Naufal Sanaullah

A Summary of Q1 Bank Earnings: World, You Just Got Hustled

I see lots of broad and general assertions, I would love some insight as to how one determines the "fair value" of bank stocks when they have trillions in depreciating assets that have yet to be marked to any realistic price and are still overlevered > 15-20x.

As per those who trivialize this as just another permabear ultrashort article, I invite specific responses to specific parts of my article. Also please keep in mind I have been repeatedly stating the market will place a nominal bottom this year (though not inflation-adjusted for several years), so I'm not exactly a permabear.

A Summary of Q1 Bank Earnings: World, You Just Got Hustled

AIG is on the losing end. which means taxpayers, since we provide all of the funding. that's why it's such a scandal, AIG is being used as an intermediary for basically an unlimited cash stream from taxpayers to banks under the guise of "systemic risk" even though no haircuts are being taken and CDS trades are being settled at face value close-outs.

banks win, taxpayers lose.

A Summary of Q1 Bank Earnings: World, You Just Got Hustled

I made enough money going short energy stocks on July 4 and going short the rest of the stock market September 2 to worry too much about being whipsawed since April 20.

The banks will recover, yes. But you have to understand HOW. Looking at current bank balance sheets, many are on the point of technical insolvency. Just absurd TCE/TA. To assert banks will just "turn arond" is a very generalized claim.

Banks will turnaround this year because of the government's capital infusions. The stock market will bottom (in nominal terms) this year. But it's all just blatant credit expansion. No rally in stocks is to be trusted unless it goes with a rally in gold.

Until the Dow can buy less than two ounces of gold, this will be the case.

The Imminent Equity Implosion

here we go

The Imminent Equity Implosion

i don't suggest precious metals are a barometer for economic growth-- they're a barometer for asset depreciation being socialized into currency depreciation by government spending, however. if we truly are turning around in credit markets, precious metals should be surging because last time i checked, spending money you don't have doesn't bring back real growth, it just transfers losses to other people (taxpayers).

yes, yes, i got stopped out very quickly everytime i tried shorting Goldman. maybe this prediction will make up for it.