THE DOT - if this turns orange or red be alert

Thursday, June 5, 2008

Mixed fundamentals - technical picture remains

Excerpt from Bloomberg

MBIA, Ambac Stripped of AAA Financial Strength Ratings By S&P

By Romaine Bostick

June 5 (Bloomberg) -- MBIA Inc. and Ambac Financial Group Inc., the world's largest bond insurers, had their AAA insurance financial strength rankings cut by Standard & Poor's.

The ratings were cut two levels to AA, New York-based S&P said in a statement today. The ratings remain under review.

Excerpt from CNBC

Mortgage Foreclosures Rise to New Heights
By Reuters | 05 Jun 2008 | 10:35 AM ET
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U.S. home foreclosures and mortgage delinquencies hit record highs in the first quarter as the sharp housing downturn put more American households under financial strain, data released Thursday showed.

Foreclosure
David J. Phillip
A foreclosed home for sale.

Nearly one in a hundred homes, or 0.99 percent, were driven into a foreclosure proceeding in the first quarter, the Mortgage Bankers Association said, up from 0.83 percent in the fourth quarter and the highest on records dating to 1979.

As the pace of failing loans quickened, the trade group said the overall share of homes in foreclosure rose to an all-time high of 2.47 percent from 2.04 percent. At the same time, the mortgage delinquency rate rose to a record 6.35 percent, suggesting foreclosures are likely to continue to mount.


Excerpt from Bloomberg

TPG, Goldman Post a 28% Return on Alltel Sale Amid Buyout Slump

By Jason Kelly

June 5 (Bloomberg) -- TPG Inc., the private-equity firm run by David Bonderman, provided good news for a buyout industry beleaguered by tight credit, making $1.3 billion for investors in less than a year by selling Alltel Corp. to Verizon Wireless.

TPG, based in Forth Worth, Texas, and the private-equity arm of Goldman Sachs Group Inc. will receive $5.9 billion in cash as part of the $28.1 billion purchase announced today. The buyout firms committed $4.6 billion in equity for the deal, which closed in November.

I am not so sure about the math of the profit Bloomberg claims here because they had a cost of carry for the 24 Bil which might have cost close to 1 Bil. in interest but nevertheless its a goodie for GS and some other banks because they got rid of a LBO-loan. But foreclosures and delinquencies keep rising to alltime highs which is not good news since more trouble is ahead for the banks especially the downgrades for the Monoliner adds pressure to the balance sheets since they have to mark down AAA products insured by the Monoliner.

The technical picture remains as expected the 1370 in the SPX was defended so far. The NDX is running into exhaustion making a double TDM 13 which is always a decisive moment for a trend.

The positive aspect will run out of momentum very likely and turn back down next week. Nevertheless some turnaround stories are developing check out SBUX (Starbucks) and BSX ( Boston Scientific)


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