The VIX is up 14%. Volatility returns with great force!
-
11AugFinancial transaction, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, daily stock picks, daily stock tips, daytrades, deals, debt, fed action, financial settlement, free stock info, free stock picks, free stock tips, market facts, markets, trading, trend, usa economics No Comments
Tags: The VIX is up 14%
-
10Augbreaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, fed action, government, market analysis, market facts, money, return rate, short term investments, stockmarket analysis, stocks, trading, trading ideas, trend, usa economics No Comments
Fed says economic recovery likely to be more modest in near-term
Fed to keep constant holdings of securities at current level
Fed expects exceptionally low funds rate for extended period
Fed announcement cuts market losses
Fed to buy long-term Treasury debt, keeps target rate unchanged
Tags: Fed says economic recovery likely to be more modest in near-term
-
10AugMovers & Shakers, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, daily stock picks, daily stock tips, equity, fed action, free stock info, government, market facts, markets, return rate, short term investments, stockmarket analysis, stocks, trading, trading ideas, trend, usa economics No Comments
There is a Fed rate announcement at 2:15pm ET on Tuesday
10 August 2010. On the previous Fed Day the FOMC
kept the rates in the 0% to 0.25% range.Fed expected to downgrade US growth outlook
The Federal Reserve’s interest rate-setting panel will meet Tuesday, under pressure to bolster a weak economic recovery that many fear is grinding to a halt.
The 10-member body is expected to downgrade its assessment of the health of the world’s largest economy, as it keeps interest rates at historic lows.
The Fed’s policies have come under the microscope in recent months, as investors asked whether the central bank was overly rosy in its previous assessments, calling its credibility into question.
In June, the Fed said the economic recovery was “proceeding” despite headwinds and would remain “moderate for a time.”
That language — which is eagerly watched by investors — may now be revised to reflect a dramatic slowdown in the pace of the recovery.
“It will be hard to take the Fed seriously if a more forthright acceptance of the array of softer data is not forthcoming,” said Ian Shepherdson of High Frequency Economics.
The scale of the slowdown was laid bare last week, when the Labor Department reported 131,000 jobs were lost in July, far more than expected.
On Monday, researchers at the San Francisco regional Fed ditched the ordinarily couched language of central bankers to warn a double dip recession was possible.
“A recessionary relapse is a significant possibility sometime in the next two years,” researchers Travis Berge and Oscar Jorda wrote, adding that “the policies that are adopted today could play a decisive role in shaping the pace of growth.”
Fed watchers will be looking for any hint of a change in those polices Tuesday, specifically a return to stimulus spending that marked the depths of the recession.
The bank battled the financial crisis by spending more than one trillion dollars, buying up Treasury bonds, mortgage-backed securities and other financial instruments to lubricate markets.
The Federal Reserve may take a tiny step in that direction by reinvesting cash from maturing bonds rather than shrinking its portfolio.
Analysts say that could mean spending anywhere between 100-300 billion dollars over the next year.
“The FOMC faces a tough meeting tomorrow with the market pricing in either a significant change to the statement or, indeed, renewed moves to stimulate the economy, such as re-investing maturing coupons on bond holdings,” said UBS analysts in a note to clients.
But some market-watchers doubt the Fed will take such drastic action without a more explicit threat to the recovery.
“Other than implicitly marking down its near term growth outlook, we expect the tone of the FOMC to not be substantially different than June,” said Joseph LaVorgna, chief US economist at Deutsche Bank.
“We do not expect the Fed to symbolically announce that it plans to reinvest maturing mortgage backed securities back into the market.
LaVorgna indicated even a modest shift in policy such as altering the interest paid on banks’ excess reserves held at the Fed could upset fragile markets.
“We do not expect the Fed to cut the interest on reserves either, as that would wreak havoc.”
Most analysts expect the Fed to ply a middle course, setting out what it will do if things get worse.
“The committee is likely to define what can be done in terms of monetary policy, if the macroeconomic situation were to worsen in the near future,” said Thomas Julien of Natixis.
