CNBC is reporting that merger talks between Citigroup (C) and Wachovia (WB) have advanced, with a meeting scheduled today for Citi executives. The major deciding factor is the status of $120B in bad debts for Wachovia, with Citi looking for help from the Fed as part of the bailout plan to sell the troubled assets. Wachovia has $400B in deposits, making it the sixth largest bank in the U.S. by assets with a strong presence in the East and Southeast regions.
An overwhelming 78-12 vote by the Senate sends a massive $634B spending bill to President Bush, who is expected to sign the measure before the government's fiscal year-end comes to a close on Tuesday. The bill contains provisions for $25B in subsidized loans for automakers in addition to removing a ban on offshore drilling on the Atlantic and Pacific coasts. Participating companies from the auto industry would not have to begin repayment of the loans for five years and the proceeds are meant to be used in the d
My favorite pick for a quick trade on the massive Fed bad debt bailout plan is Wachovia (WB) as the stock has traded with extreme volatility over the past three months and could easily double from my purchase price today of $10 per share this morning once legislators come to an agreement. If you believe legislators will reach an agreement soon on a bailout, this is a good trade as it will allow Wachovia to jettison bad mortgage debts associated with its Golden West purchase. Also, Wachovia was one of the biggest gainers last wee
The financial sector and overall stock market reversed course in late-day trading on Thursday as word spread that U.S. Treasury Secretary Hank Paulson would brief Congressional leaders on a proposal to create a government entity in the near-term which would take illiquid, bad mortgage debts off the books of banks in a similar fashion to the Resolution Trust [RTC] during the savings and loan crisis of nearly two decades ago. The plan may also involve protection of money market assets in a
Top 5 Companies by Largest 1-Year Stock Price Decline
After a brief, one-day rally in the financial sector following the Fannie Mae (FNM) and Freddie Mac (FRE) bailout on Sunday, companies such as Lehman Brothers (LEH) and Washington Mutual (WM) have lost over 47% and 57% of their market value, respectively, compared to a 5% loss in the Financial Sector SPDR (XLF) over the last five trading days. In contrast, the UltraShort Financials ProShares ETF (SKF) is up 6% in this ti
Top 5 Companies by Largest 1-Year Stock Price Decline
The accompanying tables present an overview of a U.S. Regional Bank Short Index of 102 companies between market caps of $500 million to $20 billion. The two worst-performing stocks were both down over 80% in the past year, including Washington Mutual (WM) and National City (NCC). The 40 lowest-rated companies in the index posted a loss of 47.6% over the past year, which outpac
Wall Street's top ranked bank analyst, Tom Brown, says, "bank stocks have bottomed." "If you wait for the good news, you'll wait too long," says Brown of Bankstocks.com.
Brown believes many bank stocks are selling at rock bottom prices, calling them "extraordinarily undervalued." Brown thinks we are at the beginning of "the greatest financial stock bull market in our lifetime." He writes, "the bears have things all backwards. By the time their wish list happens, the stocks will be zooming"
On the 16th of July, Lone Peak Asset Management initiated a buy recommendation on the S&P 500 when it was at 1,214. Since then, the index has risen 7% to 1,305 and we have exited the trade. The mantra of this bear market is 'buy the dips and sell the rips'; buy and hold has been a losing strategy.
The recent rally was the result of an oversold technical condition, government action to strengthen Fannie Mae (FNM) and Freddie Mac (FRE), rules against naked short selling, better than expected earnings and a dramatic decline in oil prices. If there is one lesson to have learned from 2008, it's
2 more banks have gone under. More mortgage resets coming. Recent bump due to Fed's action on naked shorting of 19 financials and housing bill. But this crisis is far from over. Many foreign national banks own FRE/FNM CDO's. Fed had to step in, else the world would lose confidence in the US financial system.
I expressed concern recently when Investors Business Daily declared that the market was in correction. I respectfully disagreed. I suggested to one of my clients that it must have been interesting to be sitting at that table and coming to that conclusion, as it was highly debatable. In the end, the strength of the NASDAQ, mostly immune from rising fuel prices and deteriorating credit concerns, was the tell. So, it pleased me immensely Thursday when IBD declared that the uptrend is alive and kicking.
Folks, Thursday was a big, big day. ABK and MBI got the downgrades, and it impacted the
5/14 - "...this time around we wanted to wait for actual results, as opposed to relying on analysts’ predictions, to mark a turning point for Financials. Now with about 80% of S&P 500 firms having reported Q1 2008 earnings, it looks as if we can make that claim with some confidence: aggregate profits of firms in XLF will be about $12 billion, down a whopping 79% versus Q1 2007, but nonetheless a big improvement over the previous quarter, Q4 2007, which saw aggregate losses of some $21 billion (Figure 1).
These results include all write-offs announced to-date, and although the level of prof...
I’ll be the first to admit that we’re not first to press with that storyline. However, one of the lessons we learned (the hard way) during the recent credit crunch is that analysts’ forecasts of earnings estimates can be quite unreliable, especially at inflexion points. For instance, last year consensus estimates for firms in the Financial Select Sector SPDR (XLF) were rising through mid-summer, well after the sub-prime story started unraveling.
So this time around we wanted to wait for actual results, as opposed to relying on analysts’ predictions, to mark a turning point for Financials.
Recap of CNBC's Fast Money, Tuesday May 6. Click on a stock ticker for more analysis.
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Market Overview: Burlington Northern Santa Fe (BNI), Google (GOOG)
Friday’s selloff saw the Dow stumble 1.22%, the S &P fall 0.8% and the Nasdaq trading down 0.3%. Guy Adami says the market hasn’t bottomed yet, but continues to like railroad stocks like BNI as well as natural gas. Najarian noted Google’s spectacular $40 drop and said the tech horsemen need a rest. Jeff Macke wouldn’t buy stocks unless they fall on a panic. The group looked at the Volatility Index and Najarian said when there
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