Today the market played a cruel joke. Despite the surging unemployment rate of 8.1 % the market decided to put in early gains, but that would be the set up of the joke. Before even being open half an hour, the market came tumbling down. The European markets were still open at the time and reaeacted by giving back most of their late gains.
Asia:
Nikkei => 7,173.10, -260.39, -3.50%
Hang Seng => 11,921.52, -289.72, -2.37%
Straits Times => 1,513.12, -5.52, -0.36%
Europe:
FTSE => 3,530.73, +0.87, +0.02%
DAX => 3,666.41, -29.08, -0.79%
CAC => 2,534.45, -35.18, -1.37%
U.S.:
Dow => 6,626.94, +32.50, +0.49%
Nasdaq => 1,293.85, -5.74, -0.44%
S&P => 683.38, +0.83, +0.12%
As for me:
AMD => 2.14, -0.02
AMD DG => 0.09, -0.20
BKC PX => 2.00, -0.30
MIPS => 2.13, +0.21
NG => 2.70, -0.12
In other news:
Senator Charles Grassley (R) Iowa, among others in Washington, says that foreign workers should be fired first. My opinion agrees with that. By doing that it reduces the number of unemployed workers in the U.S. who will be reducing their consumption of goods here. Any job that can and is being performed on U.S. soil in this recession should be done by a U.S. citizen or resident. Once the economy here has stabilized, then and only then should H1-B visas be processed again. There is no valid reason to continue the importation of workers when the employee pool here is so rich with available workers who are already citizen's or permanent resident's.
Carl Guardino, makes the point that we were all immigrants at one time or another. That is only true if you weren't born here. And even then, the statement wasn't to kick them out, just to lay them off first. If they go back to there native countries because they can not afford to stay while looking for a new job, then so be it. Look at the numbers. How many of them have families here in the U.S. that depend on them? How much of the pay that they are earning is staying in the U.S.? My guess would be that it is not much in comparison. Effectively it is an economic bleed that has been tolerated for the purpose participation in the world economy. This is not the time to be expanding foreign business relation. Once the markets have stabilized, then the importation of workers can restart.
Electrolux CEO Hans Straberg told CNBC that failing businesses should be allowed to fail and not be propped up with any more state aid. If they can not survive the winter then they should be allowed to die. Now that is quite a barbaric stance to take in the business world, but truly a point that I can agree with. For instance, in the financial sector Bank of America, Citigroup, and many more others have become too big to survive, not the other way around. And adding failing banks to them was not the best thing to do.
It would have been so much better if the FDIC had just seized the failing banks that were swallowed up by BofA, Citigroup, and Wells Fargo, and broke them up into regional holdings. Those regional holdings should then have been sold off to smaller regional banks that had enough liquid assets to purchase them. And then whatever was left should have been auctioned off for what could be salvaged and distributed as funding to the regional economies.
Again, Jon Najarian, co-founder of OpionMonster.com, appeared on CNBC promoting the suspension of mark-to-market. Again, how do you figure that? He says that by doing that the financial institutions will double in a matter of days. That is ludicrous because they still haven't proved that they have changed their business practices. And the big money investors are not going to invest in a pig with lipstick. Bad business practices is what got us here, not mark-to-market.
His appearance on CNBC increases my opinion that Jon Najarian has an ulterior motive. Maybe it has something to do with the fact that the exponential gains in options are paltry in the financial sector. There is not much left to play puts against, and maybe he is trying to do something to pump the market up so that he can profit on the rise of the supposedly "doubling" in price and profit on the dump that will most likely occur right after the bears take their money right back out. Electrolux CEO Hans Straberg understands this economy better. Let the bad businesses fail and divide what is left of their assets and sell to the smaller businesses that can afford to buy them. This includes the financial sector.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Friday, March 6, 2009
Who Watches the Watchmen?