Tags: Fed expected to downgrade US growth outlook, Fed rate announcement at 2:15pm ET on Tuesday 081010
-
09Augbreaking market news, breaking stock market news, breaking stock news, breaking wall street news, fed action, government, market analysis, return rate, stockmarket analysis, stocks, technical analysis, trading, trading ideas, trend No Comments
VIX Index Trading
Overall volume in the index market was light Monday, but the CBOE Volatility Index (.VIX) saw a bit more volume than usual. The volatility index edged up .40 to 22.14 in cautious trading ahead of an interest rate announcement from the Federal Reserve tomorrow afternoon.
In VIX options, the top trades of the day included a combination where an investor apparently bought 13,230 October 30 calls at $3.30 and sold 13,230 October 30 puts at $4.10.
This combo creates a bearish position similar to holding a short position in VIX futures. About 184,000 VIX calls and 111,000 VIX puts traded total, or nearly double the recent average daily volume.Tags: Federal Reserve announcement, rate change, VIX Index Trading
-
29JulMovers & Shakers, banking, breaking market news, breaking news, breaking stock market news, breaking stock news, fed action, global economy, government, market analysis, market facts, market projections, markets, money, mutual funds, short term investments, stockmarket analysis, stocks, technical analysis, trend, usa economics No Comments
Economists see tepid recovery deep into 2011
The U.S. economic recovery will remain slow deep into next year, held back by shoppers reluctant to spend and employers hesitant to hire, according to an Associated Press survey of leading economists.The latest quarterly AP Economy Survey shows economists have turned gloomier in the past three months. They foresee weaker growth and higher unemployment than they did before. As a result, the economists think the Federal Reserve will keep interest rates near zero until at least next spring.
Yet despite their expectation of slower growth, a majority of the 42 economists surveyed believe the recovery remains on track, raising hopes that the economy can avoid falling back into a “double-dip” recession.
The AP survey compiles forecasts of leading private, corporate and academic economists on a range of indicators, including employment, consumer spending and inflation. Among their forecasts:
•Economic growth the rest of this year and early next year will weaken, to less than 3 percent. From January through May, the economy grew at roughly a 3.5 percent pace.
•The unemployment rate will be no lower at the end of the year than it is now — 9.5 percent. A majority think it will be 2015 or later before the rate falls to a historically normal 5 percent.
•State budget shortfalls pose a “significant” or “severe” risk to the national economy. The loss of tax revenue has forced state and local governments to cut services and lay off workers.
The weak economy leaves Democrats and Republicans on Capitol Hill vulnerable as they head into the November midterm elections. Democrats, who now control both chambers, have the most to lose. The gloomier outlook is also a liability for President Barack Obama.The economists have turned more pessimistic since the recovery hit turbulence in May. Europe’s debt crisis sent tremors through Wall Street, causing stocks to tumble and raising doubts about the durability of the rebound.
Since then, businesses have been slow to step up hiring. Americans’ confidence in the economy has declined, leading shoppers to reduce spending. And the housing market has weakened further with the end of a homebuyer tax credit that had buoyed sales earlier this year.Consumers aren’t leading this rebound, as they usually do, despite ultra-low borrowing costs. Their spending growth will weaken in the second half of this year and strengthen only slightly next year, a majority of economists said. They think shoppers’ reluctance to spend more money poses a “significant” or “severe” risk to the recovery.
“It seems like we hit an air pocket in consumer spending,” said survey participant Richard DeKaser, president of Woodley Park Research.
Kasey Doshier, a graphic designer in Chicago, said the recession taught her to rein in her spending. The key moment came early last year, when her employer cut her pay 15 percent to avoid layoffs.
“I just lived paycheck to paycheck and had a good time,” said Doshier, 32. “It’s kind of scary to think that I am a paycheck away from being homeless.”
Doshier’s pay has been reinstated, but she’s still watching her money. Dinner and drinks with friends are gone. Now she goes to free street festivals and the city pool. She explores Chicago neighborhoods by taking her dog on long “adventure walks.”
The tight job market, scant pay raises and drooping home values are forcing others, too, to spend less and save more. Americans saved 4.2 percent of their disposable income last year. That was the highest level since 1998. Economists expect roughly the same level of saving this year and next.
