Skip to main content

Monday's notes

Last week's wild ride in the financial markets and the political world gave us much to talk about. So as we stumble out of the haze of a Fannie & Freddie-dominated week, let's review what happened and see what's in store for the week ahead.

1. "Bizarre five days that few will forget" - Financial Times.

"It was one of the most remarkable weeks in the history of financial markets. The US banking sector lost a quarter of its stock market value, then registered a 33 per cent gain. Rising oil prices spooked investors, then fell more than 12 per cent. Short-sellers, branded as the villains by politicians, were squeezed as never before."

A concise wrap-up of last week's dizzying action.

2. "Trouble at Fannie Mae and Freddie Mac stirs concern abroad" - NY Times.

"For more than a decade, Fannie Mae and Freddie Mac, the housing giants that make the American mortgage market run, have attracted overseas investors with a simple pitch: the securities they issue are just as good as the United States government’s, and they usually pay better.

The marketing plan worked. About one-fifth of securities issued by Fannie, Freddie and a handful of much smaller quasi-governmental agencies, some $1.5 trillion worth, were held by foreign investors at the end of March. One out of 10 American mortgages is, in effect, in the hands of institutions and governments outside the United States.

Now that the two companies are at risk, how their rescue is handled will ultimately test the world’s faith in American markets. It could also influence the level of interest rates and weigh on the strength of the dollar for years to come, analysts say."

3. "Given a shovel, Americans dig deeper into debt" - NY Times.

Just following the government's lead, of course. Don't hold your breath waiting for a story that explains how we're ALL in debt, given our global reliance on (credit-based) fiat money.

4. "Charts and news for Monday" - Red-Hot Resources.

Sean Brodrick shares charts and outlook on oil, natural gas, and the US dollar, along with news on the economy and the banking sector.

5. "Rule changes could hit balance sheets" - Financial Times.

"US accounting changes that could force banks to take trillions of dollars back on to their balance sheets will seriously complicate their capital-raising efforts at a time when the money is most needed, standards setters have been warned.

More than $10,000bn of outstanding bonds backed by mortgages and other consumer and corporate debt could be affected by accounting changes, according to a letter from two leading debt market trade associations to the US Financial Accounting Standards Board."

6. "Mugabe threatens to seize foreign firms over sanctions" - Reuters.

"Zimbabwe will transfer ownership of all foreign-owned firms that support Western sanctions against President Robert Mugabe's government to locals and investors from "friendly" countries, a state newspaper reported on Sunday.

The southern African state is struggling with an economic crisis many blame on Mugabe's policies, which has left it with an inflation rate of over 2.2 million percent and chronic shortages of food and other basic needs."

Seems Mugabe and Co. blame foreign firms for creating and exacerbating goods shortages inside Zimbabwe. Could it be their own policies are to blame for the people's suffering?

In any event, this will likely be the last straw for foreign nations looking on at the situation in Zimbabwe. Now that money and property is at stake, "Western firms" and their governments are likely to get more involved.

We'll have more as the week unfolds. Stay tuned.

Popular posts from this blog

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4.

Slate profiles Victor Niederhoffer

Slate's recent profile of writer/speculator, Vic Niederhoffer has been getting some attention from traders and finance types in recent days. I thought we'd take a look at it here too, to offer up some possible educational value from Vic's experiences with trading and loss. Here's an excerpt from Slate's profile of Victor Niederhoffer : " I've enjoyed getting your e-mails. It sounds like you've thought a lot about being wrong. Well, the reason you contacted me, to call a spade a spade, is that I'm sort of infamous for having made a big, notorious, terrible error not once but twice in my market career. Let's talk about those errors. The first was your investment in the Thai baht, which pretty much wiped you out when the Thai stock market crashed in 1997. I made so many errors there it's pathetic. I made one of my favorite errors: "The mouse with one hole is quickly cornered." That is key. There are certain decisions you make in li

William O'Neil Interview: How to Buy Winning Stocks

Investor's B usiness Daily founder and veteran stock trader, William O'Neil share d his trading methods and insights on buying winning stocks in an in-depth IBD radio interview. Here are some highlights from William O'Neil's interview with IBD: William O'Neil's interest in the stock market began when he started working as a young adult.  "I say many times that I didn't get that much out of college. I didn't have much interest in the stock market until I graduated from college. When I got married, I had to look out into the future and get more serious. The investment world had some appeal and that's when I started studying it. I became a stock broker after I got out of the Air Force."    He moved to Los Angeles and started work in a stock broker's office with twenty other guys. When their phone leads from ads didn't pan out, O'Neil would take the leads and drive down to visit the prospective customers in person.