As if you needed another reason not to day trade... Did you see what happened in the bond market today? Apparently, Treasury Secretary John Snow -- from across the Atlantic, no less -- led bond traders to believe that the Federal Reserve would begin raising interest rates. Never mind that Snow has even less control over the Federal Reserve than he has over the markets' reaction to his comments.
Bonds sold off and the dollar jumped. Once the comments were explained as not a policy statement but "only an observation that as the economy strengthens, it is likely that interest rates could rise," both markets partially reversed. How reassuring.
In today's Motley Fool Take:
- Is Citigroup's Rebound for Real?
- Quote of Note
- Kmart Keeps Martha
- Shameless Plug: Become a Fool
- TiVo's Manic Monday
- Discussion Board of the Day: Time Warner
- More Fool News
- And Finally...
Is Citigroup's Rebound for Real?
The largest financial services firm in the U.S. had a sharp increase in its investment banking business, where net income rose 31% to $1.4 billion. This was in part due to rising equity markets and, it is assumed, an improving economy.
Although the numbers give reason to have hope for better times ahead for Citigroup, and many big problems are indeed behind it, there's still reason to remain cautious.
The company's mergers and acquisitions division actually saw revenue decline 30%, marking an even more dismal low than the 2002 nadir. Meanwhile, the company's jump in total revenue is coming on the heels of very depressed 2002 results. Remember, this quarter we're comparing results to the quarter that last year marked the bear market's low.
That said, a stock market typically rises on earnings growth, and growth is occurring. But growing in 2003 is relatively easy when you're comparing to 2002. Now that we've seen double-digit earnings gains from many market leaders this year -- including Citigroup -- 2004 will be the real test of whether this rebound is for real.
Quote of Note
"The most important thing to do when you find yourself in a hole is to stop digging." -- Warren Buffett, 1990 Letter to Shareholders
Kmart Keeps Martha
While some major companies are keeping their distance, Kmart's
The lady the Washington Times dubbed "the fabled dominatrix of gracious living" is set to go to trial in January on charges of securities fraud and obstruction of justice. Her legal troubles have led to her being pilloried in the press and have fueled a 22% drop in the circulation of Martha Stewart Living magazine.
For the wounded Kmart -- a victim of falling same-store sales in the face of tough competition from the likes of Wal-Mart
Perhaps Kmart management is paying more attention to the market's opinion of Martha than the media's. Martha Stewart Living Omnimedia
Apparently, Kmart and the Street expect Martha to emerge from her trial in much better shape -- and with much greater credibility -- than many think.
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TiVo's Manic Monday
Shares of TiVo
But here's the thing: This argument ain't new. The threat to TiVo from DVR-integrated products has been around for quite a while, and TiVo's management is actively addressing it. The article left out, for instance, the fact that today TiVo and DirecTV are launching their $99 set-top/DVR box combo. Existing customers can switch to the combo box, and new customers can get in the game, all for $99 including installation.
Heck, the Times piece even rehashes the DirecTV/Hughes
The article also talks about TiVo transitioning from a box, or hardware, company into a subscription-based service. Our own Rick Aristotle Munarriz, however, covered this very thing back in August. TiVo isn't only partnering with DirecTV to get its technology into the homes of customers; holiday shoppers should have 10 different TiVo-related products to pick from later this year.
Given that there's actually no new news today on TiVo's future or its prospects for success, the market's reaction looks overdone.
TiVo was David Gardner's July recommendation in the Motley Fool Stock Advisor.
Discussion Board of the Day: Time Warner
Rick Munarriz sings AOL version 9.0's praises in AOL Loves Rave Reviews. Do you think America Online will grow its subscriber base again? Is 9.0 really that good? Will offering a bare-bones $9.95 discount service help -- or hurt? All this and more -- in theTime Warner discussion board. Only on Fool.com.
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More Fool News
- Wal-Mart Scares Up Sales
- Perks for Pay? Puhleeze!
- Tiffany for Less?
- MedImmune's Winter of Discontent
- Colgate Sticks to Teeth
- E.R. for Investors
For a list of all our stories from today, see Today's Headlines.
Today on Fool.com, we give you 12 Investing Must-Knows.
Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Jeff Hwang, Tom Jacobs, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Reggie Santiago, Dayana Yochim