Posts tagged ABK
May 11, 2009
· Filed under business, economy, investing, money, politics, stock market · Tagged ABK, Ambac Q1, C, Citigroup, MBI, MBIA, PMI
Friday was a $1500 day for me, which was a first. I made [back] the same amount of money in a day as I do after taxes in two weeks of work. I’m looking forward to being able to exclude [back] from my vocabulary.
The market has been rallying and against everyone’s suggestions, I continued to average down over the winter. Now it’s spring, or it is according to my landlord who shut the heat off for the year even though it gets into the forties over night (fucking bastard), and the world is again becoming green. I’m now down “only” 18%, and most of my stocks weathered the cold. Still, I’m looking forward to the day when I’m deep in the green with all of my survivors.
Ambac (ABK) released its Q1 results today and at one point rallied from its open of $1.58 to $2.09. It posted a loss, but “not as bad” (heh) as expected. PMI Group (PMI) was up over 50% at one point this morning before it fell to more conservative gains. PMI closed the day up 27%, which was a 50 cent gain.
After market close, MBIA (MBI) posted its first profit in five quarters, and as of 6PM, its share price is up $1.61 (23%) to $8.57. Back last summer when I first began buying stock in the bond insurers, good news for one would pull them all up. Hopefully that will hold true tomorrow.
Overall, the market sold off today after Friday’s rally. The Dow fell 155 to close at $8418, which is still the highest it’s been since January. I haven’t been following oil because the “pain at the pump” has subsided. It’s been so long since I’ve seriously written this blog because of work and work and disgust at being so wrong with stock picks and winter and work and school and just plain laziness. Winter itself takes the wind out of my sails, so add that to being six months ahead of a financial rally… well, let’s just say I felt like a total asshole. But maybe things are getting good again.
Here’s a list to consider…
Stock 52-week low Current shareprice
- ABK $0.35 $1.75
- MBI $2.17 $6.96
- PMI $0.26 $2.36
- RDN $0.70 $3.43
- RF $2.35 $5.92
- C $0.97 !! $3.96
If I was an “if only” kind of person, I’d be kicking myself for not seeing into the future that in March 2009 my stocks would be selling at fractions of where I bought them. But scrolling out their Google Finance charts to a year, two years, three years, shows that, even with current rallies, their share prices are still considerably low.
October 13, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged ABK, ambac, dow closed, Henry Paulson, interbank lending, MBI, MBIA, Mitsubishi, Moody's, Morgan Stanley, MS, Radian Group, RDN, SCA, stimulus package, stocks, Syncora, wall street
Forget Prozac, the market needs lithium. After last week’s worst week, today marked the best day in Wall Street’s history and the biggest one-day percentage gain since 1933. Stocks rallied all across the board. The Dow closed up 936 points, or over 11%, to $9,387, and the Nasdaq and S&P also gained over 11% each. Morgan Stanley (MS) traded like an OTC today, gaining 86% from its close of $9.68 on Friday after Japan’s Mitsubishi UFJ Financial Group invested in it $9 billion. Will it stick? Maybe. Countries all across the globe are now jointly focused on fixing their banks to stave off a worldwide recession, so if this doesn’t work, what will?
By the way, sometime over the weekend the plan changed from “buying toxic mortgage-backed assets” to “let’s follow Great Brittan because they seem to know how to deal with this crisis, so let’s pump money into a few good banks like they’re doing over there across the pond”. So that’s what we’re doing. And the figure is now $250 billion instead of $700 or $850 or whatever it ended up being once al the rum and wooden arrow makers across the nation were settled up.
The credit markets were closed today because of the holiday, but they open back up tomorrow. Analysts are now looking to see if the interbank lending rates, or the rates banks charge each other to borrow each other’s money (think what needed to happen but didn’t when people ran IndyMac) will come down so that banks will again lend to each other. Until banks again start covering each other, no one who missed one electric bill will be able to get a loan.
The only stocks I’m ahead in right now are Radian Group (RDN), MBIA (MBI), and Syncora (SCA); the rest are one big hemorrhage. Moody’s still hasn’t lifted their threat of downgrade of Ambac (ABK). But to stay positive after such a positive day, at least I’ll be able to average down. And average down I definitely will!
Word that a second stimulus package may be on its way may have also helped boost the markets today. Crude oil followed the rest of the market today, closing up $4.14 to $81.84.
