Credit Default Swap

The markets touched the positive end of the market pendulum today but faltered and ended near their sessions lows at the closing bell. Today in front of the Senate Banking Committee, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke were drilled over details of the $700 Billion bailout of the financial system. A question asked by Senators of Henry and Ben was, what is the money going to be used for, what are the assurances the plan will work and what do the American taxpayers get in return and the answer - not sure to the first question, no guarantees to second question and finally, toxic paper to the third question. Henry and Ben insist that there is no other alternative and that the bailout is in a sense of urgency and needs addressed as quickly as possible. Congress on the other hand are feeling pressured to address the proposal ahead of their scheduled break which is to begin, this weekend. Failing to pass the plan quickly would further threaten the economy and the financial markets, Bernanke said. "Government assistance should be given with the greatest of reluctance and only when the stability of the financial system, and, consequently, the health of the broader economy, is at risk," Bernanke said in prepared testimony before the Senate Banking Committee. "Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy." Representative. Barney Frank, Democrat from Massachusetts, chairman of the House Financial Services Committee, has been pushing for an independent oversight board, as well as stakes in any companies whose bad assets the government buys. While many people on Wall Street question if the government should get stakes in the companies if the assets are being sold at market prices, rather than at a discount well - if they don't get some help, they could end up going under so its only fair that the government aka. American taxpayers want a cut of what they are paying for. No free rides. Trading activity today as was yesterday, very sluggish with minimal spurts of activity. The ban on short-selling financial stocks is taking its toll on the activity of day traders. Amazingly though, financial stocks are still falling lower. Guess that means day traders should not ne held accountable for the falling stocks since they are capable of falling lower, all by themselves. Looks like Henry was looking for a fall guy in day traders and he was wrong in who was responsible. It's the economy stupid!  Another issue being thrown around today is the Credit-Default-Swap. The definition of Credit-Default-Swap is when the buyer or fixed rate payer makes periodic payments to the seller or floating rate payer in exchange for the right to a payoff if there is a default. Faulty use of the Credit-Default-Swaps has been blamed for the current credit crisis on Wall Street.  Government officials are pushing for regulation of the $62 Trillion market which is currently, unregulated. Counterparties of credit-default swaps thought to be a cousin of short selling, profit when the value of bonds go down. Under the new rules, such Credit-Default-Swaps can only be issued by entities licensed to conduct insurance business. The new guidelines will not take effect until January 1, 1009. The Crude Oil surge yesterday by 25 points, per the EIA Chief was likely a short squeeze and market manipulation.

Testimony by Secretary Henry M. Paulson, Jr. before the Senate Banking Committee on Turmoil in US Credit Markets: Recent Actions regarding Government Sponsored Entities, Investment Banks and other Financial Institutions Washington, DC - Chairman Dodd, Senator Shelby, members of the committee, thank you for the opportunity to appear before you today. I appreciate that this is a difficult period for the American people. I also appreciate that Congressional leaders and the Administration are working closely together so that we can help the American people by quickly enacting a program to stabilize our financial system. We must do so in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses both small and large, and the very health of our economy. The events leading us here began many years ago, starting with bad lending practices by banks and financial institutions, and by borrowers taking out mortgages they couldn't afford. We've seen the results on homeowners higher foreclosure rates affecting individuals and neighborhoods. And now we are seeing the impact on financial institutions. These bad loans have created a chain reaction and last week our credit markets froze even some Main Street non-financial companies had trouble financing their normal business operations. If that situation were to persist, it would threaten all parts of our economy. As we've worked through this period of market turmoil, we have acted on a case-by-case basis addressing problems at Fannie Mae and Freddie Mac, working with market participants to prepare for the failure of Lehman Brothers, and lending to AIG so it can sell some of its assets in an orderly manner. We have also taken a number of powerful tactical steps to increase confidence in the system, including a temporary guaranty program for the U.S. money market mutual fund industry. These steps have been necessary but not sufficient. More is needed. We saw market turmoil reach a new level last week, and spill over into the rest of the economy. We must now take further, decisive action to fundamentally and comprehensively address the root cause of this turmoil. And that root cause is the housing correction which has resulted in illiquid mortgage-related assets that are choking off the flow of credit which is so vitally important to our economy. We must address this underlying problem, and restore confidence in our financial markets and financial institutions so they can perform their mission of supporting future prosperity and growth. We have proposed a program to remove troubled assets from the system. This troubled asset relief program has to be properly designed for immediate implementation and be sufficiently large to have maximum impact and restore market confidence. It must also protect the taxpayer to the maximum extent possible, and include provisions that ensure transparency and oversight while also ensuring the program can be implemented quickly and run effectively. The market turmoil we are experiencing today poses great risk to US taxpayers. When the financial system doesn't work as it should, Americans' personal savings, and the ability of consumers and businesses to finance spending, investment and job creation are threatened. The ultimate taxpayer protection will be the market stability provided as we remove the troubled assets from our financial system. I am convinced that this bold approach will cost American families far less than the alternative a continuing series of financial institution failures and frozen credit markets unable to fund everyday needs and economic expansion. Over these past days, it has become clear that there is bipartisan consensus for an urgent legislative solution. We need to build upon this spirit to enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don't have broad support. This troubled asset purchase program on its own is the single most effective thing we can do to help homeowners, the American people and stimulate our economy. Earlier this year, Congress and the Administration came together quickly and effectively to enact a stimulus package that has helped hard-working Americans and boosted our economy. We acted cooperatively and faster than anyone thought possible. Today we face a much more challenging situation that requires bipartisan discipline and urgency. When we get through this difficult period, which we will, our next task must be to address the problems in our financial system through a reform program that fixes our outdated financial regulatory structure, and provides strong measures to address other flaws and excesses. I have already put forward my recommendations on this subject. Many of you also have strong views, based on your expertise. We must have that critical debate, but we must get through this period first. Right now, all of us are focused on the immediate need to stabilize our financial system, and I believe we share the conviction that this is in the best interest of all Americans.

