Stocks and investing thread

[kapkomet]

The issue with all of this is / was the INVESTMENT into subprime companies. And that has nothing to do with the fed doing anything. They are trying to fix something with water when it takes oil, if you pardon the analogy.

[southsider2k5]

50 BP?

 

25 beeps

[southsider2k5]

In a speech at the University of Rochester, Plosser said the Fed cannot resolve the cause of the tension in financial markets, uncertainty over the value of complex securities tied to subprime and other mortgages and who holds these derivatives.

 

"It is important to recognize that the Fed cannot resolve this price discovery problem. The markets will have to figure this out," Plosser said in his prepared remarks.

 

"Arbitrarily lowering interest rates or providing liquidity to the market does not provide the answers the market seeks," Plosser said.

Indeed, rate cuts might only delay the painful process, he said.

Philadelphia Fed President Charles Plosser strongly suggested that he is not in favor of an additional rate cut at the next policy meeting on Dec. 11.

The only problem is: Plosser does not have a vote for the meeting.

SO why lower rates???

 

Answer: They shouldn't. Its inflationary.

[kapkomet]

Answer: They shouldn't. Its inflationary.

Yep. And in this climate, highly so, IMO.

[southsider2k5]

Well, here's what a guy with a vote is saying.

 

The problem is that banks don't want to do they overnight lending when they know the fed keeps making cash injections into the system, thereby eliminating the lending risk, and keeping the overnight rates artificially low, by not allowing them to float up to where they would be willing to lend at. Once again it is the law of unintended consequences at work.

[Cknolls]

Answer: They shouldn't. Its inflationary.

 

 

They don't seem to think so. Just exclude food and energy.

[Cknolls]

Look at mortgage rates since the first ease. They haven't budged. In fact they are higher than they were a year ago. Look at the LIBOR. It is up 11 days in a row. It is trading 59 bps over the Fed Funds Rate.This tells you that banks are holding on to their cash.

 

Oh yeah look at CFC. markey up 310. CFC in the red. All is not well.

Edited November 28, 2007 by Cknolls

[Cknolls]

Does anyone think that C investment was so they could pay their dividend for the next 3 qtrs? Look what happened to FRE when they cut their dividend by 50% last week. C will do anything to avoid cutting their dividend, but methinks it is a matter of time. Lay off thousands of workers or cut the dividend? easy choice to me. Buy C at $25. Nice!!

[Cknolls]

Is this a month end liquidation rally? 1466 is the 20 DMA and 1481 is the high of the previous rally attempt on Nov.14.

 

 

Will we break the last hour sell-off pattern again today?

[DBAHO]

So I've heard down here the chances of America having a recession next year are pretty good.

 

Just wondering if you guys think that will be the case or not?

[kapkomet]

So I've heard down here the chances of America having a recession next year are pretty good.

 

Just wondering if you guys think that will be the case or not?

NSS will tell you that things are just rosey.

 

At this point, I'd say it's better then a 50-50 shot at a recession.

[southsider2k5]

NSS will tell you that things are just rosey.

 

At this point, I'd say it's better then a 50-50 shot at a recession.

 

I would say the odds are way worse than you think. I would say there is about a 10% chance of a recession, simply because the export #'s are almost exactly replacing the losses in the housing market. The economy will suffer, but I don't think we will ever hit the technical definition of a "recession".

[NorthSideSox72]

NSS will tell you that things are just rosey.

 

At this point, I'd say it's better then a 50-50 shot at a recession.

Rosey? I think you've mistaken me for some other poster. I do see a long, slow decline coming, probably at recession levels. I just don't think its going to be because of inflation as you do. Inflation may go up a bit, but I think the bigger killers will be energy policy, continued high military spending in the government, and massive credit card debt. Each of those three things has multi-pronged negative effects that are just starting to spin off problems into the greater economy. Add into that the mortgage crisis, which will probably peak in 2008 but still linger awhile, and you have a formula for medium term recession.

