Politics – 24/7 Wall St.

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Risks in Geithner’s Call For More Lending

U.S. Treasury Secretary Timothy Geithner spoke this morning and has effectively called for banks which have received government bail-out funds to boost their lending activities. Geithner noted that a lack of lending and strict limits to credit might act as a buffer against a continued recovery.

The Obama administration is trying to come up with new ways to turn the credit back on for small businesses. It is no wonder that Goldman Sachs Group (NYSE: GS) launched its initiative this morning. The firm’s public relations and financial relations campaign is a $500 million 10,000 Small Businesses initiative aimed at fostering small business growth and job-creation for up to 10,000 small businesses. The company plans to offer business education, mentorships, business networks, and capital.

Geithner noted that banks need “to be working with us, not against recovery.” He also noted that it was taxpayers saving the banks rather than their great intelligence and efforts that has led to the return of bank earnings, and he said banks have some responsibility and are obliged to assist in the recovery of communities. But, Geithner also defended banking sector earnings. It has been noted how lending standards have tightened month after month. Where this gets interesting though is in evaluating credit risks and interpolating that data for risks ahead.

Posted on: November 18, 2009 – 12:16 pm in Banking, Economy, Financial Stocks, Politics, Regulation, GS

Long-Bond Auction Conundrum

Earlier today came the results from a highly awaited $16 billion 30-Year Treasury bond auction… the famed ‘Long Bond.’ The 30-Year yield went out to buyers at 4.469%, just over 0.04% or 4 basis-points, higher than what the when-issued bill had been trading at. In short, this was not exactly a high-demand auction. The bid-to-cover ratio was 2.26. While not awful, this is far from a successful auction for the long-end of the yield curve.
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Posted on: November 12, 2009 – 2:00 pm in Bonds, Economy, Politics

Corzine as Bank of America CEO? (GS, BAC)

Jon Corzine recently lost the gubernatorial race in New Jersey. He is also a very wealthy Wall Streeter that is a former disciple of Goldman Sachs Group Inc. (NYSE: GS). He is also a democrat that is very friendly with the Obama administration. And now the strange rumor mill is getting stranger….

Charlie Gasparino on CNBC just threw out the idea that Corzine could potentially be in the running for the CEO role at Bank of America Corp. (NYSE: BAC) as the replacement for Ken Lewis….. after he touted his book again. Gasparino noted that he asked Bank of America about this and the ‘rumor’ was not denied but was given a ‘no comment’ answer which Gasparino expanded upon.

In this new world under the ‘new normal’ it seems that anything is possible.

JON C. OGG

Posted on: November 12, 2009 – 10:28 am in Banking, Financial Stocks, Management Change, Politics, Rumors, Turnarounds, BAC, GS

Did Obama Further Temper Unemployment Expectations?

Today’s market weakness is being attributed to a myriad of issues, with most profit taking being attributed to added valuation after huge gains not meeting up to the current economy. But there have been several other issues to consider with President Obama today saying that the economic gains are not enough and that more is needed… “We are just not where we need to be yet. We’ve got a long way to go, “ said Obama. But more specifically, Obama noted that job losses are likely to continue and called the job growth, or lack thereof, distressing.

Posted on: November 2, 2009 – 3:03 pm in Economy, Labor & Unions, Politics

The Smart Grid Surge Hitting Home (ITRI, COMV, ELON, ED, CEG, DUK, FPL, NVE, POM, SO)

We are seeing at least some significant moves from the company’s who have announced that they are grant recipients under part of the $3.4 billion Smart Grid pledge from the Obama administration day. We are seeing the big moves in the companies which traders and investors believe will receive the direct orders from the utilities, and are even seeing gains down in the utilities and power companies who are getting direct grants.

Itron Inc. (NASDAQ: ITRI), for smart metering systems, was up 3% at $59.56 with a $2.38 billion market cap. Comverge, Inc. (NASDAQ: COMV), for peaking and base load capacity solutions to electric utilities, operators, and electric markets, is up 10% at $12.95 with a $286 million market cap. Echelon Corporation (NASDAQ: ELON) is up 7% at $14.70 with a $598 million market cap.
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Posted on: October 27, 2009 – 3:37 pm in Green Biz, Politics, Utilities, CEG, COMV, DUK, ED, ELON, FPL, ITRI, NVE, POM, SO

The Fannie-Freddie Equity Conundrum (FNM, FRE)

It is no secret that things could be much better at Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). But the last week or so has re-highlighted just how dire the situation is for these government sponsored entities and perhaps more importantly for the common shareholders. Both Freddie Mac and Fannie Mae were forced into federal conservatorship last year by Uncle Sam.

