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Worst Quarter In Years Shaping Up For Hedge Funds Formerly Known As Bank Holding Companies
The third quarter will close in 16 market days and unfortunately for the TBTFs this means that Q3 will be the most disappointing quarter in years, unless market volume picks up dramatically in the next 3 weeks. Alas, due to the double whammy of the flattest yield curve in years, and the wholesale dereliction of stock trading by retail and other investor classes, the recently key profit drivers for Wall Street banks will be most disappointing. Since M&A has not picked up, banks will be hoping that underwriting advisory can fill in the hole. Alas, IPOs never managed to get out of the gate, which means the fate of EPS targets being met lies in IG and HY bond issuance proceeds. However, with underwriting proceeds of just 1% in the case of the former, it will take a lot for this category to recoup even a small portion of lost revenue in the much more profitable market making/flow/prop category. Lastly, the old trick of reducing NPL provisions will not work this time. All in all, if you run into your banks CEO/CFO/COO, stay out of their way: most likely they are not having a good day.
The chart below shows the ridiculously low volume on the NYSE over the past two years. Note the ever declining volume, and also the Q3 average volume which is about 20% lower than a year ago. The same is most certainly true for cash and CDS trading, as many hedge funds have already thrown in the towel.
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First?? Where is everybody.
Busy exchanging our dollars for gold...
Or packages of ramen in the case of us working poor.
Looks like this country is about wrapped up. The complete collapse should be quite entertaining.
Hell I'm here, & half drunk...
+24
IMO, the growth paradigm must be broken. To meet their ever increasing growth targets the banks took ever increasingly dubious practices including fraud and outright embezzlement (through being above the law no one would ever call them on it).
The pinnacle of innovation and desperation in maintaining the growth paradigm was stealing from the future through derivatives. Why wait for profits tomorrow through long term lending if you could pull 30 years of profits to today using derivatives and then create some fiat out of thin air to pay yourselves bonuses.
Unfortunately for the banks, they could only pull forward the profits as far as their longest range products, the 30 year mortgage... and those have dropped off the face of the earth ... and with every refinance, some hedge takes a hit on that profit pulled forward ... but maybe not the bank. So, when you have stolen all you can from the stock market and you have stolen as much as you can from the government and you have stolen as much as you can from the future, what do you do for a fourth act? (International was the plan ... but the Chinese are not as big of fools as the Americans)
but the Chinese are not as big of fools as the Americans
I'm not so sure they got that memo. Private Equity has been moving over there like no tomorrow to start Chinese currency funds, a Japanese bank actually bought a mutual fund company in China thru ICBC (how in the hell was THAT allowed to happen!), at lastly, HSBC is looking to put HQ BACK in Hong Kong. I think the money is on the Chinese being just as big a fools as Americans.
All systems are finite. Doesn't matter if it's a blade of grass, a human being, an economy, or a universe. Infinite growth is the fantasy of the wealthy class. In the end, reality wins.
Whats to stop the fraud and lies from continuing indefinitely? It's to the point where earnings have become a laugher do to "accounting tricks". Last quarter I thought to myself, this is the type of stuff Enron used to pull. Thats how fradulent accounting has become. We simply not exist in what has become an open scam of a financial system. The million dollar question is what finally brings it to an end?
FED needs to pump a Quadrillion more in the Market. Those of us under water are waiting. We all want to cash out.
I'm waiting for FASB 157 version 2.0 which will be to mark assets to model plus whatever the phuck the CFO picks out of his or her ass.
As an example, a 100k home equity, currently worth nothing on many homes, is being marked to model at par.
FASB 157 v.2.0 will allow banks to mark the worthless home equity loan at 150k.
Anybody, anybody at all, who is holding bank common equity is a complete and utter fool.
Mtm suspension is our whole economic foundation right now. Nobody should go near a bank stock until they can go back to the old rules.
Level 3 assets are fantasy world.
I haven't heard of this 2.0 you're talking. Currently an asset as you said originally marketed to market at 100k is still worth that after the suspension on book even if it's much less.
Anyone following Basel 2 or 3 these days.
what happens to the guys who plug in the robots everyday - they're safe right
The question is - do we keep paying our mortgage?
Why pay anything. Uncle sucker, em Sam seems like he wants to solve our woes.
Just do the best you can then say F it.
There's going to be some of these cowboy's pushing all of their chips in and going for broke before the Q3 dinner bell rings
Glad to see money coming out every week. The squeeze on the bankers gets tighter and tighter every day. I watched an episode of Cramer once where he was begging for the retail investor to come back into the market, Yield this, Valuation that. Fu*k them, keep pulling your money out till the 80K staff reductions hits 160k. Let them eat their 401K's and figure out how to feed there kids like the rest of the country. Now who is bleeding.
Get rid of our deficit or sell your Bentley.
Cheers!
Yep, cut them all off at the knee's! Get your money out of the big banks and corporations. Strangle the squid! Buy local (not big box) whenever you can. Screw BoA, C, JPC, et al. We the people can engineer the collapse by refusing to participate in their game!
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Nice article thanks.
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