Buy and Hold Plus: December 2009 Archives

Today is the third Friday of the month of December and that means options will expire.  That's likely to drive volatility in the markets.  On options expiration date, traders try to close out their positions with a profit, so they tend to make big purchases and that tends to drive stock prices up or down.

Our options positions, where we sold covered calls, are very likely to expire worthless today. That means we get to book the income and we don't have to sell our position, and then on Monday, we'll roll those options over and sell covered calls on our positions again.

Oil is likely to drive the markets as well, with news that Iran briefly moved its troops into Iraq and "seized an oil well."  The oil well was abandoned and Iranian troops withdrew after a few hours, but the news drove the price of oil up.  Concerns over oil may also cause some volatility in the markets today.

Naturally, the price of oil going up drove down the price of energy dependent stocks.  Airlines are likely to drop since the price of fuel is so critical to their profit margins, which have been negative lately.

There may also be some effect by the approach of Christmas next week.  Many traders will take some of the week of and that may cause them to close out their positions before they leave for the holiday.

In short, there are lots of factors that may drive volatility this trading day.  Enjoy the ride!

In a letter to a Senator, Federal Reserve Chairman Ben Bernanke said that he expects "slack resources, together with the stability of inflation expectations, to contribute to the maintenance of low inflation in the period ahead." 

This came on the same day that the government said the producer price index surged by 1.8 percent, more than double the increase analysts expected.  Even stripping out the volatile energy and food costs still resulted in an increase in the core value of 0.5 percent. That was the biggest increase in prices in more than a year.

Bernanke and his colleagues opened a two day meeting today to set their target interest rates.  Given the high levels of unemployment and the general weakness in the economy, it is highly unlikely that the Fed will increase interest rates from their current record lows of near zero.

Bernanke noted that in addition to the ten percent unemployment rate, manufacturing capacity utilization is at 68 percent.  That is lower, he noted, than the trough of every recession since World War II.

Traders sold off stocks on the producer price index numbers.  The Dow dropped by 0.5 percent to 10,452, ending a streak of five days with a gain.  The S&P 500 declined by 0.6 percent to 1,108.  The Nasdaq also fell, shedding 0.5 percent to 2,201.

While the markets reacted to the producer price index numbers, the big news for the week will come tomorrow, with Bernanke and his colleagues at the Fed releasing the minutes of their deliberations on interest rates.  Nobody expects the Fed to increase rates but they will look at the minutes for clues on future Fed actions.

In a move that we've seen take place before -- most recently in the pharmaceutical industry -- a giant company decided to purchase a smaller company in order to acquire its assets.  In the pharmaceutical industry, that's generally done so that the acquiring company can get the drugs that the smaller company has in production or in development.

In today's merger, Exxon is acquiring XTO Energy in order to acquire its natural gas assets.  The deal, which is an all stock deal for $31 billion, would provide Exxon with access to XTO's natural gas reserves at a time when natural gas prices are low.

The combination of the worst downturn since the Great Depression and large discoveries of natural gas have left its producers facing difficulties in getting the capital needed to expand and develop their resources.  XTO took advantage of this, acquiring many other companies, but it piled on debt in the process.

But, it gained control of major portions of unconventional gas reserves, such as those that are trapped in shale rock.  XTO controls an estimated 45 trillion cubic feet of natural gas.  With its purchase, Exxon is making a bet that gas prices will recover.  Part of this may be due to pressure to reduce greenhouse gases, as natural gas releases far less of the gases that are responsible for climate change.

When even the world's biggest oil company decides it's time to add cleaner buring natural gas to its assets, the handwriting is on the wall.

That is the argument that Gary Locke, secretary of the Commerce Department, is making.  Business Week met with Locke at the Copenhagen climate change summit, and noted that at the first week of the summit, Locke is in the lead role for the United States.

Locke said that he was "struck by the great enthusiasm by the business leaders...for aggressive actions against climate change."  When it came to climate change legislation that's currently in Congress, he said, "a whole cross section of industry supports strong U.S. legislation."

Locke, who in addition to highlighting the benefits of a move towards more environmentally sound practices, has been highlighting the threats that climate change presents, also said "business can't survive if subjected to floods or droughts."

