A German newspaper reported yesterday that the IMF will not support Greece anymore. In an effort to contain damage to equities the IMF made a statement saying that they will continue to support Greece.
Comments »Monthly Archives: July 2012
HUSSMAN: The Rare ‘Exhaustion Syndrome’ Is Signaling A Major Sell-Off
“Fund manager John Hussman sees ominous signs in the market right now that a big decline could be right around the corner.
His latest weekly market comment discusses extraordinary market strains:
One of the immediate issues I have with stocks here is the “exhaustion syndrome” (see Goat Rodeo) that has reemerged in recent weeks. Examining the rare past instances of this syndrome, in 1961, 1987, 2000, and early-2008 among others, the key feature is a breakdown in measures of market action from an overvalued, overbought extreme, followed by a recovery rally toward the prior high and accompanied by earnings yields below their level of 6-months earlier. Normally, the recovery carries the market back to the prior “line” of support that surrounds the peak. The emergence of this exhaustion syndrome may seem benign or unimportant, but it has historically been an important precursor of major market declines. Given what are already significant challenges for both the economy and for the prospective return/risk tradeoff in stocks, my concerns about the potential for deep market losses remain elevated.”
Comments »European Banks Are Fleeing The United States In Droves
“Since the financial crisis, European bank assets in the United States have fallen an incredible $540 billion dollars from $1.51 trillion to $973 billion.
The FT reports that a combination of write downs, sales of loans and businesses, bank failures, and higher capital ratio requirements have pushed U.S. assets held by Eurozone banks to their lowest levels since 2005.
The drop is most pronounced in countries that have suffered severe banking crises. Ireland’s banks, for example, have seen their U.S. assets decline from 130 billion in 2008 to just $3.6 billion as of March.”
Comments »Roubini: Add U.S. to List of Doomed Economies
“Nouriel Roubini picked the website “Project Syndicate: A World of Ideas” as the forum for his latest pessimistic comments about economies around the world. In this new case, the United States was his target:
Comments »Even this year, the consensus got it wrong, expecting a recovery to above-trend annual GDP growth — faster than 3%. But the first-half growth rate looks set to come in closer to 1.5% at best, even below 2011’s dismal 1.7%. And now, after getting the first half of 2012 wrong, many are repeating the fairy tale that a combination of lower oil prices, rising auto sales, recovering house prices, and a resurgence of US manufacturing will boost growth in the second half of the year and fuel above-potential growth by 2013.”
$GWR to Buy $RA for $1.39 Billion
“Railroad operator Genesee & Wyoming Inc. (NYSE: GWR) announced this morning that it would acquire RailAmerica Inc. (NYSE: RA) for $27.50 per share in an all-cash deal worth about $1.39 billion. Genesee & Wyoming (GWI) will refinance existing debt and add about $2 billion in new debt to finance the deal. ”
Comments »Gapping Up and Down This Morning
Gapping up
NXY +52.4%, PHG +6.3%, TLB +2.3%, CHK +2%, DGIT +0.9%,
KBH +3%, LMNX +2.7% ,
Gapping down
PSTI -8%, TEF -6.6%, DB -6.2%, E -5%, BBL -3.7%, RIO -3.4%, TTM -3.2%,
BP -3%, BHP -2.9%, MT -2.9%, CS -2.8%, BAC -2.5%, SDRL -2.2%, TOT -2%,
RDS.A -1.9%, GDX -1.7%, GSK -1.6%, GOLD -1.4%, SLV -1.1%, JPM -1%, GLD -0.8%,
the world
Comments »In Play and On the Wires
Nexen Who? Cnooc Goes After Recently Stumbling Global Player
“After CNOOC Ltd. said early Monday it had agreed to pay more than $15 billion for Canada’s Nexen Inc., many people—even in the oil industry—are asking: Who is Nexen?
In fact, the company is a relatively big fish in the ocean of mostly smaller oil plays active in Canada’s west. Calgary-based, the international oil and gas producer has operations in Western Canada, the Gulf of Mexico, the North Sea and in offshore West Africa. Nexen ranks ninth on the list of largest independent Canadian oil and gas producers by market cap, before the deal was announced.”
Comments »$MCD Misses Quarterly Estimates for the First Time Since 2005
Forex problems helped McDonald’s miss earnings for the first time since 2005.
Comments »US Poverty on Track to Rise to Highest Since 1960s
“WASHINGTON (AP) — The ranks of America’s poor are on track to climb to levels unseen in nearly half a century, erasing gains from the war on poverty in the 1960s amid a weak economy and fraying government safety net.
Census figures for 2011 will be released this fall in the critical weeks ahead of the November elections.
The Associated Press surveyed more than a dozen economists, think tanks and academics, both nonpartisan and those with known liberal or conservative leanings, and found a broad consensus: The official poverty rate will rise from 15.1 percent in 2010, climbing as high as 15.7 percent. Several predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965.”
Comments »Spanish Bank Short Selling Ban Causes Euro to Break 1.21
Debt Woes Renew Concerns Over the Grecian Formula
Concerns over the Greek government splintering have been renewed as Spain’s borrowing costs.
Comments »Valencia Spain Increases Investor Fear and Speculation That More Regional Governments Will Need Bailout Funds
“The prospect of more Spanish regional governments following Valencia in asking for aid sent the cost of insuring the nation’s debt to a record.
Credit-default swaps on Spain jumped as much as 31 basis points to 636, according to data compiled by Bloomberg, and were at 632 at 1:30 p.m. in London. A basis point on a swap protecting 10 million euros ($12.1 million) of debt from default for five years is equivalent to 1,000 euros a year.”
Comments »Oil Dances With the Homo Hammer
Concerns over global growth has taken oil down to the mat this morning. WTI is down $3 and Brent is down over $4
Comments »The Euro Challenges 1.21 Support
After hitting 1.21 a little over a week ago the Euro bounced nicely. The bounce has faded and the Euro is now testing this support.
Comments »FLASH: Spain Announces a Three Month Short Selling Ban on Bank Stocks
Spain is the center of turmoil this morning as their 10 year treasury hits 7.5%. As a measure to control equity markets Spain has just announced that short selling on bank stocks is in effect for the next three months….developing
Comments »Safe Haven Countries See Treasury Yields Fall to Record Lows
Concerns of global slowdown have investors pouring money into what they believe is safe haven investments. Investors are bidding prices higher and yields down for many countries.
Comments »The Aussie and Kiwi Dollars Fall in Risk Off Trade
As with equities, many currencies have sold off deeply since last Friday in risk off trading fashion.
Comments »A Chinese Central Bank Adviser Warns of More Slowdown Due to European Debt Woes
“China’s stocks fell, dragging the benchmark index down to the lowest level since March 2009, after a central bank adviser said economic growth will slow this quarter and as Europe’s crisis worsened the outlook for exports.”
Comments »Japan Cuts China Growth Estimates and Sees a Global Slowdown
“economic outlook was cut by Japan, its biggest Asian trading partner, as the Shanghai Composite Index fell to its lowest level in three years on concern about faltering domestic demand and export growth.
“The slowdown in the global economy is becoming more widespread,” the Cabinet Office said in a monthly report released in Tokyo today. Song Guoqing, an academic member of a monetary policy committee, said July 21 that China’s expansion may be 7.4 percent, the least since the first quarter 2009.”
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