GM 2.86
Obama: GM, Chrysler Need To Make More 'Painful' Changes
President Barack Obama refused further long-term federal bailouts for General Motors and Chrysler, saying more concessions were needed from unions, creditors and others before they could be approved.
He raised the possibility Monday of controlled bankruptcy for one or both of the beleaguered auto giants.
At the same time, eager to reassure consumers, Obama announced the federal government would immediately begin backing the warranties that new car buyers receive—a step designed to signal that it is safe to purchase U.S.-made autos and trucks despite the distress of the industry.
In a statement read at the White House, Obama said he was "absolutely committed" to the survival of a domestic auto industry that can compete internationally.
And yet, "our auto industry is not moving in the right direction fast enough," he added.
In an extraordinary move, the administration forced the departure of Rick Wagoner as CEO of General Motors [GM 2.8688 -0.7512 (-20.75%) ] overt the weekend, and implicit in Obama's remarks was that the government holds the ability to pull the plug on that company or Chrysler.
Ford, [F 2.8101 -0.0299 (-1.05%) ] the third member of the Big 3, has not requested federal bailout funds, and was not included in the president's remarks.
The Bush administration late last year approved $17 billion in federal funds to help GM and Chrysler survive.
Even as he pronounced their effort unsatisfactory, the president said the administration will offer General Motors "adequate working capital" over the next 60 days to produce a reorganization plan acceptable to the administration.
He also announced several steps to reassure consumers, and improve the chances that U.S. automakers will be able to sell their cars and trucks.
The president said the government will now stand behind warranties issued by the car makers, a sweeping new guarantee that some in Congress had sought.
He also noted that the economic stimulus legislation he recently signed allows the purchasers of new domestic cars to deduct the cost of any sales and excise taxes.
Obama said this provision could "save families hundreds of dollars and lead to as many as 100,000 new car sales." He also said funds ticketed for the purchase of new vehicles for government agencies would be spent as quickly as possible.
The president was flanked by numerous administration officials as he spoke, including Treasury Secretary Tim Geithner.
As the president noted, the industry has shed more than 400,000 jobs in the past year as the recession took hold.
Officials announced last week bailout funds would be made available to companies that supply the automakers, an attempt to keep them afloat.
Obama said he is committed to the survival of an auto industry—on terms that will allow it to compete internationally.
"But we also cannot continue to excuse poor decisions," he said. "And we cannot make the survival of our auto industry dependent on an unending flow of tax dollars." He also said some of the industry's progress has scarcely been noticed.
He mentioned that the North American car of the year in 2008 was produced by GM.
"Let me be clear: The United States government has no interest in running GM; we have no intention in running GM," Obama said.
But that was at the same time he was formally announcing the departure of Wagoner, whom administration officials forced into retirement on Sunday in preparation for the president's remarks.
"This is not meant as a criticism of Mr. Wagoner, who has devoted his life to this company; rather it's a recognition that it will take a new vision and new direction to create the GM of the future," Obama said.
Other changes at GM include new directors on its board.
Fritz Henderson, GM's president and chief operating officer, became the new CEO.
Board member Kent Kresa, the former chairman and CEO of defense contractor Northrop was named interim chairman of the GM board.
"The board has recognized for some time that the company's restructuring will likely cause a significant change in the stockholders of the company and create the need for new directors with additional skills and experience," Kresa said in a written statement.
GM failed to make good on promises made in exchange for $13.4 billion in government loans.
In progress reports filed with the government in February, GM asked for $16.6 billion more and Chrysler wanted $5 billion more.
GM owes roughly $28 billion to bondholders. Chrysler owes about $7 billion in first- and second-term debt, mainly to banks.
GM owes about $20 billion to its retiree health care trust, while Chrysler owes $10.6billion.
GM and Chrysler employ about 140,000 workers in the U.S. In February, GM said it intended to cut 47,000 jobs around the globe, or almost 20 percent of its work force, close hundreds of dealerships and focus on four core brands: Cadillac, GMC and Buick.
Now they will focus on forcing concessions on the bondholders and the legacy costs for the retirees. They have them over a barrel. It will be do it or die. They will get their cuts and probably get common stock for it. I do not believe that it will go bankrupt. This will be similar to the Citicorp deal where loans are exchanged for common. The deal will make the bondholders and the unions whole at some point. The question for the current stockholders is will they be wiped out. I am sure that idea will be mentioned alot but I do not think that will happen. The reason I do not is that the stock is trading at 2.86 and they are giving you all day to see it before it goes to zero. That is not the way it works ..if they were going bankrupt the stock would be trading a 1 buck. I think this just a grandstand play by the administration to wring out every last dime out of the unions and the bondholders. That's right Obama is just like Bill (I feel you pain) Clinton and George (I feel no pain) Bush. They work for the man. Anyway I believe that GM stock and bonds are a steal now. ....the beat goes on Mikey
The company that emerges out of this will work and work well.
Monday, March 30, 2009
Friday, March 27, 2009
When 1+1=2 and everyone agrees Look for a new answer
DJIA 7806 VIX 41.22 925.10 -14.90 Oil 51.87 -2.47 Dollar Index 85.57 +.96
The talk today and everyone agrees is that the massive injection of liquidity by the Fed is going to create inflation and trash the value of the dollar. That is the 1+1=2now that everyone agrees on. The correct answer is that there will be no inflation now and the dollar will skyrocket. You see in the financial markets 1+1 only equals 2 when no one believes it anymore. Mikey
The talk today and everyone agrees is that the massive injection of liquidity by the Fed is going to create inflation and trash the value of the dollar. That is the 1+1=2now that everyone agrees on. The correct answer is that there will be no inflation now and the dollar will skyrocket. You see in the financial markets 1+1 only equals 2 when no one believes it anymore. Mikey
Thursday, March 26, 2009
Rates on the 30-Year Mortgage Drop to Record Low of 4.85%
You ain't seen nothing yet they are going to 4 to 4.25%. Yesterday the bond auction went poorly because of a poor bid to cover ratio. There is also talk that the Chinese are losing patience with us. There is also talk that Euro Union president says we are spending our way to hell.
Don't listen to this the bonds are going to kick butt and the rates are gonna fall hard. Mortgage rates are going to 4 to 4.25% ...Mikey
I have two things to say:
1) Mister President of the European union you don't get it. You are the ones that are going to hell.( the Euro..135.86.. is going down the drain)
2) Gold Bugs when the rates get to 4% my guess is that you are screwed.
Don't listen to this the bonds are going to kick butt and the rates are gonna fall hard. Mortgage rates are going to 4 to 4.25% ...Mikey
I have two things to say:
1) Mister President of the European union you don't get it. You are the ones that are going to hell.( the Euro..135.86.. is going down the drain)
2) Gold Bugs when the rates get to 4% my guess is that you are screwed.
Economists at UCLA and UCSB forecast paints a grim picture....That's great news!!!
DJIA 7831 +82.76 Vix 40.96 Gold 939.50 +3.70 Oil 54.07 +1.30 Dollar Index 84.60 +.31
The boys at UCLA and UCSB forecast paint a grin picture of declining economic growth, lower retail sales, a troubled housing market and falling office prices lasting through much of 2010.California's unemployment rate will soar to between 12 and 15% by next spring and remain in double digits until at least the beginning of 2012, they said. "It looks like it will be a nasty recession, but not a depression, although the possibility that we could get into a depression has increased", said Dan Hamilton director of the UCSB forecast.
The thing I want to point out here is that I keep track of these idiots. They are never and I mean never right. In 2003 they said Real estate was a bubble and in 2005 they said it wasn't a bubble. That meant if you listened to them you would have missed the whole move and bought at the top. In 2004 they forecasted a sluggish economy because there was no job increases. In 2007 and 2008 they did not see the recession coming. Now they think the recession could possibly be a depression and it will last well into 2012.
They always feed this BS to the public and what is interesting is that no one ever calls them out on their prior forecasts. I am calling them out so remember this post and lets see what happens next. By the way the retail stocks are smoking today...The beat goes on ..Mikey
Added to YRCW today 4.11
The boys at UCLA and UCSB forecast paint a grin picture of declining economic growth, lower retail sales, a troubled housing market and falling office prices lasting through much of 2010.California's unemployment rate will soar to between 12 and 15% by next spring and remain in double digits until at least the beginning of 2012, they said. "It looks like it will be a nasty recession, but not a depression, although the possibility that we could get into a depression has increased", said Dan Hamilton director of the UCSB forecast.
The thing I want to point out here is that I keep track of these idiots. They are never and I mean never right. In 2003 they said Real estate was a bubble and in 2005 they said it wasn't a bubble. That meant if you listened to them you would have missed the whole move and bought at the top. In 2004 they forecasted a sluggish economy because there was no job increases. In 2007 and 2008 they did not see the recession coming. Now they think the recession could possibly be a depression and it will last well into 2012.
They always feed this BS to the public and what is interesting is that no one ever calls them out on their prior forecasts. I am calling them out so remember this post and lets see what happens next. By the way the retail stocks are smoking today...The beat goes on ..Mikey
Added to YRCW today 4.11
Wednesday, March 25, 2009
This article makes my point
Renters Turn Buyers as Homes Become Affordable
After six years of renting in San Francisco, Kate Wilusz jumped at the chance to swap her tiny apartment for a roomy four-bedroom Victorian home. But she is paying a mortgage instead of rent—and coming out even.
"I could not be more thrilled," said Wilusz, a financial planner who recently closed on the dream house with her husband, Charley.
In some U.S. markets, prices appear to have fallen enough to make buying cheaper than renting. Mix that with mortgage rates that are near record lows and renters who want to become buyers are rejoicing.
"The U.S. government is helping bail out those who bought at the top, but I got my own personal stimulus package through falling home prices and low interest rates on mortgages," said Wilusz, who works at Ameriprise Financial.
Wilusz said instinct told her it was time to buy, and her new home costs her as much to own as it would have to rent.
"Everyone was saying home prices in San Francisco would never go down, but any time someone says something will never happen, it usually happens and it is time to be a contrarian," she said.
San Francisco, one of the metropolitan areas covered in the widely watched Standard & Poor's S&P/Case-Shiller Home Price Indices, has shown significant home price depreciation. Home prices fell 3.8 percent in December from November.
San Francisco was also one of the worst-performing cities in terms of year-over-year declines in December, with home prices dropping an average 31.2 percent.
The silver lining in these clouds over California's housing market is clear: Lower prices are luring buyers.
Home sales in California rose 42.5 percent in February from a year earlier as the median home price slid 39.9 percent, driven by sales of foreclosed properties, according to a MDA DataQuick report last week.
The report said 29,225 new and resale houses and condominiums were sold in California last month, down 0.8 percent from January. The median price for a home in the most populous U.S. state was unchanged from January at $373,000.
Owning Costs Less
"You can now own a home in so many areas of the country for less than it costs to rent," said Mollie Carmichael, senior vice president at John Burns Real Estate Consulting in Irvine, California. Out of the 76 metropolitan area markets across the United States tracked by the company, a whopping 50 percent show that a person can buy a house for less than renting when considering the after-tax cost of homeownership, she said.
