Maniac in Motion's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/137112/comments http://seekingalpha.com/article/82045-gas-and-home-prices-what-a-difference-two-years-can-make?source=feed#comment-188915 188915 Fri, 20 Jun 2008 04:23:12 -0400 http://seekingalpha.com/article/74291-bespoke-s-u-s-sector-snapshot-4-25-08?source=feed#comment-157615 157615
I also think a Fed rate hold will reduce commodities prices, which will bring materials back in line.]]> Sun, 27 Apr 2008 18:15:58 -0400
I also think a Fed rate hold will reduce commodities prices, which will bring materials back in line.]]> http://seekingalpha.com/article/74249-the-market-domino-effect-staying-ahead-of-the-curve?source=feed#comment-157508 157508
COF will take losses on its credit portfolio, and may likely be a distressed assets takeover candidate once investors panic about the losses they continue to incur as more homeowners lose their homes. FYI, it's estimated 1 in every 6 homes will go to foreclosure by the time this is done. That is a definitive negative wealth effect, and a 10% market correction doesn't fully price in what that really means.

It's cliche, although it really does appear like investors are riding on a slope of hope.]]> Sun, 27 Apr 2008 13:24:21 -0400
COF will take losses on its credit portfolio, and may likely be a distressed assets takeover candidate once investors panic about the losses they continue to incur as more homeowners lose their homes. FYI, it's estimated 1 in every 6 homes will go to foreclosure by the time this is done. That is a definitive negative wealth effect, and a 10% market correction doesn't fully price in what that really means.

It's cliche, although it really does appear like investors are riding on a slope of hope.]]> http://seekingalpha.com/article/73215-arch-coal-s-earnings-signal-a-silent-bull-market?source=feed#comment-154501 154501 Tue, 22 Apr 2008 04:00:21 -0400 http://seekingalpha.com/article/71343-3-reasons-why-the-u-s-will-avoid-a-recession-i-m-skeptical?source=feed#comment-146234 146234
Moreover, the guy writing that article misses the point. The rally recently compensated for passing over the crisis. What's still priced into the market is decelerating cash flows from losses of jobs. Less jobs available, less income, less cash flow to pay debt.

The expansionary forces assume we still are irrationally exuberant to buy more Garmin GPS units for all out friends. With the news tossing out the R-word and the F-bomb (foreclosure, people) on a nightly basis, it's pretty safe to say consumers are more carefully watching how they spend their money right now.

The affordability index naturally assumes current incomes and cash flows. And you know what happens when you assume. If jobs are declining, overall incomes are declining, and the affordability index rises. We evidently won't see that change until the National Association of Realtors stops saying, "It's always a good time to buy a house," and revise the median income they use to calculate their indices.]]> Mon, 07 Apr 2008 04:22:53 -0400
Moreover, the guy writing that article misses the point. The rally recently compensated for passing over the crisis. What's still priced into the market is decelerating cash flows from losses of jobs. Less jobs available, less income, less cash flow to pay debt.

The expansionary forces assume we still are irrationally exuberant to buy more Garmin GPS units for all out friends. With the news tossing out the R-word and the F-bomb (foreclosure, people) on a nightly basis, it's pretty safe to say consumers are more carefully watching how they spend their money right now.

The affordability index naturally assumes current incomes and cash flows. And you know what happens when you assume. If jobs are declining, overall incomes are declining, and the affordability index rises. We evidently won't see that change until the National Association of Realtors stops saying, "It's always a good time to buy a house," and revise the median income they use to calculate their indices.]]> http://seekingalpha.com/article/71258-explaining-the-mortgage-meltdown?source=feed#comment-145839 145839
If Congress doesn't fix the home pricing problem...

Everyone who bought a house from 2005-to-2008 will be upside-down. Anyone who is upside down and is on ARM CAN NOT refinance. Banks will rather let a foreclosure occur than refinance a mortgage with a borrower owing more than the home value.

If a borrower can't refinance, she will go to foreclosure.

