Monthly Archives: January 2009

Green Companies Celebrated at Decision Makers’ Breakfast

By Rachel Pritchett


Clean, green industry was the theme of the annual Decision Makers’ Breakfast on Thursday.

Two Bainbridge Island firms were held up as examples of the future at the annual economic-development gathering hosted by the Kitsap Economic Development Alliance. Sponsors hinted more companies such as In The Works and Evergreen Electromotive would fit right in.  

Underlying all that is the Port of Bremerton’s proposed Kitsap Sustainable Energy and Economic Development project, which calls for a green business incubator surrounded by startups companies near the Bremerton National Airport.

The owners of In The Works spoke last year with Port of Bremerton leaders about someday locating in the proposed park. Those talks did not result in a lease, however.

Some 200 business people heard In The Works CEO Scott Reynvaan explain his company’s prototype catalytic converter for gas-driven pleasure boats. The converter cuts levels of hydrocarbons, carbon monoxide and nitrous oxides almost down to zero.

He and the other owners of the startups company hope to expand the technology to diesel, and to uses in industry and agriculture, he said Thursday.

All while keeping the planet green.

“For us, it’s more about the people, the planet and the profit,” in that order, Reynvaan said in describing his company’s mission.

Bob Fraik, founder of Evergreen Electromotive, has similar passion about climate change and what it will mean for his 5-year-old daughter.

“I’m really concerned what her world’s going to be like,” he said.

Fraik began Evergreen Electromotive in 2007 to develop new-generation electric vehicles to help the environment and cut down on dependence on foreign oil. His company rolled out a prototype last year, and the small white hatchback stood on display outside the Kitsap Conference Center on the Bremerton waterfront, where the Decision Makers’ Breakfast took place.

Fraik is aiming for the slower, non-highway niche, such as fleets of parking-patrol vehicles.

Both admitted developing breaking-edge technologies in a recession isn’t easy.

“I’ve never seen anything like we’re experiencing today,” Fraik said.

But both also remain convinced their prototypes will succeed.

Detroit had its shot with the electric car, Fraik said.

“I personally don’t believe that’s where the next-generation solutions are going to be coming from,” he said.

Next up at the breakfast was well-known economist John Mitchell of Portland, Ore., a former banker and professor.

Mitchell called this recession “a black swan,” or something that’s seldom seen. What makes this recession so unique is that it’s driven by woes in the housing industry and credit markets, he said.

Mitchell said this recession, while very serious, will begin to turn around in late 2009, but full recovery will take much longer.

It was the 11th year for the Decision Makers Breakfast.

Fairytale Dreams for Little ones

By Rachel Pritchett



or little girls, it’s an opportunity to enter the land of enchantment, where they become princesses who sip tea, where marionettes dance for them, and where green dragons stand watch.

Adele Daniels and Chloe Foster, both 4, and Aspyn Schuster, 5, burst through the door of Storybook Tea & Boutique. Elegant old dolls, tiny toy horses, puppets and a giant teddy bear wait at attention in the pink, living room-like shop.

But the trio parades past them and a table set for tea to a back chamber, where fairytale gowns, wings, crowns and pointy princess hats are ready to try on.

After ample consideration befitting true princesses, the gown choices are made. The princesses then sit expectantly in front of an ornate vanity, where a mommy servant brushes on makeup. Then, it is over to the jewelry case to select the royal jewels.

Now, finally, it’s back to the pink room. Let the play begin.

Adele’s mother, Wendy Daniels, 31, has poured generous doses of imagination into her new business that offers little girls and a few boys a couple hours of make-believe with their friends. That comes from her work in college and community theater, most recently with Changing Scene.

The idea was hatched at home while Adele and her grandmother were out for a walk. Wendy wanted to surprise them when they came back. She set up a tea time. When Adele say it, her eyes opened wide.

“Oh, mommy! It’s so lovely,” she said.

Grandma and Adele sat down and had a tea time neither will ever forget.

“And I just said, ‘I have to do this,’ ” said Daniels, with red curls and bright blue eyes.

Daniels had a business background with a nanny service and from running a day care. 

She knew she had a unique idea and wasn’t afraid of the recession “because people will spend money on their children,” she said.

She transformed the modest storefront into a fanciful wonderland, shopping at thrift stores for old dolls, antiques and teapots and cups.

