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Citigroup

Citigroup (NYSE:C) Is now the center of attention now within the financial sector. Of course it’s expected since they too were doing what the rest of the industry has been doing for the last few years.
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Over the weekend the Federal Reserve and the Treasury department have been talking on how to stabilize the company. The discussions are still going on and not much more is being revealed. Speculation is that they are thinking of assuming some of the risky assets held by the company. As with the rest of the trouble assets that the government has taken over from the other troubled banks. Removing the assets off of Citigroup’s balance sheet will give them the chance they need to put them in a better position to do business and raise capital.
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From all the news coverage I’ve followed over the last few days, Citigroup has declined to comment.
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I was on vacation last week and while spending my time with my family, I didn’t follow any news, but to come back to find out that Citigroup lost nearly 60% of their stock value brought me back to reality real quick. Having Citigroup collapse could possibly bring the end to the entire sector. They are too intertwined within the sector.
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When you think about it, it shouldn’t be a surprise that this is happening. Look what happened to Citigroup last month when they tried to acquire Wachovia (NYSE:WB). They lost the opportunity to Wells Fargo Corp (NYSE:WFC). They are no longer the big dog on the block. As a matter of fact they are probably the most vulnerable of all the financial institutions out there.
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Who knows what is to come this week. Last week the DOW lost 5% and that’s after the 500 point gain on Friday. I’m going to catch up on the thing I missed and watch the action from the sidelines.

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Hedge Funds Part Duex

Today five of the most powerful men in the hedge fund world are in Washington speaking to the Oversight committee. The were invited (told) to testify in Washington to the effect that hedge funds had in the economic crisis that is upon us now.
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George Soros Of Soros Fund Management, John Paulson of Paulson & co., Jim Simons of Renaissance Technologies along with Citadel Investment Group’s founder Ken Griffin appeared in front of Committee Chairman Henry Waxman.
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Ironically they agree that there needs to be more transparency from the industry of secretive funds. They also gave different views on whether or not they contributed th the financial crisis. George Soros di say that hedge funds were part of the reason for the financial bubble. Mr Soros wrote in a statement “A deep recession is now inevitable and the possibility of a depression cannot be ruled out,” sent to the Oversight and Government Reform Committee hearing.
This is the ma who is know for betting against the British pound back in 1992 and recently backing Senator Barack Hussein Obama for President.
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The Committee wants to hear from the leaders in the hedge fund industry about the role of these funds as well as their tax status and regulation. Oddly enough when the financial and economic world was falling apart, these gentlemen made on average $1 billion last year. That is also why they were called to appear in Washington.
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“Currently, hedge funds are virtually unregulated,” Waxman said. “They are not required to report information on their holdings, their leverage, or their strategies. Regulators aren’t even certain how many hedge funds exist or how much money they control.”
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I don’t know about you but this is quite fishy. Why is it that these guys can do what they do and not have to be accountable for their actions? Yes I know that many of them are operated outside of the United States, but they trade in U.S. currency and it’s assets.
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I also know that they are not the only reason for the collapse of the financial industry. Most of that blame does have to fall on the managers of those institutions, rating agencies, investment banks as well as the people who over-extended themselves with credit.
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As to the regulations that were non-existing for the last several years. Most of that blame must be put on Congress, the Treasury Dept. and the Federal Reserve. It’s their job to keep things in order. Unfortunately, many of those politicians were re-elected. Barney Frank, Henry Dodds along with Obama who was able to deflect most of the blame during the election. We will have to wait until 2010 before we have a chance to remove some of these lazy, elected government officials.
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David Ruder, a former chairman of the U.S. Securities and Exchange Commission tried a few years ago to force the hedge funds to register with the agency, but failed was also present at the hearing.
“Although hedge funds have been active participants in the financial markets during the past years, they do not seem to have played a major role in the events precipitating the crisis,” Ruder told the hearing.
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The men who were summoned to the hearing today are some of the leaders in the hedge fund industry. These guys are known by playing by the rules. The bad thing is that there aren’t that many rules for them to follow. Many of the hedge funds that we’ve been hearing about going under are the less respectable ones. The ones that don’t really follow any rules and leveraged the hell out of their funds.