These foreclosures will reduce property values, which will encourage homeowners to stop making mortgage payments since their house, too, is now upside down. And let's not forget those who opened home equity lines of credit to fully the furnish vacation home's Arizona room.

This would be a... material... downward... spiral.]]> Sun, 06 Apr 2008 06:38:00 -0400
If Congress doesn't fix the home pricing problem...

Everyone who bought a house from 2005-to-2008 will be upside-down. Anyone who is upside down and is on ARM CAN NOT refinance. Banks will rather let a foreclosure occur than refinance a mortgage with a borrower owing more than the home value.

If a borrower can't refinance, she will go to foreclosure.

These foreclosures will reduce property values, which will encourage homeowners to stop making mortgage payments since their house, too, is now upside down. And let's not forget those who opened home equity lines of credit to fully the furnish vacation home's Arizona room.

This would be a... material... downward... spiral.]]> http://seekingalpha.com/article/71258-explaining-the-mortgage-meltdown?source=feed#comment-145830 145830
The big question is if government can cultivate a plan to encourage homebuyers to buy up the glut of foreclosure growth to offset deflating prices. If it's only a tax credit of $8,000... it's not going to save the neighbors who bought a home at $400,000, and is now worth $280,000. Why should anyone buy that? I know they're gonna foreclose too because who in the right mind would pay $400,000 in debt on a home worth $280,000? And that would further deflate prices. This is the US Picture.

Gov't needs to offer a tax credit carry-over to allow homebuyers to write off any depreciation experienced from their home purchase. That will encourage homebuyers to buy today. Until then, homebuyers will just sit on the sidelines.]]> Sun, 06 Apr 2008 06:23:34 -0400
The big question is if government can cultivate a plan to encourage homebuyers to buy up the glut of foreclosure growth to offset deflating prices. If it's only a tax credit of $8,000... it's not going to save the neighbors who bought a home at $400,000, and is now worth $280,000. Why should anyone buy that? I know they're gonna foreclose too because who in the right mind would pay $400,000 in debt on a home worth $280,000? And that would further deflate prices. This is the US Picture.

Gov't needs to offer a tax credit carry-over to allow homebuyers to write off any depreciation experienced from their home purchase. That will encourage homebuyers to buy today. Until then, homebuyers will just sit on the sidelines.]]> http://seekingalpha.com/article/71219-payrolls-drop-and-you-ain-t-seen-nothin-yet?source=feed#comment-136700 136700
Why buy GRMN when you know everyone needs to buy groceries from WMT before they buy an overpriced electronic map. ]]> Fri, 04 Apr 2008 15:42:11 -0400
Why buy GRMN when you know everyone needs to buy groceries from WMT before they buy an overpriced electronic map. ]]> http://seekingalpha.com/article/70975-closer-look-at-the-arms-reset-problem?source=feed#comment-135787 135787
Buyers of liar loans were predominantly speculative investors or self-employed business types who were after one thing: ROI. With a keen understanding they are upside down, and the likelihood they've likely already done well with previous trades, they have no incentive to hang on to a property where they might be 30, 40, 50,000 in the hole in an immediate time horizon. These types will likely make a conscious decision to stop making moretgage payments on a house they can't flip to cut their losses.

Meanwhile, some folks with ARM'a resetting were unfortunately duped to buy their home with an ARM instead of a fixed rate mortgage, and will likely slowly fall to foreclosure. They will try their best to keep the one home they dreamed of buying, but if house prices don't recover in time, will fall to foreclosure.

Sooner or later, one thing will have to give. The Fed will either see no choice but to raise rates, or we'll see the greatest hyperinflation in American history by keeping rates low like Japan did in the 90's. I imagine Bernanke is VERY AWARE of what repercussions would be experienced by keeping rates too low for too long AGAIN. I think we may likely see Fed hikes immediately following the election.

With Fed rate hikes, we'll see the 1 year Treasury rise, once again hiking up mortgage rates on folks with ARM's. Homeowners will likely have no choice but to foreclose if they are still upside down on the home, which they likely will be upside down. The consensus is it would take 10 years to see home prices recover. This will further deflate values from the 2006 highs.

