Before The Bell: Fire Sale and Dollar Dive
S&P and Moody's have started a ripple effect. The dollar continues to plunge. Futures point lower.
FT reports the threat of forced sales of mortgaged-backed securities are rising after downgrades by the major ratings agencies pushed the debt vehicles into default. Standard & Poor's and Moody's have received default notices for $5 bln worth of collateralized debt obligations in recent weeks giving investors in senior tranches the right to sell assets. Read Minyan Peter's The Ripple Effect of Collateralized Debt Downgrades and Toddo's Level III Assets Broken Down.
From the Bull Pen: Bulls looking for a play in the financial sector may find safety in Mastercard (MA) with the company's revenues deriving from transaction fees as opposed to having credit-risk; near-term sell-stops at $175.
From the Bear Cave: Given the news in General Motors (GM), bears can look to General Electric (GE), which also derives substantial income from finance-based operations. Buy stops should be set above $42.
The Dollar Dive
Bloomberg reports the U.S. dollar fell the most since September against six major currencies after Chinese officials hinted of plans diversify the country's $1.4 trillion of foreign exchange reserves. Officials of China's National People's Congress stated the dollar is losing its status as the world currency and that China will readjust accordingly. Read about dollar devaluation vs. asset class deflation in Toddo's Fire on the Mountain and Russian Roulette!
From the Bull Pen: Contrarian players with more risk-tolerance may look for a snapback in the dollar bullish fund (UUP), sell-stops below $23.50.
From the Bear Cave: Those believing the dollar has more room to slide may look to the inverse ETF, the dollar bearish fund (UDN); sell-stops below $27.75.
Click on Minyanville's Stocks To Watch for more company-specific ideas.
Quick Check Around the World
Asian trading closed with the Hang Seng +0.92%, Nikkei -0.94%, Sensex -0.93%, Taiwan +0.08% and Shanghai +1.18%.
A quick check of Europe finds the CAC -0.66%, DAX -0.59%, FTSE -1.12%, ATX -1.10%, Swiss Mkt. -0.51% and Stockholm -1.35%.
As of 9:00 AM EST, S&P futures are trading -15.90 points and Nasdaq futures are down -16.00 points.
A Look At Commodities
Crude oil is trading higher +1.12 to 94.83. Gold is up +18.0 to 841.00. Silver is also higher +0.54 to 15.92. Copper is lower -1.75 to 332.40.
On the Radar
Here's a preview of economic events scheduled for today.
8:30 Productivity – Prel: 2.5% cons
10:00 Wholesale Inventories: 0.1% cons
10:30 Crude Inventories: -3894k prev.
2:00 Consumer Credit: $8.0 bln cons
Click here for Minyanville's full trading radar.
Good luck, Minyans! Have a great day!
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