Archive for August, 2011

  • Intrade: Democrat to Win in 2012 = 49.9%
    , August 11th, 2011 at 4:00 pm

    From Intrade, the latest futures price for a Democrat to win next year’s presidential election dropped to 49.9.

    For a Republican to win, the contract is 46.7.

  • 10-Year TIPs Yield = 0%
    , August 11th, 2011 at 2:16 pm

    Amazing.

  • S&P 500 Nears Death Cross
    , August 11th, 2011 at 1:27 pm

    The S&P 500 is very close to reaching a “Death Cross.” This is when the 50- and 200-DMA cross.

    This time, the 50-DMA is set to fall below the 200-DMA which technicians consider a signal of more bearishness ahead.

    Last summer, the 50-DMA was below the 200-DMA from July 1 to October 21. Bear in mind that the S&P 500 rose 15% over that time so this is hardly a perfect indicator.

    The key number for today is 1158.84. If the S&P closes above that, the 50-DMA will still be above the 200-DMA.

  • The Notch In the Yield Curve
    , August 11th, 2011 at 11:22 am

    This is an important point but it’s difficult for me to explain so please bear with me. Below is the current Treasury yield curve. The key part is the notch that extends out about three years (I added the red line to highlight the area). The blue line is pretty flattish and doesn’t start to rise until 2014 or 2015.

    Embedded in any yield curve is a prediction of where short-term interest rates will be in the future. The steepness of the blue line indicates how quickly rates will rise.

    What’s happened recently is that the market doesn’t expect rates to rise for some time. This is a direct response to the Fed’s throwing the towel announcement from earlier this week. In turn, this has led investors to crowd into gold.

    Normally, a steep yield curve is very good for stocks (and banks). The problem is that steepness doesn’t really start on the yield curve until about three years out.

  • Will They Ever Learn?
    , August 11th, 2011 at 10:37 am

    Once again, regulators consider a bad idea that refuses to die:

    Europe Considers Ban on Short Selling

    BRUSSELS — A European market regulator is considering recommending a temporary ban on negative bets against stocks across the Continent in an effort to stop the tailspin in the markets.

    The European Securities and Markets Authority, a body that coordinates the European Union’s market policies, has been requesting information from member states about such bets against stocks, known as short-sales.

    In such deals, a trader sells borrowed shares in hopes that they will decline in value before he has to buy them back to close out his loan. The difference in price is his profit, or loss. Critics say short-selling encourages speculation and pushes stock prices down, sometimes feeding on itself in a panicked market, while advocates say it keeps the market honest and maintains liquidity.

    “We are discussing with national authorities and together we will decide whether we need coordinated action,” Victoria Powell, a spokeswoman for the authority, said Thursday. She declined to comment on the timing of any decision or its possible scope.

    Short-selling is crucial to an orderly market. It’s difficult to over-state how important this is. Shorting is what gives a trader his power. It’s an energy field created by all tradeable securities. It surrounds us, penetrates us, and binds the markets together.

    Short-selling is most important right now because it helps the market uncover the weakest firms. I find it interesting that regulators continue to blame short-sellers. The fact is that regulators overwhelmingly failed in finding problem spots in the economy and that’s exactly what the shorts did.

  • Understatement of the Year
    , August 11th, 2011 at 10:16 am

    Ladies and gentlemen, I hope you’re sitting down:

    Bank of America execs say they regret Countrywide Purchase

    In other news, Napoleon concedes that invading Russia “may have been a bad idea.”

  • Dividend Yields on S&P Financial Stocks
    , August 11th, 2011 at 9:39 am

    Financial stocks have been getting battered and bruised. The Financial Sector ETF ($XLF) was over $17 earlier this year. Now it’s at $12.

    Here’s a look at how some the dividend yields stack up:

    Stock Symbol Price Dividend Yield
    Ace Limited ACE $59.35 $1.43 2.41%
    AFLAC AFL $35.57 $1.20 3.37%
    AIG AIG $22.14
    AIMCO AIV $23.32 $0.48 2.06%
    Assurant AIZ $31.23 $0.72 2.31%
    Allstate ALL $24.32 $0.84 3.45%
    Ameriprise Financial AMP $41.19 $0.92 2.23%
    Aon Corporation AON $43.36 $0.60 1.38%
    AvalonBay Communities AVB $125.67 $3.57 2.84%
    American Express AXP $42.80 $0.72 1.68%
    Bank of America BAC $6.77 $0.04 0.59%
    BB&T Corporation BBT $19.86 $0.64 3.22%
    Franklin Resources BEN $109.44 $1.00 0.91%
    Bank of New York Mellon BK $19.46 $0.52 2.67%
    Berkshire Hathaway BRKB $67.60
    Boston Properties BXP $95.66 $2.00 2.09%
    Citigroup C $28.49 $0.04 0.14%
    Chubb Corporation CB $56.51 $1.56 2.76%
    CB Richard Ellis Group CBG $16.67
    Cincinnati Financial CINF $24.03 $1.60 6.66%
    Comerica CMA $24.22 $0.40 1.65%
    CME Group CME $239.21 $5.60 2.34%
    Capital One Financial COF $41.05 $0.20 0.49%
    Discover Financial Services DFS $21.88 $0.24 1.10%
    Equifax EFX $29.54 $0.64 2.17%
    Equity Residential EQR $56.01 $1.35 2.41%
    E*TRADE Financial ETFC $10.66
    First Horizon National FHN $6.76 $0.04 0.59%
    Federated Investors FII $16.91 $0.96 5.68%
    Fifth Third Bancorp FITB $9.42 $0.24 2.55%
    Genworth Financial GNW $5.78
    Goldman Sachs GS $110.34 $1.40 1.27%
    Huntington Bancshares HBAN $4.71 $0.16 3.40%
    Hudson City Bancorp HCBK $6.10 $0.32 5.25%
    Health Care REIT HCN $43.40 $2.86 6.59%
    HCP HCP $31.44 $1.92 6.11%
    Hartford Financial Services HIG $18.15 $0.40 2.20%
    Host Hotels & Resorts HST $12.00 $0.12 1.00%
    IntercontinentalExchange ICE $109.80
    Invesco Plc IVZ $16.62 $0.49 2.95%
    Janus Capital Group JNS $6.49 $0.20 3.08%
    JP Morgan Chase JPM $34.37 $1.00 2.91%
    KeyCorp KEY $6.20 $0.12 1.94%
    Kimco Realty KIM $15.87 $0.72 4.54%
    Loews Corporation L $34.54 $0.25 0.72%
    Legg Mason LM $24.63 $0.32 1.30%
    Lincoln National LNC $20.67 $0.20 0.97%
    Leucadia National LUK $26.43 $0.25 0.95%
    Moody’s MCO $29.15 $0.56 1.92%
    MetLife MET $31.83 $0.74 2.32%
    Marsh & McLennan MMC $26.83 $0.88 3.28%
    Morgan Stanley MS $16.45 $0.20 1.22%
    M&T Bank MTB $70.39 $2.80 3.98%
    The NASDAQ OMX Group NDAQ $21.47
    Northern Trust NTRS $36.13 $1.12 3.10%
    NYSE Euronext NYX $26.87 $1.20 4.47%
    People’s United Financial PBCT $10.74 $0.63 5.87%
    Plum Creek Timber PCL $35.25 $1.68 4.77%
    Principal Financial Group PFG $22.16 $0.55 2.48%
    Progressive PGR $17.31 $0.40 2.31%
    ProLogis PLD $26.40 $1.12 4.24%
    PNC Financial Services PNC $45.28 $1.40 3.09%
    Prudential Financial PRU $47.77 $1.15 2.41%
    Public Storage PSA $109.62 $3.80 3.47%
    Regions Financial RF $4.23 $0.04 0.95%
    Charles Schwab SCHW $12.05 $0.24 1.99%
    SLM Corporation SLM $13.08 $0.40 3.06%
    Simon Property Group SPG $107.89 $3.20 2.97%
    SunTrust Banks STI $17.69 $0.04 0.23%
    State Street STT $33.24 $0.72 2.17%
    Torchmark TMK $33.56 $0.29 0.86%
    T. Rowe Price TROW $49.04 $1.24 2.53%
    The Travelers Companies TRV $49.04 $1.64 3.34%
    Unum Group UNM $21.31 $0.42 1.97%
    U.S. Bancorp USB $21.43 $0.50 2.33%
    Vornado Realty Trust VNO $77.51 $2.76 3.56%
    Ventas, Inc. VTR $44.99 $2.30 5.11%
    Wells Fargo WFC $22.88 $0.48 2.10%
    XL Group XL $18.78 $0.44 2.34%
    Zions Bancorporation ZION $16.06 $0.04 0.25%

  • Morning News: August 11, 2011
    , August 11th, 2011 at 7:41 am

    Central Bankers Race to Protect Growth

    French Banks Lead European Sector Lower

    Italy’s Tremonti Seeks Budget Reform

    Financial Turmoil Evokes Comparison to 2008 Crisis

    In U.S. Stress Tests, a Tool to Gauge Contagion in Europe

    Treasuries Fall Before Auction of 30-Year Bonds; U.S. Stock Futures Rise

    U.S. Futures Rise Amid Volatile Trade

    Gold Slips In Asia As Base Metals See Renewed Buying Interest

    Insiders Buy Stocks at Highest Rate Since 2009

    Apple’s Market Crown Is Tribute to Agility: The Ticker

    Chinese E-Commerce Giant Alibaba Reports Q2 Net Up, Sees Global Econ Threat to H2

    Internet Co AOL Authorizes $250 Million Stock Repurchase Program

    Fitch: Capital One On Negative Watch On Bid For HSBC Card Unit

    Anheuser-Busch InBev’s US Cost-Cutting, Brazil Price Hikes Boost Profit

    Paul Kedrosky: How the West Was Lost and Where it Got Us

    Stone Street: Trina Solar (Potential) Fraud Investigation Update: Definitely, Maybe…

    Be sure to follow me on Twitter.

  • The Emergence of Volatility
    , August 10th, 2011 at 10:55 pm

    Today was the Dow’s third 500+ loss in the last five days. Not too long ago, daily swings of more than 200 points were rare.

    Check out how dramatically daily volatility has increased:

  • Out of Stocks and Into Bonds
    , August 10th, 2011 at 9:12 pm

    Sometimes one chart says it all. This is the S&P 500 ETF ($SPY) compared with the Long-Term Treasury ETF ($TLT).

    The two lines are nearly perfect mirror images. In the last three weeks, the lines have dramatically diverged. Going by this metric, the market isn’t nearly as unbalanced as it was two-and-a-half years ago.