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.
Wednesday, January 9, 2008
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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