After six years of renting in San Francisco, Kate Wilusz jumped at the chance to swap her tiny apartment for a roomy four-bedroom Victorian home. But she is paying a mortgage instead of rent—and coming out even.
"I could not be more thrilled," said Wilusz, a financial planner who recently closed on the dream house with her husband, Charley.
In some U.S. markets, prices appear to have fallen enough to make buying cheaper than renting. Mix that with mortgage rates that are near record lows and renters who want to become buyers are rejoicing.
"The U.S. government is helping bail out those who bought at the top, but I got my own personal stimulus package through falling home prices and low interest rates on mortgages," said Wilusz, who works at Ameriprise Financial.
Wilusz said instinct told her it was time to buy, and her new home costs her as much to own as it would have to rent.
"Everyone was saying home prices in San Francisco would never go down, but any time someone says something will never happen, it usually happens and it is time to be a contrarian," she said.
San Francisco, one of the metropolitan areas covered in the widely watched Standard & Poor's S&P/Case-Shiller Home Price Indices, has shown significant home price depreciation. Home prices fell 3.8 percent in December from November.
San Francisco was also one of the worst-performing cities in terms of year-over-year declines in December, with home prices dropping an average 31.2 percent.
The silver lining in these clouds over California's housing market is clear: Lower prices are luring buyers.
Home sales in California rose 42.5 percent in February from a year earlier as the median home price slid 39.9 percent, driven by sales of foreclosed properties, according to a MDA DataQuick report last week.
The report said 29,225 new and resale houses and condominiums were sold in California last month, down 0.8 percent from January. The median price for a home in the most populous U.S. state was unchanged from January at $373,000.
Owning Costs Less
"You can now own a home in so many areas of the country for less than it costs to rent," said Mollie Carmichael, senior vice president at John Burns Real Estate Consulting in Irvine, California. Out of the 76 metropolitan area markets across the United States tracked by the company, a whopping 50 percent show that a person can buy a house for less than renting when considering the after-tax cost of homeownership, she said.
New Home Sales Rise 4.7% and Durable Goods Orders Pop 3.4% in Surprising Gain
DJIA 7824 Vix 41.59 Gold 927 +3.30 Oil 52.69 -1.29 Dollar Index 84.26 -.07
Sales of newly built U.S. single-family homes unexpectedly rose at their fastest pace in 10 months in February, while prices fell by a record margin from a year ago, a government report showed on Wednesday.
The Commerce Department said sales rose 4.7 percent to a 337,000 annual pace, the fastest increase since April last year, from an upwardly revised 322,000 in January.
Despite the increase, February sales were the second lowest ever after the drop in January to the slowest pace in records going back to 1963, the department said.
Economists polled by Reuters had forecast sales at a 300,000 rate in February.
The median sales price in February fell a record 18.1 percent to $200,900 from a year earlier, the department said.
Thee median marks the half-way point, with half of all houses sold above that level and half below.
The inventory of homes available for sale in February was at 330,000, the smallest since June 2002. The February sales pace left the supply of homes available for sale at 12.2 month's worth.
Durable Goods Orders Pop 3.4% in Surprising Gain
New U.S. orders for long-lasting manufactured goods rose in February for first time in seven months, according to a government report Wednesday brought some cheer to an economy mired in recession.
The Commerce Department said durable goods orders rose 3.4 percent to $165.6 billion in February, the biggest increase since December 2007, after a revised 7.3 percent plunge the prior month, previously reported as a 4.5 percent decline.
This is the latest in a series of recent economic data indicating the downturn in the economy after a brutal fourth quarter appears to be moderating a bit.
Mikey says:
Lets see...Lower inventories higher sales lower mortgage rates = HIGHER HOME PRICES. You think that may help our problem? It is starting to kick in. With the lower housing prices and higher affordability and with the Fed buying down the mortgage and the toxic asset plan .... this thing is going to fly as soon as the nabobs of negativity WAKE THE HELL UP. By the way the XHB(housing ETF is 11.51 off of its low of 8.00 on March 9th.
The beat goes on ...Mikey
Sales of newly built U.S. single-family homes unexpectedly rose at their fastest pace in 10 months in February, while prices fell by a record margin from a year ago, a government report showed on Wednesday.
The Commerce Department said sales rose 4.7 percent to a 337,000 annual pace, the fastest increase since April last year, from an upwardly revised 322,000 in January.
Despite the increase, February sales were the second lowest ever after the drop in January to the slowest pace in records going back to 1963, the department said.
Economists polled by Reuters had forecast sales at a 300,000 rate in February.
The median sales price in February fell a record 18.1 percent to $200,900 from a year earlier, the department said.
Thee median marks the half-way point, with half of all houses sold above that level and half below.
The inventory of homes available for sale in February was at 330,000, the smallest since June 2002. The February sales pace left the supply of homes available for sale at 12.2 month's worth.
Durable Goods Orders Pop 3.4% in Surprising Gain
New U.S. orders for long-lasting manufactured goods rose in February for first time in seven months, according to a government report Wednesday brought some cheer to an economy mired in recession.
The Commerce Department said durable goods orders rose 3.4 percent to $165.6 billion in February, the biggest increase since December 2007, after a revised 7.3 percent plunge the prior month, previously reported as a 4.5 percent decline.
This is the latest in a series of recent economic data indicating the downturn in the economy after a brutal fourth quarter appears to be moderating a bit.
Mikey says:
Lets see...Lower inventories higher sales lower mortgage rates = HIGHER HOME PRICES. You think that may help our problem? It is starting to kick in. With the lower housing prices and higher affordability and with the Fed buying down the mortgage and the toxic asset plan .... this thing is going to fly as soon as the nabobs of negativity WAKE THE HELL UP. By the way the XHB(housing ETF is 11.51 off of its low of 8.00 on March 9th.
The beat goes on ...Mikey
Monday, March 23, 2009
Mikey turns bearish on Oil and bullish on the dollar
DJIA 7775.86 +497.50 Gold 938.30 -14.20 Oil 53.61 -.16 Dollar Index 83.95 -.69
Oil is moving with the last pullback in the dollar. I think it is time to sell oil now at 53.61. I believe that it has benefited from the recent spat of inflation mania brought on by the Fed announcement of their purchase of 300 billion in mortgages. That move is to inflation as lighting a fire without oxygen. It ain't gonna happen now. This is initial stage where money is put in the system. Inflation will happen down the road after the Oil and Gold bugs are nailed just like the average investors was in their 401K.
The dollar will be the strongest currency because the US is out in front of all the other economies and more will have to be done in those other country's to get their economies going. The US will be first out of the recession and the others will lag. That creates a demand for the dollar and will put pressure on the commodities.
So I am moving to the sidelines on my DXO (3.23) and will concentrate on the financials. I think there is alot more to go there before they can raise private equity which is the stated intent of the treasury secretary.
I AM NOT SHORTING OIL JUST SELLING THE DXO NOT THE DIG.
Oil is moving with the last pullback in the dollar. I think it is time to sell oil now at 53.61. I believe that it has benefited from the recent spat of inflation mania brought on by the Fed announcement of their purchase of 300 billion in mortgages. That move is to inflation as lighting a fire without oxygen. It ain't gonna happen now. This is initial stage where money is put in the system. Inflation will happen down the road after the Oil and Gold bugs are nailed just like the average investors was in their 401K.
The dollar will be the strongest currency because the US is out in front of all the other economies and more will have to be done in those other country's to get their economies going. The US will be first out of the recession and the others will lag. That creates a demand for the dollar and will put pressure on the commodities.
So I am moving to the sidelines on my DXO (3.23) and will concentrate on the financials. I think there is alot more to go there before they can raise private equity which is the stated intent of the treasury secretary.
I AM NOT SHORTING OIL JUST SELLING THE DXO NOT THE DIG.
Inflationary????? Not now Gold Bugs
Gold 936.80
It will take 3 to 5 years for this pump to go through the system. The Fed is trying to prevent deflation now. This is the flip of 1979 to 1981 when the Fed raised interest rates to stop inflation. The Bonds did not take off until 1985. I remember begging people to buy bonds in 1984 but they wanted to be in money market funds. If I was in the business I would be begging them to buy stocks and guess what they are in money market funds again. Why? The news is bad don't you know and the experts of the world are says be safe now.
Anyway I digress the fact is that the Gold Bugs are going to get their ass handed to them and it ain't that far off. Nighty night Gold Bugs when you wake up the world will not be coming to an end..The beat goes on..... Mikey
It will take 3 to 5 years for this pump to go through the system. The Fed is trying to prevent deflation now. This is the flip of 1979 to 1981 when the Fed raised interest rates to stop inflation. The Bonds did not take off until 1985. I remember begging people to buy bonds in 1984 but they wanted to be in money market funds. If I was in the business I would be begging them to buy stocks and guess what they are in money market funds again. Why? The news is bad don't you know and the experts of the world are says be safe now.
Anyway I digress the fact is that the Gold Bugs are going to get their ass handed to them and it ain't that far off. Nighty night Gold Bugs when you wake up the world will not be coming to an end..The beat goes on..... Mikey
Toxic Asset Plan...This is a biggy!!...but the real biggy is the Fed buying down the mortgage rates to 4%
DJIA 7588 VIX 42.35 Gold 952 -4.20 OIL 53.37 +1.30 Dollar Index 83.93 -.40
Unveils Complex Plan To Deal With Toxic Assets
The US Treasury Monday revealed details of a highly-anticipated plan to set up public-private investment funds that will buy up to $1 trillion in troubled loans and securities at the heart of the financial crisis.
Market reaction was positive with stocks—especially those of financial firms—rising around the globe, while the dollar was stable.
The Treasury’s complex plan to use private funds to purchase toxic assets uses low-cost government financing, government guarantees and government equity as incentives.
The plan has two programs—one to purchase securities, the other to purchase loans from banks.
The initial goal is to "generate $500 billion in purchasing power," as the government put it in its plan fact sheet, but the cost could reach $1 trillion. About $75 billion to $100 billion of the government funding will come from the second tranche of the TARP.
"We're sharing in a partnership form," said White House economist Austan Goolsbee on CNBC. "If the private sector profits, then the government profits."
Public and lawmaker fury over the bonuses, and efforts on Capitol Hill to claw them back, have made many investors skittish about partnering with the government. But the Treasury specified that private partners in its latest effort to revive credit markets will not face tough executive pay restrictions.
How The Plan Works
In one initiative, the government will create up to five public-private partnerships, run by approved asset managers, with the government and private firms each providing 50 percent of the capital. The structure is meant to create a market for the troubled assets, which have been difficult, if not impossible, to price since the financial crisis first erupted 18-months ago.
Toxic assets clogging the balance sheets of financial firms could total $2 trillion and generally fall into two broad categories—illiquid or non-performing
The FDIC will oversee the program and will also provide financing along with the Treasury.
