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- Selective Financial Failures As Weapons Of Mass Destruction?
The obvious focus by just about everyone is on the domestic ramifications of the collapse of some of Wall Street’s storied financial giants.
It is my belief that the decision on what financial entities to bail out and what financial entities to let sink into oblivion is being orchestrated with an eye towards international power politics. The United States and all of our allies will suffer to a greater or lessor degree - but all will recover in comparatively short order from the present … [visit site to read more]
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Переслать - A Quick Look At Previous 4% Down Moves In The S&P 500
Indeed today will be remembered for quite some time, but as history tells us, a 4.7% down move in the S&P 500 (^GSPC) is not the end of the world by any means. In this post, I list the previous 4.00% down moves in the S&P index and then run a study on what historically has occurred if you bought the S&P on these 4% down days.
The following table ranks the top 20 largest one-day percentage declines in the S&P:
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Переслать - Is Your Brokerage Account At Lehman Safe?
Lehman Brothers‘ (LEH) filing Monday certainly affects some of the exchange traded funds (ETFs) you may have in your portfolio, but does it affect you personally?
The Dow Jones Industrial Average (^DJI) lost more than 500 points today, and many investors are nervous. Lehman's balance sheets are bloated with underperforming assets, and the sale of its $600 billion in assets could be a milestone for Wall Street, visit site to read more]
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Переслать - Dealing With A Historic Day In The Markets
MULTI-YEAR LOWS FOR MARKET
NEWS: The S&P 500 (^GSPC) closed at the lowest level in nearly three years after one a history-making weekend for the financial sector. The index lost 59 points or 4.7% to close at 1197. The Dow (^DJI) plummeted 504 points or 4.4%. The NASDAQ (^IXIC) fell 81 points or 3.6%. Oil also fell after the hurricane did not do the damage to the oil installments that many expected … [visit site to read more]
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Переслать - Monday's Stock Market Drop Foreshadows The Inevitability Of The Start Of A New Primary Leg Down
Don't even say that I didn't warn you. The rally has been over a longtime ago. Let's take a look at the technical picture of what happened today.
There was so much selling going on, but it was orderly and not panicky. If the selling was panicky, you would have seen a drop like this right near the open. However, Investors and traders continued to sell right before the close, dropping the indices to close at the low of the day. This is the largest … [visit site to read more]
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Переслать - Stock Picks And Trade Ideas For Tuesday - GOOG, SNDK, TRN, AMD
Chart courtesy of stockcharts ( click to enlarge )
Google (GOOG) - From a near term perspective the most obvious level to watch is right now the $442 level. The bulls need to push … [visit site to read more]
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Переслать - Who Are Lehman's Largest Unsecured Creditors?Lehman (LEH) owes largest unsecured creditors $157 billion. Their total debt is $613bb against 'asset's listed of $639bb. We know that the 'asset' side is wrong so the uunsecured creditors are in trouble, as everyone else gets paid first.
Sept. 15 (Bloomberg) By Jeff St.Onge- Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, owes its 10 largest unsecured creditors more than $157 billion, including debts to bondholders … [visit site to read more]
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Переслать - Finance Fails Again And Dow Drops 500 Points
Monday started poorly and ended worse for Markets as the weekend turmoil of Lehman Brothers (LEH) and AIG (AIG) weighed heavily on the financial sector and stocks as a whole. As hope for a bailout of Lehman, or at least heavy asset sales dwindled Sunday, leading suitors heading for the exits, the company had no choice but to file for the bankruptcy protection.
Still standing, but sharing the negative spotlight is AIG, the insurance giant, which said that … [visit site to read more]
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Переслать - Stock Trading Commentary: Financials Were Slaughtered On Heavy Volume
It may seem odd but the quote of the day is from Robert DeNiro in the movie Casino. It follows with my long-term thinking regarding how Wall Street has been organized and operated since the 1990s: a casino architecture where it's easy for investors to find their way in but impossible to find the exit while Da Boyz rip 'em off.
This being a political year there will be plenty of finger-pointing going on. But, this financial crisis has been the result of a great bipartisan … [visit site to read more]
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Переслать - The Credit Crunch Is Not Just A U.S. Issue But A Global One
The Dow Jones (^DJI) plunged over 500 points today! Everything looked fine up until the end of the day when we broke below the key range of 11,000. Just like the S&P 500 (^GSPC) , we tested the July 15th lows and broke them.
