The Market Is Improving, Cancel the Coffin 21 comments
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The market is healing and no one is noticing…Remember, watch what people are doing, not what they are saying.
- Goldman Sachs (GS) is dying to pay back $10 billion in TARP money, it would do it today because it could be out there making a killing if it weren’t for TARP restrictions.
- Morgan Stanley (MS) announced on 2/10 that it wants to repay TARP funds as well.
- Barclays (BCS) had a great quarter and reiterated it doesn’t want UK bailout money.
- Ken Lewis of BAC claims they don’t want any more TARP money, but the jury may still be out on this one. Plus, he has taken his own money and bought over $1 million worth of BAC stock recently.
- Jamie Diamond at JP Morgan (JPM) laughs at all the talk of nationalizing banks and says they are doing fine and lending money out everyday.
- Libor has fallen to very reasonable rates, meaning banks are lending money to each other at a pretty reasonable and doable rate
- Corporate bond insurance, or credit default swaps, have dropped at a staggering rate over the past 6 weeks, meaning the threat of default on quality companies’ debt is view as very minimal.
- Junk bond yields, although still attractive, are plummeting as investors pour into certain sectors chasing yield.
- The Bad Bank idea seems to have taken a backseat as it might not be as “needed” as some though, now government partnerships and handshakes seem to be all that might be needed to get over the credit freeze hump.
- Goldman Sachs and others have estimated the true number to get this mess in the rear view mirror is $4 trillion and guess what? The market moved 20 points. What else can be thrown at this market to drive it to Dow 6000 if we assume $4 trillion of debt and 12% unemployment? Seriously, leave a comment and let me know what scenario can shock the market down to 6000? I am not saying we won’t test 7500 or even 7000 again, but overall, I don’t see what can put us to some of the Dow 5000 or 6000 pundits out there.
- After seeing Tim Geithner's speech yesterday, as shallow and empty as it was, I have to say it proves my point. The Obama administration comes out with this turkey, and yet the market can't be driven down past 7850.
Really?? What else can they do to mess this up?
It reminds me of Brewsters Millions with Richard Prior, it's like they are trying to get the Dow to 5000 and just can't do it.
Disclosure: Long corporate bonds in JPM, MS, GS, VZ, VIA, FCX, TYC.
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Pull back the shorts and the market will thunder ahead.
If there is enough inflation (which would raise prices for Americans while keeping them affordable for foreign immigrants who would benefit from dollar weakening), we can avoid the worst case scenario. If not, those sitting on cash will be able to buy more with it- what's left after they hire bodyguards.
Sage may have a point, let's see.
The banks, already on life support, have yet to absorb the losses related to commercial real estate, and credit cards. These losses lead to a cascade of bankruptcies which in turn, sets off a derivatives frenzy that magnifies some losses into the trillions.
A large insurance company bankruptcy causes a run on the banks as rumors swirl about trillions lost. The banks and markets are closed indefinitely.
Credit cards are not accepted while the banks are closed. Merchants operate on a cash only basis. Shelves of supermarkets empty quickly. Due to the breakdown of the banking system, merchants cannot get restocked. Severe food shortages occur.
Food riots and widespread looting force the declaration of marshall law. School is suspended. Everyone is told to stay at home. Neighborhood militias are formed for protection. Barter is the primary form of trade.
After several months, order is restored. The markets eventually reopen. The Dow is at 1500. New banks are formed. We start over.
I understand that the above scenario has a very low probability. In any case, now is a good time to build an emergency supply of food just in case there is a disruption in the supply chain for any reason.
On Feb 12 08:36 AM w2j2 wrote:
> There could be massive default on credit cards.
JPM 8.62 x
WFC 6.95 x
BAC 3.16 x
USB 7.65 x
C 8.24 x
BK 8.99 x
GS 8.73 x
TRV 7.41 x
V 17.53 x
AXP 9.67 x
AFL 4.11 x
MER N/A
STT 5.92 x
PNC 6.68 x
CB 8.12 x
It certainly can't be restrictions on executive pay bonuses.
Don't be too sure. 2009 still has 10.5 months remaining.
As for BAC, they just want the Fed to guarantee all the assets of the institutions they are acquiring. What a small thing to ask... Only a few $100 billions. TARP, $25 billion more for a pay cap. Bah humbug....
Where's Citibank? I'd love to hear why they don't need more bailout $.
There are good banks out there, just about none of the big ones though. They all got high off the revocation of the only thing protecting us from a depression: the Glass Stegall Act. Tell them you are reinstating that and you will hear howling like it was a full moon in a village full of lycanthropes (werewolves).
1. The "elephant in the room" of course has been that no one seems to have asked Obama or Biden if they have thought they also were "too prominent" to have paid their taxes. Perhaps they too thought that only the "little people" pay income tax on the cash part of their compensation? or the free food in the lunch hall or whatever other perqs the "little people" don't get which are clearly spelled out as taxable perqs to congressmen and Senators? Timmy could announce he planned to tell the IRS to audit Biden and Obama's tax returns as well as the returns of everyone in the House and Senate.
Two days later, he would say he had been misunderstood. He would say he had conferred with President Obama and Ted Kennedy and other advisors. He would say, "Obviously, we aren't going to distract these prominent people with audits in the middle of the important business of running the country in this time of crisis."
2. Tiny Tim could explain (during his next speech) how the Federal reserve system works in a way everyone understands (he is smart so it might be possible) which would panic "the little people" once they understood what their money is worth.
3. Tiny Tim could announce some "good news" regarding the financing of the next treasury auction. He would announce that we had entered into a "friendship treaty with China under which they had agreed to purchase a certain level of securities for a certain number of years (and to not sell off their current holdings) in return for our "friendship" in certain matters pertaining to China's "internal matters" with Tibet, Israel, Ireland, Canada, and California concerning trade, free speech, freedom of religion, forced abductions/abortions, and Monday night football.
4. Tiny Tim could explain (during his next speech) how to make an override calculation to self employment income (in Turbo tax) to avoid paying self employment tax. Turbo tax automatically generates the self employment schedules and taxes for you. It is impossible to make an "innocent mistake". The mistake requires effort (if one uses turbo tax). After you make an override to the system, at the end, Turbo tax, then reminds you that you made an override to their system, and asks, "Are you sure you wanted to make that override to our system" During his next speech, Timmy could tell everyone on National TV "how you can circumvent paying taxes by making an override entry to turbo tax". This of course would cause huge shortfalls in tax revenue, but coming as a technical recommendation from the Treasury secretary, it could not be challenged by the IRS. The tax returns filed all across the USA with everyone's taxes equal to $0 would all be unchallengeable. This would lead to the markets falling as the projected deficit would increase by the projected lost income tax revenue of ?? This "might" lead to a decline in the Dow.