“And it’s breakable, and it’s OK,” she said.

Daniels hopes this shop one day will provide a good income. She hopes to move it to a bigger place eventually, and add themed rooms for would-be princesses, pirates and mermaids.

Most of all, she hopes Storybook Tea & Boutique offers kids a chance to learn to socialize and discover themselves — while pretending to be someone else.

“I hope it never gets old for me,” she said.



At A Glance

Storybook Tea & Boutique, with costumes, toys, crafts and tea time for youngsters; retail items for sale.

Address: 2015 Harkins Ave., Bremerton

Phone: (360) 479-3501

Web site:


Cost: $225 for a two-hour party for up to eight, discounts available

Kitsap Condo Activity Slows to Crawl

By Rachel Pritchett

Condominium sales slowed to a trickle in Kitsap County in 2008, and the few condos that sold went for a lot less money than they would have previously.

A year-end recap from the Northwest Multiple Listing Service shows only 110 condos were sold in Kitsap County in 2008, a 70 percent drop from 2007. They sold for a median price of $209,250, down 38 percent from 2007. Median means that half sold for more, half for less.

Terry Taylor, listing agent for the Harborside Condominiums in downtown Bremerton, didn’t mince words:

“If you want to sell something today, you have to be priced right.”

He pointed to the Harborside units he represents as examples of condos whose prices haven’t been brought down enough.

“They haven’t come down at Harborside hardly at all,” he said.

Harborside units range from $310,000 for an 850-square-foot unit to around $1 million for one of the three available penthouses in the complex owned by Kitsap County Consolidated Housing Authority.

Forty-five of the Harborside’s 78 units remain for sale, said Taylor, an agent at Prudential Northwest Real Estate of Port Orchard.  

The slide in Kitsap County condo prices stood in stark contrast to King County. The median price for condos there was down just 2 percent from last year, to $280,000. But the pace of condo sales in King County also was slow.

The median price of a single-family home in Kitsap in 2008 — $265,000 — was 9 percent less than in 2007, not nearly as severe as the 38 percent drop in condo prices.

The number of houses sold was down 25 percent, to 2,437.

Still, the median price of single-family homes in 2008 in Kitsap County was 60 percent higher than it was in 2002, according to the NMLS.

J. Lennox Scott, chairman of John L. Scott Real Estate, said 2008 will be seared in memory because of the credit crisis, high gas prices, the demise of Washington Mutual, the stock market and bad winter weather.

“We knew the real-estate market was due for slowing in 2008, but no one could have predicted all of these events or the profound effect they would collectively have on the housing economy,” he said.

Some other Kitsap tidbits for 2008:

Forty-three single-family homes sold for $1 million or more, the name number that sold in Snohomish and Pierce counties. And the median prices for single-family homes by school district were $588,250 on Bainbridge Island, $256,500 in North Kitsap, $259,880 in Central Kitsap, $199,950 in Bremerton and $315,793 in South Kitsap.

The real estate market, as bad as it is now, will turn around, said Taylor, the Harborside Condominiums agent.

“I think it’s at least a year, but who knows?” he asked.

The market for single-family homes will improve first, followed by condos.

And after that, the values again will rise.

“They’ll just keep going up,” he said.

“Time cures all.”

Good Monday: Stocks Fairly Level at 8,070

NEW YORK (AP) — Wall Street had a burst of optimism Monday, rising on news that drugmaker Pfizer will acquire rival Wyeth for $68 billion and on a surprise jump in sales of existing homes in December.

The Standard & Poor’s 500 and Nasdaq composite indexes rose more than 1 percent, while the Dow Jones industrial average rose more than 80 points.

Pfizer’s move offered investors reassurance that dealmaking could still take place in a difficult recession. And a report from the National Association of Realtors that sales of existing homes rose rather than fell in December stirred hopes that lower prices and falling interest rates are helping eat away at a glut of homes with “for sale” signs.

Investors also placed bets on beaten down financial stocks after Standard & Poor’s reaffirmed its credit ratings on General Electric Co., which has a large financial services business. The company last week posted disappointing fourth-quarter results that stirred fears it could see its ratings downgraded. That could have weakened the financial standing of those that hold the company’s debt.

