Money & Company

The week that was: More pain, no gain -- except for OPEC

Tom Petruno — Thu, 03 Jul 2008 15:36:54 -0700

The stock market looks like it dodged a couple of bullets today, but the modest rebound in the Dow Jones industrial average during the half-day session couldn’t salvage the week.

And take a guess which commodity closed at yet another record high.

The Dow added 73.03 points, or 0.6%, to 11,288.54, but lost 0.5% for the holiday-shortened week and stayed in bear-market territory, off 20.3% from its October peak.

The broader market was much worse, for the day and the week. Investors continued to unload some of the stocks that held up best for them in the second quarter, particularly smaller issues. The Russell 2,000 small-stock index lost 1% today and 4.6% for the week, and is down 22.2% from its all-time high reached nearly a year ago.

The slow-motion crash in bank stocks also continued, suggesting no easing of the latest jitters over the financial system. On the new-lows list today yet again: Bank of America, Wachovia, Comerica, U.S. Bancorp and Zions Bancorp, among others.

The government’s report of a net loss of 62,000 jobs in the economy in June nearly matched expectations, so that was a relief to some on Wall Street.

Should it have been? The debate over whether we are, or aren’t, actually in a recession will go on, but to some analysts there’s no question anymore.

Merrill Lynch & Co.’s econo-bear, David Rosenberg, says the lesson from history is that "you don't have six consecutive monthly declines in payrolls and not be in an outright recession."

For stock investors, the issue is what the slowdown/recession/whatever will mean for corporate earnings. Analysts have a dismal view of results for the quarter just ended: Operating earnings of the S&P 500 companies are expected to be down 12.4% from a year earlier, according to Wall Street estimates tracked by Thomson Reuters.

Yet those same analysts still believe the second half will bring a big turnaround. They’re expecting a 12.7% year-over-year gain in S&P earnings in the third quarter. . . .

But you have to wonder what will happen to that third-quarter estimate if oil stays where it is, or goes higher. Near-term crude futures in New York gained $1.72 to a record $145.29 a barrel today.

Not even a surprise rally in the dollar -- normally a drag on commodity prices -- could keep oil from doing what it does best, which is defying everyone who’s trying to talk it down.

The dollar, which had tumbled on Wednesday, rebounded after the European Central Bank sought to downplay the idea that it was on a sustained drive to raise interest rates.

The ECB, which has been yammering for weeks about the dangers of rising inflation pressures, lifted its benchmark short-term rate from 4% to 4.25%, as expected. It was the first increase in a year. But ECB President Jean-Claude Trichet hinted that one hike might be all for the near future, saying "I have no bias and we are never pre-committed."

Somehow, that sounds so European.

Michael Woolfolk, senior currency strategist at Bank of New York Mellon, noted that the dollar’s renewed slide in recent weeks left the currency vulnerable to another sharp hit, had Trichet waved the flag for more rate increases.

"Trichet could not have been expected to pre-commit to another rate hike lest he spark a further selloff in the greenback that he would just as soon avoid," Woolfolk said.

Make French champagne even more expensive for out-of-work U.S. mortgage bankers? Perish the thought.

Still, Woolfolk expects the dollar to resume its downtrend "until the Federal Reserve signals its intention to begin raising rates again to fight inflation."

They can signal all they want. But as long as the economy is bleeding jobs, and the financial system keeps showing new cracks, it’s going to be very difficult for the Fed to actually do the deed.

Photo: ECB President Jean-Claude Trichet. Uwe Anspach/EPA

It's only a half-day for markets, but even that may be too long

Tom Petruno — Thu, 03 Jul 2008 00:35:14 -0700

Thursday is looking like a big mess for financial markets. And since everybody's bracing for trouble, maybe we won't get it, and investors can limp off to their July 4th barbecues without much additional damage to their portfolios or their psyches.

Maybe.

