Federal reserve buys Tresurys and bad loans

Fed not distracted by circus over bonuses
Commentary: FOMC ramps up credit easing in face of worsening economy
By MarketWatch
Last update: 2:48 p.m. EDT March 18, 2009
Comments: 893
WASHINGTON (MarketWatch) -- The grownups in Washington aren't about to let the latest political and media circus over ill-gotten bonuses distract them from saving this economy.
The Federal Open Market Committee acted very boldly Wednesday, promising to crank up the money supply until the economy starts breathing on its own again.
The FOMC said it would buy up to $300 billion in longer-term Treasurys over the next six months. And it said it would boost its purchases of mortgage-backed securities and agency debt, all in a bid to get credit flowing through the economy again. See full story.
All told, the FOMC committed to boost its arsenal by $1.15 trillion, doubling in one pen stroke the amount of "credit easing" it's already accomplished.
The Fed's move should lower interest rates for most borrowers, especially for homeowners and for businesses. Another wave of refinancings should help millions of homeowners lower their monthly payments.
Why would the Fed want to push more money into the economy? Simply, the outlook for the economy has deteriorated since January. The committee no longer expects a recovery later this year; at least, it's not willing to put that guess into its post-meeting statement.
Still, the Fed thinks that the most likely outcome is a "gradual resumption of weak growth." Somehow, the stock market has found some solace in that tepid endorsement.
The global economy is slumping and the U.S. economy is weak.
It's no time for half measures, or grandstanding about how unfair it is that a few hundred people are getting bonuses.
----------------
Stocks Close Higher; Fed's Tsy-Buying Plan Helps
By Rob Curran
Last update: 5:25 p.m. EDT March 18, 2009
Comments: 30
(Updates with company information, beginning on the tenth paragraph.)
NEW YORK (MarketWatch) -- The Federal Reserve has resorted to the printing press, and stock traders hailed the move with a rally.
The Federal Reserve's decision to bring down interest rates by buying long-term Treasurys and more mortgage securities helped financial institutions such as American International Group and Bank of America, giving the Dow Jones Industrial Average a more than 90 point gain.
Shortly after 2:15 p.m. EDT, the Federal Reserve said it will buy up to $300 billion in longer-term Treasurys and raise the size of lending programs already aimed at reducing mortgage rates by another $750 billion. The commitment to buy Treasury securities and additional mortgage-related debt should mean lower rates for a variety of business and consumer loans.
By buying Treasurys, the Federal Reserve is increasing the amount of money in the system in a similar fashion to cutting interest rates. That likely means another decrease in mortgage rates and more favorable rate spreads for banks. Banks will now be able to borrow money more cheaply, leaving more room for a profit. Also, the value of "toxic" mortgage securities will likely benefit from the Fed's purchases in that market.
"It's basically the next best thing" to a rate cut, said Dan Cook, senior market analyst at IG Markets. "Bernanke, in 2002, laid out this exact scenario almost word for word," he added, referring to a speech in which current Fed Chairman Ben Bernanke advocated use of the "printing press" to fight deflation.
Longer term, Cook said, "this debt is [going to be] tough to service after a while. I didn't hear about an exit plan."
Citigroup, the leading gainer on the Dow, added 57 cents, or 23%, to 3.08, and has now more than tripled in value since its low in early March. Still, Citi is off nearly 90% from this time last year. And, traders say, some of its recent gains were the result of an arbitrage strategy involving new preferred shares and existing common shares backfiring.
Among other banks, Bank of America added 1.40, or 22%, to 7.67, its highest level since January. Wells Fargo added 2.56, or 17%, to 17.22.
Hudson City Bancorp (Nasdaq) added 1.23, or 11%, to 12.02 after the New Jersey bank said it would require no help from the government and dubbed analysts' estimates for the quarter "reasonable."
Life insurers, whose shares were pressured by fears about their portfolios of mortgage-linked securities and stocks, bounced. MetLife added 4.37, or 21%, to 25.56; Hartford Financial Services Group rose 1.73, or 24%, to 8.86.
Shares of government-controlled insurer AIG, which also has large exposure to mortgage securities, surged 42 cents, or 44%, to 1.38, and has more than tripled from its low.
Overall, the Dow rose 90.88 points, or 1.23%, to 7486.58, its highest close in a month. The S&P 500 added 16.23, or 2.09%, to 794.35, after ticking above the psychologically significant 800 level during the session for the first time since Feb. 17. The technology-oriented Nasdaq Composite rose 29.11, or 1.99%, to 1491.22, helped by a reported bid from Dow component International Business Machines to buy Nasdaq component Sun Microsystems.

