General Electric revises 3Q, full-year outlook (AP)
It’s a good thing they’re on the no short list, cause GE has just lowered its quarterly and full year outlook. The predictable reason: gyrations in the financial market. The good news though, GE says it’s committed to maintaining its AAA credit rating — so presumably it won’t be reluctant to raise capital at the first signs of rain.
Buffett Drove Hard Bargain With Goldman (WSJ)
Oh gosh, the Buffett the mythology lives on: “For six months, as the credit crisis deepened, billionaire investor Warren Buffett turned away a string of Wall Street firms that came hat in hand looking for help. On Tuesday, Mr. Buffett says, he was sitting with his feet on his desk in Omaha, drinking a Cherry Coke and munching on mixed nuts, when he got an unusually candid call from a Goldman Sachs Group Inc. investment banker.” Really? Like, really? He was actually drinking Cherry Coke, his beloved soft drink, right when they called? It’s only surprising that he wasn’t eating See’s candies as well, but then that would’ve just been too ridiculous.
Initial Thoughts On MySpace Music (AVC)
Fred Wilson’s been advocating music sharing and social discvoery services for long than anyone, so he’s as good a person as any to give his impression of the new MySpace Music, which just launched last night — going head to head with Apple, and other big music sites. We saw a demo, it looks potentially interesting, but obviously we’ll need to sing our teeth in it some more, to know.
Marc Faber: 14% S&P 500 Rally Post-Paulson (Paul Kedrosky)
It sounds like Mr. Gloom, Boom, Doom, is predicting a short end to the gloomb, a decent-sized boom… but then a return to doom (that’s always how it is in th end). Should the Paulson plan go through (and it probably will… now that McCain is coming back to Washington, the Dems want to rush it through so it can’t look like he’s taking credit), he’s predicting a 14 percent S&P 500 rally. Not sure where he pulls that number out of, but doesn’t really matter? Doom lies just beyond that.
Short-Sale Ban Fails to Save Ambac, Farmer Mac From 50% Plunge (Bloomberg)
Yep, even with the no shorting rule, some financials have been getting absolutely crushed, Farmer Mac chief among them. It’s just the curse of the Macs really. Nothing can save ‘em. Ambac though, we were sure they were strong and can’t believe that the stock might actually be falling on fundamentals.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
During the month of September, panicked selling by actual shareholders has had a far larger impact on the share prices of these distressed financial stocks than legitimate short selling.
Likewise, the impact of naked short selling has been much less than the impact of legitimate short selling. Naked short selling generally occurs with day-trading, and the net effect on the stock is zero by day’s end.
Take a look at short interest levels as they changed over time if you don’t believe me.
In actuality, it was the fear-mongering by the press regarding “evil short sellers” and their concerted efforts to ruin financial companies that caused the very large amount of panicked selling this month in the financials.
The irony of the situation is palpable.
TED Spread jumps again, 3.11%
When is this 14% rally scheduled to begin please?
Clusterstock!!!
Found this gem:
“Ten-year credit default swaps on Treasury debt widened to about 30 basis points…”
Why would anybody buy this stuff?
The concept only works if the issuer of this CDS has much higher ratings and stability than the U.S. government, and there is no such entity, of which I am aware.
If U.S. government debt defaults, that’s the ballgame, folks. We get a full system re-boot, complete with gold at $3000 and 3 bucks to buy one Euro.
Bess,
Comments on Buffett’s comments halfway through the WSJ article cited by Joe? To make it easy, the paragraph starts “Buffett recalls thinking…”
@4…i agree. Buy gold.
Those CDSs I suppose are like a 5000-1 bet in Vegas…
US CDS is a relative value play, it’s also used as a hedge. I’m sure there are more uses. Yes buying protection outright is silly, but people rarely have a one asset portfolio. That’s the only thing I can come up with anyway
McCain is “rushing” back to Washington for grandstanding.
Any fast track legislation is pretty much the responsibility of the leadership of both houses and the relevant committees. McCain is not part of that leadership, neither Obama.