 

But I suppose if you think we're headed into the next Great Depression, then yeah, I think things are pretty rosey.

 

[kapkomet]

Rosey? I think you've mistaken me for some other poster. I do see a long, slow decline coming, probably at recession levels. I just don't think its going to be because of inflation as you do. Inflation may go up a bit, but I think the bigger killers will be energy policy, continued high military spending in the government, and massive credit card debt. Each of those three things has multi-pronged negative effects that are just starting to spin off problems into the greater economy. Add into that the mortgage crisis, which will probably peak in 2008 but still linger awhile, and you have a formula for medium term recession.

 

But I suppose if you think we're headed into the next Great Depression, then yeah, I think things are pretty rosey.

I do think we'll see a couple of quarters of no growth - negative growth but it's not going to be a deep recession. The truth of the matter is we probably could use one to clean up the riff raff in the economy.

[Cknolls]

It all rides on the employment numbers. If unemployment starts to creep, it accelerates the recession. And the way it is setting up, there are going to be lotsa layoffs in the financial sector.

Edited November 29, 2007 by Cknolls

[southsider2k5]

More on the dollar fall's impact in the US...

 

http://www.time.com/time/business/article/...=rss-topstories

 

A Great Time to Shop — for Foreigners

Thursday, Nov. 29, 2007 By JUSTIN HORWATH AND JAKE GROVUM/BLOOMINGTON Lisa Riddick (left) and Vanessa Murray, both from Kent, England, shop at Saks Fifth Avenue in New York City.

Tina Fineberg / AP

Article ToolsPrintEmailReprintsSphereAddThisRSS Gunnhildur Lilja Sigmundsdottir came to Minneapolis from Iceland late last week with nothing but pajamas, underwear and an empty suitcase. But during four days of shopping at the Mall of America in Bloomington, Minn., she snagged a wedding dress, five pairs of shoes and seven pairs of pants. "If I needed anything, I just bought it," she says. "[Currency plays] a very big role because the dollar is so low right now." The United States has the best deals in the world right now — that is, if you're not American.

 

Overseas shoppers whose countries have a stranglehold on U.S. currency are parachuting into to places like the Mall of America as if they were diplomats — finding deals and flying back to their homelands with their suitcases filled. "They're mentioning the exchange rate more often" as the reason for their visits, says Dan Hildebrant, an assistant sales manager at Oakley, whose sunglasses store in the Mall of America is a beacon for European and Asian shoppers. The numbers are hard to argue with. A Briton shopping at Oakley could buy a $120 pair of newly released Industrial M Frames sunglasses for 60 pounds. Two years ago, the same glasses would have cost more than 70 pounds. A buyer from France can get the same pair for about 80 Euros; just two years ago she would have had to spend 102 Euros.

 

Lee Preston was lured to the Altamonte Springs mall in Florida because of the favorable rate, flying in from Britain for Black Friday last week. Showing off three expensive watches to his traveling companions, Preston said the dollar’s woes have made his trip especially economical. "I'm sorry for you that the dollar's so low but it's nice for me," Preston told TIME. In the shops of Manhattan, British accents are almost as common as those from New Jersey.

 

It's all part of the sinking dollar's mixed messages to the American public. Mark Bergen, chair of the marketing department at the University of Minnesota's Carlson School of Management, says the psychology of the falling dollar can be viewed through two different frameworks. For the pessimistic consumer in America, their buying power is depleting as foreign-made goods become more expensive. But for the optimistic economist, America is merely paying off the trade deficit and boosting its gross domestic product. "It can kind of shake your confidence a little," Bergen says. "It's just kind of a thing that looks bad. But when people are looking at the health of the economy, it can just help in the long run." Bergen says he doesn't expect trends to change anytime soon.

