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ETFC has lost 7 to 8 billion in customer deposits so far. They accepted an offer of less than 30 cents on the dollar for 3 billion dollars of their worst "asset backed" securities. They still have billions in other loans on boats and RVs, and set aside 200 million to cover the loan losses. That may (will) run to 400 million. They also accepted other funding which costs them 12.5% interest. They gave up about 18% of the company ownership and a seat on the board. The street voted on the plan all day driving down the price, while churning about 60% of the float.
Does that about cover it?
Does anyone with an etrade account plan to stick with them? Isn't it likely that Citadel is now in the catbird seat to drive down the stock and take the other 80% for a song? These are interesting times.
It might be just sour grapes for me. I went to cash yesterday and missed the moves in fnm and wcg this morning. ;)
No. Capitulation is with huge volume, fear and panic. We might get a bounce off the oversold lines on some pre-holiday short covering. Will we even finish green?
This morning's weekly MBA mortgage applications report showed a solid pickup in mortgage activity: MBA index +5.5%, purchases sub-index +4.8%, refinancing +6.4%. This morning's increase in the purchases sub-index brought the index up from the recent 6-month low. Meanwhile, the refi index is near an 8-month high as lower mortgage rates have allowed prime mortgage borrowers to refinance at lower rates.
From Barchart.com's morning call..
Oil was 25 bucks 5 years ago. We won't see that again. RBOB gasoline was 81 cents. That price won't be seen again either. World demand for energy and food continues to grow no matter what happens to the US housing market.
FAS 157 is effective for fiscal years that begin after November 15, 2007. So the banks and brokerages that just reported have another quarter before they report anything. Most of them won't issue an annual statement until next March. Sinclair and others make it sound like it's all over on Thursday. That is sensationalism, isn't it?
Fast Money is frequently wrong. Who can forget Bollings call to short MA last summer? They had Gartman on for the Friday show after a big downdraft in October. Gartman said he was selling oil and gold first thing Monday. Both of those calls were wrong big time. They are just traders like the people who post here.
As to the gold stocks, they are suffering from higher energy costs. Mining is energy intensive and $95 oil hurts. Also, stocks like ABX and AUY are in several indices and dozens of mutual funds. The shares are sold when the indices are sold or when the funds suffer redemptions. AUY hedged their copper production at prices below market and they suffer from those accounting losses. But hey, ABX and AUY hit new all time highs before the sell off yesterday. AUY has moved from 8 to 16 since the summer. GSS is a laggard, but has achieved record production. PnF charts show ABX with a target of 50, AUY targets 24 and GSS still targets 1, lol. Mining doesn't attract momentum players like alternate energy, so I don't ever expect to see ABX shares price like FSLR et. al.
Herds of WCG shorts are covering.
China beats Germany to take world trade crown
China has surged ahead of Germany for the first time to become the world's top exporter, prompting ever louder demands from the United States and Europe to revalue the yuan
http://tinyurl.com/37gz7m
Data from the World Trade Organization show that the country vaulted past the US at the beginning of this year and has since moved at lightning speed to eclipse Germany's once indomitable export machine. It shipped $111bn (£54bn) worth of goods in August, up 55pc from a year earlier.
Now boasting 8pc of global exports – three times the Britain's dwindling share – China has jumped up the technology ladder. Machinery, equipment and cars now make up 46pc of total exports, while textiles are fading from the picture.
Beijing let the yuan break through the key barrier of 7.5 to the dollar yesterday, but seems determined to resist Western pressure for faster appreciation.
US Treasury Secretary Henry Paulson said it was in China's own interest to let the yuan rise, given the clear signs of overheating. -Beijing's policy of holding down the yuan through purchases of US and other foreign bonds has caused reserves to mushroom to $1,430bn, driving up inflation to 6.5pc.
Jim Rogers, the veteran US investor, told The Daily Telegraph he was pulling his money out of all dollar assets to buy yuan, yen and Swiss francs. The latter two have been hit by "carry trade" speculation, which must reverse at some point.
"The US economy is undoubtedly in recession. Many parts of industry are actually in a state worse than recession. If it were not for [Fed governor] Bernanke injecting huge amounts of money, the stock market would probably be down much more than it is," he said.
Japan said yesterday its exports to the US plummeted 9.2pc in August, a sign that contagion from the US downturn may be spreading.
In Washington, Congress has already drawn up plans for sanctions against China, accusing the regime of stealing market share by manipulating the yuan.
But now Europe is buckling under China's export blitz. The euro has risen 18pc against the yuan over two years. The EU's trade deficit with China may top $220bn this year.
