Month: August 2011

S&P rates Subprime Mortgages higher than the USA

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S&P rates Subprime Mortgages higher than the USA MHP Standard & Poor’s gives a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it has assigned to the US government debt. S&P is poised to provide AAA grades to 59% of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497-M lent to homeowners with below-average credit scores, and virtually no equity in their properties. New York-based S&P took away the US’s Top rank on August 5, saying Washington politics were … Read more

The Noise About a Gold Bubble

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Red’s POV on all of this Noise about a Gold Bubble Gold may be a bit over extended in, but it is not a place to make a Bearish call IMO. The Gold Bears had a shot the Gold price last week, when Gold put in a temporary Top at 1911 oz and began it healthy correction. It tapped 1709 three days later. That 10.5% fall did not drive the Gold Bulls away, the Gold players saw the dip as technical mark to start buying again, and Gold’s has rallied 7.3% off that low. And during the rebound the CME … Read more

Merkel backs euro fund boost, faces revolt risk

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(Reuters) – German Chancellor Angela Merkel’s cabinet approved new powers for the euro zone’s bailout fund on Wednesday, but she faces an uphill battle to convince party skeptics to back efforts to contain the crisis. Concerned that Germany’s parliament has little control over the European Financial Stability Facility (EFSF), some members of Merkel’s center-right coalition are threatening to oppose boosting its powers when the Bundestag (lower house) votes on September 29. If enough conservatives rebel and Merkel is forced to rely on opposition parties to pass the legislation, she could face pressure to dissolve parliament and call early elections, although … Read more

Investors slash equities in August melt

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Reuters) – Global investors slashed their holdings of equities below 50 percent this month and piled into cash, reflecting what was lining up to be the worst August for world stocks since 1998. They also lifted exposure to bonds in North America, Britain and, to a lesser extent, the euro zone, where Germany is considered a safe haven. Reuters polls of 57 leading investment houses in the United States, Europe ex-UK, Japan and Britain showed the average stock holding in a balanced or model portfolio falling to 49.2 percent. It was the lowest since at least February 2009, when the … Read more

Global stocks at two-week high, rally may stall

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(Reuters) – Global shares edged up to their highest in nearly two weeks on Tuesday, but the rally looked to be running out of steam on the back of concerns over Europe’s debt troubles and U.S. growth. World stock markets, as measured by MSCI, were up 0.17 percent, but European markets were mixed, with Germany’s DAX index down half a percent and U.S. futures pointed to a weaker open for Wall Street. With big-ticket data like U.S. job numbers due later this week, many investors remain uncertain about a recovery in the world’s largest economy, leaving risk for a correction … Read more

Lehman to seek creditor vote on $65 billion payout

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(Reuters) – Lehman Brothers Holdings Inc will ask a bankruptcy judge on Tuesday to let creditors vote on its $65 billion payout plan, a key step toward ending the biggest bankruptcy in U.S. history. The investment bank, under Chapter 11 bankruptcy protection since September 2008, will present its plan outline at a hearing in U.S. Bankruptcy Court in Manhattan. If Judge James Peck deems the outline sufficient, creditors will vote on the plan on November 4. The plan would pay creditors an average of 20 cents on the dollar, with some groups receiving more, including derivatives creditors who would take … Read more

Banks Lead Greece Recovery

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Greek stocks rallied, with the benchmark ASE Index climbing the most in more than 21 yrs, as EFG Eurobank Ergasias SA (EUROB) and Alpha Bank SA announced a merger. Eurobank and Alpha Bank each rose by the allowed daily limit of 30% after saying they will combine and sell new equity to strengthen their capital in an attempt to weather the debt crisis. Larger rival National Bank of Greece SA (ETE) gained the most on record while Piraeus Bank SA (TPEIR) had the highest advance in almost 18 yrs. The ASE rose 14% to 1,006.59 at the 5 p.m. close … Read more

Strauss-Kahn meets with IMF

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Strauss-Kahn meets with IMF Chief and staff members The Washington-based International Monetary Fund (IMF) said Monday that its former boss Dominique Strauss-Kahn paid a visit to the Global lender and met with its Chief and staff members. He visited IMF headquarters Monday afternoon, and current IMF Managing Director Christine Lagarde met him prior to his meeting with Fund staff, an IMF spokesman said in a short statement. “These were private meetings, arranged at his request. We have no further comment to offer,” the statement said. IMF spokesman David Hawley said on August 25 at an IMF press conference that Mr. … Read more

