Continue reading Do bond yields hint at another credit crisis?

Do bond yields hint at another credit crisis? originally appeared on BloggingStocks on Mon, 01 Jun 2009 14:40:00 EST. Please see our terms for use of feeds.

Wells Fargo

Continue reading Wells Fargo issues an early earnings surprise, boosting the market

Wells Fargo issues an early earnings surprise, boosting the market originally appeared on BloggingStocks on Thu, 09 Apr 2009 09:00:00 EST. Please see our terms for use of feeds.

Continue reading Doomsday Scenario: Craig's List is another nail in the news coffin

Doomsday Scenario: Craig's List is another nail in the news coffin originally appeared on BloggingStocks on Tue, 07 Apr 2009 17:06:00 EST. Please see our terms for use of feeds.

Continue reading MBIA reports a Q4 loss thanks to mortgage problems

MBIA reports a Q4 loss thanks to mortgage problems originally appeared on BloggingStocks on Tue, 03 Mar 2009 11:00:00 EST. Please see our terms for use of feeds.

Continue reading Construction spending in 2008 falls by record amount

Construction spending in 2008 falls by record amount originally appeared on BloggingStocks on Mon, 02 Feb 2009 13:16:00 EST. Please see our terms for use of feeds.

Yes, you may hear that the corporate bond market is breathing again and the exotic "TED spread" -- the difference between T-Bill and LIBOR rates -- is shrinking, but no one is lending money to anyone and confidence is non-existent.

Recently the entire country of Spain (meaning Spanish national debt) was put on credit watch due to deteriorating economic conditions.

Remember, the Wall Street Crash of 1929 and the Great Depression (I am not forecasting either one, by the way) started at a medium-sized bank in Austria, not on Wall Street or in London.

Credit markets are not only frozen because we don't know what is on the banks' balance sheets; they are also frozen because banks are repairing their own balance sheets by hoarding capital.

Be sure to read all 7 reasons the stock market isn't going up any time soon.

Michael Shulman is a contributor to OptionsZone.com.

Seven reasons the market is not going up any time soon: #3 Credit markets remain frozen originally appeared on BloggingStocks on Sun, 25 Jan 2009 16:00:00 EST. Please see our terms for use of feeds.

The banks are a wreck and now the pieces are beginning to fly apart, with Citigroup (NYSE: C) struggling the most and beginning to dismember itself.

Meredith Whitney, the uber-analyst who has been right about everything in banking for more than two years, said there were $2.4 trillion in asset downgrades at the end of last year by the credit agencies. This will really whack the banks' critical Tier 1 capital.

And even if you forget earnings problems, the banks will continue to have no money to lend, which will strangle businesses and the economy.

Be sure to read all 7 reasons the stock market isn't going up any time soon.

Michael Shulman is a contributor to OptionsZone.com.

Seven reasons the market is not going up any time soon: #4 The banks are falling apart originally appeared on BloggingStocks on Sun, 25 Jan 2009 12:00:00 EST. Please see our terms for use of feeds.

Recent studies indicate that in spite of popular thinking, there is no credit crunch.

Bank credit and bank lending are at all time highs. Companies with good balance sheets are having no problem in obtaining credit. The Libor Rate, which is a measure of lending activity, is down to 2%. Even economists at the Federal Reserve are baffled by widespread comments that the U.S. is having a credit crunch.

According to reports on the credit situation, it was only a few banks that got overextended and got into trouble, which then triggered the huge bailouts we have seen.

Now where do we go from here? There should be some kind of investigation as to the number of banks and which banks caused this mess. These bankers should be identified and asked to step down immediately. We no longer can tolerate such obvious misdeeds.

Credit crunch: Why not tell the truth? originally appeared on BloggingStocks on Fri, 12 Dec 2008 10:45:00 EST. Please see our terms for use of feeds.

Yesterday's election marks the end of a string of economy-destroying ideas that stretch back to 1980. America rejected the idea that it's right to run a government of the rich for the rich. It figured out that when you cut taxes for the top 1%, run record deficits, double the national debt, and eliminate regulation, you don't get trickle down, you get meltdown. Barack Obama's election means that these ideas are history.

What will replace them? Obama has already discussed economic stimulus, middle class tax cuts, mortgage modification, a moratorium on foreclosures, infrastructure spending, wider health care coverage, and investment in alternative energy.

But the 43rd president left Obama with a challenge -- to figure out the underlying problems with the current financial system and rebuild it in a way that will work in the short and longer term. Obama must come up with new ideas on which to rebuild the crumbling ruins he's inheriting.

