ArsCompendium - Digital Scribes For The New Millenium » Apres Bernanke, Le Deluge Of Credit

Users Online

2 Users Online

Apres Bernanke, Le Deluge Of Credit

Read more articles on Politics and Investing and Drugs.

December 13, 2007

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

792 Views

Submit this article to the following social bookmark news sites:

del.icio.us:Apres Bernanke, Le Deluge Of Credit

digg:Apres Bernanke, Le Deluge Of Credit

spurl:Apres Bernanke, Le Deluge Of Credit

wists:Apres Bernanke, Le Deluge Of Credit

furl:Apres Bernanke, Le Deluge Of Credit

reddit:Apres Bernanke, Le Deluge Of Credit

fark:Apres Bernanke, Le Deluge Of Credit

blogmarks:Apres Bernanke, Le Deluge Of Credit

smarking:Apres Bernanke, Le Deluge Of Credit

With federal budget negotiations becoming more intense and worries about the national economy becoming more pronounced, the rumors about the Federal Reserve slightly cutting interest rates to stimulate the economy have come true, but the reaction of the markets is not what had been expected. Along with a slightly worse balance of trade deficit and rising crude all prices, the whole economic picture is up in the air.

Cutting interest rates should have had a positive impact on business, in general, since reversing the high costs of borrowing, makes loans easier to obtain and puts more money into circulation, so I would have expected something of a market rally to reflect the positive impact this would be expected to have on various companies’ profits. Eventually, they should expect to earn more money. But this is not exactly what happened obviously demonstrating why investing is so complicated, with the current media spin being that investors are gambling in a way.

With this as a given, while I am not in a position to give a detailed description that this would have on individual companies, that would take a lot more research than I can currently do, I do feel it would be instructive to look at companies that I have not discussed recently in my discussion of the thirty Dow Jones Industrial Average components.

First, there are three big drug companies to consider, Pfizer, PFE, Nerck & Co., MRK, and Johnson & Johnson, JNJ. Pfizer at around $24 a share last lost about three percent in value this year due to the cancellation of Exubera, its inhaled form of insulin and the loss of U.S. exclusivity for Zoloft and Norvasc, two important drugs,along with Lipitor facing competitive pressure. The company talks about having a number of drug candidates in Phase III trials soon, indicating a promise for increased sales. However, it should be noted that historically approves few drug candidates are actually approved by the FDA for human use. Last year, when I reported on Pfizer, the stock was at $24 and since it is still at $24 you can draw suitable conclusions about how well business is going for the company at this moment.

On the other hand, Merck is up 43 on cost cutting and higher sales for cancer fighting vaccine Gardasil, diabetes drug Januvia and allergy medicine Singulair less the Vioxx lawsuit costs and expected Foxamax sales losses next year due to increased competition.

Johnson & Johnson, JNJ, is up %5 for the year with a charge for Natrecor hurting and increased sales for Topamax helping.

Finally, I would also like to point out that Microsoft, MSFT, is up 17% for the year due to the uptick in the latest sales and profit report. Using this as an example, I would say Dell, DELL, which reported good results recently but did not respond with a higher stock price is due to rise if it continues to put up good numbers.