Archive for December, 2007
Posted by: in Housing
Filed under: Politics, Housing
The Wall Street Journal [subscription required] adds a new wrinkle to the story of efforts by subprime mortgage lender Ameriquest to use campaign cash to curry favor with the government. Ameriquest’s parent, ACC Capital Holdings, has paid $325 million to settle regulators’ claims that it charged excessively high mortgage rates and didn’t adequately disclose loan risks. The Journal’s story today highlights the $20.5 million Ameriquest spent at the state and federal government levels to block legislation that would have limited its predatory lending practices.
But as I posted in August, Ameriquest’s cash helped boost the fortunes of president Bush. Bush, who used home ownership politics to get re-elected, received $7.8 million from Ameriquest for his 2004 reelection campaign, his inauguration and for Laura Bush’s library foundation.
Ameriquest’s most interesting pay-to-play technique was to give Rolling Stones tickets and cash to state legislators. For instance, according to the Journal, “Arnold Schwarzenegger’s campaigns received at least $1.4 million, along with stacks of tickets to a Rolling Stones concert that were used to lure big donors.” And Ameriquest also handed out Rolling Stones tickets to state legislators in Georgia, Maryland, Nevada, Oregon, Utah, Washington and California.
What did Ameriquest get for all its giving?
It got two state legislatures to overturn legislation that blocked its business and kept a third say from introducing such legislation. In Georgia, the subprime industry helped overturn a law it opposed that required proof that a refinancing of any home loan less than five years old would have a tangible-net-benefit. In New Jersey, the subprime industry also rolled back the tangible-net-benefit rule. And In Texas, Ameriquest’s contributions helped block a law that would have restricted home appraisers from overvaluing homes — a contributor to subprime problems.
Will the subprime disaster become part of president Bush’s legacy? Ameriquest’s cash and Rolling Stones tickets recommend it already is part of the legacy of several say government officials.
Perhaps Ameriquest’s CEO, Roland Arnall, was inspired by the lyrics of the Rolling Stones’ song Sympathy for the Devil:
Please grant me to introduce myself
I’m a man of wealth and taste
I’ve been around for a long, long year
Stole many a man’s soul and faith.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Posted by: in Housing
Filed under: Before the bell, Market matters, Merrill Lynch (MER), Economic data, Housing
 That’s it, today is the last trading day and time has all but run up on anyone wanting to still impact their portfolio for 2007. Stock futures were higher this morning, indicating U.S. stocks could open on a positive note on 2007’s last trading day. And how fitting that this day, the latest reading on the ailing housing market — a subject that was key to 2007 — will be released.
Judging from the last holiday week, trading will continue to be thin and while stock markets are open regular hours, bond markets will close early at 2 p.m. EST.
While on Friday stocks barely moved with the Dow industrials rising 6 points, or 0.05%, the Nasdaq Composite declining 2 points, or 0.09%, and the S&P 500 adding 2 points, or 0.14%, for the year stocks will have likely completed with gains. Despite the turbulent year, so far, the Dow is up over 7%, the S&P 500 is up over 4% with financials weighing it down, while the tech-heavy Nasdaq Composite up over 11% thanks to such stocks as Apple (NADSAQ: AAPL), Google (NASDAQ: GOOG) and Research in Motion (NASDAQ: RIMM).
No doubt, many recaps and summaries will be done this day, but the year isn’t over yet and at 10:00 a.m. EST, the National Association of Realtors is due to report November existing home sales. After already setting a record low last month with an annual rate of 4.97 million, economists are looking for annual growth ranging between 4.7 million to 5.15 million according to Bloomberg, pointing to continued housing recession in 2008 that’ll continue to weigh heavily on the economy.
Overseas, Asian markets have already wrapped-up their year. “This year, the world discovered the Chinese stock market.” Indeed, the Shanghai Composite index soared 97% this year, making it the world’s best-performing major benchmark index. Other Asian exchanges finished the year higher as the MSCI Asia Pacific Index advanced 12% in 2007.
While several European markets are still open at this time, in general, markets are declining, “leaving the Dow Jones Stoxx 600 Index on track for its first annual decline since 2002” of 0.2%.
Not performing superior than the Nasdaq composite, bonds beat the S&P 500 so far in 2007, having the ideal year since 2002. Treasuries returned 8.7%, according to a Merrill Lynch & Co. index, as losses tied to subprime mortgages stoked demand for the safety of government debt.
Conversely, the dollar traded at a two-week low versus the euro and yen today. As of Friday, it has lost 11.4% this year against the euro, and 6% against the yen this year.
Also in corporate news this morning:
Kirk Kerkorian’s Tracinda said it is going to purchase 35% of Delta Petroleum (NASDAQ: DPTR) for $684 million, or $19 a share. DPTR shares are up 22.5% in premarket trading to $19.
According to The Observer, Merrill Lynch & Co (NYSE: MER), despite a recent huge injection from Temasek , is in speaks with Chinese and Middle Eastern sovereign wealth funds that could lead to the sale of another big stake.
