StockSHAKERS

Financial Reform Light has arrived

 

Banking industry lobbyists were popping the champagne bottles in Washington yesterday, as a greatly weakened and enfeebled financial reform bill stumbled across the finish line, coughing and wheezing all the way. It is, of course, a massive bill, which seems to leave no corner of the financial markets untouched, but I’ll give a few highlights.

Derivatives will move to public exchanges and be subjected to margin requirements. Insured banks cannot use their own capital for speculative trading. The SEC is getting into the credit rating business.

For me, the big one is SEC registration of hedge funds with either $100 million or $150 million in assets under management, depending how the slugfest in the conference committee works out. The bottom line: more regulation of everything bringing higher costs of doing business.
 The most blatant regulatory weakness were addressed, but there is a definite “closing of the barn door after the horses have bolted” flavor to it. As I write this, teams of imaginative lawyers are drawing up the incorporation documents for special purpose entities to sidestep all of this. Water is like capital: it will always flow to the least regulated, highest return corners of the globe. You might as well try to make it illegal to buy low and sell high. The more things change, the more they remain the same.

And don’t run out and buy bank shares because they dodged the bullet, no matter what John Paulson says. A possible double dip recession, another leg down in the real estate market bringing a secondary banking crisis make this a much higher risk bet than it appears.

 

Sideways trading in this market.
Internals point down, Futures started up at 6:00 EST Sunday 10/11/09
The Dollar is still driving the equities rally, as the dollar drops the inverse reaction has been occurring in the equities market.

Stockshakers actively trades the /ym Dow Futures, currently long with very tight stops. 9:00PM EST 10/11/09 Sunday.

 

Dollar Reaches Breaking Point at Banks Shifting Record Reserves

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades. Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

Sliding Share

The dollar’s 37 percent share of new reserves fell from about a 63 percent average since 1999. Englander concluded in a report that the trend “accelerated” in the third quarter. He said in an interview that “for the next couple of months, the forces are still in place” for continued diversification.  America’s currency has been under siege as the Treasury sells a record amount of debt to finance a budget deficit that totaled $1.4 trillion in fiscal 2009 ended Sept. 30.

Intercontinental Exchange Inc.’s Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell to 75.77 last week, the lowest level since August 2008 and down from the high this year of 89.624 on March 4. The index, trading at 76.489 today, is within six points of its record low reached in March 2008.

Foreign companies and officials are starting to say their economies are getting hurt because of the dollar’s weakness.

 

Stockshakers are buying CLWR.
If the stock fails 7.03 the position will be reversed.

GOOG Calls - Android fuel?

Tough choices for feds giving out broadband money

 

The federal government will soon start handing out the first $4 billion from a pot of stimulus funds intended to spread high-speed Internet connections to more rural communities, poor neighborhoods and other pockets of the country clamoring for better access. The challenge is that the government has received $28 billion in requests.

So the reviewers at the Commerce and Agriculture Departments who will award the broadband money must make hard choices. The 2,200 applications each envision something different _ more fiber-optic lines, for example, or computer labs or municipal wireless networks. But they all promise that their proposals will create jobs and bring new economic opportunities.

What follows are snapshots of four projects representing a cross section of the broadband stimulus hopefuls. It’s too soon to know which plans will win federal grants or loans, either in this round of funding or in the next, as the total broadband stimulus expands to $7.2 billion. Those that do get picked may not get the full amount they are seeking.But perhaps one _ or more _ of these projects has a chance.

 

For the Coeur d’Alene Indian tribe in the Idaho panhandle, the stimulus money could mean a lifeline to the outside world.The tribe is asking for $12.2 million for a ring of fiber-optic lines that could connect up to 3,500 homes on one side of its rural reservation, which is about half the size of Rhode Island.

Right now, the tribe’s landline broadband options are limited. The local cable company has pulled out of the market. And the phone company, Verizon Communications Inc., offers digital subscriber line (DSL) service to just a small slice of the the reservation.

Although the tribe launched its own wireless network in 2005 with the help of Agriculture Department funding, that network reaches less than half the reservation and slows to a crawl whenever too many people get online at once.

Valerie Fast Horse, the tribe’s information technology director, says stimulus money would let the Coeur d’Alene Indians build a network that is “more stable and more reliable” and could deliver faster connections at lower prices.The tribe’s wireless network currently offers top speeds of 1.5 megabits per second, comparable to standard DSL service available elsewhere. But it charges users about $100 a month, about four times the standard price. The proposed fiber network would deliver a 20-megabit connection _ faster than what most cable subscribers get _ for $100 a month. Or tribe members would be able to get a 1.5-megabit connection for $25 a month.

