Liquidity Programs and Opportunity Costs: U.S. Loss and China’s Gain

Yesterday, the Fed scaled back two of its liquidity-providing programs and announced it would let a third one expire on July 1, 2009.
Each program was designed to provide liquidity to securities dealers and money-market funds that couldn’t raise funds in the capital markets. The Fed noted that none of the programs were used anywhere close to capacity. And the improving economy and loosening of credit markets has made the programs less necessary.

VIX Showing Greater Uncertainty

Summer doesn’t officially start for a few more days. Tell that to the parents who are now getting their kids off to camp or getting ready for vacation. For the standard two-income household, living easy in summertime is just a memory. 
Including today, we have just 12 more trading days until the end of June and the end of the second quarter. I suspect we will have seen the highs for stock prices by then. That is, if we haven’t seen them already.

How Bernanke and Geithner String Along the Rally 24/7

Bravo. The government’s handling of the financial crisis and recovery should be recognized as a masterful performance. At least, so long as you don’t look too deeply into the numbers… 
Bernanke and Co. have managed to restore confidence to the point that economist Paul Krugman has joined the ranks of those who think we are only a couple months away from actual GDP growth.

Travelers (TRV) replaces Citigroup (C) on Dow

Perhaps you’ve heard the phrase "the sins of the father shall be visited on the son." Well, here’s a case where that’s definitely not true:  
Yesterday, The Travelers (NYSE:TRV) insurance took the place of its parent Citigroup (NYSE:C) on the Dow Industrials Average.  
Reuters reports that in 2002, when Citigroup spun off The Travelers, former Citigroup CEO and founder Sandy Weil said he wanted to focus on "…important opportunities to invest our capital really on a global basis, in much more high-growth businesses."

North Korea Missile Test Dampens Asian Markets

I hope every one had a fun and relaxing Memorial Day weekend. Pools are open, school is winding down, and summer is almost here. 
There were some fireworks over the weekend, but the not the fun kind. North Korea’s Kim Jong Il staged a nuclear bomb test and fired a couple short-range missiles. It’s reported that stocks in Asia were lower after the tests, but I think we need to be more clear about the risk that North Korea poses to the financial markets.

Greenspan and China Both Need to Be Quiet

One of the architect’s of the financial crisis issued a warning that banks still have unfunded liabilities that were not properly accounted for by the Treasury Department’s "stress tests."
Yesterday evening, Alan Greenspan also said that "…until the price of homes flattens out we still have a very serious potential mortgage crisis."

Rising Oil and Gas Prices During a Recession

You know over the course of the past few months I’ve not held Wall Street or the banking executives in high regard. I hold them almost – that’s almost – singularly accountable for our current recession (Uncle Sam and private citizens who borrowed too much are to blame as well), but the government is beginning to really stick its nose too far. For example, today’s headlines (those not about whether Nancy Pelosi knew about torture and when she knew it) are consumed with government pushing itself on private industry, most notably with the pressure on Bank of America (NYSE:BAC) to change its board.
 

USO, FEED Deliver: Next Up is GHM

The selling got serious yesterday. But once again, as TradeMaster technical analyst Jason Cimpl forecast, the dip was a buying opportunity. Stocks are up this morning as if nothing happened… 
But of course, something did happen. Cracks in the rally are beginning to show. And economic data is starting to weaken. Consider this morning’s Producer Price Index (PPI). This popular measure of inflation on the wholesale level came in stronger than expected. Prices for food are ticking upward.

GHM Up 65%

Oil is above $60 a barrel. Investors are buying on the expectation that the end of the recession is in sight. And hopefully, Daily Profit readers are benefiting via my recommendation of oil services company Graham Corp. (AMEX:GHM). Graham is breaking above $15 a share today. It’s now up 65% for those who have been following me for a while.