by Zero Hedge - April 29th, 2009 6:47 pm
Courtesy of Tyler Durden, ZH
The next chart compares the 30 Yr UST with the 30 Yr FN current coupon (MTGEFNCL). Welcome to the bizzaro world of negative mortgage spreads: somehow a 30 year mortgage has become cheaper than US Sovereign debt…Maybe taxpayer subsidies into Fannie/Freddie have something to do with it?
Hit tip to Dirk for the idea.
by Zero Hedge - April 29th, 2009 6:39 pm
Courtesy of Tyler Durden at Zero Hedge
The Daily Telegraph has compiled some rather sobering data on what the economic cost of the flu pandemic could ultimately be. This is a little less rosy than Steve Liesman’s prediction that everything will blow over in a day or two. As a reminder the WHO is raising the epidemic to level 5, its second highest threat level: presumably they have not gotten the memo.
From the Daily Telegraph:
At last count there were 148 officially reported cases of the epidemic worldwide, and at least seven deaths.
hat tip Michael
Photo information here: http://www.everystockphoto.com/photo.php?imageId=2723861, License: http://creativecommons.org/licenses/by/2.5/
by ilene - April 29th, 2009 6:36 pm
Courtesy of Tyler Durden at Zero Hedge
The Daily Telegraph has compiled some rather sobering data on what the economic cost of the flu pandemic could ultimately be. This is a little less rosy than Steve Liesman’s prediction that everything will blow over in a day or two. As a reminder the WHO is raising the epidemic to level 5, its second highest threat level: presumably they have not gotten the memo.
From the Daily Telegraph:
At last count there were 148 officially reported cases of the epidemic worldwide, and at least seven deaths.
hat tip Michael
Photo information here: http://www.everystockphoto.com/photo.php?imageId=2723861, License: http://creativecommons.org/licenses/by/2.5/
by ilene - April 29th, 2009 5:53 pm
Courtesy of Jan-Martin Feddersen at Immobilienblasen
Really an excellent way to boost confidence ( will probably work for CNBC 
…… After news that Stress test pass rate is 68% ( still hyperinflated & from a almost "stress free test" ) and no chance that private capital will cover the capital shortfall the spin attempt from the Geithner & Bernanke is that the convertion from preferred to common equity will do the trick…
April 29 (Bloomberg)
At least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said.
While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said.
The Federal Reserve is now hearing appeals from banks, including Citigroup Inc. and Bank of America Corp., that regulators have determined need more of a cushion against losses, they added.
By pushing conversions, rather than federal assistance, the government would allow banks to shore themselves up without the political taint that has soured both Wall Street and Congress on the bailouts. The risk is that, along with diluting existing shareholders, the government action won’t seem strong enough.
Now on to the common sense view…..
Nachfolgend ein paar Meinungen die aus der Abteilung "gesunder Menschenverstand" kommen…..
Option Armageddon
As for converting preferred to common, yeah that will boost TCE, but it doesn’t actually ADD any capital to banks’ balance sheets. 67¢ cents of preferred equity + 33¢ of common equity = $1 of total shareholder equity. Convert all the preferred to common and you still have only a $1 of total equity. There’s no extra capital on the balance sheet to absorb losses.
And, now that some of the results are coming in, the cure for inadequate capital is not more capital, but an accounting trick — converting preferred stock to common
US banks are suffering a solvency problem, and what they need is more capital, not an accounting sleight of hand. Yet that is precisely what they are getting — the same clever financial engineering that led to the crisis in the first place.
…
by ilene - April 29th, 2009 5:39 pm
Shah Gilani at Money Morning argues that the stress tests for banks are stressing, do nothing to improve transparency and the results will be misleading given that all the banks are currently using government support in some form. - Ilene
The bank stress test of the nation’s 19-largest financial institutions is a flawed exercise that threatens to elevate the very economic-system stress it was designed to relieve.
The U.S. Treasury Department isn’t scheduled to release the results of the much-ballyhooed bank stress tests until Monday. Little has been revealed so far, but one fact seems certain: Whatever information is disclosed is likely to be either too much – or even more likely – not enough for analysts, investors and the public to determine the soundness of a banking system upon which the nation’s economic growth is predicated.
We’re already starting to see bits and pieces leak into the public domain. And the response hasn’t been positive.