Under the PPIF, participating firms will identiy the assets, usually as a pool of loans, which will be auctioned off to the highest bidder. The government will determine how much funding is necesssary to enable the transaction, with leverage not ro exceed a 6-to-1 debt-to-equity ratio.
Though the toxic assets plan has been eagerly-awaited by Wall Street, the Obama administration was careful Monday not to raise expectations unduly. Goolsbee said the latest initiative was "one key brick in what's been a multiple brick process, trying to put the house back together."
The government's Financial Stability Plan also includes a $75 billion foreclosure mitigation plan, up to $1 trillion in support for consumer and business lending and a capital-for-equity swap plan.
The plan released Monday will also "create a lending program that will address the broken markets for securities tied to residential and commercial real estate and consumer credit." That will be done through the the previously announced Term Asset-Backed Securities Facility, TALF, which was launched last week by the Federal Reserve. The Fed will make "non-recourse loans" to investors to fund purchases of certain assets.
Under this program, the Treasury will partner with private firms in buying mortgage- and asset-backed securities with a triple AAA rating.
When he first mentioned public-private investment funds in February, Geithner laid out the proposal in such scant detail that markets sank on fears there was no clear-cut plan for rescuing a banking system beset by poorly performing mortgage and other assets left over from a housing boom that went bust.
Wall Streeters Face Bitterness—And Shock
Industry reaction to the long-awaited plan was positive.
"The partnership between public and private institutions is a great way to help restore liquidity in the market," said the Financial Services Roundtable, which represents 100 of the nation's largest integrated financial services firms. "It is encouraging to see Treasury creating unique ways of stimulating the economy while protecting the taxpayer
Mikey says
Before this is over these new "Private deals will be repackaged securitized and sold to the public as yield opportunities.
Yes the public will be left holding the bag again just like always. In the mean time this is a huge stimulus for the stock market and the economy.
Hey where is Meridith??????????????
Unveils Complex Plan To Deal With Toxic Assets
The US Treasury Monday revealed details of a highly-anticipated plan to set up public-private investment funds that will buy up to $1 trillion in troubled loans and securities at the heart of the financial crisis.
Market reaction was positive with stocks—especially those of financial firms—rising around the globe, while the dollar was stable.
The Treasury’s complex plan to use private funds to purchase toxic assets uses low-cost government financing, government guarantees and government equity as incentives.
The plan has two programs—one to purchase securities, the other to purchase loans from banks.
The initial goal is to "generate $500 billion in purchasing power," as the government put it in its plan fact sheet, but the cost could reach $1 trillion. About $75 billion to $100 billion of the government funding will come from the second tranche of the TARP.
"We're sharing in a partnership form," said White House economist Austan Goolsbee on CNBC. "If the private sector profits, then the government profits."
Public and lawmaker fury over the bonuses, and efforts on Capitol Hill to claw them back, have made many investors skittish about partnering with the government. But the Treasury specified that private partners in its latest effort to revive credit markets will not face tough executive pay restrictions.
How The Plan Works
In one initiative, the government will create up to five public-private partnerships, run by approved asset managers, with the government and private firms each providing 50 percent of the capital. The structure is meant to create a market for the troubled assets, which have been difficult, if not impossible, to price since the financial crisis first erupted 18-months ago.
Toxic assets clogging the balance sheets of financial firms could total $2 trillion and generally fall into two broad categories—illiquid or non-performing
The FDIC will oversee the program and will also provide financing along with the Treasury.
Under the PPIF, participating firms will identiy the assets, usually as a pool of loans, which will be auctioned off to the highest bidder. The government will determine how much funding is necesssary to enable the transaction, with leverage not ro exceed a 6-to-1 debt-to-equity ratio.
Though the toxic assets plan has been eagerly-awaited by Wall Street, the Obama administration was careful Monday not to raise expectations unduly. Goolsbee said the latest initiative was "one key brick in what's been a multiple brick process, trying to put the house back together."
The government's Financial Stability Plan also includes a $75 billion foreclosure mitigation plan, up to $1 trillion in support for consumer and business lending and a capital-for-equity swap plan.
The plan released Monday will also "create a lending program that will address the broken markets for securities tied to residential and commercial real estate and consumer credit." That will be done through the the previously announced Term Asset-Backed Securities Facility, TALF, which was launched last week by the Federal Reserve. The Fed will make "non-recourse loans" to investors to fund purchases of certain assets.
Under this program, the Treasury will partner with private firms in buying mortgage- and asset-backed securities with a triple AAA rating.
When he first mentioned public-private investment funds in February, Geithner laid out the proposal in such scant detail that markets sank on fears there was no clear-cut plan for rescuing a banking system beset by poorly performing mortgage and other assets left over from a housing boom that went bust.
Wall Streeters Face Bitterness—And Shock
Industry reaction to the long-awaited plan was positive.
"The partnership between public and private institutions is a great way to help restore liquidity in the market," said the Financial Services Roundtable, which represents 100 of the nation's largest integrated financial services firms. "It is encouraging to see Treasury creating unique ways of stimulating the economy while protecting the taxpayer
Mikey says
Before this is over these new "Private deals will be repackaged securitized and sold to the public as yield opportunities.
Yes the public will be left holding the bag again just like always. In the mean time this is a huge stimulus for the stock market and the economy.
I think the shorts are going to get a wedgy out of this one.
Hey where is Meridith??????????????
Thursday, March 19, 2009
Citicorp
Citigroup Offers Reverse Split
Citigroup on Thursday said it may conduct a reverse stock split as part of an exchange offer that could give U.S. taxpayers a 36 percent stake in the bank.
Citigroup, [C 2.709 -0.371 (-12.05%) ] which took $45 billion from the government's Troubled Asset Relief Program, also defended spending $10 million to renovate executive offices at its Park Avenue headquarters, saying the project will save more than it costs.
Chief Executive Vikram Pandit is trying to restore the third-largest U.S. bank to health after $37.5 billion of losses over five quarters, largely from exposure to housing-related and complex debt.
Citigroup shares slid below $1 two weeks ago, despite three U.S. attempts to prop up the bank since October, and the bank has eliminated its common stock dividend.
The shares rose 37 cents to $3.45 in morning trading. They traded above $50 as recently as July 2007.
As part of a Feb. 27 government bailout, Citigroup is offering to exchange common stock for up to $27.5 billion of its preferred shares at $3.25 per share.
The government would match up to $25 billion of the exchange. Citigroup will also seek shareholder approval to conduct a reverse stock split. It proposed seven possible exchange ratios, ranging from 1-for-2 to 1-for-30.
It said a split could take place before June 30, 2010. Reverse splits reduce shares outstanding and are often used to boost low share prices. The value of investors' holdings does not change.
Citigroup and its predecessors conducted seven regular stock splits between 1993 and 2000, but none since.
Following the move, Citigroup's tangible common equity ratio (TCE ratio) - a measure of the financial soundness of banks more conservative than the more widely-used capital adequacy ratio – would likely rise to $81 billion from $29.7 billion at the end of last year, the bank said.
The preferred stock exchange would not give Citigroup more cash but would bolster capital. Chief Financial Officer Gary Crittenden wrote in a letter to investors that a successful exchange is also "critical in protecting market confidence in the company."
Citigroup has 5.5 billion shares outstanding and said the exchange could increase that number to between 13 billion and 21 billion, depending on how many investors participate.
<
Citigroup on Thursday said it may conduct a reverse stock split as part of an exchange offer that could give U.S. taxpayers a 36 percent stake in the bank.
Citigroup, [C 2.709 -0.371 (-12.05%) ] which took $45 billion from the government's Troubled Asset Relief Program, also defended spending $10 million to renovate executive offices at its Park Avenue headquarters, saying the project will save more than it costs.
Chief Executive Vikram Pandit is trying to restore the third-largest U.S. bank to health after $37.5 billion of losses over five quarters, largely from exposure to housing-related and complex debt.
Citigroup shares slid below $1 two weeks ago, despite three U.S. attempts to prop up the bank since October, and the bank has eliminated its common stock dividend.
The shares rose 37 cents to $3.45 in morning trading. They traded above $50 as recently as July 2007.
As part of a Feb. 27 government bailout, Citigroup is offering to exchange common stock for up to $27.5 billion of its preferred shares at $3.25 per share.
The government would match up to $25 billion of the exchange. Citigroup will also seek shareholder approval to conduct a reverse stock split. It proposed seven possible exchange ratios, ranging from 1-for-2 to 1-for-30.
It said a split could take place before June 30, 2010. Reverse splits reduce shares outstanding and are often used to boost low share prices. The value of investors' holdings does not change.
Citigroup and its predecessors conducted seven regular stock splits between 1993 and 2000, but none since.
Following the move, Citigroup's tangible common equity ratio (TCE ratio) - a measure of the financial soundness of banks more conservative than the more widely-used capital adequacy ratio – would likely rise to $81 billion from $29.7 billion at the end of last year, the bank said.
The preferred stock exchange would not give Citigroup more cash but would bolster capital. Chief Financial Officer Gary Crittenden wrote in a letter to investors that a successful exchange is also "critical in protecting market confidence in the company."
Citigroup has 5.5 billion shares outstanding and said the exchange could increase that number to between 13 billion and 21 billion, depending on how many investors participate.
<
A selloff to give the traders religion
DJIA 7406 VIX 41.98 Gold 955.60 +66.70 Oil 51.04 +2.90 Dollar Index 83.75 -1.73
The move by the Fed to buy down the mortgages is a good thing. The inflationary effect now is nil in my opinion. The rally in Gold is bogus but is nails the shorts like me that thought it was on its way. Well that's trading for you. I still think we see 400. It would not surprise me to see the market have a sharp pullback here and give the traders some religion. The banks were getting a little to easy to make money. This is the nature of the beast. About 7100 in the DJIA would be about right......Mikey
Disclaimer:
By the way I suck on the short term market as you probably know.
The move by the Fed to buy down the mortgages is a good thing. The inflationary effect now is nil in my opinion. The rally in Gold is bogus but is nails the shorts like me that thought it was on its way. Well that's trading for you. I still think we see 400. It would not surprise me to see the market have a sharp pullback here and give the traders some religion. The banks were getting a little to easy to make money. This is the nature of the beast. About 7100 in the DJIA would be about right......Mikey
Disclaimer:
By the way I suck on the short term market as you probably know.
Wednesday, March 18, 2009
Gold weakness a good sign for the market
DJIA 7314 Gold 885 -31.30 Oil 47.48 -1.68 VIX 41.92 Dollar Index 86.96 -1.38
The sell off in Gold is preceding the market rally. The breakout above 900 is being invalidated. Gold (885.70) -31.30 is invalidating its breakout above 900 on 1/23/09. This is as the market returns to its 2/20/09 breakdown of 7450. Gold first returned to its breakout on 3/4/09 and hit its 50 day average where it bounced. This action means to me that the market is about to invalidate its breakdown of 7450 and rally at least to 7800 over the next week or so.
Citi has done the same thing by rallying to its 50 day at 3.30 today. I see most stocks starting to do this now as the rally takes hold and the rotation starts to pick up as traders look for laggards to play.