Fast Horse envisions all sorts of uses for the fiber lines, including distance learning. Tribe members already use video conferencing to participate in classes at North Idaho College, about 35 miles away, when the roads are too icy to drive. But

that requires them to travel to the tribe’s education center, which has a landline connection to the Internet. A fiber-to-the-home network would let tribal members take classes without leaving their kitchens, she says.It would also enable Coeur d’Alene members to consult with medical specialists around the country. And it would help the tribe preserve its language and culture, by allowing more members to access the tribe’s video-sharing Web site, Rezcast. Among other things, the site features clips of powwows and online tutorials with tribal elders speaking their native language.

 

Clearwire Corp., a company pioneering the use of a next-generation wireless technology known as WiMax, is upfront about the fact that some markets don’t make sense for telecom providers that need to show a profit.So Clearwire is asking for $19.4 million to build a high-speed wireless network in a handful of poor Detroit neighborhoods that it otherwise might not serve anytime soon.

Although those neighborhoods have more than 800,000 people, high unemployment and poverty levels make for a tough business case. But federal dollars would change the equation, says John Bunce, president of the Clearwire unit applying for stimulus funding.

And with that seed money as a starting point, the company pledges to spend its own capital to expand the wireless network across metropolitan Detroit, including more lucrative suburban markets.

The company offers a range of wireless plans, including a $45-a-month package that delivers speeds averaging 3 megabits to 6 megabits per second. On the low end, the company offers a basic 1-megabit connection for $25 a month.

In Detroit, Clearwire says, it would also provide free and discounted accounts for poor residents through nonprofit partners.

 

 

In Appalachia, a nonprofit Internet provider called the Mountain Area Information Network (MAIN) wants help expanding a service started back in the dial-up Internet days so that people in the mountains of North Carolina wouldn’t have to make a long-distance phone call to get online.

MAIN is asking for $2.5 million to extend its wireless network in Asheville, N.C., and several remote mountain communities. A sister non-profit is asking for $38.8 million to install fiber lines that would connect that network to the Internet.Launched in 1996, MAIN today has about 1,200 dial-up subscribers, 400 wireless subscribers and several hundred additional customers who pay to access a Wi-Fi connection for a few hours or a few days at a time. Stimulus money would enable the non-profit to spread its wireless “cloud” to 11,000 additional homes in Asheville public housing projects and surrounding low-income neighborhoods.

Wally Bowen, MAIN’s executive director, says the service would bring inexpensive mobile Internet connections _ with speeds of 3 megabits per second for $30 a month _ to a transient, low-income community that includes struggling artists and young entrepreneurs. Many of those people, he says, cannot sign up for the typical one-year or two-year contracts required to get the cheapest Internet rates from the big phone companies.

MAIN would also use federal funding to bring wireless connections to 1,700 homes in Graham County, an isolated, rural district that has no four-lane highway. Although the library and community college in Graham County’s only town,

Robbinsville, do provide high-speed Internet access, budget cuts have restricted the number of hours that those computer centers are open.

In addition, MAIN would use stimulus money to extend its wireless service to Mount Mitchell State Park, home to the highest point east of the Mississippi. That would allow campers, park rangers and visiting scientists studying acid rain and biodiversity to get real-time updates on weather and trail conditions.

 
Philadelphia is making its second run at a big municipal broadband project.

The city is asking for $21.8 million to connect police precincts, fire stations, libraries, housing projects, recreation centers and community organizations across three inner-city neighborhoods.

Allan Frank, Philadelphia’s chief technology officer, envisions doing this with a combination of fiber lines and a wireless network. That would bring high-speed links to city buildings to handle municipal affairs _ while also enabling garbage

collectors, emergency responders, fire inspectors and other city workers to stay connected using handheld devices in the field.Philadelphia also has two other stimulus proposals: The city’s public housing authority would like $2.4 million to place computer labs in housing projects. And the city’s library system, working closely with community groups, is asking for $15 million to set up Internet training programs, supply laptops and install Internet connections to get low-income residents online.

Five years ago, Philadelphia partnered with EarthLink Inc. to blanket the city with wireless access, in hopes of providing cheap connections for poor neighborhoods. But that effort ended in failure: EarthLink concluded the venture had no business model and pulled out. Now the city hopes to buy the network assets that EarthLink left behind.Frank says the stimulus money is an opportunity to “restart the conversation about what our technology future should look like.” By retaining control over the project and focusing on broadband adoption as well as access, he added, the city would avoid the mistakes it made last time.”This is a game reset for us,” he says.

 
Android to overtake iPhone in 2012 says analyst
Symbian still on top, but BlackBerry down

 

Google’s Android will have more than quadrupled its market share by the end of 2012, market watcher Gartner has claimed. But Symbian looks set to remain the dominant smartphone OS for several years to come.Android’s market share stood at a paltry 1.6 per cent during Q1 2009, but will grow to 14.5 per cent by the time Q4 2012 rolls around, Gartner forecast, based on an estimated 522m smartphones shipping worldwide during the period.As a result, Android will move from its current position as the sixth most popular operating system for smartphones to become the second most popular, Gartner said.