However, mixed news from big companies weighed on some corners of the market. Downbeat comments from Caterpillar Inc. about the health of its business curbed the advance in the Dow industrials compared with broader indexes. Shares dropped 10 percent after Caterpillar reported its fourth-quarter earnings fell 32 percent and that it would lay off workers and cut executive pay. The maker of heavy equipment said it would offer buyouts to 25,000 employees in the U.S. after plunging commodity prices left the company “whipsawed” in the fourth quarter after a strong start to 2008.

Home Depot Inc. also announced big job cuts. The company said it would slash 7,000 jobs and close its smaller Expo chain as it struggles with the weak housing market.

A bit of bright news came from McDonald’s Corp., which posted better-than-expected profits but said revenue fell from a year earlier. Same-store sales, or sales at stores open at least a year, rose worldwide and in the U.S., where the company’s low-prices have been a draw for consumers worried about the economy.

“It’s almost like a teeter-totter right now,” said Alan Lancz, money manager at Alan B. Lancz & Associates. “Earnings season is always treacherous in this kind of global economic environment with all the uncertainty.”

Still, investors found comfort in the Wyeth acquisition. The combined company will have 17 products that each have more than $1 billion in annual sales. But beyond the implications for the drug industry, the $22.5 billion in financing put up by banks for the combination is another sign that the credit markets are slowly starting to improve after locking up following the mid-September bankruptcy of Lehman Brothers Holdings Inc. That failure left lenders hesitant to extend credit.

But not all deals are going through. Rohm and Haas Co. said Dow Chemical Co. scrapped its planned acquisition of the company, which was expected to close Tuesday.

In early afternoon trading, the Dow rose 83.79, or 1.04 percent, to 8,161.35.

Broader stock indicators also rose. The Standard & Poor’s 500 index rose 9.75, or 1.17 percent, to 841.70, and the Nasdaq composite index rose 18.42, or 1.25 percent, to 1,495.71.

The Russell 2000 index of smaller companies rose 8.16, or 1.84 percent, to 452.52.

Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where volume came to 629.8 million shares.

Stocks are coming off a wild week of big ups and downs as companies’ financial results weighed on the market. All the major indexes finished last week with losses of more than 2 percent.

Of the companies in the Standard & Poor’s 500 index that have reported results in recent weeks, more than half have fallen short of analysts’ already reduced estimates. The poor showing has left investors nervous that the economy is in worse shape than feared. The numbers this week and company’s comments about the coming year will play a big part in shaping investor sentiment.

“Depending on how these earnings reports come out, that is going to set the tone going forward,” said Jon Biele, head of capital markets at Cowen & Co.

More results are due Monday from some of the biggest companies in a range of industries, including American Express Co. and Texas Instruments Inc.

Investors are also awaiting more details on President Barack Obama’s proposed stimulus package, which is working its way through Congress.

Senate committees are scheduled to take up the massive plan Tuesday and the full House is expected to vote on its version of the $825 billion package Wednesday. The plan could include big tax cuts and a massive public works program.

“Right now (the market) is in a holding pattern,” said Doug Roberts, chief investment strategist at Channel Capital Research. “They know things aren’t going to get any better soon, but want to see what this package is going to look like.”

Bank stocks gained after Britain’s Barclays PLC said it expects to turn in a profit for 2008 and that it doesn’t need a financial bailout to stay in business despite hefty write-downs. JPMorgan Chase & Co. rose $1.07, or 4.4 percent, to $25.35, while Bank of America Corp. advanced 35 cents, or 5.6 percent, to $6.59.

GE rose 37 cents, or 3.1 percent, to $12.40.

Wyeth rose 24 cents to $43.98, while Pfizer fell $1.65, or 9.5 percent, to $15.80. Pfizer said it will cut its dividend as part of the deal, though Wall Street often sells companies that announce acquisitions.

Home builders advanced following the better-than-expected housing data. KBR Inc. rose 13 cents to $15.19, and Toll Bros. Inc. rose 66 cents, or 3.7 percent, to $18.57.

Home Depot rose $1.18, or 5.4 percent, to $22.90, while McDonald’s rose 17 cents to $58.19.

A private research group also delivered good news Monday. The Conference Board said its monthly forecast of economic activity rose unexpectedly in December, largely because the rush of federal bailouts increased the money supply.

Bond prices fell Monday as stocks rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.67 percent from 2.62 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged from late Friday at 0.09 percent.

The dollar fell against other major currencies, while gold prices rose.