In any case, it'll be a short day for Wall Street ahead of the Friday holiday: Stock markets will close three hours early, at 10 a.m. PDT, because who needs an extended holiday weekend more than the New York Stock Exchange's overworked mainframe computer?

Here's what on tap today:

--Pared payrolls: The government will release its June employment report at 5:30 a.m. PDT. The consensus expectation is that the economy lost a net 60,000 jobs last month, according to Bloomberg's regular survey of about 80 economists. That would make it a sixth straight month of job losses.

A much bigger number could fan the belief that a recession is underway, which would hardly be a confidence-builder for the stock market, fresh into an official bear market Wednesday on the Dow index and the Nasdaq.

What's scary is that, if we're about to fall into recession, we aren't even close to the level of payroll cuts in previous downturns. The economy lost an average of 65,000 jobs a month from January through May. That was just about one-third the 181,000-a-month average of the last recession (March-November 2001).

--Euro rate hike: Jean-Claude Trichet, head of the European Central Bank, has been threatening for months to raise interest rates to fight inflation -- because, hey, that's what central bankers are supposed to do, oui? At their meeting today ECB policymakers are almost certain to make good on that threat, lifting their key rate from 4% to 4.25%.

Not a big deal? Tell that to the dollar, which is nearing a new low against the euro. The European currency jumped to $1.589 on Wednesday from $1.579 on Tuesday. Its record high was $1.599 on April 22.

The Federal Reserve's key rate is 2%. Higher rates in Europe give the continent an edge in attracting capital. That underpins the euro.

And what happens as the buck weakens? Commodity exporters, who price their stuff in dollars worldwide, earn less. We just hand them another reason to keep prices of raw materials, including (especially?) oil, on the rise.

So let's get out there and enjoy the weekend, before the next $10-a-barrel jump in crude.

Photo: A wag of my finger to you, Monsieur Bernanke! Jean-Claude Trichet. Pier Paolo Cito/Associated Press

Regulators to Schumer on IndyMac: Please shut up

Tom Petruno — Wed, 02 Jul 2008 17:47:18 -0700

Sen. Charles E. Schumer publicly taunted bank regulators last week about IndyMac Bancorp's financial condition, which helped trigger a sudden outflow of deposits from the Pasadena thrift. Now the New York Democrat is getting some harsh blowback from one current and one former regulator.

Their message, distilled: Zip it, Chuck.

As noted here on Monday, Schumer sent letters to the Office of Thrift Supervision, the Federal Deposit Insurance Corp. and the Federal Home Loan Bank of San Francisco, saying he was "concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers."

IndyMac, which has suffered huge losses on defaulted mortgage loans, "could face a failure if prescriptive measures are not taken quickly," Schumer wrote.

Uh, wait a minute -- how could Schumer know that? And since when are regulators supposed to tell the public in advance that a particular institution has been earmarked for possible failure? All that would do is guarantee a collapse. If depositors are within FDIC insurance limits they have nothing to worry about, anyway.

That pretty much sums up the content of a letter to Schumer today from John M. Reich, director of the Office of Thrift Supervision.

"As a regulator of insured depository institutions, we do not publicly comment on the financial condition or supervisory activities related to open and operating institutions," Reich wrote. "We believe it is critically important to maintain the confidentiality of examination and supervision information."

He went on: "Dissemination of incomplete or erroneous information can erode public confidence, mislead depositors and investors, and cause unintended consequences, including depositor runs and panic stock trades. Rumors and innuendo cause damage to financial institutions that might not occur otherwise and these concerns drive our strict policy of privacy."

John D. Hawke, the U.S. comptroller of the currency (regulator of national banks) from 1998 to 2004, had more pointed words for Schumer in a story in the American Banker newspaper today.

"If Schumer continues to go public with letters raising questions about the condition of individual institutions, he will cause havoc in the banking system," Hawke said.