The main reason for Android’s market share growth will, Gartner VP Ken Dulaney told website AppleInsider, be because “unlike Apple, they [Google] license their OS to multiple OEMs”.Dulaney said many handset makers are betting their futures on Android, while Apple is just one company.Speaking of Apple, its share of the smartphone OS market will also grow - but only from 10.8 per cent to 13.7 per cent, Gartner said.

Symbian will remain the most popular OS. However, its market share will drop from 49.3 per cent during Q1 2009 to 39 per cent by Q4 2012.Research in Motion’s BlackBerry OS is currently the second most popular handset OS, Gartner said, with a Q1 2009 market share of 19.9 per cent. But it will slip to fifth place by Q4 2012 with market share of just 12.5 per cent.Windows Mobile’s share will grow from 10.3 per cent to 12.8 per cent during the same quarters, Gartner added, which will see it remain as the fourth most popular phone-based OS.

 

Total Campaign Contributions/Lobbying by TARP Recipients

Return on Investment
Total campaign contributions and lobbying by TARP recipients*

>

Company	Campaign Contributions, 07-08 Cycle	Lobbying Expenditures, 2008	TARP Payment	Return on Investment
Bank of America Corp**	$5,752,630	$8,790,000	$45,000,000,000	309335%
Citigroup Inc.	$4,799,678	$7,660,000	$50,000,000,000	401194%
AIG	$929,774	$9,690,000	$40,000,000,000	376556%
JPMorgan Chase & Co.	$4,778,638	$5,390,000	$25,000,000,000	245754%
Wells Fargo & Company	$1,553,471	$1,200,740	$25,000,000,000	907601%
General Motors Corporation	$916,142	$14,071,000	$10,400,000,000	69293%
The Goldman Sachs Group, Inc.	$5,690,351	$3,280,000	$10,000,000,000	111378%
Morgan Stanley	$3,689,027	$3,120,000	$10,000,000,000	146764%
The PNC Financial Services Group Inc.	$68,525	$0	$7,579,200,000	11060389%
U.S. Bancorp	$496,461	$570,000	$6,599,000,000	618676%
Chrysler Holding LLC and Cerberus Capital Management	$1,075,350	$7,927,782	$5,500,000,000	60990%
GMAC LLC	$72,207	$4,620,000	$5,000,000,000	106460%
SunTrust Banks, Inc.	$175,903	$0	$4,850,000,000	2757101%
Capital One Financial Corporation	$700,161	$1,132,000	$3,555,199,000	193944%
Regions Financial Corp.	$161,775	$180,000	$3,500,000,000	1023966%
Fifth Third Bancorp	$149,550	$80,000	$3,408,000,000	1484544%
American Express Company	$1,028,038	$3,790,000	$3,389,000,000	70240%
BB&T Corp.	$262,737	$0	$3,133,640,000	1192591%
Bank of New York Mellon Corporation	$886,701	$558,402	$3,000,000,000	207498%
KeyCorp	$159,280	$210,000	$2,500,000,000	676893%
CIT Group Inc.	$23,200	$90,000	$2,330,000,000	2058204%
Comerica Inc.	$210,538	$0	$2,250,000,000	1068591%
State Street Corporation	$152,627	$980,000	$2,000,000,000	176481%
Marshall & Ilsley Corporation	$57,400	$0	$1,715,000,000	2987705%
Northern Trust Corporation	$240,892	$0	$1,576,000,000	654135%
Zions Bancorporation	$117,159	$60,000	$1,400,000,000	790151%
Huntington Bancshares	$188,700	$232,971	$1,398,071,000	331455%
Synovus Financial Corp.	$10,150	$0	$967,870,000	9535565%
Popular, Inc.	$12,700	$390,000	$935,000,000	232083%
First Horizon National Corporation	$30,050	$0	$866,540,000	2883561%
M&T Bank Corporation	$3,500	$10,000	$600,000,000	4444344%
City National Corporation	$262,965	$0	$400,000,000	152011%
Webster Financial Corporation	$14,850	$0	$400,000,000	2693503%
First Bancorp	$4,900	$0	$400,000,000	8163165%
Fulton Financial Corporation	$5,700	$0	$376,500,000	6605163%
TCF Financial Corporation	$103,300	$0	$361,172,000	349534%
South Financial Group, Inc.	$29,100	$0	$347,000,000	1192340%
