All of a sudden things have turned better again..

In light of IBM positive earnings release and the hope of Obama's magic wand, the indices gained back the losses they had yesterday. Dow rallied 279 points (3.5%), S&P 35 (4.3%) and NASDAQ 66 points (4.6%).

IBM posted better-than-expected Q4 earnings and, unlike many of its high-tech rivals, forecasts a rosy 2009. Acknowledging the extremely difficult economic environment,' IBM expects continued benefits from growing profitability on its software and services businesses. IBM said customers are continuing to sign up for outsourcing and other services contracts despite the global slowdown. IBM reported fourth quarter earnings of $3.28 per share, up from $2.80 per share in the same quarter last year and above analyst estimates of $3.03 per share. IBM also surprised analysts by forecasting full year 2009 earnings of at least $9.20 per share, well above analyst estimates of $8.75 per share.

Even though there are no news on Financial firms, most of the financial stocks settled over and above the losses that they had in yday trading. C cuts its dividend to 0.01 from 0.16 cents to shore up much needed cash. This dividend cut would save C around 817M per quarter. C, JPM, BAC, MS each posted about 30% gain in todays trading. (I am happy I didnt sell my C shares Yday).

Best part of today was AAPL's earnigs release. Earnings rose a modest 2% from last year, as higher costs and expenses dented a 6% sales growth. However, the company's quarterly earnings per share breezed past analysts' expectations as did its quarterly sales. AAPL reported a top line of 10.2 Bn in revenues, and 1.78 in earnings per share. Alaysts expetected revenues of 9.2Bn and 1.39 in earnigs. Though the guidance is below the street estimates, I dont thin it will have any significant impact. AAPL is known for its conservative guidance.

AMR Corp. (AMR) and UAL Corp. (UAUA) both reported steep fourth quarter loses. Airlines today came under a selling pressure with AMR losing about 2.48 (24%) and UAL losing about 6%. AMR trading at 7.95 is a BUY.

EBAY Q4 earnigs decline from the same quarter last year but barely beat the estimates, and worse guides much lower for Q1 09. Non-GAAP net income was $524 million or $0.41 per share, compared to estimates of 0.39. Looking forward, for the first quarter of 2009, the company expected earnings in the range of $0.32 to $0.34. Analysts expecting about 40 cents for the same period.

Economic data is likely to attract some attention on Thursday, with the Labor Department due to release its weekly jobless claims report, while the Commerce Department is due to release its report on housing starts in the month of December.

Germany is expecting the economy to shrink by 2.25% in 2009, whihc is the worst performance since WW II. This forecast is much lower than its previous prediction for the year 2009 (0.2% growth) made in mid-October.

Interesting pic off FT. http://alphaville.ftdata.co.uk/lib/inc/getfile/4156.jpg

The Singapore economy shrank 16.9% in the fourth quarter, far exceeding forecasts of a 12.5% contraction. The government said it now expected Singapore’s economy to contract 2 to 5% percent this year, slashing its forecast further from an already downgraded outlook of a range of minus 2% to plus 1% published just three weeks ago.

From Aleph blog:

Consider the similarities between the US and Britain in the current crisis:

* Accommodative monetary policies.
* Generally free-ish with respect to financial regulation and credit.
* Overleveraged housing markets after a bubble.
* Banks that felt they could hedge risks and enhance returns through structured finance and derivatives.
* Aggressive approaches to bail out financial institutions.

Yet, Sterling took a beating and the Dollar is making new highs againist most of the currencies but Yen.

Reaosn being "the US Dollar is the global reserve currency and the British Pound is not. Thus Britain, as it tries to reflate, runs up against borrowing constraints faster than the US does."

And why are they not many alternatives to USD?

"The Yen? Japan has its own problems, and their economy is not large enough to deal with all of the financial flows entailed.

The Yuan? Banking system too immature.

The Euro? Too young. Tha current danger of the Euro is not that it will be weak, but that it might be too strong, leading to hard adjustments in Ireland, Spain, Greece, Portugal, and tangential European economies with weak fiscal policy positions. I’ve said it before; I’ll say it again: the Euro is a noble experiment, but currency unions that are not political unions don’t typically work. Then again, most fiat currencies eventually fail.

External commodity-based currencies? None that I know of; few governments want to limit their power by tying their hands on monetary policy."

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and this GUY is the worst pessimist I have ever known, but the sad part is he got it right thus far.. His prediction - "Assuming a further 20% fall in house prices and unemployment peaking at 9%, we project total loan losses to amount to $1.6T out of $12.4T loans outstanding. Of these $1.6T loan losses, about $1.1T accrue to U.S. banks and brokers." And the bank Capitalization of FDIC banks being 1.4T, US financial system is Effed!!