Tag Archives: QQQ

When Margin Debt Goes Over 2.25% Of GDP, The Stock Market Always Crashes

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By Michael T. Snyder:

What do 1929, 2000 and 2007 all have in common? Those were all years in which we saw a dramatic spike in margin debt. In all three instances, investors became highly leveraged in order to ‘take advantage’ of a soaring stock market. But of course we all know what happened each time. The spike in margin debt was rapidly followed by a horrifying stock market crash.

Well guess what? It is happening again. In April (the last month we have a number for), margin debt rose to an all-time high of more than $384 billion. The previous high was $381 billion which occurred back in July 2007. Margin debt is about 29% higher than it was a year ago, and the S&P 500 has risen by more than 20% since last fall. The stock market just continues to rise even though the underlying economic fundamentals continue to get worse


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Wall Street Breakfast: Must-Know News

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AT&T reportedly thwarted in Telefonica bid. AT&T (T) has reportedly been thwarted in a €70B bid to acquire Telefonica (TEF) by Spain’s government, which has the power to stop the sale of any company that is deemed strategic. The U.S. carrier told state representatives that it would take on the Spanish operator’s €52B of debt as part of any transaction. Telefonica said it hasn’t “received any approach or…indication of interest,” from AT&T. The Spanish company’s shares were +3.1% at midday in Madrid.

Kabel Deutschland sees Vodafone deal at €11B. Kabel Deutschland (KBDHY.OB) reportedly wants Vodafone (VOD) to pay over €8B in cash to acquire the German cable operator and assume nearly €3B in debt. The cash component would represent a premium of around 10% on Kabel’s Friday close in Frankfurt and and an 11%+ premium on the €7.2B that Vodafone has already reportedly offered.

Boeing,


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Weighing The Week Ahead: A New Direction For The Fed?

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By Jeff Miller:

After weeks of speculation based upon speeches, newspaper columns, and pundit pontification, we will finally have some hard information. Maybe. The two-day FOMC meeting will include not only the regular announcement of the decision, but also revised economic forecasts and a press conference by Chairman Bernanke. Everyone will be watching for any hints of a change in policy.

  1. Will the Fed reduce the pace of the current QE purchasing?
  2. If not, will it provide more information about the timing of a possible change?
  3. What might be the size of any reduction?

Those expecting early action seem to focus on September. Tim Duy reviews the most recent data and concludes, “Bottom Line: Today’s data appears consistent with Fed expectations that they can begin tapering asset purchases this year. Still a horse race between September and December, although I think the Fed is aiming for the earlier date if data allows.”


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The Fed Had Better Fix This Mess Next Week

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mkaminisBy Markos Kaminis (Wall St. Greek):

Securities markets have been in turmoil since May 22nd, when the Federal Reserve released the minutes of its last meeting and Fed Chairman Bernanke testified before the Joint Economic Committee of Congress. Discussion of potential “Fed tapering” away from its asset purchase programs and eventually its interest rate position has caused quite a stir globally. Considering that the economy is still far from healthy, with unemployment grossly underestimated and the real estate recovery vulnerable, I expect the Fed will want to do some backtracking next week. Given the extent of the activity scheduled for it, it will have ample opportunity to dictate its message clearly and concisely this time.

The Federal Open Market Committee (FOMC) begins its two-day monetary policy meeting on Tuesday. On Wednesday at 2:00 PM ET, the Fed will publish its latest monetary policy statement, which can only offer one message (save dissenting votes),


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Wall Street Breakfast: Must-Know News

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Detroit restructuring plan set to be unveiled. Detroit emergency manager Kevyn Orr is due to unveil his restructuring plan for the debt-laden city today to unions, bondholders and bond insurers, including MBIA (MBI) and Assured Guaranty (AGO). Orr will reportedly try to persuade creditors to accept as little as 10 cents on the dollar for the city’s debt. He has indicated that creditors would be far better off compromising now than taking their chances with a bankruptcy filing.

Hilsenrath: Tapering doesn’t mean end of QE. The WSJ’s Jon Hilsenrath, who seems to have the inside track at the Fed, yesterday quoted officials as saying that a tapering of asset purchases doesn’t mean an end to asset purchases, and a hike in short-term interest rates isn’t anywhere close to being on the radar at this point. The report helped Wall Street to close higher, although stock


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Wall Street Breakfast: Must-Know News

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Great global sell-off continues. The Nikkei (NKY) has taken another thrashing, plunging 6.4% to 12,445.38 as uncertainty about the Fed’s QE program continues to grip global markets. The fall has prompted further dollar weakness, with the greenback -1.8% against the yen at the time of writing. Chinese shares plunged in reaction to tepid economic news, while the sell-off in emerging markets continued. European stocks and U.S. stock futures have joined the anti-party, as have commodities.

Safeway surges on $5.7B sale of Canadian unit. Safeway (SWY) shares defied the global rout and jumped 21% premarket after the supermarket retailer said it has agreed to sell its Canadian unit for C$5.8B ($5.7B) to Empire’s (EMP.A) Sobeys subsidiary. Safeway will use $2B of the proceeds to repay debt and most of the rest on buybacks. "The higher multiples attributed to Canadian supermarket companies" contributed to Safeway’s


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Wall Street Breakfast: Must-Know News

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Vodafone confirms Kabel Deutschland interest. Vodafone’s (VOD) shares were -3.95% premarket after its stock went ex-dividend and following the company’s confirmation that it is interested in acquiring Kabel Deutschland (KBDHY.OB). Vodafone has reportedly offered €10B for the German cable TV, Internet and telecom operator, whose shares were +9.5% at lunchtime in Frankfurt. That gives it a market cap of €7.17B. Any deal would mark a major departure by Vodafone from its focus on the cellular market.

U.K. regulator mulls probe into possible forex manipulation. The U.K.’s market supervisor, the Financial Conduct Authority, is reportedly considering opening an investigation into the alleged manipulation of WM/Reuters benchmark foreign-exchange rates, which are used to fix the value of trillions of dollars of investments. The practice has apparently been going on every day for at least a decade at major banks.

Amgen’s Enbrel blockbuster drug no better than


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Wall Street Breakfast: Must-Know News

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SoftBank raises bid for Sprint to $21.6B. SoftBank (SFTBF.PK) has sweetened its bid for Sprint (S) by increasing its offer to $21.6B from $20.1B – or $7.65 vs $7.30 – and raising the cash component by $4.5B. The deal would also give the Japanese carrier 78% of Sprint instead of 70%. Paulson, owner of 7%+ in Sprint, backs SoftBank’s revised proposal. Dish (DISH), which has made a $7-a-share bid for Sprint worth $25.5B, is reviewing its options. Clearwire (CLWR) remains a wild card.

BOJ refrains from adding to stimulus. As expected, the Bank of Japan has kept its ultra-loose monetary policy unchanged, although it gave a slightly more upbeat outlook for exports and the wider economy. The BOJ also said "some indicators suggest a rise in inflation expectations." Some market participants had hoped that the bank would take action to address bond volatility, such as by


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