Anyone watching the slow train wreck that is Countrywide Financial (CFC), as of today’s close, shares are now lower than its September 17th closing price of $19.27/share. September 17th is the day BEFORE the Fed slashed its Fed funds rate with a full (and somewhat surprising) 50-beeps rate cut; probably partially out of deference to Countrywide and their fellow submerging mortgage lenders. Bear Stearns (BSC), notably, is also lower as of tonight versus its September 17th close. As is Citigroup (C) and Capital One (COF). Also, in addition to yesterday’s parade of lowered earnings guidance, Lennar Corp. (LEN), the largest homebuilder in the U.S., reported that its third-quarter net loss was $513.9 million, or $3.25 a share. This dire news exceeded even the most pessimistic estimates on Wall Street and was reportedly the largest quarterly loss in its 53-year history. I might add that in addition to Lennar's punk report, the S&P/Case-Shiller survey of U.S. home values showed that home prices in 20 U.S. metropolitan areas fell the most ever in July. Additionally, the Conference Board’s consumer confidence figures for September dropped to its lowest level in almost two years. The Fed and the rest of the world’s egregious money printers (read: China, Japan, ECB, U.K.) have certainly gone into printing overdrive, but is the liquidity going where they want it? From my vantage, they are just exasperating the remaining and existing asset bubbles—particularly the massively, mutating and growing asset bubble in China. Incredibly, the China Shenhua Energy IPO in China reportedly attracted a record 2.6 trillion yuan or roughly $350-billion in orders for its shares slated to list on the Shanghai Exchange later this week. In other words, the company could have priced itself at a market-cap 30-percent larger than that of Microsoft (MSFT) and there would have been enough takers for every single last share!! China Shenhua Energy is the nation's largest coal producer which I can only guess makes quite a bit less money than does Microsoft and is not close to being a monopoly. Hey China, dot-com called and it wants its bubble back!! But also, take a look at the performance of arguably some of the most absurdly, over-valued, albeit liquid (that’s key), stock action since their respective August 16th lows, the day the Fed clearly went into panic-mode by slashing its Fed funds rate to nearly 4.5% (unbeknownst to most market participants) thru today’s highs: Research In Motion (RIMM), $61.54/share to $97/share (57% rally), Apple (AAPL), $111.62 to $152 (35% rally), iShares FTSE/Xinhua China 25 Index Fund (FXI), $111.25 to $174 (55% rally), Crox (CROX), $44.10 to $64 (44% rally), China Life (LFC), $50.25 to $82 (60% rally), Baidu.com (BIDU), $161 to $304 (87% rally), Amazon.com (AMZN), $70.50 to $93 (32% rally) and to a lesser degree, Google (GOOG), $480.46 to $571 (19%). Yet, Google is still significant given its market-cap. That 18-percent move accounts for an additional $27-billion in additional market-cap alone. That is freshly minted market-cap nearly 2/3rds the size of an Amazon.com (AMZN) created in just over one-month for a single company!! Clearly, money is being printed at warp speed, but it seems to be finding its way, again, into the most liquid, speculative and overvalued assets as the leverage and momentum crowd grab hold of the loose credit and cram it into whatever is working. ….Watch for a stronger-than-the-data-would-otherwise-suggest tape through Friday as the performance sluts manipulate things into the quarter’s close, ala, tape painting as they try to run the clock out ahead of packaging of quarterly statements. If there hasn’t been an all-fronts effort to prop, plug and pull markets during the third quarter, ask yourself the logic behind an S&P 500 and a Dow Jones Industrial Average that will both likely close above their respective 2Q closing values? As of now, the S&P is just marginally higher while the Dow Industrials seems almost assured of closing out the third quarter with gains even as the world of finance has become quantifiably much more scary versus just three month hence. Markets are essentially where they were in mid-July just before it had dawned on folks that the leveraged buyout binge was nearly over. And so goes bubble-nomics.
No comments:
Post a Comment