The Stocks will be going to zero

Now "zero" ratings are proliferating. Here are the stocks which are predicted will be going to zero via Business Week:

1. IndyMac Bank (IDMCQ)
   The trend may have started over the summer when some enterprising banking analysts predicted that shares of IndyMac Bank (IDMCQ) in Pasadena, Calif., would go to zero. Bravo to them, since the stock was recently about 4 cents a share.


2. Nortel Networks (NT)
   RBC Capital Markets (RY) analyst Mark Sue slapped a target price of zero on telecommunications-equipment maker Nortel Networks (NT).


3. General Motors (GM)
   Deutsche Bank analyst Rod Lache says General Motors (GM) shareholders will have worthless stock certificates within 12 months.


4. Sirius XM (SIRI)
   Henry Blodgett thinks satellite radio provider Sirius XM (SIRI) is headed for bankruptcy. Analysts at Morningstar (MORN) say the shares of 32 of the 2,000 companies they cover are likely to become worthless.


5. Citadel Broadcasting (CDL)
   According to Morningstar, Citadel Broadcasting (CDL), are in the media industry, where heavily indebted companies are seeing advertising revenues plunge.


6. Mesa Air Group (MESA)
   According to Morningstar, Mesa Air Group (MESA) faces a lawsuit over its operations in Hawaii and could see lower payments from its carrier partners.


7. Decode Genetics (DCGN)
   According to Morningstar, Decode Genetics (DCGN), which uses genealogical records from Iceland to understand genetic diseases, hasn't had any drugs approved by the Food & Drug Administration and could run out of cash.

At Morningstar, the number of companies seen as likely to go out of business has doubled in the past few weeks, and the firm expects the number to rise. Its sector analysts calculate fair value for every stock they cover based on fundamentals, says analyst Matthew Coffina, author of Morningstar's "Most Overvalued Stocks" column. Setting a value of zero "says there's a considerably better than 50% chance a stock will be worthless," he adds.

Coffina says Morningstar isn't advocating that investors sell those shares short, but it wants to warn shareholders who may be hoping for a recovery. "Even selling at 30 cents is a huge return if shares are going to zero," he says.

Sources :

Business Week: Predicting Which Stocks Are Going to Zero, December 11, 2008, 5:00PM EST

Please Note!

This is generally never true. Before buying or selling any asset you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

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Goldman Sachs cut its commodity price forecasts for 2009

According to Reuters, Goldman Sachs slashed its commodity price forecasts, citing a collapse in global economic growth and demand because of the credit crisis. After the bank predicted earlier this year oil prices will reach $200 a barrel, now it expects to see crude average $45 a barrel next year. The intensity of the global credit crunch threatens to push oil prices below $40 a barrel in the near term.

Forecasts for industrial metals aluminum and copper traded on the London Metal Exchange were cut substantially to $1,410 and $2,950 a tone next year from $2,310 and $5,230, respectively.

Meanwhile, Goldman thinks demand for agricultural products will be relatively insulated, even though it has drastically cut forecasts for corn and wheat.

"Expected challenges to acreage expansion in the upcoming planting seasons, suggests less downside from current levels and the potential for a moderate price rebound in late 2009."

Goldman expects investors looking for safety from the financial and economic crisis and a weaker dollar will boost prices of gold and silver. Gold is used by investors as a hedge against financial turbulence and as an alternative currency to the dollar.

Goldman expects economic activity to bottom in the middle of 2009 and a return to year-on-year growth in the fourth quarter of next year.

Related Posts :

Crude oil forecast for 2009

Sources :

Reuters: Goldman slashes 2009 commodity price forecasts, December 12, 2008 9:25am EST

Please Note!

This is generally never true. Before buying or selling any asset you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.

The most illiquid assets rose 15.5% to $610bn in the third quarter

The assets at “level three”, the most illiquid and is classified as hard to value and hard to sell, rose 15.5 % to $610bn in the third quarter.

Here is from FT:

The biggest US financial institutions reported a sharp increase to $610bn in so-called hard-to-value assets during the third quarter, raising concerns about the hidden dangers on balance sheets.

So-called level-three assets, classified as hard to value and hard to sell, rose 15.5 per cent from the second quarter, according to analysis by the Market, Credit and Risk Strategies group of Standard & Poor’s.

Level-three assets have risen all year for most banks as they have found it virtually impossible to sell mortgage-backed securities and collateralised debt obligations.

“A lot of banks are saying: ‘I am going to move securities to level-three assets because I have more control over, and confidence in, the model used for their valuations’,” said Gregg Berman, head of the risk management unit at Risk Metrics.

The study is based on regulatory filings by the biggest underwriters and traders of mortgage-backed securities and CDOs. These asset classes have plunged in value amid a wave of house price falls and foreclosures and are at the centre of the crisis.

Next week, Goldman Sachs and Morgan Stanley will be the first banks to report fourth quarter results, which are likely to be scrutinised for information about their holdings of opaque assets.

Michael Thompson, managing director of MCRS, said he would be “surprised if we did not see writedowns of these level-three assets” in the fourth quarter.

Already, level-three assets are many times bigger than the market cap of the banks. The US Treasury had planned to buy these using the $700bn troubled asset relief programme but changed tack and has used some funds for capital injections.

Mr Thompson said it was hard to imagine banks would not have to take further writedowns.

Related Posts :

Dec 2008-Bank, broker & countries default risk

Sources :

The Financial Times: Financial groups’ problem assets hit $610bn, December 10 2008 23:32

Please Note!

This is generally never true. Before buying or selling any asset you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.

Dec 2008-Bank, broker & countries default risk

From Prieur du Plessis:

Since a month ago the cost of insuring against government bankruptcy through CDSs has risen for all but two countries (Lebanon and Argentina) in Bespoke’s list of 38 countries. The table below shows the current (December 4) CDS prices, together with month-ago and start-of-year prices. Argentina, Venezuela, and Iceland have the highest default risk.

Interestingly, Germany, Japan, and France all have lower default risk than the US at the moment. It now costs $60 per year to insure $10,000 against US default for the next five years. “While this may not seem high, it was at $8 earlier in the year, and $36 one month ago,” said Bespoke.

Click to enlargeTable courtesy of Bespoke
As shown in the table below, Ireland, Austria, Greece, and the UK have seen default risk rise the most over the last month. Notably, the US has risen by 68%.

Click to enlargeChart courtesy of Bespoke

From Bespoke:

As shown by table below, Morgan Stanley (MS) still has the highest default risk, followed by Goldman (GS), Citigroup (C), Merrill Lynch (MER), UBS (UBS), and Bank of America (BAC). While none of the firms below have CDS less than 100 basis points, HSBC, Deutsche Bank (DB), Wells Fargo (WFC), and JP Morgan (JPM) have the lowest default risk at the moment.

Click to enlargeChart courtesy of Bespoke

Related Posts :

CDS Prices (Default Risk) for Major Banks & Brokers

Sources :

1. Investment Postcards from Cape Town: Credit Crisis Watch, December 8, 2008
2. Bespoke: Country Default Risk Rises Across the Board, December 04, 2008 at 12:27 PM
3. Bespoke: Bank and Broker Default Risk, December 10, 2008 at 11:02 AM

Please Note!

This is generally never true. Before buying or selling any asset you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.