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Archive for 2009

Chrysler Supreme Court Stay Application

Chrysler Supreme Court Stay Application

The Indiana Pensioners’ Supreme Court Stay Appeal presented below. Oddly, on page 6 the Indiana Pension Funds have for the first time noted that their first lien holdings are $100 million, whereas in all prior disclosures they noted it was $42 million. Does this number include the Oppenheimer face holdings? Otherwise it seems like a rookie clerical error that will not help their case. Alternatively, Indiana Pensioners have been purchasing Chrysler first lien debt in the open market.

Also, in the parallel case of Government Motors, a decent profiling of Judge Robert Gerber.





The Biggest Rip Off Ever?

The Perils of Securitization

The Biggest Rip Off Ever?

By MIKE WHITNEY at CounterPunch 

Is it possible to make hundreds of billions of dollars in profits on securities that are backed by nothing more than cyber-entries into a loan book?

It’s not only possible; it’s been done. And now the scoundrels who cashed in on the swindle have lined up outside the Federal Reserve building to trade their garbage paper for billions of dollars of taxpayer-funded loans. Meanwhile, the credit bust has left the financial system in a shambles and driven the economy into the ground like a tent stake. The unemployment lines are growing longer and consumers are cutting back on everything from nights-on-the-town to trips to the grocery store. And it’s all due to a Ponzi-finance scam that was concocted on Wall Street and spread through the global system like an aggressive strain of flu. This isn’t a normal recession; the financial system was blown up by greedy bankers who used "financial innovation" game the system and inflate the biggest speculative bubble of all time. And they did it all legally, using a little-known process called securitization.     

Securitization--which is the conversion of pools of loans into securities that are sold in the secondary market--provides a means for massive debt-leveraging. The banks use off-balance sheet operations to create securities so they can avoid normal reserve requirements and bothersome regulatory oversight. Oddly enough, the quality of the loan makes no difference at all, since the banks make their money on loan originations and other related fees. What matters is quantity, quantity, quantity; an industrial-scale assembly line of fetid loans dumped on unsuspecting investors to fatten the bottom line. And, boy, can Wall Street grind out the rotten paper when there’s no cop on the beat and the Fed is cheering from the bleachers. In an analysis written by economist Gary Gorton for the Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference titled, "Slapped in the Face by the Invisible Hand; Banking and the Panic of 2007", the author shows that mortgage-related securities ballooned from $492.6 billion in 1996 to $3,071.1 in 2003, while asset backed securities (ABS) jumped from $168.4 billion in 1996 to $1,253.1 in 2006. All told, more than $20 trillion in securitized debt was sold between 1997 to 2007. How much of that debt will turn out to be worthless as foreclosures skyrocket and the
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Sunday Readings

Interesting interview with Justice Antonin Scalia (below).  Click here for a free subscription to PSW Report, it’s really easy and you’ll have immediate access to all the articles. – Ilene

Tyler Durden’s Sunday Readings

  • Gordon Brown repeats vow not to go away (Telegraph)
  • Airline execs say industry outlook still grim (Reuters)
  • Extreme dumb money bullish sentiment (Technical Take)
  • Blackrock set to become largest quant fund in the world (Telegraph)
  • Monetizing debt: The grandest of larcenies (Daily Reckoning)
  • Evans-Pritchard: Merkel’s inflationary fretting may wake the bears from hibernation (Telegraph)
  • Bankruptcy filings rise to 6,000 a day (USA Today)
  • Daniel Gross: The bond war – Krugman vs Ferguson (Slate)
  • Roundup of (un)employment charts (Big Picture)
  • Justice Antonin Scalia: "The US Constitution is dead" (Fora)
  • Eli Broad’s remedy for the auto industry (Fora)

Chartology

Big thanks to Gayle and Sherrie for their donations and support.

 


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The way of a trader

The way of a trader

Courtesy of Allan

The focus here is on the bigger picture, although eventually this post will drill down to some more tradable analysis. For starters, lets look at a time frame I have seldom or ever posted before, a monthly view of the SPX:


During the past 15 years, we see two major up moves and two major down moves. Despite the rally of the past three months, the chart shows prices still mired in the most recent down move. Observe the angles of the four major directional moves, one should stand out, the most recent down move. It is by far the steepest of them all. What do you think this means?

The chart above is again a monthly chart, this time with Fibonacci retracements. Notice how prices have just now reached a 25% retracement level of the entire two year decline and that a typical 38% retracement would come in at about SPX 1015. Also observe how short this current three-month rally has been when compared to an 18 month decline. See how Advanced GET is suggesting that the completion of wave 4 will be between 960 – 1020.