Wilmington Trust Corporation	$59,850	$0	$330,000,000	551278%
East West Bancorp	$4,800	$0	$306,546,000	6386275%
Sterling Financial Corporation	$5,750	$0	$303,000,000	5269465%
Whitney Holding Corporation	$27,950	$0	$300,000,000	1073245%
Susquehanna Bancshares, Inc	$6,850	$0	$300,000,000	4379462%
Valley National Bancorp	$950	$0	$300,000,000	31578847%
UCBH Holdings, Inc.	$42,750	$0	$298,737,000	698700%
New York Private Bank & Trust Corporation	$6,350	$0	$267,000,000	4204624%
Cathay General Bancorp	$2,500	$0	$258,000,000	10319900%
Wintrust Financial Corporation	$4,401	$0	$250,000,000	5680427%
SVB Financial Group	$18,300	$0	$235,000,000	1284053%
International Bancshares Corporation	$116,100	$0	$216,000,000	185947%
Trustmark Corporation	$6,500	$0	$215,000,000	3307592%
Umpqua Holdings Corp.	$650	$0	$214,181,000	32950823%
MB Financial Inc.	$15,150	$0	$196,000,000	1293629%
First Midwest Bancorp, Inc.	$1,750	$0	$193,000,000	11028471%
Pacific Capital Bancorp	$500	$480,000	$180,634,000	37493%
United Community Banks, Inc.	$12,250	$0	$180,000,000	1469288%
Boston Private Financial Holdings, Inc.	$6,400	$0	$154,000,000	2406150%
Independent Bank Corp.	$2,250	$0	$150,000,000	6666567%
National Penn Bancshares, Inc.	$1,500	$0	$150,000,000	9999900%
Dickinson Financial Corporation	$94,050	$0	$146,000,000	155137%
Central Pacific Financial Corp.	$19,750	$0	$135,000,000	683444%
Sterling Bancshares, Inc.	$9,150	$0	$125,198,000	1368184%
FirstMerit Corp.	$4,500	$0	$125,000,000	2777678%
Banner Corporation	$6,140	$0	$124,000,000	2019444%
Signature Bank	$7,875	$0	$120,000,000	1523710%
1st Source Corporation	$450	$0	$111,000,000	24666567%
S&T Bancorp	$3,200	$0	$109,000,000	3406150%
Park National Corporation	$10,500	$0	$100,000,000	952281%
Old National Bancorp	$8,250	$0	$100,000,000	1212021%
F.N.B. Corporation	$1,000	$0	$100,000,000	9999900%
Pinnacle Financial Partners, Inc.	$29,850	$0	$95,000,000	318158%
Iberiabank Corporation	$2,000	$0	$90,000,000	4499900%
Plains Capital Corporation	$59,650	$0	$87,631,000	146809%
Midwest Banc Holdings, Inc.	$2,800	$0	$84,784,000	3027900%
Sandy Spring Bancorp, Inc.	$250	$0	$83,094,000	33237500%
Columbia Banking System, Inc.	$2,500	$0	$76,898,000	3075820%
TowneBank	$4,750	$0	$76,458,000	1609542%
Texas Capital Bancshares, Inc.	$18,150	$0	$75,000,000	413123%
Bank of the Ozarks, Inc.	$11,150	$0	$75,000,000	672546%
Wesbanco Bank Inc.	$208	$0	$75,000,000	36057592%
Green Bankshares, Inc.	$1,200	$0	$72,278,000	6023067%
Virginia Commerce Bancorp	$8,850	$0	$71,000,000	802160%
Southwest Bancorp, Inc.	$50,650	$0	$70,000,000	138103%
Flushing Financial Corporation	$2,300	$0	$70,000,000	3043378%
Superior Bancorp Inc.	$250	$0	$69,000,000	27599900%
Nara Bancorp, Inc.	$2,000	$0	$67,000,000	3349900%
First Bancorp	$2,650	$0	$65,000,000	2452730%
SCBT Financial Corporation	$250	$0	$65,000,000	25999900%
CoBiz Financial Inc.	$1,000	$0	$64,450,000	6444900%
Union Bankshares Corporation	$1,000	$0	$59,000,000	5899900%
Liberty Bancshares, Inc.	$20,900	$0	$58,000,000	277412%
Great Southern Bancorp	$2,500	$0	$58,000,000	2319900%
WSFS Financial Corporation	$21,550	$0	$53,000,000	245840%
Ameris Bancorp	$1,000	$0	$52,000,000	5199900%
State Bankshares, Inc.	$4,800	$0	$50,000,000	1041567%
Home Bancshares, Inc.	$1,500	$0	$50,000,000	3333233%
Fidelity Southern Corporation	$300	$0	$48,200,000	16066567%
MetroCorp Bancshares, Inc.	$1,500	$0	$45,000,000	2999900%
Cadence Financial Corporation	$8,250	$0	$44,000,000	533233%
Exchange Bank	$2,750	$0	$43,000,000	1563536%