Light, sweet crude slipped 1 penny to $46.46 on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 0.08 percent. Britain’s FTSE 100 rose 3.86 percent, Germany’s DAX index rose 3.54 percent, and France’s CAC-40 jumped 3.73 percent.


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Dow at 8074 Friday, Down 48

Wall Street extends slide on economic worries

NEW YORK (AP) — Stocks bounced off early lows and traded mixed Friday as weak corporate earnings reports stirred fears that the recession will be deeper and longer lasting than some investors had predicted.

General Electric Co.’s fourth-quarter numbers made investors uneasy. While the 46 percent drop in earnings met Wall Street’s lowered expectations, investors are worried the conglomerate will reduce its dividend. They are also nervous the company could lose its coveted “AAA” credit rating because of the recession that has crimped lending at GE Capital and hurt its industrial and entertainment businesses. The stock, a component of the Dow Jones industrial average, fell 8 percent.

Reports from a range of industries gave fresh evidence of the toll the weak economy is taking: Copier and printer maker Xerox Corp. fell 8 percent after its results fell short of expectations. Capital One Financial Corp., which focuses on credit card lending, reported a loss rather than the profit Wall Street expected after it set aside money to cover bad debt. The stock lost 13 percent. And Harley-Davidson Inc. said it will cut jobs and reduce shipments because of falling demand. The company’s earnings for the final quarter of 2008 fell nearly 60 percent, sending the stock down 8 percent.

“I think we’re in a period of extreme risk aversion, and the earnings play into that,” said Tim Courtney, chief investment officer at Burns Advisory Group. “When you couple companies missing earnings estimates with investor risk aversion, there’s no tolerance” for buying.

The trouble isn’t just in the U.S. The British government released data Friday showing the country’s economy shrank 1.5 percent in the fourth quarter and declared the country in a recession. The fourth-quarter decline was the worst since 1980.

Official word of recessions elsewhere around the world as economies in Europe and Asia struggle is also likely to give investors pause, Courtney said. A weakening global economy provides less opportunities for corporate growth, which could slow down any recovery, he added.

Joe Clark, managing partner at Financial Enhancement Group, said the range of results companies have posted and their opaque forecasts make it difficult for Wall Street to determine how a company or others in its industry might fare in the coming quarters. That uncertainty makes investors nervous.

“We are going to go back to a time where we won’t infer a company does well based on its sector,” he said.

In afternoon trading, the Dow industrials fell 30.26, or 0.37 percent, to 8,092.54.

Broader stock indicators were higher. The Standard & Poor’s 500 index rose 5.96, or 0.72 percent, to 833.46, while the Nasdaq composite index rose 17.39, or 1.19 percent, to 1,482.88.

The technology sector was getting a boost from Google’s surpassing analysts’ estimates. Excluding one-time charges, Google said after the end of trading Thursday that it earned about $5.10 per share, compared with analysts’ expectations for profit of $4.95 per share, according to Thomson Reuters. Google stock rose $17.16, or 5.6 percent, to $323.66.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.68 percent from 2.60 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.11 percent from 0.09 percent late Thursday.

The dollar rose against other major currencies, while gold prices also rose.

Meanwhile, oil prices rose $1.24 to $44.91 a barrel on the New York Mercantile Exchange.

The market has seen a turbulent week, with the Dow tumbling 4 percent Tuesday only to regain more than 3 percent Wednesday, followed by another big drop Thursday. Volatility has been more the rule than the exception in recent trading as investors sort through a plethora of wide-ranging earnings reports.

“I think it’s just a matter of what side of the bed the market wakes up on,” said Clark.

Corporate results are pushing and pulling the market as investors try to determine where the economy is headed.

In other corporate news, The Wall Street Journal is reporting drug maker Pfizer Inc. is in talks to acquire rival Wyeth in a deal valued at more than $60 billion. Citing unidentified sources, the Journal said the discussions have been going on for months, but a deal is not imminent. Wyeth jumped $3.09, or 8 percent, to $41.92, while Pfizer fell 29 cents to $16.92.

Meanwhile, GE fell $1.11, or 8 percent, to $12.37. Xerox fell 64 cents, or 8 percent, to $6.95 and Capitol One fell $2.75, or 13 percent, to $19.19. Harley slid 95 cents, or 8 percent, to $11.45.