The rally in the banks today mirrors Golds sell off. Good news is coming and its not that far off. The XLF 8.77 has returned to its November low and is at a 24 day high. I guess its time to bring back Meridith and pour more cold water on the parade. You know Que Meridith. This is like the Truman show I have seen it all before.
The beat goes on....... Mikey
Bought MTG @ 1.12 AMR 3.49
The sell off in Gold is preceding the market rally. The breakout above 900 is being invalidated. Gold (885.70) -31.30 is invalidating its breakout above 900 on 1/23/09. This is as the market returns to its 2/20/09 breakdown of 7450. Gold first returned to its breakout on 3/4/09 and hit its 50 day average where it bounced. This action means to me that the market is about to invalidate its breakdown of 7450 and rally at least to 7800 over the next week or so.
Citi has done the same thing by rallying to its 50 day at 3.30 today. I see most stocks starting to do this now as the rally takes hold and the rotation starts to pick up as traders look for laggards to play.
The rally in the banks today mirrors Golds sell off. Good news is coming and its not that far off. The XLF 8.77 has returned to its November low and is at a 24 day high. I guess its time to bring back Meridith and pour more cold water on the parade. You know Que Meridith. This is like the Truman show I have seen it all before.
The beat goes on....... Mikey
Bought MTG @ 1.12 AMR 3.49
Tuesday, March 17, 2009
Rally Stalls Just under November lows...Meredith Whitney again.."The lady doth protest too much, methinks."
DJIA 7221 +4.78 VIX 43.11 Gold 916.70 -4.40 Oil 48.62 +1.27 Dollar Index 87.62 +.20
The rally hjas stalled just under the Novenber lows of 7450 and just above the 20 day average of 7067. This is no mans land and the traders are probably heading to the sidelines. What is interesting to me is that we are seeing Dr, Doom and Meridith Whitney alot now. They are all over CNBC telling us that the worst is not over. These articles on CNBC are a sample:
Whitney: Banking Woes Likely to Get Worse in 2009
A surge in borrower defaults and unemployment pressures will make 2009 an even uglier year for banks than last year, analyst Meredith Whitney said.
She predicted "breakups and M&As on a grand scale" as the industry seeks to remake itself in the face of all its capital pressures.
"I don't think this year is going to look any better than last year," Whitney said in an interview Tuesday on CNBC. "In fact it will look worse because there's so much credit coming out of the system."
Whitney, a former analyst at Oppenheimer who recently opened her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.
As some have been predicting the worst may be over for the banking sector, Whitney countered that many of the statements about some of the big banks showing profits ignore the burden that additional writedowns will pose through the year. In particular, she said Citigroup's statement that it had turned a profit the first two months of 2009 might came back to haunt it once a fuller picture was presented.
Consumers also will face pressure as unemployment grows and banks and credit card companies start calling in credit lines to avoid getting stuck with even more bad debt.
"The probability of more people going into default is higher, so the banks are going to have a tough time," she said.
Dr Doom said:
Treasurys Are 'Disaster Waiting to Happen': Dr. Doom
The Federal Reserve has no option but to start buying Treasurys as the government's needs for financing are huge, but the government bond market is a disaster in the making, Marc Faber, editor and publisher of The Gloom, Boom & Doom Report, told CNBC.
Federal Reserve policymakers start a two-day meeting on Tuesday, weighing options on how to spur lending to help cash-strapped consumers kickstart the economy.
Economists expect them to leave rates at zero and look to other ways of boosting liquidity, such as buying government bonds – a measure which has already been taken by the Bank of England.
"Well I think other central banks have done it already around the world but basically what it amounts to is money printing and in fact I don't think that it will help the bond market at all in the long run," Faber told CNBC's Martin Soong.
The yield on the 30-year Treasurys touched a low of 2.51 percent last year in December but now it is back up at 3.77 percent, he said.
"Yields have already backed up pretty substantially and I tell you, I think the US government bond market is a disaster waiting to happen for the simple reason that the requirements of the government to cover its fiscal deficit will be very, very high," Faber said.
"The Federal Reserve will have to buy Treasurys, otherwise yields will go up substantially," he said, adding that as their reserves were dwindling, foreign investors were likely to scale down their purchases.
But there will be a time when the Federal Reserve will have to increase interest rates to fight inflation, and it will be reluctant to do so because the cost of servicing government debt will rise substantially.
"So we'll go into high inflation rates one day," Faber said.
The stock market is likely to continue its bounce at least for a while, but the outlook is bleak, he added.
I think we may still have a rally (in the S&P) until about the end of April and probably then a total collapse in the second half of the year sometimes, when it becomes clear that the economy is a total disaster," Faber said.
The message in those articles says STAY AWAY!!!!They have some valid points but why do we see them every day? I think it is because the boys want the stock sold to them.
I still like the action here and I like the fact that Queen Gertrude...Ehhhh...Meredith Whitney keeps pouring cold water on the rally. You know the wall of worry. Well Meredith and Faber are the bricklayers of this wall and they have alot of bricks.....The beat goes on Mikey
The rally hjas stalled just under the Novenber lows of 7450 and just above the 20 day average of 7067. This is no mans land and the traders are probably heading to the sidelines. What is interesting to me is that we are seeing Dr, Doom and Meridith Whitney alot now. They are all over CNBC telling us that the worst is not over. These articles on CNBC are a sample:
Whitney: Banking Woes Likely to Get Worse in 2009
A surge in borrower defaults and unemployment pressures will make 2009 an even uglier year for banks than last year, analyst Meredith Whitney said.
She predicted "breakups and M&As on a grand scale" as the industry seeks to remake itself in the face of all its capital pressures.
"I don't think this year is going to look any better than last year," Whitney said in an interview Tuesday on CNBC. "In fact it will look worse because there's so much credit coming out of the system."
Whitney, a former analyst at Oppenheimer who recently opened her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.
As some have been predicting the worst may be over for the banking sector, Whitney countered that many of the statements about some of the big banks showing profits ignore the burden that additional writedowns will pose through the year. In particular, she said Citigroup's statement that it had turned a profit the first two months of 2009 might came back to haunt it once a fuller picture was presented.
Consumers also will face pressure as unemployment grows and banks and credit card companies start calling in credit lines to avoid getting stuck with even more bad debt.
"The probability of more people going into default is higher, so the banks are going to have a tough time," she said.
Dr Doom said:
Treasurys Are 'Disaster Waiting to Happen': Dr. Doom
The Federal Reserve has no option but to start buying Treasurys as the government's needs for financing are huge, but the government bond market is a disaster in the making, Marc Faber, editor and publisher of The Gloom, Boom & Doom Report, told CNBC.
Federal Reserve policymakers start a two-day meeting on Tuesday, weighing options on how to spur lending to help cash-strapped consumers kickstart the economy.
Economists expect them to leave rates at zero and look to other ways of boosting liquidity, such as buying government bonds – a measure which has already been taken by the Bank of England.
"Well I think other central banks have done it already around the world but basically what it amounts to is money printing and in fact I don't think that it will help the bond market at all in the long run," Faber told CNBC's Martin Soong.
The yield on the 30-year Treasurys touched a low of 2.51 percent last year in December but now it is back up at 3.77 percent, he said.
"Yields have already backed up pretty substantially and I tell you, I think the US government bond market is a disaster waiting to happen for the simple reason that the requirements of the government to cover its fiscal deficit will be very, very high," Faber said.
"The Federal Reserve will have to buy Treasurys, otherwise yields will go up substantially," he said, adding that as their reserves were dwindling, foreign investors were likely to scale down their purchases.
But there will be a time when the Federal Reserve will have to increase interest rates to fight inflation, and it will be reluctant to do so because the cost of servicing government debt will rise substantially.
"So we'll go into high inflation rates one day," Faber said.
The stock market is likely to continue its bounce at least for a while, but the outlook is bleak, he added.
I think we may still have a rally (in the S&P) until about the end of April and probably then a total collapse in the second half of the year sometimes, when it becomes clear that the economy is a total disaster," Faber said.
The message in those articles says STAY AWAY!!!!They have some valid points but why do we see them every day? I think it is because the boys want the stock sold to them.
I still like the action here and I like the fact that Queen Gertrude...Ehhhh...Meredith Whitney keeps pouring cold water on the rally. You know the wall of worry. Well Meredith and Faber are the bricklayers of this wall and they have alot of bricks.....The beat goes on Mikey
Saturday, March 14, 2009
Tide is turning
DJIA 7223 VIX 42.36 Gold 928.10 Oil 45.80 -1.23 Dollar Index 87.93 -.23
Interest Rates3-Mo 0.1930.005
2-Yr 0.953-0.044
5-Yr 1.867-0.029
10-Yr 2.8920.032
30-Yr 3.6750.065
Mark-to-Market Meeting Set By Accounting Board
The Financial Accounting Standards Board is planning to discuss mark-to- market accounting rules on Monday.
The FASB says it will discuss "additional application guidance that would clarify" how mark-to-market is used in illiquid markets.
On Thursday, U.S. lawmakers told the top U.S. accounting rulemaker to deliver new guidance on mark-to-market accounting within three weeks, or face legislation changing the rule that has forced banks to write down billions of dollars in assets.
Financial Accounting Standards Board Chairman Robert Herz, under a barrage of questions, initially committed to the three-week timetable but later said he would have to consult with other board members.
"I will take back a very clear message from today," Herz told the U.S. House of Representatives capital markets subcommittee. "We'll do everything that we can."
The Securities and Exchange Commission's acting chief accountant, James Kroeker, told lawmakers "we can absolutely work with the FASB within that timeframe."
The Obama administration’s hope-and-change show hasn’t played well on Wall Street, but in the last week investors may finally be getting some of what they want and that could bring a happier ending than anyone imagined.
In its opening weeks the administration’s controversial cocktail of crisis management and social reform has made investors despondent, not hopeful, and change for the stock market has usually meant another price decline.
It’s turned into a malaise,” says veteran money manager Jim Awad, managing director of Zephyr Management. “Everything is going wrong. Nothing is going right.”
That is, at least until Tuesday. There is now bipartisan Congressional support for reapplying the uptick rule for short sellers of stocks, which will presumably reduce negative momentum during market declines.
More importantly, Congress is now pressuring regulators to adjust, if not totally suspend, the controversial mark-to-market accounting rule, which may help the market deal with the pricing of toxic assets now held on the books of big, troubled financial institutions like AIG [AIG 0.50 0.09 (+21.95%) ] and Citgroup [C 1.78 0.11 (+6.59%) ]. Some change seems inevitable in the near future.
“One of our major jobs is to give investors confidence,” House Financial Services Chairman Barney Frank (D-Mass) told regulators during a public hearing Thursday on the mark to market rule.
Investors have responded with stocks surging Tuesday and Thursday. Before the surprising—and some say suspect—rally, however, the S&P 500 was down 28 percent this year to 676 and trading at a 13-year low. On Election Day in November, the benchmark average closed at 1005, after a 4-percent surge.
As welcome as recent events may be, critics in New York and Washington say the White House still has a lot to prove.