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Bailout And Rescue Plans

What is the difference between a bailout and a rescue plan? There really isn’t one. It’s just a matter of how you want to get the message across. The AIG bailout is what they were calling it, but then the government was getting too much slack for how it was being presented.
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So when Hank Paulson went to Congress to get $700 billion to save the financial sector and the credit markets, he first called it a bailout. Then Congress went ahead and didn’t pass the bill, which in turn caused the stock market to plunge. By the end of the week they repackaged it and pitched it as a rescue plan.
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Either way you look at it, it’s still the same thing.
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Now it’s General Motors (NYSE:GM) and Ford Motor Corp (NYSE:F) turn. What will happen is still not clear. There is still two and a half months before Obama takes office. President Bush and Obama sat down yesterday in the oval office to discuss several things that need to be hashed out. Rumor has it that the auto industry was talked about, but neither of the men will reveal what was discussed, even though it seems that Obama’s aids have leaked the information out.
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If we are to save this economy we will need to save jobs and create new ones. Letting the the two auto companies to fail and possibly close some or all of their factories will not help this country bounce back any quicker.
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If we can go ahead and save the white collar jobs of Wall Street, why wouldn’t we save the blue collar ones of Main Street. What’s your opinion on this topic? I’d like to know.

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The Obama Effect In The Stock Market

Now that Barack Hussein Obama has won the election, what will it do to the stock market? At this moment no one is really sure. I will say that since Tuesday morning the Dow has lost 600 points, that’s a drop of 6% in one week.
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During the campaign, we heard that a new President will save this economy as well as the stock market, President bush has ruined this country and many other negative comments.
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We are to believe that President -elect Obama is exactly what this country needs to bring us back from the disaster of the last eight years. it’s not a new President that this country needs, it’s fiscally responsible policies that will save it and nothing else.
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The markets are showing us in the last week that they are still not confident in what is presently going on in Washington. When Obama spoke last Friday, the DOW dropped 100 points, it did gain back those loses by the end of the day, but not any more.
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Obama’s camp announced this morning that they would be making any more cabinet selections this week, which again gave more reason to feel confident.The markets were up big again today when the bell rang (+200 on the DOW),but started selling off immediately where at 1:00pm it gave back 300 points. Since then it has started to climb, but who knows where it will close at the end of the day.
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There is still to much fear and uncertainty in the stock market and we should all be ready for anything. I don’t see good thing in the rest of this year and I’m prepared for it. If I’m wrong, well then the worse thing that will happen to me is that I’ll miss out on some gains, but if I’m right I’ll save myself alot of trouble.
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P.S. Want to learn more about the stock market? take a free two week trail with Jim Cramer from TheStreet.com

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The Sign Of Things To Come

Now that the election is over we can get back to what is really important, getting the economy back on track. From the looks of things that went on in the first half hour, it doesn’t look like the markets took the news very well.
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As it turned out in California yesterday, the clean energy bill didn’t get the support it needed to get passed. Which in my eyes doesn’t look too good since California is usually the leading state when it comes to clean and green type technologies for their environment. The alternative energy sector is getting driven downward in the morning trading hours. As I stated yesterday in my post, It does look good for wind, solar, and other alternative/renewable energies with Obama winning the Presidency, but for right now the sector is taking a little dip. This just be the time to get into the stocks of you choice in this sector. Buy your positions in increments and on the dips.
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As for nuclear power, McCain was for it, but at the moment Obama stated that he would have alot to look at in regards to nuclear power being used in the U.S.
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What does the future for the financial sector? It’s believe that stability will be brought back to the financial industry, but remember that could be just a false sense of security. It was announced today that the Federal Reserve has appointed a new risk manager and if their choice doesn’t put a little worry in your head, then I don’t know what would. Their choice is Michael Alix, the former chief risk officer from Bear Stearns, that’s right the man who made the decision to have Bear Stearns take on all that risk that eventually destroyed them. The only thing that I could think of is that they hired him to tell them what not to do.
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Hnag in there and take profits where you can. Happy trading.