A new movie comes out this weekend call Watchmen. It is based on a graphic novel distributed by DC comics. Now, as far as I can tell, DC doesn't trade on the open market, but the distribution and production company that made Watchmen in to a movie is. Warner Bros. aka Time Warner Inc. (TWX)
At midnight on Thursday, March 5, 2009, Watchmen was released. And as of 2pm on Friday, March 6, 2009, TWX has had a bull of a day. Not much, but in this market a bull move is a bull move.
TWX opened and put in a low of 7.12 this morning and rallied up to a high of 7.47 with a pull back to 7.36. Now, that is only with a one night showing. That does cause some suspicion. Lets look at some more technicals.
The candlestick created is not finished being made as of 2PM, so can't use that. The RSI for this stock truly is not pretty in the mid-30s. The volume is not extraordinary but not depressing. The stochastics are way oversold and have been for some time, but they crossed up with today's move. The MACD is also way oversold, however, it has been slowly trending upward and has crossed upward with today's bull move in price.
So we have a very week stock with some week indicators that just barely suggest a change in trend. Not enough to sell me on making an investment either way. I definitely want to keep watching it though. I am thinking that if the box office numbers put it in the top 3 and by very tight numbers, TWX might be something to invest in, at least for a short time.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
At midnight on Thursday, March 5, 2009, Watchmen was released. And as of 2pm on Friday, March 6, 2009, TWX has had a bull of a day. Not much, but in this market a bull move is a bull move.
TWX opened and put in a low of 7.12 this morning and rallied up to a high of 7.47 with a pull back to 7.36. Now, that is only with a one night showing. That does cause some suspicion. Lets look at some more technicals.
The candlestick created is not finished being made as of 2PM, so can't use that. The RSI for this stock truly is not pretty in the mid-30s. The volume is not extraordinary but not depressing. The stochastics are way oversold and have been for some time, but they crossed up with today's move. The MACD is also way oversold, however, it has been slowly trending upward and has crossed upward with today's bull move in price.
So we have a very week stock with some week indicators that just barely suggest a change in trend. Not enough to sell me on making an investment either way. I definitely want to keep watching it though. I am thinking that if the box office numbers put it in the top 3 and by very tight numbers, TWX might be something to invest in, at least for a short time.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Thursday, March 5, 2009
False Positive Confirmed
Looks like all the bulls should have stayed on the side lines yesterday. Today, just about every index that I have been reporting on has taken a dump. The only exception to the malaise was Japan's Nikkei. It apparently didn't get the memo about China and continued to rally on news that the U.S. had a positive day.
Asia:
Nikkei => 7,433.49, +142.53, +1.95%
Hang Seng => 12,211.24, -119.91, -0.97%
Straits Times => 1,518.64, -25.70, -1.66%
Europe:
FTSE => 3,529.86, -116.01, -3.18%
DAX => 3,695.49, -195.45, -5.02%
CAC => 2,569.63, -106.05,-3.96%
U.S.:
Dow => 6,595.32, -280.52, -4.08%
Nasdaq => 1,299.59, -54.15, -4.00%
S&P => 682.56, -30.31, -4.25%
As for me:
AMD => 2.15, -0.15
AMD DG => 0.10, -0.02
BKC PX => 2.30, +0.45 (Bought to Open @ Limit 1.85, Stop 1.30)
F => 1.78, -0.09 (Sold @ Stop $1.78)
HRP JZ => 0.90, -0.25(Sold to Close @ Market, Contingent on HRP < mips =""> 2.00, -0.05
NG => 2.79, +0.21
Further reports from the Associated Press fills in the why of this market tumble.
Boeing Reports Lower Orders
General Dynamics Cuts Production and Jobs
GM Survivability Questionable
Retailers Report Declines in Sales, Except Wal-Mart
12% Behind on Mortgage or in Foreclosure
If it wasn't for this one ray of sunshine, the market may have tumbled even further.