Lobbyists can’t lobby 535 individuals in such a short time. They concentrate their monumental efforts in the leadership and is up to the leadership to bring everyone else on board. So McCain and Obama can fly around the country because in this matter they are followers, not leaders.
Of course, after the election the story changes.
No. 8 – “Of course, after the election the story changes.”
Are you sure about that?
Ambac and AGM fell from real sellers?
Simple: make it illegal to sell!!
Where’s Ayn Rand when you need her? Dead like our industry/economy.
I am struck at how ridiculous it is to have two candidates blasting the greed on Wall Street while they both have been flying around the country and getting paid by the tax payers (six-figures no less) and neither of them has been around to cast a vote (their job) since April. At least the WS guys & gals showed up to work.
It was pitiful to watch Faber report the severe decline in his net worth. The CNBC talking heads worked so hard pumping the GE stock, I imagine they cannot believe what is happening to them. Although they probably sold two years ago when they told everyone else to sell. Those were the days when they were into telling the truth.
So whose mixed nuts was Buffett munching on?
If the ban on shorts hadn’t happened, then by Friday morning both GS and MS would have been comatose and on life support. WTF is the matter with you idiots?
Ambac was in deep trouble well before last week anyway.
Idiots.
Ambac and the monolines are the next big crisis. The rating agencies are just holding their tongues until the bailout passes.
(#1 & # 4 here)
Hey idiot @ 14:
That was part of my point, but you obviously didn’t get it.
The short selling ban had to be issued, not because of the validity of the “evil short seller” premise, but because of the very large number of people that *believed* in the “evil short seller” premise propagated by any number of people in the media and otherwise.
To curb the fear, the (false) scapegoat needed to be vanquished, the actual validity didn’t matter, just that a large number of people (including scared shareholders) would be calmed by the apparent vanquishing.
Get it?
Funny how that works, huh?
@ 14 – Did it ever occur to you that GS and MS may have been in trouble before this whole short ban also? Hello! This credit crisis didn’t just start last week. It’s not like GS and MS are innocent bystanders in this whole ordeal.
- idiot.
@1 Remember the “Where we stand on program trading” adds in the late 80′s, as if program trading caused the crash of ’87. And the subsequent program trading collars put in place.
The SEC is going after the public’s perception of the problem not the root cause.
The psychology of the markets is a mess.
No one trust anyone when they speak about the economy and no one trust anyone when they speak within the government.
Despite the bailout, until the trust returns, nothing will improve.
The psychology of the markets is a mess.
No one trusts anyone when they speak about the economy and no one trust anyone when they speak within the government.
Despite the bailout, until the trust returns, nothing will improve.
@18
Yes, I do remember.
However, I do believe (and did at the time) that program trading was actually the leading cause of the Crash in ’87.
The next cause of a terrible bear market would be if they outlawed all speculation or imposed heavy taxation on transactions (as is proposed in the current edition of Portfolio magazine).
This would result in far more volatility and far less liquidity. The heterogeneity of the market participant pool would be greatly decreased, causing higher much correlation of trading intent, thus causing much more violent market behavior in the long run.
Why is Bill Gross recommending buying at 65 cents on the dollar?
Link to Portfolio article
“Reining in the Speculators”
by Jesse Eisinger
http://www.portfolio.com/views/columns/wall-street/2008/09/18/Advocating-Tax-on-Stock-Trading
Will the bailout improve anything? Interesting read:
New World (dis)order
http://ftalphaville.ft.com/blog/2008/09/25/16335/new-world-disorder/?source=rss
Bess,
You should really put the Portfolio article on its own post.
Crazy stuff.
What are you equity longs doing? Up 220/40/22 on bailout chatter, while the TED spread is as bad as it was on 9/17 and you are getting awful contraction numbers in the economic news.
Government isn’t going to fix this.
@1/4/16
Thank you.
30 year mortgage blew out 30 basis points in a week.
KbW5b4 Looking forward to reading more. Great article.Thanks Again. Really Cool.