Although the tests reportedly concluded that only one of the 19 banks that received a stress test would require additional capital, the government’s own bailout-fund watchdog has questioned whether it was really much of a test at all.
The reason: The "adverse scenario" used for the test was "disturbingly close" to current economic conditions, said Elizabeth Warren, the chairperson of the Congressional Oversight Panel for the Troubled Asset Relief Program, and a frequent critic of the government bailout programs.
Now the government is urging foundering giants Bank of America Corp. (BAC) and Citigroup Inc. (C) – which have already taken in a combined $95 billion in taxpayer-provided bailout money – to raise more capital [For the latest facts on these developments, check out this related bank stress test story that appears elsewhere in today's issue of Money Morning].
As outlined to the public, the stress tests were to pre-suppose a set of declining economic circumstances that would negatively impact bank balance sheets. For example, one scenario assumes that U.S. unemployment rises to 10.3% by the end of 2010. How or why the 10.3% assumption was chosen – as is the case with other scenario parameters – is unknown and is supposedly not to be revealed.
The assumption of testing through the end of 2010 means only that a two-year window was established for definitive…
by Zero Hedge - April 29th, 2009 4:29 pm
Courtesy of Tyler
Mr. Market is to be respected, but he is not always correct
We find it rather difficult to square today’s Fed press statement with the amazing reversal in investor sentiment towards euphoria over the past several weeks. The equity market is, as we all know, a forward-looking barometer, and now seems to have gone further than merely pricing in “green shoots”, to discounting the righthand side of the ‘V’. Mr. Market is to be respected, but he is not always correct.
Fed has a more somber forecast than Mr. Market
The Federal Reserve does possess the largest US macroeconomic model on the planet, and although the central bank acknowledged the obvious today (that “the pace of contraction appears to be somewhat slower”, which was hardly a resounding endorsement for the second-derivative viewpoint, in our view), it seems to have a much more somber forecast of the economy (that “economic activity is likely to remain weak for a time”) compared to Mr. Market.
Disconnect between Fed & market’s ability to sustain rally Although the “outlook has improved modestly since the March meeting”, the operative word is “modestly”. In addition, the “remain weak for a time” quote resonated with us even if the market has largely shrugged it off. The Fed certainly does not have a perfect forecasting track record , but let’s just say that there does appear to be a disconnect between the central bank’s choice of words to describe the economic backdrop and Mr. Market’s ability to sustain this vigorous rally.
Never in the past 60 years have prices dropped this much
As for Treasuries, the selloff continues unabated, and comes on a day when real GDP contracted at over a 6% annual rate with confirmation of a deflationary environment with the gross domestic purchase deflator (GDP deflator ex trade) declining at a 1% annual rate on top of a 3.9% annualized slide in the fourth quarter of 2008. In fact, at no time in the past 60 years have we seen domestic prices fall this much over a six-month span.
Fed
…
by Option Review - April 29th, 2009 4:17 pm
Today’s tickers: XLI, XLY, DELL, CAT, XLF, AET, AN, EWT, SLAB, QLGC, BYD & INTC
XLI Industrial Select Sector SPDR – The industrials ETF attracted massive amounts of downside protection by investors fearing a near-term contraction in shares of the fund. The price per share is currently up by 3% to $23.19 on the day following broader market gains experienced today. However, traders have enacted a decidedly bearish position on the fund in the near-term May contract. At the May 19 strike price more than 65,100 puts were purchased for an average premium of 17 cents apiece. These option contracts will begin to yield profits to the downside beginning at the breakeven share price of $18.83. Further along, the in-the-money June 23 strike price saw traders who were likely banking gains on the rise in shares today by selling approximately 27,000 calls for an average premium of 65 cents per contract.
XLY Consumer Discretionary Select Sector SPDR – The consumer discretionary ETF jumped onto our ‘most active by options volume’ market scanner after investors bought a huge chunk of puts in the near-term May contract. Shares have rallied by 4% to $21.80 today, creating lesser cost premiums on put options. At the May 20 strike price approximately 58,100 puts were picked up for an average premium of 18 cents apiece. Investors have certainly appeared to brace themselves for bearish movements in the fund. Fleshing out the pessimistic picture was the sale of 2,290 calls at the May 23 strike for 82 cents which indicates that traders do not see today’s rally stemming too much further, particularly in the near-term.