Jobless Claims Unexpectedly Drop
Apparently analysts expected the claims to drop only 20K and not the 31K from the 670K of the previous week. But don't celebrate just yet, the banks still haven't solved their issues. I still see the probability of further losses before a general market recovery can be claimed.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Asia:
Nikkei => 7,433.49, +142.53, +1.95%
Hang Seng => 12,211.24, -119.91, -0.97%
Straits Times => 1,518.64, -25.70, -1.66%
Europe:
FTSE => 3,529.86, -116.01, -3.18%
DAX => 3,695.49, -195.45, -5.02%
CAC => 2,569.63, -106.05,-3.96%
U.S.:
Dow => 6,595.32, -280.52, -4.08%
Nasdaq => 1,299.59, -54.15, -4.00%
S&P => 682.56, -30.31, -4.25%
As for me:
AMD => 2.15, -0.15
AMD DG => 0.10, -0.02
BKC PX => 2.30, +0.45 (Bought to Open @ Limit 1.85, Stop 1.30)
F => 1.78, -0.09 (Sold @ Stop $1.78)
HRP JZ => 0.90, -0.25(Sold to Close @ Market, Contingent on HRP < mips =""> 2.00, -0.05
NG => 2.79, +0.21
Further reports from the Associated Press fills in the why of this market tumble.
Boeing Reports Lower Orders
General Dynamics Cuts Production and Jobs
GM Survivability Questionable
Retailers Report Declines in Sales, Except Wal-Mart
12% Behind on Mortgage or in Foreclosure
If it wasn't for this one ray of sunshine, the market may have tumbled even further.
Jobless Claims Unexpectedly Drop
Apparently analysts expected the claims to drop only 20K and not the 31K from the 670K of the previous week. But don't celebrate just yet, the banks still haven't solved their issues. I still see the probability of further losses before a general market recovery can be claimed.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Pick(s) for the Day
Today I have a pick to discuss. It is the home of the flame broiled Whopper, Burger King. (BKC) I am going to describe how I analyzed the chart and the indicators that I used in picking this stock.
First we will start with the candlestick indicator. Yesterday (03/04/09) it created a bearish candlestick indicator, known as a bearish harami. Simply put, the stock price closed lower than it's open, and this movement was within price range movement of the previous days. The day before the stock price closed higher than it's open. This indicator is a major that informs me that a pivot in the price direction is probable. It requires additional flags to confirm.
So now I analyze my other indicators. Lets look at the RSI (Relative Strenght Indicator). The RSI is at 58, not a good sign. This tells me that the stock has strength to continue to move up. This could be a disappointment but I don't dismiss it right away. So lets continue.
Lets look at the stock price relationship to the Bollinger Bands. Currently is at a the upper Bollinger Band. Now, I wouldn't put a lot of opinion on the Bollinger Bands, because they are a moving resistance or range indicator. They really only suggest that the stock should be watched for reversal indicators. So to me it is confirmed by the candlestick indicator and not the other way around.
I have two more indicators that I like to look at. They are Stochastics and MACD. Both of these agree with the chart that the stock is in an up trend. But that is not what I am concerned about at this point.
The Stochastics are presently near the 80 mark. The 80 mark is a standard indicator that the stock is overbought and that some selling is bound to take place. In addition the Stochastics have a signal line that follows its movement. If the Stochastic starts to turn toward the signal line in an attempt to cross it, then there is further probability that the stock is reversing. This just happens to be true on this day.
The MACD (Moving Average Convergence Divergence) is similar to the Stochastics in that there is a primary line and a signal line. In this case I also have the histogram turned on that tells me what the difference in the two lines are. The histogram told me that the difference between the two lines was shrinking in comparison to the day before yesterday. So this is further indication that a reversal in movement is likely.
So because the price is at the upper Bollinger Band, the stock created a bearish harami candlestick pattern, the stochastics and MACD show signs that the move is at an end, I bought a put option against the King.
BKC PX => OTO 1.85, Stop @ 1.30 (Risk of 30%)
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
First we will start with the candlestick indicator. Yesterday (03/04/09) it created a bearish candlestick indicator, known as a bearish harami. Simply put, the stock price closed lower than it's open, and this movement was within price range movement of the previous days. The day before the stock price closed higher than it's open. This indicator is a major that informs me that a pivot in the price direction is probable. It requires additional flags to confirm.