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Posted by: in Housing
Filed under: Politics, Housing
The Wall Street Journal [subscription required] adds a new wrinkle to the story of efforts by subprime mortgage lender Ameriquest to use campaign cash to curry favor with the government. Ameriquest’s parent, ACC Capital Holdings, has paid $325 million to settle regulators’ claims that it charged excessively high mortgage rates and didn’t adequately disclose loan risks. The Journal’s story today highlights the $20.5 million Ameriquest spent at the state and federal government levels to block legislation that would have limited its predatory lending practices.
But as I posted in August, Ameriquest’s cash helped boost the fortunes of president Bush. Bush, who used home ownership politics to get re-elected, received $7.8 million from Ameriquest for his 2004 reelection campaign, his inauguration and for Laura Bush’s library foundation.
Ameriquest’s most interesting pay-to-play technique was to give Rolling Stones tickets and cash to say legislators. For instance, according to the Journal, “Arnold Schwarzenegger’s campaigns received at least $1.4 million, along with stacks of tickets to a Rolling Stones concert that were used to lure large donors.” And Ameriquest also handed out Rolling Stones tickets to state legislators in Georgia, Maryland, Nevada, Oregon, Utah, Washington and California.
What did Ameriquest get for all its giving?
It got two say legislatures to overturn legislation that blocked its business and kept a third say from introducing such legislation. In Georgia, the subprime industry helped overturn a law it opposed that required proof that a refinancing of any home loan less than five years old would have a tangible-net-benefit. In New Jersey, the subprime industry also rolled back the tangible-net-benefit rule. And In Texas, Ameriquest’s contributions helped block a law that would have restricted home appraisers from overvaluing homes — a contributor to subprime problems.
Will the subprime disaster become part of president Bush’s legacy? Ameriquest’s cash and Rolling Stones tickets recommend it already is part of the legacy of several say government officials.
Perhaps Ameriquest’s CEO, Roland Arnall, was inspired by the lyrics of the Rolling Stones’ song Sympathy for the Devil:
Please allow me to introduce myself
I’m a man of wealth and taste
I’ve been around for a long, long year
Stole many a man’s soul and faith.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Filed under: Products and services, Technology
Don’t forget that new rules regarding air travel with lithium batteries take effect on January 1. Spare lithium batteries — meaning those not installed in the devices they are intended to support — may not be packed in checked bags. Spare batteries in carry-on baggage must remain in the original packaging or be put in plastic bags so that leads are not exposed.
Batteries, whether spare or installed, are also subject to quantity restrictions. Those with up to 8-oz. of lithium, or about 100 watt-hours, are granted. That includes cell phone lithium ion batteries, as well as most laptop batteries. You can also bring additional spare batteries with an aggregate of up to 25-oz. of lithium, or 300 watt-hours. However, you may only bring up to 2-oz. of lithium metal per battery. Most consumer lithium metal batteries are below that limit, but check with the manufacturer of your devices if you are unsure.
In a nutshell, traveling with most lithium batteries intended for consumer devices should be okay, but those for professional grade equipment may be confiscated.
The fear is that non-rechargeable lithium batteries might pose a fire hazard. The FAA has found that the fire-protection systems in the cargo holds of passenger planes can’t extinguish fires sparked by lithium batteries. And the NTSB has not ruled out that a fire in a cargo plane at Philadelphia International Airport last year was caused by lithium batteries.
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Filed under: Products and services, Television, Competitive strategy, Sony Corp ADR (SNE)
 Indicating reduced profitability in the video display market, Fujitsu (OTC: FJTSY) has announced its departure from the production of high end plasma TVs. This news comes via ars technica and is indicative of a major trending pattern. Much is astir among Japanese electronics manufacturers as companies there take a turn for the lean and are engaged in forming manufacturing power alliances.
Much is being affected by the near total domination of liquid crystal display technology within a tightening, yet deepening image display sector. Take further evidence of change by considering Brian White’s post about the exit from rear projection television by Sony Corp. (NYSE: SNE). The LCD field is currently saturated and for it’s improvement it needs to thin out.
Strides are still being made in regard to making LCD displays thinner and engineers are working on reducing power consumption. Little can be done however, to improve LCD profitability with so many companies cranking out cheap displays. What’s needed now is for some of the remaining display manufacturers to aggressively address some considerable quality issues.
Gary Sattler does not knowingly hold financial interest in the companies he blogs about.
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Filed under: Products and services, Israel
Verint Systems (OTC: VRNT) provides analytic software-based solutions for the security and business intelligence markets. Its analytic solutions collect, retain, and analyze voice, fax, video, email, world wide web, and data transmissions from voice, video and IP networks, for the purpose of generating actionable intelligence for decision makers.
