Finally got a chance to look at the real Wall Street by myself and really hope good fortune will follow up onto me somehow this year:) //bless myself
Gold buyers rejoiced en force on the rate cut news, too. The yellow metal surged to a record $942. Overnight in Asian trading, gold settled back to a respectable $926.
The Senate Finance Committee approved its version of the “stimulus” package yesterday. It’s already $12 billion heavier than when it left the House… now weighing in at over $150 billion. Despite the extra funding, the average American will actually get less than they would had the House’s $146 package gone straight to law.
The current version of the stimulus package encompasses a wider range of potential recipients… now anyone making less than $150,000 per year will get a check. The new package will also now include those living on Social Security and unemployment, while additionally extending unemployment benefits and lightening requirements.
"This package will put rebates into the hands of 20 million additional American seniors," said committee chairman Senator Max Baucus, “plus lower-income payroll taxpayers and disabled veterans -- all of whom will spend this money quickly and give our economy the shot in the arm that it needs.”
Thursday, January 31, 2008
Monday, January 28, 2008
In 2007, new home sales suffered their worst yearly decline in history
reported the Commerce Department today. December sales registered an annual rate of 604,000 in the last month of 2007, down from 634,000 in November, thus bringing the total new home sales number for 2007 to 774,000. That’s a 26% drop from 2006’s 1.05 million new homes sold… the biggest annual drop since the government began tracking new home sales in 1963. The median price of such homes also fell by a massive margin… down over 10% from 2006, from $244,700 to $219,200.
So let’s take a second to absorb all of 2007’s housing data… The NAR reported the first ever annual decline in the average existing home prices, along with the largest fall in the pace of existing home sales in 27 years. Then the Census Bureau told us housing starts posted their biggest decline in 27 years. Now this, from the Commerce Dept: the worst year for new home sales on record.
So let’s take a second to absorb all of 2007’s housing data… The NAR reported the first ever annual decline in the average existing home prices, along with the largest fall in the pace of existing home sales in 27 years. Then the Census Bureau told us housing starts posted their biggest decline in 27 years. Now this, from the Commerce Dept: the worst year for new home sales on record.
Friday, January 25, 2008
Soros is still bearish on US
“The current crisis is the culmination of a super-boom that has lasted for more than 60 years,” adds the legendary investor George Soros in the Financial Times.
“The current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises [preceding the current crisis] were part of a larger boom-bust process…
“Credit expansion must now be followed by a period of contraction, because some of the new credit instruments and practices are unsound and unsustainable. The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the U.S. Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realize that the Fed may no longer be in a position to do so.”
Mr. Soros is famous for having made a billion dollars in one day betting against the monetary foolishness of Britain’s elite back in 1992.
“The current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises [preceding the current crisis] were part of a larger boom-bust process…
“Credit expansion must now be followed by a period of contraction, because some of the new credit instruments and practices are unsound and unsustainable. The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the U.S. Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realize that the Fed may no longer be in a position to do so.”
Mr. Soros is famous for having made a billion dollars in one day betting against the monetary foolishness of Britain’s elite back in 1992.
Wednesday, January 23, 2008
2005‘s support works today
After SPX approaches 1250, the support line of year 2005, the market finally see a rebounce. The rebounce will not last long and should serve for a chance to unload the share for lower cost. The rebounce could be strong.
Following its “surprise” rate cut yesterday, the Fed released this statement.
“The committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction, as well as some softening in labor markets... Appreciable downside risks to growth remain.”
Following its “surprise” rate cut yesterday, the Fed released this statement.
“The committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction, as well as some softening in labor markets... Appreciable downside risks to growth remain.”
Thursday, January 17, 2008
I think we are at the edge of buying now
Today, finally we monitor the panic sell with double average volume in a 300 point down day. And what we need to do is to wait patiently for a reversal now.
Merrill Lynch announced a $14 billion write-down this morning, bringing its total past $22 billion in the last two quarters alone. The investment bank was forced to take a $10 billion loss during the quarter, its earnings statement reported, the largest dollar loss in the bank’s 94-year history.
Thus, this week alone, banks marked down some $34 billion in bad subprime bets -- $18 from Citi, $1.3 from JP Morgan yesterday, and now $14 from Merrill. Oy… we’re not out of the woods yet.
Homebuilder confidence stayed at record lows in January, the National Association of Home Builders reported yesterday. At a score of 19, the NAHB’s housing market index rose one point from the lowest score since the association began tracking builder sentiment in 1985. The NAHB had revised December’s housing market index record low score of 19 down to 18. Like most other housing surveys, a score of 49 or lower implies pessimistic sentiment and negative growth.
