Tag Archives: BlackRock

Marc Faber Expects Market Sell Off On QE2 Announcement

With vacuum tubes expecting QE next Wednesday to come anywhere between $500 billion a $10 trillion, it falls upon Marc Faber to naturally take the other side of the bet, who, in this interview with Margaret Brennan, tells the impeccably coiffed Bloomberg anchor that instead of inciting the mother of all flash dashes and hitting the BlackRock 12 month target of Dow 36,000, Mr. Faber instead anticipates that the FED decision “could disappoint investors and may prompt a correction in US stocks.”

In response to Margaret’s question if size does in fact matter, Faber responds that anything under a trillion will “disappoint.”

And with Goldman now throwing out bogeys as high as $2-4 trillion, it is almost inevitable that a sell the news type day will be virtual certainty on mid-term election day.

“The markets are stretched: weak dollar, strong PMs and strong equities – I think a correction is overdue. But I wouldn’t think that a bear market is around the corner.”

In fact the opposite: “Maybe we will have a crack up boom in stocks and commodities like between the end of 1999 and March 2000 when the markets went up very strongly,” Faber says.

Marc “Gloom-And-Doom” Faber is once again mostly bearish on bonds (and cash), due to his long-running expectation that inflation, whether modest or hyper, will make all fixed paper investments lose value very fast.

As for specific equity sectors Faber highlights agricultural commodities and “I continue to recommend the accumulation of precious metals, whereby I think they are overdue for some kind of a correction here and then we’ll get the next move probably next year and then thereafter.”

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Credits: The Price of Accountability

Remember President Barack Obama’s pompous “BP-Will-Be-Held-Accountable”-speech? The president’s remarks on the oil spill dragged BP’s  share price right to the bottom and pushed the CDS’ straight through the roof. However, when The White House this week announced that US banks will be held accountable for any foreclosure violations, there was hardly any reaction in the financial markets at all.

“Whether investors chalked it up to part of mid-term election campaigning or simply could not discern the market impact is debatable.”

Otis Casey


Earlier this week, market price action seemed to suggest that investors were struggling to properly define the extent and impact of the potential foreclosure violations case. By the end of the week, however, I think they’ve started to see a more clear – not pretty – picture.

Bank of America, who had halted foreclosures in all 50 states, signalled on Tuesday that is was time to resume the foreclosure process. As for their process, CEO Brian Moynihan simply said; “Without question we’re doing it right.”

The day before Citigroup stated that their process was “sound”.

“While no one expected that the uncertainty in litigation risk could just disappear overnight, it at least appeared to be moderating a bit,” credit analyst Otis Casey writes in the weekly credit wrap from Markit Financial Information.

“There seemed to be a perception that the majority of the headlines would be read in the rear-view mirror – at least,” Otis Casey writes, but point out: “That sentiment was short-lived.”

WILL BE HELD ACCOUNTABLE?

Reminiscent of President Barack Obama’s “BP Will Be Held Accountable” speech, the White House announced this week that banks would be held accountable for any foreclosure violations.

This was not surprising, considering that a key part of the President’s communication strategy has been to side with “Main Street” against “Wall Street.”

“Whether investors chalked it up to part of mid-term election campaigning or simply could not discern the market impact is debatable, in any case the announcement did not have anywhere near the same market moving impact on CDS spreads the way that the BP speech did last spring on BP’s CDS spreads,” Casey notes.

YOU BUY – WE PAY

“Then some of the biggest investors in the world decided to react like it was “Wall Street vs Wall Street” (nevermind
that PIMCO headquarters is in Newport Beach),” Casey goes on.

Reports surfaced that indicated PIMCO, BlackRock and the Federal Reserve Bank of New York are looking for a way to force  Bank of America to repurchase bad mortgages that is a part of some $47 billion in bonds, packaged by its Countrywide Financial unit.

Other investors are expected to join this group.

“Furthermore, the tactic is expected to be repeated in other cases where investors believe that the quality of mortgages may have been misrepresented,” Casey adds.

CDS spreads on the major mortgage lending banks widened significantly on the news and set a negative tone for the corporate credit markets generally.

However, by the week’s end, the CDS spreads for the major US banks were tighter than where they were a week ago.

Wells Fargo reported record earnings despite lower revenues.

While Bank of America reported a third quarter loss, adjusted results beat analysts’ estimates.

Earnings results in general have given support in the last two sessions, which has helped improve sentiment and again shifted focus away from the foreclosure issues – at least in the news headlines.

MONEY CAN BE VERY EXPENSIVE

On the European side,  a bit more clarity emerged on the subordinated debt of Anglo Irish Bank.

The bank announced on Thursday that it was offering to exchange up to approximately 1.6 billion euro principal amount outstanding subordinated debt for new euro-denominated floating rate notes, due 2011, at an effective price of 20% of face value.

A separate offer for 300 million GBP, callable, subordinated notes at 5% of face value was also made.

“The exchange offers are “voluntary” but if holders choose not to participate, they could receive as little as 0.01 euro per 1,000 euro of principal amount,” Otis Casey writes.

The latest quotes are 10 points and 68 points upfront, for senior and subordinated protection, respectively.

Related by The Swapper:

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Filed under International Econnomic Politics, National Economic Politics

Wednesday's Market Action As Predicted By Jim Cramer

Just in case the consensus was that nobody could have possibly predicted Wednesday’s market action, here is Jim Cramer… proving the consensus was spot on.

From CNBC the day before:

“The “FED said good things – Cramer says.: “Buy.”

Vodpod videos no longer available.

And here are some other recommendations that received the recommendation of not only Cramer, but some  guy from BlackRock:

“In stocks, Cramer endorsed BlackRock Chief Equity Strategist Bob Doll’s buy call on Intel [INTC 19.39 -0.43 (-2.17%) ] under $20. While there has been some concern from analysts about falling PC demand, the Mad Money host said investors should be “kind of OK” with INTC as long as the company doesn’t preannounce a shortfall within the next two weeks.”

“Will someone please advise what is the ticker for a 400:1 leveraged INTC short ETF?,” Tyler Durden at Zero Hedge comments.

DOW JONES INDUS. AVG 10,378.83 -265.42 -2.49%
S&P 500 INDEX 1,089.47 -31.59 -2.82%
NASDAQ COMPOSITE INDEX 2,208.63 -68.54 -3.01%

Now, I wonder what Jon Stewart at the Daily Show will make of this….

Remember this?

Cramer Annotated

The famous Wall Street artist, Geoffrey Raymond, is about to put the final touch on his latest painting: “Cramer Naked Short”.

As usual he takes his portraits to the street and let people passing by write their comments on it.

Only after four days of soliciting random and assorted commentary, the prevailing sentiment on CNBC’s permabullish stock-picker is certainly starting to shine through.

Here’s the result (so far):

"Cramer Naked Short" by Geoffrey Raymond (click to enlarge)

"Cramer Naked Short" by Geoffrey Raymond (click to enlarge)

“Do you recognize this numerical progression: 0, 1, 1, 2, 3, 5, 8, 13 etc.?,” Geoffrey Raymond writes on his homepage.

“Some guy named Lenny Fibonacci came up with it. He also has a kind of a swirl, which looks like this:”

“There’s a good bit of suggestion amongst the Commentaries that Cramer’s nipples are Fibonacci Spirals. This is not the case, although the fact remains that the F-word appears a number of times on the face of the canvas. Go figure.”

Here’s more famous portraits by Geoffrey Raymond.

Related by the Econotwist:

Jim Cramer’s Web Company Investigated By SEC

Jim Rogers Says CNBC Is A PR Agency

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