Bill Cara: Saturday’s Report & Discourse, 12/08/2007 10:45 AM ET

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December 8, 2007

Saturday’s Report & Discourse, 12/08/2007 10:45 AM ET

The “Corner Stone” of our Community says that this info table from the report of the US Comptroller of the Currency, Administrator of National Banks in Washington, is a frightening experience. I tend to agree, but I also have to admit that I don’t fully understand it. What I do understand is the whole premise of the house of cards of HB&B is that “bilateral netting” works as long as the credit ring remains unbroken. But it happens to be breaking up. What then?

I will simplify my concern here. The last time I looked, JP Morgan Chase (JPM) et al were not good for $80 trillion, which is its total derivatives contract obligation. And I suspect Citigroup (C), having to reach out to Abu Dhabi last week for an emergency handout of $7.5 billion isn’t good for $35 trillion. I don’t think anybody should be holding their breath for Bank of America (BAC), which also has to be bailed out of its SIV crisis, to stand behind its $30 trillion.

Admittedly, these are the Big Three. But the bottom line is that the global financial system is hanging on a thread. That thread by the way is now called the MLEC --Master Liquidity Enhancement Conduit. And, BlackRock is the anointed savior.

The BlackRock founder, according to wiki, was the person who initiated these mortgage-backed securities. Goldman Sachs (Paulson)/Merrill Lynch (BlackRock/Goldman) is clearly in the middle of this. Seems to me to be 12 people sitting around a boardroom table scheming ways to get themselves out of bankruptcy and us to pay for it.

If you are wondering which financial companies are involved in the $100 billion SIV SuperFund they can't sell, and the reason for the new MLEC, the Bloomberg article states:

Citigroup (C.N: Quote, Profile, Research), which created special investment vehicles (SIVs) in the 1980s, Bank of America (BAC.N: Quote, Profile, Research) and J.P. Morgan Chase (JPM.N: Quote, Profile, Research) are heading the large-scale effort that is supposed to help SIVs sell hard-to-value paper without further unnerving jittery credit markets. As manager of the fund, BlackRock will be in charge of deciding what to do with the assets sold into the portfolio.

Unfortunately, the Bush/Paulson Mortgage Relief (HOPE) Plan is their scheme to get us to pay for it.

Oh, my head spins. Hows yours?

Counter-party risk, btw, is the new word for the water cooler. Let's all try to understand what it means.

(Note: I added some info here as I felt it to be important to an understanding of the big picture. History is being made.)

Tables

Table 1: Cara ETF List

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

XLE 76.28 -0.37 -0.48% 3.92% 3.01% 0.57% 34.82% 8.57% 12.77% 26.42%

SMH 33.42 -0.12 -0.36% 3.40% 5.13% 1.12% -0.45% -11.61% -6.36% -2.79%

XLU 44.18 0.23 0.52% 3.39% 5.39% 4.54% 19.99% 13.22% 13.43% 19.79%

XLB 42.93 0.31 0.73% 2.75% 8.63% 1.25% 24.04% 10.73% 8.30% 21.07%

IYZ 30.03 0.14 0.47% 2.67% 5.37% -1.35% 1.25% -7.69% -10.52% 3.87%

XLI 40.30 0.30 0.75% 2.28% 5.58% 1.49% 14.39% 4.11% 5.89% 14.16%

XLP 29.46 0.31 1.06% 0.92% 3.22% 4.65% 12.10% 10.17% 7.91% 13.22%

XLF 31.25 -0.37 -1.17% 0.64% 6.76% 2.90% -15.36% -5.30% -15.06% -13.43%

IYH 73.12 -0.06 -0.08% 0.54% 4.23% 4.53% 10.02% 6.65% 4.01% 10.62%

XLY 34.75 0.14 0.40% 0.23% 3.58% 0.14% -9.79% -3.28% -10.74% -8.89%

Table 2: Senior oil & gas equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

