That Was The Week That Was – 4th Week December

• Monday last the Dow sank as AmEx lead the sector’s decline. Other indices up.
• Getting ready to buy, buy, buy. Blackstone Group finalized plans for huge $15 billion buyout fund. The amount less than the $26 billion raised in 2006 is considered an enormous achievement in today’s  economic market. Blackstone’s stock has not been getting any respect in 2010. Up a paltry 8%.
• AT&T is gearing up to jump start its stock price. In addition to a 2.4% dividend increase the company will pay almost $2 billion for a bundle of spectrum licenses from Qualcomm. This is needed to provide advanced 4G mobile broadband services for new era smart phones. Can you say, Watson, I need to see you?
• A return to days of yore as banks are lining up to profit from the declining finances of U.S.cities and states, according to the WSJ on-line December 21st. CDS are back. Credit default swaps compensate buyers of a muni-issuer when it misses an interest payment or restructures its debt. Remember AIG, anyone?
• In spite of investor kvetching from February to September the Dow did an about face 2010 and was up 10.6% by Tuesday December 21st and climbed 76% since hitting a 12-year low March 2009.
• Banks lead the way on Tuesday. China helped when Vice Premier Wang Qishan said it supported efforts by European officials to stabilize the global markets hit by the euro zone debt crisis.
• The WSJ reported December 21st that traders are actually hoarding raw metals in warehouses for delivery! Normally traders simply sell before taking delivery because of the cost to warehouse and ensure. Today there is a trader who owns $3 billion of copper and holding it in warehouses. This is about half the world’s exchange registered copper stockpile. Barclays Capital announced that copper demand is likely to outstrip supply this year by an estimated 455,000 metric tons.
• The Lords of Go-Zintas are in deep trouble as accounting firm Ernst & Young is accused by NY AG and future Governor Cuomo of aiding Lehman Brothers in erasing as much as $50 billion in bad assets off the books to make the company look healthier. And Deutsche Bank agreed to pay more than $550 million and admitted criminal wrongdoing to settle a long-running probe over creating tax shelters that allowed clients avoid paying billions in U.S. taxes. Where is H&R when you need them the most?
• The economy has shown signs of accelerating according to the WSJ, on heels of another positive market day. New and existing home sales increased from the previous month and investors were less concerned with a double dip recession. GDP, a measure of goods and services produced, increased by 2.6% in the 3rd quarter, more than the government previously estimated. Inventory of homes fell to an adjusted 9.5 month supply.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.