We ended Monday just under our key support level, if we open lower Tuesday … [visit site to read more]
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Переслать - AIG To Access $20 Billion Of Assets From Insurance Subsidiaries
New York's governor David Paterson has asked state insurance regulators to allow American International Group Inc. (AIG) to provide a bridge loan to itself. Paterson, according to WSJ, granted permission to the insurer to access $20 billion of its own capital locked up in the co.'s insurance subsidiaries.
Governor Paterson stressed the fact that under the plan AIG … [visit site to read more]
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Переслать - Stock Market Summary: AIG, Wachovia, Hewlett-Packard
There is no doubt that the current financial/stock market events are quite dramatic. Let us keep our wits about us, regardless of the ensuing chaos. The economic data released this morning should not be overlooked (see earlier posts on Empire Manufacturing), nor should the news that Hewlett-Packard (HPQ) is cutting 24.5K jobs and will take a charge of $1.7B. Ok, right to the major news affecting the markets:
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Переслать - Market Close: Dow Closed Down By 500 Points
Dow (^DJI) closed down 500 points to 10917. Nasdaq (^IXIC) lost 81 and the S&P (^GSPC) lost 58 points. The closely watched VIX hit 31.78. We will be posting charts tonight with support/resistance levels on key indices. Is the blood-letting over? I'm not sure. Earlier today the S&P hit the 1200 level and bounced, but failed to hold on to gains. Towards the close it tried another bounce off 1200 and failed again, … [visit site to read more]
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Переслать - Stock Market Meltdown - Not Many US Investment Banks Are Left
Here’s a different take on an old Warren Buffett joke:
Question: What’s the quickest way to become a millionaire?
Answer: Start out as a billionaire and own a Wall Street investment firm or a mortgage bank.
That adage has never been truer than right now.
As you read this…
- Lehman Brothers (LEH)… gone!
- Bear Stearns… gone!
- AIG (AIG)… fighting for its life!
- Freddie Mac (FRE) … [visit site to read more]
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Переслать - Not Expecting PepsiCo Shares To Outperform
Strong international growth, productivity improvements, an aggressive share repurchase program, and a strong new product pipeline are driving low double-digit earnings growth for PepsiCo (PEP).
Nevertheless, a sluggish domestic carbonated beverage environment, only modest low-single digit volume growth at Frito-Lay, and pressure from higher energy and raw material costs (especially orange and grain costs) are concerns. The Hold recommendation is maintained.
PepsiCo … [visit site to read more]
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Переслать - Financial Contagion: Looking At Real Estate
With the financial sector leading the market down today, there is high likelihood that concerns over shrinking liquidity will pressure other equity sectors. Looking at the chart for XLF (XLF), the financials took a nearly 10% hit on very high volume, and dropped below the support level around 19.70.
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Переслать - Lehman, Merrill And AIG: Business Planning Implications
What to make of the financial crisis? My first concern is Main Street business. Forgive me, but I don’t get choked up when guys with multi-million dollar salaries hit the unemployment lines. It’s sad, but not too sad. Probably a good time to pick up a beach house in the Hamptons.
What about the rest of the economy? The obvious problems are companies planning stock or bond offerings or major private placements. With Lehman (LEH) in bankruptcy and Merrill … [visit site to read more]
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Переслать - Meredith Whitney Scares The Crap Out Of Everyone
Today, Meredith Whitney was on CNBC interviewed by Maria Bartoromo. It was a seven minute segment that was essentially a monologue by Whitney trying to fit in as much as she could. Boy, and did she. Read the loosely transcribed version below.
- At a minimum, this is traumatic for everyone involved. Never in my wildest dreams would I have thought the landscape would exclude Lehman (LEH), Bear and Merrill … [visit site to read more]
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Переслать - Chinese Social Networks Block Baidu Search Spiders
Baidu.com (BIDU), the top Chinese search engine, has been blocked by major social networking services (SNS) websites in China, including Blog.sohu.com, 51.com, Xiaonei.com and Hainei.com. According to reports, E-commerce auction site Taobao.com, a subsidiary of the Alibaba Group, has also taken measures to block searches conducted by Baidu.