PBR 106.71 0.03 0.03% 10.81% 5.88% -8.62% 114.15% 66.37% 100.17% 119.25%

SU 102.24 -0.17 -0.17% 6.77% -0.11% -8.16% 38.33% 12.38% 17.84% 28.77%

IMO 51.76 0.45 0.88% 5.57% -2.25% -10.65% 45.15% 15.43% 13.04% 34.41%

CVX 90.96 -0.42 -0.46% 3.63% 4.95% 2.00% 28.17% 3.78% 13.42% 24.06%

ECA 67.28 0.12 0.18% 3.11% -0.96% -8.10% 48.39% 14.01% 8.12% 27.64%

XOM 91.50 0.06 0.07% 2.62% 3.64% 2.33% 23.47% 6.71% 11.64% 20.86%

TOT 82.83 -0.86 -1.03% 2.36% 1.69% -1.28% 16.71% 10.00% 11.90% 15.47%

CEO 178.94 -10.75 -5.67% -3.05% 3.02% 0.16% 89.82% 46.52% 73.95% 100.72%

STO 30.21 -3.95 -11.56% -6.53% -6.56% -11.74% 17.59% -0.13% 10.82% 9.77%

Table 3: Senior metals and steel equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

PKX 169.57 -1.37 -0.80% 7.41% 10.48% 4.80% 113.48% 12.40% 41.06% 114.10%

GGB 29.91 0.52 1.77% 6.40% 11.27% 0.07% 82.16% 27.06% 33.29% 83.27%

RIO 36.50 -0.02 -0.05% 5.55% 12.10% -1.24% 26.65% -27.98% -15.41% 25.26%

NUE 61.98 0.74 1.21% 4.68% 16.44% 9.60% 13.72% 15.05% -4.35% -5.86%

TCK 38.93 1.28 3.40% 1.88% 2.88% -17.12% -43.78% -4.23% -6.82% -49.53%

BHP 77.00 -0.23 -0.30% 1.54% 5.74% 0.20% 98.10% 19.98% 40.61% 86.71%

AA 36.91 1.05 2.93% 1.48% 5.01% -1.99% 25.84% 5.85% -5.19% 19.80%

MT 73.93 1.12 1.54% 0.15% 3.47% -3.64% 81.20% 15.55% 22.40% 71.33%

RTP 468.00 4.53 0.98% 0.11% 7.33% 6.32% 129.30% 58.78% 69.33% 113.55%

TS 46.83 0.28 0.60% -0.74% 1.94% -1.89% -3.48% 3.65% 1.17% 2.16%

Table 4: Senior capital goods makers and transportation

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

ERJ 47.60 0.27 0.57% 9.22% 7.57% 1.62% 16.72% 7.33% 0.00% 14.84%

UTX 78.07 0.08 0.10% 4.41% 6.28% 4.51% 24.30% 5.80% 13.36% 20.59%

MMM 86.19 1.37 1.62% 3.52% 4.16% 4.06% 10.13% -3.07% 1.54% 8.33%

HON 58.51 0.28 0.48% 3.34% 7.02% -1.32% 29.73% 6.95% 3.74% 37.38%

CAT 74.20 -0.15 -0.20% 3.20% 8.12% 2.44% 21.32% 1.03% -4.02% 17.78%

FDX 100.22 1.73 1.76% 1.78% 7.07% -2.17% -8.70% -7.38% -6.69% -14.22%

BA 93.16 1.38 1.50% 0.67% 4.04% -3.24% 4.47% -1.77% -3.80% 3.50%

ABB 29.50 -0.02 -0.07% 0.41% 8.66% -4.16% 65.54% 27.26% 41.15% 74.14%

GE 37.23 -0.03 -0.08% -2.77% -1.17% -4.59% -1.95% -3.92% 1.28% 5.89%

Table 5: Senior consumer discretionary equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

JCP 47.92 3.08 6.87% 8.61% 16.03% -4.67% -38.61% -26.36% -38.40% -38.41%

WHR 85.78 0.12 0.14% 5.95% 10.14% 16.14% 1.32% -7.53% -20.31% -0.41%

TM 114.21 0.79 0.70% 1.57% 4.40% 4.79% -15.59% 0.80% -7.24% -6.12%

EBAY 33.73 -0.04 -0.12% 0.60% 5.60% 4.10% 11.80% -4.31% 10.19% 7.76%

BC 20.39 -0.16 -0.78% 0.00% 5.87% -4.85% -36.12% -12.19% -38.40% -37.34%

CCL 45.00 -0.26 -0.57% -0.27% 5.31% 0.47% -11.68% 0.63% -8.03% -5.02%

NKE 65.40 -0.01 -0.02% -0.38% 2.59% 3.32% 33.93% 19.56% 20.89% 33.55%

DIS 32.79 0.07 0.21% -1.09% 2.98% -2.50% -4.12% -2.38% -4.29% -3.95%

SBUX 22.62 -0.23 -1.01% -3.29% -1.95% -3.33% -35.83% -16.72% -17.57% -37.94%

Table 6: Senior consumer staples equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

