I’ve often highlighted the fact that equity traders view the world differently than bond traders. Actually, I’ve argued that the latter group tends to be much savvier than the former when it comes to understanding complex economic and financial issues.
Maybe it’s the fact that it takes a certain kind of intellect to understand the notion that when interest rates go up, the prices of fixed-income securities tend to fall — and vice versa. I don’t know.
Regardless, events of the … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content. 
NYSE Composite Volume Is Much Lighter This Week
Volume was significantly lighter this week as people moved away from risky assets, pending a resolution of the vote before Congress.
Last night it seemed that a solution was nearly at hand. What … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Market Summary: Wachovia, Citi And TARP
This bail out won't be a panacea, but will give us time for the orderly disposition of assets.
This sentence, in one form or another, has been uttered many times over the last year, just before every government intervention into the financial markets. Have any interventions worked yet? One analyst had the nerve to say that Main Street hasn't really felt the Wall Street turmoil, but would soon. Hmm…how do you feel about that, Main Street? Feelin' it yet? … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Friday's Market Recap: Washington Mutual Fails, Wachovia Looks For Buyer
eThe Bush administration and Congress anxiously revived negotiations today on the $700 billion rescue plan; one day after the largest bank collapse in U.S. history. Bargaining has restarted on the government's bailout plan on which investors have nervously been awaiting more details. Massachusetts Rep. Barney Frank thinks that by Sunday there will be an agreement, ending the Congressional disputes, and sense will be made of the plan. It will be interesting to see … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
WaMu Seized, Wachovia And National City Tumble
Another one bites the dust.
After the market close Thursday, Washington Mutual (WM) slipped beneath the waves. It was the largest U.S. bank failure in history and marked the end of an institution that had been in business since 1889.
The good news is this one didn’t cost the taxpayers a dime.
The bad news is its share price went to .16 cents and its bond holders have been stiffed in the deal. Prior to the bust, Washington Mutual traded as high as $45 a … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
SEC Announces End Of Consolidated Supervised Entities Program
The U.S. Securities and Exchange Commission [SEC] announced Friday a decision by the Division of Trading and Markets to end the Consolidated Supervised Entities (CSE) program, now that the five participants have collapsed or reorganized.
SEC's Chairman Christopher Cox in his statement made it very clear that the CSE program was fundamentally flawed from the beginning, since investment bank holding co.'s like: Goldman Sachs (GS), Morgan Stanley (MS), … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Solar ETFs Pushed Along By Changing Energy Landscape
The solar power industry is booming right now, and perhaps it will soon translate into success for related exchange traded funds (ETFs.)
A surge in energy prices, combined with generous incentives and tax credits, has given rise to hundreds of small businesses. Most of these are contractors and installers.But some fear that these small business could be primed for a bust, or at least a slowdown.
The main concerns over solar energy is how the energy is financed and distributed, but if … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Did Stock Charts Of Washington Mutual Give Us Clues That Something Was Wrong?
First, we never know when a company will declare bankruptcy or cease trading - charts can't tell us that. What they can do is warn us to a deteriorating situation and allow risk-management procedures to take place, as well as warning us that we should probably avoid or reduce exposure to a given stock. Let's look back at Washington Mutual (WM) on multiple time frames for such clues - and let's try and find the optimal moment when we could have known something was … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Shift To Internet Advertising Could Be Hurting Media ETFs
There seem to be few sectors and exchange traded funds (ETFs) that have managed to remain immune from the economic downturn. The latest is your local NBC affiliate.
NBC Universal CEO Jeff Zucker says the downturn has had a "profound" effect on local television stations, but that so far, there hasn't been a slowdown on the national level. NBC owns 10 local broadcasters, including stations in Los Angeles, New York and Chicago, plus 15 Spanish-language stations. About $2 billion in ad … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Treading A Fine Line When It Comes To Setting New Regulations
Interesting article from the NY Times on the need for better set of regulations for the financial industry, as well as various aspects of past financial crisis:
From the NY Times:
Either Barack Obama or John McCain could well become the first U.S. president since John F. Kennedy to be elected during a recession, not to mention a financial crisis. What sort of nation will the winner inherit? Although the string of bank failures and … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Largest Bank Failure, Bailout Snags Hit Financial ETFs
Washington Mutual (WM), a major holding in several financial exchange traded funds (ETFs), has just joined the casualty list.
JP Morgan Chase (JPM) is buying the bank's assets for $1.9 billion after the FDIC seized the bank, reports Madlen Read for the Associated Press. WaMu is the largest bank to fail in the country's history. Its $307 billion in assets … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Reduction In Financial Preferred
As I am now actively managing this site's Income Portfolio, I am trying to decide how much of the trading I want to share in posts. Right now I am leaning towards putting up a notice when I make a major position change or something similar. Today I decided to reduce the position in the PowerShares Financial Preferred ETF (PGF) by about 2/3. The portfolio started out on 7/1/08 with a 10% position in 10 stocks including PGF and in early September I started actively managing … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Budgetary Consequences Of The Financial Crisis
The consequences of the troubled asset relief program (TARP) will be felt for a number of years. The death of the investment-banking model, the transformation of the domestic system of finance and the coming wave of regulation of what is left of Wall Street will have far-reaching consequences. This, however, will take much time to absorb and assess. What is of immediate concern, is how the proposed $700 billion TARP will impact the budget outlook for fiscal year 2009.