Rep. Michele Bachmann (R-Minn.) says the President’s recent comment comparing the stock market’s daily gyrations to "a tracking poll in politics" shows “a sense of naiveté,” adding it is “very concerning that this is the number one issue of our time and he is comparing it to polls.”
The President’s apparent lack of appreciation, or even empathy, for the plight of investors losing their retirement savings may be matched by their disenchantment with his policy initiatives.
In short order, the Obama administration has cranked out a massive stimulus plan, a financial stability plan, a housing plan, a health care initiative and a budget blueprint. Trillions of dollars later, the measures—individually or collectively—have not only failed to reassure or impress Wall Street, but have actually spooked it.
The Obama administration “has done everything 180-degrees wrong in terms of how markets work,” says Rep. Bachmann, who cites, among other things, proposals for higher taxes, the stress tests for banks and a foreclosure cram down provision for bankruptcy court. (Bachmann supports a change in mark to market.)
Proposals like that essentially add insult to injury, and have become part of the problem, say critics in economic, market and political circles.
Another part of the negative dynamic is that Wall Street now has to contend with its traditional worst enemy—uncertainty—as well as unfriendly initiatives to investors, business and taxpayers.
“Obama is far more concerned about political considerations than economic ones,” says crisis management consultant Eric Dezenhall, who worked in the Reagan White House. “Obama has a tremendous amount of moral authority that translates into business hardship not being something that hurts him politically at this point.”
Business support to the President’s various initiatives, however, has been lukewarm in most cases and cool in some others, even though there is prevailing agreement that the country needs to stand behind the new President.
Yet, that’s becoming difficult for some amid all the market’s declines with Wall Street looking increasingly unimpressed with both the administrations policies and communications.
The stimulus plan and other economic recovery initiatives are now totally suspect in some circles because they appear to be driven more by a social, not economic, agenda and political, not practical, considerations.
“Think of this as redistribution; it is not stimulus,” says economist Robert Brusca of Fact & Opinion Economics. “In some sense it is all about income."
Critics argue the spending initiatives are not only ill-conceived but are potentially inflationary for the economy and also aggravate an already swollen national debt, circumstances that have rarely been good for Wall Street.
“I think people like the President but they don't like his policies," says Tom Schatz, president of Citizens Against Government Waste. (The latest NBC/Wall Street Journal poll shows that to some extent.) “There are tipping points at which time enough people will look at this and say, 'We can't let the government do more and make it worse.'”
If the shortcomings of the stimulus plan weren’t enough, there are those of the programs more near and dear to Wall Street, such as the financial stability plan, which when unveiled a month ago by Treasury Secretary Timothy Geithner lacked key details.
“Conceptual plans without meat, “says Awad, describing Wall Street’s under-whelmed reaction. “You need to have a plan on the banks and the bad assets. You cannot have confidence without it.”
“Geithner needs a plan,” says Sen. Bob Corker (R-Tenn.), echoing a growing impatience about the administration’s delay in advancing its plan for a public private partnership to deal with the pricing of toxic assets.
Though that may go a long way to boosting Wall Street confidence, such a plan is probably still weeks away—along with the results of the high-profile stress tests being applied to the top 20 institutions.
Every little bit may help for Wall Street these days, which, along with the housing sector essentially lead the economy into one of the worst recessions in modern history
“A lot of the horrible economic pain has been concentrated on Wall Street,” says Richard Wolff of the University of Massachusetts. “What you see on Wall Street is perfectly understandable; The frustration as people look at the problems that keep getting worse and what the government—whether it is Bush or Obama—is doing. It doesn’t look adequate. It looks like things are out of control.”
This is a bunch of BS, so much so that I don't even know where to begin. The thing to note in this article is:
1) There is support to change the mark to the market accounting rules.
2) The short sale uptick rule may be restored.
3) Geithner is going to start giving his plan.
The tide is turning.....Mikey
Interest Rates3-Mo 0.1930.005
2-Yr 0.953-0.044
5-Yr 1.867-0.029
10-Yr 2.8920.032
30-Yr 3.6750.065
Mark-to-Market Meeting Set By Accounting Board
The Financial Accounting Standards Board is planning to discuss mark-to- market accounting rules on Monday.
The FASB says it will discuss "additional application guidance that would clarify" how mark-to-market is used in illiquid markets.
On Thursday, U.S. lawmakers told the top U.S. accounting rulemaker to deliver new guidance on mark-to-market accounting within three weeks, or face legislation changing the rule that has forced banks to write down billions of dollars in assets.
Financial Accounting Standards Board Chairman Robert Herz, under a barrage of questions, initially committed to the three-week timetable but later said he would have to consult with other board members.
"I will take back a very clear message from today," Herz told the U.S. House of Representatives capital markets subcommittee. "We'll do everything that we can."
The Securities and Exchange Commission's acting chief accountant, James Kroeker, told lawmakers "we can absolutely work with the FASB within that timeframe."
The Obama administration’s hope-and-change show hasn’t played well on Wall Street, but in the last week investors may finally be getting some of what they want and that could bring a happier ending than anyone imagined.
In its opening weeks the administration’s controversial cocktail of crisis management and social reform has made investors despondent, not hopeful, and change for the stock market has usually meant another price decline.
It’s turned into a malaise,” says veteran money manager Jim Awad, managing director of Zephyr Management. “Everything is going wrong. Nothing is going right.”
That is, at least until Tuesday. There is now bipartisan Congressional support for reapplying the uptick rule for short sellers of stocks, which will presumably reduce negative momentum during market declines.
More importantly, Congress is now pressuring regulators to adjust, if not totally suspend, the controversial mark-to-market accounting rule, which may help the market deal with the pricing of toxic assets now held on the books of big, troubled financial institutions like AIG [AIG 0.50 0.09 (+21.95%) ] and Citgroup [C 1.78 0.11 (+6.59%) ]. Some change seems inevitable in the near future.
“One of our major jobs is to give investors confidence,” House Financial Services Chairman Barney Frank (D-Mass) told regulators during a public hearing Thursday on the mark to market rule.
Investors have responded with stocks surging Tuesday and Thursday. Before the surprising—and some say suspect—rally, however, the S&P 500 was down 28 percent this year to 676 and trading at a 13-year low. On Election Day in November, the benchmark average closed at 1005, after a 4-percent surge.
As welcome as recent events may be, critics in New York and Washington say the White House still has a lot to prove.
Rep. Michele Bachmann (R-Minn.) says the President’s recent comment comparing the stock market’s daily gyrations to "a tracking poll in politics" shows “a sense of naiveté,” adding it is “very concerning that this is the number one issue of our time and he is comparing it to polls.”
The President’s apparent lack of appreciation, or even empathy, for the plight of investors losing their retirement savings may be matched by their disenchantment with his policy initiatives.
In short order, the Obama administration has cranked out a massive stimulus plan, a financial stability plan, a housing plan, a health care initiative and a budget blueprint. Trillions of dollars later, the measures—individually or collectively—have not only failed to reassure or impress Wall Street, but have actually spooked it.
The Obama administration “has done everything 180-degrees wrong in terms of how markets work,” says Rep. Bachmann, who cites, among other things, proposals for higher taxes, the stress tests for banks and a foreclosure cram down provision for bankruptcy court. (Bachmann supports a change in mark to market.)
Proposals like that essentially add insult to injury, and have become part of the problem, say critics in economic, market and political circles.
Another part of the negative dynamic is that Wall Street now has to contend with its traditional worst enemy—uncertainty—as well as unfriendly initiatives to investors, business and taxpayers.
“Obama is far more concerned about political considerations than economic ones,” says crisis management consultant Eric Dezenhall, who worked in the Reagan White House. “Obama has a tremendous amount of moral authority that translates into business hardship not being something that hurts him politically at this point.”
Business support to the President’s various initiatives, however, has been lukewarm in most cases and cool in some others, even though there is prevailing agreement that the country needs to stand behind the new President.
Yet, that’s becoming difficult for some amid all the market’s declines with Wall Street looking increasingly unimpressed with both the administrations policies and communications.
The stimulus plan and other economic recovery initiatives are now totally suspect in some circles because they appear to be driven more by a social, not economic, agenda and political, not practical, considerations.
“Think of this as redistribution; it is not stimulus,” says economist Robert Brusca of Fact & Opinion Economics. “In some sense it is all about income."
Critics argue the spending initiatives are not only ill-conceived but are potentially inflationary for the economy and also aggravate an already swollen national debt, circumstances that have rarely been good for Wall Street.
“I think people like the President but they don't like his policies," says Tom Schatz, president of Citizens Against Government Waste. (The latest NBC/Wall Street Journal poll shows that to some extent.) “There are tipping points at which time enough people will look at this and say, 'We can't let the government do more and make it worse.'”
If the shortcomings of the stimulus plan weren’t enough, there are those of the programs more near and dear to Wall Street, such as the financial stability plan, which when unveiled a month ago by Treasury Secretary Timothy Geithner lacked key details.
“Conceptual plans without meat, “says Awad, describing Wall Street’s under-whelmed reaction. “You need to have a plan on the banks and the bad assets. You cannot have confidence without it.”
“Geithner needs a plan,” says Sen. Bob Corker (R-Tenn.), echoing a growing impatience about the administration’s delay in advancing its plan for a public private partnership to deal with the pricing of toxic assets.
Though that may go a long way to boosting Wall Street confidence, such a plan is probably still weeks away—along with the results of the high-profile stress tests being applied to the top 20 institutions.
Every little bit may help for Wall Street these days, which, along with the housing sector essentially lead the economy into one of the worst recessions in modern history
“A lot of the horrible economic pain has been concentrated on Wall Street,” says Richard Wolff of the University of Massachusetts. “What you see on Wall Street is perfectly understandable; The frustration as people look at the problems that keep getting worse and what the government—whether it is Bush or Obama—is doing. It doesn’t look adequate. It looks like things are out of control.”
This is a bunch of BS, so much so that I don't even know where to begin. The thing to note in this article is:
1) There is support to change the mark to the market accounting rules.
2) The short sale uptick rule may be restored.
3) Geithner is going to start giving his plan.
The tide is turning.....Mikey
Friday, March 13, 2009
At the 20 day Average(DJIA 7113)
DJIA 7190 Gold 926 +2.00 Oil 47.61 +.58
Every rally we have had since the breakdown in October has been contained by the 20 day average. Well here we are again. Believe me that every trader is watching this level to see if it can hold or it will break up through it. If it does the next resistance is the 50 day at about 7800. My guess is that we have a chance to do it now. Either way the market has to be bought at these levels.
The thing I like the most is that the press and the public are skeptical of this move. That is exactly what we need for this thing to keep going.
Every rally we have had since the breakdown in October has been contained by the 20 day average. Well here we are again. Believe me that every trader is watching this level to see if it can hold or it will break up through it. If it does the next resistance is the 50 day at about 7800. My guess is that we have a chance to do it now. Either way the market has to be bought at these levels.
The thing I like the most is that the press and the public are skeptical of this move. That is exactly what we need for this thing to keep going.