To do that, he will create a team of experts from both parties. That team should analyze the sources of the problems that beset the economy and financial system. And it must agree on principles which can be used to craft legislation that will rebuild the financial system. As I've posted, I believe what they'll find is the need to create a system that ends securitization. limits leverage, delivers transparency, ties compensation not to deal size but to long-term profitability, and builds firewalls between markets around the world.

Continue reading President Obama and the economy

President Obama and the economy originally appeared on BloggingStocks on Wed, 05 Nov 2008 10:30:00 EST. Please see our terms for use of feeds.

One of the characteristics of the current housing crisis is that it is an avalanche. As it heads downhill it picks up speed. The longer it goes unsolved, the harder it will be to fix. Foreclosures continue to increase. Prices continue to fall. As unemployment moves toward 7% and above, those numbers are not going to improve.

Odd then, the no one in the federal government can stop fighting over how to fix the problem long enough to come to a quick solution and begin to fix the situation before a catastrophe turns into a cataclysm.

According to The Wall Street Journal, "The FDIC has been developing a proposal, which some estimate could help between two and three million homeowners." It is less clear what the administration wants to do, but it is concerned that baling out homeowners will encourage some people to default on mortgages to get a handout.

The White House is right when looking at the small picture and wrong when it looks at the larger one. Some cheaters and scoundrels will use a program to help enrich themselves. But, it is likely that the number of thieves will be much smaller than the millions of people who have legitimate problems staying in their homes. While details which are relatively unimportant in the scheme of these hold up a plan, the rest of the system heads down the toilet.

Penny wise, and pound foolish.

Douglas A. McIntyre is an editor at 247wallst.com.

Housing: White House fiddles as Rome burns originally appeared on BloggingStocks on Tue, 04 Nov 2008 10:13:00 EST. Please see our terms for use of feeds.

Continue reading Get ready for a frantic, freaky Friday in the stock market

Get ready for a frantic, freaky Friday in the stock market originally appeared on BloggingStocks on Fri, 24 Oct 2008 09:50:00 EST. Please see our terms for use of feeds.

Despite having lots of cash - and little debt - shares of Blackstone Group LP (NYSE: BX) have collapsed along with the other financials. Over the past year, the stock price has plunged from $29.38 to a recent low of $6.88.

But the firm's uber dealmaker, Stephen Schwarzman, is getting optimistic. At the Super Return Middle East conference, he gave a presentation that extolled the benefits of the US's ambitious - and expensive - plan to get things back on track. Yes, he thinks it's a good idea for the Feds to become equity holders in some of the top US banks.

So, why is this die-hard capitalist turning into a government supporter? Well, I guess the globalization of finance requires new approaches. In fact, Schwarzman mentioned that it was critical that the recent interventions have involved a variety of governments.

What's more, by having a strong government backstop, institutions will have a comfort level with counterparty risks. In other words, it's a good bet that we'll start seeing some risk taking again. And, for Schwarzman, it should also mean a re-emergence of buyout activity, which has been virtually frozen over the past few months..

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Blackstone's Schwarzman says US plan is the right stuff originally appeared on BloggingStocks on Tue, 14 Oct 2008 11:56:00 EST. Please see our terms for use of feeds.

Analyst Michael Molnar of Goldman Sachs took a harsh tone on the solar sector today, slashing his opinion to Sell on both First Solar, Inc. (NASDAQ: FSLR) and SunPower Corp. (NASDAQ: SPWRA). Specifically, First Solar was slashed to Conviction Sell from Buy, while SunPower was dropped from Buy to Sell. In a note to clients, Molnar explained, "We strongly believe that SunPower and First Solar are two of the best solar companies in the world and that both will be part of the growing solar industry for years to come. However, in our view, even these companies will face headwinds in a market that is oversupplied with modules."

Specifically, "the risk of oversupply in the solar market will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market," said Molnar. He added, "We believe that liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future, given fears of their ultimate cost in a bad world economy."

As a whole, Goldman maintains a "cautious" view of the solar sector -- and the brokerage firm isn't alone. Piper Jaffray also weighed in on solar firms today, with a warning that higher credit costs could reduce average selling prices by an additional 6%. "The renewables industry depends on access to credit, and for the moment, the credit market remains closed," Piper stated. "We believe the cost of capital on renewable projects will increase due to higher bank financed interest rates, larger spreads, and more upfront fees." For 2009, Piper Jaffray predicts that companies' average selling prices will fall by 15% to 21%.

Continue reading First Solar, SunPower slashed to Sell at Goldman on oversupply concerns

First Solar, SunPower slashed to Sell at Goldman on oversupply concerns originally appeared on BloggingStocks on Tue, 07 Oct 2008 10:25:00 EST. Please see our terms for use of feeds.

