Stocks and investing thread

[NorthSideSox72]

Can you say MANIPULATION.

Your random sentence fragments make for strange posts. What are you talking about?

 

[Cknolls]

Your random sentence fragments make for strange posts. What are you talking about?

 

 

The FED manipulating the stock market.

[kapkomet]

http://biz.yahoo.com/ap/071214/economy.html

 

Gee, I'm shocked.

[DBAHO]

I don't know if Centro (the property group) trades in the U.S, but down here they have dropped from around $7 yesterday and currently they are trading at 42c.

 

They are having massive issues re-financing debt due to the credit crisis, and a lot of people think they could cease to be a going concern.

[Cknolls]

What happens to the stock prices and balance sheets of the investment banks when the gains they reported from the protection they bought from the bond insurers turns out to be for nought? It is a zero sum game, and the protection they bought will result in losses for the firms they hedged with. But if you put trades on that worked so well that you bankrupt your counterparty, you will not collect on those trades. Hence, we have MER, BSC and other major banks in talks to bail out ACA CAPITAL Holdings,which lost $1billion, a bond insurance company that has guaranteed $26 billion in mortgage securities. If this action fails the banks will be forced to take on billions in losses they had insured against.

[Cknolls]

BTW, ACA was de-listed from NYSE last week. Tradind .40 OTC on Tuesday. S&P kept its rating on ACA at A until today. These credit ratings agencies are another mess unto themselves, totally behind the curve.

Edited December 19, 2007 by Cknolls

[Cknolls]

How are MER and BSC and other banks going to bail out the bond insurers, when they need capital infusions themselves?

[Cknolls]

ACA is not even in the top three bond insurers. MBIA, AMBAC, and FGIC are the top three, and none of them deserve a AAA Rating. But , the ratings agencies do not want to downgrade Ambac or MBIA because it woould trigger the re-rating and possible forced sale of $2.5 trillion in municipal bonds.

 

 

 

MBIA backs $652 billion of municipal and structured finance bonds.

 

Ambac, the second largest bond insurer, guarantees $546 billion of securities.

 

FGIC corp. insures $314 billion.

[Cknolls]

Ryland Group's shares falling; Moody's cut rating to junk status.

[Cknolls]

I think Gold will breakout to the upside shortly, and even more so if the dollar happens to fall against the Euro again.

[kapkomet]

WE'RE ALL GONNA DIE!

 

/back to your regularly scheduled doomsday thread.

[NorthSideSox72]

Thanks for the analysis CKnolls, but... do we really need 3 minute updates on the bond sector?

 

And you do seem to take things to the nth degree here. Cutting the ratings for one bond carrier, even a huge one, will NOT cause the forced sale of anything like $2.5T, if anything at all. Unless they are cut way, way down.

[southsider2k5]

 

http://online.wsj.com/article/SB119786208643933077.html

 

Taxes and Income

December 17, 2007; Page A20

Every Democrat running for President wants to raise taxes on "the rich," but they will have to do something miraculous to outtax President Bush. Based on the latest available tax data, no Administration in modern history has done more to pry tax revenue from the wealthy.

 

Last week the Congressional Budget Office joined the IRS in releasing tax numbers for 2005, and part of the news is that the richest 1% paid about 39% of all income taxes that year. The richest 5% paid a tad less than 60%, and the richest 10% paid 70%. These tax shares are all up substantially since 1990, and even somewhat since 2000. Meanwhile, Americans with an income below the median -- half of all households -- paid a mere 3% of all income taxes in 2005. The richest 1.3 million tax-filers -- those Americans with adjusted gross incomes of more than $365,000 in 2005 -- paid more income tax than all of the 66 million American tax filers below the median in income. Ten times more.

 

 

For the political left and most of the media, this means only that the rich are getting richer, so of course they're paying more taxes. And it is true that the top earners have increased their share of total income. Yet, as the nearby table shows, the rich showed more rapid gains in reported income shares in the 1990s than in the first half of this decade. The share of the richest 1% jumped to 20.8% of total income in 2000, from 14% in 1990, but increased only slightly to 21.2% in 2005. This makes it hard to pin their claim of "rising inequality" on the Bush tax cuts, though the income redistributionists are trying. By this measure, the Clinton years were far worse for "inequality."

 

Notably, however, the share of taxes paid by the top 1% has kept climbing this decade -- to 39.4% in 2005, from 37.4% in 2000. The share paid by the top 5% has increased even more rapidly. In other words, despite the tax reductions of 2001 and 2003, the rich saw their share of taxes paid rise at a faster rate than their share of income. How could this be?

 

One explanation is that the Bush tax cuts reduced the income tax liability of middle and lower income households by more proportionately than the rich. The average family of four with an income of $40,000 saw its income tax liability fall by about $2,052 a year from the 2001 and 2003 tax cuts.

 

The IRS statistics also tell a more complicated economic story than the media claim. First, America continues to be a society of upward income mobility. Over the past decade, millions of Americans have joined the once highly exclusive club of six- and seven-figure earners. Some 304,000 Americans earned $1 million or more in annual income in 2005, compared to 110,000 in 1996 and 176,000 in 2000. Because there is no cap on the top income share, this increase in millionaires pushes the top income (and taxes paid) share higher. The number of millionaire households in net worth also increased to nine million in 2006, up from six million in 2001, according to TNS, a global market research firm.