To sum up, I think the article's right on the 2 major housing problems. But I think it's backwards. Liar loans are the immediate problem today, and folks with ARM's resetting will be the lingering problem tomorrow.]]> Thu, 03 Apr 2008 04:05:46 -0400
Buyers of liar loans were predominantly speculative investors or self-employed business types who were after one thing: ROI. With a keen understanding they are upside down, and the likelihood they've likely already done well with previous trades, they have no incentive to hang on to a property where they might be 30, 40, 50,000 in the hole in an immediate time horizon. These types will likely make a conscious decision to stop making moretgage payments on a house they can't flip to cut their losses.

Meanwhile, some folks with ARM'a resetting were unfortunately duped to buy their home with an ARM instead of a fixed rate mortgage, and will likely slowly fall to foreclosure. They will try their best to keep the one home they dreamed of buying, but if house prices don't recover in time, will fall to foreclosure.

Sooner or later, one thing will have to give. The Fed will either see no choice but to raise rates, or we'll see the greatest hyperinflation in American history by keeping rates low like Japan did in the 90's. I imagine Bernanke is VERY AWARE of what repercussions would be experienced by keeping rates too low for too long AGAIN. I think we may likely see Fed hikes immediately following the election.

With Fed rate hikes, we'll see the 1 year Treasury rise, once again hiking up mortgage rates on folks with ARM's. Homeowners will likely have no choice but to foreclose if they are still upside down on the home, which they likely will be upside down. The consensus is it would take 10 years to see home prices recover. This will further deflate values from the 2006 highs.

To sum up, I think the article's right on the 2 major housing problems. But I think it's backwards. Liar loans are the immediate problem today, and folks with ARM's resetting will be the lingering problem tomorrow.]]> http://seekingalpha.com/article/70646-apple-street-getting-more-bullish-on-march-quarter?source=feed#comment-134460 134460 Tue, 01 Apr 2008 04:41:42 -0400 http://seekingalpha.com/article/70577-behind-the-curve-of-potash-prices?source=feed#comment-134395 134395
The biggest problem with just following analyst comments is they're never bullish enough in a strong sector like Raw Materials, and never bearish enough in a weak sector like Financials.

]]> Mon, 31 Mar 2008 22:51:40 -0400
The biggest problem with just following analyst comments is they're never bullish enough in a strong sector like Raw Materials, and never bearish enough in a weak sector like Financials.

]]> http://seekingalpha.com/article/70546-morgan-stanley-maintaining-the-usd-s-reserve-currency-status?source=feed#comment-134080 134080
The US only 10 years ago accounted for 30% of global GDP. We now only represent 12%, losing GDP share to China. In only 10 years. And at a time, when we're facing inlationary pressures, the Fed further cuts the rate? By 225+ bps? How dire do the mistakes need to be?

Foreign central banks are already paring down their US reserves for gold. Meanwhile, both Russia and India are months away from opening domestic commodity exchanges, further decentralizing commodity prices.

What else do we need to hear until we understand the US is no longer #1 by a landslide? ]]> Mon, 31 Mar 2008 11:39:02 -0400
The US only 10 years ago accounted for 30% of global GDP. We now only represent 12%, losing GDP share to China. In only 10 years. And at a time, when we're facing inlationary pressures, the Fed further cuts the rate? By 225+ bps? How dire do the mistakes need to be?

Foreign central banks are already paring down their US reserves for gold. Meanwhile, both Russia and India are months away from opening domestic commodity exchanges, further decentralizing commodity prices.

What else do we need to hear until we understand the US is no longer #1 by a landslide? ]]> http://seekingalpha.com/article/69935-global-credit-crisis-1-2-trillion-and-counting?source=feed#comment-131635 131635
Goldman Sachs forecasts global credit losses stemming from the current market turmoil will reach $1.2 trillion, with Wall Street accounting for nearly 40 percent of the losses???

U.S. leveraged institutions, which include banks, brokers-dealers, hedge funds and government-sponsored enterprises, will suffer roughly $460 billion in credit losses after loan loss provisions, Goldman Sachs economists wrote in a research note released late on Monday.

