Owner: Buy Sell Jump URL:buyselljump.blogspot.com Join Date: Mon, 31 Dec 2007 15:38:11 -0600 Rating:0 Site Description: Random market ramblings Site statistics:Click here
Strange Brew 2008-03-06 09:08:00 Combining an election season with an economic crisis is a recipe for some really bad ideas. It's no comfort that these wacky suggestions come from both sides of the political aisle and even from important policy-makers who ought to know better. It only means that no one, whether candidate or even central banker, holds a monopoly on foolishness.A few of these proposed "fixes" deserve some comment. While it is difficult to choose among such a plethora of awful notions, we can begin with just a few, to be followed by more in later rantings. So, in no particular order:Hillary's screed against free trade has picked up in volume lately, principally as an appeal, albeit a successful one, to Ohio voters who believe that the evils of Nafta are to blame for their misfortunes rather than the anti- Read more:Strange
On to November! 2008-02-21 08:59:00 The stock market has rallied of late in the face of awful news, even as the bond market continues to struggle.We now have the spectre of Seventies-style "stagflation" hovering over us, which suggests that the Fed has little room left in which to influence economic outcomes. The credit crisis continues to deepen, reaching even into the municipal bond "auction" market. The housing market tailspin plummets on. So what is the market saying?I would speculate that the market is giving a thumbs-up to recent political events, specifically Obama hysteria at the expense of an increasingly strident and depressing Hillary Clinton. In light of Obama's left-of-Hillary posture, why should the markets cheer his ascendancy? More on that below.However, we can first dispense with the Republican side. T Read more:November
Brief Glimmers of Light 2008-02-12 11:44:00 The stock markets have a somewhat better tone recently, even in the absence of specific positive economic news. Corporate earnings continue to be inconsistent against estimates, and the black hole of mortgage-related writedowns keeps getting deeper. It is very unlikely that the major financial institutions holding perhaps hundreds of billions in CDOs are anywhere near the completion of the mark-down process. In fact, with almost no active market in these securities, it is impossible to know whether they are being carried on balance sheets at values anywhere in the ballpark.And the Fed continues to do its best to reinflate the housing bubble so that the piper will not finally have to be paid by reckless borrowers who were aided and abetted by lenders run by feckless managers, as well as b Read more:Brief
The Nanny Market 2008-01-24 09:03:00 It was only a matter of time.During this period of intense market volatility, as fear runs rampant and we are perched on the precipice of a full-scale panic, a major politician just had to chime in with a call for significant additional market regulation. It's a great way to pander to overwrought investors, those at risk of massive layoffs, and anyone who doesn't believe in the virtues of free enterprise, capitalism, and markets that function according to economic realities.In other words, to Democrats and others who mistrust Wall Street.Predictably, Hillary Clinton has issued a clarion call for the federal government to get on the case and pass new rules to wring out the "excesses" of the market. Other objective and measurable market sins include "offensive" and "wrong" executive pay pack Read more:Market
, Nanny
Now We're In Trouble 2008-01-20 10:29:00 We have not experienced this degree of turmoil in the markets for years, perhaps not since the Russian debt/Long Term Capital meltdown of 1998 (although the tech bubble implosion was no picnic either). The long weekend will provide but a brief respite to the recent gut-wrenching market contortions, giving investors a short period in which to perhaps catch their collective breath.Blowoffs, panics and meltdowns are part and parcel of all markets, and while the technology of delivering information is constantly changing, the result is the same, no matter whether the subject matter is tulip bulbs, South Seas trading companies, or start-up dotcoms with no earnings: excesses have to be expunged, usually involving massive investor losses.So the present situation differs little from most previous Read more:Trouble
Cockeyed Optimists 2008-01-14 14:11:00 Wall Street always has a constant supply of disaster stories, investment funds that "blow up," seemingly without warning. When this happens, investors often lose all of their capital or, at best, might recover pennies on the dollar.The most spectacular hedge fund catastrophe took place nearly ten years ago, when John Meriweather's merry band of Nobel Prize winners at Long Term Capital Management used absurdly high leverage in their "convergence" strategy to drive the partnership into oblivion; along with it, billions of dollars were vaporized into the ozone. Those dollars were supplied for the most part by institutional investors, who had lined up like customers taking numbers at a busy bakery, in a frantic effort to get in on the next great thing.These investors poured money into LTCM eve
Citi Gets It Done 2008-01-10 09:57:00 It's doubtful whether anyone at Citigroup will appreciate the irony of what was either a coincidence or an editorial act of playful malice aforethought in today's Wall Street Journal.At the bottom of page A11, most of which contained the carryover from a Page One story, Citi ran a paid advertisement in a handsome box in the lower righthand corner of the page.The story, the main feature article on the front page, is entitled "Citigroup, Merrill Lynch Seek More Foreign Capital." It describes in great length how these two mammoth institutions, cornerstones of the American investment landscape, are making the rounds of foreign investors, "hat in hand," in a desperate effort to shore up their capital in the face of mammoth mortage-related losses.Most of these targeted investors are so-called "s
