Blackout, Xmas Cancelled?, ETrade BK?
Blackout? ... Blackstone Group, manager of the world's biggest buyout fund, on its second quarterly report since the IPO...
reporting a quarterly loss of $113.2 million vs net income of $372.5 million a year earlier. Real estate revenue fell 44% and shares have lost 28% since the IPO.
Christmas Cancelled?
The SP500 has risen in Q4 70% of the time or 58 of 79 times since 1928. Thus far in 2007, Finance, Technology and Utilities have put the kabosh on Santa's rally.
The Nasdaq gets 44% of its market value from computer-related shares. Banks & brokers have the largest weighting in the SP500 at 18%.
Technology shares and utilities account for 20% combined. The last time the market was so dependent on computer related companies and power producers was...
in the three months ended March 2000, just before the SP500 began a 2.5 year, 49% plunge.
In the Year 2000, In the Year 2000!
1st three months of 2000, technology in the SP500 climbed 14%, while utilities added 6.4%.
This year, technology is responsible for 13% of the SP500 advance. The index has lost 4.8% in Q4, dragged down by a 12% drop in financial shares.
The SP500 would have a gain of just 0.3% this year without advances in technology stocks and utilities.
Since Nov. 7, when Cisco Systems Inc. reported a "dramatic" drop in sales to financial and automobile companies...
the Nasdaq declined 4.4% contributing to the biggest weekly loss since April 2002.
Fed Branch Meeting... The BOJ in a two day meeting that began Monday, will probably hold rates at 0.5%.
Japan's benchmark Nikkei index fell 2.5% Monday to its lowest level since July 2006. The core consumer price index fell 0.1% in September for the eighth monthly decline;
Japanese housing starts fell 44% in September from a year ago for the third straight month of decline.
Japan's jobless rate rising to 4.0% in September vs. 3.8% in August.
Worse before better... Really? Reuter's reports that Etrade tells customers to expect "news in the market" to get worse before it gets better.
E*Trade said last week it expects more write downs in its $3 billion asset backed securities portfolio and would no longer meet previously issued earnings forecasts.
Citigroup analyst Prashant Bhatia noted there is a 15% chance of bankruptcy and downgraded the brokerage to a "sell" from "hold."
ETrade President Jarrett Lilien: "We could absorb an immediate writedown in excess of $1 billion and still remain well capitalized."
$15 billion of deposits in 57,000 accounts represent roughly 25% of Etrade's funding.
eposit attrition could lead to forced selling of the assets that are supported by these deposits.
Bhatia also said E*Trade could realize losses of over $5 billion if it tries to liquidate its loan and asset backed securities portfolio as a result of losing its funding sources.
"There may be layers of protection for customers, but in our view, customers may withdraw assets first, and ask questions later."
Etrade stock down 50% on the news. Hat tip to Bloomberg & Reuter's.
reporting a quarterly loss of $113.2 million vs net income of $372.5 million a year earlier. Real estate revenue fell 44% and shares have lost 28% since the IPO.
Christmas Cancelled?
The SP500 has risen in Q4 70% of the time or 58 of 79 times since 1928. Thus far in 2007, Finance, Technology and Utilities have put the kabosh on Santa's rally.
The Nasdaq gets 44% of its market value from computer-related shares. Banks & brokers have the largest weighting in the SP500 at 18%.
Technology shares and utilities account for 20% combined. The last time the market was so dependent on computer related companies and power producers was...
in the three months ended March 2000, just before the SP500 began a 2.5 year, 49% plunge.
In the Year 2000, In the Year 2000!
1st three months of 2000, technology in the SP500 climbed 14%, while utilities added 6.4%.
This year, technology is responsible for 13% of the SP500 advance. The index has lost 4.8% in Q4, dragged down by a 12% drop in financial shares.
The SP500 would have a gain of just 0.3% this year without advances in technology stocks and utilities.
Since Nov. 7, when Cisco Systems Inc. reported a "dramatic" drop in sales to financial and automobile companies...
the Nasdaq declined 4.4% contributing to the biggest weekly loss since April 2002.
Fed Branch Meeting... The BOJ in a two day meeting that began Monday, will probably hold rates at 0.5%.
Japan's benchmark Nikkei index fell 2.5% Monday to its lowest level since July 2006. The core consumer price index fell 0.1% in September for the eighth monthly decline;
Japanese housing starts fell 44% in September from a year ago for the third straight month of decline.
Japan's jobless rate rising to 4.0% in September vs. 3.8% in August.
Worse before better... Really? Reuter's reports that Etrade tells customers to expect "news in the market" to get worse before it gets better.
E*Trade said last week it expects more write downs in its $3 billion asset backed securities portfolio and would no longer meet previously issued earnings forecasts.
Citigroup analyst Prashant Bhatia noted there is a 15% chance of bankruptcy and downgraded the brokerage to a "sell" from "hold."
ETrade President Jarrett Lilien: "We could absorb an immediate writedown in excess of $1 billion and still remain well capitalized."
$15 billion of deposits in 57,000 accounts represent roughly 25% of Etrade's funding.
eposit attrition could lead to forced selling of the assets that are supported by these deposits.
Bhatia also said E*Trade could realize losses of over $5 billion if it tries to liquidate its loan and asset backed securities portfolio as a result of losing its funding sources.
"There may be layers of protection for customers, but in our view, customers may withdraw assets first, and ask questions later."
Etrade stock down 50% on the news. Hat tip to Bloomberg & Reuter's.
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http://youtube.com/watch?v=6uSL1rilsWg