The #1 movie in America is Beverly Hills Chihuahua.
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September 29, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged ABK, ambac, C, Citigroup buys Wachovia, dow closed, downgrade, economy, Etrade, Mary Caraccioli, Moody's, Nancy Pelosi, NYSE, opening bell, reverse stock split, September 29, stock market, Sydney Morning Herald, Thornburg Mortgage, TMA, Wachovia, WB
Holy Moly, who saw that one coming?! The House of Representatives voted down the bailout 228 to 205, and it’s being blamed on a “too-partisan” speech made by the Democratic speaker of the House Nancy Pelosi. Whether her speech was partisan or not, someone’s head had to roll.
Hindsight is 20/20, and looking back to last night, there was a clear signal the bill wasn’t going to pass: after an initial positive response, the Asian markets began to slide into red. Real money movers always know things ahead of time, and the Asian markets’ slip was a sure signal that our bill was not going to pass. I should have seen it, and maybe subconsciously I did, but it seemed too unbelievable that the bailout would not pass given its enormity and all the long days and weekends Congress had put into it. But as we’ve seen with IndyMac, Fannie and Freddie, and Washington Mutual, nothing is too big to fail.
Lawmakers are headed back to the drawing board to draft up a new version of the plan, but won’t meet again until Wednesday because tomorrow is Rosh Hashanah.
I’m more of an observer now than an active player. I’m in too deep to do anything except wait, so all I can really focus on is the day to day with the stocks I own and the stocks that those stocks are absorbing. Citigroup (C) bought Wachovia (WB) today for $2.2 billion, or $1 per share.
Two funny computer errors happened today: Thornburg Mortgage (TMA) put through a 10:1 reverse stock split this morning, but not before they multiplied the share price by 10. So during today’s premarket, it looked like I had 3K extra in my account! But the quirk was soon fixed and so was the overinflated share price. By close, TMA was down to $1.15, which would have been 11.5 cents on Friday before the reverse split. To buy back the preferred shares, Thornburg needs to raise more capital. You’re welcome, TMA.
Another blip came to Wachovia’s share price today. At one point, it listed on Google finance at $500! Message boarders were going nuts, and that error put the financial sector up 7% and made it look like the only sector in the green. But that error was also soon fixed, and everyone who owns WB fell back into reality.
One last computer oddity happened at the New York Stock Exchange today: because of a glitch, the morning bell never rang. Mary Caraccioli said she’s never seen that happen.
People are still sweating a Moody’s downgrade to Ambac (ABK). I really hope not. Of all problems that could happen, that one tops my concern. Just about a month ago, I was up over 100% on ABK and now I’m in the red. If a Moody’s downgrade comes, it’ll destroy Ambac, especially after today.
The Dow, which opened down over 100 points in seeming anticipation, dropped 777 points today- the greatest one-day decline in its history and even greater than the drop after September 11, 2001- to close the say at $10,365. However to see the glass 1/10 full, this was the 17th worst daily drop percentage-wise, so not quite the worst. Crude oil fell $10.52 to close at $96.36.
The Sydney Morning Herald reported tonight that “online broking portal Etrade ground to a virtual halt this morning [Tuesday September 30] as it struggled to cope with massive trading volumes.” Is this a hint of more blood to come? Damn sure it is!
September 28, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged $250 billion, $700 billion, ABK, ambac, bailout plan, Banco Santander, bankruptcy, Ben Bernanke, Citigroup, CNNMoney, credit crunch, economy, Henry Paulson, Moody's, Nikkei, S&P, SEC, STD, Wachovia, wall street, WB, Wells Fargo
Early this morning, Congress finally agreed on the wording of the bailout. CNNMoney.com reported the following provisions attached to the way the money is spent:
*The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury’s use. (After the initial $250 million, an additional $100 million can be released by the President. If after that more money is needed, Congress can re-vote on release of the remaining $350 million.)
*Curbs will be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, companies that participate will not be allowed to offer golden parachutes to executives; they will not be able to deduct the salary they pay to executives above $500,000.
*An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary.
*Allow for the Treasury to receive the option to take ownership stakes in participating companies under certain circumstances.
*Treasury may establish an insurance program – with risk-based premiums paid by the industry – to guarantee companies’ troubled assets, including mortgage-backed securities, purchased before March 18, 2008.
