New lows!!
Dow at 7,552.29 down 444.99 (5.28%) Nasdaq at 1,316.12 Down 70.30 (5.07%) S&P 500 at 752.44 Down 54.14 (6.71%).
Crude briefly dipped below $50 a barrel today, continuing a steep correction that began in July. However, the broad economy or the market does not seem to be happy abouot it.. . A global recession next year looks probable, with both developed and emerging economies expected to slow. But the outlook for the world’s major economies becomes gloomier by the day. Yesterday’s US inflation data - which showed the sharpest fall in prices since records began - triggered fears of deflation. Higher than expected unemployment figures today added to negative sentiment (The U.S. Labor Department said that jobless claims were up 27,000 last week to 542,000, the most in 16 years). Investors are worried whether the stimulus plans and the bailout plans would work the way out if it..
The uncertainty surrounding the future of the big three Detroit car makers has been weighing on the market all week, and will continue to do so until the situation is clarified. Today for abrief moment there were headlines that the bipartisan group had come to an agreement and the market, every sector, every stock rallied. And when the actual news that the congres did not come to an definite rescue plan and that they are going to re-convene for another hearing of D3 sent the market tumbling again. The state of the market is very fragile (or may be its the wrong word), unpredictable, and it is more of a gamble sort than an fundamental driven investment.. I personally, am not ready to long any stock, and short either.. you never know when the market makes a + or - 1000 point move..
Problems in the CMBS market have also become worse. Fears of defaults are perhaps an even bigger factor. Two major JPM CMBS deals are reported to be close to default yday.. . The market is looking for names that have the biggest exposure to CMBS. Citi among all banks has the largest exposure to CMBS , and not surprisingly so, it got wacked. Today the investors turned toinsurers. Hartford Financial and Lincoln National, two life insurers with large commercial mortgage exposure have seen their spreads spiral upwards in recent days, and both are now trading upfront. Even property/casualty insurers with relatively strong capital positions, such as Chubb and Allstate, widened sharply on fears of investment losses. And the situation is going to get even worse from here..
Even guys at Goldman gave in to the volatility and the unpredictability of Oil prices. Today , in their Commodity note, GS said that they are closing all of their oil trading recommendations. Well, thats what you do when you are wrong consistently.. If you get it wrong every time you do it, you better stop doing it.!! :)
Is FED committing the same mistake that it is trying to rectify or regulate!! Courtesy Alea..
Fed balance sheet leverage: 50
Total assets: $2,076 billion
Capital: $41 billion
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These days a look at 52-week lows makes me feel nostalgic.. the same companies propping up again and again.. Todays nteworthy list contains:
F - Well, hanging by the prospect of a bailout..
GM - Same case as above. The next hearing is convened in December.
AAPl
GOOG - after all, online advertisement spending is not recession proof...
BAC, C, GE, GS and hell lot of other financials - same old story.. a fear of more skeletons in the closet!!
But if I were to be a long term investor, long term being 2-3 years, there are plpanty of investment oppurtunities around.. Of the companies I would buy:
3M COMPANY (MMM)
Apache Corp (APA)
AT&T (T)
Home Depot (HD)
Eli Lilly (LLY)
Walgreen (WAG)
Johnson Controls (JCI)
Citi (C) - if it is still kicking after 1-2 quarters..
General Electric (GE)
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On the persoanl front, lately I am being preoccupied with some trivial/nontrivial things. I hope things get sorted out soon..
I spoke with a friend of mine today, complaining about myself.. She patiently listened to the whole 30 odd min of conversation and after I ended it, she forwarded me the link of my last/lost blog.. Its been quite sometime since I read/updated it.. I had to stop it because carthiik had come to know that I smoke through one of my posts. Anyways, it was fun reading through my past!!
Song: "Dream On" - Aerosmith
Mood: Pathetic!!
Cigs: 1
Urge: 1
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