Jim Cramer's Recommendation On CIT From Yesterday: "Primed For Upside. I Would Buy"

by Zero Hedge - September 30th, 2009 9:24 am

One can only hope that at some point irresponsible, speculative and highly destructive stock calls like this would see some regulatory intervention.

Citi and CIT Are Primed for Upside, by Jim Cramer, 9/29/2009, 1:54 PM EDT

Citigroup’s on the move, so is CIT . I think that Citigroup will be the biggest beneficiary of the new plan to buy toxic assets, because it is basically running its SIV as discontinued operations and it could benefit from the new program. CIT is about the possible IndyMac link-up courtesy of John Paulson, a real smart guy who was negative about mortgages before it paid to be negative. Dan Freed on CIT CIT Surges on Report of IndyMac Deal I put both of these up there as examples of companies that won’t die, and because they won’t die, they live. I know that seems a little circular in reasoning, but because Citigroup never suffered a run like Wachovia and Washington Mutual did, it made it and as our flagship site mentioned, it is safe. If it is safe, it can go higher. Because no one forced CIT into bankruptcy, it can live to play again, and when I read in the New York Post that Paulson owns CIT debt, I realized that he’s powerful enough to save this company, particularly because he is one of the investors in IndyMac and knows his way around the bottom of the debt barrel. These two stocks represent lottery tickets that are no longer rip-ups because they have made it out of the “critical care” stage and are recovering. I would buy them both.

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A Candid Look At The ADP National Employment Report

by Zero Hedge - September 30th, 2009 9:19 am

Courtesy of Tyler Durden

While much of the focus has been on ADP change, little has been made of the absolute level of the ADP report. The chart demonstrates the freefall in this particular data series. We are now at 2003 readings and dropping fast, with the absolute level soon set to take out all time lows.

As a reminder:

The ADP National Employment Report is a measure of nonfarm private employment, based on a subset of aggregated and anonymous payroll data, using approximately 365,000 of ADP’s 500,000 U.S. business clients and approximately 24 million employees working in all 19 of the major North American Industrial Classification (NAICS) private industrial sectors. The ADP National Employment Report was developed to help meet the need for additional timely and accurate estimates of short-term movements in the national labor market among economists, financial professionals, and government policy-makers. — This series began in May 2006, and historical data was made available back til Dec. 2000.

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Frontrunning: September 30

by Zero Hedge - September 30th, 2009 9:03 am

Courtesy of Tyler Durden

ADP jobs number worse than expected at 254,000, on 200,000 cuts expected (Bloomberg)
Mortgage demand falls despite artificially low, Fed-manipulated mortgage rates (Reuters)
Neverending government stimulus revision update: Q2 GDP at -0.7% (AP)
IMF warns on rising bank losses – have no fear, Obama will fund IMF… forever – gotta unfund that quadrillion $ budget deficit somehow (Reuters, FT)
Indland empire shopping center for sale – calling all investors sekking to lose money (Retail Chatr)
Poland budget deficit apparently not an issue as country plans to stop rate cuts; even countries that can not issue debt want strong currency vs dollar (Bloomberg)
UBS warns on third quarter loss (WSJ)
Another Hail Mary for bankrupt CIT from Barclays and… bankrupt CITI; yes, one bankrupt company saving another (Bloomberg)
Ex-Moody’s employee warned SEC about muni issues (AP)
Is it time to recognize reality? (Karl Denninger)
Pickup sales fall in another blow to automakers (NYT)
Confidence (games) surges among US CEOs; results, no so much (FT)
Pimco warns on deflation to come (Fundmastery)
Mortgage deadbeats plague home market (RCM)