So now I analyze my other indicators. Lets look at the RSI (Relative Strenght Indicator). The RSI is at 58, not a good sign. This tells me that the stock has strength to continue to move up. This could be a disappointment but I don't dismiss it right away. So lets continue.
Lets look at the stock price relationship to the Bollinger Bands. Currently is at a the upper Bollinger Band. Now, I wouldn't put a lot of opinion on the Bollinger Bands, because they are a moving resistance or range indicator. They really only suggest that the stock should be watched for reversal indicators. So to me it is confirmed by the candlestick indicator and not the other way around.
I have two more indicators that I like to look at. They are Stochastics and MACD. Both of these agree with the chart that the stock is in an up trend. But that is not what I am concerned about at this point.
The Stochastics are presently near the 80 mark. The 80 mark is a standard indicator that the stock is overbought and that some selling is bound to take place. In addition the Stochastics have a signal line that follows its movement. If the Stochastic starts to turn toward the signal line in an attempt to cross it, then there is further probability that the stock is reversing. This just happens to be true on this day.
The MACD (Moving Average Convergence Divergence) is similar to the Stochastics in that there is a primary line and a signal line. In this case I also have the histogram turned on that tells me what the difference in the two lines are. The histogram told me that the difference between the two lines was shrinking in comparison to the day before yesterday. So this is further indication that a reversal in movement is likely.
So because the price is at the upper Bollinger Band, the stock created a bearish harami candlestick pattern, the stochastics and MACD show signs that the move is at an end, I bought a put option against the King.
BKC PX => OTO 1.85, Stop @ 1.30 (Risk of 30%)
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Wednesday, March 4, 2009
Market's Rebound
The market's rebounded greatly today despite reports that the U.S. private sector cut 697,000 more jobs in February and that the services sector shrank, although less than estimated, for the fifth straight month. The rally is being attributed to 1) announcements of a possible Chinese economic stimulus package that spured the bounce of the Asian markets; and 2) the released details about an Obama administration plan to help struggling homeowners.
The possible Chinese economic stimulus package peaked the interest of speculators who bumped up the price of oil and other basic materials, on the assumption that the Chinese economy may be getting restarted.
The released details of a government program designed to help as many as 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments got some the bulls off the side lines and into some retail and consumable goods sectors in addition to the construction and basic materials sectors.
Asia:
Nikkei => 7,290.96, +61.24, +0.85%
Hang Seng => 12,331.15, +297.27, +2.47%
Straits Times => 1,544.34, +15.83, +1.04%
Europe:
FTSE => 3,645.87, +133.78, +3.81%
DAX => 3,890.94, +200.22, +5.42%
CAC => 2,675.68, +121.13, +4.74%
U.S.:
Dow => 6,875.84, +149.82, +2.23%
Nasdaq => 1,353.74, +32.73, +2.48%
S&P => 712.87, +16.54, +2.38%
As for me:
AMD => 2.30, +0.23
AMD DG => 0.12, +0.02
F => 1.87, +0.06
HRP JZ => 1.15, -0.35
MIPS => 2.05, -0.01 (OTO: Buy @ Stop 2.08 - Limit 2.10, Sell @ Stop 1.78)
NG => 2.58, -0.02
QAV QZ => 1.53, -0.24, (Sold to Close @ 1.59)
Market Opinion:
A growing opinion in the market is that it may have created itself a bottom. This is on analysis of the VIX which moves opposite the S&P 500. An article by the Associated Press describes how it is believed that the volatility of the VIX has become more subdued in comparison to previous sell offs in October and November of 2008.
But my question is, can pattern recognition be applied to the volatility indices as well? If they can, then the rally today may just be another false positive.
The previous volatility run-ups of January and March of 2008 resembled a double top. And after a recovery from those run-ups in volatility, there was a steady but subtle increase in volatility until the run-ups in October and November which also resemble a double top.