Overseas, Japan’s Nikkei stock average fell 3.8 percent. Britain’s FTSE 100 rose 0.01 percent, Germany’s DAX index fell 0.96 percent, and France’s CAC-40 lost 0.71 percent.

Thursday Dow at 8,122, Down 105

NEW YORK (AP) — Wall Street has again succumbed to a disheartening reality — the recession is taking a heavy toll on U.S. companies.

Stocks closed sharply lower Thursday on more bad news about earnings and ever-increasing worries about the banking industry. The major indexes, which plunged and then soared the first two trading days of the week, ratcheted up and down during the course of the session; the Dow Jones industrial average fell as much 271 points, came close to breaking even and then slumped before closing down 105.

“We’re seeing a little bit of increase in volatility because things have not gotten much better,” said Scott Fullman, director of derivatives investment strategy for WJB Capital Group.

Microsoft Corp. set the tone for the day and made clear more pain was to come before an elusive economic recovery would emerge. The company surprised investors Thursday morning by reporting its fiscal second-quarter earnings early — and the news was not good. The software giant posted an 11 percent drop in profit and said it will slash 5,000 jobs over the next 18 months.

Microsoft said deteriorating global economic conditions and lower revenue from PC software forced it to cut back. The company also said it is unable to provide any profit and revenue forecasts for the rest of the year because of the market volatility.

Uneasiness about financial companies still plagues investors, and many bank stocks took another beating Thursday. Quarterly financial reports showing steep profit declines and big loan losses have investors worried that the financial crisis is far from over, and that the government’s efforts to prop up banks might not be enough to prevent a major failure.

Bank of America Corp. said former Merrill Lynch & Co. Chief Executive John Thain resigned. The company didn’t offer a reason for Thain’s departure, but it follows news that Merrill Lynch had moved up its year-end bonuses, handing out payments just days before it was officially acquired by Bank of America on Jan. 1. Moreover, some analysts expected that Thain would leave; it’s almost inevitable that in the marriage of two big companies, one of the former CEOs leaves soon after the deal is closed. Bank of America fell 15 percent.

More downbeat economic readings, including an increase in the number of weekly jobless benefit claims and a sharp drop in home construction activity, added to the day’s gloom.

Investors found some encouragement after two House committees prepared President Barack Obama’s economic stimulus plan for a floor vote next week. Still, there were still clear signs that it wasn’t gaining as much Republican support as the new administration had been hoping for.

The Dow fell 105.30, or 1.28 percent, to 8,122.80.

Broader market indexes recovered some of their losses but still showed big drops. The Standard & Poor’s 500 index fell 12.74, or 1.52 percent, to 827.50. The technology-heavy Nasdaq composite index dropped 41.58, or 2.76 percent, to 1,465.49 after the Microsoft news.

The Russell 2000 index of smaller companies fell 13.91, or 3.05 percent, to 442.85.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange where consolidated volume came to 5.75 billion shares compared with 6.33 billion shares traded Wednesday.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.60 percent from 2.55 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.09 from 0.10 percent late Wednesday.

The dollar rose against other major currencies, while gold prices rose.

Light, sweet crude rose 12 cents to settle at $43.67 a barrel on the New York Mercantile Exchange.

The Dow jumped 3.5 percent Wednesday amid a rally in the battered banking industry, stronger-than-expected results from IBM Corp. and hopes of swift action in Washington to help the economy. Those gains came just a day after the Dow tumbled 4 percent on worries governments would further intervene to help struggling banks.

“The increased volatility is not a good sign,” said Bruce McCain, chief investment strategist at Key Private Bank. He said fractiousness should gradually decrease as the market progresses in the sometimes long process of finding a bottom. The market’s ups and downs this week could indicate that it will take longer for Wall Street to find the level where stock prices are priced appropriately.

Double-digit moves in bank stocks have been tugging at the entire market and making investors leery of placing big bets anywhere with so many questions remaining about how banks will deal with bad assets and resume more normal levels of lending.

“There are still problems at some of the banks, which is evident by their stock price deteriorating, which is overhanging the whole economy,” Fullman said. “We need to see that there’s confidence in the banks. They’re a crucial piece to most businesses and they’re a crucial part of the economy.”

Banks like Citigroup Inc. and Bank of America have announced losses in the billions of dollars but it’s not just big banks that are troubled. Regional bank Fifth Third Bancorp spooked investors Thursday with its report that it lost almost $2.2 billion in the fourth quarter in part because of bad loans. The stock of the Cincinnati bank plunged 29 percent.

