Remember when it was an Open Market System?

March 18, 2008 | Leave a Comment

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I’m extremely curious; why was JP Morgan/Chase granted the sole privilege of purchasing Bear Stearns for $2 per share.  Seems like a lot of this went on behind closed doors and occurred in such a quick manner that other market participants didn’t have a chance in Hades to respond.  While I haven’t fully crunched the numbers, it appears that their prime brokerage business alone would be worth $236 million at a low multiple, let alone any of the other profitable divisions and residual assets.  I’m pretty sure there are a lot of pissed off hedge fund managers that would have liked to been in on the bidding here.  And let’s not overlook the shareholders that got royally screwed here. 

A tip for the Fed: let the chips fall where they may.  The only cure for the mess that we’re in is to teach all the players involved some fiscal responsibility.

Weekly Economics & Investment Recap: 2.1.08

February 3, 2008 | Leave a Comment

Attached/linked please find And That’s The Week That Was…the Brounes & Associates market/economic commentary for the week ended February 1, 2008.  Continued weakness in housing (no problem).  Plunging consumer confidence (why worry?).  Growing unemployment (so what).  Poor earnings (big deal).  Record write-downs (no biggee).  After all, Dr. Bernanke has our backs.  Apparently, these days, the Fed has the tonic for all that ails the country as the 50 bps move (in the immediate aftermath of the surprising 75 bps cut last week) brought out the “high fives” among investors.  These days, every time Dr. B. so much as sneezes, he makes national news and the markets react.  (If only the State of the Union would have garnered similar ratings.)   Well, a weak January has come to a close and investors can now move on with hopes for bigger and better things.  (Now, from a market perspective, who are we supposed to root for in the Super Bowl again?) 

Coming up in the week ahead:  Factory Orders (Monday), ISM – Services (Tuesday), Consumer Credit (Friday)

And That’s The Week That Was: 1.11.08

January 14, 2008 | Leave a Comment

Attached/linked please find And That’s The Week That Was…the Brounes & Associates market/economic commentary for the week ended January 11, 2008.  Enough already!!!  Just when you thought news from the financial world could not get any worse…the staggering write-downs at major financial institutions continue to expand as do the needs for even more capital infusions from our neighbors in the Middle East and Asia.  (That short-term fix can’t be good long-term, can it?)  With more and more analysts predicting recession, Bernanke made a pretty forceful statement that the Fed stands prepared to act to avoid the “inevitable” downturn.  Bank of America took steps to become the nation’s largest mortgage lender (is that a good move these days?) and more rumors about financial services consolidations also surfaced.   The markets encountered some serious volatility, though ended the week on a very sour note.  By true definition, we are now experiencing a “correction” from the October highs (duh!).  Earnings season kicked off on a decent note (thanks Alcoa), though all eyes are on next week’s calendar as many of the major financial players (Merrill, Citi) are scheduled to report.  Virtually all predictions have been incredibly negative.  (Hopefully, we will experience a “sell the rumor, buy the fact.”) Coming up in the week ahead:  Retail Sales (Tuesday), PPI (Tuesday), CPI (Wednesday), Fed Beige Book (Wednesday), Housing Starts (Thursday), Leading Economic Indicators (Friday)

And That’s The Week That Was: 12.21.07

December 21, 2007 | Leave a Comment

Attached/linked please find And That’s The Week That Was…the Brounes & Associates market/economic commentary for the week ended December 21, 2007.  Is anyone out there?  Do folks work after market close on the day before Christmas Eve?  What if today was the start of the “Santa Claus rally” and nobody was around to notice?  These days, best practices among financial services companies seem to mean selling stakes to foreign state-owned funds.  Add Morgan Stanley and Merrill Lynch to that growing list.  (The motto, “Singapore’s Temasek Holdings Pte. Ltd. is bullish on America” has a nice ring to it.)   With investors sick of the ongoing mortgage negativity, many turned their attention to techs which may represent the last bastion of market strength (thanks Oracle).  Meanwhile, the Fed conducted two “impromptu” auctions that garnered some decent bank participation, and a few once proud and respected governmental officials threw in their “expert” analyses on the never-ending credit crisis.  Three days and counting until the holiday shopping season officially ends and analysts still have no clues about its overall success.  Here’s to hoping it’s a happy one for you and your families. 

Coming up in the week ahead:  Durable Goods (Thursday), Consumer Confidence (Thursday), Existing & New Home Sales (Friday)

And That’s The Week That Was: 12.14.07

December 14, 2007 | Leave a Comment

Attached/linked please find And That’s The Week That Was…the Brounes & Associates market/economic commentary for the week ended December 14, 2007.  So, which report was more widely read this week: the summary of the Fed’s policy meeting or the Mitchell report on steroid use in baseball?  While Dr. Bernanke probably had a better week than Roger Clemens and Andy Pettitte, he caught a bit of grief from investors who thought that a larger rate cut was in order.  As the week progressed, the major inflation releases brought new fears that the surge in oil prices is starting to work its way through other sectors of the economy.  The subprime debacle continued though one major investment firm seemed to benefit from others’ misfortunes.  Most equity indexes fell this week and suddenly those positive gains for the full year are no longer foregone conclusions (particularly among small-caps).  Likewise, fixed income securities lost value as investors tried to understand the ramification of a Fed liquidity plan.  Now, is HGH banned at the New York Stock Exchange? 

