By admin | October 10, 2008
* GE (GE): Q3 EPS of $0.45 in-line. Revenue of $47.23B vs. $47.34B. Maintains dividend at $1.24. [PR]
* Host Hotels (HST): Q3 FFO of $0.31 beats by $0.03. Revenue of $1.17B in line. [PR]
* Infosys Technologies (INFY): FQ2 EPS of $0.56 beats by $0.01. Revenue of $1.22B (+19%) in-line. Says its liquidity position is strong. [PR]
Topics: Stock Picks | No Comments »
By admin | October 9, 2008
NEW YORK (AP) _ A runaway train of a sell-off turned the anniversary of the stock market peak into one of the darkest days in Wall Street history Thursday, driving the Dow Jones industrials down a breathtaking 679 points and deepening a financial crisis that has defied all efforts to stop it.
Stocks lost more than 7 percent, $872 billion of investments evaporated, and the Dow fell to 8,579. When the average crashed through the 9,000 level for the first time in five years in the final hour of trading, sellers had only begun to hit the gas pedal.
As bad as the day was, even worse was the cumulative effect of a historic run of declines: The Dow suffered a triple-digit loss for the sixth day in a row, a first, and the average dropped for the seventh day in a row, a losing streak not seen since 2002.
"Right now the market is just panicked," said David Wyss, chief economist at Standard & Poor's in New York. "Nobody wants to take on any risk. Everybody just wants to get their money and put it under the mattress."
It all took place one year to the day after the Dow closed at its record high of 14,164. Since that day, frozen credit, record foreclosures, cascading job losses and outright fear have seized the market and sapped 39 percent of its value.
Paper losses for the year add up to an staggering $8.3 trillion, according to figures measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing almost all stocks traded in America.
It was the second straight day that Wall Street was rocked by a final-hour sell-off, but this one was particularly shocking.
Most of the day was relatively calm, and the trading floor was quieter than usual because of the Jewish holiday of Yom Kippur. Wall Street awoke to news the federal government was brandishing a new weapon against the financial crisis — considering seeking an equity stake in major U.S. banks in order to stabilize them.
But that step appeared to be as ineffectual as the others Washington has rolled out in recent weeks, including a $700 billion bailout of the financial industry, a coordinated interest rate cut by central banks around the world and direct lending by the Federal Reserve to private companies to provide them with short-term cash.
Acquiring a stake in the banks would be yet another startling intervention by the government in the free market, but economists said President Bush was left with little choice because of the credit markets, where tight lending has choked off the everyday cash that is the lifeblood of the economy.
"In normal times, this would be out of the question, but in the present dire situation, I think the government should be employing all the powers that it can," said Sung Won Sohn, an economics professor at California State University, Channel Islands.
After the closing bell, shellshocked traders and bankers gathered at Bobby Van's Steakhouse and downed beers and drinks to chase the ghastly numbers. One Wall Streeter joked things had gotten so bad that he should apply for a job as a waiter.
"It was an ugly day, there's no ways to put it," said another customer, Alan Valdes, director of floor operations for Hallard, Lyons. "Guys were frustrated, just fed up. ... We're in an area no one has been in since 1930."
Wall Street has been teetering on the brink of panic for a month now, vulnerable to any bad news. Thursday's sell-off was triggered when a major credit rating agency put General Motors Corp. and its finance affiliate under review to determine whether it should be downgraded.
Stock in GM, one of the 30 components of the Dow Jones industrials, lost 31 percent of its value and closed at $4.76 — its lowest in more than half a century, since the Korean War began.
For the Dow, it has been nothing short of a free fall:
—The average is down 2,338 points, or 21 percent, in the last four weeks, since the Lehman Brothers bankruptcy escalated a long-running credit crunch into a full-fledged crisis.
—The point decline Thursday was the third-worst in Dow history. The worst, 778 points, came less than two weeks ago.
—Of the last 19 trading days, there have been 11 triple-digit losses — including the unprecedented six straight. The six gains have all been triple-digits, and only one of them was enough to make up the losses of the day before.
—The Dow now stands only about 1,300 points above its lowest close of the bear market that followed 9/11. In a market as volatile as this, that gap can be closed in a couple of trading days, or less.
In fact, triple-digit declines can happen almost in an instant.
On Thursday, the Dow was above 9,200 after 1:30 p.m. and still above 9,000 after 3 p.m. The pressure to sell was so intense that the Dow kept dropping precipitously for 10 minutes after the 4 p.m. closing bell as the day's losses were tabulated.
In percentage terms, the drop in the Dow exceeded the day the markets reopened after the Sept. 11, 2001, terrorist attacks. It was not close to the 22.6-percent decline on Black Monday in 1987, the last stock market crash.
