Thursday, August 28, 2008

Crazy "Yoyo" Market....

Two days ago the Bank of Nova Scotia reported a minor 2% drop in their profit and their shares fall by about 3% and today the CIBC report a whopping 91% drop in profit and their shares go up over 6%. I wonder if a Bank customer's company dropped their profit by 91% would the Bank recognize that the value of the customer's company would go up in value.... it is certainly a strange stock market going on these days...
Toronto market, CIBC shares surge despite bad news
Wednesday, August 27, 2008
CBC News
Toronto stocks were up as much as 275 points at times Wednesday, lifted partly by a paradoxical enthusiasm for Canadian Imperial Bank of Commerce, which reported a 91 per cent drop in quarterly profit.
CIBC shares rose $3.04 or 5.3 per cent to $60.10 even though the bank disclosed more big losses in little-understood markets involving structured credit, special-purpose entities, collateralized debt obligations, asset-backed commercial paper and other financial arcana.
'Yes, it wasn't as bad as expected.'— Dundee Securities bank analyst John Aiken
Despite the bad news, investors seemed relieved.
"Yes, it wasn't as bad as expected," Dundee Securities bank analyst John Aiken told CBC News.
"What it all boils down to with CIBC is the fact that the market was looking for writeoffs from the capital markets to be in the neighbourhood of $1.5 billion or more. They came in at $885 million," he said.
After tax, the $885 million hit cost the bank $596 million or $1.56 a share.
"Although it hurt earnings, it left the balance sheet in much better shape than everyone was expecting," Aiken said.

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