FEEDIt looks like “talk-too-much-itis” is running rampant amongst the financial company executives. Last week Angelo Mozilo, CEO Countrywide Financial (CFC), held the longest conference call in history. The more he talked the more the market dropped. We almost escaped this week without another market moving speech, but at 2PM on Friday Bear Stearns (BSC) decided that another one was warranted.
Having had two hedge funds collapse and having halted redemptions on another – the market needed to know that worst was over for Bear Stearns. Instead Sam Molinaro, CFO Bear Sterns, had the following to say, “I have been at this for 22 years. This is as bad as I have seen it in the fixed income market.” When asked if the company would initiate a stock buy back, often a sign of confidence, Molinaro said, “Our stock is very cheaply priced. The current stock price is not reflective of the value of the company, but we are going to preserve our capital to weather the storm.” In other words, why throw good money after bad. “Talk-too-much-itis” strikes again.
Anyone invested in anything housing related was destroyed this week. Accredited Home Lenders (LEND) stock price was played like a yo-yo. One day down 30% then next day up 30%. At one point on Wednesday, Beazer Homes (BZH) dropped 40% on rumors that was going under. By Friday, a share of American Home Mortgage Investment Corp (AHM) stock could buy about 2 ½ gumballs.
Even in the midst of such turmoil, the broad market would have closed up for the week if it had closed before the Bear Stearns call. From the start of the conference call until the market closed, the DOW lost 244 points. Thanks, for nothing.
For the week, the DOW, S&P 500 and NASDAQ were down 0.6%, 1.8% and 2.0% respectively. Semiconductors had another tough week down 2.9%.
The commodity patch was mixed. Precious metals may be its staking claim as a safe haven as Gold and Silver were up 3.7% and 3.5% respectively. Oil and Copper were down 2.0% and 1.9% respectively. Gold stocks, as represented by the XAU index, were down 0.8%.
Fear as measured by the VIX is as high as it has been since 2003. The Feds could calm the markets when they meet on Tuesday. My concern is that there is an eternity between now and the release of their statement at 2PM on Tuesday.
The TTaMG portfolios had another troubling week.
- Fab 4 -2.9%
- BBO 0.0%
- BRIC -2.3%
- Real Money -1.5%
- TBS -4.0%
- MDs Ag Play -4.6%
Once again, the only consolation is that we are smoking the market year to date.
More follows for Friends of TTaMG.
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