At the event, Locke asked a small South San Francisco company called EOS Climate, which destroys climate warming gases from old refrigerators, how many jobs have been created.  The answer, of course was lots of jobs.  But larger companies, such as General Electric and Johnson Controls also generate revenue and jobs from green technology.  General Electric is looking to benefit from a push towards greener technology by selling wind turbines, energy efficient locomotives, and technology to make the electric grid more efficient.

But Locke is also concerned that without significant investment in green technology, the United States "will wake up and ask how Brazil or Singapore, or others became the Silicon Valley of green energy."

Locke said that other countries, such as Spain and Germany, that have become leaders in green energy have done so because of regulations requiring utilities to pay a premium for energy generated from renewable sources.  China, he said, is pushing into wind and solar and has invested heavily in these technologies.

But the United States, he said, is hampered by a lack of a national policy on green energy.  "I've heard from so many companies and investors that they are sitting on the sidelines until the rules are clear," Locke said. "The longer we wait the further other countries will move ahead."

Not surprisingly, Locke closed his interview with a push for Congress to pass climate change legislation.  "That's why it's so important for Congress to pass energy legislation as quickly as possible," he said.

The Commerce Department reported today that retail sales for the month of November were $352.1 billion, an increase of 1.3 percent from October and 1.9 percent from November 2008.  Excluding auto sales, which are volatile, retail sales increased by 1.2 percent from October.

Gains were lead by gasoline stations and electronics and appliance stores.  These two sectors saw an increase in sales of 6.0 percent and 2.8 percent, respectively.  Sectors showing decreases were furniture and home furnishing stores, clothing and clothing accessories stores, and miscellaneous stores.  These sectors were off by 0.7 percent, 0.7 percent, and 1.8 percent respectively.

The consensus estimate for retail sales was for an increase of 0.6 percent, with estimates ranging from a decline of 0.8 percent to an increase of 1.3 percent.  Thus, the actual number matched the most optimistic estimates.

Auto sales are also increasing, after a big drop when the cash for clunkers program ended.  The seasonally adjusted rate climbed to 10.9 million sales, up from 10.5 million in October.

Analysts at the Bank of Tokyo Mitsubishi said that the retail sales numbers show that the consumer is increasing spending as the economy moves away from recession.  The stabilization in the labor market is responsible for this, they said, "giving consumers greater confidence to spend a little more."

In addition, as consumers see their net worth increasing with stocks surging and home prices stabilizing, they may open their wallets.  Total net worth increased by five percent in the second quarter of the year, and stock prices have increased since then.

Yesterday, we got data that's consistent with the early phases of a recovery on the jobs front.  Now we're getting better retail sales data.  This bodes well for the economy as it tries to put the worst recession in decades behind it.

"We are at the end of a difficult generation of business leadership.  Tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits.  Rewards became perverted. The richest people made the most mistakes with the least accountability."

The comments didn't end there.

"The bottom 25 per cent of the American population is poorer than they were 25 years ago. That is just wrong.  Ethically, leaders do share a common responsibility to narrow the gap between the weak and the strong."

So who would have said such a thing?  Would those have come from the recently departed Ted Kennedy?  Perhaps his fellow democrat from Massachusetts, Barney Frank?  Or maybe they came from someone like Michael Moore or Ralph Nader?

Actually, they came from the CEO of one of the world's largest companies.  Jeffrey Immelt, the CEO of General Electric, made those comments as part of a speech he gave at West Point.

Immelt's comments, if not the most pointed and sharp criticism of his fellow executives, is very close to it.

Immelt also took aim at the anti-regulation crowd.  Immelt said that business should welcome government as "a catalyst for leadership and change."  He further said that "I should have done more" to address the radical changes that occurred in the economy during the fall of 2008.

Immelt's comments are likely to be seized upon by those pushing for more regulation of financial companies.  They're likely to be dismissed by those opposing it, and those individuals will likely point to Immelt as a failed executive.

Regardless, his comments are definitely thought provoking and should give pause to those who say that corporate executives are always against regulation and don't care about the growing inequality we see between the wealthy and the rest of the population.

The Labor Department reported that initial jobless claims rose to 474,000 for the week ending December 5.  That was an increase of 17,000 from the prior week's unrevised figure of 457,000.  The four week moving average, which smooths out the fluctuations that can occur with the weekly data, dropped by 473,750, down by 7,750 from last week's revised average of 481,500.  Continuing claims decreased by 303,000 to 5.16 million, and the four week average for this figure was down by 123,500 to 5.42 million.