But of interesting note, the NAHB’s measure of six-month expectations rose unexpectedly. With a score of 28, builders now have the most confident short-term outlook since August 2007
Merrill Lynch announced a $14 billion write-down this morning, bringing its total past $22 billion in the last two quarters alone. The investment bank was forced to take a $10 billion loss during the quarter, its earnings statement reported, the largest dollar loss in the bank’s 94-year history.
Thus, this week alone, banks marked down some $34 billion in bad subprime bets -- $18 from Citi, $1.3 from JP Morgan yesterday, and now $14 from Merrill. Oy… we’re not out of the woods yet.
Homebuilder confidence stayed at record lows in January, the National Association of Home Builders reported yesterday. At a score of 19, the NAHB’s housing market index rose one point from the lowest score since the association began tracking builder sentiment in 1985. The NAHB had revised December’s housing market index record low score of 19 down to 18. Like most other housing surveys, a score of 49 or lower implies pessimistic sentiment and negative growth.
But of interesting note, the NAHB’s measure of six-month expectations rose unexpectedly. With a score of 28, builders now have the most confident short-term outlook since August 2007
Tuesday, January 15, 2008
Sucker Rally Yesterday, we probably need to stay away for a while
The U.S. stock market rallied yesterday, sending the Dow and Nasdaq up about 1.5% and the S&P 500 up just over 1%. Nearly the entire day’s gains were fueled by an early-morning earnings announcement from IBM. Big Blue beat fourth-quarter earnings estimates by a handsome margin.
But we’re willing to bet very few people noticed this: IBM's outsized profits were the result of currency moves in its global sales.
“If you take out the currency component,” Chuck Butler from EverBank points out, “IBM's sales increased 4%, not the 10% for revenues expected. Even big old (boring) IBM can make some money in the currency markets!”
In all, the move shows how desperate the Street is for good news.
And with good reason. Citigroup announced a cornucopia of bad news this morning:
- $18 billion write-down
- $12.5 billion cash infusion from outside investors, including Government of Singapore Investment Corp, Saudi Prince Alwaleed bin Talal and former Citi CEO Sandy Weill
- 41% dividend cut
- 70% decline in year-over-year revenue
- a 4,200 job cut -- at minimum
- $9.8 billion net loss -- the biggest quarterly loss in the bank’s 196-year history.
Merrill Lynch, Wells Fargo, JP Morgan and Washington Mutual all report earnings this week. While Citi is expected to be the worst of the bunch, similar write-downs and losses are practically guaranteed.
When the dust settles, this might be the worst quarter for financials since the Great Depression
But we’re willing to bet very few people noticed this: IBM's outsized profits were the result of currency moves in its global sales.
“If you take out the currency component,” Chuck Butler from EverBank points out, “IBM's sales increased 4%, not the 10% for revenues expected. Even big old (boring) IBM can make some money in the currency markets!”
In all, the move shows how desperate the Street is for good news.
And with good reason. Citigroup announced a cornucopia of bad news this morning:
- $18 billion write-down
- $12.5 billion cash infusion from outside investors, including Government of Singapore Investment Corp, Saudi Prince Alwaleed bin Talal and former Citi CEO Sandy Weill
- 41% dividend cut
- 70% decline in year-over-year revenue
- a 4,200 job cut -- at minimum
- $9.8 billion net loss -- the biggest quarterly loss in the bank’s 196-year history.
Merrill Lynch, Wells Fargo, JP Morgan and Washington Mutual all report earnings this week. While Citi is expected to be the worst of the bunch, similar write-downs and losses are practically guaranteed.
When the dust settles, this might be the worst quarter for financials since the Great Depression
Monday, January 14, 2008
Credit Suisse has Called to buy, shall we follow?
Credit Suisse has recommended an overweight position in U.S. stocks for the first time in 10 years.
By virtue of the weakening dollar and the Fed's easing cycle," said a report from the Swiss bank, “monetary conditions are now far looser in the U.S. than in Europe.” The authors of the report believe the Fed will be “more balanced in its assessment of inflation risks” moving forward. The same report suggested investors take on underweight positions in European markets.
Analysts at HSBC recently made a similar call.
By virtue of the weakening dollar and the Fed's easing cycle," said a report from the Swiss bank, “monetary conditions are now far looser in the U.S. than in Europe.” The authors of the report believe the Fed will be “more balanced in its assessment of inflation risks” moving forward. The same report suggested investors take on underweight positions in European markets.