That’s why growth of less than 3 percent is forecast into 2011. And weak growth helps explain why unemployment is likely to stay high. It takes about 3 percent growth just to create enough jobs to keep pace with the population increase.
Growth would have to equal 5 percent for a full year to drive the unemployment rate down by 1 percentage point. Neither the economists in the AP survey nor the Obama administration expects that to happen.
The Fed’s outlook has turned bleaker, too. It’s why Chairman Ben Bernanke and his colleagues are weighing new steps to invigorate the economy if the recovery shows signs of backsliding. They are also expected to hold interest rates at record lows longer than economists thought three months ago.
A survey the Fed released Wednesday showed the economy facing a bumpy path back to health. The pace of economic activity remained modest in most of the country.
Most economists surveyed said the Fed would being raising short-term rates no sooner than next spring. In the last survey, most had thought it could happen as soon as late this year.
At the same time, state budget shortfalls have emerged as a major threat in the economists’ view. State and local governments cut their spending in the first three months of this year at a 3.8 percent pace. That was the biggest cutback since the second quarter of 1981, just before the economy entered a severe recession.When states and localities tighten spending by trimming services and jobs, the cutbacks ripple through the broader economy, causing individuals to spend less, too. The drop in state and local government spending shaved about half a percentage point off the U.S. gross domestic product in the first three months of this year.
Nearly two-thirds of the economists view the states’ budget crises as a significant or severe threat to the rebound.
Despite such risks, 55 percent of the economists described the recovery as “on track” as of the middle of the year. The rest said it was “faltering.”
“There’s a risk that the loss of momentum will snowball and feed on itself, but I think in the end the recovery will stay on track,” predicted another survey participant, James O’Sullivan, global chief economist at MF Global.
-
28JulFinancial transaction, Movers & Shakers, breaking market news, breaking news, breaking wall street news, fed action, financial settlement, government, housing markets, market analysis, market projections, short term investments, usa economics No Comments
Beige Book Makes It Official: Economy Has Slowed Down
The latest Beige Book report from the U.S. Federal Reserve confirms what other recent economic reports have suggested: The U.S. economic recovery slowed somewhat in the second quarter, with some regions reporting stalled conditions.
-
23Julbreaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, debt, fed action, global economy, government, liquidity, money, trend, usa economics No Comments
White House Predicts Record Deficit
New White House estimates predict an unemployment rate of 9 percent and a budget deficit of $1.42 trillion next year — even bigger than previously expected.Officials Say Gov’t Now Borrowing 41 Cents Of Every Dollar Spent
New estimates from the White House on Friday predict the budget deficit will reach a record $1.47 trillion this year. The government is borrowing 41 cents of every dollar it spends.
That’s actually a little better than the administration predicted in February.
The new estimates paint a grim unemployment picture as the economy experiences a relatively jobless recovery. The unemployment rate, presently averaging 9.5 percent, would average 9 percent next year under the new estimates.
The Office of Management and Budget report has ominous news for President Barack Obama should he seek re-election in 2012 - a still-high unemployment rate of 8.1 percent. That would be well above normal, which is closer to a rate of 5.5 percent to 6 percent. Private economists don’t think the unemployment rate will drop to those levels until well into this decade.
“The U.S. economy still faces strong headwinds,” the OMB report said. They include tight credit markets, a high inventory of unsold housing and retrenchment by state governments bound by balanced budget mandates. The European debt crisis has also had an impact.
“Despite these headwinds, the administration expects economic growth and job creation to continue for the rest of 2010 and to rise in 2011 and beyond,” the report said.
The gaping deficits are of increasing concern to voters. But Obama and Democrats controlling Congress are mostly taking a pass on deficit reduction this year as they await possible recommendations from Obama’s deficit commission.
While there’s a slight improvement in the deficit for the current year compared to the administration’s February forecast, next year’s predicted $1.42 trillion worth , next year’s predicted $1.42 trillion worth of red ink - that’s 37 cents of borrowing for every dollar spent - is looking worse. It’s about $150 billion more than previously predicted, because of still-slumping tax revenues.