Bloomberg News reports that since the credit crunch began to push global markets down from their October 2007 peak, investors have lost $17.5 trillion in value. That's almost three times the $6 trillion in lost value following the collapse of the dot-com bubble in 2000.

Bloomberg developed its calculation by measuring the drop in the MSCI World index. It writes, "More than $17 trillion in global equity value has been wiped out since October. All 10 industries in the MSCI World retreated in 2008 as a drop in lending magnified the global economic slowdown."

To that lost $17 trillion I have added the $500 billion of writedowns and losses at global banks, a writedown figure expected to hit $2 trillion according to Nouriel Roubini.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Credit crunch cost: $17.5 trillion so far originally appeared on BloggingStocks on Mon, 08 Sep 2008 10:20:00 EST. Please see our terms for use of feeds.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

CNBC: Billionaire Wilbur Ross offers solution for credit crunch originally appeared on BloggingStocks on Mon, 18 Aug 2008 11:11:00 EST. Please see our terms for use of feeds.

AIG (NYSE: AIG) may have a new CEO, but his track record is no better than that of the man he replaced. The firm said its second-quarter net loss was $5.36 billion, or $2.06 a share. AIG blamed the housing and credit markets, but, of course, the real trouble rests with its risk management. According to Reuters, "AIG said it recorded $5.56 billion in second quarter unrealized market valuation losses on credit default swaps, the same area that led to losses in the prior two quarters."

While the company's insurance and investing units are still profitable, AIG may have to post similar losses in the next two quarters if the US credit and housing markets get worse. It has already moved ahead with its plan to raise $20 billion. It may have to add substantially to that to offset big deficits .

With AIG's stock at about $25 and a market cap of $72 billion, another capital injection cold drive shares down to $20.

In other words, AIG's shares may be down over 50% this year, but that does not make them a good investment. The stock could actually still be one of the most risky among large-cap firms. AIG joins many other financial companies in finding that replacing CEOs does them no good.

Douglas A. McIntyre is an editor at 247wallst.com.

AIG in ruins, huge quarterly loss originally appeared on BloggingStocks on Thu, 07 Aug 2008 03:53:00 EST. Please see our terms for use of feeds.

Now that analysts have figured out that the credit crisis is moving from subprime to prime borrowers, the economic detective squad has begun to look for what's next. Turns out they don't have to look much further than the same consumer who cannot afford his mortgage.

According to The Wall Street Journal, "Rising defaults on credit-card payments, coupled with a bleaker economic outlook, are spooking investors in the market where this debt is packaged and sold." The result is a double-edged blade. Banks that hold these packaged securities will have to begin to write them down just as they did mortgage-backed paper. And consumers will find credit harder to come by because banks do not want more write-offs.

The consumer will have lost one of his last places to find cash, and banks will face more losses and the risk of having to raise additional capital. Since credit has driven consumer spending, the retail industry may be in for another shock.

Continue reading The next wave of defaults: Credit cards and home equity

The next wave of defaults: Credit cards and home equity originally appeared on BloggingStocks on Tue, 05 Aug 2008 14:05:00 EST. Please see our terms for use of feeds.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Goldman Sachs goes to Washington . . . again originally appeared on BloggingStocks on Mon, 21 Jul 2008 18:22:00 EST. Please see our terms for use of feeds.

In the first half of 2008, the S&P 500 fell 12%. June's stock market was the worst since 1930. So are stocks now a screaming buy or are they poised to plunge further? Nobody knows. But my guess is that stocks will move based on how well they perform compared with expectations. And the risk of negative surprises in most industries exceeds the chance of positive ones. So stocks will probably keep falling.

Here's a quick review of six negatives:

• Oil prices. With oil at $142, up 492% since January 2001, consumers are paying about $4.10 a gallon for gas and companies that use oil are getting squeezed while trying to raise prices. An attack on Iran, a big oil supplier, looms on the horizon. This and other geopolitical uncertainties could put further pressure on oil.
• Housing. Three million people are expected to face foreclosure on their homes. And prices have dropped 15%. Since people were using home equity to finance their purchasing, their negative equity is sucking the wind out of the economy.

Continue reading Second half looks dark

Second half looks dark originally appeared on BloggingStocks on Wed, 02 Jul 2008 09:35:00 EST. Please see our terms for use of feeds.

Continue reading Fed, BOE seen ending rate cut cycle, on rising inflation concerns

Fed, BOE seen ending rate cut cycle, on rising inflation concerns originally appeared on BloggingStocks on Fri, 16 May 2008 15:46:00 EST. Please see our terms for use of feeds.