MarketWatch.com - Pre-Market Indications

Monday, July 14, 2008

Recession-Plagued Nation Demands New Bubble To Invest In

WASHINGTON—A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest.

"What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future," said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. "We are in a crisis, and that crisis demands an unviable short-term solution."

Recession Expert

A prominent finance expert asks Congress to help Americans rebuild their ficticious dreams.


The current economic woes, brought on by the collapse of the so-called "housing bubble," are considered the worst to hit investors since the equally untenable dot-com bubble burst in 2001. According to investment experts, now that the option of making millions of dollars in a short time with imaginary profits from bad real-estate deals has disappeared, the need for another spontaneous make-believe source of wealth has never been more urgent.

"Perhaps the new bubble could have something to do with watching movies on cell phones," said investment banker Greg Carlisle of the New York firm Carlisle, Shaloe & Graves. "Or, say, medicine, or shipping. Or clouds. The manner of bubble isn't important—just as long as it creates a hugely overvalued market based on nothing more than whimsical fantasy and saddled with the potential for a long-term accrual of debts that will never be paid back, thereby unleashing a ripple effect that will take nearly a decade to correct."

Enlarge Image The Next Bubble?

"The U.S. economy cannot survive on sound investments alone," Carlisle added.

Congress is currently considering an emergency economic-stimulus measure, tentatively called the Bubble Act, which would order the Federal Reserve to† begin encouraging massive private investment in some fantastical financial scheme in order to get the nation's false economy back on track.

Current bubbles being considered include the handheld electronics bubble, the undersea-mining-rights bubble, and the decorative office-plant bubble. Additional options include speculative trading in fairy dust—which lobbyists point out has the advantage of being an entirely imaginary commodity to begin with—and a bubble based around a hypothetical, to-be-determined product called "widgets."

The most support thus far has gone toward the so-called paper bubble. In this appealing scenario, various privately issued pieces of paper, backed by government tax incentives but entirely worthless, would temporarily be given grossly inflated artificial values and sold to unsuspecting stockholders by greedy and unscrupulous entrepreneurs.

"Little pieces of paper are the next big thing," speculator Joanna Nadir, of Falls Church, VA said. "Just keep telling yourself that. If enough people can be talked into thinking it's legitimate, it will become temporarily true."

Demand for a new investment bubble began months ago, when the subprime mortgage bubble burst and left the business world without a suitable source of pretend income. But as more and more time has passed with no substitute bubble forthcoming, investors have begun to fear that the worst-case scenario—an outcome known among economists as "real-world repercussions"—may be inevitable.

"Every American family deserves a false sense of security," said Chris Reppto, a risk analyst for Citigroup in New York. "Once we have a bubble to provide a fragile foundation, we can begin building pyramid scheme on top of pyramid scheme, and before we know it, the financial situation will return to normal."

Despite the overwhelming support for a new bubble among investors, some in Washington are critical of the idea, calling continued reliance on bubble-based economics a mistake. Regardless of the outcome of this week's congressional hearings, however, one thing will remain certain: The calls for a new bubble are only going to get louder.

"America needs another bubble," said Chicago investor Bob Taiken. "At this point, bubbles are the only thing keeping us afloat."
Recession-Plagued Nation Demands New Bubble To Invest In | The Onion - America's Finest News Source

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Opening View: Federal Reserve Attempts to Aid Fannie Mae and Freddie Mac

In an attempt to bolster investor confidence, the Federal Reserve and the Treasury Department yesterday announced steps to aid beleaguered mortgage giants Fannie Mae ( FNM: View sentiment for FNMsentiment, chart, options) and Freddie Mac (FRE: View sentiment for FREsentiment, chart, options) . The central bank granted the Federal Reserve Bank of New York the power to lend to the duo at a rate of 2.25% - the same rate given to commercial banks and large Wall Street firms. The Fed said the plan should help FNM's and FRE's ability to "promote the availability of home mortgage credit during a period of stress in the financial markets." What's more, Senator Christopher Dodd noted the disparity between the twosome and the recently failed IndyMac (IMB), stating, "IndyMac engaged in very bad mortgages, luring people into deals they could never afford. That's not the case with Frannie and Freddie."

