Developing Implications on Loan Accounting Law: Mark to Market, Mark to Model, or Mark to Market Crash?Submitted by Reggie Middleton on 06/05/2010 05:42 -0500
Relevant commentary from BoomBustBlog and sources throughout the Web on the accounting change that added 80% to the S&P since March 2009!!!
The Equity Markets Are Ignoring Screams of FUD (Fear, Uncertainty and Doubt) in the European Money and Credit Markets: Enter Lehman Fiasco v2.0!!!Submitted by Reggie Middleton on 06/03/2010 09:46 -0500
The title says it all...
Full recap of the ideas and recommendations at yesterday's Ira Sohn conference.
Guess who may be exposed to what? We will probably dig a little deeper into this if the market doesn't punish the company before positions can be expanded, in the mean time their is plenty for subscribers to chew on. I have included much food for thought for non-subscribers as well. Oh yeah, as I type this, futures are down 28 as the global markets drop 3 to 5% (again), all due to what I warned about since January yet the pundits said was "contained". Yeah, globally contained!
This is a European bank that is thoroughly insolvent, and this is without counting the fact that its sovereign debt holdings will probably drag it 3 fathoms below sea level, yet it is trading at one of the highest premiums in all of European bankdom!
- Asian stocks, US Futures, Euro climb on global plan to stem debt crisis.
- China posted a $1.68B trade surplus in April, Xinhua News Agency reports.
- ECB says will intervene in bond market in unprecedented bid to buoy Euro.
- EU crafts $962B show of force to support Euro, halt global crisis.
- Fed restarts currency-swap tool with ECB in effort to contain debt crisis.
- US, Australian, Japanese bonds tumble as Europe arranges rescue package.
- Accounting regulators find deficiencies in 15 audits conducted by Deloitte & Touche.
- Asian stocks, commodities rally on economic recovery, Greece.
- Bond traders declare inflation dead with yields below 2008 crisis levels.
- China is considering introducing new or higher taxes on real estate.
- Consumer spending in US probably stepped up, carrying expansion in 2010.
- Dollar rises versus Yen amid signs of global recovery before Fed meeting.
- Finance Ministers urge IMF, EU to speed aid to Greece at Washington Talks.
- Germany is laying the legal ground for its contribution to the financial aid package for Greece.
Banks are busted, all of the big guys were doing the Lehman thing, and it gets worse. I take a look under the hood of the big boys to see what they were hiding. On a side note, as I type this the story is breaking all over the place. Is this the return of true, investigative reporting? I hope so!
As SocGen's Dylan Grice points out, we have gotten to the point where the Shiller PE demonstrates S&P valuations are now back in the highest valuation quintile: in other words the market is now more expensive than during 80% of the time. The risk-return at this point makes little sense, because as Grice points out the 10 year return using this quintile as an entry point is just 1.7%, compared to 11% for the lowest quintile. So what should one do: "Go take a holiday if you can. Avoid the ?boredom trades?." If those two are not an option, Dylan provides some trade ideas.
Ovebanked, Underfunded, and Overly Optimistic: The New Face of Sovereign Europe, and Ireland in Particular!Submitted by Reggie Middleton on 03/31/2010 05:38 -0500
This is a very meaty piece, written for those who are serious about the true state of affairs in sovereign Europe as NOT reported in the mainstream media. Though not necessarily for freshmen, it is more than worthwhile for those who want to know what is not being said.
Economic contagion begets financial contagion, which will spread across much (if not most) of Europe, causing further economic contagion. This is what is written on the tea leaves in Ireland.
Alan Greenspan Discusses The Fed's Inability To See Bubbles, Is Confident There Is A "Bubble Waiting To Burst In China"Submitted by Tyler Durden on 03/27/2010 13:12 -0500
The maestro managed to run away from the old folks' bent on monetary destruction home just long enough to carry this amusing interview with Bloomberg TV's Al Hunt. Tomes (will) have been written about Greenspan's dementia, just as books will be available on the Kindle one day analyzing his successor's massive mistakes which are slowly but surely leading to an American day of reckoning, so we won't comment much, suffice to point out some of the key highlights in Greenspan's presentation. Most amusingly, note the escalating battle between Greenie and the Fed's new vice-chairman Janet Yellen, who blatantly contradicted Greenspan's that higher interest rates would have prevented a housing bubble. For all it's worth, Alan's response is actually quite interesting: "We tried to do that in 2004. We ran into a conundrum. For decades, every time the Fed raised its short-term rates, the 10-year note, which is really the proxy for mortgage rates, the yield went up with it. This time, it did not. And the reason it did not, is you cannot have the 10-year note determined both by arbitraged global finance and individual central banks. As a consequence of that…starting in the period where the sensitivity of the early stages of the bubble were building up, it was very clear that what was determining the rise in prices was movements in long-term mortgage rates going down, not the federal funds rate." In English, this is quite intriguing: China, which at about this time started running up massive trade balances, essentially became indifferent about US monetary policy, as it gobbled up everything east of 5 Years, with a preference on the 10 Year. The reason for this is the US consumer became the one driving force behind the massive Chinese economic expansion. With the consumer out, and with China set to report its first trade deficit in 6 years, and the Fed pulling out its support of mortgages, and the Chinese National Bank pulling liquidity, the move in 10 Year over the next few weeks is now more critical than ever, which is why the 10 Year - 30 Year MBS spread is paradoxically pressured at an all time tight spread, as all the early MBS shorts are covered, forcing pundits to say MBS are cheap as fighting momentum in this market is professional suicide. To be sure, this technical push down will soon end. And when this last coiled spring blows out, watch out below, first in housing, then in rates, in corporates, and last, in equities.
- Asian shares mostly down; India's RBI's rate hike dampens demand.
- Bernanke says taxpayers shouldn't bear cost of dismantling financial firms
- China cautioned US against citing its currency as a reason for imposing trade sanctions.
- Historic health overhaul bill passes; Democrats clinch win in 219-212 House vote.
- IMF's Lipsky says advanced economies are facing 'acute' debt challenges.
- Merkel: Greece doesn't need financial help.
- Aetna reaffirms 2010 targets, says 2010 results "are off to a good start."
Federated's David Tice Is Not A Fan Of Bernanke-Manufactured, Free Money Driven, Bear Market Bounces, Sees "Huge" Potential For DeclineSubmitted by Tyler Durden on 03/19/2010 13:34 -0500
Federated Investors' David Tice has a thing or two to say about the rally - "We've been the beneficiary of a massive credit bubble that we've not yet worked off the excesses... This secular bear market will not bottom until we get back until we get back below book value." In a portion of the interview not caught by the Bloomberg clip below, Tice says that the decline potential for the market is "huge." Don't tell that to the algos whose one and only program for the past month and a half is Buy.The.Dips.
Broken Incentives: “People See What They're Incentivized to See. If You Pay Someone Not to See the Truth, They Won’t See the Truth.”Submitted by George Washington on 03/15/2010 13:15 -0500
It is difficult to get a man to understand something, when his salary depends upon his not understanding it.
A detailed overview of the current state of charge-offs, delinquencies and (yes) improvements in the mortgage industry - and most importantly what can be discerned from these trends...