We have taken an in-depth look here at the situation and the past to get a feel for the future of these companies (GSE’s). If you parse through the data and watch what has been happening in Washington D.C. of late, there is the clear reminder that these emperors have no clothes on. In the world of Star Trek, these companies stockholders may be facing a Kobayashi Maru scenario.
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Posted on: October 25, 2009 – 7:45 am in Accounting, Bankruptcy, Bonds, Compensation, Corporate Governance, Cult Stock, Editor's Picks, Financial Stocks, Housing, Law, Politics, Regulation, Turnarounds, FNM, FRE

Brazil Olympic Stock Plays Feeling Lofty (EWZ, BRF, BZF, BBD, BRP, BTM, BAK, PDA, EBR, ABV, ELP, SID, CPL, ERJ, GFA, GGB, GOL, ITUB, NETC, PBR, TAM, TNE, TSP, VALE, VIV, VCP)

Investing into emerging markets where the Olympics are headed is supposed to be a safe bet, in theory. Despite a flat close for stocks in the U.S. on Friday, Brazilian shares rose almost across the board Friday after last week’s decision to send the 2016 Summer Olympics to Rio de Janeiro. It was huge for the iShares MSCI Brazil (NYSE: EWZ) gaining 1.9% to $67.30 ($26.64 to $68.50 is the 52-week range) and the Market Vectors Brazil Small-Cap ETF (NYSE: BRF) rose 1.5% to $39.76 (its 52-week range is $23.68 to $40.42). The WisdomTree Dreyfus Brazilian Real (NYSE: BZF) currency ETF rose 0.54% to $25.89.

Outside of the ETF investing, this story becomes one where stocks may still have great growth prospects. But if you are a value investor or one who does not like to chase stocks when they are close to yearly or all-time highs, then there is a problem. So many of these stocks are hitting highs or are so close that you have to wonder just how much upside is there. Using 52-week highs and all-time highs is of course not the only metric for valuations, but you might be surprised as you read through a summary of the major Brazilian stock performances on Friday alone. Throw in the Brazilian Real currency versus the US Dollar component as these are all ADRs and it adds in yet another element.

Banco Bradesco S.A. (NYSE: BBD) is the huge Brazilian bank and its shares rose 1.8% at $19.94, with a 52-week trading range of $7.40 to $20.20 and an all-time high north of $24.00.

Brasil Telecom Participacoes S.A (NYSE: BRP) is a telecom player in Brazil and its shares rose 2.9% to $52.33, with a 52-week trading range of $22.00 to $53.49 with highs in 2007 and 2008 hitting north of $80.00.

Brasil Telecom S.A. (NYSE: BTM) is a telecommunications services provider whose shares rose 3.3% to $26.28 and its 52-week trading range is $9.49 to $26.55 and it was in the mid-$30’s in early 2008.

Posted on: October 5, 2009 – 7:01 am in ADR, Commodities, ETF, Economy, Emerging Markets, Entertainment, Financial Stocks, HI/LOW, Infrastructure, Large Cap Stocks, Politics, ABV, BAK, BBD, BRF, BRP, BTM, BZF, CPL, EBR, ELP, ERJ, EWZ, GFA, GGB, GOL, ITUB, NETC, PBR, PDA, SID, TAM, TNE, TSP, VALE, VCP, VIV

Direct Stimulus Spending Hits $100 Billion Milestone

by Christopher Flavelle, ProPublica

Federal agencies have now spent more than $100 billion on contracts, grants, loans, and entitlements, according to Recovery.gov, the site mandated by Congress to track stimulus spending. Combined with the $62.5 billion in tax relief that’s already out the door, total outlays are slightly more than 20 percent of the stimulus package passed by Congress in February.

The $100-billion milestone is a symbolic one. Moreover, as we’ve noted in this space before, the pace of stimulus spending has declined in recent months, from about $1.3 billion daily in its first 100 days to about $570 million a day in September, as large block grants to states gave way to smaller (and slower) spending projects. So while it took seven months for federal agencies to spend their first $100 billion, the next $100 billion may be a longer time coming.