Analysts at HSBC recently made a similar call.
Thursday, January 10, 2008
Bush tried to save the market in his last year
The Dow had fallen nearly 150 points by 2 o’clock, but, by some market miracle, it managed to rally over 200 points in the final hour, to end the day up over 1%. The S&P 500 and Nasdaq behaved similarly, but fared even better… both rose 1.3%.
Yesterday, marked the first day in 2008 when all three indexes closed higher.
Why the sudden comeback, you ask. We searched high and low for a good reason for the sudden reversal -- ironically, led by the dogs of Wall Street such as JP Morgan, Citigroup, E*Trade and Merrill Lynch. Alas, we found only one shred of evidence for yesterday’s sudden reversal of a nasty six-day losing streak, penned by Ambrose Evans-Pritchard of the Telegraph:
“On Friday [Jan. 4], Mr. Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit -- officially the President's Working Group on Financial Markets -- was created after the 1987 crash.
“It appears to have powers to support the markets in a crisis with a host of instruments, mostly through buying futures contracts on the stock indexes (Dow, S&P 500, Nasdaq and Russell) and key credit levers. And it has the means to fry ‘short’ traders in the hottest of oils.”
Yesterday, marked the first day in 2008 when all three indexes closed higher.
Why the sudden comeback, you ask. We searched high and low for a good reason for the sudden reversal -- ironically, led by the dogs of Wall Street such as JP Morgan, Citigroup, E*Trade and Merrill Lynch. Alas, we found only one shred of evidence for yesterday’s sudden reversal of a nasty six-day losing streak, penned by Ambrose Evans-Pritchard of the Telegraph:
“On Friday [Jan. 4], Mr. Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit -- officially the President's Working Group on Financial Markets -- was created after the 1987 crash.
“It appears to have powers to support the markets in a crisis with a host of instruments, mostly through buying futures contracts on the stock indexes (Dow, S&P 500, Nasdaq and Russell) and key credit levers. And it has the means to fry ‘short’ traders in the hottest of oils.”
Wednesday, January 9, 2008
Really Nice Reversal today
Today will mark the first rally attempt. Once we see confirmation, could get in the market again :)
Afternoon selling came at the expense of Countrywide Financial.
The New York Times, doing what it does best, kicked it off with a heart-manipulating expose accusing Countrywide of fabricating lending documents and burning blue collars in western Pennsylvania.
Then Lehman Bros. did what it does best… After a wicked session of dart throwing and chicken bone reading, analysts there decided to downgrade CFC stock. Their analysis suggested that Countrywide would never be able to return to former profit levels.
After that came the rumor. CFC, whispered traders, was about to declare bankruptcy. The stock got taken to the woodshed. By the end of the day, CFC stock had fallen 28%, to 5 bucks and change. Countrywide shareholders are down 80% since this summer.
“There is no substance to the rumor that Countrywide is planning to file for bankruptcy,” a spokesperson from the company shot back, “and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company.”
CFC investors should be familiar with that one… they heard it at $30 and $18 and $11. And this morning, CFC opened down another 15% right off the bell. They wouldn’t be straying too far from the script if Mozilo and his brood denied bankruptcy rumors all the way to $0.
Afternoon selling came at the expense of Countrywide Financial.
The New York Times, doing what it does best, kicked it off with a heart-manipulating expose accusing Countrywide of fabricating lending documents and burning blue collars in western Pennsylvania.
Then Lehman Bros. did what it does best… After a wicked session of dart throwing and chicken bone reading, analysts there decided to downgrade CFC stock. Their analysis suggested that Countrywide would never be able to return to former profit levels.
After that came the rumor. CFC, whispered traders, was about to declare bankruptcy. The stock got taken to the woodshed. By the end of the day, CFC stock had fallen 28%, to 5 bucks and change. Countrywide shareholders are down 80% since this summer.
“There is no substance to the rumor that Countrywide is planning to file for bankruptcy,” a spokesperson from the company shot back, “and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company.”
CFC investors should be familiar with that one… they heard it at $30 and $18 and $11. And this morning, CFC opened down another 15% right off the bell. They wouldn’t be straying too far from the script if Mozilo and his brood denied bankruptcy rumors all the way to $0.
Tuesday, January 8, 2008
Merrill claims "Recession"
We have continuously to believe that recession is here. However the trader won't and push it harder today after Merrill's report.
A recession in the U.S. “has arrived,” reports Merrill Lynch this morning. "According to our analysis, this isn't even a forecast any more, but is a present-day reality.”