The social networking websites decision to block Baidu, which controls 60% of China's search market share, is made on the argument … [visit site to read more]
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Переслать - Decision To Go For More Natural Gas Could Weigh On ETF
The Department of Energy met last week to discuss whether it's worth going after more natural gas, and the answer to their question will have implications for the related exchange traded fund (ETF).
The Department estimates that there is at least 10 year's worth of natural gas in coal and shale, enough for the entire United States, reports Renita Jablonski for MarketPlace. Geologists are … [visit site to read more]
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Переслать - With ETFs, There Are Ways To Play Lower Industrial Output
Industrial output has broad implications for the economy and exchange traded funds (ETFs), so it isn't good that it plunged by the largest amount in three years.
Output fell by 1.1% last month, and economists were expecting a drop of just 0.3%, reports Martin Crutsinger for the Associated Press. Nearly every sector was hit, too: utilities were off by 3.2%, autos were down 1%, mining, which includes drilling for oil … [visit site to read more]
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Переслать - Equity Market Being Used As Source Of Funds By Financial Institutions
The stock market is being used as a source of funds right now which is not good. The largest players in the equity market have major major capital issues right now. AIG (AIG) needs $70 Billion to survive, that is a HUGE number (Goldman Sachs’s (GS) entire market cap is $53B; they basically need a Goldman and a half) and they are just one major player. This is the point where stocks are no longer viewed as representing … [visit site to read more]
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Переслать - Turkey And ETF Could Be Headed For A Fall
Some alarming signs from Turkey have sent its exchange traded fund (ETF) down more than 11% today.
The country is suffering from its slowest growth rate in six years, rising inflation and current account deficit, factors that are leading some to question the overall health of Turkey's economy, reports Hot News Turkey.
In the second quarter of this year, the economy grew a scant 1.9% compared to … [visit site to read more]
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Переслать - Stay Away From The Financials, This Is Not Over Yet
Two hurricanes hit America this weekend - one in Galveston and the other in lower Manhattan - both of which have caused billions of dollars in damage. The financial landscape has been rearranged as much as the sandbars in the gulf have been. Lehman Brothers (LEH), a firm dating back to before the Civil War is gone, bankrupt, kaput. Merrill Lynch (MER) was pressured by the Fed to put it up for sale to Bank of America (BAC), but was … [visit site to read more]
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Переслать - VIX Spikes And The 2002 Market Bottom
With the VIX (^VIX) spiking over 30 this morning and investors wondering if the markets will ever find a bottom, this seems like a good time to talk about VIX spikes and market bottoms. Specifically, I want to dispel the myth that bear markets have to end in some grand capitulation climax that includes a dramatic volatility spike.
A perfect counter example to the VIX spike requirement can be found in the bear market that followed the NASDAQ boom which crested in March … [visit site to read more]
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Переслать - US Bancorp Without Much Upside
Despite concerns of liquidity and continued turmoil in the credit markets, U.S. Bancorp's (USB) core second-quarter results were slightly ahead of our expectations, driven by an increase in net interest income. The improvement stemmed from growth in higher spread assets and benefited from a liability sensitive balance sheet in a declining rate environment. While we are encouraged to see diversified revenue source, we remain wary of growing credit and margin … [visit site to read more]
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Переслать - A Look At The Intraday S&P 500 Chart
A look at the 5 minute chart of the S&P 500 (^GSPC) futures shows us that a somewhat symmetrical triangle pattern is taking shape. As trading gets close to the apex of the triangle, we can expect a somewhat violent move one way or the other.
My thinking here at this time is that it will break LOWER. But we are also on "stick save" alert. So wild and volatile moves remain the order of the day.
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Переслать - Use Extreme Caution When Trading Stocks This Week
We could see a week ahead that will be discussed years later - as such, if you are a newer trader, it might be best to switch to simulation mode this week or use this week as a training experience, rather than risking real capital in an environment that could swing violently up and down due to market events scheduled to happen this week.
First of all, we start this Monday (as of 10:15 EST) with a 2.5% plunge in the S&P 500 (^GSPC), Dow Jones (^DJI), … [visit site to read more]
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Переслать - Forex Trading Outlook: 80% Chance The Fed Will Cut Interest Rates On Tuesday
Euro
The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4085 level and was capped around the $1.4480 level. Trading was quite volatile as traders reacted to the bankruptcy of U.S. investment banking giant Lehman Brothers (LEH), a 158-year old firm that failed to secure emergency funding from the U.S. government or find a buyer this weekend. The U.S. government concluded the financial markets had … [visit site to read more]
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Переслать - Financial Stocks May Be Toast, But US Dollar Shows Resilience As Safe Haven Currency
Many people may feel like dumping US stocks, but apparently, this sentiment doesn’t have a lasting effect on the US dollar. Monday hasn’t been a pleasant day for stocks, but in the forex markets, many institutional traders have rushed to buy US dollars in the midst of all these historical changes in the US financial markets even though the visit site to read more]
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Переслать - Hurricane Ike Is The Latest Wild Card In The "Guess The Gasoline Price Game"
By William Patalon III
Last week's crude and gasoline inventories dropped more than expected as the effects of Hurricane Gustav resulted in some production disruptions. Gustav, which struck last month, was the fourth-most-destructive storm to hit the United States, causing $20 billion in damages.
And then came Hurricane Ike.
Ike made landfall in the Galveston area of the U.S. Gulf Coast on in the pre-dawn hours Saturday (the day I was penning this column) as … [visit site to read more]
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Переслать - Why Invest In Precious Metals?
Junior mining stock investors are feeling “pulverized” as the precious metals and their mining stocks continue to sell-off in dramatic fashion in the face of the Lehman Brothers’ (LEH) collapse. Investor portfolios across the board are now showing tremendous losses, causing even greater worry and concern for the U.S. financial markets than we have already experienced.
The latest cause for this activity seems to be more than just hedge fund selling and is most … [visit site to read more]
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Переслать - Fed Policymakers Forced To Balance Weak Growth And High Inflation At Tomorrow's FOMC Meeting
Already forced to deal with the competing and contradictory challenges of a slowing economy and escalating inflation, U.S. Federal Reserve policymakers will now also have to factor a deteriorating labor market and big drop-off in consumer spending into their interest-rate deliberations when they meet tomorrow (Tuesday).
“There’s a big question mark over the performance of the economy … [visit site to read more]
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Переслать - Monday: Daily US Market Report
I'll quickly take you back to last Monday, when we saw the current credit market crisis starting to unfold. I wrote at the time:
The saga of Fannie and Freddie has overnight become an international best seller. The only common sense to be made of the situation comes from China… Elsewhere, equity markets are soaring – from +3% to +5% or more – because of short-covering in the banks. Yes, other stocks are positive on the session too, but not nearly to the same … [visit site to read more]
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Переслать - Economic Conditions: Not Even Close To The Great Depression, We're A Nation Of Exaggerators
In the past two months, this newspaper alone (Washington Post) has written no fewer than nine times, in news stories, columns and op-eds, that … [visit site to read more]
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Переслать - Goodyear Tire Tapping The Brakes
The Goodyear Tire & Rubber Company (GT) is benefiting from a major restructuring program along with lower raw material costs and improved selling prices. However, the company is constantly cutting production on the back of lower demand.
Goodyear has reduced tire production significantly in both North America and Europe. It further plans to close 92 underperforming retail stores. Apart from this, the company also has substantial unabsorbed overhead costs. Weak tire … [visit site to read more]
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Переслать - Lehman Bankrupt, Merrill Sold To Bank Of America, AIG Flounders, UBS Writes Down Another $5B
THIS WEEK'S ISSUE:
- In Play: Lehman Brothers (LEH)
- In Play: Bank of America & Merrill Lynch
- In Play: American International Group (AIG), Washington Mutual (WM), … [visit site to read more]
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Переслать - Ireland Shores Up For Tough Economic Times
Since the launch of NETS ISEQ 20 Index (IQE) exchange traded fund (ETF), the Irish economy can't seem to get out of its slump.