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Daily Highlights: 9.30.09

by Zero Hedge - September 30th, 2009 8:32 am

Courtesy of Tyler Durden

Asian stocks rose for a second day, led by automakers and technology companies.
Bank of Japan said to consider ending corporate debt purchases on recovery.
Cash for farmers, surplus purchases in $350 million congressional dairy aid package.
China’s shares rebound from 3-day slump ahead of holiday; steel, banks, oil gain.
Consumer confidence in US unexpectedly declines amid rising unemployment.
EU nations to hammer out financial oversight, exit strategies in wake of G-20 summit.
FDIC: Banks must prepay fees through 2012 to boost depleted reserves.
Home prices in 20 US cities climb the most in four years as slump abates.
IMF says losses from financial crisis have fallen by $600 bln to $3.4 trillion as shares rise.
Oil rises to above $67 in Asia despite increase in US crude inventories.
Yen falls for 2nd day on speculation government will intervene.
Bank of America, 3 other banks’ FDIC fees may total more than $10B.
Big 5 Sporting Goods Q3 same-store sales up 1.6%.
Boston Scientific to pay $716M to J&J for partial settlement of litigation over heart stents.
CIT Group in midst of last-ditch bid to restructure by handing control to its bondholders.
Daimler’s Mercedes-Benz to take on 800 new employees at Brazil bus, truck plant.
Darden posts unexpected drop in Q1 sales by 2.3% to $1.73B; profits up 15% at $94.3M.
Deere & Co. plans to take a $300M goodwill write-down on its John Deere Landscapes unit.
EU tells Lloyds Banking Group to relinquish 3.7M checking accounts to secure govt rescue.
Exelon Chief shelves hunt for acquisitions as takeover prospects diminish.
Gannett Co. sees Q3 EPS at $0.39-0.42 (cons est. $0.31), helped by lower costs.
HP’s CEO is finalizing plans to combine printer and personal-computer divisions.
Micron Tech sharply narrowed its Q4 loss amid prior year write-downs, to $88M.
Morgan Stanley’s mack proposes single global bank regulator.
Nike’s Q1 net rises slightly to $513M, on cost cutting measures. Revs fell 12%.
Oracle buys HyperRoll, provider of financial reporting solutions. Terms undisclosed.
Royal Bank of Canada to buy JP Morgan’s Third Party Registered Investment Advisor.
Sealy Corp.’s Q3 net rises 11% to $12.1M; revs down 13.7% at $349.6M.
Thor Industries beats by $0.22, posts Q4 EPS of $0.45. Revs fell 22.6% to $440.9M.
Wynn said to raise $1.63 billion in Hong Kong IPO.

Economic Calendar: Data on ADP Employment, GDP, Chicago PMI, Crude Inventories.…

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The Oxen Report: Markets Set to Rise, CIT Set to Fail

by David Ristau - September 30th, 2009 8:30 am

Good to be back with you today after having to miss yesterday. We had an okay Monday as we went 1/2 on the day. We had been expecting the market to make a major pullback, but it instead had a nice rise on some M&As and bargain hunting. Still, our short sale of the day, LDK Solar Inc. (LDK) worked well for us. Solar has been in the pits, and we were able to buy LDK at 8.80 early on in the day and sell off at 8.63 for a sweet 2% gain. The buy pick of the day, Ultrashort Proshares Financial ETF (SKF), was not as successful. We got involved with the stock at 25.75, and we got stopped out at 25.00 for a 3% loss. It was our first miss on the buy pick of the day in a week, and it was the first 3% loss in weeks. Today, we will have to bounce back to getting both of these right.

Here we go…

Buy Pick of the Day: Fifth Third Bancorp Inc. (FITB)

I am going to get behind a market rally coming on Wednesday, in the wake of Tuesday’s losses. There are just too many positive indicators, and while I want to be bearish (like usual), I am going to restrain myself and look at the short term fundamentals of this market. It all starts with the GDP report that came out at 8:30 AM. The GDP for Q2 was revised down by the government to a loss of only 0.7%, while the expectations were that it would be revised upwards to 1.20% from 1.00%. The suprise gain shows the economy really turned around in the latter part of Q2, and it sets up Q3 to be hopefully a growth quarter…ending the recession. Nonfarm unemployment rates were higher than expected, but the way futures are playing out, it does not really seem to matter, which will get to in a moment.

Fifth Third (FITB) is the pick of the day. This is one to get excited about if the market does rally because of its oh so sexy 2.44 beta rating, and its close connection to a company that got an upgrade today, Huntington Bancshares (HBAN), which is the best news that company has seen in a very long time. Both companies are regional banks in the midwest based in Ohio. The company’s upgrade from…

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Wednesday – End of Quarter, End of Pump?

by Phil - September 30th, 2009 8:29 am

David Fry S&P Chart - ETF Digest Yesterday could not have gone better!

I titled the morning post "Confidence is Key" and decided that, since my targets were dead on Monday, that we should stick to our bear plan into the Consumer Confidence report which was, as we expected, a huge disappointment. My 9:50 Alert to members suggested the DIA 9/30 $99 puts for $1 into the report and then we got a nice 100-point drop for the rest of the day that ran those puts up to $1.60 (up 60%). Also, in that same alert, we went back into SRS (now dubbed "The Widow-Maker") at $9 and those finished the day at $9.50 (up 5.5%) and the Nov $8 puts we sold for .75 dropped to .60 (up 20%). These are not bad trades to make while we wait around for the market to pick a real direction.

