The lead story this morning of ZH is "The Only Thing Better Than A Zero Hedge? Wells Fargo's "Never Lose" Economic Hedge", explaining more accounting shenanigans (if you read the links below, you will see that I have caught Wells in a few rather aggressive interpretations) related to MSR's. One thing that was noted was the inputs for valuing MSRs using interest rates as was extolled by management. Well...
Did a hedge gone wild account for nearly half of Wells Fargo's Q4 earnings? More importantly, when the economy turns sour, will the same "hedge" drag the company's net income down faster than a financial weapon of mass destruction obliterates lower Manhattan? An analysis of Wells Fargo's Mortgage Servicing Rights and associated "economic hedges" indicates that investors should be concerned by a flashing red light hidden deep within the bank's assets, and the associated loose accounting principles.
Of particular note is the difference between some readers perception of the Suntrust results and mine. If you take a close look at the results, you will see credit performance and asset quality is still deteriorating. The perception of a reprieve or moderation is potentially misleading due to the fact that Suntrust (like most other large banks) is actively shrinking their loan portfolio and transferring bad assets from one category to another.
To the credit of the CEO, he actually appears to tell it like it is and does not appear to be on a marketing binge to sugarcoat reality.
In his first State of the Union speech in 2010, President Barack Obama carefully chose his words in calling for a new jobs bill to stimulate real organic economic growth. However, politicians have always been extremely deft about making speeches that present a united front with the people against corruption, while often hammering out legislation behind closed doors that ensures no real change will ever occur. To determine if the wool is being pulled over our eyes once again, let’s turn to the actual text of President Obama’s State of the Union speech.
Cramer Is Now Negative On Fins, Says To Bail On Citi "Which Can Now Break The Print Price", Goldman Sachs Is Bond, James BondSubmitted by Tyler Durden on 01/27/2010 17:39 -0500
Cramer joins the alternative apocalypse crowed, which in itself is neither surprising nor amusing. However, on the amusing front, we are not sure if we are more entertained by Cramer's comparison of the President with Goldfinger, or the of Goldman Sachs with James Bond. Either way, as the CNBC comedian says: "You CANNOT OWN THESE STOCKS RIGHT NOW" referring to Citi among others. It may very well be time to load up on Citi.
I have decided to release a significant amount of opinion on Wells to the public, and have created an extended version of the report for subscribers with geo-specific charge-off estimates stemming from the FDIC/NY Fed model that we have created in house. A rather comprehensive piece of work. It appears that much of the sell side community is much, much more optimistic on the prospect of Wells than I am. It must be the Warren Buffet investment...
I have never voted Against the Democrats in my life, BUT I WILL THIS TIME just like the people of Mass. did last week.
Its your time to stick up for the people of New York State and this country we call home. I will be watching to see what you do for us.
The people of America are to the breaking point and if we snap how long do you think Citi, Bank of America, and Wells Fargo will last if everybody stops paying ther Morgages and Credit Cards.
- Asian stocks, oil fall on China rates concern, Obama bank plan.
- Asia-Pacific bond risk jumps on Obama bank threat, China growth.
- China is expected to soon surpass Japan as No.2 economy on its revision of 2008 GDP.
- China’s growth surge may make inflation task tougher: Chinese Premier.
- Gold heads for biggest weekly slump in six on Dollar's gain, China outlook.
- Iraq signs Zubair oil field deal with Italy's Eni, US firm Occidental and SKorea's KOGAS.
One of the largest state-operated workers comp fund had massively misrepresented its performance. And you thought only Bernie could pull off multi-billion dollar scams...
"Market Conditions" Is Back; Energy Transfer Cancels $1.75 Billion Note Offering One Day After LaunchSubmitted by Tyler Durden on 01/21/2010 20:27 -0500
Damn, those windows of opportunity sure are brief: it seems syndicators now think the high frequency trading mentality has taken over the primary market. Less than 24 hours after launching a $1.75 billion unsecured note offering, Energy Transfer Equity pulled the very same refinancing attempt. Zero Hedge Capital Markets, Inc. is happy to undercut all eight (yes, eight) members of the underwriting syndicate and place the offering at one tenth the proposed underwriting fee, and will even provide a highly confident letter (that has the simple contingency that the placement be done only if the equity market has had twenty successive 1%+ up days and not a single downtick in the past 24 hours). If ETE management finds our terms attractive, they know how to reach us.
For All of You Guys Who Thought Goldman Was Invincible and the Administration Wouldn't Touch Them...Submitted by Reggie Middleton on 01/21/2010 12:27 -0500
I have had a lot of problems with the way the last two adminstration have dealt with this financial crisis and Wall Street, but I must say "Kudos to Obama". Somebody had to do it. Call it politically motivated if you want to (he is a politician, isn't he?), nobody else bothered to contain the self reinforcing boom/bust risk cycle that is Wall Street.
I was not going to bother to comment further, but after hearing pundit after pundit attack Obama for the bank levy and Glass Steagal 'lite', after banks allegedly paid their dues... I just couldn't take it anymore. This short-term memory-itis is driving me nuts!
- China money market rates rise after economic growth, inflation accelerate.
- China’s Q4 GDP grew at the fastest pace since 2007, at 10.7%.
- Crude oil trades below $78/bbl on concern China may take steps to curb growth.
- Gold pares advance as Dollar rallies after China growth spurs curb concern.
- Japanese demand for bank loans dropped the most in more than 5 years on lower spending.
- Most Asia stocks fall, Chinese swap rate rises on concern growth to slow.
- Obama to propose rules on proprietary trading to reduce bank risk taking.
Today's banks are much more complex than LTVs and 2nd liens, but when these risky products on the downturn are multiples of your tangible capital, it really doesn't take more than that to start causing some severe solvency issues. You can have a trillion dollars in assets, but if you have $20 billion in equity with $100 billion in investments that will take a 50% loss, you are underwater by $30 billion. You can talk about these banks using terms such as "complicated", "complex", "fancy" and all of the other high falutin' adjectives that you can think of, but at the end of the day, if you lose more than you own you are insolvent. Now, that's a simple concept and it works quite well for my investment pursuits.
JP Morgan's Q4 results show that banks are not only still in hot water yet, but the pot hasn't even really started to boil. Why is it that I look at the info and get such a different impression than much of the media and the sell side who proclaim "blow out results"? Yeah, the results "blow" alright...