Looking at the -$486 … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Bailout Plan Update
Despite the previous announcement that an “in principle” agreement had been reached, it appears that talks on the bailout plan stalled last night:
From the WSJ:
WASHINGTON — Wrangling among the nation’s top political leaders threw the Bush administration’s $700 billion bailout plan into disarray late Thursday, despite a dramatic day of negotiations on Capitol Hill that seemed to promise a deal.
Negotiators broke off talks Thursday … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Hurricane Damage Accounts For Oil Price Rise
An insightful report in the Financial Times posted below ascribes the recent rise in oil prices above $100 to the far greater than expected losses of oil production in the Gulf from hurricane damage. As the report also mentions, oil prices have risen despite softness in the global economy. There are many factors influencing the global price of oil, but considering only the hurricane-induced supply decline and the economy-induced demand decline would lead one to expect lower oil … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Wachovia Finally Addressing Their Pay Option Portfolio
Wachovia (WB), who at last count owned $122bb of the most toxic loan every created (the Pay Option ARM), has taken on an aggressive initiative with mortgage brokers/bankers to help them refi their way out of their financial troubles. They hope to refi about 30% or 135k loans over the next couple of years. The Pay Option ARM, in part, just took WaMu (WM) down and many think Wachovia will be next.
Wachovia's plan is to dole out leads to mortgage … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
VIX Options As Catastrophe Insurance
As I type this, Congress is still debating the Troubled Asset Relief Plan (TARP) and various modifications and alternatives that have sprung up over the course of the past week.
While the outcome is uncertain, there is clearly a broad recognition that even a flawed plan announced before the markets close today may be better than the possibility of the panic and chaos we could see in global financial markets on Monday if Congress is still trying to agree on a course of action.
If there is … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Republican Opposition To Paulson's Bailout Plan Stalls Discussions
An insurrection among Republicans in the House of Representatives today (Friday) torpedoed any chance that the Bush administration's planned $700 billion plan would pass expeditiously, as members of the House refused to back U.S. Treasury Secretary Paulson's measures and offered up their own plan to solve the credit crisis – a plan they say does not cost the American taxpayer.
Discussions over the government bailout of the financial markets stalled late Thursday, when House Republicans … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
GE Cuts Earnings Forecasts Amid U.S. Credit Turmoil
General Electric Co. (GE), yesterday (Thursday) reduced its annual profit forecast for the second time this year and announced plans to reduce dependence on its financial services arm and focus more on the company's industrial operations, particularly in China.
"GE today revised its earnings guidance for the third quarter, to a range of $0.43 to $0.48 per share from $0.50 to $0.54, reflecting unprecedented weakness and volatility in the financial services markets," … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Remaining Medium-Term Bearish On Global Equities
This market just gets more and more surreal. Yesterday saw the release of not one, not two, but three pieces of abjectly awful US economic data. So naturally, equities surged higher and government bonds tanked….because of more hopeful noises over the passage of the TARP.
The orders data was wretched on both a headline and core basis. The core shipments figures, which get plugged straight into the GDP calculation, were also awful, prompting at least a couple of immediate Q3 forecast … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Although Congress Squelches The 'Paulson Plan', It's Still $700 Billion To You And Me
Did U.S. taxpayers dodge a bailout bullet? Maybe not completely.
To be sure, under the $700 billion credit-crisis bailout plan proposed by U.S. Treasury Secretary Henry M. "Hank" Paulson Jr., there were some decidedly scary codicils.
For one thing, there was a near complete lack of taxpayer protection. To see what I mean, just take a look at the part of the plan that reads: "Decisions by the [U.S. Treasury] Secretary pursuant to the authority of this Act are non-reviewable and … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Doubts Over Bailout Plan Even While Lawmakers Reach Credit Crisis Compromise
Congressional negotiators late yesterday (Thursday) reached a tentative agreement on a credit-crisis compromise that gives the Bush administration about a third of the $700 billion it has requested up front, but made sure half that outlay was subject to a congressional veto, published reports state.
Details remained sketchy late yesterday. However, this much is known. Under the plan – known as the "Troubled Assets Rescue Plan," or TARP – U.S. Treasury Secretary Henry … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Germany, ETFs Feel Punch Of Credit Crisis
After a four-month slide, German consumer confidence is picking up again - but it might not be enough to help the country's related exchange traded funds (ETFs).
A forward-looking consumer climate forecast rose to 1.8% for October, up slightly from 1.6% in September, reports Patrick Mcgroarty for the Associated Press.
The confidence isn't enough to go across the board, as business confidence has hit a … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Forex Blog by Lloyd
Long GBP/USD @ 1.8044 (Final results +78 pips)