The biggest decliners among financial stocks Thursday included Bank of America, which tumbled 97 cents, or 14.5 percent, to $5.71, and Citigroup Inc., which dove 56 cents, or 15 percent, to $3.11.

Tech shares took a hit following Microsoft’s report, though computer and electronic gadget maker Apple Inc. reported fiscal first-quarter profit and revenue that topped analysts’ projections.

Microsoft dropped $2.27, or 12 percent, to $17.11, while Apple gained $5.53, or 6.7 percent, to $88.36.

Overseas, Britain’s FTSE 100 slipped 0.19 percent, Germany’s DAX index fell 0.98 percent, and France’s CAC-40 fell 1.24 percent. Japan’s Nikkei stock average rose 1.9 percent.

Kitsap’s Unemployment Rate Continues to Rise

The Associated Press



Washington’s unemployment rate jumped to 7.1 percent last month, the largest one month increase in more than three decades.

Kitsap County’s unemployment rate jumped from 5.8 in November to 6.1 percent in December.

The state’s jump of more than half a percentage point from 6.4 percent in November was the biggest increase reported since 1976, according to the state Employment Security Department.

Washington state’s unemployment rate has nearly caught up to the national rate of 7.2 percent.

Last year at this time, the state’s unemployment rate was 4.6 percent. Washington had 54,600 fewer jobs last month than a year ago, a 1.8 percent decrease. Nationally, employment declined by 1.9 percent over the past year.

Economists say nearly 252,000 people are unemployed and looking for work.

Wednesday: Dow Rebounds 279, at 8,228

NEW YORK (AP) — IBM gave Wall Street a reprieve from bad news Wednesday and investors responded by giving stocks a big rebound from their Inauguration Day plunge.

The Dow Jones industrials surged nearly 200 points as gains by technology stocks and a partial recovery in financial shares pulled the market sharply higher. All the major indexes rose more than 2 percent after earnings reports and forecasts from PNC Financial Services Group Inc. and Bank of New York Mellon eased concerns that the troubles at financial giants like Citigroup Inc. were hitting all banks.

Some bounce would have been expected following Tuesday’s sell-off that took the Dow down 332 points. But a better-than-expected 2009 forecast from IBM Corp. left technology shares looking like relatively safe bargains. Energy stocks also advanced as oil prices gained.

Good Inauguration to You: Market Not in Celebratory Mood

Dow at 8,013 at noon, down 281. Rachel


NEW YORK (AP) — The dawn of the Obama presidency could not shake Wall Street from its dejection over the banking industry’s growing problems.

After hearing the new president’s inaugural address Tuesday, investors continued selling, sending the major indexes down more than 2 percent. Traders on the floor of the New York Stock Exchange paused at times to watch the inauguration ceremony and Obama’s remarks, but the transition of power didn’t erase investors’

concerns about the struggling economy.

Obama said the economic recovery would be difficult and that the nation must chose “hope over fear, unity of purpose over conflict and discord” to overcome the worst economic crisis since the Great Depression.

Investors are expecting Washington will be a central part of the economic recovery. But the first few minutes of Obama’s term did little to ease their concerns.

“At this stage, markets in general and bank investors specifically are really looking to government as the way out,” said Jack Ablin, chief investment officer at Harris Private Bank. “Certainly, of just about all of inaugurations that I can recall today’s event probably has the not only the symbolic importance but really tangible importance to the stock market.”

Obama’s speech suggested Wall Street would see greater oversight: “Without a watchful eye, the market can spin out of control,” he said.

Investors already nervous about the state of U.S. banking were rattled by the Royal Bank of Scotland’s forecast that its losses for 2008 could top $41.3 billion, the biggest ever for a British corporation. The British government injected more money into the struggling bank Monday. The government also announced another round of bailouts for the country’s banks.

The moves in Britain are designed to insure banks against further losses and are similar to steps the U.S. government has made to protect Citigroup Inc. and Bank of America. Both companies on Friday reported multibillion dollar fourth-quarter losses. Citigroup also said it planned to split its operations in two in an effort to return to profitability.

Meanwhile, the Financial Times is reporting that Bank of America will begin cutting as many as 4,000 jobs in its capital markets unit as it consolidates its operations in that division with those of recently acquired Merrill Lynch & Co.

