Warren Buffet added some optimism to the market by proposing to re-insure the muncipal bond portfolios of bond insurers like MBIA, AMBAC and FGIC. Bond insurer stocks didn't react positively - which is perhaps obvious since the re-insurance offer covers only the least risky part of their portfolio...if you look at it from another angle, the offer can be judged as showing how desperate the insurers have become for capital-saving options. However, on the whole, Buffet's offer signals that it's not after all going to be a prolonged recession. Munis carry their own share of risk in prolonged recessions and Buffet's offer means he doesn't see as much of a risk as others do! The broader market did respond positively to this bit of news.
Meanwhile, Henry Paulson got the big 6 of the mortgage market - Citi, Bank Am, Wachovia, Wells Fargo, JPM & Country wide - to come together for 'Hope Now'...and roll out Project Lifeline. This would mean a 30-day moratorium for foreclosures while lenders re-jig loan terms for the borrower...meaning we will see the crisis managed better and soften the landing (to whatever extent we could at this point!). On a broader note, this is another whiff of positive news for a beaten market.
With the above, i re-iterate my earlier position on Financials. Bigger banks and many large investment banks dont probably hold much promise for shorts the rest of teh year. Pick of the lot - Citi. After some interim correction to reach 29+, its back in to the low 26. Don't expect a secular rise to 30+, but be patient and you will get rewarded!
Techs continued to tread tough ground - GOOG, AAPL both trudged down after an early rally. Not sure how long the tech crunch is going to last, but these are good buys for patient investors... i mean those with more than a 3-month horizon.
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment