|
Morning Coffee: Count Me in for $10 Billion!
(Stocks in article: NYSE: UBS, NYSE: MCD, NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: C, NYSE: MER, NYSE: MTN, Nasdaq: AAPL, Nasdaq: HAYZ, Nasdaq: MOGN, XETRA: EII.DE, Paris: GLEG5.PA, NYSE: SHI, NYSE: MHP, NYSE: MCO)
Equities are tentative but positive as they continue to anticipate Fed expansinary action. Today's most important market-moving events are discussed below, and include UBS, the Fed, Jesse Jackson's misdirected march, and China's real interests exposed.
- UBS Says, Count Me in for $10 Bln. - Not to be outdone by its banking brethren, UBS (NYSE: UBS) today announced it would use several channels to raise capital and secure its Tier 1 capital status. The market viewed it positive that UBS was able to mitigate risks, despite diluting current shareholder interests through deals with two foreign investors and the promise of selling treasury shares it had planned to cancel. The total capital being raised will exceed the headline figure of $10 billion quite substantially, and UBS looks set to take a loss for the year. However, this does provide more clarity and disclose risks to a concerned marketplace, and this should be appreciated.
- Anticipating the Fed - We have not seen one pundit, however skeptical, with the (insert word here) to publicly consider the possibility of Fed inaction. The Greek reminds you of the number of times you have read and heard about herd mentality. While I believe Fed action would be helpful, I view it unlikely and please read my thoughts on the subject here. Only The Greek holds this bold view. One report listed below discusses the Fed's preferred inflation gauge, and a recent concerning measure from it. Based on recent economic data, which has been mixed and recently positive, and ongoing inflation concerns, The Greek is looking for Fed inaction this time around to be accompanied by a cut at the discount window and wording reassurance that the Fed has your back if need be.
- Civil Rights Leaders March on Wall Street - Rev. Jesse Jackson and other civil rights leaders are marching on Wall Street today, and six other cities across the country. They are arguing for corporate America to atone for its mistakes that are to blame for the foreclosure epidemic among the nation's poor. Nice thought, but I view the President and related agency action, as well as banking efforts to renegotiate loans, as positive moves. The Greek believes Jesse ought to move his protest a few blocks over the Water Street, where Standard & Poor's (NYSE: MHP) is located, and protest the rating agencies that in my view did not properly measure the risk in mortgage-backed securities and allowed them to issue and trade under erred assessment. We rely on companies like S&P and Moody's (NYSE: MCO) to do this for us, and while measuring risk ourselves, we expect more from them.
- China - A good bit of data came out of China over the last few days. The country again is tightening lending restraints, increasing the reserve requirement on banks for the umpteenth time. Also, China is further restricting foreign investment to keep things in check. China is trying to contain inflation, but recent wholesale inflation figures showed a rise of 4.6%. In other news, China's third most important supplier of crude became an even more important provider to the energy hungry behemoth. The problem here is that China's needs precluded United Nations concerns, and the country in question is Iran. Sinopec Group (NYSE: SHI) agreed to a significant natural gas supply deal that will lead it to invest $2 billion in Iran (a vested interest) to develop the Yadavaran Oil Field and to buy 10 million tons of liquefied natural gas a year for 25 years. The obstacles are mounting to U.S. confrontation of Iran, and WWIII is looking less like a slip of the president's tongue and more like real possibility. Actions speak louder than words, and China has shown its cards to the wise poker players in this game.
-
Wall Street Greek
|