Still, it is becoming increasingly clear that Washington has ever fewer places to reach in its toolbox to stop, or perhaps even slow, the crisis. Among the options still left are buying up foreclosed properties and making direct loans to homeowners, both of them hard for free-market supporters to swallow.
Speaking in the afternoon before the market closed, President Bush told an audience on the South Lawn of the White House that the economy was going through a "very tough stretch." But, he said: "I'm confident in our economy's long-term prospects."
After the market closed, the White House said Americans should remain confident despite the market plunge, and Bush planned to speak from the Rose Garden on Friday morning — though he was not expected to unveil any new policy proposals.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid asked Bush on Thursday to call an emergency meeting of the G-8 industrial nations' heads of state to address the continuing global credit freeze and instability in world markets. The G-8 comprises France, Germany, Italy, Great Britain, Japan, the United States, Canada and Russia.
In the markets Thursday, the broader stock indicators registered similar declines to the Dow's. The Standard & Poor's 500 index fell 7.6 percent to the 909 level, and the Nasdaq composite index fell 5.5 percent to 1,645.
Meanwhile, the credit markets remained stubbornly locked-up. The benchmark rate that banks charge each other for loans, known as Libor, rose to 4.75 percent from 4.52 percent a day earlier, signaling banks are still afraid to make loans because they worry they won't be paid back.
"The story is getting to be like that movie Groundhog Day," said Arthur Hogan, chief market analyst at Jefferies & Co. "Everything we're seeing is historic. The problem is historic, the solutions are historic, and unfortunately, the sell-off is historic. It's not the kind of history you want to be making."
Adding to Wall Street's nervousness, a ban on short selling — a process in which investors borrow shares of stock and essentially bet the value will fall — expired.
With three and a half weeks before voters elect Bush's successor, there was also no immediate comment on the Wall Street action from the presidential candidates, Democratic Sen. Barack Obama and Republican Sen. John McCain.
Earlier in the day in Dayton, Ohio, Obama took aim at McCain's plan to have the government absorb the full cost of renegotiating mortgages for borrowers under strain from the dramatic decline of the values of their homes.
McCain rolled out the idea at the second presidential debate earlier this week, a forum in which he also told voters it was important to have a steady hand in the White House during a time of economic crisis.
___
AP Economics Writer Martin Crutsinger reported from Washington. Associated Press writers Tom Raum in Washington and Patrick Rizzo in New York contributed to this story.
Topics: Daily Updates | 1 Comment »
By financepress | October 2, 2008
Are
remortgages and secured loans still an option in today's troubled times? What actually happens to remortgage / secured loans markets when a
credit crunch and a housing market crisis come hard on the heels of a decade of rapid house prices increases?
The first thing to note is this: it'll take a long ‘crash' to wipe out all the gains of the last decade (and cause serious problems for anyone thinking about a secured loan or remortgage). When house prices peaked in October 2007, according to Nationwide's House Price Index, the average house had taken just ten years to more than treble in value, rocketing from £60,754 (Q3 1997) to £186,044.
It's true that prices then dropped around 9% (to £169,316) by July 2008, but this only took them back to the kind of price levels we'd seen in September 2006. In other words, it took nine months to wipe out the gains of the 13 pre-peak months.
It's always dangerous to draw parallels with previous housing market downturns, but looking back to 1989 (the last time house prices peaked), prices went down about 20% over three and a half years before starting to climb again. Prices are dropping faster this time, but the recent decade of rapid rises shows just how much demand there is for housing - or rather how much demand there
will be as soon as the
mortgage market picks up again...
How much equity is there out there?
Whatever lies ahead, the average person who's owned their house for the last decade could easily have over £100,000 of equity - enough collateral to remortgage or secure a substantial loan. Aside from the increases in the property value, there's also the ten years of mortgage payments to take into consideration.
Of course, anyone who's already secured a
loan against their property in the past would have less equity to draw on now - unless they'd used that secured loan to finance home improvements, potentially increasing the value of their house (and therefore their equity).
Is it available?
Just because the equity is there, it doesn't necessarily mean it can be accessed. Lenders have become very cautious about lending money, even if the would-be borrower is offering to secure it against property. After all, a house is less valuable as security at a time like this, when property is steadily decreasing in value and hard to sell - every lender knows that other lenders are equally hesitant about granting mortgages, which is significantly reducing demand in the
housing market.
So mortgages and secured loans have become both harder to obtain and more expensive. Lenders are also less willing to lend as much: many are limiting remortgages to 80% of the property's value, as they don't know what will happen to prices and can't rely on natural price appreciation to guarantee recovery of the funds.
However, even though the criteria are stricter,
homeowners with enough
equity (and the means to make the repayments) can still withdraw it - so for them, a secured loan or remortgage is still an option.