Brazil raises primary surplus target

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Brazil raises primary surplus target Brazilian Finance Minister Guido Mantega said Monday that the government will raise the primary surplus target for Y 2011 to minimize the effects of the Global financial crisis. The surplus will be raised from 117.8 to 127.8-B Reais (US$73.6 to 79.9-B), representing some 3.3% of the nation’s GDP. In the 1st 7  months this year, Brazil’s primary surplus amounted to 92-B Reais (US$57.5-B). “We are taking precautions against a possible escalation of the crisis to prevent Brazil from suffering the same fate as the affected countries,” Mantega said. “We want Brazil to continue in a … Read more

Japan Unemployment Rate Rises as Noda Becomes Prime Minister

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Aug. 30 (Bloomberg) — Japan’s jobless rate rose for a second month and retail sales dropped, underscoring the challenge for incoming Prime Minister Yoshihiko Noda in securing Japan’s recovery from the March 11 earthquake. The unemployment rate rose to 4.7 percent in July as payrolls fell by 40,000 from a month earlier, the statistics bureau said today in Tokyo. Retail sales slid a seasonally adjusted 0.3 percent from June, a Trade Ministry report showed. Noda, who was elected premier by the lower house of parliament today, inherits a recovery under threat from an advancing yen and a global slowdown. A … Read more

Gross Says Look Elsewhere as U.S., Europe Face Recession

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Aug. 30 (Bloomberg) — The global economic crisis is leading to a possible “developed economy” recession in the U.S. and Europe, which may be hard to alleviate, according to Pacific Investment Management Co.’s Bill Gross. In this environment, the world’s biggest manager of bond funds favors investing in Australia, Mexico, Brazil and Canada, along with non-dollar currencies that have strong ties to the Asian continent, Gross, co-chief investment officer and founder of Pimco, reiterated. Although global equities are attractive because dividend yields in many cases are higher than bonds, they’re vulnerable to faltering growth, Gross wrote in a monthly investment … Read more

Central Bankers Urge Governments on Expansion

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  Central bankers gathered at an annual retreat in Jackson Hole, Wyoming, this weekend had a message for political leaders: monetary policy alone can’t keep the global expansion going. Federal Reserve Chairman Ben S. Bernanke urged adoption of “good, proactive housing policies” to reverse the depressed U.S. real estate market and warned lawmakers to avoid steps that may hurt short-term growth. Ewald Nowotny of the European Central Bank Governing Council said euro-area governments should expand the powers of their regional bailout fund. “Most of the economic policies that support robust economic growth in the long run are outside the province … Read more

Industries Prone To Bubbles and Why

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A bubble (sometimes called an asset bubble, financial bubble or investment bubble) exists when the market prices of assets in a particular class far exceed those assets’ true value. These inflated values are unstable and eventually fall dramatically. Dozens of bubbles have inflated and burst over the course of history. While some bubbles appear to be one-time events, certain industries have seen bubbles form repeatedly, with investors seemingly never learning from past mistakes. Let’s examine a few of these industries and what appears to make them bubble-prone. Precious Metals In times of economic turmoil, many investors view precious metals as … Read more

The Fed’s Toolkit Revealed

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The slowdown in US growth has raised speculation the US Federal Reserve may have to provide additional monetary support to the economy, and the Fed Chairman say they are monitoring the issues and standing by. With interest rates already effectively Zero and the Fed’s balance sheet at a record US$2.85-T, US central bank officials has not acted yet to stimulate economic activity further yet. Persistent unemployment and new turbulence in financial markets has added pressure on the Fed to do something. US Fed Chairman Ben Bernanke noted last week that the Fed is prepared to respond to possible further weakness. … Read more

Greek Banks to Merge

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ATHENS—Two of Greece’s largest lenders, Alpha Bank SA and EFG Eurobank Ergasias SA, Monday announced plans for an estimated €7 billion ($10.15 billion) tie-up that would create the country’s largest bank, in a bid to address mounting problems in the Greek banking sector. “I am confident that the new combined entity will act as an important agent for the economic development of the country,” Eurobank Chairman Efthymios Christodoulou said. “It is also well placed not only to withstand the current economic turbulence, but to create new opportunities and play a pivotal role in the future growth of the region.” According … Read more

Obama to Tap Krueger as Top Economist

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President Barack Obama on Monday plans to nominate Princeton University’s Alan Krueger to be chairman of the White House Council of Economic Advisers, a White House official said. If confirmed by the Senate, Mr. Krueger, a labor economist, is likely to provide a voice inside the administration for more-aggressive government action to bring down unemployment and, particularly, to address long-term joblessness. Mr. Krueger, 50 years old, returned to Princeton a year ago after serving as assistant Treasury secretary for economic policy during the first two years of the Obama administration—which means he has recently cleared the sometimes treacherous Senate confirmation … Read more

What a week! My prediction for next week.

