Blogs

  • Your Home as a Retirement Fund?

    Is home equity a foundation of your retirement fund? Apparently it is for a number of people. Both anecdotal evidence and some consumer surveys indicate that a number of Baby Boomers plan to "retire on the house." The plan is especially prevalent...
    Posted to Retirement Watch by Bob Carlson on 09-12-2008
  • The Room 09/12/2008

    In today's "special" edition of the Room, I want to go somewhat beyond the latest news and observations on same. Instead, I want to discuss the big picture as it relates to the U.S. and global economy. I do so because it is growing more important with each passing day to get a solid fix on where things stand and, more importantly, where they are going next and how you can protect yourself. It's hard to overstate just how unpredictable and dangerous the economic and investment environment has become. While these are topics we'll be covering in today's online event, Casey's Crisis & Opportunity Update, the situation at this point is moving so fast, and is so highly charged, that it is time to pay very, very close attention to things. As you should expect, we have been furiously fingering the tea leaves in an attempt to make actionable sense out of the big moves now in motion. While there is much that we know about the unfolding events, there is also much that is unknowable – for instance, how much longer the long-suffering foreign holders of U.S. dollars will be patient....
  • Dollar bulls take a breather...

    * Dollar bulls take a breather... * Paulson is out of control... * From the mouth of babes... * Fingers crossed for Chuck... ** Dollar bulls take a breather... Good day...Just as Chuck predicted, we had a Thundering Thursday yesterday, as thunderstorms moved into the St Louis area early yesterday and are expected to stick around throughout the weekend. Yesterday was a pretty slow day in the currency markets, with the dollar trading in a fairly tight range, but overnight the dollar changed direction and we saw it lose ground across the board for the first time in weeks. This turnaround was seen in the European markets as traders finally started to realize the speed of the increase in the US$ was overdone. But before I get going this morning, I need to run a public service announcement for Chuck. Yesterday's Pfennig announced that the Reserve Bank of New Zealand cut interest rates .25%. This was in error, the bank actually cut .50% to a rate of 7.5%. Chuck realized his error just after hit the send button, and wanted to make sure I let everyone know (He received more than a few emails from readers letting him know his error). The extra quarter point cut was aimed at giving the NZD a good jump start, and Governor Alan Bollard is indicating more rate cuts will be on the way: "We've got room to move,.. We're in a loosening mode." The reaction of the currency markets was the same with a 50 bps cut as it would have been with a 25 bps cut, they sold off the kiwi as the interest rate differentials narrowed....
  • Week of 09/11/2008

    In This Issue:

    Feds Ease The Mortgage Threat, But Create New Problems
    Housing Is Now More Political Than Ever
    Top-Yielding CDs Blast Treasury Returns
    India's Outsourcing Stocks Are Again Attractive
    The Bottom Line This Week

    Two weeks ago, investors were inclined to ignore moderately bad news because they were focused on what looked like a coming economic recovery. Last Thursday, however, the optimism evaporated when the unemployment rate jumped unexpectedly. Rumors of additional problems with insolvent hedge funds added to the angst, as did growing worries about the king-sized problems at Fannie Mae and Freddie Mac.

    Investors put it all together and decided the outlook wasn't as encouraging as they first thought. In fact, it was starting to look as if a further economic slowdown could be in the works.

    When the new forecast made the rounds, the market dropped 345 points. We had a tepid 33 point rebound on Friday, but it fell into the faint praise category which actually deepened the gloom. When the final bell rang for the week, the Dow and the Nasdaq were down 2.8% and 4.7% respectively.

    Over the weekend, however, the outlook went from dead black to positively upbeat when Treasury Secretary Paulson announced his benevolent agency would rescue Fannie and Freddie. On Monday, jubilant investors pushed the market back up 290 points.

    ...
  • The Fear Side of the Greed and Fear Cycle

    “The only thing new in this world is the history that you don't know” Harry S. Truman Just as day follows night and spring follows winter so, too, does investor psychology follow the seasons of emotions from greed to fear and back. Behavioral...
    Posted to Musing on the Markets by Vinny Catalano, CFA on 09-11-2008
  • Falling In And Out Of Love...

    * Euro sinks to 1-year low... * RBNZ cuts rates 25 BPS... * Carry Trades continue to unwind... * Fannie and Freddie cause problems for banks... ** Falling In And Out Of Love... Good day... And a Thunderin' Thursday to you! Today we mark 7 years since the "monsters" attacked our great nation and thousands of lives were lost needlessly. My blood still boils at the thought of what happened on Sept 11, 2001, and the thoughts of the twin towers coming down still flashes in my mind. 7 years ago today, we witnessed the horrific scenes from terrorists in our country. I recall trying to come up with words the next day, and just couldn't, so I stuck to currencies, in attempt to keep things as normal as they could be. I hope everyone flies their flag today in remembrance of this day 7 years ago. OK... We're seeing a complete meltdown in the currencies this morning, folks.. The euro has fallen to the low 1.39 handle, and all is looking quite bleak for the single unit right now. Our metals trader, Kristin, sent me this note that she came across regarding the euro......
  • Scaredy Cats!