 

Liberals decry this as proof of a new "gilded age." But we'd say these gains are a sign that more Americans are joining the ranks of the truly affluent. More than 13 million American households, or about one in 10, had an income of more than $100,000 a year in 2005. This is the kind of upward mobility that a dynamic society should want because it means that incomes aren't stagnant and opportunity continues to exist.

 

Keep in mind as well that the IRS only records the income that taxpayers report. Its data don't include income that the rich hide in tax shelters or otherwise defer. And there is evidence that lower tax rates since 1981 have caused the rich to declare more of what they earn. In 1980, when the top income tax rate was 70%, the richest 1% paid only 19% of all income taxes; now, with a top rate of 35%, they pay more than double that share. With lower rates and fewer tax loopholes after the 1986 reform, there is less incentive to shelter income to avoid tax.

 

The IRS figures are also misleading because they include income that can make many Americans rich for only a single year. In 2005, for example, taxpayers earned an estimated $600 billion in income from capital gains, which is reported on tax forms as part of adjustable gross income. But that might include the one-time gain from a middle-class senior couple that has lived modestly for decades but suddenly retires and sells the family business or home for $1 million or more. They may be "rich" in Hillary Clinton's definition of the term, but in fact they are benefiting in one tax year from a lifetime of hard work and thrift.

 

The amount of capital gains declared on tax forms has doubled since the tax rate was cut to 15% from 20% in 2003, which has also contributed to more Americans being "rich." Dividend income has also increased by at least 50% since that rate was cut to 15% from nearly 40% in 2003. So part of the income gains of the rich are simply a result of assets that have been converted into taxable income -- in part because of lower tax rates.

 

We hate to break up the media's egalitarian chorus with these details, but facts are facts. If Democrats really want to soak the rich, they'll keep tax rates where they are, or, better, lower them some more.

[NorthSideSox72]

 

http://online.wsj.com/article/SB119786208643933077.html

That is a poorly written article - and I don't think I've ever had to say that about the WSJ. A few errors and misrepresentations...

 

1. There is one Dem who has consistently said he wants a balanced budget amendment and will not raise taxes - Bill Richardson.

 

2. People in the very high income ranges get a lot of income from investments - interest, cap gains... that the lower income groups do not. And as the article even states... the AGI numbers will of course have gone up big time from 1990-2000, but not from 2000-2005. The article then adds a tepid line about "hard work", which is all well and fine but has zero to do with the analysis of the data.

 

Wow. I like the WSJ a lot, despite that they do clearly lean to the right. But this article is pretty bad - it spends all its time talking about tax portions for salary grades but then glosses over the "oh yeah, there is a reason for that" part.

 

[kapkomet]

That is a poorly written article - and I don't think I've ever had to say that about the WSJ. A few errors and misrepresentations...

 

1. There is one Dem who has consistently said he wants a balanced budget amendment and will not raise taxes - Bill Richardson.

 

2. People in the very high income ranges get a lot of income from investments - interest, cap gains... that the lower income groups do not. And as the article even states... the AGI numbers will of course have gone up big time from 1990-2000, but not from 2000-2005. The article then adds a tepid line about "hard work", which is all well and fine but has zero to do with the analysis of the data.

 

Wow. I like the WSJ a lot, despite that they do clearly lean to the right. But this article is pretty bad - it spends all its time talking about tax portions for salary grades but then glosses over the "oh yeah, there is a reason for that" part.

There are many one time vehicles to get you to the highest bracket. And also keep in mind that investments (DOLLAR WISE, not %) are pretty high right now. The gains tax revenue, even with the cut in rates, is still quite high due to cap gains, etc.

[southsider2k5]

http://biz.yahoo.com/ap/071221/economy.html?.v=6

 

Consumer Spending Surges in November

Friday December 21, 8:49 am ET

By Martin Crutsinger, AP Economics Writer

Consumer Spending Surges in November by Largest Amount in 3 1/2 Years

 

 

WASHINGTON (AP) -- Consumers put aside worries about slumping home sales and soaring gasoline prices and headed to the malls in November, pushing spending up by the largest amount in 3 1/2 years.

The Commerce Department reported Friday that consumer spending surged by 1.1 percent last month, nearly triple the October gain. The gain reflected various promotional efforts by retailers such as heavy discounting and longer store hours at the start of the holiday shopping season.

 

ADVERTISEMENT

 

 

The November advance was the biggest one-month jump since a 1.2 percent rise in May 2004 and was significantly above the 0.7 percent analysts had expected. Incomes were also up last month, rising by 0.4 percent, double the October increase but slightly below the advance that had been expected.

 

An inflation gauge tied to spending showed a 0.6 percent increase in November, the biggest jump in more than two years, reflecting last month's big surge in gasoline prices. Excluding energy and food, prices were up 0.2 percent. Core inflation is up 2.2 percent over the past 12 months, above the upper range of the Federal Reserve's comfort zone of 1 percent to 2 percent.