Topics: Daily Updates | No Comments »
By financepress | October 1, 2008
New figures from the
Office for National Statistics have shown that the
economy shrank faster than originally thought between July and September.
Economic output (GDP) contracted by 0.6% in the three-month period, up on the ONS’ previous predictions of 0.5%.
However, the previous quarter’s figure remained unchanged at zero growth (0%).
It was the first time the economy had shrank in the third quarter since 1992, and the worst overall quarter since 1990, according to
The Times.
The economic crisis has caused financial hardship for increasing numbers of households, and many have struggled to stay out of debt.
A
Debt Advisers Direct spokesperson commented: “People in debt are likely to be amongst the worst affected by the financial crisis, and it’s important that people address their debts as soon as possible to avoid more severe
debt problems in future.”
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By admin | September 17, 2008
- Asia markets closed mostly down. Nikkei +1.2% to 11,750. Hang Seng -3.6% to 17,637. Shanghai -2.9% to 1,929. BSE -1.9% to 13,263.
- In Europe at midday, London -2.2%. Paris +0.4%. Frankfurt +0.6%.
- U.S. futures: Dow -0.4%. S&P -0.6%. Nasdaq -0.5%. Crude +3.1% to $94.00. Gold +0.6% to $784.90.
Topics: Daily Updates | No Comments »
By admin | September 17, 2008
Titanium Metals (TIE) -- “No, that is a second-rate titanium play. Titanium Metals is a second-rate Allegheny Tech (
ATI) and I don’t like Allegheny or the rest of the titanium group. I'd rather hang myself with a tie than own shares of TIE."
Mercado Libre (MELI) -- “Cramer thinks Mercado Libre is tied to closely to eBay and that’s not a good stock to own right now. So stay away from Mercardo Libre."
Sterling Financial (STSA) -- “"I am recommending so few banks right now I can't go down the food chain here. I don't want this one. Go with
BB&T (BBT) or
Wachovia (WB).”
Topics: Stock Picks | No Comments »
By admin | September 17, 2008
Research In Motion (RIMM) -- “Hedge fund selling has hurt this stock. There's nothing the matter with this company. Blackberry is here to stay and I want to buy more."
Energy Conversion Devices (ENER) -- “I am bullish on Energy Conversion Devices. This is the single best alternative energy play out there. I wish I owned it myself."
I like my Fortress Four Banks:
- JP Morgan Chase (JPM)
- Bank of America (BAC)
- US Bancorp (USB)
- Wells Fargo (WFC)
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By admin | September 16, 2008
AIG's problems... After asking the Fed for a $40B bridge loan yesterday, and talks with several buyout firms failed, AIG's (AIG) borrowing needs shot up to $70-75B, prompting ratings downgrades from Moody's, S&P and Fitch Ratings. The credit downgrade could trigger as much as $14.5B in collateral calls, and up to another $5.4B in early termination fees, and puts the company's survival in jeopardy. If AIG doesn't secure financing by Wednesday, it may be forced to file for bankruptcy. Kenneth Lewis, CEO of BofA (BAC), said "I don't know of a major bank that doesn't have some significant exposure to AIG," making a potential AIG failure "a much bigger problem than most that we've looked at." Shares -60.8% to $4.76 at yesterday's close.
Partial Solutions. New York state, where AIG is based, threw the troubled insurer a lifeline to the tune of $20B by allowing the firm to access funds tied up in regulated subsidiaries. The move buys AIG some time, but doesn't solve the company's underlying capital problems. Strongly encouraged by a Fed seeking private-sector solutions, JPMorgan Chase (JPM) and Goldman Sachs (GS) are trying to arrange $70-75B in loans for AIG through a syndicate of banks. Some private equity firms, including TPG and Kohlberg Kravis Roberts, are potentially interested in buying specific AIG assets but are unlikely to contribute to a capital infusion.
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By admin | September 16, 2008
- Asia markets closed down. Nikkei -4.9% to 11,609.72. Hang Seng -5.4% to 18,300.61. Shanghai -4.5% to 1,986.64. BSE -0.1% to 13,518.80.
- In Europe at midday, London -2.4%. Paris -1.3%. Frankfurt -1.6%.
- U.S. futures: Dow +0.1%. S&P -0.1%. Nasdaq +0.6%. Crude -2.6% to $93.19. Gold -0.6% to $782.40.
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By admin | September 12, 2008
- Asia markets closed mixed. Nikkei +0.9% to 12,215. Hang Seng -0.2% to 19,353. Shanghai +0.03% to 2,080. BSE -2.3% to 14,001.
- In Europe at midday, London +1.0%. Paris +0.8%. Frankfurt +0.5%.
- U.S. futures: Dow -0.2%. S&P +1.4%. Nasdaq +2.1%. Crude +1.3% to $102.18. Gold +1.6% to $757.60.
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