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ARTICLES, EDITORIALS, CULTURE AND NEWS

Category: Stock Market Commentary

  • Market agents focused on the 2yr-10yr T-note spread and are missing half (or more) of the story. It’s like trying to fix your brakes by looking under the hood at your engine.In today’s world we use SOFR (Secured Overnight Funding Rate) instead of the short-term T-bill. The 30-year T-bond is the same security reference Laurent…

  • David R. Kotok DT 2.0 used a formula to calculate tariffs based primarily on the trade deficit between the US and each country as a trading partner. The formula converts the trade deficit into a percentage. That is how it gets to tariff rates with a floor of 10% and no ceiling. Essentially, the larger…

  • "If you can keep your head when all about you are losing theirs … If you can wait and not be tired by waiting … If you can think — and not make thoughts your aim … If you can trust yourself when all men doubt you … Yours is the Earth and everything that's…

  • A financial regulator issues a warning on A.I. Gary Gensler, the chairman of the S.E.C., has been studying the potential consequences of artificial intelligence for years. The recent proliferation of generative A.I. tools like ChatGPT has demonstrated that the technology is set to transform business and society. Mr. Gensler outlined some of his biggest concerns…

  • By Felix Martin June 16, 20237:41 AM EDTUpdated a day ago LONDON, June 16 (Reuters Breakingviews) – Already reeling from the “Razzlekhan” scandal, punch-drunk from the collapse of TerraUSD, and floored by the implosion of FTX, cryptocurrencies were finally dealt a knockout blow last week by the U.S. Securities and Exchange Commission. The watchdog brought separate charges against…

  • 1. NEVER, EVER ADD TO A LOSING POSITION… NOT EVER!: Adding to losing trades eventually leads to ruin. All great market humiliations are first preceded by a person… or a group… doing so, such as the Nobel Laureates of Long Term Capital Management or Nick Leeson of Barings or Sam Bankman-Fried! 2. TRADE LIKE A…

  • GUANGZHOU, China — China’s Inner Mongolia region plans to ban new cryptocurrency mining projects and shut down existing activity in a bid to cut down on energy-consumption. Bitcoin mining consumes an estimated 128.84 terrawatt-hour per year of energy, more than entire countries such as Ukraine and Argentina, according to the Cambridge Bitcoin Electricity Consumption Index,…

  • What is the blockchain? Blockchain is one of the biggest buzzwords in technology right now. But what is it? And why are all your friends and family talking about it? Let’s start from the beginning. The first major application of blockchain technology was bitcoin which was released in 2009. Bitcoin is a cryptocurrency and the…

  •                                      Sandy Weill was the guest host on CNBC’s Squawk Box this morning.  Sandy( My former boss, when I was a Vice President at Salomon Smith Barney) used this opportunity to rewrite his legacy.  In 1999, Sandy was the main force behind repealing Glass Steagall and forming the modern financial supermarket, which combines all aspects…

  • How Boaz Weinstein and Hedge Funds Outsmarted JPMorgan The New York Times | 27 May 2012 | 02:02 AM ET Boaz Weinstein didn’t know it, but he had just hooked the London Whale.  It was last November, and Mr. Weinstein, a wunderkind of the New York hedge fund world, had spied something strange across the…

  • Are our stock, bond and money market investments vulnerable to another financial crisis?  Can high frequency traders jeopardize the integrity of our financial markets?  Is a systemic risk still present in the markets?  Too big to fail was a major issue that emerged during the financial crisis of 2008 and 2009.  Through consolidation the major banks…

  •   Can you imagine if European lawmakers went on a five week vacation during a financial crisis, the outcry that would come from our lawmakers in Washington would be deafening.  The fact that they left town one day after passing an abysmal deficit reduction package and have made no attempt to return to Washington to pass…

  •  August 5, 2011 The Dow Jones Averages are trading between plus 170 and minus 140.  Goldman Sachs comes out with an announcement mid-day downgrading U.S. growth to the 2-21/2% range.  They also give the economy a one in three chance of falling into another recession.  Neither of these projections is particularly new.  We have heard these exact projections before. …

  •   I don't want to alienate my Republican brothers and sisters, but c'mon, this is not the party of Lincoln and Roosevelt.  An elite group of right wing broadcasters, including Limbaugh, Beck and O'Reilly, who while counting themselves as members of the highest wage earners in the country( Limbaugh was paid $54M in 2009*), initiate attacks on unions,…

  •   If you thought the return in your money market fund was low, read this.  I have had cash balances in the  Bank of America Cash Reserves Daily Fund for some time.  The rate of return was very low and eventually reached nothing.  I was just informed that that this fund has been charging me .75%…

  •   SEPTEMBER 20 MONDAY THIS DAY I IN HISTORY 1873: Panic closes NYSE On this day in 1873, the New York Stock Exchange closed for ten days. The closure was enacted two days after one of the nation's most prominent brokerage firms, Jones Cooke & Co., declared bankruptcy. The Panic of 1873, as it was…

  • The greater fool theory states that you needn't worry about buying high during a bubble, because there will always be someone else willing to buy even higher.   The SEC case against Goldman Sachs hinges on whether Ikg, the German Bank that was a buyer of the cdo portfolio called Abacus 2007-AC1, knew that the short seller had a…

  • Excerpts from Warren Buffett's 2009 Letter to Shareholders. I have been in dozens of board meetings in which acquisitions have been deliberated, often with the directors being instructed by high-priced investment bankers (are there any other kind?). Invariably, the bankers give the board a detailed assessment of the value of the company being purchased, with…

