Anemic GDP Helps Market, Except HIG

The first estimate of third-quarter GDP came in slightly better than expected at negative 0.3%.  In a quarter that included the virtual collapse and de-privatization of the global financial system, that is positively rosy.  Of course, because things didn't really hit the fan until the end of the third quarter, the effects of the seizure in most forms of lending won't appear in GDP, a notoriously lagging indicator, until the fourth-quarter.  

Equity markets are higher on a smattering of non-catastrophic earnings reports and yesterday's 50 basis point cut by the Fed.  Here are some company specific headlines:

•  Exxon reported a profit of $14.8 billion, a number that was and probably will remain the biggest quarterly profit ever, since the price of crude oil has tumbled precipitously in the past month.  
• Amex announced it will cut 7,000 jobs.  
• Motorola posted a $397 million loss on a one-time restructuring charge and postponed its planned spin-off. 
• CBS lost $12.5 billion on a non-cash write-down of goodwill and other intangibles.  Without the write-down, the company reported earnings of 43 cents a share on a 2.9% increase in revenue, which beat earnings expectations.  It is nice to know that you can lose $12.5 billion in a quarter and have your stock rally 11% because you "beat expectations."

And then there was Hartford, the insurance company, who shares have plummeted precipitously recently in anticipation of horrendous earnings.  As it turned out, the company managed to disappoint even lowered expectations by reporting a $2.6 billion loss.  As the joker at Fox-Pitt Kelton, who somehow still has a job as an analyst, so eloquently stated: "The risk of a rating agency downgrade and the inability of management to provide comfort on the level of their capital cushion make it very difficult to assess the downside or to argue that there is significant upside in the near term."  And then, Mr. Fox-Pitt Kelton analyst downgraded the stock from "outperform" to "in-line."  I don't know what "in-line" actually means in analyst-speak, but I can say with authority that HIG's stock has outperformed nothing in the past few months, other than maybe LEH, FNM, FRE, AIG and my running shoes.