 

At the Holiday Inn near the Mall of America Tuesday, Evie Walters, director of sales at the hotel, opened a big conference room packed with luggage belonging to Icelanders, whose patronage is especially popular here due to cheap flights and no taxes on clothing and shoes. Most of them, like Sigmundsdottir, come before the holidays and book rooms for about a week, with nothing but the clothes on their backs, and leave with over 50 pounds of clothing and toys. "They're power-shopping here every day," Walters says. Many interviewed after Black Friday say they spent upwards to $5,000 each.

 

Although U.S. consumers are feeling the pinch of the waning dollar, both domestically and abroad, the American seller's ear is keen to accented English. At the Mall of America, the number of international visitors has jumped 10% this year, according to Doug Killian, associate director of tourism at the mall. "We're finding in some cases that a shopper might need a pair of shoes, but because the exchange rate is so favorable they'll buy three or four pairs," he says. Sigmundsdottir said one pair of Puma sneakers costs the equivalent of $200 in Iceland, so she bought two pairs at the Mall of America for $89 apiece. "Anybody who's selling is going to love this," Bergen says. With reporting by Michael Peltier/Miami

[DBAHO]

I would say the odds are way worse than you think. I would say there is about a 10% chance of a recession, simply because the export #'s are almost exactly replacing the losses in the housing market. The economy will suffer, but I don't think we will ever hit the technical definition of a "recession".

Apparently the housing market over there is worse than when you had the recession back in 1991. The Federal Reserve could cut it's benchmark rate to 3%, and the Consumer Confidence Index also fell from a consensus of 91.0 to 87.3

 

China's economy looks like it maybe slowing down a bit as well, and that could possibly affect exports out of the U.S.

[DBAHO]

It all rides on the employment numbers. If unemployment starts to creep, it accelerates the recession. And the way it is setting up, there are going to be lotsa layoffs in the financial sector.

There are predictions that if a recession took place over there, unemployment could rise from 4.7% to around 5.5% by the end of next year, which is certainly quite a jump. Interesting times ahead....

[southsider2k5]

On the good news front... Crude Oil is down under $90, while gasoline is quickly re-approaching $2.20. Crude is down almost $10 from its intraday highs, and about $8 from its closing highs. Also natural gas is back under 7.50.

 

Stock futures are up over 160 in pre-open activity.

[Cknolls]

The Fed doesn't have a Band-Aid big enough to cover up the festering wound. I'm selling the 1490 level in SPX when it touches this morning.

[NUKE_CLEVELAND]

The Fed doesn't have a Band-Aid big enough to cover up the festering wound. I'm selling the 1490 level in SPX when it touches this morning.

 

 

Probably a good trade but for the wrong reason. We got as low as 1405 earlier in the week and now we're knocking on resistance. 85 points on the S&P is a lot to digest in one week. I bet you we're above that level by year end though.

[Balta1701]

Talk seems to be growing about a 50 basis point cut here in Dec.

[kapkomet]

Talk seems to be growing about a 50 basis point cut here in Dec.

f***ing insane. Not just insane, but f***ing insane.

 

 

[Cknolls]

f***ing insane. Not just insane, but f***ing insane.

 

Exactly. Keep lowering rates while the real cost of money (LIBOR), keeps rising. Very smart!

[kapkomet]

NSS72's investment pick of the day...

 

Come Monday, any of you stock and index pickers out there, I'd strongly advise you short the major non-luxury retailiers. Its really a perfect little storm of positives for them that will not hold up. Black Friday wasn't as bad as hoped, which gave them rise. But that Black Friday rush was partially boosted by much better weather than previous years, not to mention that Black Friday shoppers are highly price-motivated. A strong showing may in fact mean a weak overall holiday market. Add in the huge amounts of debt problems lately and the housing crunch... I think by early January, we'll see the retailers did worse than last year.

 

And today... from the AP...

 

The holiday shopping season got off to an uneasy start despite a big Thanksgiving weekend as consumers took advantage of big discounts and then pulled back, leaving retailers with mixed sales results for November.

 

Gen-ie-ous, NSS.