Sterling Bancorp	$1,300	$0	$42,000,000	3230669%
Eagle Bancorp, Inc.	$801	$0	$38,235,000	4773308%
Bridgeview Bancorp, Inc.	$6,600	$0	$38,000,000	575658%
OceanFirst Financial Corp.	$3,300	$0	$38,000,000	1151415%
First Defiance Financial Corp.	$2,000	$0	$37,000,000	1849900%
State Bancorp, Inc.	$6,850	$0	$36,842,000	537739%
Fidelity Financial Corporation	$1,657,052	$2,190,000	$36,282,000	843%
Yadkin Valley Financial Corporation	$1,250	$0	$36,000,000	2879900%
West Bancorporation, Inc.	$250	$0	$36,000,000	14399900%
Porter Bancorp	$5,000	$0	$35,000,000	699900%
Encore Bancshares Inc.	$4,300	$0	$34,000,000	790598%
First Security Group, Inc.	$3,350	$0	$33,000,000	984975%
Centrue Financial Corporation	$1,000	$0	$33,000,000	3299900%
Pulaski Financial Corp	$1,000	$0	$33,000,000	3299900%
Peapack-Gladstone Financial Corporation	$2,300	$0	$28,685,000	1247074%
Centerstate Banks of Florida Inc.	$500	$0	$27,875,000	5574900%
Citizens & Northern Corporation	$700	$0	$26,000,000	3714186%
Peoples Bancorp of North Carolina, Inc.	$2,125	$0	$25,054,000	1178912%
Shore Bancshares, Inc.	$3,800	$0	$25,000,000	657795%
Horizon Bancorp	$2,600	$0	$25,000,000	961438%
Intervest Bancshares Corporation	$2,300	$0	$25,000,000	1086857%
HF Financial Corp.	$250	$0	$25,000,000	9999900%
Heritage Financial Corporation	$1,250	$0	$24,000,000	1919900%
Wainwright Bank & Trust Company	$15,250	$0	$22,000,000	144162%
Citizens South Banking Corporation	$750	$0	$20,500,000	2733233%
First Financial Service Corporation	$7,325	$0	$20,000,000	272938%
BNCCORP, Inc.	$5,050	$0	$20,000,000	395940%
C&F Financial Corporation	$250	$0	$20,000,000	7999900%
Carver Bancorp, Inc	$5,300	$0	$19,000,000	358391%
Bar Harbor Bankshares/Bar Harbor Bank & Trust	$500	$0	$19,000,000	3799900%
Security Federal Corporation	$1,250	$0	$18,000,000	1439900%
ECB Bancorp, Inc./East Carolina Bank	$1,000	$0	$18,000,000	1799900%
Timberland Bancorp, Inc.	$430	$0	$16,641,000	3869900%
Carolina Bank Holdings, Inc.	$1,250	$0	$16,000,000	1279900%
BankFirst Capital Corporation	$500	$0	$16,000,000	3199900%
Monarch Financial Holdings, Inc.	$1,997	$0	$14,700,000	736004%
Magna Bank	$2,250	$0	$13,795,000	613011%
Morrill Bancshares, Inc.	$3,100	$0	$13,000,000	419255%
LCNB Corp.	$1,000	$0	$13,000,000	1299900%
OneUnited Bank	$3,550	$0	$12,063,000	339703%
First Manitowoc Bancorp, Inc.	$2,500	$0	$12,000,000	479900%
1st Constitution Bancorp	$2,000	$0	$12,000,000	599900%
Pacific Coast Bankers’ Bancshares	$250	$0	$11,600,000	4639900%
Mid Penn Bancorp, Inc.	$1,800	$0	$10,000,000	555456%
Uwharrie Capital Corp	$1,500	$0	$10,000,000	666567%
Midland States Bancorp	$500	$0	$10,000,000	1999900%
New Hampshire Thrift Bancshares, Inc.	$500	$0	$10,000,000	1999900%
Citizens First Corporation	$74,700	$0	$8,779,000	11652%
Syringa Bancorp	$750	$0	$8,000,000	1066567%
First Sound Bank	$2,716	$0	$7,400,000	272359%
Western Community Bancshares, Inc.	$5,600	$0	$7,290,000	130079%
Fidelity Bancorp, Inc.	$5,100	$0	$7,000,000	137155%
Somerset Hills Bancorp	$2,000	$0	$7,000,000	349900%
American State Bancshares, Inc.	$5,350	$0	$6,000,000	112050%
Patapsco Bancorp, Inc.	$1,050	$0	$6,000,000	571329%
Seaside National Bank & Trust	$400	$0	$6,000,000	1499900%
Northeast Bancorp	$1,000	$0	$4,227,000	422600%
Pacific Commerce Bank	$1,500	$0	$4,060,000	270567%
Capital Pacific Bancorp	$1,750	$0	$4,000,000	228471%
Bank of Commerce	$15,950	$0	$3,000,000	18709%
FPB Financial Corp.	$500	$0	$3,000,000	599900%
Treaty Oak Bancorp, Inc.	$250	$0	$3,000,000	1199900%
Grand Total	$37,477,300	$76,702,895	$305,212,309,000	267208%

