Wang’s Happy Trading

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From Briefing.com

Periodicals Wrap-Up for Friday, September 19th
WALL STREET JOURNAL: Add Citigroup’s (C) name to the list of potential bidders for Washington Mutual (WM), the Wall Street Journal said. Despite its own problems Citi has raised over $40B in capital and now is in a strong position to expand. “People view us today as being a source of the solution, instead of part of the problem,” says Gary Crittenden, Citi’s CFO, who didn’t directly comment on WaMu…FINANCIAL TIMES: The Financial Times reported that five banks have examined Washington Mutual’s financial records in the framework of an auction process being managed by WaMu’s advisor, inside sources said. Along with Citigroup, the five banks include JPMorgan (JPM), Wells Fargo (WFC), HSBC (HBC), and Banco Santander (STD), according to the sources. It is unknown which, if any, of the five banks intend to bid…BLOOMBERG: Three people familiar with the matter said that Lehman Brothers (LEH) is in talks to sell some of its Japan assets to Sumitomo Mitsui Financial (SMFJY). Additionally, Bloomberg reported that Lehman Brothers Japan is trying to sell its equity, investment banking and real-estate assets to Barclays (BCS) and Mitsubishi UFJ Financial (MTU)…NIKKEI: General Motors (GM) is in talks to sell its commercial truck business to Isuzu Motors, the Nikkei reported. This would represent the first acquisition of a U.S. Big Three automaker’s business by a Japanese carmaker…

SEC halts short selling of financial stocks
The Securities and Exchange Commission, acting in concert with the U.K. Financial Services Authority, today took temporary emergency action to prohibit short selling in financial companies to protect the integrity and quality of the securities market and strengthen investor confidence. The U.K. FSA took similar action yesterday.

Paulson briefs Congress on bad debt plan, some details emerge-CNBC
Treasury Secretary Henry Paulson provided Congressional leaders with details of the government’s plan to deal with bad debt held by financial firms. The plan, which may include the creation of a government entity for assuming the bad debt, could cost up to $500B, a Bush administration official said. Under the initiative, the government would buy private label mortgages, as well as additional government-backed mortgages.

Asian Markets Wrap-Up for Friday, September 19
Stocks in Asia soared and all markets there advanced, a result of central banks putting cash into money markets, and as plans unfolded to help banks and insurers…JAPAN: The Nikkei 225 Stock Average rose 431.56, or 3.8%, to 11,920.86, while the broader Topix index increased 51.44, or 4.7%, to 1,149.12. Resona was up 18% to Y134,300. Mitsubishi UFJ Financial Group (MTU) added 12% to Y862. Orix (IX) surged 16% to Y13,730. Mitsui O.S.K.was up 10% to Y1,091. Nippon Steel Corp. climbed 11% to Y442…CHINA: The CSI 300 was up 177.12, or 9.3%, to 2,073.11. ICBC bank increased 9.9% to 3.78 yuan. Bank of China added 10% to 3.36 yuan. China Construction was also up by 10% to 4.19 yuan…AUSTRALIA: The S&P/ASX 200 Index increased 196.80, or 4.27%, to 4,804.10. Macquarie Group leapt 38% to A$35.90. National Australia Bank (NABZY) added 17% to A$23…AROUND ASIA: In Hong Kong, the Hang Seng Index advanced 1,695.27, or 9.61%, to 19,327.73…In South Korea, Kookmin Bank (KB) jumped 7.1% to 55,900 won. Hanjin Shipping Co. increased 11% to 29,000 won.

Morgan Stanley looks to sell stake to China Investment Corp-FT
The Financial Times reports that Morgan Stanley (MS) is in talks to sell a stake in itself to China Investment Corp, a move which people familiar with the discussions say management would prefer to a merger with Wachovia (WB). The sources say talks with CIC are “advanced,” although no deal has yet been formed. CIC currently holds a 9.9% stake in Morgan Stanley and a stake sale could bring the investment fund’s total holding to 49%.

Russia to sell arms to Iran and Venezuela-TimesOnline
“Contacts between our countries are continuing and we do not see any reason to suspend them,” says Anatoli Isaikin, general director of Rosoboronexport, the Russian state arms exporter about his country’s plan to sell military hardware to Iran and Venezuela.

Credit concerns causes commercial paper market to break down-WSJ
Companies go to the commercial paper market for short term funding. Yesterday, overrun by investor concerns about the safety of money market funds, it wasn’t’ working, reports the Wall Street Journal. “We are not functioning in the short term credit market,” says Howard Simons with Bianco Research. “We have issuers who can’t issue and buyers who won’t buy. How can this market function?”

U.S. equity futures remain higher
Stock futures remain higher after additional guarantees to the financial system were announced by the Treasury Department. Treasury said that it will insure money market holdings “for the next year”. That news gave an additional lift to the already strong futures. With little in the way of traditional economic news scheduled for release today, investors will await any additional details on a bailout package.

Fed to help stabilize money market funds with loans to banks-CNBC
Banks can use Fed loans to buy asset-backed commercial paper.

Credit crisis may force consolidation in the oil industry-WSJ
Falling energy prices may lead to consolidation among energy firms in North America, reports the Wall Street Journal. For the first time in years, larger, financially sound companies smell an opportunity to pick up smaller, troubled firms. “These guys have been waiting for this correction in the market to build up their longer-term inventory of growth. They have not been growing by the drill bit,” says Thomas Ebbern with Tristone Capital in Calgary.

Is short selling to blame for bank stocks fall?-WSJ
Regulators are restricting short selling to halt the decline in some bank’s shares. But is targeting a key stock market function that allows investors to hedge their long positions the right move? asks the Wall Street Journal’s “Heard on the Street”. What if it doesn’t work and banks stocks continue to decline? It’ll mean the problem is not short selling and that the focus should be on other fundamental problems.