 

The big jump in spending came at a critical time for retailers -- the start of the all-important holiday shopping season. But there have been more recent signs that sales slowed in December.

 

Consumer spending is closely watched because it accounts for two-thirds of total economic activity. Many economists believe that overall economic growth will be at a barely discernible rate of 1 percent in the current quarter, as the country struggles with the fallout from the housing downturn and a spreading credit crisis that has made bank loans harder to get for individuals and businesses.

 

While the risks of a recession have risen, the Federal Reserve is fighting to avert a full-blown downturn by cutting interest rates. It has not been as aggressive as financial markets want, however, because of Fed worries about inflation pressures.

 

The 1.1 percent rise in consumer spending followed a 0.4 percent rise in October. Excluding the effects of inflation, spending would have risen by 0.5 percent, the best showing for inflation-adjusted spending in 11 months.

 

After-tax incomes were up 0.3 percent in November, but after adjusting for inflation, incomes actually fell by 0.3 percent after a 0.2 percent drop in October. Democratic presidential candidates, hoping to make the economy an issue in next year's contest, have been stressing the weak gains in incomes as an example of failed Republican policies.

 

With spending rising at a faster rate than savings, the nation's savings rate dipped into negative territory in November at 0.5 percent. That meant that households spent all of their incomes and either dipped into savings or borrowed to finance the higher level of spending last month.

[NorthSideSox72]

http://biz.yahoo.com/ap/071221/economy.html?.v=6

Which falls right in line with the early reports about Black Friday. Strong start.

 

But there have been negative indications in December, and I think those will turn out to hold too. Total sales will be disappointing.

 

[kapkomet]

Which falls right in line with the early reports about Black Friday. Strong start.

 

But there have been negative indications in December, and I think those will turn out to hold too. Total sales will be disappointing.

I'll tell you what, the stores yesterday were PACKED, and I say that compared to Black Friday. I was out both days and there was no comparison. You couldn't even find a parking spot in most places yesterday (Christmas Eve).

 

[NorthSideSox72]

I'll tell you what, the stores yesterday were PACKED, and I say that compared to Black Friday. I was out both days and there was no comparison. You couldn't even find a parking spot in most places yesterday (Christmas Eve).

We'll see what the numbers look like in a week or two. I hope you're right, because a decent retail season could help ease the rate of descent into this recession (or slow-down anyway) that we are headed for.

 

[NorthSideSox72]

Then we have this. October home prices fall a record 6.7% in October (rate annualized), the biggest ever drop for the 10-city Case-Shiller index. The 20-city version fell 6.1%.

 

Chicago at -3.2% annual-equivalent actually fared better than most.

 

[NUKE_CLEVELAND]

Then we have this. October home prices fall a record 6.7% in October (rate annualized), the biggest ever drop for the 10-city Case-Shiller index. The 20-city version fell 6.1%.

 

Chicago at -3.2% annual-equivalent actually fared better than most.

 

 

Selfish of me I know, but Im looking to buy a 1st home in the August/September time frame in a small town near Seattle ( that's where my next posting is going to be ) and I'll be set up to profit nicely if things stay the same or worsen with home prices.

[kapkomet]

Then we have this. October home prices fall a record 6.7% in October (rate annualized), the biggest ever drop for the 10-city Case-Shiller index. The 20-city version fell 6.1%.

 

Chicago at -3.2% annual-equivalent actually fared better than most.

And look what market fared the best... Dallas. I've been telling people since I've moved here that the market here is IDEAL for many reasons.

 

[Balta1701]

To save money, Bank of America will no longer be supplying its workers with such luxuries as soup in the cafeterias, flavored teas, and hand soap in the bathrooms.

 

It will be a long time before I shake hands with anyone at BofA.

[Balta1701]

Top Golden Parachutes for 2007

Executive Company *Total Payout Stock Owned Total

Bob Nardelli Home Depot $165 million $44 million $209 million

Stanley O'Neal Merrill Lynch $68.9 million $90.1 million $159.1 million

Ezra Dabah Children's Place $7.5million $124.6 million $132.1 million

David Neelman Jet Blue $858,000 $117.3 million $118.2 million

Charles Prince Citicorp $17.2 million $60.73 million $77.9 million

Gary Forsee Sprint $66.7 million $10 million $76.7 million

Ed Zander Motorola $29.4 million $37.1 million $66.6 million

Kevin Rollins Dell $53.4 million $1.2 million $54.7 million

Richard Lenny Hershey's $42.8 million $0 $42.8 million

Peter Boneparth Jones Apparel $19.3 million $11.2 million $30.5 million

Mitch Caplan ETrade $13.3 million $5.2 million $18.6 million

Paul Pressler The Gap $15.5 million $0 $15.5 million

Steven Heyer Starwood $0 $13.2 million $13.2 million

Mark Jackson Noble Corporation $3.9 million $0 $3.9 million

Krish Prabhu Tellabs $1.9 million $1.3 million $3.2 million

*Includes severance payouts, pensions, savings plans, options and other benefits.

CNBC

 

[Balta1701]

No one has posted it yet, but the December Jobs report was as bad as we've seen in a couple years.