They're shorting something and leveraging their reputation to drive it down. What was it? Are they trying to drive down their own price to buy back shares? What's the INCENTIVE to disclose?]]> Wed, 26 Mar 2008 05:22:25 -0400
Goldman Sachs forecasts global credit losses stemming from the current market turmoil will reach $1.2 trillion, with Wall Street accounting for nearly 40 percent of the losses???

U.S. leveraged institutions, which include banks, brokers-dealers, hedge funds and government-sponsored enterprises, will suffer roughly $460 billion in credit losses after loan loss provisions, Goldman Sachs economists wrote in a research note released late on Monday.

They're shorting something and leveraging their reputation to drive it down. What was it? Are they trying to drive down their own price to buy back shares? What's the INCENTIVE to disclose?]]> http://seekingalpha.com/article/69547-market-sentiment-eye-poppingly-bearish?source=feed#comment-130376 130376 Sun, 23 Mar 2008 18:38:14 -0400 http://seekingalpha.com/article/69535-how-bad-is-the-dollar-s-fall?source=feed#comment-130307 130307
Central banks are now intervening to keep the dollar decline moving further. The dollar weakness is threatening how global companies do business. Foreign companies have already complained to government that revenues and profits are being hurt because the revenues earned from America convert to weaker profits in their home countries. Weaker profits make for weaker earnings per share, damping down stock price. On the flip side, the dollar weakness inflates earnings for US companies because of the currency exchange, which is why I'm getting slightly more bearish on US equities.

As a result, central banks are making coordinated efforts to buy more Treasurys, which keeps a further dip in the dollar in check. People's Bank of China, Bank of Japan, Bank of Israel, Bank of England, and the European Central Bank are all accumulating treasurys at these price levels. For instance, if the European Central Bank buys more US treasurys, then it keeps the Euro/USD ratio from rising further, which would hurt profits for companies in the EU. Plus, when the dollar goes up in value, they have an awesome accumulation of treasurys they bought on the cheap.

Thinking an entire country will go belly up is ridiculuous. It's foolish to think we'd go back to a gold standard. We are a global, fiat currency system. One developed country's currency weakness will not undermine every developed country's currency. What next? Are we going to start jumping on horses and stagecoaches because gas is too expensive in the short-term? Yes, there is some doom + gloom being circulated, but don't fall for the gold conspiracy like so many others. Gold is not an inflation play, and it's definitely not a currency play at these levels either.

If you wanna protect, just buy another currency. Although with meaningful central bank interventions around these levels, it may already be too late.]]> Sun, 23 Mar 2008 13:16:16 -0400
Central banks are now intervening to keep the dollar decline moving further. The dollar weakness is threatening how global companies do business. Foreign companies have already complained to government that revenues and profits are being hurt because the revenues earned from America convert to weaker profits in their home countries. Weaker profits make for weaker earnings per share, damping down stock price. On the flip side, the dollar weakness inflates earnings for US companies because of the currency exchange, which is why I'm getting slightly more bearish on US equities.

As a result, central banks are making coordinated efforts to buy more Treasurys, which keeps a further dip in the dollar in check. People's Bank of China, Bank of Japan, Bank of Israel, Bank of England, and the European Central Bank are all accumulating treasurys at these price levels. For instance, if the European Central Bank buys more US treasurys, then it keeps the Euro/USD ratio from rising further, which would hurt profits for companies in the EU. Plus, when the dollar goes up in value, they have an awesome accumulation of treasurys they bought on the cheap.

Thinking an entire country will go belly up is ridiculuous. It's foolish to think we'd go back to a gold standard. We are a global, fiat currency system. One developed country's currency weakness will not undermine every developed country's currency. What next? Are we going to start jumping on horses and stagecoaches because gas is too expensive in the short-term? Yes, there is some doom + gloom being circulated, but don't fall for the gold conspiracy like so many others. Gold is not an inflation play, and it's definitely not a currency play at these levels either.

