Timeless and Time-Tested Warren Buffett Watch Predictions

As a new year approaches, it is customary for journalists to make predictions about the future.  This time around, CNBC.com has a collection of prognostications from CNBC bloggers on a special page: Predictions ‘09.

Last year around this time, Warren Buffett Watch offered its Eight Predictions for ‘08 .. and Beyond. 

In keeping with Buffett’s long-term way of looking at things, the eight predictions were intentionally on the ‘timeless’ side of the predicting spectrum.

Here they are again, with a little bit of editing.  This could be the start of a new holiday tradition!

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Archana’s Analysis: The Guru of the Stock market. His predictions were almost true. If we look at our current economic conditions, every thing is happening just as he said. People just neglect to learn from the history and then they face recession.  

Recessions’ are not bad, in fact its good time to buy stocks and make money. Only thing is that you should know how to make money. “Somebody’s dreadful decision in the past, is money for somebody else”. Veteran people are extremely confident about their decisions and exactly there they go wrong, in fact they worsen the situation.

US Market – 22/12/08

US Market: Stocks chugged higher in the past week, with the broader indexes edging out slight gains. The S&P 500 was up 0.89 percent at 887.60, and the Nasdaq gained 1.5 percent to 1564. But the Dow lost 50 points, or 0.6 percent to end at 8579. The Bush Administration’s announcement that it would provide loans to General Motors and Chrysler eased investor concerns about a snowballing bankruptcy in the auto industry.

Citigroup U.S. equities strategist Tobias Levkovich said as 2008 exits, investors are not making major investment decisions but early in the year there could be some money flowing into stocks because of the changes in Washington. “I suspect with the Obama inauguration there’s going to be some excitement going into it,” he said

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Archana’s Analysis: Today traders may see mixed trading in Dow and Nasdaq. There will be little stability and more of volatility but expect mixed trading today. There will be pull back rally with little ups and downs. Market breadth seems to be more inclined positively. Hope for best trading today!

Treasury’s Paulson Vague on Auto Bailout Prospects

Treasury Secretary Henry Paulson on Thursday offered mixed signals on the chances of a bailout for troubled automakers, saying failure is not an option but adding that any bankruptcy should be “orderly.”

His tone suggested there was lingering doubt within the Bush administration on how to deal with the teetering industry.

“President Bush has been pretty clear that, since Congress has failed to act, he wants to take steps to avoid a failure,” Paulson said at a Business Week forum. But, he added: “If the right outcome is bankruptcy, then it’s better to get there through an orderly process.”

Chrysler and General Motors [GM  3.66  down  -0.71  (-16.25%) have said Chapter 11 bankruptcy protection would risk causing their suppliers to collapse, driving dealers out of business and compounding job losses at a time when the U.S. economy is already mired in recession.

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Archana’s Analysis: Treasury Secretary Henry Paulson declared bailout package for troubled automakers was to add stability to auto industry. Yesterday Auto industry sector was down and avoid any more pain to industry and people, measures are being taken.

Henry Paulson is trying really hard to save his position as well as controlling economy. He has been criticized for his decision and had very well defended his actions taken.  I would rather say that this good decision at this point of time. It may help the economy to recover slowly…

 

Fed Cuts Rates to Near 0%, Vows to Bolster Economy

The Federal Reserve slashed its target for overnight interest rates to a record low of zero to 0.25 percent, and said it would employ “all available tools” to battle a year-long recession.

The surprise move to lower its target for the benchmark federal funds rate from one percent puts the Fed in uncharted territory. Financial markets had expected the Fed to lower rates by no more than three-quarters of a point, to 0.25 percent.

In its statement, the Fed underscored its committment to use extraordinary measures, including using its balance sheet to support the credit markets.

“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Fed said

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Archana’s Analysis: Slashing down interest rates almost 0 % will boost US economy. This is indeed a very good step taken by Fed. It will invoke investors to move to government agency securities and then corporate bonds, which market strategists say is a necessary precondition to any sustainable improvement in stock prices.  Yesterday market jumped up with DOW -> 359.61pts up and NASDAQ -> 81.55pts up.

This is definitely boost up the US econmy and people will start investing in real estates and funds.

JPMorgan Chase Is Having A ‘Terrible’ Quarter: Dimon

JPMorgan Chase CEO Jamie Dimon told CNBC that the banking giant has had a “terrible” November and December, sending its stock down sharply and prompting a selloff in financial shares.

In a live interview, Dimon said the worse-than-expected quarter resulted from the “normal culprits”—mortgages, credit, and high-yield bonds and loans. Dimon didn’t give any projections on results, but his comments sent JPMorgan’s stock [JPM  29.94  down -3.58  (-10.68%)  down more than 10%.

Still, the CEO was upbeat about the bank’s future. “We continue to grow,” he said. “Earnings themselves may go up or down, but if you continue to grow the franchise, you’ll do in the long run a very good job.”

Still, financial stocks tumbled in reaction to Dimon’s comments.

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Archana’s Analysis: It seems that for now, there is no solution to overcome economic crisis. US bailout package fo banking and financial sector couldn’t make greater impact on crisis. In fact CEO of JPMorgan Chase has decalred terrible quarter. Mortgage, credit, loans are the main culprit $25 billion package is not sufficient to overcome it. Treasury had given this money to Banks without any guarantees that the funds would be used to make new loans to consumers and businesses.