The current record holder is the $1.41 trillion deficit for 2009.
Economists agree that the most important measure of the deficit is against the size of the economy. Opinions vary, but many economists say a deficit of 3 percent of gross domestic product is sustainable since it would stabilize the overall debt when measured relative to the economy.
The report put the deficit at 10 percent of GDP this year and 9.2 percent of GDP next year. It would never reach the 3 percent figure under Obama’s predictions - which underestimate war costs and depend on assumptions of tax hikes that may not materialize.
OMB Director Peter Orszag said the numbers represent a “fiscal situation that requires attention.”
Obama “has done little to confront this domestic enemy,” said Rep. Mike Pence, R-Ind. “Washington desperately needs real leadership. We cannot continue to postpone the hard choices and sacrifices that are necessary to stop this fiscal train wreck.”
Deficits have skyrocketed since the recession took hold in 2008 and Congress responded with a massive bailout of the financial system and last year’s $862 billion stimulus measure.
“What we should be doing now is putting in place deficit reduction policies that will kick in after the economy has more fully recovered,” said Senate Budget Committee Chairman Kent Conrad of North Dakota. “It is an unsustainable long-term course.”
-
14JulLife settlement, breaking market news, breaking stock market news, breaking wall street news, cash, debt, fed action, global economy, government, money, usa economics No Comments
Federal budget gap tops $1 trillion through June
Federal budget gap through June tops $1 trillion amid GOP resistance to more gov’t spending
The federal deficit has topped $1 trillion with three months still to go in the budget year, showing the lasting impact of the recession on the government’s finances.
In its monthly budget report, the Treasury Department said Tuesday that through the first nine months of this budget year, the deficit totals $1 trillion. That’s down 7.6 percent from the $1.09 trillion deficit run up during the same period a year ago.
Worries about the size of the deficit have created political problems for the Obama administration. Congressional Republicans and moderate Democrats have blocked more spending on job creation and other efforts. Republicans also have held up legislation to extend unemployment benefits for the long-term jobless because of its effect on the deficit.
Another failed effort would have provided cash-starved states with money to help avoid layoff of public employees and finance the Medicaid program for the poor and disabled.
President Barack Obama also encountered resistance to further stimulus spending at a meeting of the Group of 20 major industrial nations last month in Toronto.
Obama expressed concerns about the risks to a fragile global recovery from withdrawing spending too soon. But the G-20 adopted targets to cut deficits in half as a percentage of their economies over three years.
The deficit in the federal budget in June totaled $68.4 billion, the second highest June deficit on record, but down from the all-time high of $94.3 billion in June 2009, a month when the government was spending heavily to stabilize the financial system and jump-start economic growth.
June is normally a surplus month as the government collects tax payments from corporations and individuals who make quarterly payments. Only seven years in the past 56 have seen deficits in June.
Many private economists are forecasting that the deficit for the entire budget year, which ends on Sept. 30, will come in around $1.3 trillion. That would be the second highest deficit on record, but it would be down slightly from last year’s all-time high of $1.4 trillion.
The Obama administration is forecasting that the deficit for the 2011 budget year, which begins Oct. 1, will remain above $1 trillion for a third straight year, projecting an imbalance of $1.27 trillion. And the administration predicts the imbalances over the next decade will total $8.5 trillion.
The deficits have been driven higher by the lingering effects of the worst recession since the 1930s. About one-third of the higher deficits in this period are a result of a drop in government tax revenues.
The other two-thirds of the deficit increases reflect higher government spending to stabilize the financial system with the $700 billion bailout program and the $787 billion stimulus program that Congress passed in February 2009. The increased spending also reflected added demands for such programs as unemployment benefits and food stamps.
The tide of red ink has sparked a political backlash with surveys showing rising unhappiness among voters with the ballooning deficits.
Through the first nine months of the current budget year, government revenues have totaled $1.6 trillion, up 0.5 percent from the same period a year ago.
