Jul
18
Supply, Demand, and Offshore Drilling
Filed Under Markets, Oil, Politics | 3 Comments
The oil markets have seen drastic rises in prices over the last few months, as short-term trading volume has seemingly trumped fundamental pricing based on the expectations of supply and demand. At least that is one opinion.
The Wall Street Journal today published an editorial written by the Senate minority leader, Mitch McConnell, claiming that this is truly a market driven by ailing supply. He goes on to put his, and his party’s support behind a bill proposing to cut down on both supply constraints and consumption, as well as tackle the issues in the futures market which have lead to such volatile price swings.
Ah, but if this is really an issue of supply and demand, then why attack the traders? It seems illogical to propose both of these mandates. First, go after the traders who are punishing the American public through the increase in gas prices (remember, he claims it is simple supply and demand economics). Second, legalize offshore drilling to alleviate supply constraints, accomplishing the same ends, but from a completely different viewpoint. In all fairness, shouldn’t the answer be just one or the other? Read more
Jul
14
WaMu (WM): Epic Fail
Filed Under Banks, Markets, Real Estate | Leave a Comment
The markets have lost almost all confidence in Washington Mutual and their exposure to residential mortgages (nearly $300B worth).
The stock is now trading at $3.6B market cap, or about 16% price-to-book.
Chances are, investors got it right. While the writedowns may be slow to come for WaMu, they will definitely have to mark assets down billions upon billions of dollars as delinquencies and foreclosures mount.
Shareholders were recently diluted when TPG acquired a preferred ownership stake at $8-$9.
Will the Fed, or possibly another bank, step in and take over the ailing firm’s balance sheet?
Jul
11
Crude Bulls Skip Sleep; Fannie/Freddie Testing The Extent Of Their Solvency
Filed Under Markets, Oil, Real Estate | Leave a Comment
After a late day rally in the crude futures markets on Thursday, the bulls pumped the price of oil up nearly another $5 overnight, to $146.xx.
Fannie Mae and Freddie Mac are down nearly 50% overnight, valuing the equity in the firms near $5B on TRILLIONS of dollars of assets. The implicit guarantee from the American taxpayer may soon turn explicit, as capital injections will become necessary in the near future. There is no doubt about it; the American taxpayer and the Dollar’s strength are on the hook.
And the trading day is only beginning…
Jul
10
The Modern Stock Trader Is Back Online
Filed Under Site News | Leave a Comment
After a one year hiatus, I’ve decided to bring back the prophetic blog that shook the markets in early 2007. Well, that may be stretching the truth, but I did make some sweet calls on stocks back then. Easier said then done, right?
So why bring the blog back now? Frankly, I believe the disinformation campaigns as of late, especially in such a bearish market, are leaving out what is really going down on the Street, and is very alarming.
Expect what was promised earlier at the creation of the blog – I plan to share my thoughts and opinions on market conditions, specific stocks, and maybe even some real estate ideas. Heck, maybe I’ll throw in a poorly-edited lecture on credit derivatives and the death of securitization. The bears are here and they are real. So turn off CNBC, and enjoy some of the articles at The Modern Stock Trader when you get a chance.