Coming up in the week ahead:  Housing Starts (Tuesday), GDP (Thursday), Personal Income/Spending (Friday)

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And That’s The Week That Was: 11.30.07

December 3, 2007 | Leave a Comment

Attached/linked please find And That’s The Week That Was…the Brounes & Associates market/economic commentary for the week ended November 30, 2007.  So what do Donald Kohn and the Abu Dhabi Investment Authority have in common (besides that fact that most people had not heard of either before the week began)?  Well, this week the Fed Vice Chair and the state-owned investment pool of Abu Dhabi became huge hits within the US investor community.  First, Citigroup received a much-needed injection of capital from its friends in the Middle East; and then a few well-time remarks by Kohn prompted Fed-watcher to predict another rate cut at the December meeting.  With oil prices falling from the previously high levels just below $100/barrel, equity investors rejoiced and sent the Dow into a few record-setting days.  The other indexes followed suits, though some sour news from techs (thanks Dell) sent the Nasdaq into a tailspin as the week came to a close.  Retailers got off to a solid start in the holiday season, though expectations are still mixed and a poor Sears earnings announcement did not help matters. 

Coming up in the week ahead:  ISM – Manu (Monday), Factory Orders (Wednesday), ISM – Services (Wednesday), Unemployment Rate (Friday), Nonfarm Payroll Additions (Friday) 

And That’s The Week That Was: 11.9.07

November 12, 2007 | Leave a Comment

Attached/linked please find And That’s The Week That Was…the Brounes & Associates market/economic commentary for the week ended November 9, 2007.  Is it over yet?  Please tell me it has just been a bad dream?  Why doesn’t the stock market close for Veterans Day?  Needless to say, shell-shocked investors departed Friday asking many of these same questions.  For the week, the Dow plummeted by over 550 points or about four percent.  The Nasdaq plunged over six percent and the S&P 500 dropped by over 3.5 percent.  The small-cap Russell 2000 index now stands in negative territory for the year.  More subprime-related write-downs combined with some earnings warnings and a few negative predictions by the Fed Chair…and the equity freefall was on.  Retailers grew more fearful about their upcoming holiday season as the earlier than normal discounting failed to produce any dividends thus far.  With everyone and their brothers (mothers, fathers, in-laws, dogs) shying away from stocks, fixed income (and gold) investors reaped the rewards.   Oil soared on the ongoing supply concerns (and speculation that it will soon surge passed $100/barrell and just keep going).  And, a few renown (at least, once renown) Wall Street execs started retirement a tad sooner than expected.  Enjoy the weekend (and consider staying home for Veterans Day as well). 

Coming up in the week ahead:  PPI (Wednesday), Retail Sales (Wednesday), CPI (Thursday), Industrial Production (Friday)

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And That’s The Week That Was: 11.2.07

November 5, 2007 | Leave a Comment

Attached/linked please find And That’s The Week That Was…the Brounes & Associates market/economic commentary for the week ended November 2, 2007.  Though Merrill’s Stanley O’Neal updated his résumé’ this week (any pointers, ex-Bear Stearns exec Warren Spector?), the unemployment and non-farm payroll releases showed that generally employees are weathering the subprime storm quite nicely (thus far).  In fact, a quick glance at the week’s news would seem to depict that things in the economy are buzzing along just fine.  GDP is growing; labor remains steady; and, as expected, the Fed cut rates by another 25 bps.  So, why are the markets (sans techs) plunging?  Well, apparently the worst is yet to come and the mortgage woes are nowhere close to ending.  And, apparently inflation will soon be rearing its ugly head and oil prices are nowhere close to capping out.  And, apparently the Fed’s job is done for now and they can go back to the speaking tour with “all talk and no action.”  And, apparently equity valuations are still too high and financial services companies will guide the overall markets more directly than techs.  And apparently, the clout of the bears exceeds that of the bulls these days (though, apparently, sentiment is changing by the week, day, hour, minute, second).

Coming up in the week ahead:  ISM – Services (Monday), Balance of Trade (Friday)
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Blogs as Indicators of Sentiment

October 24, 2007 | Leave a Comment

Our pal Finbar is reporting today that many banks are issuing policy statements asking employees to refrain from making comments on blogs.  I don’t know if this is limited to the UK  or also prevelent here in the States as well.  From talking to many friends and colleagues at big banks here, I understand that many employees are already restricted from visiting many social media type web sites such as Facebook.  This is too bad.

Finbar makes the keen insight that “Markets live on rumour, denial and false hopes and blogs are the best way to get a feel for the true market sentiment.”  I believe the same and I know there are a number of companies out there who are attempting to capture, qualify and quantify that sentiment to advantage.  Does any body know which firms these are?  I’d like to get a better handle on how they do this and how accurate their indicators are.

As Finbar points out,  ”the markets are happy at the moment but the blogs are not; market corrections take time.”
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And That’s The Week That Was: 10.12.07

October 14, 2007 | Leave a Comment

Attached/linked please find And That’s The Week That Was…the Brounes & Associates market/economic commentary for the week ended October 12, 2007.  Fed policy meeting minutes, earnings season, a surprise announcement by Wal-Mart, and a few new “gender-friendly” transaction…Yep, investors had plenty to digest this week.   Techs benefited from some favorable merger news, while small-cap issues lagged behind again.  Holiday shopping season approaches and most retailers have no idea what the future months may bring.  Fed Chair Bernanke is riding a sudden wave of popularity, though the “what have you done for me lately” attitude will be re-examined come October 31 and the next Fed meeting.  (Bear in mind, oil prices keep rising and inflation may not stay on the backburner forever.)  Until then, enjoy the love, Dr. B. 

Coming up in the week ahead:  CPI (Wednesday), Housing Starts (Wednesday), Fed Beige Books (Wednesday)

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