S&P mistakes

----------
gold mistake 4

My problem with using in GOLD short on 11/23/08 ( 23:00 hours NY time ) going SHORT at 790 based on VP is
a) VP showed Nural index 1 , the day before and that day also ( thursday, friday for next day). Ignored this and next 2 below.
a2) Triple Expoential graphs shows clear LONG side
a3) Predicted short/medium/long term diff all 3 agreeing for LONG that is increasing from previous day
B) I ignored the Nural 1 and went short ( after looking some other reports of gold over shot so some profit taking )
c) and mainly folled by VP next day high/low of 790-775 , so went short at 790 assuming I am shorting that the 'next day predicted high;. But the acutal thing is If I am on LONG I can only Use the PLow for my protective STOP as shown above

---------------
crude oil mistakes 3
1. entered Long at 60.9 on Vantage advice when next day predicted low/high is shown 61.5/63 .
2. on Asia markets ( US night), it was all low below 60.5 , with morning net shows 300 cut
3. continue whole next day US market I holded Long based on Vantage advice again shows good low/high , down by 1000 , night nothing happened , total cut to 2900
4. continued 2 nd day night , it came close to 58.25 , my limit 58.9
5. on the morning 11 a.m EST , energy dept. crude inventory report due, so on a small rally I got rid of it at net cut of 2000
6. evening third day great Dow rally 500 points , reached crude 59.45 , I got rid of at 57.85

what I did is good, but only thing is missed Oppertunity that is , I should have followed dow drop got S&P to 815 , should have bought Dec 08 60 future options costed only 5.0 that is 500/contract , when up it truned to 1500

----------
SP mistake 2
11/17 monday S&P early close
- took position on friday clsoe at 855 , after looking 'option close week' gained many months in the past.
- monday saw drop up to 700, so panicked and placed limit with 300 cut , it executed later
- VP showed a possibility of at leaset no loss, should have watited since it is only monday , it came to 500 profit later


----------------
SP mistake 1
1. after NOv 4 th rally (990), on 5 th did a LONG around 970 assuming it go up to 990 again
2. Wednesday/thurday it dropped to 900 expecting a friday unemployment report ( expecting 300,000 worst some says on CNBC )
3. so 2 day drop of 70 points => 3500
4. I saw friday morning unemployment figure came as 6.5% instead of expecting 6.1 in 'CNN late breaking news' so closed the LONG at 910 ( bought at 970 ) taking hit of 3500
5. on Friday it raised to 935 since the worst is over , so I got early
6. mistake 2: friday at close trading around 925 , did a short , closed this on Monday early morning at 945 , another 1200 hit. monday it dropped again to 910.
------------


11/17 crude contract expire
- hightower report showed sentiment is bear, and VP also showed bear no big upside
- should have taken short at 57 over week end for close of 55.5
- should also have taken another 57 short on monday morning .. for 1.5 points gain ...
- find the 'path of least resistance' , you can only get these state for sure few times/month, after getting assurance from a) VP data b) hightower report , take postion.

-----------------

see S&P mean traget 12/31/2008 that is 1120 , so index with 1000 this early with definatly gives back since you have 1.5 months to reach just +100 after 100 following the rule below.
In bear market , sell on big counter-trend rallies (Bruce )

Believing in Estimates Means 20% Advance for S&P 500 (Update4)

Nov. 10 (Bloomberg) -- Even after cutting estimates at the fastest rate ever, Wall Street strategists still need the biggest year-end rally in the Standard & Poor's 500 Index for their forecasts to come true.

Strategists were also calling for a record gain at this time last year, after the first quarterly decline in corporate profits dragged the S&P 500 down from its high of 1,565.15 on Oct. 9, 2007. It never materialized and stocks have dropped 41 percent since.

Biggest Bears
Kostin, Trennert and Lee are among the most pessimistic of Wall Street strategists with year-end estimates tracked by Bloomberg. The three expect the benchmark for American equities to end 2008 at an average of 1,075, up 15 percent from its closing level last week.



The average Wall Street forecast calls for the S&P 500 to break out of a bear market and surge 20 percent to 1,118 by Dec. 31 -- more than twice as much as the biggest-ever advance to close out a year, according to data compiled by Bloomberg. Strategists were even more bullish at the beginning of the year, predicting that the S&P 500 would end 2008 at a record 1,632.


Bull bets
------------
1)
``The U.S. is going to be the first market out of the bottom,'' Barton Biggs, a former Morgan Stanley strategist who now runs Traxis Partners LLC, a New York-based hedge fund, said on Bloomberg Television. ``We're at a major buying opportunity.''

2)
He says stocks will rebound as borrowing costs fall.
``The market discounted what we believe will be a recession in 2009'' when it reached a five-year low of 848.92 on Oct. 27, Trennert said.


BEAR bets
-------------
1)
``Even a 15 percent gain could be a stretch,'' said Robert Doll, who helps manage $1.3 trillion as chief investment officer for BlackRock Inc. in Plainsboro, New Jersey. ``My guess is from here to the end of the year we do have another rally, but confined inside a narrower trading range.''


2)
Still, the 20 percent rally strategists predict must overcome a deteriorating economy as the fallout from the credit crisis spreads. The jobless rate rose to 6.5 percent in October from 6.1 percent the previous month.

``It's a stretch,'' said Leo Grohowski, the chief investment officer for the wealth management unit of Bank of New York Mellon Corp., which oversees $158 billi