Market ADD 2008-01-07 06:14:00 It would appear that the market is nearly finished cycling through the CDO crisis. This doesn't mean that there won't be additional massive writedowns accompanied by massive layoffs. But as far as the stock market is concerned--been there, done that--when it comes to mortgage-backed securities, so on to the next issue or crisis, in this case the looming or already-present recession, depending on one's point of view.I attribute the market's ever-briefer attention span to informational overload, which compresses issues into shorter and shorter time spans, providing it less time to process more information. This process has accelerated as the volume of available information has increased exponentially and the time it takes to deliver it has decreased, nowadays down to about instantly. The Read more:Market
Revulsion and Amusement 2008-01-04 09:53:00 First the revulsion: Hillary Clinton gushing about Warren Buffett being her "favorite billionaire." Ranting to a cheering crowd of 500 about how the tax code is tilted toward the rich, the populist candidate with mansions in Washington and Chappaqua cited a survey Buffett took suggesting that while he pays only 17% of his income in taxes, his secretaries and middle managers pay 25% to 30%. If Buffett (the outspoken champion of the Draconian and redundant estate tax) finds this so scandalous, perhaps he should just voluntarily pay in more. There probably are no instances of a taxing authority, whether the Feds or states, turning down monies not owed by a taxpayer that he insists on paying.Or he can just give his employees healthy raises, so that while they will continue to pay a higher pe Read more:Amusement
Let Sleeping Dogs Lie 2008-01-02 11:11:00 Evidently President Bush is leaning on Congress to do more to "help make the [housing] market more stable," according to one of his spokespersons. This development should make everyone nervous. Congress can be counted on to make a bad problem worse, so it is odd that Bush should be prodding it into action at such a precarious time.It is hard to believe that Democrats have much of a vested interest in really addressing the housing mess, even if there was something meaningful to be done. As the economy stumbles and home prices drop as defaults increase, a wonderful election issue is developing, and Democrats won't be able to resist making the most of it.This inevitably leads to two possibilities, neither one of which is pretty. The Democrat-controlled Congress will either balk at enactin Read more:Sleeping
Who Will Investigate Our Subprime Lawmakers? 2007-12-31 08:42:00 In today's Wall Street Journal, reporter Glenn Simpson wrote a terrific page one story outlining the subprime lending industry's enormous influence on Congress and various state legislatures. It used that influence, of course, to ensure that the Feds and important states did not pass legislation that would have limited subprime lenders' ability to continue to make loans under ludicrously lax standards. That influence was purchased through concerted, expensive lobbying efforts as well as with direct contributions to many dozens of entities including state politicians, both major parties' national committees, and even President Bush.The industry was ensuring that it could go on making the very loans to otherwise unqualified borrowers who today are defaulting in droves, sending shock waves do Read more:Subprime
, Investigate
Baring Bear 2008-03-16 08:55:00 In today's New York Times, Gretchen Morgenson, a thoughtful writer for its business section, speaks of only bad outcomes as the result of the Fed "bailing out" Bear Stearns. According to Morgenson and many other business commentators, market experts and economists, the risk of "moral hazard" resulting from the Fed's move outweighs any benefits that such a bailout could provide.It is a compelling argument. Morgenson provides a laundry list of awful consequences, including more damage to an already declining dollar, further aggravation of runaway inflation, and a continuation of what she calls the "slow bleed" at banks and other financial institutions.When looking at Bear's predicament, one can't help but consider what an unsympathetic candidate it is for any help at all, much less at the ex
First Do No Harm 2008-04-08 20:00:00 Would you administer strychnine to a dying man?That's precisely what both Democratic candidates propose for the U.S. economy. Well, perhaps "dying" is an overstatement when it comes to America's financial health. But it's hard to argue that our economy at present is a picture of robustness.Democrats appear determined to ignore--indeed, to defy--the most basic principles of Economics 101, which neither one evidently bothered to take in college. Unfortunately, both of them appear to have been preoccupied with other activities at the time. It's too bad, because a little basic knowledge would come in handy in the event either one of them is elected to the most powerful position on Earth.Retro is in right now. New baseball stadiums resemble, at least superficially, edifices from the Golden Age Read more:First
An Oily Mess 2008-06-06 08:37:00 Of all the pitiful activities of Congress over the course of this new century's first decade, none will be more damaging than its failure to address America's energy needs.Rather than looking for solutions, our lawmakers have sunk to their usual pattern of pandering, grandstanding and scapegoating, all in an effort to appear to be grappling with one of the country's great challenges. In the halls
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