Government spending totals $2.6 trillion, down 2.8 percent from the same nine months a year ago. That decline primarily reflects lower spending on the financial bailout effort as banks are now repaying the billions of dollars they received to bolster their capital reserves at the peak of the financial crisis.
Obama has appointed a national debt commission to report after the November midterm elections on ways that the federal deficits can be brought under control.
The heads of the panel told the National Governors Association on Sunday that everything needs to be considered including curtailing popular tax breaks, such as the home mortgage deduction.
“The debt is like a cancer,” Democrat Erskine Bowles told the governors. “It is going to destroy the country from within.”Tags: $1 Trillion Dollars, 1000000000000.00, Federal budget gap tops $1 trillion through June, Trillion Dollars
-
01JunFinancial transaction, banking, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, cash, debt, fed action, financial settlement, government, loan, market facts, money, return rate, structured settlements, usa economics No Comments
U.S. Regulators Close Five More Banks
* EverBank
* Bank of Florida
* Granite Community Bank
* City National Bank
* Sun West BankThe U.S. state and federal regulators have shut down five banks in Florida, California and Nevada, The Wall Street Journal reports. The closure has brought the nationwide total of failed institutions until May 2010 to 78.
EverBank of Jacksonville will buy the banking operations of the three units of Bank of Florida, including a combined $1.32 billion in deposits. The regulators have also seized California-based Granite Community Bank, which will be taken over by Tri Counties Bank. The Los Angeles-based City National Bank will acquire the Sun West Bank, which has $353.9 million in deposits.
-
31MayFinancial transaction, Movers & Shakers, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, daily stock tips, daytrades, fed action, financial settlement, free stock info, global economy, market analysis, market facts, markets, short term investments, stockmarket analysis, stocks, trading, trading ideas, trend, usa economics No Comments
2010 The Worst May in a Half-Century
Assessing damage from the worst May since 1962.
THE STOCK MARKET SUFFERED its worst May in a half century, but there’s a bright side to the darkening mood: A 12.3% slide since late April and greatly diminished expectations mean any good economic news this summer might, once again, carry a jolt of surprise.Within a month, our focus has swung from convalescing corporate profits to Europe’s fiscal chaos and the drag on global economic growth. A 14-month rally without major setbacks has also swelled the throng of uneasy investors who were anticipating, quite rightly, a correction — and who were poised to sell.
.How worried have we become about global growth? A recent survey showed the huddle of bearish investors (51%) dwarfing the bulls (30%) by the biggest margin since last summer. Money managers lunging at options to protect their portfolios drove the VIX volatility index above the 40 threshold for just the sixth time ever — joining, in the panic hall of fame, the 1987 stock-market crash, the 1998 Russian financial crisis, the dot-com bubble collapse, the Sept. 11 attacks and the 2008 credit crunch.
For investors, the most pressing question now is how much damage is already factored into retreating stock prices. The market now trades at roughly 11 times what Standard & Poor’s 500 companies are expected to earn over the next two years — slightly below its 25-year average, but richer than the stricken 8 multiple when this bull market unfurled, in March 2009.
Morgan Stanley’s global strategist Gerard Minack thinks the market would have made “a reasonable allowance” of the downside risk to earnings at 10 times. That’s roughly 9% below the current level, and it assumes sovereign stress remains contained and economic data point to slower growth but no hard landing. “There is a risk the growth slowdown is more pronounced in 2011, but we doubt investors will see enough news to price in such a risk in, say, the next one to two quarters,” he notes. In other words, the S&P 500 at 1000 might have priced in the second half’s “probable” risks.
Last week, the S&P 500 dipped as low as 1041 before rebounding, and the swings were frequent and violent. An early plunge on Tuesday drew buyers, but Wednesday’s early rally was promptly sold. Thursday’s 3.3% surge, after China said it wasn’t bailing on European debt it held, fizzled Friday after a rating agency did something neither original nor startling: It downgraded Spain’s credit rating. Consumer spending was flat in April, Dreamworks Animation (ticker: DWA) drooped after the fourth installment of Shrek, which is one installment too many, disappointed at the box office, while Hugh Hefner showed you can’t have too many playmates and mansions — Playboy Enterprises’ (PLA) plan to open two clubs in Macau lifted partner Las Vegas Sands’ (LVS) shares 12%.