The company has had a tough last couple of years, but much of the drop was unjustified. Because of filing problems at Verint’s parent company, Comverse Technology (OTC: CMVT), Verint was delisted from the Nasdaq and has been trading on the pink sheets. Its business is growing strongly. It continues to sign deals, highlighted by the recent announcement that the Port Authority of New York and New Jersey will expand its deployment of Verint’s Nextiva Critical Infrastructure (CI) solution and integrated analytics at all security checkpoints within LaGuardia and Newark Liberty International Airports.
Verint’s problem is with low volume — institutions are unable to take a position in the stock due to the low trading volumes. We expect these low volumes to continue until parent company Comverse Technology resolves its filing situation. Once this takes place, and Israeli Verint re-lists on the Nasdaq, the stock should move up strongly, as it is trading at just 9.7 times next year’s estimates and is also near a 50% discount to competitor NICE Systems (NASDAQ: NICE). I am looking for large returns from Verint in ‘08.
DISCLOSURE: Writer is long VRNT, NICE, and CMVT as of 12/28/07.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.
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Posted by: admin in Today News
Finance minister's adviser Shome quits - Times of India
Press Trust of India |
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Filed under: Other issues, Products and services, Law, Consumer experience, Money and Finance Today, Economic data
 For millions of people, one of the most anticipated treats of any year is getting that tax refund check in the mail from Uncle Sam. Folks file their taxes early in hopes of getting back their tax refunds as early as possible, but this year may prove to be a bit frustrating, as around 3 million taxpayers could see delays in their refunds.
Why? The main reason for the upcoming delays is a current law change by Congress relating to the nation’s alternative minimum tax. Delays pushed the changes to the end of the year, and with the action coming so close to tax season, the IRS is now struggling to reprogram its computers to deal with the changes.
For those of you unfamiliar with the substitute minimum tax (or AMT), it was instituted in 1970 as a way to ensure that upper-income families couldn’t avoid paying taxes through their legal deductions. At the time that it was established, the AMT was aimed at only the top 155 families in America, who had so many tax deductions that they could effectively avoid paying Uncle Sam all together… and we all know how much Uncle Sam likes to get paid!
However, through the years there has been one major problem with the alternative minimum tax: inflation, or more specifically, the fact that the tax law has not been adjusted to deal with inflation. As a result, instead of a couple hundred people falling into the minimum substitute tax bracket, there are now millions. It is estimated that by the year 2010, one out of every five households would fall into the AMT bracket if changes are not permanently made to the current system.
So for millions of taxpayers, the delays in their refunds should be a welcome treat, since it is after all due to the fact that they will be able to avoid falling into the substitute minimum tax bracket. For now it looks like the moves by Congress will only affect the 2007 tax year, but lawmakers have also said that Congress will look at a permanent fix to the problem next month when they reconvene after the holiday break.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.
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Filed under: International markets, SEC filings, Products and services, Management, Middle East, Oil, Headline news
 Dubai World, a state owned investment company, announced that it has increased its ownership in MGM Mirage (NYSE: MGM) to 6.5% by purchasing an additional five million shares of stock in the company.
Following the announced purchase, Lawrence Klatzkin of Jefferies & Co. told his clients that MGM is one of his top three picks and maintains a “buy” rating. According to Klatzkin, investors can expect to see Dubai World continue to add to its MGM holdings. This will continue to help keep the stock strong and definitely minimize any sort of downside risk.
Dubai, which has been swimming in money since the oil boom brought billions into the economy, has been moving fast over the past decade to branch out in its revenue streams. Seeing the end of the country’s oil reserves in the near future, the country has been working hard to become one of the world’s top tourist destinations, and moving into Las Vegas gaming is just one more step in the country’s strategy to remain a relevant world player once the oil runs dry.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the internet investment advisory service Investor’s Observer.
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Posted by: in Housing
Filed under: Other issues, Housing, Federal Reserve
The U.S. Federal Reserve announced that $16.5 billion of its first $20 billion in loans under its term auction facility went to institutions in the New York district [subscription required], an area that includes the headquarters of some of the nation’s largest banks, The Wall Street Journal reported on Friday. The Fed doesn’t disclose loan sizes or borrowers’ identities.
Meanwhile, the Fed’s Dallas district reported loans of $1.4 billion, while the St. Louis district reported loans of $1 billion.
Earlier this fall, the Fed established the term auction facility as an substitute short-term loan operation because banks were reluctant to access the Fed’s traditional short-term window, the discount window. Banks became reluctant to borrow from the discount window because of the stigma attached: doing so can telegraph distress to other banks.
Fed Analysis: So far, the Fed’s effort, along with the effort of the European Central Bank and other major central banks, to provide short-term loans to banks appears to be working. Both overnight and two-week liquidity has improved, as measured by yield spreads and transaction conditions. A later announcement by the Fed to maintain the term auction facility “for as long as necessary” further calmed the markets. Still, investors/readers should keep in mind that the housing correction / credit quality issue is young: given the plethora of at-risk subprime loans and related assets, more default declarations are undoubtedly ahead in 2008.
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