Bank of America
As Bank of America was plunging throughout October, it appears its short interest was, counterintuitively, following suit. As the NYSE reports, short interest in John Paulson's favorite bank (or not - the Paulson & Co. 13F coming out in a few days may have some nasty surprises for longs) was 153MM shares at the end of September. This number dropped by a whopping 54 million shares, or 35.3% in just one month (see table below). This means that the ongoing drop in the name had little to do with a resurgence in shorting, and all to do with increased selling. Furthermore, the far more proportionately bigger drop in SI, means that should there be another notable weakness in the name, then the drop this time will be that more accentuated, as there is less of a short covering impetus to the downside (and greater room for new shorts). In addition to BofA, other notable observations are that shorts in Ford rose to 282 million, making it the second most shorted stock on the NYSE, just after perennially most hated company Citi, which had 423.8 million shares short. The other usual suspects were mostly ETFs which as readers know all too well by know, are merely short hedging vehicles to long single name positions by hedge funds.
China Wants World To Believe Inflation Jumped By 4.4%, In Line With Shadow Expectations, Fastest Fake Price Growth In Two YearsSubmitted by Tyler Durden on 11/10/2010 23:02 -0400
That China somehow magically pulled a 4.4% inflation number for October out of its hat is not surprising. After all this is precisely the number that the "local market" was expecting as there are no secrets in China, even if the Bloomberg surveyed Keynesian fundamentalists-cum-economists end up being "pleasantly surprised." Yet none of this is at all relevant: now even Credit Suisse's Sean Keane (see below) is openly ridiculing the magic 8-ball that the Chinese department of truth is. The only open question is whether this acceleration in the economy to a two year high will lead to a rate hike. And the answer, as Bank of America says, is no. Which means a whole of nothing is about to happen as a result of this latest non-news which just confirms that China's economy is telegraphed to be overheating at precisely the rate that its politburo has determined is just right.
Contrary to popular expectations, robosigners are not just assorted WalMart rejects, also known as Bank of America employees of the month. Meet the Damilic Corporation, which makes the first true to life Robosigner. It is amazing Bank of America has still not taken the company public yet. With signing rates of 500 sheets/hour, this company is sure to trade at a Netflix comparable P/E of 100 in no time.
Banks, Monolines, and Ratings Agencies As The Three Card Monte (Wall)Street Hustlers! Its a Sucker’s Bet, Who’s Going to Fall for it in QE2?Submitted by Reggie Middleton on 11/09/2010 13:31 -0400
Banks, insurers and ratings agencies conspired to move junk assets that were guaranteed to implode - and implode they have. They were (Wall)Street hustling, 3 Card Monte style, but what most are dismissing is that the ponzi/hustle collapse has yet to truly happen!
Goldman Announces 2 Trading Loss Days In Q3, Settles Research Lawsuit, "Rainy Day" Fund At Record $173 BillionSubmitted by Tyler Durden on 11/09/2010 09:51 -0400
It is now official that Bank of America has a 'better' trading desk than Goldman (no matter that it is outsourced to Calcutta). GS has just released its 10-Q, in which it discloses that even though it had 7 days in the quarter in which it made over $100 million, it actually lost money on 2 days out of a total of 66. This compares to BofA's flawless Q3. Additionally, in Q2, while Goldman has far more trading losses, it also made big money (>100) on more than double as many days. The trend here is unmistakable: the open ended >$100MM trading days for Goldman are plunging: from 35 to 17 to 7. And this is a trend which now that Goldman prop's activity is far more limited, will persist.
As Fed Allows Red Close, And All Time Record High Close In Gold, Is JPM's Commodity Trading Desk In Need Of A Bailout?Submitted by Tyler Durden on 11/08/2010 17:11 -0400
Since it is now obvious that the Federal Reserve treats the market as its plaything, it is refreshing that even Brian Sack's henchmen throw stocks a bone. Today it was in the form of a triple whammy: i) a red close (yes, imagine that), ii) on a POMO day, iii) as gold surged to fresh all time record highs. And while it is unclear or not if this was an orchestrated red close (as the Fed has now confirmed it does all it can to push stocks higher, various "conspiracy theories" as to why the market may ever go lower may emerge), the short covering squeeze that the LBMA is undergoing right about now as margin calls flood, are all too real. Forget Bank of America. Pretty soon the real bail out target will be JP Morgan's commodity "trading" desk.
People like Jennifer Fan and pretty much everyone at JPM have no clue what the impact of $87.50 oil is on their limo drivers and thus they can make idiotic predictions like that AND get paid for it. There simply is not enough money in the World to support $100 oil.
Today's fraudclosure (remember that?) court ruling of the day comes once again from Florida, where in the case of Merrill Lynch Credit Corp vs Karin Lenz (Southern Florida case 09-60633) courtesy of yet another massive fumbled mortgage note discovery process, Judge Marcia Cooke has found that Merrill was not allowed to foreclose on a property that had an IRS tax lien on it, that a tax lien is found to have priority over a mortgage, and that in a nutshell the (presumed) mortgage servicer does not have standing to foreclose when the IRS is involved and demands its pound of flesh. This will be the latest cog rammed right up the wheels of the foreclosure process, as another hundred thousand or so mortgage will now likely be derailed as the IRS seeks to recoup tax revenues in a way that implicitly impairs banks, and further delay foreclosures, now that there is affirmative case law precedent.
William Black ratchets his campaign for putting an allegely insolvent Bank of America into conservatorship by several notches, following up on Jonathan Weil's argument presented a few days ago that there is massive "book cooking" by Moynahan's henchmen, and that it is about time that BofA truly opens it books for all to evaluate just how undercapitalized the mega bank truly is.
