Wednesday the Fed wraps up their meeting…
My guess is a cut of half a point. That puts the rate back to Dwight Eisenhower days! Now is a great time to refinance your house, or even credit card loans. I suggest just calling your credit card company and ask them to give you a lower rate. Use some fancy economic words. You’ll be surprised at how low you can negotiate your loan at. I’m not sure how that will work if you have an auto loan from a credit union, but with these historic lows on rates, its worth a try to just ask.
The big question for me is, when will the Fed start raising rates again? I mean, I think getting under 1% will probably not be efficient on the lender side.
As for the market, I am expecting a retracement in the early hours that will probably be filled back up. I also think the Vix will be relatively quiet, showing that it won’t be an easy day to day-trade. Maybe in the final hour, the best setup would be to short weak stocks if we see sector-wide profit taking.
As for possible fades:
MercadoLibre, Inc. [[meli]]
GeoEye Inc. [[geoy]] … government no longer has satellite spending on budget
Titanium Metals Corporation [[tie]]
United States Steel Corporation [[x]] … which rallied right off its 52-low yesterday! It will get under that in a few days. Keep it on the short list.
DryShips Inc. [[drys]] , TBS International Limited [[tbsi]] … short on any spike.
As for possible breakouts:
Integral Systems, Inc. [[isys]] … me and Mac approve
Intuitive Surgical, Inc. [[isrg]] … see Ragin’s vid
National-Oilwell Varco, Inc. [[nov]] … oil could see more strength heading into November. This one is Fly’s pick. I like
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Gio-
As a spec play, what are your thoughts on solar? Im looking out 12 months or so to see a move. Im convinced that inflation flares up in a big way sometime over the next year or two and we will see a ramp in oil and commodities.
Thats my thesis. Is it just bullshi## or do you think it holds some weight?
I enjoy your music vid’s…..keep em coming.
P.S I like your call on short GEO,X,and TIE
Unfortunately, the Fed cutting short term interest rates will not result in lower mortgage rates and may possibly cause them to increase. Home equity lines of credit are tied to the prime rate and will benefit as prime will most likely be dropped to 4%.
But the Fannie/Freddie 30 & 15 yr bond performance (past two days have been getting smoked) is what determines mortgage rates for most banks and non-portfolio lenders.
About X
Demand Softening for X
By Scott Rothbort
RealMoney Contributor
10/29/2008 7:39 AM EDT
URL: http://www.thestreet.com/p/rmoney/industrials/10444769.html
For Rothbort’s preview heading into the United States Steel conference call, please click here.
United States Steel (X) soared by 14% in trading today. This was in part due to a much better-than-expected earnings report and in part due to a huge rally in the U.S. markets. The quarter is backward-looking, however, and not forward-looking.
Automobile sales have ground to a halt. Durable goods production is declining as well. Europe’s economy is weakening at a faster pace than the U.S., thanks to poor monetary policy and the global credit policy.
The analysts also realize these conditions and have significantly lowered expectations for the fourth quarter, however, the 85% price decline in U.S. Steel’s stock price from the summer’s high of $196 to today’s intraday low of $28.43 is just not justified. Even if you cut 2008 EPS by half in 2009 — note that the Street has $15.81 for 2009 vs. $19.36 for 2008 — the stock is selling at just over 3 times forward earnings. On top of that, it carries a yield of $3.50.
Perhaps U.S. Steel is so hated that you have to buy it here.
The company reported EPS of $7.79 on net sales of $7.312 billion. Included in EPS was a 67-cent charge for employee signing bonuses and environmental remediation. In addition, foreign currency losses of 33 cents per share were incurred. Excluding those items, U.S. Steel earned $8.79.
Capacity utilization was lower than the second quarter as production was reduced in North America and Europe as customer order rates declined. Operating margins improved for both flat-rolled and tubular segments.
Flat-rolled prices increased by $130 per ton, to $907, on a sequential basis. Flat-rolled shipments were down due to seasonality and weakness in the auto industry. Global steel demand was stable for most of the quarter. Weakness in the U.S. dollar supplemented third-quarter North American flat-rolled shipments through slab sales and export opportunities. Lower imports and manageable inventory levels helped shipments and prices during the quarter.
The European segment’s operations were down dramatically on a sequential basis. Shipments declined as market conditions deteriorated and costs increased.
Operating income was $80 per ton on shipments of 519,000 tons. The average realized price rose to $2,390.
Cash flow from operations was $1.3 billion. Free cash flow after capex and dividend payments was $572 million. U.S. Steel ended the quarter with $793 million in cash, total liquidity of $2.1 billion, and 4.7 million shares remain available under the repurchase authorization.
Management expects a decline in fourth-quarter results — current consensus is for EPS of $4.76 — due to softening demand.
new set forming
wow, edit function!!! sweet!
mortgage guy… i know very little about that stuff. but last time i talked to my banker, they said its a good time to refi.
Hey Ass… i think shorting X while getting long other commodities like NOV, HK, and GMXR is a good idea. I’m bullish on an oil rebound heading into November. The music will come.
Gio – if you have a rate of 5.5%, would you refi to 6.5%? (current rate for excellent credit score w/ no points) Rates got the ‘homo hammer’ since last week. Rates (mortgage backed securities) have been almost as volatile as the stock market recently, so what your guy told you two weeks ago (or two days ago) may not be applicable today.
However, as mentioned earlier, HELOCs are doing well as prime is currently at 4.5%, soon to drop .5 – .75 bps?
A banker telling you it’s a good time to make him money…impossible!!!
p.s. i’m a fan
actually, i hated that banker. 6.5%… that’s high. all the good rates require a lot of points. Here in Hawaii, most likely you’d have to go for the 635k+ jumbo rates (?), since the median house prices is above that. that’s ridiculous too.
p.s. I’m short hawaii real estate
HELOCs will drop half point. .75 is unlikely, and i think the Fed wants to keep a quarter point in their pocket for the next selloff, or at least the next president.
great calls Gio. You remain both a pimp and a G.
Danny… how does your LoBV indicator work on a Fed-volatile induced day like this? I’m bringing back the quarter flip.