    * Not your father's currency traders.... * The euro does the rope-a-dope... * Deep Thoughts * Jimmy Rogers on the bail out... ** Scaredy Cats! Good day... And a Wonderful Wednesday to you! Hurricane Ike moves into the Gulf... Which way it goes from here isn't good for anyone. We had another day of watching the euro rally during the day, only to see it fizzle out by the end of the day. I go home each night and think all the way home about all this stuff going on, and wonder just who in their right minds would be buying dollars right now... Scaredy Cats that's who... So... Here you go... Deep Thoughts by chuck butler... Here's the skinny on that thought... Ever since the Fed, Bank of Japan (BOC), and European Central Bank (ECB) intervened in their coordinated, covert operation, market participants and traders are scared to death to short dollars, for fear of more intervention that could wipe out their trades, and post losses for them. Come on... These aren't the currency traders that I grew up with! Those traders took any Central Bank intervention as a "challenge" and would laugh in the face of Central Bank intervention! Central Bank intervention usually meant it was a desperate measure to shore up a currency, and that was like blood in the water for a shark... Currency traders would hit that currency even harder! But not these scaredy cats! That's one thing I think about... And then there's this......
  • A Yacht, Greenspan and Uranium Stocks

    On Monday, in a CNBC Europe interview, Jim Rogers wondered if the US was “…more communist than China .” He was referring to the Fed’s bailout of Freddie Mac and Fannie Mae, and to a lesser extent, the bailout of Bear Stearns back...
  • P/E Scenario Modeling

    For the past several months, the S&P 500 has been locked in a trading range of roughly 1230 to 1300. Why has it settled into this particular range? Allow me to offer a few reasons via a scenario forecast. In last Thursday’s blog entry titled...
    Posted to Musing on the Markets by Vinny Catalano, CFA on 09-09-2008
  • A Misguided Slam On Active Management

    It is not uncommon to have major Wall Street players criticize traditional market timing strategies in the financial media. However, such criticism is somewhat misguided in today's market, when many buy-and-hold investors are suffering major investment losses. That's why I was somewhat surprised to see David Dreman, a known contrarian, tag along with the buy-and-hold crowd in a recent Forbes article. In this week's E-Letter, I'm going to take on Mr. Dreman's recent comments about traditional market timing strategies. I'll also show you his recent performance as compared to that of Scotia Partners, one of our latest market timing managers. You can then decide for yourself which one has had the upper hand in the recent volatile market environment....
  • Does The Bail Out Constitute A CDS Event?

    * A potential CDS debacle... * Currencies rally back... * Brazilian real history... * Saber rattling or geopolitical pressure? ** Does The Bail Out Constitute A CDS Event? Good day... And a Terrific Tuesday to you! Right out of the starters blocks this morning, I have to apologize for the tardiness of the Pfennig yesterday... We were experiencing some technical difficulties... In fact, if you sent me an email, I didn't get it yesterday! Things look better this morning, so, maybe we're back on track! I know it's no one's fault when this stuff happens, but it sure doesn't make me feel good about getting up at X:XX AM (I won't say because you will think I'm crazy!) to come in and write the Pfennig, only to see it not go out until late in the day! Well... The stock market here in the U.S. sure liked the news about Fannie and Freddie! I guess, they, just like the dollar bulls, didn't get the memo that this will put billions of dollars of tax burden on taxpayers, and most likely is going to cause a major disruption in the Credit Default Swaps (CDS) that are on the books... Oh, well, we have to learn to deal with mental giants all our lives, this is just another case of that!...
  • This Crisis Is Not Over

    What a momentous weekend. I was pounding the table about the need to move quickly on Fannie and Freddie in my last few letters, and especially this last letter. And then they did it. There are a lot of details that have yet to come out, and it is likely to be far more expensive the Savings and Loan crisis was for the US taxpayer, but it did get done. Hopefully, we can get some real regulation for part of our costs, as well as get rid of the implicit guarantees by US taxpayers so that something like this never happens again. The fact that it did was the fault of the regulatory environment and Congress. They fired the heads of Fannie and Freddie (with multi-million dollar parting gifts), but sadly, the truly responsible parties will be re-elected to perpetrate yet more frauds....
  • Another Government Bailout!

    * Fannie & Freddie news... * Jobs Jamboree very disappointing! * Risk Taking back on the board! * Troubles brewing in China? ** Another Government Bailout! Good day... And a Marvelous Monday to you! We had some historic economic news over the weekend as the Gov't has decided to take over Freddie Mac and Fannie Mae... When I heard the news, I made sure I would check on the currencies later in the day when the Asian markets opened. At first, it was all dollar negative news, and the euro was flying high to near the 1.44 handle... So... I went to bed thinking that the markets would be a shambles this morning when I got to work, etc. etc. But, that's not the case, as I turned on the currency screens I saw the euro had lost all that ground it had gained and is back to looking sickly around 1.42 again. In fact, I just looked over, and the single unit has given up the 1.42 handle and is trading below... I'm searching and searching for news on this strong dollar move, and can't seem to find anything... So, I'll go on with the normal fun, and see if something pops up later as I go along......
  • Sectors and Styles Weekly Investment Strategy Report: September 8, 2008

    excerpts from this week's report*: Technical Analysis "Last week’s market performance pushed the Moving Averages Scorecard to its worst level thus far, at 16.67% bullish. A potential key reversal might be forming in the Financials but there...
    Posted to Musing on the Markets by Vinny Catalano, CFA on 09-08-2008
    Filed under: