Daily Market Commentary for August 10, 2009

E-Bay Motors

GM and eBay are ready to launch their online auto marketplace, could it turn eBay into eBay motors? (read more at Millennium-Traders.Com)

Economic data released today: N/A

At the NYSE closing bell on the New York Stock Exchange, here is how the major world indices and major U.S. stock indices ended the trading session on the world markets as well as the emerging markets including the stock market closing bell price:
DOW (Dow Jones Industrial Average) shed 40.05 points, EOD 9,330.02
NYSE (New York Stock Exchange) shed 36.66, EOD 6,550.05
National Association of Securities Dealers Automated Quotations (NASDAQ) shed 9.33 points, EOD 1,990.92
S&P 500 (SPX) shed 3.93 points, EOD 1,006.55
BEL 20 (BEL20) gain 41.77 points, EOD 2,294.44
CAC 40 (CAC40) shed 16.6 points, EOD 3,504.54
FTSE100 (UKX100) shed 9.36 points, EOD 4,722.20
NIKKEI 225 (NIK/O) triple digit gain 112.7 points, EOD 10,524.26

New York Stock Exchange (NYSE) stock market indicators for the trading session today:
Advanced stock prices 1,461, declined stock prices 1,636, unchanged stock prices 77, stock prices hitting new highs 87 and stock prices hitting new lows 3. NYSE quotes for volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the New York Stock Exchange stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: APA gain 1.34, HOD 88.46, LOD 86.01, EOD 88.40; CME shed 3.04, HOD 287.90, LOD 281.54, EOD 282.93; RTP shed 8.19, HOD 156.82, LOD 153.68, EOD 155.52; OCN gain 2.06, HOD 10.71, LOD 8.85, EOD 10.13; BKS gain 0.97, HOD 28.78, LOD 24.00, EOD 25.01; POT shed 0.53, HOD 97.41, LOD 95.61, EOD 96.45; GGC gain 8.32, HOD 36.35, LOD 27.01, EOD 35.65; AZO shed 3.34, HOD 151.00, LOD 146.67, EOD 147.98; SWM gain 4.86, HOD 48.50, LOD 43.00, EOD 47.90; FAS shed 1.46, HOD 77.40, LOD 72.53, EOD 74.63; ARD shed 0.97, HOD 30.25, LOD 29.25, EOD 29.56; RBS shed 1.10, HOD 15.25, LOD 14.72, EOD 14.92; AIG gain 1.56, HOD 29.89, LOD 27.90, EOD 28.70; AXP shed 0.35, HOD 32.97, LOD 31.97, EOD 32.34; BBY shed 2.09, HOD 38.61, LOD 37.21, EOD 37.66; STT shed 1.29, HOD 54.11, LOD 51.26, EOD 52.57.

National Association of Securities Dealers Automated Quotations (NASDAQ) stock market indicators for the trading session today:
Advanced stock prices 1,324, declined stock prices 1,414 unchanged stock prices 123, stock prices hitting new highs 53 and stock prices hitting new lows 8. NASDAQ quotes, volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the NASDAQ stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: FSLR gain 0.87, HOD 147.87, LOD 144.63, EOD 147.34; PCLN gain 18.92, HOD 150.88, LOD 142.00, EOD 150.24; BIDU gain 4.84, HOD 354.55, LOD 346.51, EOD 351.88; GMCR gain 1.92, HOD 69.90, LOD 67.58, EOD 67.98; DISH gain 0.88, HOD 20.38, LOD 18.99, EOD 19.30; RIMM shed 3.81, HOD 75.70, LOD 72.93, EOD 73.28; ELON gain 1.75, HOD 11.98, LOD 9.46, EOD 10.05; GENZ gain 2.35, HOD 51.09, LOD 47.09, EOD 50.54; ALGT shed 2.42, HOD 41.74, LOD 39.50, EOD 39.87.

Market trends on the American Stock Exchange (AMEX) and stock market indicators for the trading session today:
Advanced stock prices 259, declined stock prices 288, unchanged stock prices 54, stock prices hitting new highs 21 and stock prices hitting new lows 2.