Economic data released today: n/a

Hot Stock picks on the move today for day trading:
Bunge Limited (NYSE: BG) and Massey Energy Company (NYSE: MEE) both provided decent trading momentum for the active day trader today on both the long position end as well as the short-selling side. Both stocks ended up to the down side at the closing bell.

At the NYSE closing bell on the New York Stock Exchange, here is how the major world indices and major U.S. stock indices ended the session on the world market as well as the emerging markets including the stock market closing bell price:
DOW (Dow Jones Industrial Average) triple digit loss of 163.59 points on the day to end the trading session at 10,852.10
NYSE (New York Stock Exchange) triple digit loss of 133.34 points to end the trading session at 7,785.27
NASDAQ loss of 22.92 points to end the trading session at 2,156.06
S&P 500 loss of 18.87 points to end the trading session at 1,188.22
FTSE All-World excluding U.S. loss of 1.93 points to end the trading session at 207.77
FTSE RAFI 1000 gain of 18.37 points to end the trading session at 4,830.21
BEL 20 (BEL20) loss of 74.83 points to end the trading session at 2,892.87
CAC 40 (CAC40) loss of 97.58 points to end the trading session at 4,125.93
FTSE100 (UKX100) loss of 86.00 points to end the trading session at 5,150.26
NIKKEI 225 (NIK/O) unchanged at 12,090.59

New York Stock Exchange (NYSE) stock market indicators for the day:
Advanced stock prices 905; declined stock prices 2,327; unchanged stock prices 57; stock prices hitting new highs 12 and stock prices hitting new lows 128.
NYSE quotes for volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the New York Stock Exchange stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: Massey Energy Company (NYSE: MEE) stock price shed 2.02 points on the trading session, high on the trading session $44.14, low on the trading session $40.33 with a closing stock price at $41.28; Consol Energy Incorporated (NYSE: CNX) stock price shed 6.21 points on the trading session, high on the trading session $61.49, low on the trading session $55.28 with a closing stock price at $55.95; LDK Solar Corporation Limited (NYSE: LDK) stock price shed 3.38 points on the trading session, high on the trading session $38.89, low on the trading session $34.77 with a closing stock price at $34.92; CF Industries Holdings Incorporated (NYSE: CF) stock price shed 8.18 points on the trading session, high on the trading session $122.06, low on the trading session $109.25 with a closing stock price at $113.61; Walter Industries Incorporated (NYSE: WLT) stock price shed 4.42 points on the trading session, high on the trading session $63.14, low on the trading session $56.59 with a closing stock price at $58.26; Waste Connections Incorporated (NYSE: WCN) stock price shed 2.90 points on the trading session, high on the trading session $35.25, low on the trading session $33.05 with a closing stock price at $34.15; Air Products & Chemicals Incorporated (NYSE: APD) stock price shed 6.44 points on the trading session, high on the trading session $78.49, low on the trading session $72.97 with a closing stock price at $73.84; Union Pacific Corporation (NYSE: UNP) stock price gained 0.87 points on the trading session, high on the trading session $76.49, low on the trading session $72.70 with a closing stock price at $73.73; Ultrashort Financial Corporation (NYSE: SKF) stock price gained 1.99 points on the trading session, high on the trading session $107.15, low on the trading session $99.78 with a closing stock price at $103.99; Rio Tinto plc (NYSE: RTP) stock price shed 42.86 points on the trading session, high on the trading session $305.08, low on the trading session $285.03 with a closing stock price at $289.14; Bunge Limited (NYSE: BG) stock price shed 0.23 points on the trading session, high on the trading session $76.00, low on the trading session $71.47 with a closing stock price at $72.71; CME Group Incorporated (NYSE: CME) stock price shed 25.00 points on the trading session, high on the trading session $422.24, low on the trading session $370.65 with a closing stock price at $371.00.