"Leaking his IndyMac letter to the press was reckless and grossly irresponsible. I don't see how he can be trusted with confidential information in the future. What this incredibly stupid conduct does is put at risk the willingness of regulators to share any information with the [congressional] oversight committees. After this, you'd be crazy to share information with Schumer."

The senator's office didn't respond to a request for comment today. On Monday, Schumer aide Brian Fallon offered this explanation for Schumer's action: "The home loan bank system has an obligation to lend responsibly and police its members. But it has not been doing its job. We have found the only way to get the home loan bank system to act appropriately and positively is to make public the concerns we've already expressed privately."

If that's Schumer's policy on the U.S. financial system's troubles overall, it's going to be a long, hot summer.

Photo: Sen. Charles Schumer. Mark Wilson/Getty Images

Wall Street makes it official: The bear is here

Tom Petruno — Wed, 02 Jul 2008 13:44:30 -0700

No more waiting: We’re now in a genuine bear market for the Dow Jones industrials and, for the second time this year, for the Nasdaq composite.

Zapped by another jump in oil prices, the Dow closed today at 11,215.51, down 166.75 points, or 1.5%. That left the blue-chip index off 20.8% from its record closing high of 14,164.53 reached on Oct. 9.

The tech-heavy Nasdaq slid 53.51 points, or 2.3%, to 2,251.46, leaving it down 21.2% from its 2007 peak. The Nasdaq already had visited bear territory briefly in March, when it was off as much as 24% from its high before rebounding.

A drop of at least 20% is considered the threshold for a bear market. Many other broad-market indexes haven’t yet joined the bear fest, but they’re all close. "I'd say it's only a matter of time," said Art Hogan, veteran market analyst at Jefferies & Co. in Boston.

The Dow’s slide under the 20% threshold wasn’t a shock, given that the index has been battling to stay above it for days. But this still is a bell-ringer for investors, Hogan says. The last broad-based bear market on Wall Street was in 2000-02.

Crossing the 20%-loss line "says the market is struggling, and it’s struggling for some very credible reasons," he says.

The catalysts for today’s sell-off: the usual suspects, and a few more.

Oil rose to a fresh record high, nearing $144 a barrel. And just to stick the inflation knife deeper into financial markets, copper, too, surged to a record because of miners’ strikes in Peru. (Here's your bull market: The CRB index of 19 major commodities now is up 32% year to date.)

Meanwhile, the dollar slumped, an index of home builders’ stocks fell through its previous 2008 low, and General Motors’ shares dived 15% to a new 54-year low of $9.98 after a Merrill Lynch analyst warned that bankruptcy was "not impossible" for GM.

All of this is leading up to another potentially big day for markets on Thursday, when the government reports on June employment trends (a net loss of 60,000 jobs is expected) and the European Central Bank is expected to raise its benchmark short-term interest rate for the first time in a year, citing inflation. The ECB’s move could slam the dollar once again -- if currency traders didn’t get most of that out of their systems today.

Oh, and U.S. investors and traders will have to cram their responses to the jobs report and the ECB into a half day, because markets will close at 10 a.m. PDT in advance of the Fourth of July holiday. That could just stoke the volatility meter tomorrow.

Who’s ready for a long weekend?

Photo: Oh sure, they look cuddly enough when they're young. Don't be fooled. Polar bear cub Flocke at the Nuremberg zoo. TImm Schamberger/AFP-Getty Images

IndyMac still facing nervous depositors; Sen. Schumer says he is 'reassured' by Treasury and by the FDIC

Tom Petruno — Tue, 01 Jul 2008 20:44:38 -0700

Struggling IndyMac Bancorp acknowledged today that it continued to face a larger-than-normal number of depositors looking to pull their funds, after new concerns about the Pasadena lender’s health began to swirl late last week.

"We had continued elevated traffic in the branches today, but by afternoon it was subsiding," said Grove Nichols, IndyMac's director of communications. "Hopefully, the rush is abating."