Thursday, March 12, 2009
Mikey is sick today
I really like the action here lets hope this is the one. If it isn't one of them will be.
Wednesday, March 11, 2009
TARP Update...Plan proceeding details soon
Geithner: Toxic Asset Plan Close to Finished
Secretary Timothy Geithner said Tuesday that that the Obama administration is close to finishing a plan to deal with the toxic assets at the heart of the financial crisis.
Geithner told interviewer Charlie Rose late Tuesday that the administration started with “just a deep mess,” but will keep working on the problems until they’re fixed.
Geithner said the plan will be unveiled within the next couple of weeks. It will provide government financing to private investors who are willing to buy the bad assets clogging banks’ balance sheets.
The administration believes that by getting the bad loans and other troublesome assets off banks’ books, it will encourage financial institutions to resume more normal lending to consumers and businesses.
Bought DAL@5 added to ABK@.50 added to IP @5.35
Secretary Timothy Geithner said Tuesday that that the Obama administration is close to finishing a plan to deal with the toxic assets at the heart of the financial crisis.
Geithner told interviewer Charlie Rose late Tuesday that the administration started with “just a deep mess,” but will keep working on the problems until they’re fixed.
Geithner said the plan will be unveiled within the next couple of weeks. It will provide government financing to private investors who are willing to buy the bad assets clogging banks’ balance sheets.
The administration believes that by getting the bad loans and other troublesome assets off banks’ books, it will encourage financial institutions to resume more normal lending to consumers and businesses.
Bought DAL@5 added to ABK@.50 added to IP @5.35
Tuesday, March 10, 2009
Bank rally?Bearish Banker Babe Meridith Whitney says 1st quarter will not hold.
They are bringing out all the bears on this rally as the Guru herself poop poos this rally and says that earnings in the first quarter will be temporary. She and everyone they bring on is throwing cold water on this rally. She says that Citi's capital position is stronger relative to how it was," said Whitney. "But I wouldn’t call it strong, and said that "I'm not optimistic about them." Whitney made her comment after being asked about Citi's Chief Executive Vikram Pandit saying he was confident about the troubled bank's survival prospects. She said Citigroup will have to sell more of its assets to stay in business. She also said that that credit cards are the next credit crunch and said that banks' portfolios continue to shrink and when you shrink the portfolios for the banks, "credit losses eat into earnings and they have to peddle faster to collect on loans and they make less money and lose money."
You know that is all very true Banker babe but the stocks are priced to go out of business. The news today I think tells you that they are going to survive and that means the prices of these banks will be marked up substantially even if earnings do not explode in the near term. That also goes for the market which is in my opinion should be priced at 10500.
Prices of secutities of note:
DJIA 6888 UYG 1.89 XLF 7.16 SSO 16.25 UYM 9.33 DIG 19.97 C 1.43 BAC 4.63 AA 6.07 IP 4.88 DDM 19.46 MBI 3.67 ABK .47 MTG 1.00 GM 1.80 GE 8.82 DZZ 23.46 INTC 13.80 DAL 4.71 FNM 40 FRE 40 XLK 14.02 QQQQ 27.35 Gold 895
You know that is all very true Banker babe but the stocks are priced to go out of business. The news today I think tells you that they are going to survive and that means the prices of these banks will be marked up substantially even if earnings do not explode in the near term. That also goes for the market which is in my opinion should be priced at 10500.
Prices of secutities of note:
DJIA 6888 UYG 1.89 XLF 7.16 SSO 16.25 UYM 9.33 DIG 19.97 C 1.43 BAC 4.63 AA 6.07 IP 4.88 DDM 19.46 MBI 3.67 ABK .47 MTG 1.00 GM 1.80 GE 8.82 DZZ 23.46 INTC 13.80 DAL 4.71 FNM 40 FRE 40 XLK 14.02 QQQQ 27.35 Gold 895
This just in ...The Pros are skeptical...Wink ...Wink
Citigroup Sparks Big Rally, But the Pros Are Skeptical
Wall Street got some good news from Citigroup and responded with a huge rally. But some investment pros are skeptical that the banking giant—or the market itself—had turned the corner.
"I've lost count of how many of these rallies we've seen over the last year and a half and I don't suspect we'll see anything different here," Mike Larson, analyst with Weiss Research, told CNBC.com. "Would I be chasing this? No."
CHASE WHAT? THE MARKET IS AT 6850. I WOULD NOT CALL BUYING IT HERE AS CHASING. At some point they will be chasing it. Is this the rally that goes? I don't know and will never figure that out. This is a process that will continue until one of these these rallies go. This one looks promising but if the traders chase it they will fail it again. How much is enough is is difficult to figure. But this is in my mind a bottom and the rally out of here will be a big one. Traders are definitely concerned about a pullback from any rally and that is what we need to have a sustainable rally. If we trade above about 7600 the shorts will start covering and this thing will feed on itself.
The whole premise of this decline is that the banks are in trouble. The biggest problem bank is supposed to be CITI. Well guess what the damn bank is making money. HELLO!!!!!!!!!!!!!
Citi is selling for 1.44 +.39 and nobody believes....Yet.
It is impossible to know which rally will go and spending your time trying to figure that out is a waste of time and when the rally comes you will miss it. Where we are now is way below the mean and big time oversold. The system is doing things to bring things back to normal. That will happen and I believe that will happen in 1 year. I believe that if I wait for things to return back to normal there is a big return.
Anyway an up day is for today fun and maybe just maybe this is the rally that goes. The beat goes on....Mikey
Wall Street got some good news from Citigroup and responded with a huge rally. But some investment pros are skeptical that the banking giant—or the market itself—had turned the corner.
"I've lost count of how many of these rallies we've seen over the last year and a half and I don't suspect we'll see anything different here," Mike Larson, analyst with Weiss Research, told CNBC.com. "Would I be chasing this? No."
CHASE WHAT? THE MARKET IS AT 6850. I WOULD NOT CALL BUYING IT HERE AS CHASING. At some point they will be chasing it. Is this the rally that goes? I don't know and will never figure that out. This is a process that will continue until one of these these rallies go. This one looks promising but if the traders chase it they will fail it again. How much is enough is is difficult to figure. But this is in my mind a bottom and the rally out of here will be a big one. Traders are definitely concerned about a pullback from any rally and that is what we need to have a sustainable rally. If we trade above about 7600 the shorts will start covering and this thing will feed on itself.
The whole premise of this decline is that the banks are in trouble. The biggest problem bank is supposed to be CITI. Well guess what the damn bank is making money. HELLO!!!!!!!!!!!!!
Citi is selling for 1.44 +.39 and nobody believes....Yet.
It is impossible to know which rally will go and spending your time trying to figure that out is a waste of time and when the rally comes you will miss it. Where we are now is way below the mean and big time oversold. The system is doing things to bring things back to normal. That will happen and I believe that will happen in 1 year. I believe that if I wait for things to return back to normal there is a big return.
Anyway an up day is for today fun and maybe just maybe this is the rally that goes. The beat goes on....Mikey
Citi says its making money for the past 2 months....Now you tell us?
DJIA 6800 +253 Gold 902.40 -15.60 Oil 47.57 +.50 Dollar Index 88.23 -.77
Citigroup Stock Rebounds On Pandit's Upbeat Report
Citigroup was profitable in the first two months of 2009 and is confident about its capital strength, Chief Executive Vikram Pandit said, easing concerns about the troubled bank's survival prospects.
"I am most encouraged with the strength of our business so far in 2009," Pandit wrote in a memo to staff on Monday. "We are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007."
Pandit's assessment suggests that Citigroup may surprise analysts, who on average expect the third-largest U.S. bank by assets to lose money at least through September, following $37.5 billion of losses over the past 15 months.
Citigroup earned $2.2 billion in the July-September period in 2007.
"It's better than being in the red," said Peter Cardillo, chief market economist at Avalon Partners in New York.
Citigroup shares [C 1.33 0.28 (+26.67%) ] rose sharply after falling below $1 for the first time last week.
The cost of insuring its debt against default fell from Monday's record high, indicating investors see less risk.
Other bank stocks also rose, including a gain of 18.7 percent for Bank of America [BAC 4.64 0.89 (+23.73%) ], the largest U.S. bank by assets. The KBW Bank Index rose 7.2 percent.
Since October, New York-based Citigroup has received two federal bailouts, $45 billion of capital from the Treasury Department's Troubled Asset Relief Program, and a government agreement to cap losses on $300.8 billion of troubled assets.
Last month's bailout would make the government Citigroup's largest shareholder, with a potential 36 percent stake.
The Wall Street Journal, citing people familiar with the matter, on Tuesday said U.S. officials were examining fresh steps for Citigroup if its problems mounted. But it said talks were preliminary and no imminent rescue was planned.
Citigroup also faces waning patience in Washington for expanded taxpayer support of the banking system.
In the memo, Pandit said he was disappointed with "broad-based misperceptions" about the bank, and that its credit spreads reflect neither its condition nor the government's interest in supporting the financial system.
Pandit said revenue in January and February was $19 billion, excluding various writedowns, versus a quarterly average of $21 billion as adjusted in 2008.
He also said deposit flows were "relatively stable." Expenses of $8.1 billion over the two months were below the bank's target.
Moreover, Pandit said the government's assistance would make Citigroup "the strongest capitalized large U.S. bank."
Some key Republicans in Congress have said the United States should consider letting some large troubled banks fail rather that commit more money to prop them up. Among these are Richard Shelby, the top Republican on the Senate banking committee, who Sunday called Citigroup a "problem child."
Pandit said the bank was confident about its capital strength after undertaking stress tests, using assumptions that were more pessimistic than those of the Federal Reserve.
David Williams, head of European bank research at Fox-Pitt Kelton, said Citigroup should disclose more about its tests to help regain credibility with investors.
"A one dollar stock price tells you the market has stopped listening," he said.
Williams said investors would "significantly reward" Citigroup if first-quarter results, expected in mid-April, reflected Pandit's upbeat tone.
Gee I guess the government made a pretty good buy at a buck fifty after all. Can you say what a racket?
The beat goes on...... Mikey
Citigroup Stock Rebounds On Pandit's Upbeat Report
Citigroup was profitable in the first two months of 2009 and is confident about its capital strength, Chief Executive Vikram Pandit said, easing concerns about the troubled bank's survival prospects.
"I am most encouraged with the strength of our business so far in 2009," Pandit wrote in a memo to staff on Monday. "We are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007."
Pandit's assessment suggests that Citigroup may surprise analysts, who on average expect the third-largest U.S. bank by assets to lose money at least through September, following $37.5 billion of losses over the past 15 months.
Citigroup earned $2.2 billion in the July-September period in 2007.
"It's better than being in the red," said Peter Cardillo, chief market economist at Avalon Partners in New York.
Citigroup shares [C 1.33 0.28 (+26.67%) ] rose sharply after falling below $1 for the first time last week.
The cost of insuring its debt against default fell from Monday's record high, indicating investors see less risk.
