Avalanche of City Debt Downgrades and Eventual Bankruptcies Coming Up; Numerous Cities Bankrupt Over Pension Promises

This is depressing news on bankrupt municipalities, but it's reality.  Just like Detroit's bankruptcy, it is also inevitable.

http://globaleconomicanalysis.blogspot.com/2013/07/moodys-downgrades-chicago-debt-citing.html

Moody's Downgrades The UK From AAA To Aa1

http://www.zerohedge.com/news/2013-02-22/farewell-aaa-moodys-downgrades-uk-aaa-aa1

MOODY'S DOWNGRADES GLOBAL BANKS

http://www.businessinsider.com/downgrade-watch-five-us-banks-will-be-hit-in-moodys-cuts-2012-6

Fears of Bank Runs Mount in Southern Europe

http://www.spiegel.de/international/europe/fears-of-bank-runs-increase-in-europe-a-833879.html

Will Meredith Whitney Be Proven Right In The End?

Beware the muni...

http://www.zerohedge.com/news/will-meredith-whitney-be-proved-right-end

USSAAA - S&P Reconsiders Downgrade After White House Challenge

http://www.zerohedge.com/news/cnn-sp-reconsiders-downgrade-after-white-house-challenge

STUNNER: S&P REVISES US OUTLOOK TO NEGATIVE

This S & P potential downgrade of US government debt alone confirms US Treasury Secretary Tim Geithner lied when he declared "the US will never lose its AAA credit rating" <click here>.

This is the same Standard & Poor's, like their peers, which totally missed the mortgage industry implosion--and were deservedly criticized for being asleep at the wheel after blessing toxic subprime mortgage-backed securities with a AAA rating as well.  I guess S & P got tired of the criticism and decided to do their job of dispensing the truth after all. 

http://www.zerohedge.com/article/stunner-sp-revises-us-outlook-negative

JPMorgan adds to position despite downgrade

On August 2, 2010, JPMorgan Chase analyst Kory Casimov downgraded Arena Pharmaceuticals to "Neutral" from "Overweight", reaffirming a $6 price target. Shares declined as a result of the downgrade.

ttp://finance.yahoo.com/news/Arena-shares-fall-on-JPMorgan-apf-3217542724.html?x=0&.v=1

This downgrade occurred two weeks after JPMorgan had upgraded Arena on July 16, 2010, after competitor Vivus's anti-obesity drug Qnexa was rejected by an advisory committee.

Why the sudden flip flop from upgrade to downgrade, after positive news? Shares of ARNA had soared from below $3 to a peak of $8 a month later, after several positive developments. So perhaps ARNA was trading at frothy levels. But with pivotal events of Lorcaserin's own advisory committee review on September 16, 2010 and a PDUFA date of October 22, 2010, shares of ARNA could rise even more on positive outcomes.

But a closer look at ownership holdings triggers more questions than answers on JPMorgan's motivation for the upgrade and subsequent downgrade.

Records show that as of August 12, 2010, JPMorgan had a new long position for ARNA shares:

2010-08-12 2010-06-30 13F-HR J P Morgan Chase And Co -2.35% Institution 43,082 New Holding 43,082

Which brings up the question: Why would JPMorgan downgrade ARNA--only to build a new long position in ARNA shares? Could their downgrade allow their clients to cover their short positions at a lower price? Or perhaps could they enable long clients to buy in at a lower price--after missing the big run up? A cynic would deduce the downgrade simultaneously provided an escape hatch for trapped shorts, and a lower entry point for long clients who missed the boat.

Best-case, it's a conflict of interest to issue a downgrade and then build a long position. Worst-case, this could be blatant manipulation of a stock.

And Wall Street wonders why retail investors are retreating from markets. Perhaps they're tired of being fleeced by investment firms more interested in their own proprietary trading desk than their fiduciary duties to their retail clients.

JPMorgan downgrades ARNA

Two weeks ago, JPMorgan upgraded shares of ARNA to Overweight. This morning, JPMorgan downgrades ARNA to Neutral, with a price target of $6. Sure, shares have appreciated 80% since the upgrade, but this appears suspicious. Could it be they have clients that need to cover their shorts--or longs that missed the run up and would like to enter at a lower price? Not that I am suggesting there is manipulation at work--since it's illegal, but the timing suggests opportunism.

http://www.businessweek.com/news/2010-08-02/boyd-charles-river-humana-mosaic-penske-u-s-equity-movers.html

http://www.canadianbusiness.com/markets/market_news/article.jsp?content=D9HBFN6O0

See disclaimers in the side bar.

Disclosure: long ARNA shares, added to my position this morning.

Thanks for the gift, JPMorgan and shorts.

Berkshire Hathaway downgrade

In the "what in the heck is this world coming to?" category, Berkshire Hathaway's credit rating was officially downgraded from the highly coveted "AAA" to "AA+" by S & P. Warren Buffett, Chairman of Berkshire Hathaway and considered the greatest equities investor of all-time by consensus, has made huge bets on an economic recovery, recently acquiring Burlington Northern railroad for $26 billion.