US Treasury announces guaranty program for money market funds
he U.S. Treasury Department announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund � both retail and institutional � that pays a fee to participate in the program. President George W. Bush approved the use of existing authorities by Secretary Henry M. Paulson, Jr. to make available as necessary the assets of the Exchange Stabilization Fund for up to $50 billion to guarantee the payment.

Sudden Impact: Think the Next Day Ahead
The key today is not how we open, but how we close. It does look like after all the drama of the week that the major averages will close flat to up, something that seemed impossible yesterday before the various initiatives were launched. Amazingly even with today taken into account we will be getting back to the July low in the NDX and the March low in the SPX as we previously noted. One thing to add to the list of risks looking ahead for next week is what may happen post-expiration. Keep NDX 1761.08 and SPX 1256.98 on the radar. Those are the new objectives (and pins) for today that traders are pushing to. One other thing for technicians. We are going to have the potential for a major gap-up on index charts which is a very rare event. If we get one, technical systems are going to interpret that as a bullish break. That may get buy systems even more roaring than they are now. There are only a handful of such events by the way going back 80 years. If the gap holds, we are into something interesting.

Natural Gas: Adjusting estimates lower on macroeconomic outlook@CSTI
Collins Stewart adjusted lower their 2008 and 2009 earnings and cash flow estimates for most names in the group to reflect the shift in the macroeconomic outlook. Collins expects the lower demand for energy to continue as the current financial crisis results materially lower U.S. and global economic growth. Estimates lowered for: GDP; CRK; TXCO; GSX; WRES; NGAS; RAME; DBLE.

Fed to buy Fannie Mae and Freddie Mac discount notes from primary dealers
To further support market functioning, the Federal Reserve also plans to purchase from primary dealers federal agency discount notes, which are short-term debt obligations issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

United Therapeutics-UTHR upgraded to Buy from Hold@STFG
After holding discussions with several investigators of the company’s Freedom-C trial as well as several experts, Stanford increased their estimate of the odds of Freedom C’s success to 755 from 40%.

Jim Cramer’s “Mad Money”
Cramer advised selling into any future rallies to free up cash for the declines that are most certainly ahead. He said Thursday’s 410-point rally in the Dow was entirely due to rumors that the federal government is considering a resolution mortgage trust to begin buying up bad home loans in an effort to rescue the U.S. banking system. He said the Fed needs to cut interest rates to 1% to spur growth and add liquidity into the markets. He again urged the re-instatement of the uptick rule. And finally, Cramer said regulation is needed to stop the credit default swap activity that companies have been engaging in. All of these things, said Cramer, are what the markets need to finally put the housing and financial crisis behind us. Then, Cramer talked with Richard Dugas, pres/CEO of Pulte Homes (PHM), about the state of the housing market. Dugas said he still feels there’s a ways to go before the housing market hits bottom. He said that while the situation is improving, there is still a lot of excess home inventory that needs to be worked off. Dugas said his company currently has one of the best balance sheets in the industry, with over $1B in cash. Both Cramer and Dugas agreed that now may be a great time to buy a home and shares of Pulte Homes. SELL BLOCK: Cramer said that the markets are clearing saying that investment banks, like Goldman Sachs (GS), just cannot be owned, while other companies, like General Mills (GIS), and Heinz (HNZ) are the place to be. Cramer says put the investment banks, like Goldman, on the back burner, and instead focus on the deposit banks, such as Wells Fargo (WFC) US Bancorp (USB), Bank of America (BAC), Wachovia (WB) and JPMorgan Chase (JPM). Cramer said even names like Tootsie Roll (TR),which is now on the SEC’s watch list of heavily shorted names, will likely see a pop as the shorts vacate in droves. MAD MAIL: Cramer expects Cal-maine Foods (CALM) to rise now that it’s on the SEC’s list of heavily shorted names. He still likes Panera Bread (PNRA) more, but thinks that any profitable company on the SEC’s list should do better going forward. Cramer is still a believer in Clean Energy (CLNE) as a speculative stock. LIGHTNING ROUND: (Bullish) FRO; NAT; SHLD; PCU; WAG; AAPL. (Bearish) RF; ING.

Fast Money Position recap- Macke Owns (SDS), (WMT), (MSFT); Adami Owns (AGU), (BTU), (C), (GS), (MSFT), (NUE); Pete Najarian Owns (AAPL) And (AAPL) Collar; Pete Najarian Owns (ETFC); Pete Najarian Owns (MS) And (MS) Puts; Pete Najarian Owns (NOK) And Is Short (NOK) Calls; Pete Najarian Owns (RIMM) Call Spreads; Pete Najarian Owns (TSO) Call Spread; Pete Najarian Owns (WB) Put Spread; Pete Najarian Owns (WM) And (WM) Puts; Pete Najarian Owns (XLF) And (XLF) Puts; Finerman Owns (GS); Finerman’s Firm Owns (MO), (MSFT), (NOK), (SUN), (TSO), (VLO); Finerman’s Firm Owns (WFC) Puts; Finerman’s Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (COF)

Can you believe this rally? Wow this whole week has been historic and you will remember this week for the rest of your lives….I went cash as soon as my spidey senses knew something was wrong with the bear thesis. The late day rally made me more convinced to go long. This gap up is extraordinary and should be watched to see how strong it is. I’m looking to go long and have developed a new strategy moving forward. Target the issues with the highest short ratios and short interest, there you will find glory. I’m sharing my list in the trading room, see you there.