.The S&P 500 eked out a 2-point gain to finish the flip-floppy week up 0.2% at 1089. It is still 10.5% off its late-April high. The Dow Jones Industrial Average fell 57, or 0.6%, to 10,137. The Nasdaq Composite Index rallied 28, or 1.3%, to 2257, its second gain in three weeks, while the Russell 2000 added 12, or 1.9%, to 662. But European and Chinese stocks rebounded nearly 3%, both snagging their second gain in three weeks, while copper halted a four-week slide.
With U.S. markets closed Monday for Memorial Day, the S&P 500 will end this month down 8.2% — its worst May since 1962, and the biggest monthly slide since February 2009, just before this bull market began. The May losses totaled 7.9% for the Dow, 8.3% for the Nasdaq, and 7.7% for the Russell.
EMERGING MARKETS AREN’T immune if global growth sputters, but is the new world unfairly flogged for the old world’s budgetary sins? Before Thursday’s rebound, the MSCI Emerging Market iShares (EEM) were off 15% from their late-April peak, barely better than the 17% drubbing meted out to the MSCI EAFE iShares (EFA) that track developed markets. Have we swung so far from the abandoned notion of “decoupling” economies that we now expect all markets to be fused at the hip?
Emerging markets unencumbered by debt are struggling for other reasons: Some of their economic indicators are stalling, and the stronger dollar threatens their export-dependent economies. But if the looming global slowdown is to be blamed on developed countries’ fiscal wantonness, then emerging markets’ chaste balance sheets ought to offer some solace. China’s public debt, for example, is just 18% of its gross domestic product, compared with nearly 200% for Japan. In fact, emerging markets’ ratio of debt to GDP averages 37% — a fraction of the developed world’s 94%. Even Israel, the emerging nation with the highest debt-to-GDP ratio, 78%, has been plucked from those ranks and newly reclassified as a developed market.
Calling emerging markets “the baby getting thrown out with the bath water,” Bespoke Investment Group founder Paul Hickey listed a dozen American depositary shares of emerging-market companies whose charts look strong even after the recent correction. These include the Brazilian beverage company Companhia de Bebidas das Americas (ABV); Chinese Internet search company Baidu (BIDU); America Movil (AMX), a Mexico-based telecom giant; and Peruvian bank Credicorp (BAP).
Blame Europe: The old saw about selling in May and going away has never been so right, as fear of slowing global growth sent the Dow down 7.9% this month.
.With Europe hobbled and the U.S. humbled, emerging markets’ short-term fate may depend disproportionately on China. Ironically, trouble in Europe helps reduce the odds that China’s economy will overheat. In fact, the hit to global growth gives China’s central bank some breathing room in its crusade to tighten monetary policy, says Morgan Stanley’s China economist Qing Wang. The firm deems a hard landing in China in the foreseeable future “unlikely,” is overweight Chinese stocks, and continues to recommend developed world stocks that are exposed to emerging markets.ARGON ST, WHICH MAKES sensors for military intelligence, has been on the radar of big defense contractors ever since it hired financial advisers and reportedly began shopping itself to giants like Raytheon (RTN). and Boeing (BA). But the speculative frenzy has subsided a little, and the stock price has fallen more than 10%.
The decline can’t all be blamed on the market correction; the small defense intelligence specialist also reported underwhelming second-quarter earnings.
This takes Argon (STST) to an intriguing juncture: With shares near 24, down from their 2010 peak above 27, Oscar Gruss’ special situations analyst Bill Kavaler pegs the potential stock upside at $6 if a suitor surfaces, although shares could fall $2 if no deal is reached.
Argon shares aren’t cheap, and already fetch 21 times projected profits, but small contractors with proprietary know-how typically command a premium, and Argon’s multiple is still just shy of its median over the past five years. Although fiscal belt-tightening doesn’t bode well for defense budgets in general, Argon specializes in the kind of reconnaissance and surveillance technology that can help the leaner armies of tomorrow.
Recent Comments