Congress wanted to get the bill together before the opening of the Asian markets tonight. The Nikkei 225 opened $10 lower than Friday’s close, but then began a slightly hesitant ascent. How the bill’s finalization will affect our market’s opening tomorrow, or if anymore bankruptcies or downgrades will occur, is still up in the air. My guess is that there will be a sigh of relief across all sectors tomorrow but any real change will only happen after the bill is signed, sealed and the money is delivered.
Will Ambac (ABK) avoid a Moody’s downgrade before the relief comes through, and when the relief comes through, will it help ABK? Message boarders seem to think the price of ABK will skyrocket tomorrow, and the very late-day increase in ABK’s share price on Friday may have hinted belief that a weekend deal would in fact help ABK come Monday. But the “Moody Monster” is still lurking in the woods. Analysts are blaming a lot of the financial crisis on these ratings agencies for rating companies way higher than they deserved, therefore needing to make drastic corrective downgrades. On March 20, 2001, Frank Raiter, Standard & Poor’s former top mortgage official, said he was asked by S&P to rate a real estate investment he had never even reviewed. He told Bloomberg that he was told to “just guess” because the S&P was in competition with other ratings companies (possibly Moody’s?) for fees on a $484 million deal. It’s good that ratings are being revealed as little more than smoke and mirrors, but people still take ratings seriously, and a Moody’s downgrade of Ambac would devastate the company and its stock price.
And will the news of consensus on Capitol Hill save Wachovia (WB) from going bust before another bank picks up its fractions? Or will we remember Wachovia as the last big victim of the “credit crunch”? We’ll have to wait to see…
September 21, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged "Paulson's Monster", $11 trillion, $700 billion, ABK, ambac, bankruptcy, banks, Barclays, Berkshire Hathaway, bond insurer, economy, Google, hedge funds, Henry Paulson, investing, Lehman Brothers, MBI, MBIA, Moody's, SEC, Warren Buffett
“Paulson’s Monster”, as it’s being called, has now proposed the need for $700 billion of taxpayer dollars, raising the US debt limit to $11 trillion, to spin off the bad sectors of the financials into its own entity. Paulson claims his plan will “minimize” the cost to the taxpayer in the long run, but who can really be sure? As part of the plan, Paulson said that he was currently in talks with other countries for help. He wouldn’t disclose which countries.
Back in Ratings land, one ABK message boarder claimed that the Feds raided Moody’s on Friday looking for connections between the ratings company and hedge funds. No link was provided, and given that any Joe Schmo can go on a Google Finance board and post whatever he or she pleases, it could very well be completely fabricated. However, a Bloomberg article titled “Berkshire’s Bond Insurer, Moody’s Stake Face Probe”, reports that one such link may in fact come to light:
“Billionaire Warren Buffett’s Berkshire Hathaway Inc. faces a probe by Connecticut’s attorney general for possible conflicts created by owning almost 20 percent of credit ratings company Moody’s Corp. while also running a new municipal bond insurer.
Moody’s gave its top rating last week to Berkshire Hathaway Assurance Corp., created in December as existing bond insurers struggled to maintain their AAA ratings. A favorable rating for Berkshire by New York-based Moody’s, or a lower rating for competitors including MBIA Inc. and Ambac Financial Group Inc., may give Buffett’s company an advantage.”
So maybe there is truth in rumor.
In other news, Barclays is the proud new owner of Lehman Brothers’s investment banking and trading businesses. The $1.75 billion deal approved yesterday is a definite bargain as compared to the one Barclays would have had to strike last week for Lehman’s entire assets before bankruptcy.
September 21, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged ABK, AIG, ambac, banks, banned, Barclays, Ben Bernanke, Charles Schumer, economy, financials, Henry Paulson, investing, LEH, Lehman Brothers, LEHMQ, MBI, MBIA, Moody's, Moody's Ratings, short selling, stocks
Whoa mama. I was definitely wrong about the profit-taking. The US market rallied harder in the last two days than it has in 38 years- longer than I’ve been alive! Lehman Brothers, now on the OTC board as LEHMQ, gained 313% on rumors that it would sell parts of itself to foreign banks. Barclays is back in the running. In just the last two days of trading, I made up almost all of what I had lost in the last week and a half.
