The overt-optimism in deficit forecasting and the wishful extrapolation of growing GDP may score a few points with voters in the near term, but you tend to pay for it in spades in the end. We gave explicit warnings concerning the optimism in the British forecasts, and those warnings have proven to be quite prescient.
This is an excerpt from part two of a multi-part series on the companies vying for dominance during the 3rd major paradigm shift in personal and enterprise technology over the last 30 years. This one will be a biggie (not smalls) and promises to create an investment behemoth out of the winner and relegate the losers to relatively niche markets. This is saying a lot considering the size of the companies participating in the battle for the pole position. I created this series to provide a truly objective, truly informed, and truly analytical (from an empirical perspective) knowledge source on this very important intersection in personal computing and distributed media.
I've written blog posts calling government officials liars when they said the Greek crisis was over, written posts calling for inevitable haircuts while the bulls said the Greek crisis was overblown, and even put up with BS EU stress tests that won't even account for the possibility of default - or its economic cousin, restructuring. Well, how ironic that the EU puts out the criteria for its banks stress tests sans default/restructuring scenarios today, the same day that Greece releases a press release of a broad restructuring of its hospital debt. Hmmmm.... As realistic as platinum frog farts!
HSBC's Chief Economist states that emerging markets hit a bump in the road in terms of growth (duhhh!) but their longer term outlook is positive. I agree, but since we happen to live in the present, we have a few wrinkles to iron out first. After all, it can be said that HSBC is simply talking their book since they are highly levered into the emerging markets! Here is my take on the situation from a more objective perspective.
Many people have asked me how SRS and REITs share prices can defy gravity the way they have given the abysmal state of commercial real estate (CRE). Well my opinion is that the equity and the debt markets have allowed agent and principal manipulation to the extent that it materially distorts and interferes with the market pricing mechanism.
CNBC runs as a headline the usual contradictory nonsense that we come to expect from certain heads of state. It would be funny if it didn’t portend such dire consequences. The Spanish banks, just last week, were declared to be some of the healthiest in Europe (spoken with my fingers crossed behind my back, wry smile and spittle dripping from the side of my mouth). Of course, Banco Santadar and BBVA shares rocketed on the news that they are no longer insolvent and that the Spanish housing market pauses no threat.
The culmination of several man/months of short research has whittled a pool of 1,800 companies down to just 10, half of which appeared on our short scan list in 2008. You can guess how profitably that ended. Now that the "Great Melt-up of 2009" seems to have run its course, these companies are poised to fall back down to earth - and fall relatively hard at that. I have featured one particular company herein, closely tied to housing, construction and CRE, three of the worst sectors for a weak balance sheet to be in right now.
A quick piece on how we're selecting stocks to short for the balance of 2010, along with a live spreadsheet of over 1,400 non-financial stocks in our initial pool of candidates, including their pricing and key solvency metrics.
So early in the morning, Bloomberg runs a story, "Sales of Existing Homes in U.S. Probably Climbed on Tax Credit". A few hours later, the housing report comes out and Bloomberg then runs "Existing Home Sales in U.S. Unexpectedly Fell to 5.66 Million Rate in May". Hmmm! BoomBustBlog readers saw this coming way back in March with "It’s Official: The US Housing Downturn Has Resumed in Earnest". Thus far, we've been right on the money. Hey Bloomberg editors, I'm available if you need me...