Below is a close-up of the above chart via a weekly chart:


This above chart has a more completed look to the wave 4 advance from early March. The problem is that a confirmation will not occur until the Blue Wave sell level is hit. This level was 842.99 last week and will probably be at a higher level next week. We will know the new reversal level on Monday.

Moving to a daily view of the SPX, here is an interesting perspective courtesy of Market Club:


The MC chart is on a buy with a sell basis the weekly charts under 880. I’ve added a Parabolic stop/reverse indicator which is suggesting a level of 887.65 will generate a reverse-short signal. So with a weekly Triangle sell at 880 and the daily at 887.65, we have the makings of important support levels that if breached would signal a major change of trend.

Here is a daily view of the SPX, showing a much closer Blue Wave sell level:


The daily chart above has a much closer Blue Wave reversal sell level, 918, only a little over 20 SPX points lower.

Finally, the 120-minute chart, a time frame…
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Optimistic Unemployment and Housing Forecasts Looking Downright Silly

Optimistic Unemployment and Housing Forecasts Looking Downright Silly

Courtesy of Mish

Economics may be the "dismal science" but economists as a group sure seem to be an optimistic lot. Yes, there are a handful of "doomers" like Nouriel Roubini but most economists did not see the recession coming until it was already 10 months old.

Please consider unemployment forecasts. The Fed forecast unemployment at 8.4% in 2009 and the "adverse forecast" was at 10.3% in 2010.

Hello Ben, in case you did not notice, Jobs Contract 17th Straight Month; Unemployment Rate Soars to 9.4% and Bankruptcy Filings Reach 6,000 A Day.

Adverse Assumptions

Let’s take a look at all the Fed’s adverse assumptions for the recently conducted "stress-free test" as laid out in the Fed’s Stress Test White Paper.

Click on Table for Sharper Image

1 Percent change in annual average.
2 Baseline forecasts for real GDP and the unemployment rate equal the average of projections released by Consensus Forecasts, Blue Chip, and Survey of Professional Forecasters in February.
3 Annual average.
4 Case?Shiller 10?City Composite, percent change, fourth quarter of the previous year to fourth quarter of the year indicated.

Case Shiller Housing Index

Please consider the latest Case Shiller Housing Index.

The S&P/Case-Shiller Home Price Index ? which covers 20 metropolitan areas ? showed a price decline of 18.7% in March, suggesting a greater fall in prices than expected. Analysts were looking for an -18.40% reading, following the -18.67% reading for February. The 10-city measure fell a similar 18.6%.

The numbers were even worse on a quarterly basis. The Q1 report ? which covers all nine U.S. census divisions, rather than just 20 metropolitan areas ? recorded a 19.1% decline compared to the first quarter of 2008, marking the steepest fall ever in the 21-year history of the index.

“All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines,” said David Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Seventeen metro areas recorded a monthly decline in March, with Minneapolis, Detroit and New York posting record monthly declines.”

Note that the baseline scenario for housing for 2009 is -14%. Home prices are already down 19.1% and the adverse scenario will be under


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The S&P 500 Conundrum

Click here to sign up for a free subscription to the PSW Report.  It’s easy! 

Adam Hewison, co-creator of Market Club, sent me his new video analysis of the S&P 500, which he calls a "conundrum wrapped in an enigma" – here’s his intro and video below. – Ilene

The S&P 500 Conundrum

Courtesy of Adam of Market Club

A conundrum wrapped in an enigma… that’s the S&P 500 index.

I was just looking at the S&P 500 index as we come to a close for the week of June 6th. While the market appears to be higher for week, it also appears that we’re losing momentum on the upside.

This can be seen in the second attempt to close over the 950 level. Also some of our momentum indicators are showing negative divergences. This means that while the S&P 500 is making new highs for the move, the momentum indicators are not showing the same configuration and making new highs. This can often be the first clue of a potential market correction.

In this short video on the S&P 500, you’ll will see exactly what I’m looking at and why.

[Click on chart to watch the video.]

 

 





Sunday Readings

Sunday Readings

  • Gordon Brown repeats vow not to go away (Telegraph)
  • Airline execs say industry outlook still grim (Reuters)
  • Extreme dumb money bullish sentiment (Technical Take)
  • Blackrock set to become largest quant fund in the world (Telegraph)
  • Monetizing debt: The grandest of larcenies (Daily Reckoning)
  • Evans-Pritchard: Merkel’s inflationary fretting may wake the bears from hibernation (Telegraph)
  • Bankruptcy filings rise to 6,000 a day (USA Today)
  • Daniel Gross: The bond war – Krugman vs Ferguson (Slate)
  • Roundup of (un)employment charts (Big Picture)
  • Justice Antonin Scalia: “The US Constitution is dead” (Fora)

  • Eli Broad’s remedy for the auto industry (Fora)

Chartology

Big thanks to Gayle and Sherrie for their donations and support.