Chicago Board of Trade Futures Market for the day, at time of this posting:
E-mini S&P 500 (ES) Sept 09: EOD 1003.50; Change -3.00
E-mini NASDAQ-100 (NQ) Sept 09: EOD 1,607.00; Change -12.50
E-mini DOW $5 (YM) Sept 09: EOD 9,291; Change -34
E-mini S&P MidCap 400 (MF) Sept 09: EOD 649.30; Change -1.80
Nikkei 225 (Yen) Sept 09: EOD 10,520; Change -70

World Currencies for the Forex Market, for Forex Trading by active Forex Traders, at time of this posting:
Euro 0.7073 to U.S. Dollars 1.4139
Japanese Yen 97.0900 to U.S. Dollars 0.0103
British Pound 0.6073 to U.S. Dollars 1.6465
Canadian Dollar 1.0886 to U.S. Dollars 0.9186
Swiss Franc 1.0854 to U.S. Dollars 0.9213

COMMODITY MARKETS:
Energy Sector - Nymex:
Light Crude (September 09) shed $0.33, EOD $70.60 per barrel ($US per barrel)
Heating Oil (September 09) gain $0.02, EOD $1.93 a gallon ($US per gallon)
Natural Gas (September 09) shed $0.03, EOD $3.64 per million BTU ($US per mmbtu.)
Unleaded Gas (September 09) gain $0.02, EOD $2.03 a gallon ($US per gallon)

Metals Markets - Comex:
Gold (December 09) shed $12.60, EOD $946.90 ($US per Troy ounce)
Silver (September 09) shed $0.31, EOD $14.36 ($US per Troy ounce)
Platinum (October 09) shed $17.60, EOD $1,250.90 ($US per Troy ounce)
Copper (September 09) shed $0.02, EOD $2.77 ($US per pound)

Livestock and Meat Markets - Chicago Mercantile Exchange (cents per lb.):
Lean Hogs (October 09) gain $0.10, EOD $45.00
Pork Bellies (February 10) no change $0.00, EOD $79.58
Live Cattle (October 09) no change $0.00, EOD $88.35
Feeder Cattle (September 09) shed $0.68, EOD $100.30

Other Commodities - Chicago Board of Trade (cents per bushel):
Corn (December 09) gain $4.00, EOD $330.50
Soybeans (November 09) shed $28.50, EOD $1,010.00

BOND MARKET:
2 year EOD 99 16/32, change 3/32, Yield 1.24, Yield change -0.06
5 year EOD 99 10/32, change 7/32, Yield 2.73, Yield change -0.09
10 year EOD 94 3/32, change 11/32, Yield 3.76, Yield change 0.02
30 year EOD 94 25/32, change 17/32, Yield 4.51, change -0.09

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U.S. banks have been charging off soured commercial mortgages at the fastest pace in nearly 20 years, according to an analysis by The Wall Street Journal. At that rate, losses on loans used to finance offices, shopping malls, hotels, apartments and other commercial property could reach about $30 billion by the end of 2009.

The losses by regional banks on their commercial real-estate loans will be among the most watched details as thousands of banks report second-quarter results over the next two weeks. Many of the most troubled banks have heavy exposure to commercial real estate. So far, 57 banks have failed this year.

The $30 billion estimate is based on financial reports filed by more than 8,000 banks for the first quarter. The trend continued as a handful of major banks reported second-quarter results, including Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Bank of America Corp. Regional banks tend to have higher exposure to commercial real estate than these big financial institutions.

The commercial real-estate market, valued at about $6.7 trillion, represents 13% of the U.S.'s gross domestic product. But the recession and scarce credit are pushing more commercial developers and investors into default. Meanwhile, property values continue to decline, and banks are required to record a loss on any troubled real-estate loans where the appraised value falls below the amount owed.