The acquisition required cash, stock, and $8 billion in notes, now rated AA+. This reduced Berkshire's cash position, increased their debt levels, and introduced risk into the Berkshire holding company's business model.

http://www.usatoday.com/money/markets/2010-02-05-aaabuffett05_ST_N.htm

UK downgrade

The UK is about to join the ranks of downgraded sovereign debt.

http://www.zerohedge.com/article/sp-we-no-longer-classify-uk-among-most-stable-and-low-risk-banking-systems

US could lose AAA credit rating

This threat has been articulated by this blogger a few times, despite the possibility being "unthinkable" by the mainstream financial press--at least until now. Fitch, one of the major credit ratings agencies, just issued a warning on the possibility of the US losing its AAA credit rating.

http://www.telegraph.co.uk/finance/economics/6969163/US-must-cut-spending-to-save-AAA-rating-warns-Fitch.html

Fitch Ratings has issued the starkest warning to date that the US will lose its AAA credit rating unless acts to bring the budget deficit under control, citing a spiral in debt service costs and dependence on foreign lenders.

PIMCO predicts UK bonds downgrade in 2010

Not that it took a genius, but PIMCO's Scott Mather predicts United Kingdom gilts (sovereign debt) will be downgraded in 2010. This will inevitably raise the cost of borrowing 100 basis points (1%) for England, further exacerbating their huge debt problems.

http://www.zerohedge.com/article/pimco-sees-uk-rating-downgrade-probability-80-gilts-higher-100-bps

With downgrades in Iceland, Ecuador, Hungary, Dubai, Greece, Spain and Ireland, it's likely the UK will be joining that unpleasant party. In fact, many countries in Europe will share that fate, including EU member countries, putting pressure on the Euro.

ARNA Press Release tomorrow at 5:30 am Pacific time

Now that the press release is issued, I can mention the name of the company I've been raving about. I didn't want to invite scrutiny from regulators about pumping and dumping. Some of my friends and family have known about this speculative play for several weeks and months. I'm glad to say a few acted upon it. It was entirely their decision and they performed their own due diligence.

The timing of the conference call, 5:30 am Pacific time, is significant. It is pre-market opening, which suggests good results from their Phase III clinical trials. A positive announcement post-market close, leaves market manipulators plenty of time that evening and the next morning to manipulate the stock price, punishing shareholders in after hours training. Regarding the timing of announcements of pivotal trials: negative announcements are usually scheduled after market close, while positive announcements usually occur before market opening.

In fact, market manipulation is why this stock stayed at $4 for many days in March. The shorts drove the share prices down, making a profit on the share price decline. Shorting also benefited institutions betting on the share price rising, as they get to buy shares at a lower price. That's why it's common to see analysts downgrade stocks before an important announcement, which is exactly what happened with Arena. Market manipulation is nefarious and illegal, and these individuals and institutions should be bird-dogged and reported to the SEC. However, as an individual investor, and as one who acknowledge sometimes the system is rigged, one should adjust one's investment strategies accordingly. In my case, it allowed me multiple entry points to accumulate shares, because investor sentiment was negative, and I had conviction that Arena was on to something big--I had confidence that Lorcaserin is a game-changer.

Friday's close was $4.50. After positive results, I expect the market to gap up before tomorrow's market opening in the teens, with high volatility throughout the week, amid price spikes for the next few days. I will avoid trading as orders will be difficult to fill--I will just monitor it and watch the shorts scramble, while the share price soars.

Investing is risky and investing in biotech stocks even riskier. Do your own due diligence and consult your financial advisor, altho 99% of them are behind the learning curve. Proceed with caution, and good luck to all.

Disclosure: I own shares in ARNA underlying shares and ARNA call options.


http://finance.yahoo.com/news/Arena-Pharmaceuticals-to-Host-prnews-14777035.html

SAN DIEGO, March 29 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA - News) today announced it will hold a conference call and webcast on Monday, March 30, 2009 at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss top-line results from BLOOM (Behavioral modification and Lorcaserin for Overweight and Obesity Management), the first of two pivotal trials evaluating the safety and efficacy of lorcaserin for weight management. Jack Lief, President and Chief Executive Officer, Dominic P. Behan, Ph.D., Senior Vice President and Chief Scientific Officer, William R. Shanahan, M.D., Vice President and Chief Medical Officer, and Christen M. Anderson, M.D., Ph.D., Vice President, Clinical Development, will host the conference call.

The conference call may be accessed by dialing 877.874.1565 for domestic callers and 719.325.4758 for international callers. Please specify to the operator that you would like to join the "Lorcaserin BLOOM Trial Results" conference call. The conference call will be webcast live under the investor relations section of Arena's website at www.arenapharm.com, and will be archived there for 30 days following the call. Please connect to Arena's website several minutes prior to the start of the broadcast to ensure adequate time for any software download that may be necessary.

About Arena Pharmaceuticals

Arena is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing oral drugs in four major therapeutic areas: cardiovascular, central nervous system, inflammatory and metabolic diseases. Arena's most advanced drug candidate, lorcaserin, is being investigated in a Phase 3 clinical trial program for weight management. Arena's broad pipeline of novel compounds target G protein-coupled receptors, an important class of validated drug targets, and includes compounds being evaluated independently and with partners, including Merck & Co., Inc., and Ortho-McNeil-Janssen Pharmaceuticals, Inc.