WMT 49.02 -0.25 -0.51% 2.34% 7.19% 12.38% 3.09% 15.64% -1.49% 5.71%

KO 63.15 0.08 0.13% 1.69% 1.36% 2.73% 29.99% 15.68% 22.91% 29.62%

WAG 37.11 0.52 1.42% 1.42% -6.59% -4.92% -19.45% -15.95% -15.56% -14.18%

ABV 76.14 -0.62 -0.81% 1.41% 10.20% 0.51% 55.07% 15.82% 15.08% 60.13%

PG 74.12 -0.06 -0.08% 0.16% 1.73% 4.63% 14.84% 13.21% 18.93% 16.18%

BUD 52.79 0.09 0.17% 0.13% 5.18% 4.58% 7.25% 5.92% 0.88% 9.91%

WFMI 43.05 0.12 0.28% 0.09% 5.64% -6.23% -5.34% -0.19% 10.41% -11.26%

MO 77.60 -0.20 -0.26% 0.05% 6.35% 6.71% 19.53% 15.15% 11.57% 21.71%

PEP 77.00 -0.03 -0.04% -0.23% 1.97% 4.76% 22.77% 13.27% 16.05% 21.41%

DEO 86.91 -0.40 -0.46% -4.05% -2.70% -4.88% 9.28% 1.47% 5.01% 12.58%

Table 7: Senior healthcare equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

AET 58.93 0.45 0.77% 5.46% 8.85% 7.89% 37.43% 17.30% 14.65% 38.07%

UNH 56.65 0.67 1.20% 3.00% 4.77% 12.65% 7.76% 15.17% 6.17% 14.47%

PFE 24.40 0.23 0.95% 2.69% 6.18% 5.58% -7.19% 0.62% -7.19% -1.85%

NVS 57.47 0.70 1.23% 1.68% 2.66% 9.11% -1.15% 7.62% 3.89% -0.97%

GSK 53.27 0.42 0.79% 1.12% 4.88% 4.66% -1.00% 0.38% 3.76% 1.37%

BMET 45.99 0.06 0.13% 0.24% 0.31% 0.48% 10.90% 1.05% 8.47% 41.68%

JNJ 67.68 -0.62 -0.91% -0.09% 1.20% 4.78% 1.93% 9.73% 9.16% 2.45%

BMY 29.23 0.15 0.52% -1.35% 4.10% 1.74% 10.80% 5.11% 0.21% 15.76%

AMGN 52.10 -3.05 -5.53% -5.70% -3.09% -7.01% -23.83% 2.36% -8.02% -24.61%

DNA 68.49 1.92 2.88% -10.18% -8.46% -9.10% -16.27% -13.40% -8.56% -17.42%

Table 8: Senior financial company equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

C 34.31 -0.04 -0.12% 3.03% 8.23% 4.29% -37.90% -24.56% -34.67% -32.34%

CS 61.90 0.25 0.41% 2.62% 8.27% 1.53% -11.71% -4.42% -14.38% -9.25%

MER 61.42 0.09 0.15% 2.47% 14.72% 14.18% -34.39% -16.07% -29.61% -31.40%

HBC 86.92 0.65 0.75% 1.66% 2.57% -3.41% -6.51% -2.36% -5.11% -4.27%

LEH 63.47 0.33 0.52% 1.34% 4.29% 13.12% -19.28% 19.87% -13.40% -16.38%

JPM 46.08 -0.13 -0.28% 1.01% 9.85% 8.14% -4.14% 5.88% -7.51% -1.18%

UBS 50.48 -0.12 -0.24% 0.00% 11.58% 7.24% -17.77% -3.09% -17.34% -16.62%

DB 131.57 -0.75 -0.57% -0.14% 5.81% 5.79% -2.79% 6.11% -7.51% 0.19%

MS 51.69 0.11 0.21% -1.95% 3.61% -3.71% -36.67% -17.30% -38.99% -33.88%

GS 217.89 -4.62 -2.08% -3.86% 0.65% 3.79% 8.55% 21.74% -0.98% 8.84%

Table 9: Senior technology equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

