Readings: Impact costs, Trade not invest, FNM & FRE hosed again
The global stock slump — the MSCI World Index fell 20 percent from its Oct. 31, 2007 peak — has heightened money managers’ demand that their brokers execute trades at the lowest possible cost. Mutual funds and hedge funds gain an edge on rivals with every cent they shave off a stock purchase, or by unloading an investment without driving down a stock’s price.
In the world ranking, JPMorgan customers lost an average of 0.105 percent, or 10.5 basis points, of performance when they bought or sold stocks through the bank.
The shift to electronic trading has eroded commissions to a little more than 3 cents per share in the U.S.
- Raymond James: “For trading, not eating!”
. . . we consider both the financial and real estate groups to be “trading sardines, not eating sardines” since we doubt the news surrounding them will get materially better anytime soon.
We believe the “selling stampede” in the energy complex is overdone and is therefore nearing an end. Moreover, with the recent decline in crude prices, numerous members of OPEC have been calling for production cuts. While we are not expecting production cuts in the near-term, we continue to believe that if prices fall further, OPEC will step in and defend a price near $100/bbl.
. . . we like gold stocks at these price-points, but are again turning cautious on the U.S. dollar (see charts); and, as with energy stocks, are recommending gradual re-accumulation.
Fannie Mae and Freddie Mac debt yields versus Treasury notes soared to the highest since March, as the U.S. government reiterated that it doesn’t plan to use new authority to bail out the mortgage-finance companies.
Buyers also fled the companies’ debt versus interest-rate swaps, another benchmark. Yields on Fannie Mae’s 5-year bonds reached 1.8 basis points less than 5-year swap rates, the highest since July 10, according to Bloomberg data.
Both stocks dropped ~ 25% last night.
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