In addition to a poor Consumer Confidence report (53.1 vs 57 expected), we also got a very poor Investor Confidence reading at 118.1, down from 122.8 in August, which was a 5-year high. "There is a recognition that a portion of the recent rise in global equity prices can be attributed to liquidity expansion rather than fundamental opportunities. Institutional investors are pausing to assess this balance," study says.

Speaking of investors who are not confident, GE’s own Jeff Immelt, unlike his army of pump-jocks on CNBC, isn’t willing to sully his own reputation by mindlessly cheerleading the economy. He was in Singapore yesterday and said that: "high unemployment and slower lending will drag on U.S. economic growth, likely resulting in the weakest recovery in decades… Easing up money has always been the elixir to keep the economy in recovery mode," Immelt said. "But once you get interest rates to zero percent, you can’t go much below that, which is kind of where we are right now. A lot of the jobs lost in financial services and construction are never coming back."

If you don’t think Immelt is in touch with the economy despite GE’s Global footprint and $180Bn in sales, perhaps we can listen to WMT CEO Robson Walton (yes, nepotism), who oversees $400Bn in annual sales and he said at yesterday’s CEO conference: "The World recovery is going to be led by Asia although it’s going to be very challenging. I think this recovery is going to be a slow one – sales have been tough."

As noted in …

Tags: China Anniversary, CIT, debt, GDP, IMF, Sarkozy, SPY, USO

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Retirees, Procrastinate At Your Peril

by ilene - September 30th, 2009 4:07 am

Retirees, Procrastinate At Your Peril

procrastination Courtesy of Tim at The Psy-Fi Blog

Fun or Future Famine

Given a choice between doing something light-hearted and fun which brings immediate gratification or something boring and difficult that won’t pay off for decades – if ever – most of us wouldn’t find it very difficult to make a choice. In fact we’re probably designed to operate this way, since the probability of surviving long enough to enjoy our future wasn’t very great for most of human history.

Now, however, things are different. In the developed world most of us are going to live long past our sell-by dates. Which means our in-built tendency to prevaricate over the tricky, boring and very long-term problem of preparing for retirement is an issue that most of us can’t afford to put off a day longer. If we’re to avoid eking out our dwindling days in destitution we need to stop procrastinating, pronto.

Hyperbolic Discounting

Procrastination is the technical term for the preference of pleasure today over pleasure tomorrow. It’s been the subject of considerable research because the failure of tomorrow’s pensioners to plan for their old-age is a major concern for governments. They’d rather not have to deal at all with old people who don’t pay any taxes and who are a burden on healthcare services, but when they haven’t got any savings they’re worse than a nuisance as they tend to moan a lot and generally vote the wrong way.

One of the odder impacts of procrastination is the effect of time as captured by something called hyperbolic discounting utility. Generally people will take $100 today over $110 tomorrow but would rather have $110 in twenty one days over $100 in twenty. Of course, when the days count down and day 20 becomes today they reverse their preferences. This is profoundly irrational because over such short periods the risk of not being paid is minimal.

Paying Through The Nose

Our desire for short-term gratification and our inability to properly calculate the cost of money allows companies to make heaps of profits out of us. Pretty well anything that enables us to get what we want today without paying for it until tomorrow is enough to get us hooked. So offers of instant credit by stores gets people buying on the never-never like there’s no tomorrow. Only there is,

…

Tags: procrastination, retirement, retirement planning

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Case-Shiller, FHA And Home Prices

by ilene - September 30th, 2009 3:51 am

Welcome back from the break to Tom Lindmark. I was happy to click on your link and find something new!

Case-Shiller, FHA And Home Prices

housing market Courtesy of Tom Lindmark at But Then What

I’ll jump back into posting with a few thoughts on housing.

First, Case-Shiller as out with its July home price survey. It followed the trend of improving prices established over the last couple of months. Nationwide prices were up 1.6% and the number of cities showing price declines dwindled to just two. Here are the numbers for the twenty cities in the survey.

(About the numbers: The Case Shiller indices have a base value of 100 in January 2000. So a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the metro market.)