Posted on: September 29, 2009 – 4:42 am in Politics

FOMC Preview: The End of Free Money Coming Soon

The FOMC is expected to give us a decision on interest rates this Wednesday, September 23 around 2:15 PM EST. One tool we prefer to use for determining the direction of Fed Funds is long standing 30-Day Fed Fund Futures contracts traded on the CME. We are seeing a mix of several events culminating here over the question of whether the target Fed Funds should be at this 0.00% to 0.25% or near-0% as it has been now that things are getting less-bad and even getting better. The notion here is that the announcement for the Fed Funds target will remain as it has been. And contrary to all of the other noise, this might not be the last FOMC statement without a formal exit from the Federal Reserve from its free money policy. But there is also the notion that rates could get higher and faster than what the Fed Funds Futures are predicting.
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Posted on: September 20, 2009 – 11:06 am in Bonds, Economy, Options, Politics

The Unusual Suspects (GT, CTB, S, DT, LOPE, BBY, ORCL, PALM, GLD, CSX, UNP, RGR)

We have a whole host of stocks and sectors to watch throughout this coming week. We have Goodyear Tire & Rubber Co. (NYSE: GT) and Cooper Tire & Rubber Co. (NYSE: CTB) to watch on some tariff news. Sprint Nextel Corp. (NYSE: S) will likely be a key mover on Monday on potential merger reports. Grand Canyon Education Inc. (NASDAQ: LOPE) is supposed to have a secondary offering early this week. Earnings are coming from Best Buy Co. (NYSE: BBY), Oracle Corp. (NASDAQ: ORCL), Palm, Inc. (NASDAQ: PALM) and others. $1,000.00 gold is going to be key for the SPDR Gold Shares (NYSE: GLD). CSX Corp. (NYSE: CSX), Union Pacific Corp. (NYSE: UNP), and Sturm, Ruger & Co. Inc. (NYSE: RGR) are all likely suspects to watch for catch-up trading based on news outside of those companies. More details are provided on each of these. Stay tuned this week.
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Posted on: September 13, 2009 – 12:27 pm in Autos, Calendar, Commodities, Earnings, Editor's Picks, Mergers and Buy Outs, Politics, Regulation, Rumors, Secondary Offering, Short Interest, The Week, Trading Alert, Transports, BBY, CSX, CTB, DT, GLD, GT, LOPE, ORCL, PALM, RGR, S, UNP

First Solar’s New CEO High Compensation Package (FSLR, HON, GE)

We previously noted how First Solar, Inc. (NASDAQ: FSLR) had scored on its new CEO. Robert J. Gillette is coming out of Honeywell International Inc. (NYSE: HON) to take over for founder Michael Ahearn and gets a seat on the board of directors. An SEC filing last night showed that Mr. Gillette is coming on board with a very high compensation package. Considering he was CEO of Honeywell Aerospace, you know there was no way he’d be coming over on the cheap. But now in the world of picking over pay at financial institutions, we want to highlight the package at America’s #1 independent solar player. We are not compensation bashers, but we want to see if the have-nots and disparaged in America complain about about a high pay package for an alternative energy leader. That is for you to decide after looking at the package here.
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Posted on: September 11, 2009 – 10:43 am in Alternative Energy, Compensation, Green Biz, Management Change, Politics, Regulation, FSLR

Still No Death Blow for Insurers (AET, HUM, UNH)

The Obama speech to a joint session of Congress last night did not exactly deliver the death blow to health insurers. It also did not give the insurers the keys to the palace. Despite the call for an exchange and the notion of a public option still being included, there was a backdoor left open for this to be in regional markets where there is limited competition. There are other potential workarounds that need to be met, and the real wild card is going to be over new entrants in pre-existing conditions. So far we are seeing a positive move in top health insurers like Aetna Inc. (NYSE: AET), Humana Inc. (NYSE: HUM), and UnitedHealth Group, Inc. (NYSE: UNH).
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Posted on: September 10, 2009 – 10:31 am in Healthcare, Medical, Politics, AET, HUM, UNH

24/7 Wall St. TV: 81 Million Visitors To Government Websites

Eighty-one million people visited federal government websites in July which is about four out of ten people on the Internet in America. There are several notable trends when the traffic is broken down by government department. Most of these indicate that people are better off spending their time elsewhere on the Internet. Visits to the Nasa.gov site are up 88%, which is a sign people don’t have enough to do with their days. Read More »

