Now is a good time to ask if the market is resilient for forward looking abilities, easy low volume manipulation, or in the throws of a last hopes/ last ditch attempt of rallying out of technically negative territory.Comments »
Monthly Archives: September 2011
So U.S. futures opened to the downside as the Euro had a second fall and gold is trending higher; all setting the tone in Asia. Markets were expecting something from Geithner’s visit with EU finance ministers.
Glad i sold most of my position @ Friday’s open…but hey a schizoid market can do anything; like making me eat my words by lunch tomorrow….that’s an early pre-planned lunch break.
More eurozone drama, just in time for emmys night.
S&P futs open down 16.Comments »
President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.
With a special joint Congressional committee starting work to reach a bipartisan budget deal by late November, the proposal adds a new and populist feature to Mr. Obama’s effort to raise the political pressure on Republicans to agree to higher revenues from the wealthy in return for Democrats’ support of future cuts from Medicare and Medicaid.
Mr. Obama, in a bit of political salesmanship, will call his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.
Mr. Obama will not specify a rate or other details, and it is unclear how much revenue his plan would raise. But his idea of a millionaires’ minimum tax will be prominent in the broad plan for long-term deficit reduction that he will outline at the White House on Monday.
Mr. Obama’s proposal is certain to draw opposition from Republicans, who have staunchly opposed raising taxes on the affluent because, they say, it would discourage investment. It could also invite scrutiny from some economists who have disputed Mr. Buffett’s assertion that the megarich pay a lower tax rate over all. Mr. Buffett’s critics say many of the rich actually make more from wages than from investments.Comments »
Swiss bank UBS on Sunday increased the amount it said it had lost on rogue trades to $2.3 billion and gave details of how a trader concealed his risk exposure by creating fictitious positions in its systems.
UBS stunned markets on Thursday when announcing unauthorized trades had lost it some $2 billion. London trader Kweku Adoboli was charged on Friday with fraud and false accounting dating back to 2008.
“The loss resulted from unauthorized speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months,” UBS said in a statement.
“The loss arising from this matter is $2.3 billion. As previously stated, no client positions were affected.”
The fraud is a disaster for the reputation of Switzerland’s biggest bank.
UBS has only just recovered from the financial crisis when it had to be bailed out by the state, prompting calls for its top managers to step down and for its investment bank to be split off into a separate unit.
UBS also said its board of directors had set up a committee to be chaired by independent director David Sidwell, former chief financial officer at Morgan Stanley, to conduct an independent investigation into the trades and their relation to the bank’s control systems.
The bank said it had covered the risk resulting from the unauthorized trades, and its equities business was again operating normally within previously defined risk limits.
It said the trader had concealed the fact the index future trades violated UBS risk limits by allegedly executing fictitious cash exchange-traded fund (ETFs) positions in the bank’s system.
ETFs are index funds listed on an exchange and can be traded just like regular stocks. They try to replicate index performances and offer lower costs than actively managed funds.
Regulators have warned about risks from some of the more complex forms of ETFs.Comments »
Bernanke, Europe hold key to aiding rally
Wall Street hopes for more Fed action and clear signs European leaders will follow through on their new urgency to tackle the euro zone debt crisis if U.S. stocks are to build on their best week since early July.
Investors expect the Federal Reserve to take steps to pull down long-term interest rates when policymakers meet on Tuesday and Wednesday to help revive the persistently weak U.S. economy.
Fed Chairman Ben Bernanke, speaking in Jackson Hole, Wyoming, on August 26, said the Fed’s Open Market Committee would meet for two days in September instead of the scheduled one day to discuss ways to boost the recovery.
But even with expectations of more intervention to boost the economy, investors will keep a close eye on developments in Europe.
Any lack of progress or backsliding on efforts to get the currency bloc’s fiscal house in order will renew worries the crisis could seriously damage the world financial system and major economies.
“The Fed is really going to dominate next week,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
“But the market has been trying to work its way higher here, trying to feel if maybe the European thing won’t cascade out of control.”
Treasury Secretary Timothy Geithner, at a meeting of euro zone finance ministers in Poland on Friday, urged them to leverage their bailout fund to better tackle the debt crisis, but there was no agreement on what steps to take.
While the Standard & Poor’s 500 has been moving upward over the past week, the benchmark index has been stuck in roughly a 100-point range over the last six weeks.
It is likely to run into resistance near the 50-day moving average of about 1,228, with analysts also pointing to the 1,250 level as the next significant hurdle.
“This is really a consolidation phase, which is normal after the kind of early August swoon that we had. So far this trading range is developing in a very positive and healthy way,” said Gail Dudack, chief investment strategist at Dudack Research Group in New York.
“Longer term, the market is looking better but we are getting very close to that resistance at 1,250 which would be pretty surprising if we can break above that at this early juncture. It could take a little more time, people shouldn’t be disappointed.”
The week’s economic calendar includes reports on the beleaguered housing market along with weekly initial jobless benefits claims.
Housing “is dead and it will stay dead, and I don’t expect anything out of unemployment either,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
“The biggest event is Bernanke.”
Companies due to post earnings next week include homebuilder Lennar Corp, Nike Inc, General Mills Inc as well as technology companies Adobe Systems, Red Hat Inc and Oracle Corp.
FedEx Corp, the No. 2 U.S. package delivery company, which is seen as a proxy for how the economy is performing, is also scheduled to report quarterly results.
Though earnings have managed to hold up in the face of a lackluster recovery, analysts worry this might not last if the financial system suffered the shock of a Greek debt default.
But while many feel Bernanke has telegraphed the plans for the Fed meeting, the euro zone debt crisis remains an uncertainty that could knock the market lower.
“It’s absolutely the wild card because Europe’s problems may be similar to what we saw in 2008, but they are much more difficult to deal with because country debt is far more difficult to deal with than mortgage debt,” Dudack said.
She added that having so many countries that are part of a committee trying to solve the problem only added to the complications.Comments »
General Motors Co. and the United Auto Workers, sobered by the government bailoutand bankruptcy just two years ago, agreed on a new four-year contract without the public acrimony or strikes that have plagued the talks in the past.
Details weren’t released, but the union said the deal reached late Friday includes some of its major goals, including improvements in profit-sharing, promises of new jobs and better health care benefits. The deal will serve as a template for contracts that still must be negotiated with Chrysler Group LLC and Ford Motor Co., setting the pay and benefits for 112,500 U.S. auto workers. It also will set the bar for pay and benefits at nonunion auto companies and other industries across the country.Comments »