This page has been archived and commenting is disabled.
Banks Continue Upgrading Banks
The latest trend among financial analysts is the ongoing circular upgrading of banks by other banks. The most recent example is yesterday's report by Morgan Stanley "Q3 remains constructive for wholesale banks." In the piece, analyst Huw Van Steenis sees nothing but blue skies ahead of the financial sector, especially Credit Suisse and Deutsche Bank. The verdict: "We remain positive on some of the wholesale banks as we expect them to be beneficiaries of low rates, steep curves, compressing risk spreads and refinancing needs." The fact that banks are now effectively liquidity proxies for various printing presses, especially that of the Fed, which continues throwing liquidity into the market at a $35 billion a week clip, is strangely missing from the analysis.
Here is Huw's commentary on CS and DB. We fully expect the former two to have comparable kind words for Morgan Stanley within the week.
For CSG we still see 25% upside to our Sfr73 base case price target and 70% to our bull case. Our estimates for 2010e are 15%+ above latest street estimates and our 2010e divi estimate is similarly higher by 30%+ (and we have separately written we think there are opportunities to play).
DBK is executing well and we have upped our estimates today. Management has indicated that they think provisions will now be below €3bn for 2009, and we have sought to model this, although we feel the risk on the CRE portfolio remains elevated. As a result we have just 8% to our base case price target, although 45% to our bull case should the risks be less elevated than we currently think. We also recognise that per company statements and press reports Deutsche is in talks to buy a stake in Sal Oppenheim (e.g. September 29, Reuters), and per unconfirmed press reports is in renewed discussions to buy the mid market portfolio of ABN (October 5, Reuters). The CFO last week said that they may consider capital raising with any such acquisition, and we are intrigued that this could offer an opportunity to further degear the group and diversify it, which could offer medium-term upside should these events take place. This said, as we argued in our depth note - Deutsche Bank: Switching Out, July 30, 2009 – given legacy/higher risk assets represent 1.4x TCE, or, put another way, some ~25% of the €37.6 TBVPS in 2Q09 is the accounting benefit of IAS 39, we think that until we gets a lot more comfort on asset quality of the legacy assets, it will hold back expectations on earnings and book value growth.
Somehow, and not too surprisingly, a full discussion of what happens to DB if all the accounting magic is removed and all the "assets" on its balance sheet are revealed, especially in light of the firm's capitalization ratio which leaves most of its American brethren gasping in jealousy, is missing.
We hope someone keeps track of tech analyst reports from 1999 when so called professionals were upgrading tech stocks with the same reckless abandon as now is the case in the financial bubble. It would make for an amusing read. On our part, Zero Hedge has started a repository of all relevant financial upgrades, together with the people who penned them, which will be an amusing read when this most recent iterration of the Madoff scheme finally falls apart.
»
- 2926 reads
- Printer-friendly version
- Send to friend
- advertisements -
"ongoing circular upgrading" = circle jerking. Technical terms.
What was it the The Wolf warned against doing too soon in Pulp Fiction?
Ejaculating?
No. But you've got the right idea...
Giving back TARP money?
it was something along the lines of... "let's not start sucking each other's d*cks just yet."
I would agree with you but obviously they ain't got no balls... so they all must be doing a rug-munching daisy chain. Meredith Whitney only one with some balls.
I'm liquidating my FAZ for the tenth time. Not only the upgrades, but the is anyone covering the $230B that was "removed" from Citigroups balance sheet. According to Grayson, it has not showed up on the Fed's balance sheet.
little advise: do not buy FAZ
Upgrading themselves, soon we'll have upgrade bid wars.
I guess its time to short the rating agencies!! who needs them anymore!
Did you hear.... McDonalds just upgraded Burger King, who just upgraded Wendy's, who just a minite ago upgraded McDonalds
This is everything that is wrong with our current state of affairs--
RUN Forest, Runnnnn!!
Is called "bank orgy"... they are fu**ing each other to death...
It's a circle jerk.
From: SEC, FED
To: Bank Analysts
Re: Dogs with Fleas
Due to Chinese Wall issues surrounding selling crap. Please pick a bank with more crap than yours and "Promote" You will not be issued a "Blodgett" notice.
If you have any questions, please refer to your Turbo Tax instructions.
Why not ?
Chinese say
http://research.stlouisfed.org/fred2/series/LLRNPT?cid=93
We might as well face it bears, Bernanke saved the global economy. The price action and every report is taken positively. I don't like it and they have lied and cheated to get here, but the bottom line is that it worked. I am a exhausted bear who would capitulate if I could. I am sure we will test new lows but that will be 6 months to 6 years from here.
I know a number of unemployed folks who do not feel saved. Also, it appears most retirement funds are going into bonds, so the "wealth effect" may not extend as far down the food chain as appears on face value.
Patience.
I'm with ya. My bear balls are bleeding
Bernanke saved nothing - go to FT Alphaville and check out the S/P chart price adj for DXY. Bernanke's smoke and mirrors may have created a false dawn, but it will be short lived. The difference this time is that structural bears have no reason to capitulate and every move higher cements conviction.
As thatcher said: "don't go wobbly"
I'm not sure how the DXY decline is helping ANF today.Computers running wild.7%+ so far on -18% yoy sales but then again that is of course better than expected -20%.I will run out of money by the time all collapses back to where it should be.
Furthermroe see FT today re possible capital controls (covered at Naked Capitalism). The objective of the Fed to simply chase the bears out of the US market so there is no seller. Next step will be to lock the exit doors so those seeking to take their money elsewhere will find themselves deadbolted.
Hey did you hear.... McDonalds upgraded Burger King, who upgraded Wendy's, who upgraded McDonalds!!!
Kudos, Tyler.
A repository of relevant financial upgrades. Excellent. Michael Moore can do a movie sequel with the material. This one will be a dark comedy.
When do we get our hands on the near zero interest rates? My suggestion, a default Tea Party. No more repayments until we recieve the same interest rate directly from the FED. Take my house for all I care.
I'm personally getting exhausted too. On one hand it has been really funny joking around about all this crap that going on. On the other, I just can't believe that 'leader', 'statesmen', 'dumb fucks', are letting this happen. Anyone one with the interent and some reading and searching skills can see and understand that this is totally undermining the future forever. How can they sleep at night.
I have read so much doom, it make me sad. I don't even live in the US but close enough that I know this will effect me and my young family, especially my one year old daughter for her entire life.
And I would to add that, I am pissed I didn't play along and, totally watched the market pass me by. Lately I been thinking I should jump in, but after get slapped around so much from the top of 2007..including a panic purchase of a new house in Aug 2006.
I work in the Oil and Gas industry...kinda thank GOD now, but still worry about my future, especially competing with another 2000 unemployed direction drillers. But I tell you, my freedoms are not there and my client like to think they can get 'leverage' on me, and that sucks.
So me....for now, I'm in the silver camp, made some big purchases of the real stuff...yup, heavy in my pocket, but I just don't know where else to turn for investments. I think I capture my general demographic, someone who has lost and lost some more trying to bet again the cabal/banking nobility, they control the numbers, the paper, and the TV...just can't seem to win.
Good Luck Everyone.
Ahhh.......Aaahhhhh......AMERO!!!...Excuse Me!!
Interent Ubuser Out
It's a slow motion train wreck we are witnessing ...
Long term oil and gas is still a good industry. Enjoy your vacation... it won't last too long.
Greatest confidence game in history. Government employees in on it too. Almost every day somebody comes out and says things are better.
Corporate incest. Disgusting.
as a bear, i love seeing the bear capitulation.
this is so textbook it's not even funny. actually, it is pretty funny.
Apparently UBS did not get this memo.
i have yet to see the UBS initiations published anywhere in the msm....
No candy for ratting out Tax Cheats...
Until they start marking assets to market they are worthless. Paying for a pig in a poke.
Deadhead- You sound like someone who is short 100 shares of qqqq. People who are professional and do this for their lively hood don't think it's so funny. So shut the f&ck up!
What side of the bed did you get out on today... it makes no difference if someone has personally invested $20,000 in a short position... or if you are moving millions of dollars for other people as a trader... in fact my personal wealth is more important to me than your job... so many of us read ZeroHedge to protect that wealth...
IMHO... you should probably take a step back and reevaluate your position on the contributions of others... unless someone is really over the top or way out of line... "shut the f&ck up" is not the usual banter on this website... we tend to be a little more civil here... most of the time anyway.
Ya we keep trying to get minnesota's niceness indepentantly audited but she keeps appealing to higher courts. :)
Sorry if things are going bad for you rhinotrader. I don't think anyone should have to trade this market under all the layers of bullshit.
Looks like she's only Minnesorta Nice today. :-)
Yep :-)
Funny Hephasteus... I'm Nice 95% of the time... I'll leave the other 5% to your imagination :-)
"Bernanke saved the global economy."
Ha ha ha ha ha ha ha ha ha ha... good one!
OK OK you were just kidding... but that was great.
Please reserve the "Now shut the f&ck up" for STFU moments... thanks.
I just went big long C....
My point precisely! When I read a fellow ZHer's enjoying schadenfreude at someone being short and gloating it pisses me off. I would not exactly think that "civil" means that your personal wealth is more important than my job as well, lol.
Point taken... I don't know if Deadhead really meant it that way... he really is a nice guy... but maybe he did for all I know... doubt it though...
Well then I guess it is a draw... you emphasize that your job as a trader is more important... I emphasize the my personal wealth is more important... so then let's just simply agree that both are equally important...
And I really do empathize if you have a large short position in this market... I would not want to have your job in a million years...
I agree, my job sucks!
Hey Rhinotrader... you may already know this... but if you click the "reply" under someone's comment you can reply directly to that comment... rather than just posting it in the general thread :-)
33 TARP recipient banks have missed their most recent dividend payments to Treasury:
http://blogs.reuters.com/rolfe-winkler/
Rolfe scores good info again.