The SEC banned ALL short selling- regular and naked alike- of 799 financials for the next 10 days. The United Kingdom temporarily halted short selling yesterday, and the US did the same. This is a huge step from just banning naked shorting; this is a total ban on betting that stocks will lose value, essentially disqualifying half of the game. Hillary Clinton and Charles Schumer, both New York Senators, proposed the ban. Critics say this ban will warp the market, making it seem as if the financial stocks are worth more than they are. But when naked shorting was banned in July, the effect lasted long after the ban was lifted. In fact, it lasted right up until last week when AIG teetered and fell and dragged the entire sector along with it. So in a market that is so emotionally driven, a little banning may do the trick to snap the depression (no pun intended).
Henry Paulson, our Treasury Secretary, and Federal Reserve Chairman Ben Bernanke proposed the idea to spin all bad parts of financial institutions into its own entity- a black hole of badness. This idea reminds me of that story I had to read in high school about the utopian society that was only a utopia because of the little girl who lived in a cage in the basement of someone’s house. Remember that one? I was never big on reading, so titles slip my mind. I just remember the girl in the cage and the annual field trip every schoolkid would take to see the girl in the dirty dark cage dungeon as a reminder of why they lived as perfectly as they did. I wonder if part of the Paulson and Bernanke plan will have the American people visiting the dark entity once a year. Oh wait, now I get it. We will be visiting once a year- at tax time. Seems these two guys kept up on their high school reading.
Meanwhile in Ratings Land, Moody’s threatened to downgrade Ambac (ABK) and MBIA (MBI), which dropped ABK 42% and another 27% in afterhours, and MBI 8% and another 8% in afterhours. The ABK message boards caught fire, and it seems Moody’s may catch some of it by Monday, if not sooner.
Do you know the name of that book yet? Maybe it was a short story.
September 15, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged ABK, AIG, American International Group, BAC, Bank of America, bankruptcy, banks, CHC, fmd, Great Depression, Lehman Brothers, lending window, PMI, RDN, reform, short sellers, TMA, wall street, WaMu, Washington Mututal, WM
Exactly two months from the widely-believed bottom, “the biggest shakeup since the Great Depression” is what it’s being called. Today was the largest 1-day loss to the Dow in seven years. What a total mess. All this time, I’ve been sure no one knew what they were talking about the financials and that the bottom was already hit. Slowly though, I’m coming to ask myself, “what were you thinking??” Analysts had said the worst wasn’t over, but of course I didn’t believe them; I’m stubborn and always have been. Late last night and early this morning, former employees streamed out of Boston’s Lehman building, and all other Lehman locations, with boxes and resumes in hand. After last night’s negotiations failed, it was certain death for their jobs, and their stock, which was at 70 cents by 6:30AM, 45 cents by 7:30AM, and 18 cents at day’s close. In less than 24 hours, the 158 year old mainstay lost 94% of its value. Not only was the bankruptcy of Lehman Brothers the largest bankruptcy in United States history, it dwarfed all other bankruptcies in our country’s history. Along for the hellevator ride from par to the bottomless abyss went all the financials today. Even Merrill Lynch, which was up 30% in premarket trading because of being bought out last night for nearly twice its current value, closed the day up just 0.6% from its sorry close on Friday.
Articles and blog titles that ht today had some pretty colorful titles: “Jaw-dropping day for financial markets”, “A day of reckoning”, “Meltdown in US finance system pummels stock market”, “AIG fights for survival”, “Street’s nasty surprises keep experts guessing”, “Giants fall on judgment day”, “Stocks plummet on financial meltdown”, “It’s a morose Monday for Street’s employees”, “Goodbye to easy money”, and “Broken brothers” were just a sampling. The articles spanned all languages as today hit the entire world like a million tons of bricks.
So many questions arose out of today. What will happen to WaMu? What will happen to the mortgage insurers now that one of the banks they insured has evaporated? What will happen to AIG’s stock value now that the bank plans to head to the lending window? AIG had asked for $40 billion, but word on the street is that they’ll “only” get $20 billion. Following suit of its sibling ratings companies, Standard & Poor cut Washington Mutual’s rating to “junk” today.