Meanwhile, Sen. Charles E. Schumer (D-N.Y.), who helped fuel depositors’ concerns about the bank last week, sounded like he was trying to double-back a bit. He told the Associated Press that he had spoken with Treasury Secretary Henry M. Paulson Jr. and with Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., and was "reassured they are on top of the situation."

IndyMac's depositors "should not worry," he added, given the bank’s FDIC insurance.

Loss-ridden IndyMac has been hammered by mortgage loan losses as defaults have surged over the last year. Its troubles have been well known on Wall Street, where its stock has collapsed this year. (The shares edged up 3 cents to close at 65 cents today.)

But worries that the bank could fold were fanned last week after Schumer sent a letter to the FDIC, the Office of Thrift Supervision and the Federal Home Loan Bank of San Francisco, saying he was "concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers."

The letter shocked some Wall Street analysts, who said Schumer was in effect sealing the lender’s fate by raising the prospect of its failure.

As detailed here, IndyMac said Monday that it saw about $100 million of its $19 billion in deposits flow out on Friday and Saturday, as nervous depositors lined up at some of its San Gabriel Valley branches.

Nichols wouldn’t provide figures on the net decline in deposits Monday and Tuesday. "We're not going to update the press on a daily basis on our deposits," he said. Most of the unusual traffic in IndyMac’s branches today was from depositors who were concerned but were reassured after talking to bank employees, he said.

The Times also fielded numerous calls this morning from depositors worried about their IndyMac CDs. Several said they knew their accounts were federally insured, but feared that it would take weeks, months or longer to recover them if the bank shut down.

FDIC officials, however, note that when a bank fails they’re required by law to promptly have checks for insured depositors if another bank doesn't immediately take over the accounts.

From the FDIC website: "It is the FDIC's goal to make deposit insurance payments within one business day of the failure of the insured institution. Typically, a bank that has failed will be closed on a Friday. The FDIC will then work the weekend to complete deposit insurance determinations for most deposits and be prepared on Monday to either transfer the insured portion of a deposit to another FDIC insured institution or provide deposit insurance payment checks."

For more from the FDIC, see this Q&A.

For IndyMac's rebuttal to Schumer's letter and to a report Monday on its lending practices, go here.

Photo: Sen. Charles Schumer. Andrew Harrer / Bloomberg News

With Ford, patience would have been a virtue for Kerkorian

Tom Petruno — Tue, 01 Jul 2008 19:17:29 -0700

From Times Staff Writer Ken Bensinger, who covers the auto industry:

Is this how billionaires become millionaires?

With Ford Motor Co. shares today at their lowest level since the mid-1980s, billionaire L.A. investor Kirk Kerkorian’s decision to load up on the stock in the last few months now looks premature, at a minimum.

In late April, Ford reported a surprising first quarter profit, and confidence in the auto giant soared. Around that time, Kerkorian -- known for his, ahem, activist interest in more than one car company over the years -- announced that his Tracinda Corp. investment firm had acquired 100 million Ford shares, or a 4.7% stake, at an average price of $6.91.

On April 28, Kerkorian stepped up again, making a tender offer to buy an additional 20 million Ford shares for $8.50 each -- a 13% premium over the market price.

Wall Street was, briefly, jubilant. The Wall Street Journal, talking of revivals at privately held Chrysler as well as at Ford, wrote: "The turnaround efforts at both companies . . . still have a long way to go. But the bottom line is that Ford appears to have pulled ahead. Mr. Kerkorian's latest automotive investment is best viewed as proof of that."

Whoops. On May 22 Ford announced that its long-stated goal of profitability in 2009 had gone up in smoke. Instead, it was cutting production, idling shifts at plants and delaying delivery of its big 2009 model launch, the redesigned F-150 pickup.

The stock, already on a downswing after reaching $8.48 on May 1, sank to $7.16 on May 22, and kept sliding from there. By June 9 -- the day Kerkorian set to complete the tender offer -- the shares were trading for $6.36.

