Thursday, November 20

DOW Set to Fall Further

Online Stock Trading - Art Hogan Changes Stance on Bottom of Current Market

Back in October Art Hogan of Jefferies, who is a guy who I listen to a lot, famously stuck his neck out and called the bottom on the DOW on CNBC at 7882.50. It was mentioned so often it became known on CNBC by Mark Haynes and Erin Burnett and others, as 'the Hogan bottom' or even 'Hogan's bottom'. Today, however, after Art Cashin yesterday, his stance seems to have changed. He didn't actually say the markets were going lower but he did say this would be a very tough couple of days and he was not at all confident the bottom would hold. The reason for the change is, he says, because the FED has changed the rules by changing the TARP and there is no clarity regarding the automakers bailout/bankruptcy.

So it would appear that there is a consensus that the Oct. 10 low of 7882 will be taken out. Art Hogan says we need some clarity from the FED, but there was at least one guy - Oscar Carboni at livewithoscar.com who has been saying all along that this market was going lower. He said days ago that the S&P would go to 807. He bases his analysis almost purely on the charts and indicators, though he does keep up with the news and the general pervading economic gloom.

Oscar has also said the S&P is headed towards 723 and probably 688 - if there is a rally it will be short-lived and he will be shorting it at the top.

So it looks like more downside pain for the time being and hopefully a turn up in the markets, possibly after the Thanksgiving holiday or maybe in the New Year. That's just a guess by the way, not a prediction.

People are also talking about breaking up Citigroup!

Tuesday, November 18

Art Cashin Backtracks on DOW Bottom?

Online Stock Trading - Art Cashin and Art Hogan

Art Cashin Backtracks on DOW Bottom ?

The bottom on the DOW on October 10 was 7882.50. When watching CNBC recently both Art Hogan and Art Cashin they both have been saying this is THE bottom. So much so in Art Hogan's case that CNCB insist on calling it 'the Hogan bottom' or 'Hogan's bottom'. He has also repeated on a number of occasions that he thinks the bottom is in. Art Cashin has also been saying that 7882 on October 10 was THE bottom. Today, however, did I notice him watering down his conviction?

He said the bounces since October 10 have been lower each time and he also made vague reference to the fact that if the markets went below 7882 we could see a 'trap door', implying that we might see a heavy sell-off. It was not clear what he meant but it seemed to me significant that for the first time he seems to be having doubts about what he has thus far been pretty confident was the bottom. He seemed to me to be hedging his bets, so that he could say 'see I did mention the possibility'.



There are people around that are not convinced that the bottom is in and say we could see 688 on the S&P - one of the more colourful and interesting is Oscar Carboni at livewithoscar.com. He sees a slow bottoming process with the next drop being the last (for a while) and a slow recovery over the next few months.

Personally my totally uninformed opinion is that we will go below the October 10 bottom, so that probably means we won't.


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Wednesday, November 12

Paulsons Permanent Revolution

Stocks and Shares - Paulson's Permanent Revolution

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"Permanent revolution" is a Marxist concept most closely associated with Leon Trotsky, to explain how "socialist revolutions could occur in societies that had not achieved advanced capitalism. " Well, Henry Paulson seems to be taking the idea a few revolutionary steps further.

In an extraordinary move the US treasury has jettisoned the plan it had to spend billions of dollars buying up toxic mortgage assets. It has decided instead to concentrate on helping the consumer credit sector.

This surprise shift in policy sent shares tumbling, Henry Paulson, who looked somewhat nervous and uneasy, announced that he had decided to abandon the idea of helping US banks by taking over toxic mortgage assets. This was the core of his $700bn “troubled assets relief program”, or Tarp.

"Our assessment at this time is that this is not the most effective way to use Tarp funds," Paulson said.

A large part of the $700 billion set aside for Tarp has already been allocated for buying stakes in the US’s largest banks. Paulson now says that he wants to develop a programme to ensure that credit is made available for buying products such as cars, and for student loans and credit cards.

"This market is currently in distress, costs of funding have skyrocketed and new issue activity has come to a halt. Today, the illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards. This is creating a heavy burden on the American people and reducing the number of jobs in our economy," he said.

As a result the treasury may invest in a more extensive range of companies, along with private shareholders.

The Tarp was not very popular when it was first introduced and only got through Congress after much criticism. The news of the change caused markets to fall around the world – the Dow fell more than 3% to 8420. The FTSE 100 fell 65 points to at 4182. The Dax and the CAC 40 also fell.

Analysts were generally pleased to see the changes made by Paulson's, although it surely casts doubt upon his original judgement.