Of the stocks I watch, here are today’s nearly unbelievable numbers:
Regions Financial (RF): Down 4% to $11.12
Community Bancorp (CBON): Down 4% to $4.53
Syncora Holdings (SCA): Down 6% to $2.39
Thornburg Mortgage (TMA): Down 7% to 35 cents
Triad Guarantee (TGIC): Down 9% to $2.1549
Financial Select Sector ETF (XLF): Down 9% to $19.15
MBIA (MBI): Down 11% to $11.45
National City (NCC): Down 11% to $4.28
First Marblehead (FMD): Down 14% to $2.67
Centerline Holding (CHC): Down 14% to $2.05
Radian Group (RDN): Down 14% to $3.90
Citigroup (C): Down 15% to $15.24
Ambac (ABK): Down 16% to $6.24
PMI Group (PMI): Down 17% to $2.57
Deerfield Capital (DFR): Down 18% to 60 cents
Bank of America (BAC): Down 21% to $26.55
MGIC Investment (MTG): Down 21% to $5.35
Washington Mutual (WM): Down 26% to $2.00
American International Group (AIG): Down 60% to $4.76
My friend works for AIG. I hope that if he loses his job it’ll be the kick in the pants he needs to get his ass to Hollywood.
The Dow plunged 504 points today to close below $11,000 to $10,917. A few days ago, an analyst on TV said that “it is possible we may see $100 oil within six months”. Within six months, buddy, how about within six days? Crude oil fell to a 7-month low today, losing $5.47 to close at $95.71 a barrel.
This experiment is going to be much longer-term than I previously thought. Luckily I have time to wait. I took another advance on my credit card to possibly take advantage of some of the week’s bargains, and will pay it back on Friday when my paycheck hits.
Later in the day, an article titled “Wall Street Losses Seen Spurring Regulatory Reform” hit CNNMoney.com. Some are calling for another ban on short-sellers. Alan Greenspan, in his interview this weekend, said that short-sellers are necessary to keep prices as a closer reflection of company values. But if Washington Mutual, for example is really trading at [now less than] 17% of its book value (MarketWatch, September 11), how real are the shorties really keeping things?
September 9, 2008
· Filed under economy, investing, money, politics, stock market · Tagged ABK, ArthurDental, BAC, C, dow, Fannie Mae, FMH, freddie mac, investing, LEH, Lehman Brothers, MA, oil, OPEC, PMI, RDN, reuters, September 9 2008, STI, TGIC, TMA, trading, Visa, Washington Mutual, WM
My God, what have I done? All across the country, investors in all sectors and companies must be asking themselves the same thing. I know my friends are. After yesterday’s huge [emotional] rally in all sectors but one (energy), today seemed completely irrational. Everything fell. This was more than profit-taking. All of yesterday’s gains, 280 points, were shaved off the Dow as the index slipped all day to close down to $11,230, as investors in the financials asked themselves one extra question: “will any financial survive?”
Lehman Brothers (LEH), Washington Mutual (WM), Radian Group (RDN), PMI Group (PMI), Ambac Financial (ABK), First Marblehead (FMH), MBIA, Inc. (MBI), MGIC Investment (MTG), Triad Guarantee (TGIC), and Thornburg Mortgage (TMA) are just some of the financial institutions that had double-digit percentage losses today, and those are just the ones with losses greater than 10%. Citigroup (C), Bank of America (BAC), JP Morgan (JPM), SunTrust (STI), American Express (AXP), and even Visa (V) and MasterCard (MA) lost today. Lehman Brothers (LEH) is reporting their third quarter earnings tomorrow- a week early- after their Korea Development Bank deal fell through and its stock price lost 45% of its value today. LEH stock did bump up 7% in afterhours trading, so maybe there’s good news on the horizon. But no doubt, this bad news cast even more doubt into the financial sector today and helped push share values down. Today was very, very painful. Luckily I was so busy at work, with teaching, duties, and meetings, that I had no time to sit down and digest what was happening.
But my friends did. One of my stock friends, who has made a small fortune day-trading these financials, sent me an article that eased my mind a bit. It definitely crossed my mind a few times in the last couple days that my experiment may not work out after all, but the article he sent gave me some hope. It was titled “S&P Picks and Pans: Wells Fargo, Washington Mutual, TW Telecom, JC Penney, Avery Denison”, and was an article in BusinessWeek online. After all the upgrades and downgrades and rating cuts by people with questionable credentials and too much power, it was nice to read an article from a reputable source deeming one of my stocks, WM, a “hold”. If Washington Mutual is a hold and its going through some actual concrete, documented troubles, then my thinking (and hope) is that yesterday and today’s major sell-offs were out of pure fear. But I still hope the sell-off doesn’t continue!