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A Look Back And A Peek Forward

After the first three week we had in October, it was nice to see the great week that just occurred. It could be a sign if things to come. The election is in less than 72 hours and the race is tightening up. At this point it could go either way. I look forward for it all to be over.
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As for the stock markets, I think the worse may be over. Unless we end up with a one political party control of Washington D.C. The Dow was up nearly 14% this week, while the NASDAQ gained 11% and the S&P 500 jumped 10% during the same period. I love weeks like this and these are the weeks that we need to see more of.
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In this week we’ve seen that the financials are loosening their grip on their money. As well as the fact that we’re seeing the acquisitions of the smaller/troubled banks getting scooped up by the big dogs. PNC has taken control of the Ohio based National City Corp. This is what needs to be done if we ever want to see growth again in this country.
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The Federal Reserve lowered the funds rate down to 1.00%. It hasn’t been this low since the summer of 2003. At this point they can’t lower it any more. so I would imagine that if anything they’ll leave it at this level for awhile. I mean what else are they going to do in this economic turmoil?
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The volatility in the stock market has slowed down from what we have been seeing for the last few weeks. The VIX has come down quite a bit after hitting a high of around 90%. That’s good for stability, but bad for the day traders out there that were have a field day with the Ultashorts Powershares. Then again that why the VIX was up so much recently.
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I’m looking forward to some great gains again in this coming week and plan to take profits where I can. I say that because like I said earlier, there is an election taken place this week.

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Not Another Manic Monday

What a day in the stock market. the day started with the big three markets in the green and continued that way throughout the entire trading period. I did expect the day to go quite different on the fact that Ben Bernanke and Hank Paulson were due to speak during the trading day. When that usually happens lately, the markets don’t react in a positive way. It was mentioned over the weekend that there will be continued international support for the financial system, with focus being on the effort to loosen the credit lending.
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The basic material sector had a great day today. It assumed that the sector was oversold over the past week and took back some of those loses. The entire sector started in positive territory and continued to tick upward.
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Oil also had a good day by moving up just over $4 during the day. It’s being said that the bottom is starting to show with this commodity. OPEC is expected to cut production after their meeting in a couple of days. As a matter of fact the latest news is now that they might not cut production since they need make up for the revenue from the drop in prices.National Oilwell Vargo Inc. Had a great day with a 24% gain. A stock that was beaten up for last few months after hitting a high of $92.70 back in July of this year and now after today’s gain is at $31.80 in after market trading.
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Early in the day Ben Bernanke spoke with Congress today on the condition of the economy. He did say that he sees the economy to be weak during the next couple of quarters. He also took the time to inform Congress that a second stimulus check is something that should be considered to help the economy. I do have to say that when Bernanke speaks (in english) I still need a translator to figure what he’s really saying to us average Joes.
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The markets looked quite strong today and continues to look that way through after market trading, but be aware that we are not out of the woods yet. Take you time and do your due diligence with any company that you want to jump into.