Nonetheless, Kerkorian made good on the offer for 20 million shares at $8.50 each, even though he had the option of pulling out because the market price had tumbled.

And still, he wanted more: On June 19 Kerkorian disclosed that he had purchased an additional 20.8 million shares of Ford on the open market at prices between $6.10 and $6.75, raising his stake to 6.5%. That week, the 91-year-old investor met with Ford leadership, including Chief Executive Alan Mulally, in L.A.

Which brings us to Ford’s report today on its June sales. They were dismal, off 28% from a year earlier. Worse than General Motors’ sales, even. Investors hammered Ford’s stock as low as $4.41. The shares ended at $4.71, off 10 cents for the day and the lowest since 1985.

All told, Kerkorian now has 140.8 million Ford shares worth $663 million. That means he’s down at least $325 million, or almost 33%, on his investment. (A Tracinda spokesperson couldn’t be reached for comment.)

But of course, it’s not a real loss unless you sell. And Kerkorian is nothing if not persistent when he gets involved with auto companies -- as he showed in his attempt to buy Chrysler in 1995 and his failed effort in 2005-06 to force GM into alliances with Renault and Nissan.

Photo: Kirk Kerkorian. Tim Shaffer / Reuters

Dazed and confused: Wall Street's strange second quarter

Tom Petruno — Tue, 01 Jul 2008 00:03:16 -0700

Weird, weird second quarter on Wall Street.

It was devastating for almost everyone holding financial-company stocks, of course. And on the flip side, almost anything tied to the energy sector was golden -- in fact, better than gold. The average energy-related stock on the New York Stock Exchange surged 18.3% in the quarter, as the price of crude rocketed 37.8%, to $140 a barrel. The price of gold was up 1.1% in the quarter, to $926.20 an ounce.

The weirdness was in a lot of what was between the extremes of financials on one end (Bank of America Corp. , down 37% in the quarter) and well-known oil and gas plays on the other (ConocoPhillips, up 24%).

Here’s a look at some of the highlights and lowlights:

--Utilities power up: The Dow Jones utility index gained 8.7% in the quarter. Historically, electric utilities have been a classic "defensive" stock sector, meaning a place to hide in times of market turmoil. That may have helped them last quarter. The diversification moves of some of the companies over the last decade into energy trading, telecom services, infrastructure and other areas also may be a draw for some investors.

But a traditional element of utilities’ defensive appeal -- their dividend yield -- isn’t much of a lure these days. The average annualized yield of the Dow utility stocks is 3%, not much above the 2.85% yield of the Dow industrials. And for the utility industry as a whole one big question looms: Will the companies’ regulators allow them to fully pass through to customers the surging cost of fuel, as they have in the past?

--Transports on a roll: The Dow transportation stock index gained 3.4% in the three months and was the only one of the better-known indexes that was positive in the first half (up 8.3%) and that managed to reach a new all-time high (on June 5).

While airlines were hammered by soaring jet-fuel costs, their declines in the Dow transports index were offset by gains in railroad shares, including Union Pacific Corp. and CSX Corp. Soaring demand for coal and for farm commodities has been a boon for the rails, which do a big business hauling that stuff (it can’t go FedEx, after all). Even so, some of the rail giants have warned that the recent Midwest floods could hamper their business in the near term.

--Mid-cap surprise: The Standard & Poor's index of 400 mid-capitalization stocks rose 5.1% in the quarter, a tremendous showing when you consider that the big-cap S&P 500 sank 3.2% in the period.

Although energy stocks helped both the mid-cap and big-cap indexes, the mid-cap index also benefited from particular strength in non-energy sectors including biotech (companies such as Vertex Pharmaceuticals), fertilizer and chemical firms (CF Industries Holdings and FMC Corp.) and infrastructure construction companies (Quanta Services Inc.). It also got a boost from a rebound in beaten-down shares of higher-education companies (including Strayer Education and ITT Educational Services).

--Black-and-blue chips: Could Dow Jones & Co.’s decision to add Bank of America to the Dow industrials index in February been more poorly timed? That addition gave the 30-stock Dow five financial issues (the others: American Express, American International Group, Citigroup Inc. and JPMorgan Chase & Co.).

In the midst of a horrendous credit crunch, that was just asking for trouble. Not surprisingly, the renewed plunge in financial issues was a major reason for the Dow’s 7.4% decline in the second quarter. It also was a lousy three months for General Electric, General Motors and Coca-Cola Co., among other Dow issues.

What happened to the concept of blue-chips as havens in tough markets? As Wall Street’s sell-off worsened dramatically in June, big-name stocks may have suffered from a case of "sell what you can," as I explain in this recent post.

No Disney hug from Wall Street for 'Wall-E'

Tom Petruno — Mon, 30 Jun 2008 15:58:23 -0700

From Times staff writer Josh Friedman, who covers the movie biz:

Where is the love for "Wall-E"?

The animated, futuristic adventure about a lonely, love-struck robot opened to rave reviews and topped the weekend box office with $63.1 million in domestic ticket sales -- the ninth straight No. 1 launch for Walt Disney Co.’s Pixar studio.

But stock market investors gave Disney shares the cold shoulder Monday, bidding them down 37 cents, or 1.2%, to $31.20.

Part of the problem is that "Wall-E," which 97% of critics endorsed, according to RottenTomatoes.com, "was successful but wasn’t ‘Nemo’-like" in its opening, said Richard Greenfield, an analyst at Pali Research. "Finding Nemo" and "The Incredibles," Pixar’s two biggest hit movies, both opened to slightly above $70 million.

What’s more, Disney got off to a slow start this summer at the box office when its highly anticipated sequel "The Chronicles of Narnia: Prince Caspian" fell short of lofty expectations. The first film in the series from Disney and Walden Media, November 2005’s "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe," grossed $292 million domestically, but "Prince Caspian" has only hauled in about $138 million since its May 16 release.

"And in case you haven’t noticed, the entire media sector is melting down," added the ever-cheerful Greenfield, referring to the stocks. The Bloomberg-Hollywood Reporter index of 39 media issues dipped today to a fresh five-year low. Disney has held up better than many of its peers; the stock is off 3.3% year to date, compared with a 30% plunge in Viacom Inc. shares and a 10.4% drop in Time Warner Inc.

While shares of Disney’s highest-profile rival in the animated film genre, DreamWorks Animation SKG Inc., often are affected by its two feature releases each year, even a Pixar movie is unlikely to move the revenue needle much at a diversified media conglomerate like Disney.

Studio entertainment generates only about 15% of the company’s operating income, while Disney’s theme parks and TV networks, including ESPN, generate significantly larger portions, notes analyst David W. Miller at SMH Capital.

"The broader concern for Disney shareholders is how well are the theme parks going to hold up in this economy," Miller said.

Photo: Wall-E. Disney/Pixar

After some depositors pull funds, IndyMac responds to latest rumors about its health; says it's working with regulators

Tom Petruno — Mon, 30 Jun 2008 14:27:35 -0700

UPDATE: Comments from Sen. Schumer's office now are included below.

Pasadena-based mortgage lender IndyMac Bancorp, battling fresh rumors that it is near collapse, conceded today that its financial position "has deteriorated since last quarter," and said it was working on a plan with its regulators to improve "the safety and soundness" of the bank.

The company's statement, put up on its corporate website, follows a weekend that saw depositors line up at some of its San Gabriel Valley branches to pull their money, as they reacted to news reports questioning the company’s survival.

It’s no secret on Wall Street that IndyMac has been ailing in the wake of huge losses on its loan portfolio as borrower defaults surge. The company’s stock price has been hammered down to mere pennies, and the plunge in the shares has accelerated over the last week. They ended at a record low of 62 cents today, down 23% from Friday’s close of 81 cents.

