Lockstep Investing

Q4 Outlook: Real Life Stress Tests Begin

Woops! I hope it was a small position. It sounds like you did not hedge it at all.

JPMorgan: Counting Bailout Money as Profit

Apparently Congress has the same concerns that I have...

www.nytimes.com/2009/0...

"Tens of billions of those dollars have merely passed through A.I.G. to its derivatives trading partners, shielding them from losses. The Fed has refused to provide the names of those financial institutions, and senator after senator, Democrat and Republican, said that was an outrage."

I wonder what these congressmen would say if they found out it was the company they lauded so much as the "prudent navigator". Horsepucky to that!!!

What to Buy: Debt

Good article. I definitely think there is upside in corporate debt, but only in specific non-cyclical industries.

seekingalpha.com/artic...

Rating the Top 12 U.S. Banks - From Hidden Gems to Zombies

Martin, on Wells Fargo you miss the California exposure and the Wachovia (Golden West) exposure. That alone pushes that bank into walking wounded status.

On JPM you fail to mention that they are the biggest CDS broker in the market. Counterparty risk anyone? They are a zombie in their own right. They know if a crisis happens the only thing that can save them is government intervention. That is why the Fed gave them Bear Sterns to begin with, it is better to have all the counterparty risk in one spot so it is identifiable and manageable, rather than spread across market players.

Overall, good summary.

Citigroup's Derivatives Reduce Bailout to a Non-Event

Rakesh, to underscore your points, the OCC has polled the top ten CDS players and it is an accepted estimate amongst them that the net exposure is 15% of nominal exposure. It will vary for each firm, as you are aware is demonstrated by the heavily weighted underwriting exposure of AIG. So I think there is weight to your statements about credit derivatives and expect there will also be counterparty issues with other derivatives as you mention above.

www.occ.treas.gov/ftp/...

Cramer's Lightning Round - Who Needs Citi? (10/28/08)

Haters, all of you.

Cramer has been dogging Citi for two years now.

Bank of America has a huge derivative book, but it is focused on industrial credit default swaps, not residential mortgage backed securities like Bear Sterns, UBS, Lehman and the rest.

Citi put the seven SIVs on the balance sheet and has been too bloated do any transaction since. It is a ward of the Federal Reserve and is just a silent version of AIG waiting for unwind.

Profit Plays for the End of the 'Fail-and Bail' Cycle

This article is horrible! "This is not confined to Lehman as I predicted last week". UGGHH!! Who didn't know that!

There is absolutely no insight in this post. None.

You do so much better in emerging markets analysis.

My Ten Predictions for 2008

Good job with the 2007 predictions. Most of them have come true already.

As UBS Shows, It Pays To Be Conservative in Banking

What do you say about your post now? Apparently there was more exposure than you anticipated.