If you wanna protect, just buy another currency. Although with meaningful central bank interventions around these levels, it may already be too late.]]> http://seekingalpha.com/article/69487-alan-greenspan-loses-his-mind?source=feed#comment-129675 129675
What the gov't needs now and in the future is an FDA-like regulatory staff to approve new financial products to enter the market. Without such a body, financial institutions lean themselves progressively to Russian roulette type bets.

Let's imagine, for a moment, the pharmaceuticals industry without the FDA. Like so, new financial products entering the market with minimal regulation like MBS and the credit derivatives markets run rampant on reckless product innovation to bolster bank fees and commissions. That's what it's all about, isn't it? New revenue channels to engender more lucrative commissions?

Investment bankers are just salespeople with a finance glossary. Their job was never to decide an investor's risk appetite, it is only to sell investors more stuff more often to book more profits in fees.

The investor doesn't give them a commission, Goldman Sachs does.]]> Fri, 21 Mar 2008 05:02:16 -0400
What the gov't needs now and in the future is an FDA-like regulatory staff to approve new financial products to enter the market. Without such a body, financial institutions lean themselves progressively to Russian roulette type bets.

Let's imagine, for a moment, the pharmaceuticals industry without the FDA. Like so, new financial products entering the market with minimal regulation like MBS and the credit derivatives markets run rampant on reckless product innovation to bolster bank fees and commissions. That's what it's all about, isn't it? New revenue channels to engender more lucrative commissions?

Investment bankers are just salespeople with a finance glossary. Their job was never to decide an investor's risk appetite, it is only to sell investors more stuff more often to book more profits in fees.

The investor doesn't give them a commission, Goldman Sachs does.]]> http://seekingalpha.com/article/68683-the-bear-stearns-saga-and-the-fed-s-dilemna?source=feed#comment-127358 127358 Sun, 16 Mar 2008 21:28:07 -0400 http://seekingalpha.com/article/68683-the-bear-stearns-saga-and-the-fed-s-dilemna?source=feed#comment-127239 127239
The buy won't consider current revenue streams, it's all about the losses JPM will swallow from taking BSC under its wing. And the losses incurred by MBS exposure may likely be partially tax-deductible if JPM works it right with government begging JPM to do so.

Companies buy other companies at a premium when they see a synergy. There's no synergy here. It's less a takeover and more a takeunder. A JPM/BSC acquisition is less about winning synergies and more about keeping global financial markets from needing a defibrillator.

CLEAR! :$]]> Sun, 16 Mar 2008 15:50:45 -0400
The buy won't consider current revenue streams, it's all about the losses JPM will swallow from taking BSC under its wing. And the losses incurred by MBS exposure may likely be partially tax-deductible if JPM works it right with government begging JPM to do so.

Companies buy other companies at a premium when they see a synergy. There's no synergy here. It's less a takeover and more a takeunder. A JPM/BSC acquisition is less about winning synergies and more about keeping global financial markets from needing a defibrillator.

CLEAR! :$]]> http://seekingalpha.com/article/68641-the-new-pillars-of-inflation?source=feed#comment-127220 127220
That said, many of the commodity prices are rising becaus of the dollar devaluation. If oil were to, in a monumental OPEC announcement, be depegged from the US dollar, it would be good news for oil consumers, and bad news for the US.

The dollar has been resilient to depreciate much more quickly because so much has been pegged to it over the last 3 decades. However, it was only done so with the assumption that a strong dollar would alway be a strong dollar. That's why the Secretary and the President say they continue to support a strong dollar policy. Of course, what a politician says and what his central banker does are evidently 2 different things. To support a strong dollar, the Fed should be raising rates, be damned the consequences. That was the Volcker method, and he gave confidence to world markets even if he wasn't Mr October at home.

There's a saying that sounds much better in Spanish, but loosely translates like this: "Between the things you do and the things you say, I see a widening gap today."]]> Sun, 16 Mar 2008 15:14:08 -0400
That said, many of the commodity prices are rising becaus of the dollar devaluation. If oil were to, in a monumental OPEC announcement, be depegged from the US dollar, it would be good news for oil consumers, and bad news for the US.

