Archive for July, 2008
Thursday, July 31st, 2008
U.S economy contracted in the 4th quarter of 2007, the first quarter of negative growth since 2001 recession. This GDP number came to 1.9% for last quarter. Economists projected 2.3% growth. If it were not for the stimulus check, growth would have been even lower. Based on this information we can predict that 2nd half of 2008 is going to be bad if not worse. (Update: Weekly applications for jobless benefits soared to 448,000 last week, highest level since 2003.)
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From Marketwatch.com (just the highlights)
WASHINGTON (MarketWatch) — Boosted by stimulus checks from Uncle Sam and big drop in imports, real growth in the U.S. economy accelerated in the second quarter to a 1.9% annual rate, the Commerce Department reported Thursday.
Consumer spending was supported by the largest increase in disposable personal income in six years, thanks largely to about $80 billion in tax-rebate checks from Washington.The economy was held back by the crumbling housing market and by a huge drop in inventories. Investments in equipment and software also fell during the quarter.
Inflation ticked higher. The personal consumption expenditure price index rose at a 4.2% annual rate, while core prices (which exclude food and energy) rose 2.1%, not far above the Federal Reserve’s implicit target zone.
The economy has grown 1.8% in the past year. In nominal terms, the economy grew 3% in the quarter to an annual rate of $14.26 trillion. As the economy slowed, businesses cut their inventories by $62 billion in the second quarter. The change in inventories subtracted 1.9 percentage points from growth.
http://www.marketwatch.com/news/story/gdp-accelerates-19-pace-2nd/story.aspx?guid=%7B4C331F68%2DD6FF%2D42CC%2D9E98%2D7DBC5FCCA712%7D
Filed under: Economy, Economy Statistics | | 1 Comment »
Monday, July 28th, 2008
WASHINGTON (AP) — The government’s budget deficit will surge past a half-trillion dollars next year, according to gloomy new estimates, a record flood of red ink that promises to force the winner of the presidential race to dramatically alter his economic agenda.
http://biz.yahoo.com/ap/080728/budget_deficit.html
Filed under: Economy, Economy Statistics | | No Comments »
Monday, July 28th, 2008
Silicon Valley’s latest hype - Cuil. Google former search experts Tom Costello and Anna Patterson created a new start-up to take search to the next level. Utilizing the semantic approach to search that understand how words are related to return more relevant results to users.
Investors poured $33 million into the startup and Cuil clearly dominated tech headlines today. If you are investor these days with couple of millions to play with, you certainly would be looking into search engines.
Highlights of the service include a new user interface that is very different from the traditional two column approach adopted by most popular search engines like Yahoo or Google, with results on the left and paid advertisements on the right hand side.
http://www.nzherald.co.nz/feature/story.cfm?c_id=1502269&objectid=10524092
Google slided 3% today in trading (unrelated to the Cuil news) closed at 477.12 down 56% from its peak last fall.
Filed under: Digital Media, Web3.0 | | No Comments »
Friday, July 25th, 2008
1) Financials are on another down trend. What changed from last week? Nothing. The only reason why it went up last week was the short covering (due to new SEC regulation and Fed bailout plan). Only fools bought into last week rally. All major Newspapers (NY Times, WSJ) called the bottom in Financials last week. Oh boy, they were genius. How many times I have to re-iterate 2008 is not a year to invest in Financials. I wonder how many of these banks will survive beyond 2008. Most of them depend on housing as their primary revenue source. Now housing is bust, they need to look for new business models. Until then stay away from them.
A best way to play Financials is on the short side. Buy SKF with a put protection.
2) In other news, which one of the iconic American company to go bankrupt first? Ford or GM? My vote is for GM.
3) Oil bubble is burst
Oil trend is over (unless ofcourse U.S or Israel attacks Iran). The prices are expected to hover around this level and will not come down below $100, so get used to $4 gas at the pump.
4) Obama vs McCain
Obama presidential contract futures are at 65%, McCain is at 31.
My prediction: Obama will beat McCain in 2008 election.
5) Dollar
Dollar is off its lows, but still in trouble for the rest of the year. Watch out employment numbers. EU will most probably cut the rate by year end which might stabilize dollar.
How about this for fun?
Filed under: Economy, Financial Markets | | No Comments »
Saturday, July 19th, 2008
Something dramatic happened last week. Both Financials and Oil reversed its usual trends. Two important things happened.
1) Last Sunday, the Treasury department and Federal Reserve unveiled a rescue plan that would bolster the two mortgage giants, Freddie and Fannie which play a crucial role in the U.S Housing market
2) Seperately, SEC took charges against short-sellers by issuing an emergency rule to curb short selling (U.K did last month)
These actions drove short-sellers and speculators cover their shorts both in Financials and Energy sectors. We saw a major outflow of money going from Energy into Financials sector. Investors and Traders closed their positions in the speculative Oil market. Does this mean the Oil bubble has burst? More importantly, has the Financials bottomed yet? Answer is “Maybe” in the short term. I think “a” bottom is in for the Financials. Has the crisis in the Financials fixed overnight? I don’t think so. I doubt this over-levereged, cheap money driven financial bust is over already. In the longer term, Financial sector is going to see more write-downs, zero to minimal earnings growth and more regulations from both Fed and Treasury and more government supervision.
As far as trading ideas, I would buy DUG at the next bottom, short USO, buy XLF for a short-term trade.
Have a great weekend fellows.
Filed under: Economy, Financial Markets, Trading Strategy | | 2 Comments »
Sunday, July 13th, 2008
July 14 (Bloomberg) — InBev NV agreed to buy Anheuser- Busch Cos. for $49.9 billion to become the world’s biggest brewer, the Wall Street Journal reported, citing unidentified people familiar with the situation.
The $70-a-share takeover of St. Louis-based Anheuser-Busch is the second-biggest of a U.S. consumer-goods company and ends a month of court fights and public disputes over the future of the 156-year-old maker of Budweiser. Leuven, Belgium-based InBev will change its name to Anheuser-Busch Inbev, and Anheuser will have two seats on the board, the Journal said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFeprSPTUVFk&refer=home
Filed under: Financial Markets | | No Comments »
Sunday, July 13th, 2008
U.S moves to rescue Fannie and Fannie
WASHINGTON (Reuters) - The U.S. Treasury Department and Federal Reserve on Sunday announced sweeping measures to lend money and buy stocks if necessary in embattled mortgage lenders Fannie Mae and Freddie Mac.
http://www.reuters.com/article/newsOne/idUSN1332789320080713
First Bear, next IndyMac and now Freddie and Fannie.
65 billion is light guesstimate of fannie and freddie next 3 year losses.
Watch USD imploding tomorrow. Short term botton is in. I expect market (especially Financials) to rally tomorrow mostly because of shorts covering.
http://www.marketwatch.com/news/story/white-house-fed-step-rescue/story.aspx?guid=%7BF942EDC2%2DE975%2D4F01%2DAF6F%2DF1D7591E4526%7D
Filed under: Economy, Financial Markets, Financial Statistics, Housing | | No Comments »
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