Presently we are in another recovery period in the volatility, which is also in a subtle up trend like before. So before anyone gets their hopes up about the direction of the market, I would wait to see if this subtle volatility uptrend deflates into a downtrend.
Personally, I will be looking for more of these "diamond in the rough" stocks but for the general market I will remain bearish. Possibly until late 2009, early 2010.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
The possible Chinese economic stimulus package peaked the interest of speculators who bumped up the price of oil and other basic materials, on the assumption that the Chinese economy may be getting restarted.
The released details of a government program designed to help as many as 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments got some the bulls off the side lines and into some retail and consumable goods sectors in addition to the construction and basic materials sectors.
Asia:
Nikkei => 7,290.96, +61.24, +0.85%
Hang Seng => 12,331.15, +297.27, +2.47%
Straits Times => 1,544.34, +15.83, +1.04%
Europe:
FTSE => 3,645.87, +133.78, +3.81%
DAX => 3,890.94, +200.22, +5.42%
CAC => 2,675.68, +121.13, +4.74%
U.S.:
Dow => 6,875.84, +149.82, +2.23%
Nasdaq => 1,353.74, +32.73, +2.48%
S&P => 712.87, +16.54, +2.38%
As for me:
AMD => 2.30, +0.23
AMD DG => 0.12, +0.02
F => 1.87, +0.06
HRP JZ => 1.15, -0.35
MIPS => 2.05, -0.01 (OTO: Buy @ Stop 2.08 - Limit 2.10, Sell @ Stop 1.78)
NG => 2.58, -0.02
QAV QZ => 1.53, -0.24, (Sold to Close @ 1.59)
Market Opinion:
A growing opinion in the market is that it may have created itself a bottom. This is on analysis of the VIX which moves opposite the S&P 500. An article by the Associated Press describes how it is believed that the volatility of the VIX has become more subdued in comparison to previous sell offs in October and November of 2008.
But my question is, can pattern recognition be applied to the volatility indices as well? If they can, then the rally today may just be another false positive.
The previous volatility run-ups of January and March of 2008 resembled a double top. And after a recovery from those run-ups in volatility, there was a steady but subtle increase in volatility until the run-ups in October and November which also resemble a double top.
Presently we are in another recovery period in the volatility, which is also in a subtle up trend like before. So before anyone gets their hopes up about the direction of the market, I would wait to see if this subtle volatility uptrend deflates into a downtrend.
Personally, I will be looking for more of these "diamond in the rough" stocks but for the general market I will remain bearish. Possibly until late 2009, early 2010.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Tuesday, March 3, 2009
Uncle Sam's Economic Plan
Today I watched a recording of the CNBC interview with Eric Hovde of Hovde Capital Advisors LLC. (Uncle Sam's Economic Plan) This is another guy that has his head on straight. I will be commenting on it today. But before I do that let's review the markets.
Another wild ride in the markets today. The markets showed a wrestiling of position between the bulls and the bears in the U.S. markets, but the bears won out once again.
Asia:
Nikkei => 7,229.72, -50.43, -0.69%
Hang Seng => 12,033.88, -283.58, -2.30%
Straits Times => 1,528.51, -4.89, -0.32%
Europe:
FTSE => 3,512.09, -113.74, -3.14%
DAX => 3,690.72, -19.35, -0.52%
CAC => 2,554.55, -26.91, -1.04%
U.S.:
Dow => 6,725.30, -37.99, -0.56%
Nasdaq => 1,321.01, -1.84, -0.14%
S&P => 696.33, -4.49, -0.64%
As for me:
AMD => 2.07, +0.06
F => 1.81, -0.07
NG=> 2.60, +0.06
AMD DG => 0.10, +0.01
HRP JZ =>1.50, unchanged
NLH JZ => 0.87, -0.68 (Sold to Close).
QAV QZ => 1.83, +0.06 (Bought to Open @ 1.77, Stop @ 1.59)
Because of the continuing lack of confidence in this administrations policy making, I am betting on the bears with a put position against the Nasdaq ETF, Powershares QQQ Trust (QQQQ, QAV QZ - 26MAY09Put). But as you can tell I am still holding on to most my bull positions unless their stops are met.