Home Prices, by Metro Area

Metro Area July 2009 Change from June Year-over-year change

Atlanta 110.06 2.3% -11.8%

Boston 154.53 1.2% -4.9%

Charlotte 121.23 0.6% -9.0%

Chicago 128.32 2.7% -14.2%

Cleveland 107.93 1.5% -1.3%

Dallas 121.17 1.2% -1.6%

Denver 128.79 1.5% -2.9%

Detroit 70.25 1.1% -24.6%

Las Vegas 106.08 -1.1% -31.4%

Los Angeles 163.86 1.8% -14.9%

Miami 147.27 1.3% -21.2%

Minneapolis 118.68 4.6% -17.3%

New York 173.66 0.8% -10.3%

Phoenix 106.66 1.8% -28.5%

Portland 150.06 1.1% -13.9%

San Diego 150.99 2.5% -12.3%

San Francisco 128.86 3.3% -17.9%

Seattle 149.44 -0.1% -15.3%

Tampa 142.84 1.4% -18.4%

…

Tags: Case Shiller, FHA, government subsidies, home prices, Housing Market, loans, Recovery

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Low Volume When The Market Rises Strongly

by Chart School - September 30th, 2009 12:48 am

Low Volume When The Market Rises Strongly

Courtesy of Rob Hanna at Quantifiable Edges

I showed yesterday how a very-low volume day during a decline can often lead to a short-term reversal. Today I will review a study that first appeared in the blog on 5/13/2008. It looks at extremely low volume on strong up days – like Monday. (Volume studies typically use the symbol $TVOL in Tradestation, which is their measure of NYSE volume. This is what is being used in the below study.)

[click on table to enlarge in a new window]

We’ve seen several studies like this over time and many of them were identified by the Quantifinder on Monday. With so many studies confirming each other, it seems the downside edge in these very low volume rises is for real. One caveat with Monday’s action though is that it was Yom Kippur, meaning a lot of traders were out of action and somewhat lower volume could be expected. Still, it’s been a steady enough edge that I decided to it was worth review.

Tags: low volume SPX rises, Quantifiable Edges, traders

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What Do They Know, Anyway?

by ilene - September 29th, 2009 11:55 pm

What Do They Know, Anyway?

Courtesy of Michael Panzner of Financial Armageddon

Despite the cornucopia of costly bailouts, the billions in borrowed money being scattered about like candy, the quick fixes like cash-for-clunkers, the junk-led surge in stocks and the accompanying euphoria on Wall Street, the distorted data points, and the relentless spin coming from the powers that be, most Americans simply aren’t buying the so-called recovery story.

Is it because they are not paying attention? Or is it because the "little people" — as the now departed Manhattan hotelier and real-estate magnate Leona Helmsley once referred to average Joes — have their eyes wide open to the disturbing reality that still surrounds us? You know my answer, of course.

Regardless, The Dallas Morning News reports on the latest group of genuinely hard-working Americans to make their less-than-upbeat feelings known in "Survey: Most Small Business Owners Say Recession Isn’t Over For Them":

Most small business owners remain cautious in their economic outlook, with more than two-thirds saying the recession is not over for them, according to this month’s Discover Small Business Watch index released on Monday.

In addition, more than half of owners rate the economy as poor, up from 48 percent in August. Only 10 percent said it’s excellent or good.

That’s a change after three consecutive months of gains. The index fell 2.1 points to 87.7 in September from August. The latest Discover index is based on a random telephone survey of 750 U.S. small business owners who have less than five employees and 3,000 consumers.

Ryan Scully, director of Discover’s business credit card, called it more of a pause than a reversal of recent trends. Many people “are eager for a definitive signal that the economy is on the mend, but America’s small business owners aren’t sending that message yet,” he said.

The outlook for the rest of the year isn’t much better. Nearly half of small business owners expect the fourth quarter to be worse than a year earlier, according to the index. Thirty percent expect no change and 21 percent expecting a year-over-year improvement.

Small businesses still struggle to control operating costs. The report shows that half of small business owners say they plan to cut spending on business development, such as advertising, inventory and capital expenditures,…

Tags: Consumer Confidence, green shoots, Small-business owners

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Metro Area	July 2009	Change from June	Year-over-year change
Atlanta	110.06	2.3%	-11.8%
Boston	154.53	1.2%	-4.9%
Charlotte	121.23	0.6%	-9.0%
Chicago	128.32	2.7%	-14.2%
Cleveland	107.93	1.5%	-1.3%
Dallas	121.17	1.2%	-1.6%
Denver	128.79	1.5%	-2.9%
Detroit	70.25	1.1%	-24.6%
Las Vegas	106.08	-1.1%	-31.4%
Los Angeles	163.86	1.8%	-14.9%
Miami	147.27	1.3%	-21.2%
Minneapolis	118.68	4.6%	-17.3%
New York	173.66	0.8%	-10.3%
Phoenix	106.66	1.8%	-28.5%
Portland	150.06	1.1%	-13.9%
San Diego	150.99	2.5%	-12.3%
San Francisco	128.86	3.3%	-17.9%
Seattle	149.44	-0.1%	-15.3%
Tampa	142.84	1.4%	-18.4%

Buy Pick of the Day: Fifth Third Bancorp Inc. (FITB)

Home Prices, by Metro Area

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