March 31, 2008

Market Comments for March 31, 2008 1) The market staggered to a close for the quarter, bringing in the worst quarterly performance in 5 years. Brokers were down 25%, technology down 16%, and banks were down 9%. Homebuilders, which have been savaged for two years now, were unchanged. Drug stocks, normally a safe haven, were down 13%. 2) A study was published today by the … [Read more...]

March 20, 2008

Market Comments for March 20, 2008 1) The major story today was the continued melt down in the commodities markets triggered by the increase in margin requirements on Sunday night.  Most commodities are down 10%-20% on the week, with silver down 20% in one day. This was long overdue and is opening up windows for late players. How were gasoline prices going up to record … [Read more...]

March 19, 2008

Market Comments for March 19, 2008 1) As I suspected, the first sign of stock buying precipitated a major sell of in commodities. The moves down from the Sunday night highs have been breathtaking. Crude is down from $111 to $103. Natural gas dropped from $10.40 to $9.10. Gold has had its worst day in five years, cratering from $1,020 to $940. Trailing stops would have taken … [Read more...]

March 18, 2008

Market Comments for March 18, 2008 1) The price action of Lehman Brothers these days is frighteningly similar to that of Bear Stearns just before it went bankrupt. In the last week Lehman's share price has dropped from $60 to $20. At the very least this has to be considered a near death experience. Today CEO Richard Fuld came out and said that there were no liquidity … [Read more...]

March 17, 2008

Market Comments for March 17, 2008 1) Bear Stearns (BSC) was taken over by JP Morgan (JPM) at $2/share, about 5% of its breakup value of $7.7 billion. It is a virtual total wipe out for the BSC equity holders. JP Morgan stock jumped 10% on the windfall gain. They are getting about $20 billion of sub prime securities for free in the deal. The HQ building alone is worth $4 … [Read more...]

March 14, 2008

Market Comments for March 14, 2008 1) Put buying on Bear Stearns (BSC) increased tenfold yesterday and so did the stock volume. In every financial crisis it seems that one major institution has to be offered up to the market gods for sacrifice before it ends. Bear Stearns is the most likely candidate this time. Goldman Sachs (GS) and Morgan Stanley (MS) have already ceased … [Read more...]

March 13, 2008

Market Comments for March 13, 2008 1) Carlyle Capital was the big story today with its default in Amsterdam. These bone heads had $23 billion in bond positions securited by only $650 million of capital, giving them a leverage of 35 times. Good riddance. Expect a lot more bodies like this to float to the surface. A lot of big milestones were hit today: Gold over $1,000, Yen … [Read more...]

March 12, 2008

Market Comments for March 12, 2008 1) The Fed action yesterday is like a cortisone shot for a sick patient. It gives immediate relief, but doesn't cure the disease. Financial problems won't end until house prices stop going down and eroding bank capital. But the Fed has injected $1 trillion in liquidity since December and by next week will have lowered interest rates … [Read more...]

March 11, 2008

Market Comments for March 11, 2008 1) The Fed announced that they would accept $200 billion in triple A mortgage backed securities which is one quarter of its entire balance sheet. This was absolutely the right thing for the Fed to do. Apparently the market thinks so too, with the Dow up 417 points, the largest up day in 5 days. Banks were the leading sector, up 5-10% across … [Read more...]

March 10, 2008

Market Comments for March 10, 2008 1) Lehman Brothers (LEH) will imminently announce a lay off of 5% of its global work force. The stock hit a new 52 week low, down 52% in a year. 2) The futures market is now discounting a 100% chance of a 75 bp Fed funds rate cut next week. I now think they will cut only 50 bp and disappoint the market. This will take the fed funds rate … [Read more...]

March 8, 2008

Market Comments for March 8, 2008 1) The non farm payroll for February came in at a truly disastrous minus  -63,000. Most analysts had been expecting gain of 30,000. Earlier months were revised down dramatically. It is the worst payroll performance in 5 years. NASDAQ and most other stock indexes hit a new low for the year. An omen of worse to come. 2) The second richest … [Read more...]

March 7, 2008

Market Comments for March 7, 2008 The stock market setting up for a big dump! 1) Crude made it to $106 today. The short term target is now $111. Natural gas also flew to $9.90, up 30% from my entry point of six weeks ago. 2) Carlyle Group in San Francisco failed to meet margin calls on fixed income positions this morning which could lead to more panic dumping. Oh, how … [Read more...]

March 6, 2008

Market Comments for March 6, 2008 1) Oil jumped $5 to $104.65 and Natural Gas to $9.90 on an unexpected drop in weekly inventory figures. The chairman of Exxon (XOM) made an interesting comment today. He said that 85% of the growth of oil demand last year was in countries that have artificial price controls and subsidies on oil like China. Demand will fall off a lot if these … [Read more...]

March 3, 2008

Market Comments for March 3, 2008 1) Natural Gas soared again to a new two year high of $9.61 in its race to catch up with crude. Gold flew to $991, just short of my short term target of $1,000. More concerns about power outages in South Africa. 2) The Sage of Omaha, Warren Buffet, released his annual letter to investors, a must read for all students of the market. A … [Read more...]