My reasons for holding are because of their extremely low price points, some technical indicators, and my inherent personal optimism in for those companies.
Now on to the interview, Uncle Sam's Economic Plan. Eric Hovde made a lot of good points that I want to reiterate. But first some numbers that I was interested to see. Residential real estate loans account for about 40% of total bank assets, commercial real estate loans accounts for about 24%, and business real estate loans accounts for about 20%. Right now it is the residential real estate that is dragging down the sector. It's Hovde's opinion that commercial real estate is not far behind from being added to the problem even while residential real estate continues to slide. He is looking for it to start reversing quickly if residential real estate finally stabilizes and turns around.
Hovde is also more realistic in my opinion and states that the U.S. is "rapidly and subtly falling into a depression." This, he says with the understanding that there really isn't a technical definition of a depression. I agree with Hovde, and I am sure most people do, that the credit bubble was the cause.
Despite the governments attempts, the market has a total lack of confidence in the administrations direction. The continuing opinion is that there are too many general ideas out there with few if any specifics about what is being done now to stimulate the economy. As a result the government appears to be quasi socialist at this time.
Hovde describes some examples as to how the stimulus does not focus enough on long lasting changes. One such example is on the building of a high speed rail. Hovde sees a high speed rail as a good idea, but where it is being planned for is the problem. "Anaheim to Vegas? Are you kidding me?! ... go to Disneyland and then gamble away [in the casinos]?", stated Hovde.
Hovde is not overly critical about all things. He understands extending unemployment benefits, funding police forces, health care and the like. He is mostly stunned by the degree and scope. He is even fine with paying higher taxes. (Hearing that shocked me.)
Things that Hovde disagrees with are the taking away of the home mortgage deduction, not for him but for all the others that need it in this housing recession. As far as the deduction for charitable contributions, Hovde is "infuriated" that it is being reduced at this time where charities are needed most.
Another issue that irritates Hovde is the exploitation of cramdown. He sees people gaming the system. He has actually been approached by individuals that are capable of paying there mortgage wanting to stop paying their mortgage just so that they can get a reduction in mortgage payment.
My opinion, why wasn't Hovde added to the President's cabinet?
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Another wild ride in the markets today. The markets showed a wrestiling of position between the bulls and the bears in the U.S. markets, but the bears won out once again.
Asia:
Nikkei => 7,229.72, -50.43, -0.69%
Hang Seng => 12,033.88, -283.58, -2.30%
Straits Times => 1,528.51, -4.89, -0.32%
Europe:
FTSE => 3,512.09, -113.74, -3.14%
DAX => 3,690.72, -19.35, -0.52%
CAC => 2,554.55, -26.91, -1.04%
U.S.:
Dow => 6,725.30, -37.99, -0.56%
Nasdaq => 1,321.01, -1.84, -0.14%
S&P => 696.33, -4.49, -0.64%
As for me:
AMD => 2.07, +0.06
F => 1.81, -0.07
NG=> 2.60, +0.06
AMD DG => 0.10, +0.01
HRP JZ =>1.50, unchanged
NLH JZ => 0.87, -0.68 (Sold to Close).
QAV QZ => 1.83, +0.06 (Bought to Open @ 1.77, Stop @ 1.59)
Because of the continuing lack of confidence in this administrations policy making, I am betting on the bears with a put position against the Nasdaq ETF, Powershares QQQ Trust (QQQQ, QAV QZ - 26MAY09Put). But as you can tell I am still holding on to most my bull positions unless their stops are met.
My reasons for holding are because of their extremely low price points, some technical indicators, and my inherent personal optimism in for those companies.