GE/NBCU TRYING TO STIFLE OTHER MEDIA’S COVERAGE OF COMPANY

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EXCLUSIVE: GE/NBCU TRYING TO STIFLE OTHER MEDIA’S COVERAGE OF COMPANY: Immelt Orders Nielsen Media Iced Over GE-NBCU-Obama Story: NBCU’s Zucker Follows Orders And Freezes Out The Hollywood Reporter For Past 6 Weeks

By Nikki Finke of Nikki Finke’s Deadline Hollywood Daily

Excerpt:

It’s a very dangerous situation when any huge multinational corporation wages war against media companies. Especially when that huge multinational corporation is General Electric, which itself owns a media company, NBC Universal, and it’s using all its power and influence and money to try to harm another media company, Nielsen, and Nielsen Business Media, and its trade publication The Hollywood Reporter. This certainly sounds like a situation which the FCC, and the FTC, and the U.S. Justice Department should be investigating. Just one problem: the controversy stems from GE/NBCU’s coverage of President Obama. Here’s what happened:

According to my sources inside and outside Nielsen Business Media, The Hollywood Reporter trade publication ran a story dated April 22nd and updated on April 24th covering the "drama" at the most recent GE shareholders meeting in Orlando. THR‘s West Coast Business Editor Paul Bond wasn’t sent to the meeting, but he interviewed about half a dozen people who’d been inside the shareholders meeting and told him what transpired (see below). Bond’s THR story focused on the attempts by stockholders and Fox News Channel and other media to find out whether or not GE Chairman/CEO Jeffrey Immelt ordered his news operations to be less critical of President Obama and his policies.

Bond’s story was immediately picked up by The Drudge Report under the headline "GE shareholders outraged over MSNBC bias; Microphone cut off." It became a widely posted news story on conservative and liberal and media websites everywhere. That’s when, sources inside and outside Nielsen Business Media tell me, GE Chairman Jeff Immelt ordered a GE company-wide ban on all of The Hollywood Reporter‘s parent company Nielsen: advertising, editorial, the works… Continue here.

 


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Goldman Now Dominating Dark Pool Trading; Who Is Sigma X?

Goldman Now Dominating Dark Pool Trading; Who Is Sigma X?

The last time I discussed dark pools, it was in the context of SEC regulation due to the increasing sense of opacity of what happens in this subset of the stock market. A new Reuters article adds fuel to the fire, indicating that not only are dark pools aggressively taking away from exchange trading action, but it is in fact bank-run dark pools that are the primary culprit.

“Dark pools,” where orders are anonymously matched so that traders do not alert the wider market to their intentions, have triggered concerns that stock pricing may not be transparent.

But the growth of those run by broker-dealers such as Goldman Sachs and Credit Suisse are squeezing other “dark” electronic trading venues, as well as exchanges, resulting in lower fees.

“The dark pools are definitely going to grow; the wild card is any new regulation,” said Dmitri Galinov, director and head of liquidity strategy at Credit Suisse’s advanced execution services, running the bank’s CrossFinder dark pool.

Overall, dark market share rose last year, but in the last eight months hit a ceiling near 9 percent of the U.S. market.

And while dark pools controlled by independent private ventures such as ITG would be a perfectly normal response to market demand for liquidity facilitation, it is surprising to discover that a vast majority of the pools are in fact controlled by the very same recipients of TARP funding (who are now doing all they can to issue stock so they can repay their TARP bonus burden).

Dark pools owned by brokers and large market makers accounted for 70 percent of all dark U.S. equity volume in April, up from 64 percent in December and from 58 percent a year earlier, according to Rosenblatt Securities, a widely referenced agency broker that tracks 18 dark pools.

Dark pools, which usually publish trades to the consolidated tape with little detail well after they are executed, have been around for decades, but their brands have gained more exposure in the last few years.

As frequent Zero Hedge readers know, when it comes to program trading on a traditional exchange such the


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The New, New Normal

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The New, New NormalVisit John's MySpace Page

Courtesy of John Mauldin, Thoughts from the Frontline Weekly Newsletter

We are coming to a critical inflection point, perhaps the most critical point that we have had in 70 years for the US and to a great extent the global economy. The choices we make (or that Congress and the Fed make for us) will affect not just our investment portfolios but business and our jobs for a very long time. Last week I talked about the three paths we face as a nation. I want to go back to that theme and expand upon it. You need to clearly understand what the risks are so that you can interpret the actions and data that will be coming at us in the next few quarters. I am feeling a little tired today, so I am going to take the liberty to reproduce Bill Gross’s latest comments as well, which are somewhat in line with my own.