CTSH 33.36 1.60 5.04% 7.27% 9.52% 5.67% -14.20% -6.11% -10.97% -16.89%

INTC 27.73 -0.25 -0.89% 6.33% 10.61% 6.94% 36.27% 8.87% 30.13% 34.35%

INFY 44.77 1.40 3.23% 6.22% 14.50% 5.64% -19.80% -6.18% -5.73% -18.12%

ADBE 44.37 -0.17 -0.38% 5.29% 5.87% -1.47% 11.15% 3.28% 3.86% 17.54%

ORCL 21.14 -0.28 -1.31% 4.76% 4.09% 3.88% 20.73% 4.86% 12.87% 21.08%

SNDK 38.65 -0.71 -1.80% 3.23% 7.03% -1.02% -7.36% -26.98% -9.95% -14.15%

ADSK 48.20 0.11 0.23% 2.36% 5.26% 1.77% 18.84% 6.76% 10.37% 15.48%

SAP 52.35 -0.18 -0.34% 2.21% 1.45% -0.11% -1.60% -5.44% 9.40% 1.63%

QCOM 40.12 -0.29 -0.72% -1.62% -1.01% 0.91% 7.10% 5.89% -2.19% 2.50%

CSCO 27.45 -0.34 -1.22% -2.03% -4.32% -7.36% -1.05% -12.91% 6.19% 2.12%

Table 10: Yahoo Finance U.S. Treasury Debt, Municipal and Corporate Bond Yields

US Treasury Bonds
Maturity Yield Yesterday Last Week Last Month

3 Month 2.96 2.95 3.05 3.29

6 Month 3.12 3.14 3.23 3.58

2 Year 3.10 3.01 3.01 3.55

3 Year 3.09 2.98 2.96 3.52

5 Year 3.49 3.38 3.39 3.88

10 Year 4.10 4.01 3.94 4.31

30 Year 4.57 4.47 4.38 4.65

Municipal Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 3.11 3.13 3.19 3.32

2yr AAA 3.10 3.11 3.26 3.30

2yr A 3.38 3.38 3.38 3.32

5yr AAA 3.28 3.28 3.35 3.42

5yr AA 3.26 3.24 3.35 3.43

5yr A 3.39 3.39 3.46 3.53

10yr AAA 3.73 3.70 3.71 3.85

10yr AA 3.64 3.62 3.56 3.76

10yr A 3.96 3.92 3.93 4.08

20yr AAA 4.37 4.36 4.41 4.45

20yr AA 4.16 4.15 4.20 4.65

20yr A 4.74 4.74 4.83 4.46

Corporate Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 4.26 4.20 4.22 4.53

2yr A 4.72 4.47 4.35 4.72

5yr AAA 4.60 4.49 4.53 4.77

5yr AA 4.83 4.75 4.70 5.11

5yr A 4.83 4.69 4.59 5.04

10yr AAA 5.22 5.16 5.03 5.34

10yr AA 5.45 5.43 5.32 5.80

10yr A 5.70 5.59 5.39 5.92

20yr AAA 5.52 5.44 5.65 5.10

20yr AA 5.78 5.68 5.75 6.07

20yr A 6.25 6.19 6.11 6.13

Table 11: Interest-sensitive securities

Sorted by 1-Week Price Performance.
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

CFC 11.54 -0.56 -4.63% 6.65% 19.59% -14.33% -72.60% -36.63% -69.63% -71.88%

FRE 35.54 -1.56 -4.20% 1.34% 34.27% -18.90% -47.65% -40.08% -45.67% -48.12%

SHY 82.17 -0.09 -0.11% -0.40% -0.28% 0.56% 2.66% 1.19% 3.09% 2.37%

AGG 100.86 -0.84