After many weeks of selling effort by market makers, market participants begin to loose confidence in equity stocks and some impatient investors even start to trim down portfolio holding on hope of buying back at lower price in the future despite significant cash holding in the portfolio. The stake of equity stocks is being accumulated in the hands of group of market participants with confidence in market valuation.
In the current highly manipulative market, the action of market makers is influential on market movement. In the last two weeks, market makers take little action despite market participants speculation. There is no sign that market makers have retreated from the market. It is expected that market will have more activities in the coming week when market makers return with capital inflow into market.
Beware: Psychos on the Street
Psychopaths are less vicious than traders.
This may seem harsh, but a recent study determined that traders were more ruthless than psychopaths. They wanted to win, even if, in so doing, they didn't make more money.
As Banks Struggle, Fed Racks up Huge Profits — for Taxpayers
This is a difficult time for America's large banks. Bank of America, still suffering from an intense mortgage hangover, is a single-digit stock. Morgan Stanley has been getting hammered for its exposure to European banks. New regulations, consumer anger, and a slowing economy are taking a toll.
Unlike the type of banking that Bank of America and Citi conduct, the type of banking that the U.S. central bank conducts is reliably profitable. We noted a year ago that the Federal Reserve, America's central bank, is a big moneymaker.
Thanks to the second round of quantitative easing, in which the Fed purchased $600 billion in Treasury securities, the Fed's holdings have expanded. The Fed reported that in the first six months of 2011 it turned over $40.45 billion to Treasury. Last week, the Fed's balance sheet stood at about $2.83 trillion, including more than $2.6 trillion in securities. And through September 29, the next-to-last day of Fiscal 2011, Fed earnings had contributed $82.5 billion in revenues to the government for the fiscal year, according to the Daily Treasury Statement.
The Picture for Kodak Is Not Pretty
Kodak, the maker of photography film for well over a century, once enjoyed 80% market share for film. The firm first started its decline in the 1980's when Japanese competitors like Fuji film took business with lower prices.
More than cheap film, the emergence of digital photography is what really killed Kodak's business. Ironically, Kodak invented digital photography back in 1975. Unfortunately, for them, they have not been able to leverage the technology in a profitable way.
Was there mismanagement and complacency at Kodak? Probably. Was the acquisition of Sterling Drug for $5.1 billion a poor use of capital? Yes. But in the end, the company was mainly a victim of what economists call 'creative destruction': technology simply changed too much for Kodak to handle.
A Huge Housing Bargain -- but Not for You
The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors -- vulture funds.
These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.
You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.
In the process, these investors will instantaneously become the largest improved real estate owners and landlords in the world. The U.S. taxpayer will get pennies on the dollar for these homes and then be allowed to rent them back at market rates.
The entire massive HUD REO Portfolio is quietly managed by a handful of private firms already, a group listed as Management and Marketing Contractors.
These M&M companies are principally owned by and employ former high-ranking government officials from the various germane agencies -- the Treasury, HUD, FHA and others. And they will provide the necessary access to the current government employees who are tasked with bringing this program to fruition. Once the privatization is complete, those government employees will move from their positions, and many will take up new employment at one of the M&Ms or the new vulture funds.
It is probable, however, that once the privatization has occurred and the properties are generating rental income for the investors, the initial investors will cash out by forming real estate investment trusts (REITs), real estate operating companies (REOCs) or limited partnerships (LPs) that will be made available to retail investors.
Emerging Equity Bears Turn Bullish
The longest losing streak for developing-market equities in more than a decade is turning investors who shunned the stocks a year ago into buyers after valuations fell to the lowest levels since March 2009.
Emerging-market equity funds have posted nine straight weeks of outflows, with investors withdrawing $2.6 billion in the seven days ended Sept. 28, according to data compiled by Cambridge, Massachusetts-based research firm EPFR Global.
“The fundamentals of the emerging-market economies are pretty strong,” said Kelvin Tay, the Singapore-based chief investment strategist at UBS Wealth Management. “On a medium-to longer-term basis, the emerging-market space looks far better than advanced nations.”
Shorts Scramble After Headlines From Europe, Stocks Rip Higher
Shorts covered furiously after an FT report that EU finance ministers are talking about ways to recapitalize European banks, along with the WSJ report about Dexia’s bad-bank plans.
As Tom Lauricella points out, though, the EU finance minister comments in the FT report were made in a press conference hours ago. I swear somebody’s got a headline-reading algo out there that covers shorts and buys stocks any time there’s a vaguely positive FT headline about Europe.
These market swings are still not signs of healthy trading, even when they end in the green. Nothing much actually changed in the last 40 minutes of trading today.
3 Reasons Why Stocks Should Start to Rally
Things are so bad; it may actually be good for stocks. Unless major support gets broken, stocks should stage a strong end of year rally. But, if support gets broken the S&P may fall well below 1,000 fast.
The combination of the steep summer sell off and multi-week range bound trading thereafter has created a bear flag (a technical formation). Such a bear flag would have deeply bearish implication for the S&P and the broader US stock market. The measured target for a bear flag bottom is S&P 895.
The challenge for investors will be to balance the expectation for a market bottom with the potential for a continued sell off.
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