A Different Perspective on Health Care

But before we jump into the letter, I want to acknowledge the very large response I got from readers about the cut and paste I did about the differences between the national health care systems of Canada and Great Britain the health care system of the US. To say that I touched a raw nerve is an understatement. I should also admit that I learned a great deal from some very cogent and thoughtful letters. I often write about the problems with using selective statistics in gauging the economy. I have learned that you can do the same with health care statistics.

There are many letters I could quote, but let me give you a counter for the statistics from last week from Raoul Pal of Spain. And of course, there are other statistics that can be brought in to make almost any case you want. But I found these to be very thought-provoking.

"Using the Economists World in Figures I think there is a very interesting and maybe appalling story to tell. In its simplest terms a healthcare system is there to extend the longevity of live of the population. It is the single best and simplest way to judge it because we can all find examples of where one country is better than…
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Zero Hedge

LooTeRS!!!

Courtesy of ZeroHedge. View original post here.

Submitted by williambanzai7.

...

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Phil's Favorites

Bloomberg Sensationalism and Inaccuracies Regarding "Forced Nationalization of Crimea"

Courtesy of Mish.

A few days ago a friend emailed the Bloomberg article Russia Delivers a New Shock to Crimean Business: Forced Nationalization.

I replied something along the lines of "interesting, but I am going to bounce this of Jacob Dreizin", a US citizen who provides frequent updates to me regarding Ukraine.

I also bounced the article off Pater Tenebrarum at the Acting Man blog. Pater commented ...
Russian oligarchs stealing stuff back from Ukrainian oligarchs would be my guess. I should add, the arbitrariness of this process is of course quite disturbing (regardless of the fact that Ukraine's oligarchs are a bunch of corrupt thieves). But this strikes me mainly as a case of politically motivated payback. The oligarchs all aligned themselv...



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Chart School

The Big Four Economic Indicators: Real Retail Sales

Courtesy of Doug Short.

Note from dshort: With yesterday's release of the Consumer Price Index for October, I've updated Real Retail Sales for October.

Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:

  • Industrial Production
  • Real Personal Income (excluding Transfer Payments)
  • Nonfarm Employment
  • Real Retail Sales
  • ...

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    All About Trends

    Mid-Day Update

    Reminder: David is available to chat with Members, comments are found below each post.

    Click here for the full report.




    To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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    Market Shadows

    EZCH - Not So EZ Year

    EZCH - Not So EZ Year

    By Ilene 

    After a disappointing quarter and some probable tax-selling, EZchip might be a good turnaround for next year.

    So I'm thinking we'll sell a stock or two out of Paul's otherwise neglected Virtual Portfolio (check back) and add EZCH.

    ...

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    OpTrader

    Swing trading portfolio - week of November 17th, 2014

    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 ...



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    Sabrient

    Sector Detector: Investors make up new rules for their new market paradigm

    Reminder: Sabrient is available to chat with Members, comments are found below each post.

    Courtesy of Sabrient Systems and Gradient Analytics

    By Scott Martindale

    Investors in U.S. equities seem to have embraced a new market paradigm in which upside spikes come more swiftly than the downside selloffs. Remember when it used to be the other way around? When fear was stronger than greed? The market is consolidating its gains off the early-October V-bottom reversal, and no one seems to be in any hurry to unload shares this time around, with the holidays rapidly approaching and all. After all, there are bright blue skies directly overhead giving hope and respite from the early freeze blanketing the country.

    In this weekly update, I give my view of the current market environment, offer...



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    Stock World Weekly

    Stock World Weekly

    Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

    The newest Stock World Weekly is ready. Click here for the this weekend's reading and sign in with your PSW user name and password. 

    Picture credit: AnnaER at Pixabay. 

    ...

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    Digital Currencies

    Ukraine Central Bank Bans Bitcoin "To Protect Citizens" From Financing Terrorism

    If you would have supposed that Ukraine had enough problems to make banning bitcoins a backburner issue, you'd have been wrong. The rationale, "to protect consumers' rights" makes little to no sense... The other one, "to keep money in the country" makes more sense. 

    Ukraine Central Bank Bans Bitcoin "To Protect Citizens" From Financing Terrorism

    Courtesy of ZeroHedge. View original post here.

    The Hryvnia has collapsed to new record lows near 15/USD this morning. The Central Bank and bankers "agreed to keep UAH at 15-16/USD" but are &qu...



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    Option Review

    Yamana Gold call options sink

    Yamana Gold call options sink

    By Andrew Wilkinson at Interactive Brokers

    A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract o...



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    Pharmboy

    Biotechs & Bubbles

    Reminder: Pharmboy is available to chat with Members, comments are found below each post.

    Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

    First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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    Help One Of Our Own PSW Members

    "Hello PSW Members –

    This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

    Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

    http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

    Thank you for you time!




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    Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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