*TARP recipient list accessed at Treasury.gov on Feb. 2, 2009. List includes only recipients that spent money on lobbying or were associated with campaign contributions. Campaign contributions include money from PACs and individuals but do not include post-election fundraising.

**Includes data for Merrill Lynch, which was acquired by Bank of America

Guaranty Bank of Austin is the 81st bank failure of ‘09 as the Mesothelioma  of the financial world continues
Guaranty Bank of Austin, Tex. became the 81st bank failure of 2009 after it was closed by Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corp. as receiver, the federal agency said late Friday. The FDIC said it has entered into a “purchase and assumption agreement” with BBVA Compass of Birmingham, Ala. As of June 30, Guaranty Bank had total assets about $13 billion and total deposits of about $12 billion.  As the Mesothelioma  of the financial world continues it looks mor and more like we are still due for a down turn on the U.S. Equities markets.

Wednesday - Going long.
QQQQ call options.

Keeping an eye on INTC calls options.

Sell into the close.

Option experations week…

If the US Dollar turns up from here the odds favor a decline in the S&P 500 if the current relationship Continues.

Tech and Commodities are the target sectors here.

MSFT Calls purchased over the last 4 weeks.

Mondays session was a blood bath for the markets.
However Stockshakers made an easy 70% on the day:

FAZ  +23.35 (+41.22%)
SKF  +39.60 (+29.32%)

If you bought the Call options you made over 150% IN 1 DAY!
Congratulations Stockshakers!
 Index   Last    Change   % change
• DJIA   8149.09 -679.95  -7.70%
• NASDAQ 1398.07 -137.50  -8.95%
• S&P 500 816.21 -80.03   -8.93%

 

DOWS worst days  

  Date          Close  Net change  % change
1 Sept.29, 2008 10,365.45 –777.68 –6.98
2 Oct. 15, 2008 8,577.91  -733.08 -7.87
3 Sept.17, 2001 8,920.70  –684.81 –7.13
4 Dec.  1, 2008 8,149.95  -679.95 -7.70 ****
5 Oct.  9, 2008  8,579.19  –678.91 –7.33
6 April14, 200010,305.78 –617.77 –5.66
7 Oct. 27, 1997 7,161.14  –554.26 –7.18
8 Oct. 22, 2008 8,519.21  -514.45 -5.69
9 Aug. 31, 1998 7,539.06  –512.62 –6.37
10 Oct. 7, 2008 9,447.11  –508.39 –5.11
 
The Dow fell 679.95, or 7.70 percent, to 8,149.09, its fourth-largest point drop ever. The S&P 500 index dropped 80.03, or 8.93

percent, to 816.21. This was the worst point and percentage drop for both blue chip indexes since Oct. 15.

The Nasdaq composite index fell 137.50, or 8.95 percent, to 1,398.07. The Russell 2000 index of smaller companies fell 56.07, or 11.85

percent, to 417.07.

Only 218 stocks were in positive territory on the New York Stock Exchange while 2,693 declined. Volume came to 1.62 billion shares.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.76 percent from 2.92

percent Friday. The yield on the three-month T-bill, considered one of the safest investments and an indicator of investor sentiment,

slipped to 0.02 percent from 0.05 percent Friday. The lower the yield, the more anxious investors tend to be.

Sectors performance Monday 12/01/08:

No.   Name           Change
1 Financial             -12.25%
2 Basic Materials    -10.79%
3 Industrial Goods  -9.85%
4 Conglomerates    -8.56%
5 Services               -7.91%
6 Utilities               -7.40%
7 Technology         -7.15%
8 Consumer Goods-7.14%
9 Healthcare          -5.82%

Stockshakers Finace is the best!

Are Americans living beyond our means?

Stockshakers views the 3% year over year growth in Black Friday spending (as per ShopperTrak RCT Corp) in a down economy as a resounding “Yes!”
Retail sales jumped 3% year over year, according to ShopperTrak RCT Corp (some have expected holiday sales to drop 10% year overyear). eCommerce, meanwhile, which is down 4% versus last year so far, rose a surprising 1%.  Sales tomorrow (Cyber-Monday) willlikely be the big bellwether for eCommerce.

Is A huge pension bailout Coming up?

Falling markets and a sour economy have opened a gap of more than $200 billion in the pension plans of S&P 500 companies, including Ford and GM. Will taxpayers get stuck with the bill?

The derivatives crash has not yet happened.

The bailout train is going to be so long with so many requests the U.S. Dollar is going to be under pressure.
However current indicators are pointing for a short term bounce for the US Dollar.

The UDN may be a great ETF to focus on in either directions Puts ofr the rally and then buy the calls as the Dollar turns back down.

The Proshares DB Bearish the US Dollar fund.

The last 5-6 sessions have shown strength and some momentum to this bear market bounce.
We will see a retest of the support levels in the next day or 2. Then Stockshakers sees the potential for a continuation of the rally after the retest.

The Russell has bounced the most IWM so look to the 2x Inverse ETF for the reversal.
It is just a matter of time before we retest the lows again. (This may be a very short term retest.)

Commercial Real Estate Downturn is expected to become a tsunami in early to mid ‘09.

The coming collapse of Commercial real estate has not yet been realized.

Ross Perot made the cover of TIME magazine for the devastating effects he is personally dealing with as a result of the broad sweeping commercial real estate market weakness.