Other bank stocks also rose, including a gain of 18.7 percent for Bank of America [BAC 4.64 0.89 (+23.73%) ], the largest U.S. bank by assets. The KBW Bank Index rose 7.2 percent.
Since October, New York-based Citigroup has received two federal bailouts, $45 billion of capital from the Treasury Department's Troubled Asset Relief Program, and a government agreement to cap losses on $300.8 billion of troubled assets.
Last month's bailout would make the government Citigroup's largest shareholder, with a potential 36 percent stake.
The Wall Street Journal, citing people familiar with the matter, on Tuesday said U.S. officials were examining fresh steps for Citigroup if its problems mounted. But it said talks were preliminary and no imminent rescue was planned.
Citigroup also faces waning patience in Washington for expanded taxpayer support of the banking system.
In the memo, Pandit said he was disappointed with "broad-based misperceptions" about the bank, and that its credit spreads reflect neither its condition nor the government's interest in supporting the financial system.
Pandit said revenue in January and February was $19 billion, excluding various writedowns, versus a quarterly average of $21 billion as adjusted in 2008.
He also said deposit flows were "relatively stable." Expenses of $8.1 billion over the two months were below the bank's target.
Moreover, Pandit said the government's assistance would make Citigroup "the strongest capitalized large U.S. bank."
Some key Republicans in Congress have said the United States should consider letting some large troubled banks fail rather that commit more money to prop them up. Among these are Richard Shelby, the top Republican on the Senate banking committee, who Sunday called Citigroup a "problem child."
Pandit said the bank was confident about its capital strength after undertaking stress tests, using assumptions that were more pessimistic than those of the Federal Reserve.
David Williams, head of European bank research at Fox-Pitt Kelton, said Citigroup should disclose more about its tests to help regain credibility with investors.
"A one dollar stock price tells you the market has stopped listening," he said.
Williams said investors would "significantly reward" Citigroup if first-quarter results, expected in mid-April, reflected Pandit's upbeat tone.
Gee I guess the government made a pretty good buy at a buck fifty after all. Can you say what a racket?
The beat goes on...... Mikey
Monday, March 9, 2009
Dr. Doom ...Lets keep this one
DJIA 6547 Gold 919.20 -22.80 Oil 47.21 +1.69 Dollar Index 89.19 +.64
US Recession Could Last Up to 36 Months: Roubini
The man who predicted the current financial crisis said the US recession could drag on for years without drastic action.
Among his solutions: fix the housing market by breaking "every mortgage contract."
"We are in the 15th month of a recession," said Nouriel Roubini, a professor at New York University's Stern School of Business, told CNBC in a live interview. "Growth is going to be close to zero and unemployment rate well above 10 percent into next year."
Echoing a speech he made earlier in the day, Roubini said he sees "no hope for the recession ending in 2009 and will more than likely last into 2010."
Roubini, who is also known as "Dr. Doom," told CNBC that the risk of a total meltdown has been reversed for now but that the economy is going through "a death by a thousand cuts." He also said that "most of the U.S. financial institutions are entirely insolvent."
"The market friendly view for the banks is nationalization," said Roubini. "Temporarily take over the banks, clean them up and get them working again."
As for the claim that the Treasury Department can't legally take over the banks, Roubini said that most of the banks are already owned by the government and that the government could "put them in receivership" if it had to.
Earlier in the day, Roubini spoke to the CBOE Risk Management Conference and said he believes total losses could peak at $3.6 trillion in the financial system, with half of that being borne by banks and bank dealers and the other half borne by hedge funds and pension funds, among others.
He said that while U.S. GDP next year could be zero, global GDP could dip into negative territory.
"We could end up ... with a 36-month recession, that could be "L-shaped stagnation, or near depression," Roubini said. He puts the chance of a severe U-shaped recession at 66.7 percent, and a more severe L-shaped recession at 33.3 percent.
Roubini listed a litany of negative omens: Capex spending down 20-30 percent for investment grade companies, self-perpetuating deflation, all making a bad situation worse.
"If you expect prices to be lower tomorrow, why would you buy today?", asked Roubini. He says it's easier to break out of am inflationary cycle than a deflationary one, and while a year of deflation "is okay," longer would be "a disaster."
So what can the government do? The easy part is lowering interest rates and buying toxic assets. The hard part, he says, will be tackling housing. Roubini says that the housing market, like a company restructuring in bankruptcy, needs to have "face value reduction of the debt." Rather than go through mortgages one by one, he says reduction has to be "across the board...break every mortgage contract."
Roubini also took issue with the $800 billion stimulus package, saying it's not enough. For one thing, there's only $200 billion upfront, and half of that is a tax cut, which Roubini calls "a waste of money" that is not going to make a difference.
Finally, while he says there will be "a light at the end of the tunnel", it'll probably get worse before it gets better. Those who believe in a second half recovery this year "are delusional" he says.
In fact, based on Roubini's calculations, we could conceivably see the S&P 500 at 500, the Dow at 5000.
HE SAYS DJIA AT 5000 AND THE REST OF THE YEAR IS BAD. WE'LL KEEP THIS ONE AND SEE WHAT HAPPENS.
Hey he is an expert and he has been right so he must be right, right? Well so was Pickens when oil was going up and we all know what happened there. I find it very timely we see him now with the DJIA at 6547.
By the way most really good lows come by at death by a thousand cuts. Usually it is more like 100 cuts when they say this. It is painful but it is in the grand scheme of things a good thing. What is also interesting is that he says that L shaped recession is 33% and the U shape is at 66%. The guessing game for everyone is when. Those who focus on the when never win. That is the game they are getting us to play now. The message from Buffet and others is that it is going to be a long time. You know, what is the hurry. I like that talk. That does not make me money now but this is what I hear at all bottoms and tops.
Last week I saw a post on CNBC saying that the experts trying to call a bottom were wrong and you can't do it don't try. I agree but the message is telling you not to invest. I disagree with that. I think we are within 3 months of a big rally how much lower we go I don't think too much but the death by a thousand cuts is in progress and that is a very good sign to me. I remain extremely bullish now and will be adding to my SSO soon.
The beat goes on Mikey
US Recession Could Last Up to 36 Months: Roubini
The man who predicted the current financial crisis said the US recession could drag on for years without drastic action.
Among his solutions: fix the housing market by breaking "every mortgage contract."
"We are in the 15th month of a recession," said Nouriel Roubini, a professor at New York University's Stern School of Business, told CNBC in a live interview. "Growth is going to be close to zero and unemployment rate well above 10 percent into next year."
Echoing a speech he made earlier in the day, Roubini said he sees "no hope for the recession ending in 2009 and will more than likely last into 2010."
Roubini, who is also known as "Dr. Doom," told CNBC that the risk of a total meltdown has been reversed for now but that the economy is going through "a death by a thousand cuts." He also said that "most of the U.S. financial institutions are entirely insolvent."
"The market friendly view for the banks is nationalization," said Roubini. "Temporarily take over the banks, clean them up and get them working again."
As for the claim that the Treasury Department can't legally take over the banks, Roubini said that most of the banks are already owned by the government and that the government could "put them in receivership" if it had to.
Earlier in the day, Roubini spoke to the CBOE Risk Management Conference and said he believes total losses could peak at $3.6 trillion in the financial system, with half of that being borne by banks and bank dealers and the other half borne by hedge funds and pension funds, among others.
He said that while U.S. GDP next year could be zero, global GDP could dip into negative territory.
"We could end up ... with a 36-month recession, that could be "L-shaped stagnation, or near depression," Roubini said. He puts the chance of a severe U-shaped recession at 66.7 percent, and a more severe L-shaped recession at 33.3 percent.
Roubini listed a litany of negative omens: Capex spending down 20-30 percent for investment grade companies, self-perpetuating deflation, all making a bad situation worse.
"If you expect prices to be lower tomorrow, why would you buy today?", asked Roubini. He says it's easier to break out of am inflationary cycle than a deflationary one, and while a year of deflation "is okay," longer would be "a disaster."
So what can the government do? The easy part is lowering interest rates and buying toxic assets. The hard part, he says, will be tackling housing. Roubini says that the housing market, like a company restructuring in bankruptcy, needs to have "face value reduction of the debt." Rather than go through mortgages one by one, he says reduction has to be "across the board...break every mortgage contract."
Roubini also took issue with the $800 billion stimulus package, saying it's not enough. For one thing, there's only $200 billion upfront, and half of that is a tax cut, which Roubini calls "a waste of money" that is not going to make a difference.
Finally, while he says there will be "a light at the end of the tunnel", it'll probably get worse before it gets better. Those who believe in a second half recovery this year "are delusional" he says.
In fact, based on Roubini's calculations, we could conceivably see the S&P 500 at 500, the Dow at 5000.
HE SAYS DJIA AT 5000 AND THE REST OF THE YEAR IS BAD. WE'LL KEEP THIS ONE AND SEE WHAT HAPPENS.
Hey he is an expert and he has been right so he must be right, right? Well so was Pickens when oil was going up and we all know what happened there. I find it very timely we see him now with the DJIA at 6547.
By the way most really good lows come by at death by a thousand cuts. Usually it is more like 100 cuts when they say this. It is painful but it is in the grand scheme of things a good thing. What is also interesting is that he says that L shaped recession is 33% and the U shape is at 66%. The guessing game for everyone is when. Those who focus on the when never win. That is the game they are getting us to play now. The message from Buffet and others is that it is going to be a long time. You know, what is the hurry. I like that talk. That does not make me money now but this is what I hear at all bottoms and tops.
Last week I saw a post on CNBC saying that the experts trying to call a bottom were wrong and you can't do it don't try. I agree but the message is telling you not to invest. I disagree with that. I think we are within 3 months of a big rally how much lower we go I don't think too much but the death by a thousand cuts is in progress and that is a very good sign to me. I remain extremely bullish now and will be adding to my SSO soon.
The beat goes on Mikey
Friday, March 6, 2009
Mikey turns Bearish...............Just Kidding
DJIA 6494 -100 Gold 940.80 Oil 45.61 +2.00 Dollar Index 88.89 -.31
Just another day at the Blue Moon Cafe. More pain being inflected on the good guys.
The press continues to pour on the bad news. It see it on every newscast and every paper. I tell ya the rally out of here is going to be huge. Time wise I think we will have a very different climate in 6 to 9 months.
Better days are coming. The beat goes on ....MIkey
Just another day at the Blue Moon Cafe. More pain being inflected on the good guys.
The press continues to pour on the bad news. It see it on every newscast and every paper. I tell ya the rally out of here is going to be huge. Time wise I think we will have a very different climate in 6 to 9 months.
Better days are coming. The beat goes on ....MIkey
Thursday, March 5, 2009
The Big Give up and the V bottom
DJIA 6599 -276 Gold 930 +24 Oil 43.65 -1.73 Dollar Index 89.24 +.54
This is it gang everyone is giving up now. I had thought that there would be bounces along the way but this looks like a low that will hold for a long time. I believe we are on the verge of a HUGE HUGE RALLY. I have bought more UYG today at 1.50 The beat goes on ...Mikey
This is it gang everyone is giving up now. I had thought that there would be bounces along the way but this looks like a low that will hold for a long time. I believe we are on the verge of a HUGE HUGE RALLY. I have bought more UYG today at 1.50 The beat goes on ...Mikey
Wednesday, March 4, 2009
Depression??? Mikey says who cares!!
