Beat Procrastination With These 3 Steps [BNET]

Keep Your Cool in a Tough Market [Morningstar]

The US House of Representatives votes on the $700 Plan in about 2-3 hours. [22:00, MNL time]

Here are some highlights:

• US Treasury gets USD250 billion upfront (the balance is conditional and staggered)
• Recoup plan if the US government loses money after 5 years
• Limits on executive pay
• Insurance

 

Oh, and by the way, this action is completely unprecedented.

There’s blood all over Wall Street, all over the world in fact. What went down over the past 24 hours or so?

• Wachovia sells its bank business to Citigroup
• Fortis bank gets injections from Benelux
• Bradford & Bingley nationalized, part of it sold to Banco Santander
• Hypo Real Estate gets a booster shot from Germany
• Icelandic Glitnir Bank gets taken over by its government

Things happening on the market now [22:20, MNL]

• S&P 500 down 3.70% (broad-based selling)
• DJIA down 2.93%
• NASDAQ down 4.24%
• FTSE down 3.96%
• WTI Crude down 6.48%
• NYMEX Crude futures fell through the $100/bbl level
• Gold up 2.49%
• UST 2yr and 10yr yields down

The Fed has just released a press statement on further measures they’re taking to keep credit going into the financial sector:

• An increase in the size of the 84-day maturity Term Auction Facility (TAF) auctions to $75 billion per auction from $25 billion beginning with the October 6 auction,
• Two forward TAF auctions totaling $150 billion that will be conducted in November to provide term funding over year-end, and
• An increase in swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, Danmarks Nationalbank (National Bank of Denmark), European Central Bank (ECB), Norges Bank (Bank of Norway), Reserve Bank of Australia, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank to a total of $620 billion, from $290 billion previously.   

CITI doesn’t see the TARP doing anything fundamental for financial markets – it’s not a “get out of jail free” card. It targets securities, not loans. Lots of writedowns to emerge.

Meanwhile, as of 19 September 2008, ECRI’s WLI fell by 12.3%. Not so good, my friends. Lakshman Achuthan says “the train has left the station” re: a recession in the US, and regulators are playing catch-up.

Wow. That Earth, Wind and Fire song is SO going to have a whole new connotation.

Five former Secretaries of State give advice to the future president of the United States. Brilliant brilliant forum. Find the transcript here.

Participating were the following former Secretaries of State:

2001-2005: Colin L. Powell
1997-2001: Madeleine Korbel Albright 
1993-1997: Warren Minor Christopher 
1989-1992: James Addison Baker III 
1973-1977: Henry Alfred Kissinger

But it’s more like the Grinch is sneaking up to steal Christmas.

It wouldn’t be right if I didn’t blog to chronicle what’s happening now, so I’ll start off with a question:

Q: What’s black and white and red all over?

A: Financials.

In a nutshell:

• Lehman went bankrupt on Monday
• Merrill, seeing its shares falling fast and hard, sold itself to B of A
• AIG is tottering, propped up only by the US government
• Equities the world over looked to start falling off cliffs
• Holidaymakers came back in Asia on Tuesday to catch up in the lemming-run
• Oil prices broke through some key supports and are taking a nose-dive as well
• Russia had to stop trading to try and get a grip as fire and selling are coming together into one word
• LIBOR o/n doubled yesterday

And as I write, the big old financials are continuing to spill blood on Wall Street, RTS is still shut and analysts are looking at more big shakeouts in financials.

Not to mention other industries feeling the heat now, which I don’t follow closely, but they’re out there.

LEI’s are still down, too.

So with all these job cuts, where is consumer spending going to go? Probably not the North Pole.

Oh, but in other doomsday news, it’s been reported that the ozone hole above Antarctica grew in 2008.

Boy could we all use some eggnog, fireplace and comfy wooly sweater right about now, huh?

“Well above-average activity has occurred so far during the 2008 hurricane season. We expect a very active September,” say Klotzbach and Gray of the of Colorado State University Tropical Meteorology Forecast Project. I believe them.

Here is a scheule of their forecasts (Saw these guys quoted on Bloomberg TV)

Hannah, Ike and Josephine are forming in the Atlantic. Hannah could be as strong or stronger than Gustav. Keep an eye out!

Reported as Gustav breaks the back of the oil rally – crude has fallen through its 200-day MA. Negative consumption for oil… 70-80 USD/BBL are the marginal cost of consumption – if oil breaks the resistances, it may retreat to these levels.

On Leadership

Be a consensus-builder.

On Presenting an Idea Effectively

The order is:

1. What you want to do
2. Why you want to do it
3. How you’re going to do it

And Moving Forward

Patience must be your BFF.

Bad News, Bad News Everywhere

The IMF’s Market Update to its semiannual Global Financial Stability Report shot stocks down and gave a boost to bonds yesterday. What was the big fuss? Basically this:

• Subprime-related losses appear to be pretty much known and accounted for, but there are signs that the default problem is seeping into other credit areas.
• What’s worse, the housing market bugbear [which is putting spenders in negative equity], doesn’t look like it’s going to end anytime soon. We do see other economies’ housing markets looking grimmer, though.

Bloomberg TV @ 22:00ish, MNL

Janney analyst Guy Lebas on fixed income after B of A tops expectations:

• Monthly home price declines are fluctuating between 1 to half a percent level – this MAY be a good sign.
• Inflation and growth - short end of the YC is growth-sensitive, and long end is sensitive to inflation and inflation expectations. We are seeing a steepening YC.
• Optimistic on short end – inflation is a problem for longer-term bonds. Buy 2-5 years.
• In a quiet release week, what do we look out for? It’s all about the consumer. Look at retail sales figures (ICSC-UBS store sales numbers coming out tomorrow, 22 July 2008, 19:45, MNL).

In other news…

• Paulson: the downturn may continue for some time.
• Business economists surveyed are less pessimistic about the economy for 2H08 than in 1H08.
• Leading Economic Indicators (LEI) are down another month in a row at -0.1%.

An hour with our friends on Bloomberg TV tonight.

22:00ish, MNL

Early in US trading, equities started diving on what looks like a more broad-based selling in financials. GM looking precarious at the deep end.

The nail-biters today? Ben’s speaking, Dubya’s speaking, Hank’s speaking and Chris is speaking. Lots of words to be thrown around within the next few hours.

The IMF (fairly) recently published a brief on Globalization here, which identifies several general principles that “seem to underpin greater prosperity”. These include the following:

• Investment (particularly foreign direct investment);
• The spread of technology;
• Strong institutions;
• Sound macroeconomic policies;
• An educated workforce; and
• Participation in, and integration with, the global economy.

The paper also discusses the implications of more integrated financial markets, citing two main findings of a recent IMF paper on the subject:

1. Countries must do a careful cost-benefit analysis (CBA) before they fully liberalize capital flows; and
2. There are costs associated with being too conservative on opening capital flows.

The policy lesson to be drawn then is that capital account liberalization “should be pursued as part of a broader reform package encompassing a country’s macroeconomic policy framework, domestic financial system, and prudential regulation”.