Now on to the interview, Uncle Sam's Economic Plan. Eric Hovde made a lot of good points that I want to reiterate. But first some numbers that I was interested to see. Residential real estate loans account for about 40% of total bank assets, commercial real estate loans accounts for about 24%, and business real estate loans accounts for about 20%. Right now it is the residential real estate that is dragging down the sector. It's Hovde's opinion that commercial real estate is not far behind from being added to the problem even while residential real estate continues to slide. He is looking for it to start reversing quickly if residential real estate finally stabilizes and turns around.
Hovde is also more realistic in my opinion and states that the U.S. is "rapidly and subtly falling into a depression." This, he says with the understanding that there really isn't a technical definition of a depression. I agree with Hovde, and I am sure most people do, that the credit bubble was the cause.
Despite the governments attempts, the market has a total lack of confidence in the administrations direction. The continuing opinion is that there are too many general ideas out there with few if any specifics about what is being done now to stimulate the economy. As a result the government appears to be quasi socialist at this time.
Hovde describes some examples as to how the stimulus does not focus enough on long lasting changes. One such example is on the building of a high speed rail. Hovde sees a high speed rail as a good idea, but where it is being planned for is the problem. "Anaheim to Vegas? Are you kidding me?! ... go to Disneyland and then gamble away [in the casinos]?", stated Hovde.
Hovde is not overly critical about all things. He understands extending unemployment benefits, funding police forces, health care and the like. He is mostly stunned by the degree and scope. He is even fine with paying higher taxes. (Hearing that shocked me.)
Things that Hovde disagrees with are the taking away of the home mortgage deduction, not for him but for all the others that need it in this housing recession. As far as the deduction for charitable contributions, Hovde is "infuriated" that it is being reduced at this time where charities are needed most.
Another issue that irritates Hovde is the exploitation of cramdown. He sees people gaming the system. He has actually been approached by individuals that are capable of paying there mortgage wanting to stop paying their mortgage just so that they can get a reduction in mortgage payment.
My opinion, why wasn't Hovde added to the President's cabinet?
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Monday, March 2, 2009
Nationalization Revisited.
The financial sector continues to give the market a heart attack as AIG reports huge losses and the their bailout is renegotiated.
Asia is the first to react to the bad news:
Nikkei => 7,280.15, -288.27, -3.81%
Hang Seng => 12,317.46, -494.11, -3.86%
Straits Times => 1,533.40, -61.47, -3.85%
Europe didn't react any better:
FTSE => 3,625.83, -204.26, -5.33%
DAX => 3,710.07, -133.67, -3.48%
CAC => 2,581.46, -121.02, -4.48%
And the US finished the day:
Dow => 6,763.29, -299.64, -4.24%
Nasdaq => 1,322.85, -54.99, -3.99%
S&P => 700.82, -34.27, -4.66%
As for me:
AMD => 2.01, -0.17
F => 1.88, -0.12
NG => 2.54, -0.32
AMD DG => 0.09, -0.01
HRP JZ => 1.50, unchanged
NLH JZ =>1.55, unchanged
Today I listened to a Yahoo! Finance techticker interview by hosts Aaron Task and Henry Bloget, and their guest Nouriel Roubini of NYU's Stern School. In the interview they got Roubini's reaction to Bill Gross' comments that "nationalization is a bad idea." I believe Roubini made a few interesting points about how the "nationalization" of the banks isn't the same as the Swedish model that Gross is referring to. If you haven't watched the video, please do(2). This video is a continuation of the interview where Roubini encourages full nationalization as better(1).
Roubini comments in a way that indicates that the situation is no longer "if" the banks will be nationalized, but how and how much. He uses the words "partial" or "full" and illustrates that with Citigroup who is now 36% owned by the government. To him, anything over a third is effectively partially nationalized, and that is the status of Citigroup right now.
I personally don't agree with the idea of fully nationalizing the banks since it will wipe out the shareholders, of which I am not. However, Roubini does make a point at the end of the first video that could very well be true. He comments that at this point fully nationalizing Citigroup and Bank of America would barely have an effect on the market because their stock has already been beaten down so much. Nationalizing the "big banks" would only have about a 50 point effect on the Dow and the significant moves in the market are a result of systemic fear because of the financial sector.
Unfortunately, I see that as a continuing inevitability. News reports will still come out about how the government is disassembling these "to big to fail" banks and those reports will affect the stock value of other companies since these big banks are still the account providers for existing companies.
My opinion on what the government should do is very simple, yet not at all pretty. If the banks want to clean up their balance sheets, they should have to follow these 4 steps.
First, accept a moratorium on all incomplete foreclosures. This will provide time for the owners to get their act together for the last step.
Second, the banks will have to accept the government's offer to buy the bad assets from them at market value or for the foreclosure principle balance, whichever is least. This is fare because the Bank wants more but the government wants to pay less, neither will be happy.
Third, the government should then send the list of assets to the county court house for which the properties reside so that they can be auctioned off, starting at the value the government bought it from the banks for. The resulting amount should then be funneled into the counties budget to pay for education and infrastructure.
Forth, the banks should be forced to allow for every property owner the opportunity to refinance even if they are not in default yet.
Like I said, it is simple, not pretty.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Asia is the first to react to the bad news:
Nikkei => 7,280.15, -288.27, -3.81%
Hang Seng => 12,317.46, -494.11, -3.86%
Straits Times => 1,533.40, -61.47, -3.85%
Europe didn't react any better:
FTSE => 3,625.83, -204.26, -5.33%
DAX => 3,710.07, -133.67, -3.48%
CAC => 2,581.46, -121.02, -4.48%
And the US finished the day:
Dow => 6,763.29, -299.64, -4.24%
Nasdaq => 1,322.85, -54.99, -3.99%
S&P => 700.82, -34.27, -4.66%
As for me:
AMD => 2.01, -0.17
F => 1.88, -0.12
NG => 2.54, -0.32
AMD DG => 0.09, -0.01
HRP JZ => 1.50, unchanged
NLH JZ =>1.55, unchanged
Today I listened to a Yahoo! Finance techticker interview by hosts Aaron Task and Henry Bloget, and their guest Nouriel Roubini of NYU's Stern School. In the interview they got Roubini's reaction to Bill Gross' comments that "nationalization is a bad idea." I believe Roubini made a few interesting points about how the "nationalization" of the banks isn't the same as the Swedish model that Gross is referring to. If you haven't watched the video, please do(2). This video is a continuation of the interview where Roubini encourages full nationalization as better(1).
Roubini comments in a way that indicates that the situation is no longer "if" the banks will be nationalized, but how and how much. He uses the words "partial" or "full" and illustrates that with Citigroup who is now 36% owned by the government. To him, anything over a third is effectively partially nationalized, and that is the status of Citigroup right now.
I personally don't agree with the idea of fully nationalizing the banks since it will wipe out the shareholders, of which I am not. However, Roubini does make a point at the end of the first video that could very well be true. He comments that at this point fully nationalizing Citigroup and Bank of America would barely have an effect on the market because their stock has already been beaten down so much. Nationalizing the "big banks" would only have about a 50 point effect on the Dow and the significant moves in the market are a result of systemic fear because of the financial sector.
Unfortunately, I see that as a continuing inevitability. News reports will still come out about how the government is disassembling these "to big to fail" banks and those reports will affect the stock value of other companies since these big banks are still the account providers for existing companies.
My opinion on what the government should do is very simple, yet not at all pretty. If the banks want to clean up their balance sheets, they should have to follow these 4 steps.
First, accept a moratorium on all incomplete foreclosures. This will provide time for the owners to get their act together for the last step.
Second, the banks will have to accept the government's offer to buy the bad assets from them at market value or for the foreclosure principle balance, whichever is least. This is fare because the Bank wants more but the government wants to pay less, neither will be happy.
Third, the government should then send the list of assets to the county court house for which the properties reside so that they can be auctioned off, starting at the value the government bought it from the banks for. The resulting amount should then be funneled into the counties budget to pay for education and infrastructure.
Forth, the banks should be forced to allow for every property owner the opportunity to refinance even if they are not in default yet.
Like I said, it is simple, not pretty.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
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