From business point of view no interest are being charge on lending this fund to banks but banks are going to charge the customers. From my knowledge of understanding it is very bad deal. Bailout package should be there but with appropriate usage in the market. Just throwing in liquidity into the market won’t help to overcome crisis.

Bailout Efforts Now Focus On Main Street, Not Banks

Attention Santa Claus: The financial bailout has a new address—It’s Main Street, not Wall Street.

Having thrown trillions of dollars at Wall Street and the financial sector, Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson now appear ready to do the same for Main Street, with a spate of proposals to help homeowners and the housing market.

In what seemed like a well-choreographed,  one-two punch this week, Paulson floated a trial balloon for a plan to ease mortgage rates to stimulate new home buying while Bernanke offered a number of proposals to address soaring home foreclosures.

 “It looks like they’re finally getting serious about doing something, which is important,” says Robert Brusca, chief economist Fact & Opinion Economics. “There are different remedies for different circumstance and enough programs out there for enough people. I’m encouraged.”

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Archana’s Analysis: Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson steps towards economic crisis is really admirable. I think pouring money into Main Street, is to help homeowners, mortgage markets, foreclosuresf and the housing market. At this circumstances, declaring Bailout packages for Main street will help from economic crisis.

BofA and Merrill Job Cuts Could Now Reach 30,000

Bank of America could end up cutting 30,000 jobs as it moves to absorb Merrill Lynch, three times as many as previously estimated, sources told CNBC.

As of yesterday, sources were saying that layoffs could total at least 10,000 and would start before the end of the year.

But Bank of America CEO Kenneth Lewis wants to wring out $7 billion in savings from the merger over the next few years, so the total number of jobs lost could be closer to 30,000, they said.

Some of these job cuts could be through attrition or the sale of some businesses. But the heaviest cuts will probably come in the investment banking business, which has dried up during the current credit crisis.

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Archana’s Analysis: Expect more worst condition in US economy. BOA is being drained off but still it had acquired Merrill Lynch. More layoffs will be from Merrill Lynch side. BOA is the country’s largest mortgage lender and one of the biggest credit card issuers should come up with few plans which will pull in some liquidity. Their major step should be to stop issuing of any further credit cards or mortgage lending’s or cut interest rate to 2-3 %.

Recession Is Officially Here —And May Last for Awhile

The US economy slipped into recession in December 2007, the official arbiter announced Monday, and experts think the downturn is far from over.

The the National Bureau of Economic Research—a private, nonprofit research organization—said its group of academic economists who determine business cycles decided that the US recession began last December.

The news pushed US stocks lower and renewed calls for another economic stimulus program.

The current recession, which many economists expect to persist through the middle of next year, is already the third-longest since the Great Depression, behind only the 16-month slumps of the mid-1970s and early 1980s.

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Archana’s Analysis: I think downfall will continue in US as no resolution or plan is as supportive so that it sustain s in the market. I think US government has to come up with new solution to overcome the downrally. Bailout package wont help much. It can add 20% foe sustainability. I think few major steps had to be taken by US to overcome economic crisis. Major steps could be in Mortgages, Credit card spendings, inflow of liquidity into the market, etc.

How Will Bernanke Fit Into Obama’s Economic Plans?

As President-elect Barack Obama continues to name members of his economic team, it raises the question of where Federal Reserve Chairman Ben Bernanke fits into the plan.

Under normal circumstances, it would probably be premature for Obama to say whether he will nominate Bernanke to a second term when his current one expires in January 2010. Obama himself has not commented on Bernanke’s future since being elected, nor has his transition team.

But given the severity of the financial crisis—as well as media reports and speculation about a possible successor—there is growing talk about why Bernanke might not be headed for a second term and what it might mean for the markets.

A lot of that has to do with Bernanke’s job performance, the connection between party affiliation and appointments and tendency to clean house during tough times.

“Bernanke finds himself in a situation where he risks being personified as a cause of crisis as opposed to being a captain who got caught up in a storm,” says Eric Dezenhall,founder of Dezenhall Resources, a damage control expert who’s represented CEOs facing criminal prosecution and corporate crises.

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Archana’s Analysis: Well Ben Bernanke, Chairman of Federal Reserve Bank has done good work and is efficient, smart personality. Well as FRB Chairperson should have being known about the happenings, activities going to take place in near by future. “It is easy to say but is hard to work out.” The financial crisis and  worst situation didn’t arise suddenly. It was an ongoing process and had come up with time.” And this is really hard to digest that senior people were unaware of these conditions. So I think Ben Bernanke’s position as a chairman of FRB is risky!

US – Credit Easing

US Housing May Get a Lift From Latest Credit Easing

The government’s latest effort to help unfreeze credit markets may achieve some success, but it still raises questions about the overall US strategy in the financial crisis, say observers in and out of government.

The move will work “as well as anything else has worked,” says Jerry O’Connell, a former vice president of the Federal Reserve Bank of Dallas and Citigroup  

At its most basic level, the Federal Reserve’s $600 billion program to buy mortgage-related debt should lower interest rates somewhat and thus spur lending and support the troubled housing market.

“We see this as a positive step,” says Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry trade group that was among those pushing for the plan. “This is a big help for the housing market,” adding it should also make it easier to refinance and modify troubled mortgages.

There was approval from other quarters as well, although it was clearly muted.

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