  •   Commentators and observers of stock market activity love to talk about the vix, or volatility index. They point to the level and trend of the vix as an indicator of future stock market direction. When an analyst has nothing more compelling to talk about it is time to turn the channel. The vix is a lagging indicator…

  • Excerpts From A CNBC Post In his annual letter to Berkshire Hathaway shareholders, Warren Buffett says he did some "dumb things in investments" last year. Buffett admits that "I made at least one major mistake of commission and several lesser ones that also hurt… Furthermore, I made some errors of omission, sucking my thumb when…

  •                     Very few economic remedies prove effective when their success is judged in advance of their implementation, as is the case now.  Given the breadth of the economic problems, everything the government proposes is scrutinized and debated to such an over extent, that the measure is considered DOA even before the first step is taken.  Surely…

  •                We heard numerous references to AAA rated investments at the congressional hearings yesterday.  The bankers and congressmen extolling the virtues of an AAA rating as the standard for safety.  How short their memories are.  Remember that the sub-prime paper, auction rate preferreds, CDO's and credit default swaps that got us into this mess had AAA ratings. Obviously…

  • Reprint From A Forbes Article Money ManagersPaulson Profits Again Anita Raghavan, 02.04.09, 11:17 AM ET Amid a sea of hedge funds posting big losses last year, money manager John Paulson wound up a big winner. His Paulson Advantage Plus fund racked up a gain of 37.6% net, according to a letter he sent investors. His…

  •   Whether it is just a footnote, or a testament to the insanity surrounding this financial crisis that we are going through, Larry Flynt of Hustler Magazine fame and other members of the Porn industry have petitioned the Federal Government to be included in the TARP bailout to the tune of five billion dollars. Their reasoning is that if…

  •   For those of you looking for stock ideas, here is my list for 2009.  They started to perform well in 2008, but were short circuited by the troubled economy and bear market. NKE appeared on last years list. They are franchise companies well positioned to outperform the overall market.  Best in class: IBM NKE ADBE MGM STT INTC…

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  • 11/19/2008   The Uptick Rule was enacted in 1938 to prevent stock market manipulation.  It states that a short sale can only be executed after an uptick in the price of a company’s stock. It was meant to prevent cascading prices and bear raids.  In 2007 the SEC eliminated the rule after a trial run…

  •     Lehman Brothers held their auction of credit default swaps Friday and received 8 5/8 cents on the dollar.  Even if they had received $.20 on the dollar and you used that as an average value for all c.d.s., that would still leave only 20 % or $12 trillion of the estimated $60 trillion of credit default swaps with value.  That…

  •     Commenting on the balance sheet of a major investment bank: "On the right side there is nothing left and on the left side there is nothing right."   —A timely little quote relayed to me by my friend Aezaz Hussain. 

  • Confidence     Confidence     Confidence We know that confidence will play a major role in investors returning to the market.  Once the credit markets unlock from the paralyzed state that they have been in, stock prices will react positively.  But we may need more than a resolution to the immediate problems before a new bull market can take hold. …

  •   There is no doubt that the current financial crisis can be linked back to the elimination of the Glass Steagall Act in 1999.  The Glass Steagall Act, otherwise known as the Banking Act of 1933, disallowed the combinations of commercial banks and other financial entities, i.e. investment banks and insurance companies. Once the barriers…

  • A clearing house for all derivatives would create transparency, increase liquidity, and let derivatives trade in a market place, much the same way as bonds, stocks and options already trade.  By derivatives, I mean credit default swaps( of which an estimated $40 – $60 trillion exists ), currency swaps, embedded derivatives, interest rate swaps and all…

  • What were the Fed, SEC, and Treasury thinking when they asked Merrill Lynch to help bail out Lehman?  Merrill knew they were next on the list of the short sellers if a Lehman deal was reached. How secret was it that Merrill was nearing a deal with BofA at the same time that BofA was…

  • The large severance packages offered to senior executives at Fannie Mae and Freddie Mac are just two of the latest examples of senior execs. that preside over the collapse of their companies, and are rewarded for their incompetence and/or malfeasance.    Here's an idea, compensation based on stock performance averaged over a five year period.  This stock based compensation puts…

  •   On September 8, 2008 Lehman Brothers announced that it was going to hold it's third quarter fiscal release on September 18th, and disclose strategic initiatives the company was undertaking.  As pressures rose on the stock, Lehman decided to release it's unfinished plans on September 10th.  The market was disappointed to hear tentative plans and not actual measures that the…

  • "Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy.  And if they don't have the first, the other two will kill you. You think about it; it's true.  If you hire somebody without the first, you really want them to be dumb and lazy. Chains…

  • The pundits spoke, predicted and prophesied with their pens.  Told us to expect an increase of 1/10th of a percent or 172,000 unemployed people for the month of May, but the number reported was five times that amount, 1/2 of a percent or 861,000 people.  The largest single month increase in 22 years. Download employment_situation_summary.mht…

  • James Cayne, Chairman of Bear Stearns, bought a condo in the Plaza this week for $26.5 Million.  This added to another condo he had previously bought on the same floor for $2.6 million. Of course anyone can buy anything they want if they can pay for it, but when the purchase comes the same week…

  • The investment into Sub-prime and Alt- A mortgages has resulted in such great losses that the brokers are pulling back from their fiduciary responsibilities to their customers in other areas. In particular I am discussing the class of securities known as auction rate preferred securities(APS).  These securities are marketed by the major brokerage firms as…

  • Is the Bank of America buyout of Countrywide Financial an example of prescient synergistic investing or a compelled merger to protect an already existing investment? Countrywide has not been able to secure the funding it has needed to keep it's business going. In August 2007, Bank of America invested $2 Billion in Countrywide 7 1/4%…