Delinquencies on commercial mortgages held by banks more than doubled to about 4.3% in the second quarter from a year earlier[/b], Foresight Analytics estimates. Rep. Carolyn Maloney (D., N.Y.), who heads the House's Joint Economic Committee, said she is working with Treasury Department officials on a plan to try to head off rising defaults on commercial mortgages before they cascade into a crisis.

In contrast to home loans, the majority of which were made by about 10 lenders, thousands of U.S. banks, especially regional and community banks, loaded up on commercial-property debt.

Ironically, small banks appear to be much less aggressive in recognizing losses than their bigger brethren. According to the Journal analysis, the largest banks, with assets of more than $100 billion, saw charge-offs roughly quadruple last year, while losses at many medium-size banks grew at a much smaller rate of 120%.

One monument to both the excessive froth of the real-estate boom and the morning-after headache setting in for lenders is the landmark Equitable Building, rising 33 stories above downtown Atlanta.

In 2007, San Diego real-estate firm Equastone LLC paid $57 million for the office tower and took out a $51.9 million mortgage from Capmark Bank, a Utah-based unit of Capmark Financial Group Inc. in Horsham, Pa. Equastone planned to expand the tower and attract a tenant with pockets deep enough to rename the building.

Shortly after the purchase, the economic slump pushed vacancies higher and rents down. In April, Capmark Bank foreclosed on the building after Equastone defaulted on the debt.

In June, the Equitable Building was sold in a foreclosure auction for $29.5 million, 43% less than the original loan amount. And the buyer? It was 100 Peachtree Street Atlanta, a company formed by Capmark Bank for the purpose of acquiring the building. There were no other bidders.

Steven Nielsen, Capmark Bank's chief executive, said the mortgage was written off to the "estimated value" of the building. He wouldn't specify the size of the related charge-off on Capmark's books. Property-tax records show the building was valued at about $44.8 million at foreclosure, which would equal a $7.1 million loss for the bank.

Some bankers say they feel growing pressures from regulators to take losses on commercial real-estate exposure as a way of reducing the possibility of a catastrophic hit later.

"We recognize losses as quickly as any bank, partly because bank regulators dictate that," said Ed Garding, chief credit officer at First Interstate Bank, of Billings, Mont. More than 40% of the bank's loans are in commercial real estate, but according to the Journal analysis, annualized charge-offs in 2009 would be just 3% of its nonperforming commercial mortgages as of the end of 2008. That compares with an average of 34% for all U.S. banks.

Mr. Garding said the commercial real-estate market has held up relatively well in First Interstate's markets in Montana and Wyoming. Meanwhile, "we're strongly collateralized so the loan doesn't result in a loss," he added.

Among other banks with notably low charge-offs: Based on the Journal study, annualized write-offs this year would be only 9% of all nonperforming commercial mortgages at a Wachovia Corp. unit in Charlotte, N.C. A spokeswoman at Wachovia declined to comment.

At New York Community Bank, a New York State-charted savings bank, that ratio would be a meager 2% in the first quarter. Ilene Angarola, director of investor relations at New York Community Bancorp., the bank holding company, credited the bank's strong underwriting standards. "Even though we have seen a decline in property values, our loan-to-value ratio is conservative enough that we haven't experienced anywhere near the degree of the charge-offs our peers have experienced," Ms. Angarola said.

Some analysts, meanwhile, worry that banks aren't sufficiently recognizing losses on their commercial real-estate loans, thereby exposing themselves to bigger losses later. According to Deutsche Bank AG, since the beginning of last year, the amount of charged-off commercial mortgages as a percentage of such debt outstanding has ranged from a high of 3.2% to as low as 0.3%.

"Net charge-offs to date have been highly inadequate," said Richard Parkus, head of commercial mortgage-backed securities research at Deutsche Bank. "This is clearly a problem that is being pushed out into the future."

How aggressively regulators respond could help determine how long the commercial-property market remains mired in turmoil. "If banks are allowed to bury problem loans away in their portfolios for years via massive term extensions, this is likely to be a very long process," Mr. Parkus said.