National Association of Securities Dealers Automated Quotations (NASDAQ) stock market indicators today:
Advanced stock prices 976; declined stock prices 1,933; unchanged stock prices 113; stock prices hitting new highs 7; stock prices hitting new lows 115.
NASDAQ quotes, volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the NASDAQ stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: Steel Dynamics Incorporated (NasdaqGS: STLD) stock price gained 0.01 points on the trading session, high on the trading session $21.78, low on the trading session $20.63 with a closing stock price at $21.15; GMX Resources Incorporated (NasdaqGS: GMXR) stock price shed 0.65 points on the trading session, high on the trading session $56.14, low on the trading session $50.85 with a closing stock price at $53.88; Cache Incorporated (NasdaqGS: CACH) stock price shed 2.48 points on the trading session, high on the trading session $7.71, low on the trading session $6.63 with a closing stock price at $7.01; Baidu.com Incorporated (NasdaqGS: BIDU) stock price shed 5.13 points on the trading session, high on the trading session $277.66, low on the trading session $261.39 with a closing stock price at $263.50; Google Incorporated (NasdaqGS: GOOG) stock price shed 0.74 points on the trading session, high on the trading session $440.79, low on the trading session $425.72 with a closing stock price at $429.40.

Market trends on the American Stock Exchange (AMEX) and stock market indicators for today:
Advanced stock prices 363; declined stock prices 842; unchanged stock prices 67; stock prices hitting new highs 7; stock prices hitting new lows 64.

Chicago Board of Trade Futures Market activity for the day, at time of this posting for December 2008 Contracts:
E-mini S&P 500 (ES) end of day price 1,187.75 change -26.00
E-mini NASDAQ-100 (NQ) end of day price 1,652.75, change -17.00
E-mini S&P SmallCap 600 (SMP) end of day price 374.70, change -5.80
$5 DJIA (YM) end of day price 10,858 change -205

World Currencies for the Forex Market, for Forex Trading by active Forex Traders, at time of this posting:
Euro 0.6805 to U.S. Dollars 1.4696
Japanese Yen 105.330 to U.S. Dollars 0.0095
British Pound 0.5383 to U.S. Dollars 1.8577
Canadian Dollar 1.0352 to U.S. Dollars 0.9660
Swiss Franc 1.0825 to U.S. Dollars 0.9238

Commodity Markets:
Energy Sector: Light Crude (NYMEX: NYM) shed $2.76 on the day for a closing price of $106.61 a barrel ($US per barrel)
Heating Oil (NYMEX: NYM) shed $0.05 on the day for a closing price of $3.01 a gallon ($US per gallon)
Natural Gas (NYMEX: NYM) gained $0.20 on the day for a closing price of $8.14 per million BTU ($US per mmbtu.)
Unleaded Gas (NYMEX: NYM) shed $0.11 on the day for a closing price of $2.60 a gallon ($US per gallon) 

Metals Markets:
Gold Market Price (COMEX: CMX) shed $17.80 on the day for a closing price of $891.20 ($US per Troy ounce)
Silver (COMEX: CMX) shed $0.28 on the day for a closing price of $13.17 ($US per Troy ounce)
Platinum (NYMEX: NYM) shed $4.80 on the day for a closing price of $1,231.00 ($US per Troy ounce)
Copper (COMEX: CMX) shed $0.10 on the day for a closing price of $3.15 ($US per pound) 

Livestock and Meat Markets (cents per lb.):
Lean Hogs (Chicago Mercantile Exchange: CME) shed 0.20 on the day for a closing price of 68.45
Pork Bellies (Chicago Mercantile Exchange: CME) gained 1.28 on the day for a closing price of 95.00
Live Cattle (Chicago Mercantile Exchange: CME) shed 0.45 on the day for a closing price of 103.45
Feeder Cattle (Chicago Mercantile Exchange: CME) shed 0.53 on the day for a closing price of 105.95 

Other Commodities (cents per bushel):
Corn (Chicago Board of Trade: CBT) gained 1.75 on the day for a closing price of 560.25
Soybeans (Chicago Board of Trade: CBT) shed 18.00 on the day for a closing price of 1,187.00

Bond Market:
2 year bond gained 3/32 on the day for a closing price of 100 17/32 with a Yield of 2.08, Yield Change -0.05
5 year bond gained 5/32 on the day for a closing price of 100 16/32 with a Yield of 3.01, Yield Change -0.03
10 year bond shed 3/32 on the day for a closing price of 101 12/32 with a Yield of 3.82, Yield Change -0.01
30 year bond shed 3/32 on the day for a closing price of 101 14/32 with a Yield of 4.41, Yield Change 0.00

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