The dollar has been resilient to depreciate much more quickly because so much has been pegged to it over the last 3 decades. However, it was only done so with the assumption that a strong dollar would alway be a strong dollar. That's why the Secretary and the President say they continue to support a strong dollar policy. Of course, what a politician says and what his central banker does are evidently 2 different things. To support a strong dollar, the Fed should be raising rates, be damned the consequences. That was the Volcker method, and he gave confidence to world markets even if he wasn't Mr October at home.

There's a saying that sounds much better in Spanish, but loosely translates like this: "Between the things you do and the things you say, I see a widening gap today."]]> http://seekingalpha.com/article/68642-is-3-25-gas-helping-harley-davidson?source=feed#comment-127214 127214
We are in a recession being considered more and more like the 1930's. And with a Bear Stearns government bailout, the unfolding events make me think economists will no longer just joke around with words. The cash-strapped consumer is not likely to put her 5 year-old daughter on the back of a Harley to visit Big Lots. A family would likely rather buy a smaller compact vehicle because everyone can get in, and the cost to buy a compact car is cheaper than buying a self-serving Harley.

HOG suffers from a "Love the company hate the stock" sentiment. I'm sorry captain, gotta think with your wallet, not with your heart.]]> Sun, 16 Mar 2008 15:05:10 -0400
We are in a recession being considered more and more like the 1930's. And with a Bear Stearns government bailout, the unfolding events make me think economists will no longer just joke around with words. The cash-strapped consumer is not likely to put her 5 year-old daughter on the back of a Harley to visit Big Lots. A family would likely rather buy a smaller compact vehicle because everyone can get in, and the cost to buy a compact car is cheaper than buying a self-serving Harley.

HOG suffers from a "Love the company hate the stock" sentiment. I'm sorry captain, gotta think with your wallet, not with your heart.]]> http://seekingalpha.com/article/68619-did-the-fed-s-move-prevent-a-stock-market-panic?source=feed#comment-127013 127013
Then hedge funds will move into commodities to further tax the people with "inflation."

Meanwhile, the government will use taxpayer dollars to keep they're friends on life support in the public interest while investment banks unload depreciating private mortgage-backed debt securities like they're magical collateral assets in a clear case of alchemy.

Although a BSC insolvency notice would have engendered a domino series of margin calls to the hedge funds associated with BSC, the time-delaying save only slows the market downturn momentum giving the hedge funds more time to quietly deleverage away from equities. Funds of funds will get out to lock in 5 years' worth of profits, and only taxpayers will be left with crippled 401k's denominated in devalued dollars when the market crash finally arrives... it's admittedly a very smart economic system for a few.

The market will wind down to the same place, although they're just using taxpayer dollars with term-auction facilities and devaluing the dollar with rate cuts to give hedge funds more time to comfortably deleverage. Would you prefer another espresso, Sir?

\]]> Sat, 15 Mar 2008 22:15:49 -0400
Then hedge funds will move into commodities to further tax the people with "inflation."

Meanwhile, the government will use taxpayer dollars to keep they're friends on life support in the public interest while investment banks unload depreciating private mortgage-backed debt securities like they're magical collateral assets in a clear case of alchemy.

Although a BSC insolvency notice would have engendered a domino series of margin calls to the hedge funds associated with BSC, the time-delaying save only slows the market downturn momentum giving the hedge funds more time to quietly deleverage away from equities. Funds of funds will get out to lock in 5 years' worth of profits, and only taxpayers will be left with crippled 401k's denominated in devalued dollars when the market crash finally arrives... it's admittedly a very smart economic system for a few.

The market will wind down to the same place, although they're just using taxpayer dollars with term-auction facilities and devaluing the dollar with rate cuts to give hedge funds more time to comfortably deleverage. Would you prefer another espresso, Sir?

\]]> http://seekingalpha.com/article/59243-gold-s-run-increased-demand-or-etf-proliferation?source=feed#comment-108825 108825 Mon, 07 Jan 2008 19:24:23 -0500