Anheuser-Busch (BUD: View sentiment for BUDsentiment, chart, options) has agreed to a takeover by Belgian brewer InBev, in a deal valued at $52 billion. The merger will create the world's largest beer maker, Anheuser-Busch InBev, which is expected to generate cost synergies of $1.5 billion per year annually by 2011. The North American headquarters for the new firm will be in St. Louis, while InBev Chief Executive Carlos Brito will maintain the reigns at the top post.

Elsewhere, Continental Airlines (CAL: View sentiment for CALsentiment, chart, options) announced that it will post a pretax second-quarter charge of $58 million relating to capacity reduction plans slated later this year. After adding stock-sale-related gains, tax credits, and other non-operational items, the airline is expected to post a total after-tax gain of $22 million. In pre-market activity, the shares were downgraded to "neutral" from "outperform" at Credit Suisse, with the broker slashing its price target on the equity to $9 from $15. According to Thomson Financial, the average 12-month price target on the security stands at $27.70.



Opening View: Federal Reserve Attempts to Aid Fannie Mae and Freddie Mac


NYSE Arca Morning Update

Stocks trading on NYSE Arca at a price more than 15% away from the previous trade day's consolidated close price. (As of 08:30:00 ET)

Stock
Friday's Close Current Price Pct Chng Current NYSE Arca Vol
FNM

$10.10

$14.24

41%

2,330,499

FRE

$7.70

$10.79

40%

1,553,568

CRME

$8.35

$10.10

21%

112,575

LEH

$14.49

$17.13

18%

708,607

10 Most Active stocks on NYSE Arca as of 08:30:00 ET

Based on Dollar Volume: Based on Share Volume:
Stock
Dollar Volume
SPY
$226,373,717
FNM
$31,273,296
BUD
$26,856,940
QQQQ
$23,614,638
SDS
$18,381,084
GLD
$16,872,851
FRE
$15,925,582
XLF
$12,170,166
LEH
$11,697,006
IWM
$8,342,643
Stock
Share Volume
FNM
2,330,499
SPY
1,802,470
FRE
1,553,568
LEH
708,607
XLF
632,729
QQQQ
522,162
BUD
396,959
IMB
292,500
SDS
265,206
C
224,629


NYSE Arca Morning Update

Pre-Market Trading Most Active Stocks - NASDAQ

NASDAQ - Pre-Market Ten Most Advanced

Active Share Volume Declined

Symbol

Company Name

Market
Close
Last Sale (Pre-Market) % Change
(Pre-Market)
Share
Volume

(Pre-Market)

Wynn Resorts, Limited
$69.94 $78.53 12.28% 439,134

Royale Energy, Inc.
$8.70 $9.39 7.93% 40,980

Carrizo Oil & Gas, Inc.
$61.25 $65 6.12% 3,700

Randgold Resources Limited
$47.05 $48.88 3.89% 24,950

Gymboree Corporation (The)
$34.20 $34.95 2.19% 3,991

James River Coal Company
$46.29 $47.26 2.10% 7,357

Steel Dynamics, Inc.
$33.38 $34.01 1.89% 9,904

Melco Crown Entertainment Limited
$7.52 $7.65 1.73% 4,100

Brigham Exploration Company
$14.79 $15 1.42% 6,581

Cogo Group, Inc.
$4.28 $4.33 1.17% 11,100

As of 7/11/2008 9:30:01 AM

NASDAQ - Pre-Market Ten Most Declined

Active Share Volume Advanced

Symbol

Company Name

Market
Close
Last Sale (Pre-Market) % Change
(Pre-Market)
Share
Volume

(Pre-Market)

Diamond Management & Technology Consultants, Inc.
$4.41 $3.15 28.57% 161,474

Tuesday Morning Corp.
$4 $3.40 15.00% 4,023

Big 5 Sporting Goods Corporation
$7.46 $6.40 14.21% 7,750

UAL Corporation
$4.17 $3.84 7.91% 110,279

FCStone Group, Inc.
$17.64 $16.25 7.88% 4,820

Amkor Technology, Inc.
$9.52 $8.83 7.25% 33,974

Infosys Technologies Limited
$43.99 $41.28 6.16% 32,503

NetLogic Microsystems, Inc.
$33.26 $31.37 5.68% 20,000

Lawson Software, Inc.
$7.17 $6.77 5.58% 265,471

Acergy S.A.
$18.32 $17.30 5.57% 55,553

As of 7/11/2008 9:30:02 AM



Pre-Market Most Active Stocks - NASDAQ Premarket



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