"To say that the backdrop is 'recession like,’” Merrill asserts, “is akin to an obstetrician telling a woman that she is 'sort of pregnant.'" What a refreshingly mordant statement for a Wall Street bank. Makes our coffee taste that much better this morning.
And what’s this? President Bush appears to agree … umn, we think.
“Recent economic indicators,” he told a coalition of the mind-numbed yesterday in Chicago, “have become increasingly mixed.” It’s comforting to have such convincing leadership… this coffee is really good this morning.
“Core inflation is low -- except when you're going to the gas pump it doesn't seem that low; or when you're buying food it doesn't seem that low. Core inflation is low, but energy and food prices are on the rise -- have risen.”
And he knows this because he goes to the pump himself… and buys his own food. Oy.
A recession in the U.S. “has arrived,” reports Merrill Lynch this morning. "According to our analysis, this isn't even a forecast any more, but is a present-day reality.”
"To say that the backdrop is 'recession like,’” Merrill asserts, “is akin to an obstetrician telling a woman that she is 'sort of pregnant.'" What a refreshingly mordant statement for a Wall Street bank. Makes our coffee taste that much better this morning.
And what’s this? President Bush appears to agree … umn, we think.
“Recent economic indicators,” he told a coalition of the mind-numbed yesterday in Chicago, “have become increasingly mixed.” It’s comforting to have such convincing leadership… this coffee is really good this morning.
“Core inflation is low -- except when you're going to the gas pump it doesn't seem that low; or when you're buying food it doesn't seem that low. Core inflation is low, but energy and food prices are on the rise -- have risen.”
And he knows this because he goes to the pump himself… and buys his own food. Oy.
Monday, January 7, 2008
Recession is here, no doubt
If you’re the charting type, Friday’s hike in unemployment confirms a likely bottom at the end of 2006. The trend suggests higher unemployment rates to come:
The unemployment rate has now risen 0.6% in less then 12 months. Historically speaking, any rise of more than 0.5% in less than 12 months also indicates a recession:
Here I made a statement under the assumption that the Labor Department is releasing accurate numbers… during an election year.
“The jobs report was heavily manipulated to keep the payroll number positive,” says government stats watchdog John Williams at shadowstats.com.
“Politically, it is extremely important for the Bush administration to keep the monthly jobs changes on the plus side, because a down month or two could provide the timing base needed for the National Bureau of Economic Research to call a recession, and such is not wanted in an election year. As with the month before, the reported monthly payroll gain was statistically indistinguishable from a monthly contraction.
“Keep in mind that beyond the standard gimmicks, the Bureau of Labor Statistics simply can report any jobs number it desires. The current message from the reporting seems to be that the administration does not want to show a recession, but it would like Mr. Bernanke to ease further.”
And if last week was any indication, the stock market won’t be faring very well in 2008, either. Be careful of the coming ER season, it won't be any upside surprising.
The unemployment rate has now risen 0.6% in less then 12 months. Historically speaking, any rise of more than 0.5% in less than 12 months also indicates a recession:
Here I made a statement under the assumption that the Labor Department is releasing accurate numbers… during an election year.
“The jobs report was heavily manipulated to keep the payroll number positive,” says government stats watchdog John Williams at shadowstats.com.
“Politically, it is extremely important for the Bush administration to keep the monthly jobs changes on the plus side, because a down month or two could provide the timing base needed for the National Bureau of Economic Research to call a recession, and such is not wanted in an election year. As with the month before, the reported monthly payroll gain was statistically indistinguishable from a monthly contraction.
“Keep in mind that beyond the standard gimmicks, the Bureau of Labor Statistics simply can report any jobs number it desires. The current message from the reporting seems to be that the administration does not want to show a recession, but it would like Mr. Bernanke to ease further.”
And if last week was any indication, the stock market won’t be faring very well in 2008, either. Be careful of the coming ER season, it won't be any upside surprising.
Friday, January 4, 2008
Yesterday marked the worst start of a new year that Wall Street has seen in 25 years
From the Financial Times : “The Dow Jones Industrial Average fell 1.7 per cent to 13,043.96 points, its worst percentage decline on the first trading day of a year since 1983. The S&P 500 closed 1.4 per cent lower at 1,447.16 and the Nasdaq Composite shed 1.6 per cent to 2,609.63.”
Turns out the markets weren’t too keen on the ISM data that showed manufacturing had weakened in December, sinking below 50 to 47.7.