"The argument for buying the bad debt was never a strong one to begin with," said Howard Simons at Bianco Research, "the problem is ... declining asset prices in the real estate area. Until you see housing prices stabilise you will continue to have a growing supply of bad loans. We have better use for the public money than buying assets or loans that should never have been created in the first place."

It now appears that it’s consumer spending that’s the problem not subprime mortgages. It seems to me we are entitled to ask « do they actually know what they are doing ? »

“I will never apologise for changing an approach or strategy when the facts change,” Paulson said. Cool, way to go Hank!

Speaking to the Financial Times one senior hedge fund manager said : “Removing the bad assets from the balance sheet is the only way to stop the losses. Injecting capital is just a temporary band-aid – and had the Tarp been executed when it was proposed, the huge mark to market losses of the last few weeks would have been avoided.”

Democrats have expressed concerns that banks were not using the money to encourage lending but instead were using it to rebuild their balance sheets and hand out bonuses to their incompetent executives and buddies.

Barney Frank, Chairman of the House financial services committee, has specifically said that ­Congress could block the release of the remaining $350 billion if banks do not lend the money more aggressively.

It still seems to me that the great and good at the top of the pile are running around like headless chickens. Viva la revolucion !

Press Share Tips

Stocks and Share - Newspaper Share Tips and Rumours

(The boring bits have been removed :-) )

THE TIMES
Tempus:

Buy Babcock on weakness –
Playtech best left on the shelf –
Penna Consulting has further to run

Comment:
Tesco's US dream dampened by meltdown (like so many others who tried to open in the US - Ed.)
Rumours of sandbanks ahead for Carnival
Tiddler to watch : Hargreaves Services

DAILY TELEGRAPH
Questor:

Buy Babcock –
Buy Aveva –
Hold- Jardine Lloyd Thompson

THE INDEPENDENT
Investment:

Hold VT Group

Hold Sci Entertainment –
Sell Aer Lingus

Comment:
Lonmin hit by GM fears

DAILY MAIL
Vodafone ceases empire building

DAILY EXPRESS
Dealers point out opportunities for growth for May Gurney
World Games deal rumoured for TSE Group.


Monday, November 10

Circuit City Goes Bankrupt

Stocks and Shares - Circuit City Files for Chapter 11 Protection


Circuit City, the second largest electronics retailer in the US has filed for Chapter 11 bankruptcy protection. Share in GM sank to their lowest level since 1946.

Evidence if ever there was that the credit crisis is now seriously affecting the rest of corporate America. Circuit City said it would dismiss 20% of its workforce.

The speed of the slowdown caught the retailer by surprise, as shoppers stopped spending. The major electronics companies pulled the plug on Circuit City by stopping its credit and insisting on payments up front.

People have stopped spending and the economy is not slowing down it has fallen off a cliff and will only 'slowdown' when it crashes into the ground, which is no longer far below.

Friday, November 7

Investors Chronicle and Newspaper Share Tips

Online Stock Trading - Investors Chronicle and Newspaper Share Tips

Shares to Watch

INVESTORS CHRONICLE

Tips:

Buy Cobham at 193p --
Buy Antofagasta 360p --
Buy British Energy 740p --
Buy Coffeeheaven International 17p

Sell Intercontinental Hotels at 522p
Sell Aveva at 800p

Updates:

Buy Nighthawk -- Trikona -- Prostrakan

Sell BSkyB -- XXI Century

Lidco fairly priced

Company News:

Buy Synergy Healthcare -- Sweet China -- FirstGroup -- BowLeven -- Probability -- BP Marsh and Partner -- Baqus

Sell Punch Taverns.


FINANCIAL TIMES

Toyota slashes profit forecast

Banking bonus clawbacks -- the movement to go after bonuses paid to those deemed responsible for the financial crisis is based on mindless retribution (ha ha -it's actually based on a desire to see the incompetent and arrogant *ankers hanging from the lampposts - but that's illegal - Ed. - people are being kicked out of their homes by the very bankers who caused this mess and who are sitting pretty with their millions)

Comment:

Imperial Energy up on deal approval hopes

THE TIMES

Tempus:

Take profits in RSA Insurance --
Buy International Power on weakness --
Hold Sportech


Comment:

Reports from the Middle East suggest that BT has signed a deal with Saudi Telecom

Tiddler to watch : China Medical Systems

DAILY TELEGRAPH

Questor
:

Avoid Man Group --
Avoid Millennium & Copthorne --
Hold RSA Insurance

THE INDEPENDENT

Investment

Segro a cautious hold --
Sell Tomkins --
Buy Latchways

Comment:

Morgan Stanley hammers Hammerson

Thursday, November 6

Trichet is Right Yet Again

The Stock Market - Trichet is Right Yet Again

Jean-Claude Trichet has just reduced interest rates by 50 basis points (unlike the BoE which shocked the world with a 150 point decrease) and he has done the right thing yet again ! How do I know he has? Because he's just been on CNBC again telling the world how what he has just done is exactly the right thing at this moment in time, which is excellent news.