Peter Mandelson, the EU trade commissioner, has warned Beijing that it must curb the tidal wave of goods flooding EU markets, or risk turning a friend into a foe. "It's a question of China... being more conscientious in shouldering their fair share of the demands of this trading relationship," he said.
The yuan has appreciated 8pc against the dollar since the creation of a crawling peg in July 2005, but the move has barely made a dent on exports. Wu Xiaoling, the deputy governor of the central bank, said China would move at its own pace. "Maybe we are not rushing things as some people wish us to do, but we are moving in a correct direction and in a smooth manner," she said.
By delaying, China is importing inflation. This will ultimately have the same effect on its competitiveness by pushing up labour costs, but at a greater cost to political and economic stability. Food price rises are now nearing levels that set off the Tiananmen Square protests in 1989.
The Dollar is rising against the Euro. Gold has dropped 20 bucks. Perhaps the G7 did more than advertised.
yes, it works, thanks
Net foreign purchases of long-term securities were minus $69.3 billion. (data for August)
http://www.ustreas.gov/press/releases/hp611.htm
"Entire US Market"? The energy and mining sectors are on fire. The China stocks are strong. Drive makers like STX and WDC look great. The list goes on ...
Layoffs fall nearly 10% in September from August
Announced layoffs totaled 71,739 in September, down 9.7 percent from 79,459 in August, when it hit a six-month high. They were 28.5 percent lower than September 2006, when employers announced 100,315 job cuts, one of only two times last year when monthly job cuts exceeded 100,000.
Year to date, employers have announced 587,594 job cuts, 8.1 percent fewer than the 639,229 cuts announced in the same period a year ago.
http://tinyurl.com/2e2rtn
Lol. The best lines from that movie: "Badges!? We ain't got no badges. We don't need no badges! I don't have to show you any stinking badges!"
"Total U.S. employment in 2007 including part-time workers was around 140 million - a number which excludes self employed individuals, most household employees and undocumented employment." http://www.bizstats.com/employment.htm
600 jobs isn't material to the macroeconomic picture.
I think that the jobs number on Friday will beat expectations. That will take enough pressure off of the Fed to delay more rate cuts and send the dollar higher. The ECB is under pressure to weaken the euro. Their actions will also be dollar positive for a few weeks at least. We are entering the seasonally strongest period for stocks (Oct-Jan).
Stock buybacks are strong, as noted by Trimtabs on the 27th:"New Stock Buybacks Skyrocket to $33.1 Billion Last Week, Fifth-Highest Amount in Our Records--and It Is Still Pre-Earnings Season! Corporate Buying Remains Huge While New Offerings Least Since August 2002."
As far as gold goes, it has run higher on a number of fears and on massive injections of liquidity. Fears are obviously fading. The fed open market actions are also diminishing. http://www.gmtfo.com/RepoReader/OMOps.aspx
The new year for Euronation gold sales began this week. So they can sell up to 500 tonnes at any time over the next 12 months. Gold had a good run. But the china stocks are much better. CTDC did better in one day than gold did all year.
As far as that goes, copper and nickel have outperformed gold, so why the fascination with a single commodity?
The US Dollar is hitting new lows.
Scientific instruments, ships and boats, soybeans, specialized industrial machines. . . and the list goes on.
In 2006 U.S. exports grew by 12.7 percent over 2005 to $1.4 trillion. Exports comprised 11.1 percent of U.S. GDP in 2006, the highest ever in dollar terms. (That's a big impact on the economy). July (most recent month for which we have data) exports of goods and services ($137.7 billion) and July exports of goods ($98.4 billion) were records.
That 98.4 billion one month record export of goods included:
Foods, feeds, and beverages 6.870 billion
Industrial supplies and materials 26.374 billion
Capital goods, except automotive 38.561 billion
Automotive vehicles, parts, and engines 11.343 billion
Consumer goods 12.360 billion
other 4.1 billion
The U.S. is the #2 exporter in the world, behind Germany by a little bit, but way ahead of China and Japan. Subtract Germany and the U.S. exports more than the rest of the E.U. put together.
In 2006, amid record imports of manufactured products:
• Real U.S. manufacturing output reached an all-time high.
• Real manufacturing revenues reached an all-time high.
• Real manufacturing operating profits reached an all-time high.
• After-tax profit rates for manufacturing corporations reached an all-time high.
• Return on equity for manufacturing corporations reached an all-time high.
• The value of U.S. manufacturing exports reached an all-time high.
• U.S. factories remained the world’s most prolific, accounting for over a fifth of world manufacturing value added.
If you want to read further begin here: http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
http://www.freetrade.org/files/pubs/pas/tpa-035.pdf
CERA makes bad assumptions about depletion rates. They are consistently too low. So their assumptions about future supply are also wrong. The report is two years old and it's wrong for 2006 and 2007. Oil is over 80 bucks during the fall shoulder season. Where is Dan Yergin now?
Total world production has never exceeded 85.4 million bpd. http://omrpublic.iea.org/world/wb_wosup.pdf
The IEA says: "Broadly, it still sees global 2007 oil product demand rising 1.7% to 86 million barrels of oil a day, rising to 88.2 million barrels in 2008." http://tinyurl.com/2u9b28
That looks pretty bullish for the oil cos...
In edit, additional responses to the CERA report have been posted here: http://www.theoildrum.com/story/2006/11/15/83857/186
"Today's MBA mortgage applications index rose +5.5%, with the purchases sub-index rising +5.2% and the refinancing index rising +6.0%. That upward rebound left all three indexes near the level seen just before the banking crisis emerged in early-August. The upward rebound in mortgage activity seen in the past 2 weeks suggests that the fall-out from tight mortgage condition has yet to cause a significant hit to mortgage activity"
From: Barchart.com U.S. Morning Call for Wednesday, September 12, 2007
The Dow is 5% off the all time high, which was set this July during the 4th year of a bull market. Bull markets in commodities, bonds and stocks continue unabated.
"Employment – Ignore BLS Employment Estimate: Job Growth Rebounds to Rate of 150,000 Jobs per Month Beginning in Mid-August. Beginning Monday August 20th, following the Federal Reserve’s lowering of the discount rate on Friday August 17th that stabilized the financial markets and soothed jittery nerves, our real-time data indicated that solid employment growth resumed. Based on our real-time and near real-time economic indicators, we estimate that employment growth has bounced back to approximately 150,000 new jobs per month, indicative of a moderately growing economy."
From TrimTabs
www.trimtabs.com
The U.S. is the second largest exporter in the world,(Germany is #1). U.S. exports in 2006 were valued greater than 1 trillion dollars.
The breakdown for the most recent reporting month is : Exports increased to $137.7 billion in July from $134.1 billion in June. Goods were $98.4 billion in July, up from $95.0 billion in June, and services were $39.2 billion in July, up from $39.1 billion in June. Details of what we export can be found following links:
http://www.census.gov/indicator/www/ustrade.html
http://tinyurl.com/2gaoeo
I like FCX for swing trades. GSS is moving nicely today.
Check out gold. The miners are on fire.
The EIA report today shows demand for gasoline and distillates is up (again) year over year.
"Over the last four weeks, motor gasoline demand has averaged over 9.6 million barrels per day, or 0.5 percent above the same period last year. Distillate fuel demand has averaged nearly 4.2 million barrels per day over the last four weeks, up 0.7 percent compared to the same period last year. Jet fuel demand is down 1.8 percent over the last four weeks compared to the same four-
week period last year."
Apparently the economy isn't dying after all.
It was posted from Briefing.com and the volume/price spike gives it some weight. Gold is down today 3 bucks already and the indices that contain NEM are also down. But I've seen nothing official.
Rumors of ABX taking out NEM. Volume is high on NEM today.
Spot gold is spiking to 668 area.
There are opportunities in the beaten down lenders. NFI is getting a small boost, likely in sympathy. A fed funds rate cut will do the same thing for the entire financial sector. It's a real crap shoot to hold anything short overnight.
CFC got some financing, taking off in the after market.
A friend shorted VMW from 73 to 68 today using stock. He is trading the Ameritrade platform so they had shares to short as well as Fidelity.
VMW is shortable now. Fidelity has over 10k shares available.
Gold is a liquid commodity and it fell with most of the other commodities as funds sold their liquid assets to raise cash to cover margin calls in their illiquid assets. Stocks of companies that reported good earnings also fell. Oil fell 2 bucks on Thursday even though Wednesday's EIA report was bullish and there were two named storms in or aimed at the gulf. Two years ago, similar events hiked oil by 4 to 5 bucks a barrel overnight. Thursday, panic selling sank all boats.
Oil and gold bounced Friday with most stocks and other commodities. Why didn't you ask why gold bounced?
Spot gold printed 644.40, copper down 8%, wow
Gold is down another 5 bucks this morning. The HUI has been sold down with the broad market. Since both gold and broad markets are heading down again, I'd say the gold stocks that are in indices are good short candidates today. FCX has been a good mover.
It's just a depression in the gulf and it will make landfall tomorrow without becoming a hurricane. The storm in the Atlantic is still just a storm with max winds of 50 mph. Once these things are gone, watch oil and natgas drop.