DELL Dell Inc. – The just-in-time manufacturer of personal computers has rallied by more than 4% to $11.35 amid broad market gains today. We observed one trader who appears to have established a covered call in the January 2010 contract. It is likely that this investor bought shares of the underlying stock today or was already long the stock previously, and then sold 24,500 calls at the January 12.5 strike price for a premium of 1.50 each. The trader pockets the 1.50 premium and has locked into gains of 10% on the rise in share price should the calls land in-the-money and the underlying stock get called from him at expiration next year.
CAT Caterpillar, Inc. – Shares of CAT have rallied by more than 3.5% today to arrive at…
by ilene - April 29th, 2009 4:03 pm
Adam Warner, at Daily Option Report, comments on his option strategy for FSLR.
ports tonight!Then you look at the graph below, 10 Day HV, and you can see options WAY overprice recent volatility trends. 30 day normalized options carry an 80 volatility, which is only low when you see it was twice that high last Fall. But it’s extremely high vs. 10 Day HV in the 40 range.
I’d expect options volatility to settle somewhere in the middle, maybe mid 60′s. So like pretty much every other stock these days, we know FSLR will beat their estimates, and we see the options board anticipating the standard 8-10% move.
I’m fading the volatility pumpage via the Iron Condor route, shorting OTM call and put spreads.
by Zero Hedge - April 29th, 2009 3:32 pm
Courtesy of Tyler
Government Capital LLC’s automotive subsidiaries are multiplying.
April 29 (Bloomberg) — President Barack Obama plans to announce tomorrow that Chrysler LLC will be placed into Chapter 11 bankruptcy, leading to an alliance with Italian automaker Fiat SpA, people involved in the matter said.
Administration officials are still resolving outstanding issues, and the plan is not finished yet, said one of the people, who declined to be named. Any bankruptcy filing could come as soon as tomorrow, people familiar with the matter said.
Chrysler’s best assets would be sold to a new entity that would have an ownership structure similar to that envisioned in an out-of-court deal between the Auburn Hills, Michigan-base automaker and Turin, Italy-based Fiat, the people said.
The Italian company would become a 20 percent owner of Chrysler, and a union retiree health-care trust fund would own 55 percent, with the rest of the company staying in the government’s hands initially, people familiar with the matter said.
Chrysler has made progress in out-of-court restructuring, including reaching labor deals with the United Auto Workers union and Canadian Auto Workers on new contracts. Chrysler Chief Executive Officer Bob Nardelli said today in a memo to employees that the company is waiting to hear whether its 46 lenders will agree to take $2 billion in cash to wipe out $6.9 billion in secured debt.
*****
I will personally pay CNBC $1 (with that amount they can easily LBO themselves) if they mention this news before market close.
Update: I get to keep my dollar. CNBC viewers are not worthy of getting anything but propaganda.
by Zero Hedge - April 29th, 2009 3:11 pm
Courtesy of Tyler at ZH
…
January 27th, 2012 1:52 pm
Largest Central Banks Now Hold Over 15 Trillion in Fictitious CapitalCourtesy of Russ Winter of Winter Watch at Wall Street Examiner
I could not help noticing that China’s imports from Japan fell 16.2pc in December. Imports from Taiwan fell 6.2pc. The strong yen strikes again: Honda decides to build a high-performance hybrid Acura in Ohio – instead of its home nation of Japan. The firm’s continued shift in p...
January 27th, 2012 1:40 pm
Reminder: David is available to chat with Members, comments are found below each post.
January 27th, 2012 12:55 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
In an effort to reach the angry mob, CNBC's Rick Santelli goes all Sesame Street on the numbers behind the US Debt Ceiling Rise. Focusing for two minutes on what this practically means for every man, woman, child, and politician, the shouting Chicagoan points out that when the US breaches this new limit then the world's entire population will be on the hook for $2,346 each (and $52,409 per US person).
...January 27th, 2012 12:35 pm
Courtesy of Doug Short.
The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) posted -6.5 in its latest reading, data through January 20. The latest public data point is a reduced contraction from last week's -7.6 (a slight downward revision from -7.5). This is the highest level (i.e., least negative) since early September. However, the underlying WLI declined fractionally from an adjusted 123.3 to 122.8 (see the third chart below).
Early last December Lakshman Achuthan, the Co-founder of ECRI, spoke with Tom Keene on Bloomberg Television's Surveillance Midday. You can watch the video on the ECRI website here, with bold heading Recession Update. The eight-minute video is well worth watching in its...
