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Banking Shares Surge on FDIC Power Expansion

US Session Key Developments

  • Bernanke, Geithner Ask Congress to Ease FDIC Borrowing Limits
  • Bank of America, Wells Fargo Surge Over 15.80%

Banking Shares Surge on FDIC Power Expansion

Banking shares jumped today despite an overall down day after Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner asked Congress to expand the Federal Deposit Insurance Corp.’s borrowing power. Last week, FDIC head Sheila Bair announced that the consumer bank insurer would possibly run out of funds, sending financials tumbling down. The requested legal authority would allow the FDIC to borrow as much as $100 billion from the Treasury, up from $30 billion as of February. Banks as a sector surged ahead by 10.72%. Bank of America and Wells Fargo were two of the greatest beneficiaries of the positive sentiment as the stocks rallied $0.61 or 19.43% and $1.36 or 15.80%, respectively. Warren Buffet also stated that in 3 years the San Francisco based Wells Fargo will have prospects “better than ever.”

Dow 30                6547.05                 -79.89                    -1.21 %
The Dow had a mixed day with four sectors actually finishing the day in the green. Financials jumped 3.23% with Bank of America leading the pact. Health Care and Telecommunication Services tumbled nearly -4.0% each as risk appetite saw money shifting over to the riskier, banking, stocks.

NASDAQ              1268.64                  -25.21                     -1.95%
The NASDAQ saw every sector in the index sell off today. Information Technology was the hardest hit, finishing down -2.39%.

S&P 500                676.53                   -6.85                       -1.00%
The S&P 500 also saw a mixed day with Financials and Energy being the only two sectors to finish the day ahead. The VIX volatility index rose slightly, by 0.35 points to finish at 49.68.

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Filed under: Economics, Stocks, , , , , , , , , , , , , , ,

BUFFET: Economy Has ‘Fallen Off a Cliff’

“We are doing thins now that are potentially very inflationary…”

“Patriotic Americans will realize this is a war…”

FLASHBACK: Warren Buffet’s Berkshire Hathaway Profits Fall 96%…

Filed under: Economics, Obama, , , , , , , , , , , , , ,

S&P 500 Falls to Lowest Since Oct. 1996 After AIG Record Losses

U.S. Session Key Developments

  • AIG Reports Record $61.7 Billion Loss
  • Berkshire Hathaway Profits Plummet 96%
  • S&P 500 Dips Below 700, First Since Oct. 1996
  • General Electric May Lose AAA Credit Rating


S&P Falls to Lowest Since Oct. 1996 After AIG Record Losses

Stocks continued to take a beating after AIG reported the largest loss in U.S. history of $61.7 billion. Sentiment went into the open weighed down after Warren Buffet’s Berkshire Hathaway recorded its worst earnings in history after having seen profits plummet 96% in the fourth quarter. Indeed, in his accompanying statement as the head of Berkshire, Buffet stated that the economy would remain “in shambles” throughout 2009. Furthermore, investor confidence suffered from General Electric’s failed attempt to secure its AAA credit rating after it had slashed its dividend for the first time since 1938. On Friday, Moody’s stated that it was still reviewing the credit status of GE and that it would still consider cutting the rating of the Dow’s only original component. Overall the extremely negative sentiment being projected throughout the weekend saw traders sell in mass hysteria. At the end of it all, the S&P closed at its lowest level since October 1996 while the Dow closed below 7000 for the first time in nearly 12 years.

Dow 30              6763.29                  -299.64                      -4.24%
The Dow began the day in negative territory and remained there for the entire trading session. Every sector in the index finished the day bleeding with Materials and Financials performing the worst, decapitating each by -8.24% and -8.20%, respectively.

NASDAQ            1322.85                     -54.99                     -3.99%
The NASDAQ performed the best of the three major U.S. equity indices, losing slightly less than 4.0%. Surprisingly the sectors that lost the most were not the Financials, but rather Energy, which lost nearly 10% and Telecommunications Systems, which lost 9.43%

S&P 500              700.82                     -34.27                     -4.66%
The S&P was by far the worst performing index of three majors. It closed the day at its lowest level since October 1996 allowing the VIX volatility index to rise above 50 for only the second time in nearly two months after having jumped 13.6% to finish the day at 52.65

– LG

Filed under: Economics, Stocks, , , , , , , , , , , , , , , , , ,

BUFFET’S BERKSHIRE PROFIT SINKS 96%; ECONOMY ‘IN SHAMBLES’

BUFFET’S BERKSHIRE PROFIT DECLINES 96%

SAYS ECONOMY WILL BE ‘IN SHAMBLES’ THROUGH 2009

U.S. TREASURY BUBBLE WILL BURST

BLOOMBERG: Warren Buffett’s Berkshire Hathaway Inc. posted a fifth-straight profit drop, the longest streak of quarterly declines in at least 17 years. Fourth-quarter net income fell 96 percent to $117 million, or $76 a share, from $2.95 billion, or $1,904 a share, in the same period a year earlier, the Omaha, Nebraska-based firm said in its annual report…

BUFFET: “Though the path has not been smooth, our economic system has worked extraordinarily well over time…It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead…”

WSJ: Berkshire expanded derivative contract ownership last year; Berkshire’s underwriting units fell 17%…

FT: Berkshire will stick with same strategy…


Filed under: Economics, , , , , , , , , , ,