{"id":9393,"date":"2011-09-22T09:06:54","date_gmt":"2011-09-22T13:06:54","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=9393"},"modified":"2011-09-22T09:33:37","modified_gmt":"2011-09-22T13:33:37","slug":"tracing-ills-finding-brightspots-with-great-difficulty","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=9393","title":{"rendered":"Tracing ills. Finding brightspots (with great difficulty)"},"content":{"rendered":"

I don’t need to tell you the news. It’s dismal:<\/p>\n

+ European shares have plummeted to a 26-month low. European banks are truly in the toilet. Pimco’s boss told the Financial Times today that ” French Banks Could Tip Europe Back Into Recession.” He said French banks could tip Europe “into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy.”<\/p>\n

In an opinion piece, Mohamed El-Erian says Europe must move quickly to stabilize its banks “at its core in ways that go far beyond what the European Central Bank announced on Wednesday.” The European Central Bank said Wednesday that it will widen the range of securities it will accept as collateral for lending to European commercial banks while also limiting the amount of senior unsecured debt it will accept.<\/p>\n

El-Erian said French banks are a particular cause for concern, noting that “credit markets now put their risk of default at levels indicative of a BB rating, which is fundamentally inconsistent with sound banking operations.” He adds that bank equity now trades at a 50% discount to tangible book value on average, while the ratio of market capital to total assets has fallen to 1%-1.5%, compared with 6%-8% for “healthier banks.”<\/p>\n

“These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion,” he says. The result, he says, would be a banking crisis and a recession.<\/p>\n

Although the ECB has moved to boost liquidity, El-Erian says “capital cushions and asset quality remain unaddressed. As a result, Europe is on the verge of losing control of orderly solutions to its debt crisis.”<\/p>\n

He urges fiscal authorities and banks to work with the ECB on “three immediate, simultaneous and drastic measures.”<\/p>\n

These comprise the injection of capital through public-private partnerships, a realistic assessment of balance sheet assets and improved depositor protection. “Greater burden sharing” with the private sector may also be needed, he adds.<\/p>\n

+ Asian markets today are down 5% amid reports of weak growth.<\/p>\n

+ Futures for today’s American markets suck. Mr. Market here hates what the Fed is doing, or not doing.\u00a0 It sees the chances of Obama’s jobs bill passing as close to zip. which basically means there will be no stimulus for today’s ailing economy. Most American money managers are now under water for 2011.<\/p>\n

+ FedEx is doing awfully. That bodes ill for our economy because they’re the biggest private package carrier. Bloomberg reported this morning:<\/p>\n

FedEx Corp. (FDX), operator of the world’s biggest cargo airline, cut its full-year profit forecast as volumes declined amid a slowing economic recovery.<\/p>\n

Per-share earnings for the year will be $6.25 to $6.75, 10 cents lower than the previous range, the Memphis, Tennessee- based company said today in a statement. Analysts had projected $6.35, the average of estimates in a Bloomberg survey.<\/p>\n

FedEx, which ships more packages by air than rival United Parcel Service Inc., has seen volume growth slow as demand for express shipments stagnates amid a weakening economic recovery. FedEx also has been spending more on jet fuel, whose average cost jumped about 48 percent in the period. The company typically has a two-month delay in recovering fuel costs through surcharges.<\/p>\n

FedEx’s stock has plummeted and will probably drop some more after today’s news:<\/p>\n

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UPS looks like it’s ready to fall some more.<\/p>\n

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+ Even gold has gotten squirrelly of\u00a0 late. It’s being dumped along with the bathwater and the baby.<\/p>\n

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+ My mortgage REITs — AGNC, ANH, MITT, MTGE and NLY — are all now 5% below what I paid for them. Their high dividend yields\u00a0 (14%+) are more than compensating for their decline. While NLY’s dividend dropped from 68 cents to 60 cents, AGNC’s latest dividend has stayed at $1.40.<\/p>\n

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+ In contrast, Apple is one of the few bright spots.\u00a0 Its sales hould scream this Christmas. When I showed off my Apple nano watch at dinner two nights ago, two people said they would buy one for presents — for their husband, for their grandchaildren. They all said it had solved their present-buying problem this year. I’m guessing some of them will buy Apple stock for their kids also.<\/p>\n

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This will make you happy.<\/strong><\/span> We took out-of-town friends last night. They absolutely\u00a0 loved it. Now playing on Broadway:<\/p>\n

\"\" <\/a>\"\"<\/a><\/p>\n

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There wasn’t an empty seat in the theater last night. But theater and movies also bomed during the depression. For tickets, click here.<\/strong><\/a><\/p>\n

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\n<\/strong><\/div>\n

Harry Newton who is pleased he’s warned against banks and the general run of no-dividend or low-paying dividend stocks. But he’s now annoyed with himself that he didn’t go short — especially since all this misery has been SO predictable. Still time to short the Dow and the S&P 500 — the easiest bets.<\/p>\n","protected":false},"excerpt":{"rendered":"

I don’t need to tell you the news. It’s dismal: + European shares have plummeted to a 26-month low. European banks are truly in the toilet. Pimco’s boss told the Financial Times today that ” French Banks Could Tip Europe Back Into Recession.” He said French banks could tip Europe “into a full-blown banking crisis […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9393","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/9393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9393"}],"version-history":[{"count":0,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=\/wp\/v2\/posts\/9393\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.technologyinvestor.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}