January 27th, 2012 11:15 am
Submitted by Mark HannaCourtesy of MarketMontage. View original post here.
Some combination of better made cars, and less Americans able to pay new car prices has conspired to push up the average age of U.S. vehicles to a new record high. Reflecting this sea change, one of the best investment g...
January 27th, 2012 10:05 am
Courtesy of Benzinga.
Shares of battered tech company Research in Motion (NASDAQ: RIMM) are seeing much strength during Friday's trading session.
Fairfax Financial Holdings released a 13G filing with the SEC this morning, in which they disclosed a 5.12% stake in Research in Motion.
Currently, shares of Research in motion are up over 4% at $16.85. Over the last year, Research in Motion is down over 72%.
Research In Motion Limited is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. RIM provides platforms and solutions for access to information, including e-mail, voice, instant messaging, short message service.
...January 27th, 2012 12:00 am
Top 5 RisersStockRatingAnalysisASBCBUYMany analysts are expecting higher than previously expected long term growth from Associated Bancorp, and its near-term earnings outlook is also improving.CZZSTRONGBUYThe recent earnings history for Cosan Ltd shows significant improvement while projected valuation continues to rise.STLDBUYProjected value continues to rise for Steel Dynamics while long term increases in earnings growth are also becoming more widely expected.PSESTRONGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a fe...January 26th, 2012 6:16 pm
Courtesy of John Nyaradi.
Major markets and major index ETFs corrected slightly today after the stock market’s euphoric party yesterdayMajor markets suffered a slight hangover today, as the S&P 500 dropped .57%, the Dow Jones Industrial Average dropped .18%, the NASDAQ dropped .46% and the Russell 2000 Index dropped .34%, after yesterday’s crazy Fed and Tech Sector induced Wall Street Party. The NASDAQ, in particular, partied very hard, so hard in fact that the NASDAQ reached its 11 year record high.
The major market index ETFs were hungover too as the SPDR S&P 500 ETF lowered .51%, the SPDR Dow Jones Industrial ...
January 26th, 2012 1:38 pm
Today’s tickers: DB, ATHN & LSI
...
more from Caitlin
January 23rd, 2012 8:56 am
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
Optrader
...January 22nd, 2012 10:09 pm
Here is the virtual portfolio weekend update. Basically a recap of the positions and some notes about the trades. As usual, I'll post the previous week's P&L for comparison. Not the greatest of week in general! AA Money Only transaction last week as we bought back the AA Feb 9 puts on Tuesday for close to a 70% profit. The idea is to sell another set of put as soon as we get a chance. Previous week P&L - $400.00 We lost some ground this week, but we'll keep on selling premium! FAS Money We also lost some ground in this virtual portfolio, but we have sold plenty of premium for the coming week. A little correction would go a long way to help! On Wednesday we sold the FAS Feb 72 puts (already good for 50%), on Thursday we added the Jan4 78 calls and on Friday we had to roll the Jan 78 puts to the Jan 80 puts. We were hoping for these ones to expire worthless on Friday, but a late stick killed that hope. Previous week P&L - $4372.00...January 22nd, 2012 2:52 am
NEW: Elliott and Ilene are available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here's the latest Stock World Weekly. We discuss the Fed's next move, and it's new policy for more QE-cating. Brief review of Sabrient's trade ideas for 2012 (already doing well) and a few new buy-writes from Phil and Pharmboy. Enjoy! (Feedback appreciated - give some life to the comment section below.)
Click this link for this weekend's newsletter, and sign in or sign up.
...January 18th, 2012 1:09 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Finding new and exciting Biotech companies that target novel mechanisms is like trying to find a needle in a haystack. Sure there are many companies working on cutting edge science, but investing in those companies to reap the rewards of their work is a very dangerous game. More often than not, companies fail because the mechanism does not pan out, the compound(s) do not have pharmacokinetics (get into the body or last very long in the body), or an adverse event happens that knocks years off a development timeline. In addition, the stock can be manipulated by market makers so investors don't know which way is up. I approach investing in biotechs as a long term prospect. I continue to like our current portfolio of biotech companies (join in chat for many of those plays), and we continually add/subtract shares and sell/buy options on ...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Philstockworld, LLC (PSW) nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. |
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