Theory says when the ISM hits a level of 45 for two consecutive months, it indicates a recession. We are definitely in a turmoil situation worse than we have expected.
The minutes from December’s FOMC meeting were released yesterday, showing that the Feds believe they may need to cut rates again. Apparently, the turmoil in the housing market was worse than they expected, and surprise, surprise, it has affected consumer spending. According to the minutes, “tighter credit condition, higher gasoline prices and the continuing housing correction might be restraining growth in real consumer spending.”
Basically, the Fed is caught between a rock and a hard place – nothing new here. They are trying to fight inflation while dealing with the slowdown in U.S. growth.
There were some bright spots for traders yesterday, however...energy stocks and precious metals.
Gold futures hit a high not seen in 28 years today, surging above $860 an ounce. The yellow metal ended the year with a 31% gain – its seventh consecutive year of gains.
Will gold continue its winning streak in 2008? Of course only time will tell because no one can predict the future. Nevertheless, one thing is certain. If central banks persist with actions that debase national currencies, the gold price will continue to rise in terms of those currencies.
Given all the debasement that we have seen over the past seven years, it seems like a sure bet that central banks are not going to change their ways. Their pronouncements to ‘fight inflation’ and to protect a currency’s purchasing power are nothing more than hollow rhetoric.
Meanwhile, crude oil hit $100 a barrel on the weak dollar, geopolitical uncertainty – and the possibility that global demand will outstrip supplies.
Turns out the markets weren’t too keen on the ISM data that showed manufacturing had weakened in December, sinking below 50 to 47.7.
Theory says when the ISM hits a level of 45 for two consecutive months, it indicates a recession. We are definitely in a turmoil situation worse than we have expected.
The minutes from December’s FOMC meeting were released yesterday, showing that the Feds believe they may need to cut rates again. Apparently, the turmoil in the housing market was worse than they expected, and surprise, surprise, it has affected consumer spending. According to the minutes, “tighter credit condition, higher gasoline prices and the continuing housing correction might be restraining growth in real consumer spending.”
Basically, the Fed is caught between a rock and a hard place – nothing new here. They are trying to fight inflation while dealing with the slowdown in U.S. growth.
There were some bright spots for traders yesterday, however...energy stocks and precious metals.
Gold futures hit a high not seen in 28 years today, surging above $860 an ounce. The yellow metal ended the year with a 31% gain – its seventh consecutive year of gains.
Will gold continue its winning streak in 2008? Of course only time will tell because no one can predict the future. Nevertheless, one thing is certain. If central banks persist with actions that debase national currencies, the gold price will continue to rise in terms of those currencies.
Given all the debasement that we have seen over the past seven years, it seems like a sure bet that central banks are not going to change their ways. Their pronouncements to ‘fight inflation’ and to protect a currency’s purchasing power are nothing more than hollow rhetoric.
Meanwhile, crude oil hit $100 a barrel on the weak dollar, geopolitical uncertainty – and the possibility that global demand will outstrip supplies.
Wednesday, January 2, 2008
Gold surged to an all-time high this morning.
The precious metal rose from $836 to $848 in morning trading, just a breath away from its record high of $850, set in 1980. By lunchtime, gold had soared to just short of $860, and continues to rise.
“It looks like gold is in the midst of a breakout of its two-month consolidation,” writes our gold adviser Ed Bugos. “If confirmed, we are likely to see at least a $100 rally in the next few weeks, and the bulls may even challenge the $1,000 level as early as February.
“The longer I spend looking at my charts, the more I’m convinced that the market is poised for a history-making move. The time is ripe for the bulls to challenge $1,000 and wake the world up with a foray into four-digit terrain. Let the fireworks begin!”
The fireworks began awhile ago for gold’s die-hard fans. The metal rose over 31% in 2007 -- its seventh consecutive positive year versus the dollar.
Focus on :ABX, NG, AZK
“It looks like gold is in the midst of a breakout of its two-month consolidation,” writes our gold adviser Ed Bugos. “If confirmed, we are likely to see at least a $100 rally in the next few weeks, and the bulls may even challenge the $1,000 level as early as February.
“The longer I spend looking at my charts, the more I’m convinced that the market is poised for a history-making move. The time is ripe for the bulls to challenge $1,000 and wake the world up with a foray into four-digit terrain. Let the fireworks begin!”
The fireworks began awhile ago for gold’s die-hard fans. The metal rose over 31% in 2007 -- its seventh consecutive positive year versus the dollar.
Focus on :ABX, NG, AZK
Tuesday, January 1, 2008
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