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Injection For The Financial Sector

Last night we were given a peek into what Hank Paulson and the Treasury Department have in their magic hat for the next stage of saving the financial sector. An injection of $250 billion to be distributed to U.S. banks.
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We are being shown that the government is standing by what they said in regards to supporting and saving the financial sector. The official announcement is to be given at 8:00am on Tuesday by Mr. Paulson, he outlined the plan Monday afternoon to nine of the country’s leading banking institutions. It didn’t seem that this plan is a voluntary one. Paulson’s advice is that they would have to accept the government investment.
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The banks that were involved and told how much of an injection they will receive. The breakdown is as follows: JP Morgan and Citigroup will receive $25 billion each, Wells Fargo and Bank of America each will get $20 billion (as well as another $5 billion for each of their acquisitions), Goldman Sachs and Morgan Stanley receive $10 billion each along with Bank of New York Mellon and State Street will receive $2 to $3 billion.
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There’s a lot more to the plan than I care to get into here and since I’m posting this just after midnight Monday night, there’s still quite a bit that is unclear at this time. The one thing I can say at this moment about the news, is that there will be another up day for the stock market, especially the financial sector. Which of course makes me a happy camper since I bought Morgan Stanley Friday afternoon after it fell below $10.
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Don’t get me wrong, I do expect the markets to go back down in due time, but there is positive news that will help the markets for the next day or so. At this time in this economic crisis, I will take advantage of any opportunity I can get my hands on. The name of this blog isn’t called beating the stock market for nothing and I will do it one stock at a time.

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It Happened Again In The Stock Market

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photo by ken ratcliff

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That’s right, again the markets dropped even more today. At this rate we’re going to be down to the market levels of 1995 in no time at all. As a matter of fact it’s been more like a roller coaster ride all day long. The day ended 191 points down for the day.
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The markets opened flat and within the first minute of open trading it fell nearly 200 points. From there it turned around and worked it’s way being up 170 points. All that happened in the first thirty minutes.
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This morning the Federal Reserve along with several other central banks from five other countries lowered their fund rate by fifty basis points. This is something that has never happened before and you will most likely see again in your lifetime. One would think that this would stimulate the markets to rally and help the economy. Unfortunately that wasn’t the case, instead the market are showing that they don’t know what to make of it. Part of the reason may be because of the banks don’t trust each other. They don’t want to lend money to one another at this time. I understand why they do this, I wouldn’t be lending money to anyone who has shown irresponsibility with their finances. Ive heard of creative financing, but what these entities have done recently is ridiculous.
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The markets have been going up and down in today’s trading that shows the uncertainty in the economy. The swings have been big, moving as much as 400+ at several times throughout the day. The DOW crossed yesterday’s closing threshold six times going from positive to negative and back again.
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The only silver ling that is out there is the Powershares UltraShorts. Most of them have climbed more than 50% in the last five days. I not sure if there will be any more gains from these stocks that I would want to put money in at this time. If you’re a day trader and have the ability to jump in and out of the stocks within the same trading day then you could make a killing in the volatility that has been going on today.
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The Credit And Housing Crisis Downfall

The stock market has taken a beaten for the month of September (as well as the last twelve months) and I do expect more of the same as the rest of the year. The main reason for it is the credit and housing crisis issues that have plagued us for some time now. I spoke about it before on this site and have voiced my opinion on it.
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I don’t know where many of my readers stand on many issues, but I’m pretty sure that most would agree that this issue came about from the greedy people in the business as well as irresponsible borrowers. Some people out there feel that this issue started in the last few years and the powers-that-be are to blame.
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What people need to do is to go and get the information for themselves because “knowledge is power”. Someone may be able to take your car or your money, but they can’t take away what you learned. Once you learn something, no one can take it from you. This is why I’m putting up this video for my readers. We as investors and traders should know the history that brought us to this problem, so we can reconize the pattern for the future.
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This video is meant to be politically related, but it deals with the history of the credit and housing crisis. (I will tell you that I’m a Libertarian, I don’t agree completely with either the Democrats or the Republicans. I’m an American that believes in a smaller government, and less government involvement in my life). For that reason you need to watch it. If there’s anything that you dispute or disagree with being truthful, then do as the video says and Google any of the information that’s in this video. The video is almost eleven minutes long, but very informative.
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Please feel free to voice your opinion on this video or if you want to vent, be my guest.
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P.S. Want to learn more about the stock market? take a free two week trail with Jim Cramer from TheStreet.com

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