There were 21 states with decreases in unemployment claims of more than 1,000, lead by California's decrease of 28,672 claims.  However, it's important to keep in mind the reason for California's decrease, which was due to a shorter workweek.  On the downside, there were seven states where there was an increase of more than 1,000 claims, with Wisconsin's 8,067 increase the highest.

Weekly jobless claims are very volatile over the past two months of the year, as the holiday season makes it more difficult for the government to adjust the data for seasonal fluctuations.  Nevertheless, economists provided estimates on how many people they thought would file initial claims, and the consensus was for a drop to 455,000.  Estimates ranged from 380,000 to 490,000.

The four week moving average dropped to its lowest level since the week ending September 27, 2008, when it was 470,250.

Nomura Securities said that the level of initial claims "is consistent with only moderate job losses and a very strong signal that firing is tapering off."  The company added that the figures are consistent with "a gradual improvement in the labor market."

Employers have cut 7.2 million jobs from their payrolls since the recession began in December of 2007.  However, according to the Economic Outlook Group, "companies are reassessing their staffing needs in the face of the recovery and slowing the pace of layoffs."  Despite this, companies are not showing "any inclination to begin hiring."

Overall, the jobs data is consistent with an economy in the early stages of a recovery.  Jobs are always the last to recover, and there needs to be rationality on the part of investors.  With 7.2 million jobs lost, even a return to the job creation rates of the 1990s, when 22 million jobs were created over the decade, means that it will take years to replace the jobs that were lost during this recession.  At 2.2 million jobs created per year, it will take about three years and three months to return to the same level of employment we saw before the beginning of the recession.

With the bad news about debt from Dubai, Greece, and Spain, world equity markets dropped.  The DAX and FTSE were off by one percent.  Asian markets dropped as well.  For the day, the MSCI world index declined for the fifth day in a row.

However, the one bright spot for equities markets was the United States.  American equities initially followed their counterparts lower, but by the end of the day upgrades on companies like 3M and Sprint resulted in a gain for the major indices.

The Dow, S&P 500, and Nasdaq all rose for the day.  The Dow climbed by 0.5 percent to 10,337.  The S&P 500 was up by 0.4 percent to 1,096.  And the Nasdaq rose by 0.5 percent to 2,184.

Analysts said that the reason for U.S. equity markets defying the trend and gaining on a day that saw declines for many of their counterparts was an increase in confidence by investors as well as a willingness to take on additional risk.

However, in light of the downgrade of Greece's and Dubai's debt and a warning from Moody's that the economy of the United States is unlikely to grow at a fast enough pace to reduce significantly the ballooning American deficit, investors need to be cautious.  Some said that this warning from Moody's amounted to "a warning shot across the bow of the US triple A rating."  Any cut in the rating would increase borrowing costs and drive up interest rates.  That would create problems for the economy which is working its way out of the worst downturn since the Great Depression.

Analysts also said that many large institutions are not looking to shoot for big gains by the end of the year.  Instead, they're looking to lock in their gains and close out the year with a positive return.

Investors will also get some critical data on the economy in the next few days.  First will be the weekly data on initial unemployment claims.  With the government reporting that job losses improved to their best level since the recession began, investors will look to see if the weekly claims data confirms the payrolls information.  They'll also be looking at retail sales figures that will be released by the government on Friday to see if the consumer is returning.

That data will definitely be market moving, so investors should be ready to react to it.

Today's downgrade of debt from Greece and Dubai as well as a revision of Spain's debt outlook to negative show that while the financial system may have stabilized, problems remain.

Fitch reduced its rating on Greece's debt from A- to BBB+.  Greece's debt is still considered investment grade, however, there was also a negative outlook assigned to it.  That was a blow to the Greek government, which is struggling to contain a ballooning deficit.  These actions came on the heels of another warning from Standard & Poors.

Moody's also contributed to the concerns about credit, with a downgrade of six Dubai companies with ties to the government.  These companies, which had invested in huge projects during the recent economic boom, were assumed by many to have the backing of the emirate's government.  With Dubai officials making clear that no such backing exists, investors have grown concerned that these companies may not be able to make good on their promises.

The bad news continued, as S&P revised its outlook on Spain's debt to negative from stable.  Spain's debt had been downgraded from AAA in January, but S&P put a stable rating on the debt, indicating that it believed Spain's debt wouldn't face additional pressure.  The likelihood of continued pressure stems from an extended period of economic weakness and greater deterioration in the Spanish government's finances.

"We now believe that Spain will experience a more pronounced and persistent deterioration in its public finances and a more prolonged period of economic weakness versus its peers...with trend GDP growth below 1 per cent annually," S&P said.

Naturally, on this news, stocks dropped.  Greek stocks dropped six percent in response to the news.  Dubai's stock market plunged by 6.1 percent, with losses lead by banks with exposure to Dubai's debt.  And European stock markets closed lower, with the FTSE off by 1.6 percent and the DAX down by 1.7 percent.

BNP Paribas said "first Dubai, now Greece, and loitering in the background are Eastern European countries that are struggling with huge deficits.  The implication globally is that the financial crisis is far from over and particularly sovereign risk has significantly intensified."

Investors would be well advised to heed those words.  The financial system isn't on the brink anymore, but it's still facing problems.

In a sign that consumers are slowing down the pace of their shopping, the International Council of Shopping Centers and Goldman Sachs reported that chain store sales slipped by 1.3 percent from last week.  The pace of chain store sales is still up by 2.6 percent on a year over year basis, as last year shoppers were very reluctant to spend with the near implosion of the financial system in September still fresh in their minds.

The ICSC still forecasts same store sales to increase by two percent over last year, which means that the holiday shopping season won't be a complete bust, but that it will only show moderate improvement over the worst in decades.  For the holiday shopping season, a one percent increase from the year ago period is their forecast.

As you know, consumer spending is two thirds of the economy, so it's a key indicator of where the economy is going.  This particular survey is very timely, as it provides investors with a snapshot of what's happening with chain store sales on a weekly basis, unlike the government's data which provides a monthly snapshot.

That monthly data will be released on Friday, and it's sure to be closely watched.

As you know, one of the sources of information that we use here in order to provide you with information on what's happening in the financial world is American Public Media's Marketplace.

Marketplace is a great source of information.  Just like the rest of public media, because they are not reliant on advertising, they are able to focus on news they feel is relevant, not news that they think will draw the greatest number of listeners.  So, instead of constant coverage of balloon boy, you'll get real news.

But that doesn't mean they can't have fun.  Here's something that sums up all the week's business news in a one minute poem.

Marketplace Minute with Bill Radke 12/04 from Marketplace on Vimeo.

This is something that's definitely worth your time!  Check that and the rest of Markeplace's offerings out.

Investors will get a big dose of economic data in the upcoming week.  Perhaps the most closely scrutinized data will be the data on retail sales and initial unemployment claims.

The first big event of the week, however, won't be a release of economic data.  On Monday, Ben Bernanke addresses the Economic Club of Washington DC.  In light of the jobs data that came out last week which showed that November job losses dropped to 11,000 -- and some economists predicted that may be revised to a gain -- investors are now concerned that the Fed may start to remove some of the liquidity that they have injected into the system.  That would slow down economic growth, but it's a necessary move in order to prevent inflation from rearing its ugly head.

Later on Monday after Bernanke's speech, data on consumer credit will be released.  Analysts expect that the amount of credit that consumers are using will drop, which is no surprise given the consumer's new focus on thrift and saving instead of spending.

Early in the morning on Tuesday, investors will get some insight into how the holiday shopping season is going so far.  The International Council of Shopping Centers (ICSC) and Goldman Sachs will release data on same store sales for the week.  Many investors are looking at the holiday shopping season for signs on whether consumers are opening up their wallets.  This will help give them some information to work with.

Then, on Thursday, investors will be watching the initial unemployment claims figures for a guide on how the state of the labor market.  With all indicators showing that the labor market is turning a corner, this will be closely watched to see if the weekly data helps confirm the trend with monthly payrolls.

Finally, the week closes with a trifecta of economic data in the morning.  First up will be the Commerce Department's release of retail sales for the month of November.  Investors will be looking at this data to see whether it confirms the data they get from the ICSC-Goldman Sachs data.

Investors will also see the University of Michigan's consumer sentiment index, which will provide them with another look at how the consumer, who accounts for two thirds of the economy, sees things.  There can be no robust expansion without the consumer taking place, so this data is critical.

Then, five minutes after the data on consumer sentiment is release, investors will have to digest data on business inventories.  Declines in inventories show that businesses are not confident about the economy, and thus are letting the amount of stock they carry decline.  On the other hand, increasing inventories show the opposite.  Lately, many analysts have said that inventories are getting to a point where they as so low that they need to be replenished.  This would mean that production will increase, which would mean that hiring would be required in the manufacturing sector.

After the week, we should have much more information on how the consumer feels, how the jobs market is trending, what the Fed is thinking, and how businesses feel about the economy.  That data can be used by investors to determine what the best course of action is.

After getting much better than expected news on the labor market, stocks climbed.  However, the initial pop, which saw major indices climb by more than one percent, stocks gave back much of their gains.

The S&P 500 swung between gains and losses 20 times per day according to data compiled by Bloomberg.  At the close, all of the major indices were up.  The Dow climbed by 0.2 percent to 10,389.  The S&P 500 was up by 0.6 percent to 1,106.  And the Nasdaq climbed by one percent to 2,194.

Economists all agreed that the much better than expected payroll numbers was good news.  National Bank Financial, whose estimate came closest to the actual number, said that there could be a return to increasing payrolls after the revisions to the initial data.

Still though, Credit Suisse said that while the trend is positive, the economy may not have yet hit the trough in employment.  While revisions have been in the positive direction lately, "we shouldn't take that as evidence that we're at the bottom."  The National Bureau of Economic Research, which is the official judge of when recessions begin and end, said that it's likely "the trough in employment will be around this month."

So while the trend in jobs was good news for investors, worries about jobs were replaced with worries about what the Fed might do with interest rates.  If the job market returns to growth, then the Fed will likely unwind its unprecendented measures to inject liquidity into the system and then they will raise interest rates.  Rising interest rates tend to drive down stock prices, so investors were concerned.

Even so, the good news is that jobs, which are a lagging indicator, seem close to turning the corner.  If that's the case, then stocks will rise as the economy picks up.

The Labor Department reported that payrolls in November declined by 11,000.  That is way down from the revised 111,000 jobs lost in October, and is the lowest level of payroll cuts since the beginning of the recession in December 2007.  The unemployment rate also dropped, falling to ten percent from 10.2 percent.

Not surprisingly, some sectors of the economy did better than others.  Construction employment dropped by 27,000.  Manufacturers shed 41,000 jobs in November.  There were also losses in the information technology sector, which lost 17,000 jobs.  Many of the job cuts in that sector came from the telecommunications sector, which reduced payrolls by 9,000.

Sectors showing gains in employment were the professional and business services sector and the health care sector.  The gains in those sectors were 86,000 and 21,000 jobs, respectively.

There was also good news on the number of hours worked and average hourly compensation.  The average workweek increased by 0.2 hours to 33.2, and employees got paid more per hour worked, with their pay climbing by a penny per hour to $18.74.

In response to the report, Labor Department Secretary Hilda Solis said "I am encouraged by the pattern of moderated job loss; however, I will not be satisfied until there are robust job gains."

The actual report absolutely blew away the consensus estimate, which was for a drop in payrolls of 125,000.  Estimates ranged from a drop of 30,000 to 180,000.  The unemployment rate was expected to stay steady at 10.2 percent, with estimates ranging from 9.9 percent to 10.4 percent.

The economist with the most accurate forecast came from National Bank Financial in Montreal.  He said that the improvement in corporate profits is resulting in "a much brighter labor market.  Confidence has been restored and firms now have started to redeploy their cash."

RDQ Economics said that the jobs numbers should "reduce anxieties about the sustainability of the economy."  However, they warned that there was a "large degree of slack in the labor market."  And Goldman Sachs warned that there may have been a "structural" change in the labor market, where employers have learned how to squeeze more output out of fewer workers.  The upside, according to their economists, is that companies may find they cut jobs too aggressively during the downturn and will find they need to respond with equally aggressive hiring with the economy recovering.

Even though the jobs numbers are much better than expected, it is important to keep in mind that 7.2 million jobs have been lost since the beginning of the recession.  Thus, even if the economy returns to the kind of growth we saw in the 1990s, when payrolls expanded by 22 million over the decade, it will take over three years to return to the employment levels we saw before the recession began.