As of August, their economy continued to retract, with activity, backlogs, and employment all declining at record rates, reports The FinFacts team. Among the main findings of a survey include:
- A contraction of new … [visit site to read more]
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Переслать - Financial Contagion Spreading: Citigroup, Washington Mutual, Wachovia Corp, General Motors, Ford And AIG At Risk
Gold and silver rallied Friday as the crisis on Wall Street deepened with gold up $17.80 to $759.80 and silver up 21 cents to $10.74. The rally continued in Asia overnight when gold surged more than $20 to over $785 before gradually giving up those gains in early trading in London. Gold's gains in Asia have been eroded as oil prices have fallen sharply (some 4%) and in extremely volatile trading the dollar has recovered sharply from steep overnight lows ( dollar has rallied 1.6% from … [visit site to read more]
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Переслать - The Paradigm Shift: 'Too Big to Bail Out'
The Paradigm Shift: "Too Big to Bail Out." Is anyone really set for this? A friend, Bill Fleckenstein, told me "to win this game, all you have to do is recognize when other people finally 'get it'."
From what I have seen tonight from .gov and heard in the past couple of weeks from clients and the financial press, perhaps the proverbial 'light bulb' just went on. Is it possible? Does everyone finally get it?
A paradigm shift back to 'normal' maybe … [visit site to read more]
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Переслать - The Stock Market Plummet - Fueled By Lehman Brothers And Merrill Lynch
Just as I was about to make a post on the status of the markets, I hear news of investment banks Lehman Brothers (LEH) and Merrill Lynch (MER). But before we turn to the big news, let me show you what I was seeing in the S&P500 (^GSPC) over the weekend. Looking at the big picture, I drew the following trendlines:
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Переслать - Special Market Commentary: Credit Crisis Deepens, Lehman To File For Bankruptcy
The events unfolding tonight are indeed unprecedented. If you have not been following the events taking place this weekend I will summarize what we know at this time.
It is important to be mindful that these events are still unfolding. There is likely to be more announcements, speculation, and conjecture about what has happened this weekend, and what will happen going forward.
With that in mind here is what is happening right now:
- Lehman (LEH) was unable to … [visit site to read more]
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Переслать - Lehman Bankruptcy Filing - Futures Down Significantly
Excerpts from the New York Times:
ACCORDING TO PEOPLE BRIEFED ON THE MATTER, LEHMAN WILL FILE FOR BANKRUPTCY PROTECTION ON SUNDAY NIGHT
- According to the report, Lehman (LEH) will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, according to these people.
- A group of banks will provide a financial backstop to help provide an orderly winding down … [visit site to read more]
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Переслать - Lehman Goes To The Wall
Unfortunately for all at Lehman Brothers (LEH), it looks like the King’s English Defence has failed to avoid checkmate. Latest reports suggest that the street is preparing for a Lehman bankruptcy as Team 1250 has said “no mas.”
As always in these … [visit site to read more]
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Переслать - Saudis Talking And Pumping Down The Price Of Oil
A report published in the Emirates Business 24/7 posted below detailing Saudi plans for increasing oil production looks very much like it came directly from the Saudi Aramco PR department. Each of the four fields discussed in the report has been extensively analyzed in prior posts. What is interesting is partly that this one report summarized the entire Saudi program in one place. But even more interesting is that the report was issued at all. It seems to be designed to … [visit site to read more]
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Переслать - Is Chipotle Mexican Grill Too Hot To Handle?
Restaurant stocks have been getting hammered lately, and for good reason.
Whether their results have flat lined or deteriorated, Wall Street has not taken any prisoners, for better or worse.
One of the last shoes to drop finally happened on Friday September 12 when Chipotle Mexican Grill (CMG) (CMG-B) had one of those nice little "Business Updates" that we've all come to love so much around here, … [visit site to read more]
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Переслать - Everybody's A Genius In A Bull Market
In the last bear market after the popping of the Tech bubble, hedge funds held their own and exhibited positive and uncorrelated returns to other asset classes. This time, hedge fund returns have been far more correlated with equities.
A recent visit site to read more]
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Переслать - Disaster In The Derivatives Market Redux
In light of growing fears about the multi-trillion dollar derivatives market on the heels of woes at Lehman Brothers, American International Group and other firms, I thought it made sense to repost an article I wrote in November 2005, “The Coming Disaster in the Derivatives Market.”
