Thursday, October 8, 2009

Thursday Morning

Stock futures are up this morning after a better than expected earnings report from DJIA component Alcoa (AA). The aluminum company's shares are up 6% in early trading. Jobless claims fell slightly, giving a further boost to shares.

Latvia, in need of a international bailout, is facing criticism of its handling of bad mortgages.
“By trying to change the legislation so that the debts can only be limited to the collateral total, that kind of gives the game away, and that, together with the Swedes’ saber-rattling, they really are out there on the edge now,” said Oates, former head of east European equities at UBS AG, by phone from Tallinn, Estonia.

Two smart portfolio managers share their next two short-selling targets.
David Einhorn, the manager of hedge fund Greenlight Capital, minted money betting Lehman Brothers would collapse under its oppressive debt. Now he is wagering that global investors will lose faith in America, thanks to the country's post-credit crisis spending. At the same conference where Einhorn spoke, Bill Ackman, founder of Pershing Square Capital Management, announced his intention to short shares in Escondido, Calif.-based Realty Income.

This should surprise no one. The Federal Housing Administration, which effectively has stepped in to make bad loans after private lenders stopped, will need a bailout.
The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, Pinto said. The trend has left the agency backing risky loans and exposed to fraud in a “market where prices have yet to stabilize,” he said. The program insures loans with down payments as low as 3.5 percent and has no formal credit-score requirements.

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