Crude oil dipped below $70 yesterday. This means that there’s nothing in the way of further price declines, says J. Christoph Amberger. He says that by December OPEC will take $50 for a barrel of oil and be happy to take it.
– “A recession, perhaps the deepest one in decades, may be unavoidable,” reports the Gray Lady. One of the biggest problems facing the US is more pain in the housing market. Home mortgage rates have risen in spite of the government’s bailout splurge.
– European and Asian stock markets mostly dropped today after a two-day rally. Recession is still very much on the mind of Mr. Market, it seems.
– In Asia, Hong Kong’s Hang Seng Index nearly 5% to close at 15,998.30. Stocks in Australia, South Korea, China, India and Singapore also sank. Japan’s Nikkei 225 index, however, ending up just over 1.1% at 9,547.47.
Leon Cooperman is one of the best living investors. He’s the founder of Omega Advisor, a $4.5 billion hedge fund based in New York.
According to Leon, “This is the most difficult environment I’ve lived through. And I’ve been doing this for 41 years.”
Capital & Crisis editor Chris Mayer caught up with Leon at a value investing conference recently. Cooperman presented Atlas Pipeline (NYSE:APL) as one of his favorite ideas of the moment — a pick Chris previously recommended to Catital & Crisis readers.
– US stock index futures are up today on news of that Uncle Sam is planning on pumping $250 billion into banks.
– The Treasury says about half that figure will likely to go to buying stakes in the top nine US banks to get them lending to each other again.
– The Treasury will also consider lifting the cap on deposit insurance for certain bank accounts and guaranteeing certain types of bank lending.
One of the biggest collapses this year hasn’t been in stocks. Crude oil has lost half its value since it peaked at just under $150 a barrel in July. Today, a barrel of the black goo sells for just over $80.
Outstanding Investments co-editor Byron King says “it seems like the investment locomotive — energy, resources and related infrastructure — has derailed.”
Does this mean you should sell your resource stocks? Byron says selling now would leave a lot of value on the table. That’s because resource stocks are now priced well below their intrinsic value.
It remains to be seen whether fear takes control of the markets again today. So far, global equities have seen a reprieve from the brutal pounding they suffered last week.
The crash in stock prices has most investors spooked. But it’s worth keeping you head while others lose theirs, says Strategic Investment editor Dan Amoss.
Right now, there are some very healthy resource stocks are shockingly cheap. What Dan calls “screaming bargains.”
– The German government is gearing up today to pump cash in the the bank and insurance sector. Talk is that Germans will stump up €470bn as part of the much-hyped ‘coordinated bailout’ campaign by European governments.
– The move has set off a rally in European banking stocks.
– Asian markets were also up this morning. Hong Kong shares shot up over 10%. It was the biggest one-day rise in more than 33 years.
– Meanwhile, European central banks have promised unlimited dollar funding.
Crude oil prices have been highly volatile this. From its $146 peak in July, the black goo is down at $87 a barrel.
It’s a scary time to be a direct investor in oil. But Byron King says is one way of sidestepping the wild price swings: investing in tanker ships.
“As long as people continue to use oil,” says Bryon, “there will be some consistency to the tanker business.”
There is a relatively tight market for charters. And many good reasons why there won’t be a capacity glut in coming years.
– The worlds financial markets are waking up to a harsh reality this morning: the financial crisis has moved far beyond US subprime-mortgage meltdown to a fundamental breakdown of trust in the money markets that is dragging the sick and the healthy down alike. Yesterday’s drop below the 10,000 mark for the Dow is ample evidence that the Bush administration’s pork-laden plan to rescue the US banks has fallen short of its stated goal of shoring up confidence in the markets.
– As quoted in Agora Financial’s 5 Min. Forecast, “The idea of the bailout,” one trader told CNBC soon after the close on Friday “sounded better than the actual bailout.”
– The credit crisis has spread. Over the weekend, Germany issued a blanket guarantee of consumer bank deposits. The German government also bailed out lender Hypo Real Estate Holding AG that was close to collapse after private lenders pulled out of an their own bailout plan.
– European stocks are getting trashed. According to the Financial Times, “Dizzying falls across the [financial] sector came across the continent and led to big overall losses on leading indices.”
– There are calls for a European-wide fund to recapitalize banks. So far, European governments are acting individually to stem the crisis.
