NYSE:CIT) and a number of key bondholders agreed to a $3 billion rescue agreement that will allow the company to restructure without filing for chapter 11 bankruptcy protection

• Hasbro (NYSE:HAS) reported Q2 earnings of 26 cents a share, ex-items, beating Street estimates of 23 cents a share.  Revenues rose 1% year-over-year to $792.2 million, versus consensus estimates of $797.1 million

• Halliburton (NYSE:HAL) reported Q2 earnings of 30 cents a share, ex-items, beating consensus estimates of 27 cents a share.  Revenues in the quarter sank 22.1% year-over-year to $3.5 billion, but came in ahead of consensus estimates of $3.4 billion

• Las Vegas Sands (NYSE:LVS) is reportedly planning to apply for an IPO in Hong Kong in August

•  Weatherford International (NYSE:WFT) missed Q2 EPS estimates of 16 cents, reporting earnings of 10 cents a share on revenues of $2.0 billion

• Johnson Controls (NYSE:JCI) reported fiscal Q3 earnings of

...