But depositors may have been spooked by a letter late last week from Sen. Charles E. Schumer (D-N.Y.) to the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Federal Home Loan Bank of San Francisco, saying he was "concerned that IndyMac’s financial deterioration poses significant risks to both taxpayers and borrowers."

The letter stunned some Wall Street analysts, who said Schumer was in effect sealing the lender’s fate by raising the prospect of its failure. Schumer's response? Don't kill the messenger. “Make no mistake about it: IndyMac’s problems were caused by IndyMac’s management and no one else," Schumer spokesman Brian Fallon said in an email. "The home loan bank system has an obligation to lend responsibly and police its members. But it has not been doing its job. We have found the only way to get the home loan bank system to act appropriately and positively is to make public the concerns we’ve already expressed privately."

In its statement today, IndyMac said that after the Schumer letter appeared in the media, "we did experience elevated customer inquiries and withdrawals in our branch network last Friday and on Saturday of roughly $100 million." IndyMac said that amounted to about 0.5% of its total deposits of $19 billion.

"While branch traffic is somewhat elevated this morning, it is substantially lower than on Saturday," the bank said. It added that more than 96% of its deposits were fully insured by the FDIC (meaning the accounts were within federal insurance limits, and therefore should be safe no matter what happens to the company).

But the final part of IndyMac’s statement sounds more like a plea than a declaration that it will survive: "We are hopeful that this issue appropriately abates soon," the bank said about the deposit outflows, "so that we can focus, with our regulators’ involvement, on the important issue of continuing to keep IndyMac Bank safe and sound through this unprecedented crisis period."

Separately today, the non-profit Center for Responsible Lending published a report slamming IndyMac's lending practices in recent years. Read it here.

Photo: Nick Ut/Associated Press

Around the markets: holding back the bear, a final day of window (un)dressing and a $2.1-million lunch with Mr. B

Tom Petruno — Mon, 30 Jun 2008 10:21:05 -0700

Some notes from around the markets early today:

-- Bear still at bay: As on Friday, the Dow Jones industrial average once again crossed the bear-market boundary this morning -- and once again quickly rallied back above it. The Dow fell as low as 11,287, which put it down 20.3% from its record closing high of 14,164.53 on Oct. 9. The market then turned higher. At about 10 a.m. PDT the Dow was up 65 points, or 0.6%, to 11,411.08, trimming the decline from the October high to 19.4%.

A drop of 20% or more is Wall Street’s classic threshold for designating a bear market -- although, let's face it, to most investors the pain of a 20% decline is indistinguishable from the pain of a 19.5% decline.

-- Window dressing -- or undressing? As the end of any quarter approaches, the worst-performing stocks often get hammered even harder. The reason: Some portfolio managers want to jettison their dogs so clients don’t see them on their quarter-end statement and ask, "Why do we own that loser?"

The usual term for these end-of-quarter moves is "window dressing." But Marc Pado, U.S. market strategist for Cantor Fitzgerald, says "window undressing" is a more fitting description of the selling that in recent days has hammered shares of financial companies, automakers and other already beaten-down issues.

It’s still going on today: The financial-stock index within the Standard & Poor’s 500 was down as much as 2% early in the day -- on top of the 17.2% drop it suffered from March 31 through Friday. General Motors this morning fell to $10.57, its lowest since 1954 and down from $11.55 on Friday.

-- Check, please: The winner of last week’s annual auction of a charity lunch with billionaire Warren Buffett was ID’d over the weekend: He is Zhao Danyang, who manages the Pureheart China Growth Investment Fund in Hong Kong, Bloomberg reports. The auction, conducted on EBay, was won by Zhao with a bid of $2,110,100, according to Denise Lamott, a spokeswoman for the Glide Foundation in San Francisco. Glide will get the proceeds from the auction.

From Bloomberg: "Buffett will entertain Zhao and seven companions at a New York steakhouse and answer virtually any question except what he is buying and selling."