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Alex_G
60 Comments
Five Forces Driving the Euro Down
Five Forces Driving the Euro Down
Look at PPP Euro vs USD, net debt vs GDP, then tell us that USD is overvalued vs Euro. Net debt also includes future social service obligations, recognized or not. The Eurozone is in a world of hurt rev vs future obligations compared to the US, and they have a declining pop base. Tech analysis only works for trends, not fund. Emotions don't count in these equations.
Five Forces Driving the Euro Down
Way to add to the conversation. The point she is making is that we may suck, but we suck less than the eurozone. Look at the oil usage numbers, the demand destruction going on, and the global economic outlook, then decide were the price of oil is heading.
When you post attacks like this, you just look like a horses ass.
$200 Oil: Before Decade's End, Not Year's
1)China will grow at the rate it has grown the last 5 years. This will not happen. They will contract to some degree, maybe even recess. The 60% drop in their stock market is telling us something.
2)China has an insatiable appetite for oil at any price. China is very inefficient in converting energy use into GDP, the USA being 4x and Japan being 9x as efficient. Right now, their government is subsidizing energy costs, to what degree is anyones guess. The net effect of this is transferring a portion of their foreign reserves to energy exporters.
High energy prices will affect China far more than the US or Europe. Manufacturing based economies are more energy intensive. As long as oil and coal prices stay at sustained levels, I believe this stock market will face continued downward pressure.
3) $4 gas is the magical number where US demand destruction begins. We actually had more demand destruction in the 1st quarter, when gas was far cheaper than that.
The bulk of the 2nd quarter run up in oil prices was not due to demand exceeding supply, but speculators running up prices. Oil shills like Goldman and Morgan saw to that. In the current economic conditions, oil over $100 is not economically viable. Economic conditions would have to change drastically over the next 2 years for oil to reach $200.
Who Will Crack the CIGS Nut in Thin Film?
Panels that harvest energy with CIGS (copper indium gallium selenide) cost far less to make and install, say backers. The material can be sprayed onto foil, plastic or glass or incorporated into cement and other building materials. Conceivably, the entire exterior of a house or building could become a solar generator.
Buy Opportunities Like These Do Not Come Along Very Often
The market last week finally woke up to the issue of builder loans outside of vegas, FL, AZ and central CA. yes, i still have small legacy positions in a few of these stocks, but for the most part got out when they were 150% of historical metrics.
Here's my problem with buying CTBK now: 75% land and construction loan exposure scares the living shit out of me. I would rather buy it at $15, knowing the worst is behind them, than buy them under $10 while they are still falling, not knowing what is coming up in builder loan losses.
And the problem with builder loans is the same everywhere in the country: Builder borrows to buy land or lots w/ 35% down, LTV of 65%. At 35% ormore lot value drop, builder is at 0 or negative equity. Banks now will not loan the rest to finish project, so builder has to carry out of cashflow or sell. Builder needs to build to have cashflow. Other builders can't get financing to buy the land. You get the picture. This is what has been happening so far in 2008 in the first parts of the country to have the real estate bubble burst. We are late here, but it is coming, at least to some degree, to what at this point we don't know.
So, when would i buy? I will re-enter these stocks when they reach option price or i feel that builders can get loans again to finish the projects they started.
The 3 i will look at the hardest are FTBK, CACB and CTBK.
Buy Opportunities Like These Do Not Come Along Very Often
You just don't get the metrics, do you? And you clearly don't live here, and you don't understand small banks. You know that the bank is not in Seattle, right?
Buy Opportunities Like These Do Not Come Along Very Often
If you look at the small banks that are down 75-90%, they all have one thing in common: Builder exposure over 50%. How's that for a useless statistic?
I am not saying they will fold, far from it, but the risks are very high in the sector, and the more builder exposure you have, the greater the risk.
I am not short the stock, and have been long since it was a pink sheet stock.
Many small banks will fail due to exposure to the construction industry, the first being in the Vegas, Scottsdale and Inland Ca areas. Washington will lose a couple as well.
Buy Opportunities Like These Do Not Come Along Very Often
75% of their loan book is construction and land, w/ 65% of that number being 1-4 family. Very high #s. Their primary market is the suburbs and x-urbs of seattle, which are now seeing price drops anywhere from 10-30%, depending on how far away from the city you are. Most of the nation's real estate markets peaked mid to late '06, while our market peaked late summer '07, almost a year later. There will be write-offs, probably by the 4th Q. This downturn will be much more powerful than the one we experienced in 1990. I know for a fact that some x-urbs are seeing lot prices discounted as much as 50% from the peak.
I do know the profile of their borrowers, a couple are friends of mine. They are leveraged builders. The commercial part of their loan book should be firm, as that market has not seem much price deflation yet and vacancies are low here.
As far as Goldman's call goes, i really don't think they were talking about small local banks leveraged to the construction industry.
Buy Opportunities Like These Do Not Come Along Very Often
Not talking about commercial. Pull their Call Report. They have substantial exposure to raw land via single family home builders.
They are known as conservative lenders and have always been over capitalized, so I don't think dilution will happen. Long term, they will be a great buy, but small banks tend to move in a pack, so adjust your time horizon out to at least 18-24 months.
Buy Opportunities Like These Do Not Come Along Very Often
I live in CTBK's area and have been following them for many years. They have substantial exposure to builders and raw land, which has, in some cases, decreased by 50%.
A 'Cheesy' Options Combination for Buffett Lovers
What China's Stock Market Implosion Means for Oil
You said:
"Americans consume 30% of global oil production, china accounts for less than 5%. Oil prices would really feel the pain when US enters the second phase of the credit deleveraging."
Pardon me for saying so, but what the hell does that mean?? Does credit de-leveraging mean the USA will be using more oil? What? It's a bit the wrong question, a lot the wrong answer and basically the wrong dimension.
Sorry for being a bitch, but really...
What China's Stock Market Implosion Means for Oil
Yes, China could immediately cut energy costs by letting the Yuan float higher, but that would also make their products less attractive on the world markets. A bit of a catch-22, I would say...
What China's Stock Market Implosion Means for Oil
High energy prices will affect China far more than the US or Europe. Manufacturing based economies are more energy intensive. As long as oil and coal prices stay at sustained levels, I believe this stock market will face continued downward pressure.
Watch what happens to energy subsidies in China after the Olympics. There might well be energy price protests.
I don't have the time to delve into the hard numbers and quantify the exact effects to their economy with any accuracy, so if anyone else has done the work, please share!!