Parkcentral Global Hub Ltd., the fund overseen by Parkcentral Capital Management LP, a Plano, Texas, firm controlled by the Perot family, peaked this year at $2.5 billion in assets. It used borrowed money to amplify its bets, said people familiar with the matter, and began dumping assets last week.

That leverage helped hasten the fund’s meltdown as the commercial mortgage-backed securities, or CMBS, market cratered last week, and the borrowings also could leave lenders with tens of millions of dollars in losses, the people said.

A Parkcentral spokesman Tuesday confirmed that the fund has been forced to liquidate to pay off creditors, but he declined to elaborate. He blamed the “unprecedented upheaval of the capital markets in general and the freezing of credit markets in particular.”

The nose dive of commercial real-estate debt marks the latest blow for hedge funds, which globally are having their worst year on record. Some investment managers are trying to persuade investors to pony up more money to shore up funds.

The current McClellan Oscillator is registering overbought conditions. We have been learning to live with new volatility extremes as the norm. The overbought over sold indicators have changed but rarely do we reach the above 200 level on the McClellan Oscillator when it has not been followed by a vigorous drop within a session or possibly a few. The proclivity of this area of the McClellan Oscillator is to not allow a very long stay above a 200 level.

The US Dollar may bounce to the $87.25 level from here.(86.54)

Gold could take a breather as the Dollar strengthens momentarily along with most other commodities and commodity focused equities.
Gold will see support in the $800 and again in the $775 range.

One of the sectors to keep a watchful eye on is the Homebuilders.  Demand for new homes decreased again in October with year-end results of 515,000 as the most likely number reported.  A decrease of 40% from 2007.  2009 projections are in the range of 375,000 projected this is worse than the 2008 figures.  Knowing what the most likely outcome will be Stockshakers will be focusing on put options in the homebuilders - BZH, CTX, LEN, PHM this week.

With the exception of the medical/Drug sector and some utilities and natural gas, most indications are for some selling for one or two sessions starting as soon as the open of trading on Monday 12/01/08.

IWM could retrace as much as 50%on the Fibs to $41.00 the bounce that would follow could be very lucrative.

Oil showing indicators for a brief pullback.

FAZ (3x ETF Financials showing the potential for a solid bounce here)
BGU, TNA, ERX all 3X Bulls setting up for a sell-off. (These issues are so new we don’t have enough data to set our extended ranges on these yet.)

RIMM may sell off here for a session or 2 and then the target to the upside would be $47
GOOG next target support at $275

BCPC, BTFG, STRA, QID, DXD, BIIB, LG, XRIT, WGL, VIX, VXN, SDS, All poised for a bounce.

Stockshakers is long the inverse ETF’s here.

The Dow rallied 17% in the previous five sessions, marking the largest percentage gain since 1932 and the best five-day point gain on record. The impressive bull rally has many traders worried about a potential pullback, while others are taking the strength as a sign of a market bottom.

DOW supports 8650, 8350, 8200

-Stockshakers.com

Stockshakers have received questions about the current slide and why it has intensified since September 15th you may not see these factors mentioned elsewhere.
 Much of the selling over the past few days is related to option volatility positions. Most of the

professional options traders and funds have been selling November volatility for the past Few months. This basically means that in one way or another they are now getting the position in stock that they don’t want and they are also essentially long indices at prices well beyond anything they could have imagined.
 
8 weeks ago you could have sold the November SPY 80 puts and in all other times, it was a position that would have been within any healthy model. The lower the SPY’s went, the greater the price of the puts

became making them even more attractive to sell.
Until now, markets have rarely ever sold off this hard in such a short time.
This type of trading move was well within all risk profiles of all models as a prudent hedge to make. A

week and a half ago though, these good hedge moves started looking a bit scary as they started moving in the money and the mentality shifted to the the thought that all we need is a good bounce and we’re out.
That bounce has not happened and now facing large losses, these funds and traders have had to unwind

unwanted long positions, therefore increasing the selling at exponential rates.
Here is a very real risk, at the end of the session today there may be a landslide of positions that still need to close or be realized.
 The selling may be done with after yesterdays sell-off. Any further selling will come from the last ones who decided to take the positions into today but most of it is now likely done. We don’t pick bottom’s but at least for the next few weeks these guys are out of the way.
 The indexes and most stocks are under the 200-day. Yes, the market is likely getting close to a bottom.

Have a good weekend and let’s hope this rally is the real thing.

Stocks Crash To 11-Year Lows
 

Oh…and that Bounce Stockshakers are looking for ? May possibly happen during Fridays trading session!
 
The last time the S&P 500 closed lower than today’s close (752) was April 14, 1997.
At 780 on the S&P 500, we are now in the lowest 20% of historical market valuations. This does not mean we are at a bottom. It does mean that long-term returns from this level are likely to be good.
Dell reports grim news regarding earnings and projections.
 