In a sign that the labor market is improving, the Labor Department reported that initial unemployment claims for the week dropped by 5,000 to 457,000.  Continuing claims increased to 5.47 million, an increase of 28,000.  The four week moving average, which smooths out weekly fluctuations, dropped to 481,250.  That was a decline of 14,250 from the previous week. The continuing claims four week moving average also declined.  That number fell to 5.54 million, down 75,750 from the previous week's figure.

Despite the overall improvement in the claims figures, 19 states showed an increase of more than 1,000 claims.  Only one, Michigan, had a decline of more than 1,000 claims, as fewer layoffs in the auto industry reduced the number of job cuts in that state.

The 457,000 initial claims was the lowest number of claims filed since September 2008, and it was significantly better than what analysts had expected.  The consensus estimate for initial claims for an increase of 14,000, which would have put the claims number at 476,000.  Estimates ranged from 450,000 to 500,000, so the actual number was towards the optimistic side of projections.

Many analysts had expected an increase in claims for the week, but they said that conditions were improving in the job market.  Analysts at JPMorgan Chase said that they saw a "steady downward trend" in initial claims and others predicted that there would be a "very large decline" seen in the early December numbers.

As the economy begins to emerge from the worst downturn since the Great Depression, companies are shedding fewer employees.  However, they remain reluctant to add to their payrolls and are waiting until they are confident that the economy has returned to growth before they resume hiring.

Barclays Capital said that the latest claims numbers show that "the labor market is turning" and that the economy will see a turn to "positive job growth over the next few months."  This turn to job growth will be key an economic recovery.  The fact that economists are starting to use that phrase is an encouraging sign in itself.

E-commerce sales in the United States rose by 14 percent compared with last year, according to Coremetrics.  Analysts had projected growth of anywhere from five to ten percent, so the actual results were much better than expected.

However, while the growth in online sales is good news, it's important to keep it in perspective.  Online sales only account for six percent of total retail sales, so much of the holiday spending will be done in traditional stores.  The growth in the online sector will have a small impact on overall retail sales for the holiday season, which the National Retail Federation is expecting to decline by one percent.

And just like in traditional stores, retailers online are using discounts to get consumers to shop.  Amazon began running promotions about a week before the Thanksgiving weekend kickoff to the holiday shopping season.  Their promotions included discounts on LCD televisions and some CDs priced at $5.

So while the discounting online will eat into the margins of retailers, there are likely winners.  Who will those winners be?

The companies who take the merchandise ordered online and deliver it to the customers who ordered it.  Discounts and free shipping may hurt margins of retailers, but they boost the profits of UPS and FedEx.

FedEx expects to process 13 million packages on December 14, which is its busiest day.  Last year, they processed 12 million packages, so in one year, they'll see an increase in packages of 8.3 percent.  In order to deal with the additional traffic, FedEx will hire 10,000 temporary employees.  Its bigger rival, UPS, will hire 50,000 additional workers.

According to analysts, two things that consumers look for when shopping online are ease of purchase and free shipping.  So, with one of the best tools online retailers have being waiving shipping costs, expect UPS and FedEx to benefit.  As Marketplace said, the surge in online shopping can be summed up as win one for the shipper.

Dubai World's announcement that it would seek a "standstill" agreement on all of its debt roiled the markets last week.  A new announcement from the company, however, eased those worries.  The big news was that Dubai World would only be seeking relief on slightly less than half of its debt.  Instead of negotiating with banks on all $59 billion of debt that Dubai World owes, they will only be looking to restructure $26 billion of their debt.

Dubai's ruler also sought to reduce worries from investors.  In a press conference, when asked about worries about Dubai defaulting on its debt, he said that those worrying about a default "do not understand anything."

In addition, the president of the United Arab Emirates, of which Dubai is a member, said that the UAE was in "good condition" and strong enough to handle "the current difficult circumstances of the international economy."  He added that most sectors of the economy had started to show growth in the current quarter.

Investors saw the potential default of Dubai World as another hit that the world's banking system couldn't take after reeling from $1.7 trillion in losses and writedowns.  The Royal Bank of Scotland has the most capital at risk with Dubai World, while HSBC has the most capital invested in the UAE, reports from JPMorgan Chase said.

Analysts said that Dubai World's latest announcement removes a lot of worry from the market.  They called the problem a relatively small one.  However, they also said that investors should see the Dubai crisis as a sign that the world's economy is still not out of the woods and that caution needs to be part of any investor's thinking.