Bank Of America Reports No Day With Trading Losses In Q3, Announces MBS Complaints Over $375 Billion Worth Of SecuritiesSubmitted by Tyler Durden on 11/05/2010 15:31 -0400
In its just released 215 page 10-Q, BofA announced it has just overtaken Goldman, and where even Goldman ended up having days with trading losses, Bank of America was perfect. Gotta love all those 3rd grade BofA prop traders (as an FYI to all, BofA is where you go where the safety school equivalent of prop trading dumps you). What is more interesting is that the seemingly flawless trading machine which is BofA has just disclosed it has received a complains by the Chicago FHLB, Cambridge Place, and Charles Schwab (and others) that allege misrepresentations in over $375 billion worth of RMBS. It appears the FRBNY is not the only entity that now is gunning for the scalp of the last remaining flawless frontrunner.
Fitch Puts Entire US Residential Mortgage Servicer Space On Negative Outlook Over Fraudclosure ConcernsSubmitted by Tyler Durden on 11/04/2010 14:32 -0400
What's that you say Bank of America and JPM, "it's all contained?" Hey Fed, it's not too late to add $8 trillion in MBS to QE2. On the other hand, now we know what QE3 will be buying. "Fitch Ratings has assigned a Negative Outlook for the entire U.S. Residential Mortgage Servicer ratings sector on increased concerns surrounding alleged procedural defects in the judicial foreclosure process. This industry-wide issue will cause all servicers to be under increased scrutiny from a wide range of state and federal regulators, state attorneys general, and GSEs. All servicers will be affected, even those fully in compliance with all foreclosure rules and regulations."
- Fed takes bold, risky step to bolster weak economy (Reuters)
- Oil rises towards $86 on Fed, weak dollar (Reuters), we expect $90 oil within a week
- Asia Girds for Stronger Currencies, Bubble Threat From Fed Move (Bloomberg)
- Obama Says He'll Negotiate With Republicans on Bush Tax Cuts (Bloomberg)
- Sarkozy To Meet Hu As France Takes G20 Lead (FT)
- Pettis Op-ed: Targeting Currencies Will Not Stop Trade Imbalances (FT)
- Bank of America Edges Closer to Tipping Point: Jonathan Weil (Bloomberg)
- Analysis: Strategic tensions threaten Asia as China rises (Reuters)
- Goldman's Pay Pool Shrinks Fastest as Traders' Fortunes Dwindle (Bloomberg)
Goldman Cuts Bank of America Price Target From $19 To $16 Even As It Continues Understating Putback ProblemsSubmitted by Tyler Durden on 11/03/2010 08:48 -0400
Goldman's Richard Ramsden has released another report whose only purpose is to prove that the market is wrong and that banks are angles, that putbacks already priced in by the market for the TBTFs are far greater than even the worst downside case, that business models are "robust", that Basel concerns are overrated, and more such things which, of course, are a self referential plea not to sell Goldman.... Oh yes, and despite all this he cuts the price target for WFC, PNC and, oops, Bank of America, from $19 to $16/share. If Goldman cuts Price Targets when all it sees are pots of gold and unicorns, one dreads to think what may happen if the bank was actually concerned about the fraudclosure situation that according to some rumors has brutalized the banks' October (and now November) mortgage-related cashflow.
Various rumblings started at Zero Hedge and a few other fringe sites, and now essentially mainstream (not to mention emanating from such firms as, oops, Goldman Sachs) as pertains to a rather curious correlation between POMO days and market outperformance, appear to have finally gotten to such institutional stalwarts as Bank of America and its traditionally imperturbable Jeff Rosenberg (whose opinion we tend to respect). In a piece released tonight titled appropriately enough, "The POMO Conspiracy Theory", Rosenberg (not to be confused with former M-Lyncher David) sets off to debunk that POMO days have an impact on risk assets. Alas, he fails. The conclusion: "Our analysis points to the correlation, but not causality of POMO with rising stock prices." Sure enough, if one could confirm definitive "causality" of Fed intervention in the stocks markets, that would pretty much be the ballgame right there. And it appears that even his correlation results force Rosenberg to step back: "We likely are about to get a lot more days of POMO if the market’s expectations of $500bn further expansion of the Fed’s balance sheet is confirmed at the conclusion of Wednesday’s FOMC meeting. If the correlation of POMO purchases and stock prices were to continue to hold going forward as it has since August, than we should expect more frequent days where stocks go up as the Fed pumps in liquidity into the financial markets." Thank you for proving our point Jeffrey. Amusingly, at the end of his "debunking", Rosenberg, in typical banker fashion inverts the argument by 180 degrees, and says essentially that even if POMO is goosing markets, it basically creates a self-fulfilling prophecy that "can contribute to a better economic outcome" as it boosts inflation expectations. Jeffrey: a better outcome yes, but for you. And nobody else.
S&P has released its first official estimate of what it believes the cost of Donk will be on the Too Vampiric To Fail. In a nutshell, the range of various costs could be as high as $22 billion, due to a drop in debit fees, lower derivative income, FDIC DIF replenishment, prop trading, and new compliance expenses. Additionally S&P expects another $85 billion in additional required Tier 1 Capital (which is a joke compared to its Tangible Common cousin). One thing is certain: just as Grayson yesterday said that nobody has any idea about what the charges associated with foreclosure and MERS-gate, and all are merely guessing, the same thing can be said of S&P. It is without doubt that the final outcome of Donk will either cost nothing or infinitely more. Yet for some reason this report made the headlines, so we present it for those 3 readers who actually care what S&P has to say.