A Reuters article from yesterday titled “Ambac’s planned muni insurer may be hit by changes” shed some light on what the common sentiment towards the mortgage and bond insurers might be. “In another even more fundamental change, agencies are mulling a shift in how they rate muni debt, using the same scale used for corporate debt. That would result in widespread rating upgrades for municipal bonds, which have a much smaller risk of default than corporate bonds. Higher ratings would in turn reduce the need for insurance.” If there’s less risk of default, then there’s less need for insurance.
One last article I’ll quote, this one from MarketWatch.com titled “Community building ire MarketWatch readers kindle own outrage over Fannie, Freddie takeover” quoted ArthurDental, who is a member of the MarketWatch Community. “”Everyone gets upset about financial aid to the poor,” ArthurDental wrote, “but where’s the outrage when taxpayers foot the bill because some ‘investments’ went sour? So stockholders would be largely wiped out; why then aren’t bondholders made to pay for their mistakes, too?”
It’s telling that this article didn’t hit yesterday when the market soared, but ArthurDental is right. When SSBX failed, I lost my investment. But when Freddie and Fannie exposed themselves to trillions of dollars in bad mortgages and therefore didn’t have the capital to pay the bonds it issued to China, the two lending giants got a slap on the wrist and trillions of our taxpayer dollars. Hey, I made a mistake investing in a company run by a McCain, where’s my money? It ain’t coming and I have to deal. And that’s the way it should be.
That Hurricane Ike took a turn south, and the Organization of the Petroleum Exporting Countries (OPEC) will likely maintain its oil production even though demand is down, caused the price of crude oil to fall to a 5-month low. Crude oil lost $3.08 to close the day at $103.26 a barrel. I lost $1700 today, or in my brother’s terminology, “seventeen hundo”. Ouch.
So what is going to happen now that the rules of the game have completely changed? I don’t dare speculate. But whatever it is that eventually happens seems as if it won’t make itself known for a while. For now, I’ll keep the faith. I took a gamble and put in a limit order for 25 more shares of WM today, and you can imagine my surprise when I signed on later, saw the stock price was at $3.30, and that my order executed at $3.60. When I put the order in, I assumed it was so low that it would expire unexecuted.
And more than anything, tomorrow’s a new day when anything can happen.
September 4, 2008
· Filed under money, politics, stock market · Tagged ABK, bear market, Bill Gross, dollar, dow, euro, market september 4, McCain, MTG, National City, Palin, PIMCO, PMI, RDN, SCA, speech, stock market september 4
“Nobody knows why the Dow dropped 345 points today” was the headline on Bloggingstocks.com. The bottom dropped out of the Dow today- 344 points to close at $11,188!- and speculation is flying about why. All three indices- the Dow, NASDAQ, and S&P 500- fell back into bear markets.
A lot of data was slotted to come out this week, and today’s data showed that initial unemployment claims, and therefore people recently laid off, have risen to a near 5 year high. But retail store sales are up and oil dropped $1.46 to $107.89, a 5-month low. Oil has lost $40 in two months. So why did the market plunge today?
Conspiracy theorists think the rich of the world sold off for a reason and are keeping tight-lipped about why. Maybe it was a hedge fund sell off. A story came out yesterday predicting the fall of many hedge funds because commodities are falling. Maybe it’s just a manifestation of the extreme volatility the market has seen this summer. Bill Gross, the head of Pacific Investment Management (PIMCO), recognized and announced August’s light trading volumes, and warned of an imminent “financial tsunami”. Maybe this scared people? What the heck is a financial tsunami? Was today’s selloff a reflection of a weakening global economy? The dollar is up to its highest against the euro since the year began, and it now takes just $1.43 to get one euro. The euro was created, in part, as a similar exchange to the US dollar, but $1.43 is a great improvement from the $1.5903 it would have taken to get one euro on July 15. And isn’t it true that if the US economy improves it will lead the world back out of the hole?
Maybe Sarah Palin’s dirty nomination speech made everyone run. “When [Obama] you’re done parting the waters and healing the world…”? Was she serious? Maybe when she’s done slinging mud she’ll focus on what she’ll do about the desperate economy and enormous national debt.
