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Wednesday, April 7, 2010 as of 11:14 AM ET

The Casone Exchange
  • March 20, 2011 04:57 PM UTC by Cheryl Casone

    Best Guess: Global Markets Derail Merger Monday

    Monday’s markets could either way.  Even if the futures point to a big open at 9:30ET any little tremor, bomb, or explosion could sink the momentum.  I am usually bullish on the markets (and remain so long term) but I am not sure that even today’s announcement of AT & T buying T-Mobile for $39B is enough for a big market swing.  I’ve been watching the developments in Libya and Japan today for a hint of where we may go this week, and my “Best Guess” is that there is too much global tension and worry that the United States is going to be more involved in Libya than we want.  Experts today are saying the next logical, and probable action, is U.S.  boots on the ground.  The United States, Great Britain, and France made a bold and big move when they created the no fly zone and began air strikes.  There is no going back and for now that means a market that does nothing but go back.




    The oil markets may be rocked later this year or early next not by another meltdown in a big oil producing country, a sovereign debt default. But not in the Middle East. In Latin America. In Venezuela. It has more than a 50-50 chance of defaulting on its bonds. The country’s socialist leader, Hugo Chavez, is squandering his country’s oil wealth faster than his oil sector can make money. Chavez is rapidly expropriating private property and seizing assets. The country’s industrial output has dropped double digits nearly every year for the past five. It also has the highest rate of  inflation in Latin America. PDVSA, the state-owned oil company, has seen its output of 3.3 million b/d drop to 2.25 million. The country’s books are a mess.


    the events in the middle east and n africa are just beginning and will be with us for a long time-with unpredictable effects


    Twitter goes public, but the valuation is less than projected estimates being discussed in the media.



    Muni bond market will be one that bends but doesn’t break.  The financial crisis, the prediction of hundreds of billions of dollars in defaults by a star banking analyst and now the political turmoil in state capitals have all lead to the significant spooking of investors in municipal bonds and resulted in 13 straight weeks of outflows from municipal bond funds.  While many experts argue that the concerns over the municipal bond market are grossly exaggerated, the wounds and losses associated with ’safe’ bond investments are still very fresh in the minds of many institutional and retail investors.  The ‘fool me once shame on you, fool me twice shame on me’ idiom appears to have led many muni-investors to sell now and ask questions later.  As expected, the dislocation in the municipal market has attracted the attention of some of the most sophisticated investors and it seems some of these experts are backing up the truck to take advantage of the fear that has engulfed this market.

    Has the prediction of defaults, the protests in state capitals and the fresh memory of unprecedented losses just created one of the single greatest buying opportunities in a market that is typically stable and predictable or are the investors fleeing the municipal bond market going to be proven to be the smartest investors in the room?  Well, I expect this to be a market that bends, but doesn’t break.  The more heated the debate and the greater the outflows, the more I like municipal bonds.  Besides, with a recovery rate of 80% thanks to the bond holder friendly municipal bankruptcy code, if I’m wrong, you’ve got some downside protection.


    Collective bargaining is under fire but it’s not going away. Reform and more transparency in contract negotiations yes. But elimination no. It’s not gonna happen and for proof of that one need look no further than New Jersey and New York, whose fiscal situations are far worse than either Wisconsin or Ohio and collective bargaining isn’t even on the table.





    Given that the world’s economy is now growing at about 4.5%, oil prices for Brent would likely need to rise beyond the 2008 peak of $145 to stall out the recovery. Inflation is reasonably low and the economy has plenty of slack. That means the central bank will likely continue to play down sudden jumps in oil prices. For now.


    Best guess is that oil will peak within a week and tumble rapidly and take down the equity markets with it as they seem to be running in tandem.


    Greece will once again put pressure on the European Union and the Dollar will strengthen against the Euro.



    The apartment and farmland sectors will continue to be the only bright spots in real estate. No housing recovery in 2011.


    Rising Gas prices could have a profound effect on how far Americans travel from home or spend this year on vacation and strong effect on the profitability of the travel industry.


    With gas prices heading higher Fed Chairmanbernanke  will have to address overall inflation



    Best guess…..Nouriel Roubini made headlines this am calling for 100B of muni defaults. Meredith Whitney has been criticized for saying hundreds of billions of defaults were coming….. whether they are correct in their estimates the fact is that  small towns and counties  (as well as States) all over are strapped for tax revenue. Real estate sales in the past helped to generate tax and assessments. This crisis will continue and we will see drastic changes – layoffs, closing of municipal offices, parks closed or maintenance shuttled….so be careful on what munis you buy.


    Best guess: oil prices coming down.  Saudi Arabia’s government is not in play.  A change in Iranian government would de-risk the middle east.  US oil inventories are overflowing and natural gas is in a glut.


    The Apple IPad2 will disappoint in sales and revenue for Apple.  The IPad3 will be the big money  maker.

"Captian" Chuck Nash

WTH? I go to the Commodities and Futures page; and, WTH are the futures readings? I expected that from CN B.C., but not from Fox.

March 20, 2011 at 9:09 pm

about this blog

  • Cheryl Casone joined FOX Business Network (FBN) in September 2007 as an anchor. Prior to FBN, Casone served as a correspondent for FOX News Channel’s (FNC) business unit and was a regular guest on FNC’s Your World with Neil Cavuto. Casone brings years of experience covering finance, business, and consumer news to FBN.

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