For the last two years, every time I have heard Jean-Claude Trichet speak about interest rates and what he has decided to do, he has consistently said that what he has done has been correct - including when he increased interest rates just a few months ago ! The man is a genius, he never makes a mistake!

The obvious question is "Jean-Claude, if everything you have done has been right, how come European economies are in such a bleeding mess? Why are people losing their jobs in droves and being evicted from their homes?" The only conclusion possible is that that is what he wanted all along, which seems a bit strange to me, but then I'm not an economist.

UK Interest Rate Shocker

Stocks and Shares - Interest Rate Slashed 1.5% in the UK

Online Stock Trading

The Bank of England has shocked eeverybody by slashing interest rates by 1.5% in a dramatic attempt yet to revive an economy on the brink of recession or worse. The move has brought UK interest rates beneath those of the EU, which may have been the reason they made such a large move.

Official interest rates in the UK are now at 3%. The move has been welcomed by business leaders, but bankers being bankers there is no guarantee that they will reduce the rates they charge to their customers, not even the Northern Rock which is now run by the government.

Richard Lambert the Director General of the CBI said "This could help to ease conditions in the credit markets, and allow banks to pass the benefits on to their customers."

Today's 1.5% cut is the largest in the UK March 1981 when rates were cut by 2%. Rates are now at their lowest level since 1955.

The Bank of England said it made the move because of the "substantial risk" of undershooting its 2% inflation target as a sharp recession looms.

"Since mid-September, the global banking system has experienced its most serious disruption for almost a century," it said.

"While the measures taken... begun to ease the situation, the availability of credit to households and businesses is likely to remain restricted for some time."

The Bank's Monetary Policy Committee made its decision after figures showing house prices have slumped by 15% in the past year and car sales plummeted by more than 23% last month.
However, some mortgage lenders have said they are unlikely to pass on the full rate cut to borrowers as they still need to pay bonuses to their top executives.

The official reason is that Libor rates are still high.

The Government, which has given £37bn of taxpayers cash to banks to save them from their own incompetence, has demanded they pass on the rate cuts to small businesses and homeowners.

The MPC cut rates by 0.5% at the beginning of October but mortgages did not see any benefit of that rate cut.

Shares Magazine and Newspaper Tips

Stocks and Shares : Shares Magazine and Newspaper Shares Tips

Shares to Watch

SHARES MAGAZINE
Plays:

Sell Marks & Spencer at 242.5p

Updates:
Sell Reckitt Benckiser -- Close out on Intercontinental Hotels and Goals Soccer Centres
Buy AstraZeneca, London Stock Exchange and BAT
Sell Engel East European and Reckitt Benckiser

Sector Report:
Buy Reed Elsevier and United Business Media --

Sell Johnston Press.

FINANCIAL TIMES
UK newspapers revenues will fall sharply in 2009 as advertisers reduce spending

Comment:
Gold shines as a long-term asset
Rolls-Royce down after 'sell' advice from UBS
Game Group up on US bid rumours
Rumours that Cape has won a Royal Navy contract
Sci Entertainment rumoured to be a takeover target for Take 2 of US
Regen Therapeutics up on Alzheimer treatment hopes

THE TIMES
Tempus:

Too early to be buying ITV –
Pace a speculative buy –
Findel - avoid

Comment:
Times MPC urges full 1 point cut in interest rates
Cattles may be close to receiving a banking licence

Tiddler to watch : Louisiana Oil & Gas - rumours of a £2 million share placing

DAILY TELEGRAPH
Questor:

Buy FirstGroup –
Hold ITV –
Sell Rok

THE INDEPENDENT
Investment:

Hold Cobham –
Sell Liberty International –
Hold Interserve

Outlook:
Interest rate cuts are UK's only weapon in the fight against recession -- Dollar weakness may undermine Obama's best laid plans

Comment:
Game Group may be GameStop Corp bid target

DAILY MAIL
Yell Group struggling

DAILY EXPRESS
Old Mutual down on funding fears
Playtech benefits from Acquisition hopes
Amerisur – gossip that it isbeing considered for acquisition or JV involving licences in Paraguay