October 2008

Now that the rescue plan is passed, Congress and the candidates need to turn their attention to the overall economy.   Whatever you want to call the economic slowdown we are facing, don't call it mild.   The rapid loss of jobs and weak condition of housing are proof enough that the economy needs triage.   Some economic wounds can be healed with tax cuts.   Now.  Especially for American ... read more

It's time to get more aggressive. The Fed and Treasury have added more than a trillion dollars in total in the past few months to the banking system through discount window borrowing, government backed loans, auctions and debt sales.  This is on top of the $700 billion dollar rescue package Congress passed last week.    It has not stemmed the tide of pain in the stock or credit markets.   ... read more

I can hear Alexander Hamilton rolling over in his grave. Last night Senator McCain announced a plan to buy $300 billion in actual mortgages from homeowners sitting on loans they can't afford.    While pushed as new, it actually seems part of the current $700 billion dollar rescue plan already made into law last week.    As this article notes, section 110 of that law ... read more

The saying goes, "as goes California so goes the nation."    Let's hope that's not true this time. The Wall Street Journal has an excellent article today (subscription required) about the state of California and its troubles. These passages stick out from the story: John Luc has seen how housing problems bleed into the broader economy. Mr. Luc is the 36-year-old manager of Homestore ... read more

Quick note ... Shares of General Motors (GM) fell below $5.50 today.  That's first time this has happened since 1950.  There is no major news on GM today either. We did a phone interview with GM analyst Mike Ward of Soleil Securities on the program today and he noted a few things: GM is on the SEC's "cannot short sell" list and that no short-sale rule ends today.   We are likely ... read more

Lost in the credit squeeze, market meltdown and basic chaos in Washington and Wall Street over the past few weeks is the sad story of Yahoo (YHOO). Yahoo shares hit another multiyear low of $13 today.   They haven't seen this level since mid-2003.   Of course, Yahoo could be trading at $33, or not trading at all and instead be a part of Microsoft.    Perhaps a forgotten part of the news ... read more

The market and newsflow is rapid.    So much happening it's difficult to focus on one thing.    I am on air right now (writing during commercial break) but here are a few quick thoughts and observations 2 hours into trading: 1. The Dow tanked 700 points at open, recovered, and is down again.  Remember yesterday at the market close we had many multi-million share block trades hit right ... read more

Time magazine cover from Nov. 2nd, 1987 following the 22.7% drop on "black Monday" on Wall Street. Here's the current cover: ... read more

Crunching data trying to gain some historical context.    I made this chart (sorry its a little low-tech) comparing the drop in 1987, the 2 year drop from 2000-2002 and the recent drop.  The chart is from 1985 until today. A few things stick out: 1. Why did the market drop roughly 38% the first two times? 2. Notice the massive wealth creation after the 1987 drop and the multi-year ... read more

The government continues its push to "rescue" the mortgage market.   Bloomberg outlines the latest plan, ordering Fannie and Freddie to buy $40 billion per month in underperforming mortgage bonds.   Amazingly, this is separate from the $700 billion dollar TARP plan: Oct. 11 (Bloomberg) -- Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 ... read more