“The derivatives genie is now well out of the bottle, and these instruments will almost certainly … [visit site to read more]
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Переслать - Bank Of America To Acquire Merrill Lynch
The WSJ is reporting Bank of America (BAC) and Merrill Lynch (MER) are in advanced merger talks.The terms under discussion aren't clear yet at this point, but Merrill's board is reportedly meeting to vote on a $29 per/share takeover offer which would value the firm, currently at $26 bln, above … [visit site to read more]
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Переслать - About Lehman, AIG And Merrill Lynch
Also numbers are changing. Last night the numbers being reported by the press were that Lehman (LEH) had $50bb in bad Real Estate assets. Now, suddenly a few are reporting $85bb. That makes all the difference in the world. No wonder they can't get a deal through with their $30bb 'bad bank' idea.
This story is all about getting the assets off Lehman's books so they don't have devastating effects on everyone else's books upon a 15 cent fire sale. But now the … [visit site to read more]
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Переслать - Real Estate Speculation And Mortgages
If you want to understand interest rates, a sweeping panorama is presented in Sidney Homer’s A History of Interest Rates, 2000 B.C. to the Present. (There’s a fourth edition out, available on Amazon, but I like my signed first edition, published in 1963.)
Chapter 1 starts out, “In historic times credit preceded the coining of money by over two thousand years.” Think about that; loans at interest before there was even money. (If that’s not obvious to you, answer at end of … [visit site to read more]
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Переслать - How I Set Up My Stock Charts
A number of readers have asked me to define what chart settings and indicators I use and I thought I should post regarding this information.
I trade with TradeStation and do all trading through them, but for the blog, I enjoy posting charts from StockCharts.com because of the professional look and feel of their charts, and because they're much more commonly seen than TradeStation charts, which can be endlessly customized to your needs. I started out years ago with StockCharts and have … [visit site to read more]
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Переслать - Egypt's Uncertain Future Could Hit ETFs
Egypt might not be all that it seems when it comes to real life and exchange traded funds (ETFs).
Visitors to the country might see nothing but posh beach resorts and glimmering factories, with the rumble of stable economic growth and much promise. But a closer look reveals what the masses are living, and many families will begin the day by pushing and shoving for one loaf of government-subsidized bread. Today, 44% of Egyptians still register as poor or extremely poor, visit site to read more]
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Переслать - Greed Can Be Death To Your ETF Portfolio
Exchange traded funds (ETFs) are touted for their transparency, but does transparency matter when fear or greed rules the markets?
Howard Lindzon says people wanted Russia, Brazil, oil, China, coal and agriculture, and all the transparency in the world doesn't stop any cycle of greed and fear.
People are focused on return of capital not return on capital. Remember not to get caught up in the hype and sell … [visit site to read more]
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Переслать - Federal Open Market Committee Meeting: September 16
Nearly ten years ago the Federal Open Market Committee convened a special meeting to address the problems in U.S. financial markets regarding the failure at Long Term Capital Management. It is not without irony that one decade later the Fed and the U.S. Treasury are addressing an infinitely more complex problem with respect to Fannie Mae and Freddie Mac, while at the same time contemplating the potential failure of major investment and commercial banks.
Unlike the special meeting that … [visit site to read more]
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Переслать - A Closer Look At August's US Retail Sales
August’s retail sales report came out today and for some bizarre reason many in the media are reporting the data as a decline of -0.3%, despite the fact that the -0.3% is the month to month decline from July ‘08, and retail sales were actually up 1.6% on a YoY basis.
From the U.S. Census Bureau:
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and … [visit site to read more]
Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
Переслать - Is High Home Ownership Rate Hurting Michigan?
From a recent CD post:
Homeownership impedes the economy's readjustment by … [visit site to read more]
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Переслать - Heavy Regulation, Dysfunctional Governance
Financial regulation has produced a lot of laws and a lot of spending but poor priorities and little success in using the most important laws to head off a disaster. The pattern is reminiscent of how legislators often seem more interested in building new highways — which are highly visible projects — than in maintaining old ones.
The biggest financial deregulation in recent times has been an implicit one — namely, that hedge funds and many new exotic … [visit site to read more]Article Published On GraceCheng.com - visit Grace Cheng Financial News & Opinions for more great content.
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