Posted on: September 9, 2009 – 10:24 am in Politics, TV

Bill Gross Sees Tough Times For America

Bill Gross is co-CIO for arguably the most influential bond management firm in the U.S. PIMCO is the biggest ax in the bond market of the bond management firms, and Gross’ outlook for what lies ahead for America is leaning toward a stark one. He is looking for slow growth and more government involvement. He notes in his September outlook that things have changed from the past and will continue to change for maybe a decade or two. And his scenario of ‘the new normal’ is a boring one…. economies grow very slowly and profits are relatively static.
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Posted on: September 1, 2009 – 1:11 pm in Activist Investor, Economy, Emerging Markets, Politics

China’s Insatiable Energy Deals Only Growing (PTR, XOM, CVX, RDS-B, SNP, CEO, MRO)

On Monday, the Shanghai Composite went under 2,700 and between Monday and Tuesday is back to lows not seen since May’s end. Technically, it is back in bear market territory now that it has come off 20% from the highs. But there is one single aspect here which may be the silver lining for China. As asset prices sink, it is easier for China and its central government to buy more and more of whatever it wants on the cheap. While the notion that China’s deal making for key assets is not new, the pace at which China is locking in energy supply deals seems to only be increasing. And it is effectively doing it without a single handshake taking place on US soil and without US oil.

After reviewing some of the public deals that China has been making, it is rather obvious that its appetite to buy and secure more sources of oil and gas is not ending whether China is technically in the 2007 to 2009 recession or not. If you have what many Westerners believe is a 50-year plan, then overextended Americans, lower commodity prices, and cheaper stocks of key infrastructure and energy players just makes it easier to buy up oil and gas for all of the energy needed to power the infrastructure for over 1.3 billion people. China has already spent billions in several bigger public deals and it seems as though the size and the pace is only rising.
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Posted on: September 1, 2009 – 6:01 am in China, Editor's Picks, Emerging Markets, Infrastructure, Mergers and Buy Outs, Oil & Gas, Politics

Lockerbie And Crude Ethics

The Times of London claims that people within the British government turned over convicted Lockerbie bombing participant Abdelbaset Ali Mohmed al-Megrahi to Libya as part of an attempt to secure a major oil deal. The Times reported “Gordon Brown’s government made the decision after discussions between Libya and BP over a multi-million-pound oil exploration deal had hit difficulties.” The heinousness of the Lockerbie bombing gives the apparent “trade” a special level of abhorrence, but it is not the first time that the interests of profits have outweighed better ethics. Read More »

Posted on: August 31, 2009 – 4:50 am in Editor's Picks, Oil & Gas, Politics, BP, SNP, XOM

Why The Stimulus Program Is Slow Going: 2,200 Applications For Broadband Funds

Part of the $787 billion stimulus package is $28 billion set aside to improve the nation’s broadband infrastructure.

According to USA Today, some of the applications are 500 pages long. The government has to sort through applications by telecom firms, cable companies, state and local governments, schools and libraries. And, that is just a partial list. Read More »

Posted on: August 28, 2009 – 6:01 am in Economy, Politics

24/7 Wall St. TV: Postal Layoffs Won’t Help

The US Postal Service may be able to drive up the national rate of unemployment all on its own. The USPS will offer 30,000 workers buyouts. It has 650,000 workers, so that number is not as significant as it may seem at first.

The Postal Service expects to lose $7 billion this fiscal year. It believes that the buyouts could save $500 million, which is not nearly enough to solve its financial problems. Read More »

Posted on: August 26, 2009 – 2:07 pm in Politics, TV

The CBO Budget Outlook And The Problem Of Revenue

The Congressional Budget Office and The White House both offered appraisals of the federal deficit for the next 10 years. Each analysis yielded alarming numbers. The CBO figures estimated that the total red ink for the period will be $7.1 trillion. That is based on federal spending that accelerates 67% from 2008 to 2019 when it reaches almost $5 trillion. Revenue moves up even faster, 68%, which should be expected. It is rare that either the government or private enterprises set budgets which are not based on optimism about growing revenue. Read More »

Posted on: August 26, 2009 – 4:41 am in Economy, Editor's Picks, Politics

GM’s Board Goes On Offense

GM has been trying to sell Opel for months and has talked to nearly every company in the world that has any interest in owning an auto firm and can prove it can make a modest down payment. GM was losing so much cash that it put the unit on the market as it headed into Chapter 11. There was no guarantee GM had a future, even as it entered the court room. The US government owned 70% of the car company once the proceedings were over and American tax payers had put up $50 billion for that privilege. Read More »

Posted on: August 25, 2009 – 4:39 am in Autos, Labor & Unions, Politics

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