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The nay sayers, glass half -empty, perma-bears, and high frequency traders did their best to crack my resolve.  But beware, when you live out West with three ski resorts out your deck, highs in the high 70’s with no humidity, it take more than Chicken Little to make me croak.  East coast types were palpitating about the rare hurricane, Irene, that seemed to be bearing down on Wall Street.  With the German DAX and Greece debt in free fall, weather cooperated to make the average hedge fund type positively cataclysmic.  Hard to believe the market rebounded 4.5% for the week, … Read more

Analysis: “Safe haven” assets start to look risky – Yahoo! Finance

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Analysis: “Safe haven” assets start to look risky tA bank clerk removes 200 Swiss franc banknotes out of a money counter in a bank in Zurich August 16, 2011. REUTERS/Arnd Wiegmann On Friday August 26, 2011, 6:04 am EDT By Jeremy Gaunt, European Investment Correspondent LONDON (Reuters) – This year’s heady bout of risk aversion on financial markets has ratcheted up demand for gold, U.S. Treasuries and the Swiss franc to levels that suggest they may no longer be the “safe havens” they are billed as. Some investors see all three as vulnerable to a sharp sell-off should the global … Read more

Can Apple Be Apple Without Jobs?

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Wednesday evening’s announcement from Apple (Nasdaq:AAPL) that CEOSteve Jobs was resigning could hardly be called a surprise, but it will certainly accelerate a transition process that has been ongoing in fits and starts for a number of years. Apple has tapped a solid manager to replace Jobs, but competition in Apple’s core markets is heating up and investors may be right to wonder whether the company can maintain its over-the-horizon vision and ultra-confident operating strategy without such a rare visionary leading the show. News That Really Isn’t New That health issues would eventually force Steve Jobs to step down from … Read more

‘s Jackson Hole Fed Meeting Remarks

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For one weekend every year, the economic world turns its watchful eyes away from New York and Washington and to Jackson Hole, Wyo. This weekend, the Kansas City Federal Reserve will again host the annual Federal Reserve conference in the valley just outside Yellowstone National Park. Recent economic troubles have brought intense scrutiny to the meeting, and markets will be watching Fed Chairman Ben Bernanke’s Friday morning speech particularly closely for the barest hint of future policy moves. Full article available @: http://finance.yahoo.com/news/Markets-Await-Bernankes-usnews-3591226210.html?x=0&sec=topStories&pos=main&asset=&ccode=

Buffett’s Berkshire to Invest $5 Billion in Bank of America

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Aug. 25 (Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. agreed to invest $5 billion in Bank of America Corp., aiding a lender hobbled by costs tied to subprime mortgages. Buffett’s company will get a 6 percent dividend on his preferred stock investment and warrants to buy 700 million common shares about $7.14 each, according to a Business Wire statement today from Omaha, Nebraska-based Berkshire. –Editor: Dan Kraut   Full article available @: http://www.businessweek.com/news/2011-08-25/buffett-s-berkshire-to-invest-5-billion-in-bank-of-america.html

Treasuries Advance as Report Shows U.S. Jobless Claims Rose

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Aug. 25 (Bloomberg) — Treasuries rose as a government report showed initial jobless claims unexpectedly increased last week, fueling concern the economic recovery is slowing and stoking demand for U.S. debt. Treasuries snapped three days of decline speculation Federal Reserve Chairman Ben S. Bernanke may disappoint investors betting on a commitment to step up stimulus. European and Asian stocks rose a day before Bernanke’s remarks at a conference in Jackson Hole, Wyoming. Pre-auction trading indicates today’s $29 billion government offering of seven-year notes will produce a record low auction yield. “The Treasury market is reacting to the headline number being … Read more