It’s unclear what happened today, but what I know for myself is that I lost $300 today when the Dow lost 345, and I gained $1,000 yesterday when the Dow gained just 15. Five of my financial stocks- PMI, RDN, ABK, SCA, and MTG- had double digit gains yesterday, so I expected a selloff today; but I expected it to be a lot worse than it was after [fighting my internet connection and finally] seeing that the market took such a hit today. National City’s (NCC) rating was cut today by S&P but the stock price fell less than 6%! First Horizon’s (FHN) rating was also cut, and its stock price fell just over 6%. If I can make large gains when the market makes small ones, and have medium losses when the market has big ones, then I’ll be sure my experiment is working.
Data on the total unemployment rate comes out tomorrow, and it is believed to be at 5.7%. Will this data spike the market again? A lot of questions are unanswered.
It’s easy to read between the lines that I’m voting for Barack Obama, but to stay aware of both sides, I have been watching speeches from both sides and John McCain’s speech scared me tonight. By the end of his speech, it seemed that if he had a gun he would have started popping caps in the air. I’m not sure I’d feel safe with him in the same room as the red phone and bomb button.
In the hopes that Mary Caraccioli had some insight into today’s market, I stayed up past McCain’s speech and then past Comcast Channel 3’s insightful commentary on McCain’s speech to catch Money Matters Today. It’s usually on at 11PM (and rerun the next day at 11AM) but to my dismay, the show was completely run over by the McCain commentators and was not pushed up to a later time. The sports show Out of Bounds came on instead. Typical. I guess tomorrow will be a complete surprise.
August 28, 2008
· Filed under money, stock market · Tagged ABK, ambac, Gustav, IEA, investing, MBI, MBIA, money, RDN, trading
Yertle, my 7,000 year old turtle, woke me up this morning grinding her shell against my bedroom furniture she’s a little too big to fit under, and because it was already light out, my efforts to fall back asleep failed. So, I got up and of course got onto Etrade to watch the premarket. Expecting to see all zeros in the % change column in my watch list, you can imagine my surprise when most were green. I had never realized that the premarket watch list reflected the closing price from the afterhours the night before, and because good news came out about MBIA (MBI), it blew up over night and took a lot of its fellow bondsmen with it, including ABK, PMI, SCA, TMA, and RDN.
Yertle’s not really 7,000 years old; actually I have no idea how old she is. She could be 7,000, she could be 70. All I know is that I’ve had her for 12 years and she’s about the same size as when my friend first handed her down to me, which leads me to believe she’s probably older than anyone would guess and that I’ll have to will her to someone when I die.
Europe and Japan are reportedly headed towards their own recessions, but Bloomberg reported that our economy- possibly fueled by exports to these struggling regions- grew faster in the second quarter than originally calculated. This boosted today’s market big time. Trading is thought to have been the biggest contributor to the growth of the economy in the quarter, and a bigger contributor than it has been in 30 years. Well no kidding! Everyone knows to get in at the bottom!
My car got towed today because I was on the wrong side of the street for street sweeping, and it wasn’t until I got to the tow lot that I realized I had my debit instead of my credit card. So I got back on my bike, rode back home, got the card, rode back to the tow lot, and paid them $117.47 (on top of the $40 ticket this fair City slid under my wiper) to bail my car out of car prison. If it wasn’t for MBI and Ambac (ABK), which came out of the cut today with a 41% gain sometime between the tow fiasco and when I finally sat back down to look at everything, I would have been way more pissed. Street sweeping. Please! Five seconds after the zambonie passes, trash is back on the street. What a joke.
The stars align once in a while in the financials sector, and today was one of those days. Thursday August 14 was the last time it happened. Today’s massive gains were a combination of the revised economy numbers, MBIA’s good news, and the Bloomberg report that “Crude oil fell more than $2 a barrel after the International Energy Agency (IEA) said it would tap strategic stockpiles, if needed, because of Tropical Storm Gustav.” Forecasters are now predicting Gustav will turn Category 3 and is headed straight to Louisiana. Oil crashed at 11AM because of the IEA’s announcement, then took a bit of a bounce around noon, but the damage was already done. The Dow gained 212 to end the day at $11,715, oil lost $2.56 to end the day at $115.59, my stocks pulled in $1,700, and so probably ended the week’s rally. No doubt the profit takers will enter the market tomorrow.