Investors were uneasily awaiting the bulk of companies earnings reports to see how badly industries beyond banking are hurting.

“Today’s market is under pressure with fourth-quarter earnings season (increasing this week) and it may not have been effectively priced into the market yet,” said Arthur Hogan, chief market analyst at Jefferies & Co.

State Street Corp., which had been performing better than most financial services companies, reported a 71 percent drop in fourth-quarter profit as it was forced to billions of dollars in write-downs on its commercial paper program and investment portfolio. The bank also said it expects 2009 operating earnings to be flat with 2008, below the company’s long-term goal of 10 percent to 15 percent growth. State Street plunged $17.18, or 47 percent, to $19.16.

In midafternoon trading, the Dow Jones industrial average fell 213.93, or 2.58 percent, to 8,067.29, its lowest level since Nov. 21. The blue chips closed Nov. 20 at their lowest point in more than five years.

During much of Obama’s address, the average was down about 150 points. The Dow generally declines on Inauguration Day. Traders hadn’t appeared so focused on TV screens since Sept. 29, when the House initially voted against the banking bailout package and the Dow tumbled 777 points.

Broader stock indicators also declined Tuesday. The Standard & Poor’s 500 index fell 28.26, or 3.32 percent, to 821.86, and the Nasdaq composite index fell 60.51, or 3.96 percent, to 1,468.82.

The Russell 2000 index of smaller companies fell 21.15, or 4.53 percent, to 445.30.

Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange, where volume came to 849.1 million shares.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.39 percent from 2.34 percent late Friday. The yield on the three-month T-bill, in demand because it is considered one of the safest investments, rose to 0.12 percent from 0.11 percent late Friday.

Light, sweet crude rose $2.38 to $38.89 a barrel on the New York Mercantile Exchange.

The dollar was mixed against other major currencies, while gold prices rose.

Richard E. Cripps, chief market strategist for Stifel Nicolaus, said the market’s decline was interrupted by Obama’s inauguration speech but that the markets then continued to trade on the problems in the financial sector.

“There’s just tremendous fear and uncertainty in the banking sector,” Cripps said. “Even those closest to the issue, like executives and analysts, there’s a feeling of tremendous uncertainty. They’re not giving any positive guidance because they just don’t know. Lacking that (certainty) we’re left to our worst fears, and that’s what you’re looking at with bank stocks.”

Some banks showed steep declines. Citigroup fell 48 cents, or 13.7 percent, to $3.02, while Bank of America fell $1.38, or 19 percent, to $5.80. Morgan Stanley fell $1.44, or 9.2 percent, to $14.15.

Johnson & Johnson reported a better-than-expected fourth-quarter profit of 97 cents per share, but provided a 2009 outlook below analysts’ average expectations. Johnson & Johnson said it expects to earn between $4.45 and $4.55 per share. Analysts polled by Thomson Reuters, on average, forecast earnings of $4.61 per share for the year. J&J rose 1 cent to $57.45.

Italian automaker Fiat signed a nonbinding agreement to form an alliance with struggling U.S. automaker Chrysler to share technologies and vehicle platforms. Fiat will acquire a 35 percent stake in Chrysler as part of the deal. Fiat will not invest cash, but provide access to products and platforms.

Overseas, Japan’s Nikkei stock average fell 2.3 percent. Britain’s FTSE 100 fell 0.42 percent, Germany’s DAX index fell 1.77 percent, and France’s CAC-40 fell 2.15 percent.

Bainbridge Island Featured in New York Times



Bainbridge Island was featured Friday in the N.Y. Times. You can read it at:


or just go to and search for Bainbridge Island.


Thanks, Maureen Buckley of Buckley and Buckley Real Estate of Bainbridge Island for the tip. I’ve been lucky enough to live on Bainbridge for a number of years. Our three daughters went through the wonderful school system there, and we really enjoyed all the outdoor opportunities we’ve enjoyed there, whether it’s been hiking through the many open spaces, drifting on an air mattress off Manzanita Bay, or swinging on the old rope swing at Fort Ward, where the kids also liked to climb around the old military buildings. Of course, we’ve enjoyed Bloedel Reserve and the concerts and Island Music Guild for years. That said, it’s expensive and inconvenient, for certain. Just one of those choices you make.