VIX Falls as Sentiment Turns on Wall St

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TVIX, a measure of stock market volatility, fell 5% percent to 33. The VIX traded as high as 48 Aug. 8 after staying below 20 for much of the year. VIX is the ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market’s expectation of stock market volatility over the next 30 day period. The VIX is quoted in percentage points and translates, roughly, to the expected movement in … Read more

‘s cuts Japan rating, blames politics

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(Reuters) – Moody’s Investors Service cut its rating on Japan’s government debt by one notch to Aa3 on Wednesday, blaming a build-up of debt since the 2009 global recession and revolving-door political leadership that has hampered effective economic strategies. Japan is preparing to elect its sixth leader in five years to replace unpopular Prime Minister Naoto Kan, under fire for his handling of the response to a March tsunami and subsequent radiation crisis at a crippled nuclear power plant. The downgrade, while not out of the blue, served as another reminder of the debt burdens that nearly all of the … Read more

Investors trade in tight range ahead of Bernanke speech

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(Reuters) – World stocksedged up and oil advanced on Wednesday as investors tried to position themselves ahead of a Federal Reserve Chairman Ben Bernanke’s key speech. The gains follows weeks of market turmoil, with disappointing U.S. economic news and escalating worries about the debt crisis in Europe hitting sentiment. Benchmark stock indexes are on track for their worst month since the fall of 2008, after the Lehman Brother fall. World stocks as measured by MSCI .MIWD00000PUS were up 0.1 percent on the day but were on track for a 10.3 percent year-to-date loss. The U.S. benchmark Standard & Poor’s 500 … Read more

To my friend, the bear

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Darn, a 322 point rally just after you announced a five alarm fire with the sell all call to boot. Yes, we’ve taken a hit.  Confidence is way down and that’s what most of the early indicators are showing.  But don’t’ listen to what we say, look at what we buy.  People lust over Apple products, Taylor Swift concerts, and the residential rental market is absolutely booming.  Maybe owning a house is not the best idea for everyone after all. Europe is a great concern to us but then we appear to be a great concern to them and then … Read more

Students Need ‘Bs’ to Keep Parents’ Cash Flowing, Fidelity Says – Bloomberg

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Students Need ‘Bs’ to Keep Parents’ Cash Flowing, Fidelity Says By Alexis Leondis Two-thirds of U.S. parents said they’ll only pay for their children’s college education if they maintain minimum grades of B, on average, according to a survey by Fidelity Investments. The average grade point parents will require to pay tuitions is 3.1 out of 4.0, or about a B, once their kids are in college, based on the survey of almost 2,400 families released today by the Boston-based mutual-fund company. Seventy-five percent of respondents said they don’t want to burden their children with college loans compared with 65 … Read more

FRBSF Economic Letter: Boomer Retirement: Headwinds for U.S. Equity Markets? (2011-26, 8/22/2011)

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Boomer Retirement: Headwinds for U.S. Equity Markets? By Zheng Liu and Mark M. Spiegel Historical data indicate a strong relationship between the age distribution of the U.S. population and stock market performance. A key demographic trend is the aging of the baby boom generation. As they reach retirement age, they are likely to shift from buying stocks to selling their equity holdings to finance retirement. Statistical models suggest that this shift could be a factor holding down equity valuations over the next two decades. via FRBSF Economic Letter: Boomer Retirement: Headwinds for U.S. Equity Markets? (2011-26, 8/22/2011).

Markets Rally Ahead of Fed News

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US shares add to gains on anticipation of Fed action US Stocks are rallying Tuesday, with the S&P 500 and the NAS up more than 2%, as buyers emerged before a highly anticipated address by US Federal Reserve Chairman Ben Bernanke later this week. Technology and other growth stocks drove much of the market’s gains, with the S&P Information Technology Index .GSPF up 2.4%. A weaker-than-expected reading of the US housing sector was the latest in a string of discouraging data that has raised expectations the US Fed will take measures to prop up the economy. New US single-family home … Read more

"The insomniac hedge fund guy" is a moniker Harvey Sax, the portfolio manager for The Insiders Fund has used from time to time on email, blog , and social media posts. While Mr. Sax is the portfolio manager of The Insiders Fund, these posts are not communications from, nor endorsed by, Alpha Wealth Funds, LLC or any of its managed funds. References to Alpha Wealth Funds or its affiliates are for identification only and do not imply sponsorship or approval. All registered trademarks herein are the property of their respective owners.

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