Over the first half of the day, the market struggled to find a direction, and the Senate Banking Committe meeting provided it,,.. Down, ofcourse..
Anways, he bailout plan came under fire by both Democrats and Republicans in todays Senate meeting. Paulson and Ben spent as much time listing out the loop holes in the plan, as pushing the plan. Both Paul and Ben debated that the financial markets are in quite fragile condition and without this action they will surely get worse. THough the argument seems pretty assuring, both the parties voiced wide range doubts over the plan. Senate expressed its concerns over whether the plan would work or not, and how burdened the tax payer be. Besides, Senate wanted more tranparency/details over the plan and would want to additional add-ons, like an equity stake in the companies, changes to the banruptcy law, Cut down executive compensaton and modifying the loans underlying the mortgages. For Ben and Paul, this seems to be the last and best resort and their desperation is voiced in Paulson's comments - "You've not heard me say there's not risk to the taxpayer. You've heard me say there's less risk to the taxpayer with this course. What the cost to the taxpayers will ultimately be will depend upon how the economy recovers, what happens in the housing market and how we execute this program."
My opinion, long term (or even short term) the consequences of the Fed and Tresaury actions would weigh heavy on the economy and the financial stability. The ban of short selling on 900 odd financial stocks was intened to stop the price fall, but on the flip side, it will reduce the liquidity of the markets whihc eventually might lower the prices even further. Proof: Bloomberg has cretaed an Index with the short-sale-restricted stocks.. On the day of the enactment, the index shot up by 11%, and the next day (yday) the index was down 6%, and today it was down 0.25%. And the bailout- though in short term this might seem to stabilize the markets, long term it might create a high interest rate, higer tax, and higher inflation economy.
In energy sector, Chesapeake, a major oil and gasplayer, has decided to cut down on its capital expenditures by 3.2Bn over the next 10 quarters. CEO expected the rig count to drop from 400 to 200.. Months back when Nat gas was trading at $13 range, the yields supported the drilling activity, but now as the proces came down to $7 range, and the crdit crunch - it makes sense that the drilling would be cut down to half.
Goog unvieled its first Andriod based phone.. priced at about $179, selling through TMobile, available in stores from 29th Sep. The phone named G1 (not Gphone), was manufactured by HTC and looks pretty appealing. I read some of the reviews; weighing either way. Though it might seem like Goog is competitng with AAPL in hand set market, it infact is pushing its platform and betting on mobile traffic rather than encroach on the market share of AAPL. Not good for AAPL.
Buffet is going to invest 5Bn dollars in GS. Did Buffet, a famous value investor, make his call for a bottom in financials? Tomw the financials are going to rally, hopefully. Also, I was reading this interesting snippet from MS analyst report. It seems Investment banks (LEH, GS, MS ) were (should be) agressive in taking the write offs, where as BIG bank holding companies (C, JPM, BAC) are conservative in wrting off losses. Now, as GS and MS are deemed to be bank holding companies, I guess, all the write offs (about 4Bn for GS) are going to reverse.. and that might also drive the financials up.
WAMU - downgraded to "E" (I never knew such a rating existed) and yet breathing.. It is up for sale since two weeks or so, but no one seems to want the whole on WM.
Well,, tahts as much I can write for today.. Pretty tired tweaking Bloomberg on my lappie. The application is freakin robust and HUGE!!! Will take forever to get my hands around it.. I guess...
Anways, he bailout plan came under fire by both Democrats and Republicans in todays Senate meeting. Paulson and Ben spent as much time listing out the loop holes in the plan, as pushing the plan. Both Paul and Ben debated that the financial markets are in quite fragile condition and without this action they will surely get worse. THough the argument seems pretty assuring, both the parties voiced wide range doubts over the plan. Senate expressed its concerns over whether the plan would work or not, and how burdened the tax payer be. Besides, Senate wanted more tranparency/details over the plan and would want to additional add-ons, like an equity stake in the companies, changes to the banruptcy law, Cut down executive compensaton and modifying the loans underlying the mortgages. For Ben and Paul, this seems to be the last and best resort and their desperation is voiced in Paulson's comments - "You've not heard me say there's not risk to the taxpayer. You've heard me say there's less risk to the taxpayer with this course. What the cost to the taxpayers will ultimately be will depend upon how the economy recovers, what happens in the housing market and how we execute this program."
My opinion, long term (or even short term) the consequences of the Fed and Tresaury actions would weigh heavy on the economy and the financial stability. The ban of short selling on 900 odd financial stocks was intened to stop the price fall, but on the flip side, it will reduce the liquidity of the markets whihc eventually might lower the prices even further. Proof: Bloomberg has cretaed an Index with the short-sale-restricted stocks.. On the day of the enactment, the index shot up by 11%, and the next day (yday) the index was down 6%, and today it was down 0.25%. And the bailout- though in short term this might seem to stabilize the markets, long term it might create a high interest rate, higer tax, and higher inflation economy.
In energy sector, Chesapeake, a major oil and gasplayer, has decided to cut down on its capital expenditures by 3.2Bn over the next 10 quarters. CEO expected the rig count to drop from 400 to 200.. Months back when Nat gas was trading at $13 range, the yields supported the drilling activity, but now as the proces came down to $7 range, and the crdit crunch - it makes sense that the drilling would be cut down to half.
Goog unvieled its first Andriod based phone.. priced at about $179, selling through TMobile, available in stores from 29th Sep. The phone named G1 (not Gphone), was manufactured by HTC and looks pretty appealing. I read some of the reviews; weighing either way. Though it might seem like Goog is competitng with AAPL in hand set market, it infact is pushing its platform and betting on mobile traffic rather than encroach on the market share of AAPL. Not good for AAPL.
Buffet is going to invest 5Bn dollars in GS. Did Buffet, a famous value investor, make his call for a bottom in financials? Tomw the financials are going to rally, hopefully. Also, I was reading this interesting snippet from MS analyst report. It seems Investment banks (LEH, GS, MS ) were (should be) agressive in taking the write offs, where as BIG bank holding companies (C, JPM, BAC) are conservative in wrting off losses. Now, as GS and MS are deemed to be bank holding companies, I guess, all the write offs (about 4Bn for GS) are going to reverse.. and that might also drive the financials up.
WAMU - downgraded to "E" (I never knew such a rating existed) and yet breathing.. It is up for sale since two weeks or so, but no one seems to want the whole on WM.
Well,, tahts as much I can write for today.. Pretty tired tweaking Bloomberg on my lappie. The application is freakin robust and HUGE!!! Will take forever to get my hands around it.. I guess...
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