Is This a Depression? For Markets, It May Not Matter
DJIA 6946 +219 Gold 903.50 -10.10 Oil 45.37+3.72 Dollar Index 88.65 -.3650
Call it whatever you like—recession or depression—the current economic state has investors concerned that a worst-case scenario is in the offing.
Many think the word "depression" is, in fact, incidental to the real state of affairs. Things are bad, really bad, and everybody knows it.
"The closest thing we can find to the market collapse that we are experiencing now would really be '73-'74," says Peter J. Tanous, president and director of Lynx Investment Advisory in Washington, D.C. "The market went down over the two-year period 45 percent. I was already in the business 10 years in '73, and I can tell you this is far, far worse."
The dreaded "D" word has crept its way increasingly into public dialogue as both gross domestic product and the stock market have cratered since the beginning of 2009, beyond levels previously imagined by a large swath of analysts.
But unlike recession, there's really no technical definition for depression.
Just the use of the word, though, harkens back to the Great Depression that began with the stock market crash of 1929, and is sending shivers through the investing community.
"It becomes worrisome because so much of investing is based on confidence," says Quincy Krosby, chief investment strategist at The Hartford. "If you think that this tug of war going on now, that we are not going to pull out this, that any relief is temporary and that we will follow the pattern of depression, it's going to keep investors out of the market."
Forget, too, that the economic conditions are vastly different than during the Great Depression, which featured 25 percent unemployment and a string of double-digit drops in GDP. The worst the US has seen so far is 7.6 percent unemployment and the past quarter's GDP drop of 6.1 percent.
But investors have themselves worked into such a lather over the current downturn that perception is all that matters.
"I would classify this as a severe recession, but it's all semantics," says Tom Higgins, chief economist at Payden & Rygel in Los Angeles. "If we're talking about the events that we saw prior to 1929 or if we talk about 1907, we're just not there by orders of magnitude. This is a recession, it's a severe recession, but it's not a depression."
Higgins projects probably one more quarter of declines similar to the last quarter, then thinks GDP could turn slightly positive in the fourth quarter of 2009.
Not everyone agrees.
Some think the economy is headed for 10 percent productivity losses, though no one expects a repeat of Depression-era unemployment.
Also on CNBC.com
"I think we rapidly and subtly have moved into a depression," Eric Hovde, CEO at Hovde Capital Advisers, said Tuesday on CNBC. "Given that you don't have any technical definition, it's hard to vehemently say one way or another, but I don't think there's any question that we have had over a 10 percent collapse in GDP." See Hovde's full comments in video.
As the debate rages, investment pros are coordinating their strategies.
Interestingly, Hovde thinks that even though the economy is at depression levels, the next move for stocks will be higher.
"We're slightly short," he said in describing his investment strategy. "I think we probably will see the next move be a move to the upside, and it could be a pretty good move to the upside given how fast things have collapsed."
Others are bracing for more damage ahead. Krosby is advocating stocks with low price-to-earnings ratios that can withstand the downturn, recession or not, while Tanous has continued to back stocks with high dividend yields, also with an eye not only to yield but also quality.
Like most of their peers, they're both concerned with investor perception of the market.
When President Obama on Tuesday advocated buying stocks, Krosby said traders snickered. Retail investors, meanwhile, look at the Dow Jones Industrial Average—trader focus more on the S&P 500—and see the continuing unrest over a lack of direction from the White House, she said.
"Psychologically it does feed on itself," Krosby says. "The Dow is Main Street's measure of their portfolios, of the mood of the country. It's almost a referendum on what the president's abilities are. You will hear people equate the two."
Art Cashin, director of floor operations, said he has felt the despair on the trading floor of the New York Stock Exchange, particularly after the Dow's 299-point fall Monday.
"I will tell you that the psychology of Monday's selloff was severe," Cashin told CNBC. "That gets up to the high despondency level and that usually tells me that we're getting ready. When they've given up all hope that's when hope is usually around the corner, and that was pretty close to giving up all hope."
"When you're in that oversold state you should have a bounce, and when you don't that's a very negative sign," Krosby adds. "It's telling you there is something far deeper going on."
So if it is a depression, bad psychology can only be overcome with good news, and that's been in scarce supply.
"We will at some point get a rally. All we need is one single bit of positive news that nobody expected," Tanous says. "We should not delude ourselves into thinking we are out of the woods, because we're not. We're still staring into the big black hole."
Mikey says BUY!!!! The stock market is priced for a depression already. If we don't have a depression and the banks are not nationalized the UYG goes to 15 and the stock market goes to 11000. If everyone knows something it is alredy priced into the market. These prices reflect the worst case senario I'll take my chances and say the world does not come to an end. The beat goes on....Mikey
DJIA 6946 +219 Gold 903.50 -10.10 Oil 45.37+3.72 Dollar Index 88.65 -.3650
Call it whatever you like—recession or depression—the current economic state has investors concerned that a worst-case scenario is in the offing.
Many think the word "depression" is, in fact, incidental to the real state of affairs. Things are bad, really bad, and everybody knows it.
"The closest thing we can find to the market collapse that we are experiencing now would really be '73-'74," says Peter J. Tanous, president and director of Lynx Investment Advisory in Washington, D.C. "The market went down over the two-year period 45 percent. I was already in the business 10 years in '73, and I can tell you this is far, far worse."
The dreaded "D" word has crept its way increasingly into public dialogue as both gross domestic product and the stock market have cratered since the beginning of 2009, beyond levels previously imagined by a large swath of analysts.
But unlike recession, there's really no technical definition for depression.
Just the use of the word, though, harkens back to the Great Depression that began with the stock market crash of 1929, and is sending shivers through the investing community.
"It becomes worrisome because so much of investing is based on confidence," says Quincy Krosby, chief investment strategist at The Hartford. "If you think that this tug of war going on now, that we are not going to pull out this, that any relief is temporary and that we will follow the pattern of depression, it's going to keep investors out of the market."
Forget, too, that the economic conditions are vastly different than during the Great Depression, which featured 25 percent unemployment and a string of double-digit drops in GDP. The worst the US has seen so far is 7.6 percent unemployment and the past quarter's GDP drop of 6.1 percent.
But investors have themselves worked into such a lather over the current downturn that perception is all that matters.
"I would classify this as a severe recession, but it's all semantics," says Tom Higgins, chief economist at Payden & Rygel in Los Angeles. "If we're talking about the events that we saw prior to 1929 or if we talk about 1907, we're just not there by orders of magnitude. This is a recession, it's a severe recession, but it's not a depression."
Higgins projects probably one more quarter of declines similar to the last quarter, then thinks GDP could turn slightly positive in the fourth quarter of 2009.
Not everyone agrees.
Some think the economy is headed for 10 percent productivity losses, though no one expects a repeat of Depression-era unemployment.
Also on CNBC.com
"I think we rapidly and subtly have moved into a depression," Eric Hovde, CEO at Hovde Capital Advisers, said Tuesday on CNBC. "Given that you don't have any technical definition, it's hard to vehemently say one way or another, but I don't think there's any question that we have had over a 10 percent collapse in GDP." See Hovde's full comments in video.
As the debate rages, investment pros are coordinating their strategies.
Interestingly, Hovde thinks that even though the economy is at depression levels, the next move for stocks will be higher.
"We're slightly short," he said in describing his investment strategy. "I think we probably will see the next move be a move to the upside, and it could be a pretty good move to the upside given how fast things have collapsed."
Others are bracing for more damage ahead. Krosby is advocating stocks with low price-to-earnings ratios that can withstand the downturn, recession or not, while Tanous has continued to back stocks with high dividend yields, also with an eye not only to yield but also quality.
Like most of their peers, they're both concerned with investor perception of the market.
When President Obama on Tuesday advocated buying stocks, Krosby said traders snickered. Retail investors, meanwhile, look at the Dow Jones Industrial Average—trader focus more on the S&P 500—and see the continuing unrest over a lack of direction from the White House, she said.
"Psychologically it does feed on itself," Krosby says. "The Dow is Main Street's measure of their portfolios, of the mood of the country. It's almost a referendum on what the president's abilities are. You will hear people equate the two."
Art Cashin, director of floor operations, said he has felt the despair on the trading floor of the New York Stock Exchange, particularly after the Dow's 299-point fall Monday.
"I will tell you that the psychology of Monday's selloff was severe," Cashin told CNBC. "That gets up to the high despondency level and that usually tells me that we're getting ready. When they've given up all hope that's when hope is usually around the corner, and that was pretty close to giving up all hope."
"When you're in that oversold state you should have a bounce, and when you don't that's a very negative sign," Krosby adds. "It's telling you there is something far deeper going on."
So if it is a depression, bad psychology can only be overcome with good news, and that's been in scarce supply.
"We will at some point get a rally. All we need is one single bit of positive news that nobody expected," Tanous says. "We should not delude ourselves into thinking we are out of the woods, because we're not. We're still staring into the big black hole."
Mikey says BUY!!!! The stock market is priced for a depression already. If we don't have a depression and the banks are not nationalized the UYG goes to 15 and the stock market goes to 11000. If everyone knows something it is alredy priced into the market. These prices reflect the worst case senario I'll take my chances and say the world does not come to an end. The beat goes on....Mikey
Tuesday, March 3, 2009
Gloom and Doom
DJIA 6786 +23.34 Gold 915.50 -24.50 Oil 40.87 +.72 Dollar Index 89.21 +.14
We have taken out the lows at 7400 and are 600 points below the low. The stimulus package and the new TARP money is just about to enter the economy. The medicine has not yet been administered but all and I mean all of the experts say it won't work. There are signs that the banks will work with homeowners on their credit problems but for now the mood is hopeless.
I see NBC morning news on the floor of the stock exchange telling the masses that we are going to have a depression. That is as good as it it gets.
If a rally were to develop from here no one would believe it or chase it.
That is exactly what we need now and I look forward to that rally. Gold have rolled over from its double top at 1000 and I believe it will be a source of funds just as every other asset has been. I still look for Gold to hit 400 and the market to have an huge rally from these levels.
The beat goes on....... Mikey
We have taken out the lows at 7400 and are 600 points below the low. The stimulus package and the new TARP money is just about to enter the economy. The medicine has not yet been administered but all and I mean all of the experts say it won't work. There are signs that the banks will work with homeowners on their credit problems but for now the mood is hopeless.
I see NBC morning news on the floor of the stock exchange telling the masses that we are going to have a depression. That is as good as it it gets.
If a rally were to develop from here no one would believe it or chase it.
That is exactly what we need now and I look forward to that rally. Gold have rolled over from its double top at 1000 and I believe it will be a source of funds just as every other asset has been. I still look for Gold to hit 400 and the market to have an huge rally from these levels.
The beat goes on....... Mikey
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