• Over the past year, the S&P 500 index lost $1 trillion more than the entire 2000-2002 bear market, according to Standard & Poor’s. From the October 2007 highs of 1,565, to yesterday’s close of 806.58, the S&P 500 market capitalization lost $6.69 trillion. That’s almost $1 trillion more than entire 2000-03 bear market losses of $5.76 trillion.

• The S&P 500 hasn’t been this far below its 200-day moving average on a percentage basis since The Great Depression.

• CPI: U.S. consumer prices in October registered their largest single-month decline since before World War II. It is the largest monthly drop in the 61-year history of the data;

• The dividend yield on the S&P 500 is now greater than the yield on the 10-year Treasury. That hasn’t happened since 1958.

• First-time claims for U.S. unemployment insurance rose to the highest level since September 2001. The total number of people on unemployment benefit rolls jumped to the highest level since 1983.

• Housing starts fell to 791,000, off 38% from a year ago. That’s the slowest pace of starts since data began being compiled in 1959. Starts are now down 65% from the early 2006 peak — this has become the very worst housing downturn on record.

• Permits for new houses, at a 708,000 pace, were off 40% from a year ago, also the lowest total since it has been tracked starting in 1960. Put this into context of population — in 1960, the total U.S. population stood at 180 million — 60% of today’s 300 million.

• more Doug Kass: The 30-year return for BBB-rated corporate bonds is now greater than the 30-year return for stocks. So it has not paid to take equity risk for 30 years

• The TIPS Spread ( Treasury Inflation Protected Securities versus the 10-year Treasury) is at a record low 54 basis points (1997)

• The Russell 3,000 now has 1228 stocks a share price under $10. That’s 42% of the index. At the market’s 2002 lows, there were significantly less stocks trading below $10/share just 884

 

Nasdaq  1316.12  -70.30 
Dow     7552.29 -444.99
S&P 500  752.44  -54.14
RUS 2K   385.31  -27.07

 

October lows broken for the DOW during Thursdays trading session.
2002 lows were broken for the S&P500.
The Russell has broken all lows but the 2002 lows
NASDAQ broke down and is now just points over the 2003 lows and 5 points or so from the 2002 low.
SMH has broken the 2002 lows.
Oil has broken $50 a barrel.

Options Expiration Fridays trading session.

Gold $699 support may bounce to the upside, Upside Resistance $775.00

Volatility is at record highs

Energy may see some distribution on Friday.

The early selling may giveway to a bounce that could leave some gaspiing for breath during Fridays sessions.

Internals are pegging. (This is some the highest readings we have ever seen in the over sold indicators.)
Remember we have seen moves in this bear market of astounding proportions, years worth of gains lost in a day and years worth of gains in one day on a bounce like the one we see potentially setting up here.

Moves are massive in this bear market and news is always amplified in a bear market.

Technical indicators now suggest a large bounce possibly in Fridays trading session.

Upside DOW target is 7950 during market hours 8070 if we break above this level next resistance is at 8200.

You may not believe this but we may have a Holiday rally monthly indicators suggest we have some relief coming in the next 30 days.

Banks of Japan hold interest rates unchanged.

 

JP Morgan fires 3,000

 
Long Calls on BIIB

 

3X long ETFS keep a watch for a bounce or ride the Inverse 3X down to the bounce and reverse positions.

(This is from October 18th - as the global wealth shrinks back to zero Stockshakers thought you may enjoy hearing what these guys really think)

So long, suckers. Millionaire hedge fund boss thanks ‘idiot’ traders and retires at 37
Andrew Clark in New York
The boss of a successful US hedge fund has quit the industry with an extraordinary farewell letter dismissing his rivals as over-privileged “idiots” and thanking “stupid” traders for making him rich.

Andrew Lahde’s $80m Los Angeles-based firm Lahde Capital Management in Los Angeles made a huge return last year by betting against subprime mortgages.

Yesterday the 37-year-old told his clients that he had hated the business and had only been in it for the money. And after declaring he would no longer manage money for other people, because he had enough of his own, Lahde said that instead he intended to repair his stress-damaged health; he made it clear he would not miss the financial world.

“The low-hanging fruit, ie idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking,” he wrote. “These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government,” he said.

“All of this behaviour supporting the aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”

Lahde became one of the biggest names in the investment industry when one of his funds produced a return of 866% last year, largely by forecasting the US home loans industry would collapse.

In his farewell letter, which concluded with an appeal for the legalisation of marijuana, Lahde said he was happy with his rewards and did not envy those who had made even more money.

“I will let others try to amass nine, 10 or 11 figure net worths. Meanwhile, their lives suck,” he wrote, citing a life of back-to-back business appointments relieved only by a two-week annual holiday in which financiers are still “glued to their Blackberries”.

Lahde’s retirement came amid an implosion among the hedge fund industry - some 350 of the funds have liquidated this year, according to Hedge Fund Research.

His final words of advice? “Throw the Blackberry away and enjoy life.”

-Billions tend to make life more enjoyable

-stockshakers.com