DSX Lover

Still Too Early For Banks

Banks are way to cheap right now, but you can't owe them, you can only rent them. They aren't going broke, and not all are the same, but the resets peak in June and July, they are worth the risk. Totally Agree with Papa Bear Doug Kass comments (The value of the Franchises are intact and the earnings power is there), Buy the DIPS sell the RIPS. You must owe some of these, because when housing inventory starts to decline they will be up 20-40% from where they are now and you will be late to the party.

Under The Radar News - Monday

at 12 Billion Pounds, RBS is issuing stock at Book Value, unlike U.S. smaller regionals that issued stock way below their book values like WM and NCC. When this clears, it does not mean WM, NCC, and anyone selling below Book will be safe for management, they will actually easier takovers. If you look at NCC, they are issuing Stock and convertibles at $5, when you take into account all new shares, the overall shares will have a Book Value of $10, and stock is selling for less than 7. Any foreigner like HBC, BCS, or STD can offer $12-$15 and take it for themselves. Current shareholders would be loved that, after the horrible take under offered by current management, and an incompetent board of directors.

Citigroup's Flush

After it deeps a couple of points of course.
Never buy Stocks that are up 10% in a Day.-Jim Cramer

14 Bank and I-Bank Write-Downs

If you think the worst is yet to come, then give the disclosure of what you own, or short of. These article is not helping anyone make a better investment decision. 400,000 New houses in Inventory, 600K estimated 2008 sales, although I Don't believe any of those two(1.750 Million were sold in the peak year). 4 Million existing home sales on Inventory, 1 Million foreclosures last year, 1.3 estimated for these year. All the foreclosures don't add up to $1 Trillion in these estimates, and if they are repackaged at 50% discount, there's a maximum of $500 Billion in loses. I see $250 Billion in writedowns so far, so the worst is clearly over. Homebuilders inventory, has gone down considerable, and once Existing Home sales inventory drops, we can look forward. With Banks selling at 60-80 cents on Book, its the best time to go long NCC, RF, FITB, HBAN, because those Europeans monsters are full of cash, and looking to invest. Other midsize Regionals selling close to book are BBT, CMA without subprime crap.

Jim Rogers' Picks and Pans - Barron's Interview

Who's going to keep paying 100% increases year over year in commodities while being able to afford them? commodities are so overvalued, and with 8.5% Chinese inflation is just a matter of time before they begin plunging. It seems so fair to say that there's is economic growth in Chindia with over 2.5 Billion in people, but the sad truth is that over half of them are poor, and no one can sustain a 100% increase in commodities, Specially because the income of these poor people did not doubled from last year. Counting the days, wheat, oil, and corn go down like falling knives. As for shorting C, I'm not so sure, over 50% of the Business is International, if shares don't recover they are going to be buying back their own stock like crazy within the next 6 months.

Money Center Banks - The Greater Fool

Vernon you're a fool. Money-center banks only underwrite corporate loans, to increase the liquidity of those assets, and to decrease to total costs to the borrower. They make more money by keeping those loans themselves, and earning the interest spread on them. So now because nobody wants to buy corporate loans in the secondary market these loans are no good ah? that's the biggest nonsense I have ever heard. These loans will remain in the books of the banks, forever because the default rates are lower than they have ever been, and the Net interest margin is now huge with the fed lowering the rates. Whoever thinks is getting corporate loans for 70 cents on a dollar is dreaming. Banks can take the writedowns under FASB157 rules, but they will become writeups once the nonsense clears the market.

Lehman Brothers is Looking Sick Again

If you find out what's the real default rate on their assets, and stop talking about market value non sense, you will realize that this whole write downs are way overblown, and out of proportion.
Start thinking about write-ups in the upcoming quarter because analyst are blowing it big in the down-side.
If you have any gains from Shorting SUBPRIME, or for shorting Financials better cover them now, because they are getting ready to evaporate.

I'm on Meredith Whitney's Side

I'm not on her side, and I believe that She was blown it on the downside just like any other analyst in Wall Street, Mrs. Whitney please stop being a brat, and giving bad news so that your people can short Financial Stocks. The Actual Default Rates, of all outstanding loans, Bonds, and Mortgage Bonds, are way below their actual prices in the secondary market. Commercial Banks mentioned above (Regions, COmerica, Citibank,JPM MOrgan, and BOFA) have plenty of capital according to Bacel II, plus, with a decreasing loan market, who the heck needs to raise capital when the Banks will be earning 20% ROE after the charge ups are finished in Q1. Can you please start mentioning about profits once those write-downs become write-ups. The Value of the franchises of the Commercial Banks (I did not said Merrill, and Morgan Stanley) is intact, and are being way underpriced according to historical book values, and earnings potential. The matter of the fact is that most people don't understand the commercial banking business, and panic when there's rumors of bankruptcy in the air that are not true. Citigroup should had never cut its dividend and it didn't have to, with $113 Billion in Capital, $1 Billion in Dividend was not going to make a difference, that's the way Bob Rubin looked at it, before Ignorant people like DICK Parsons got worried and convinced the board to diminish the dividend. All this charge-offs are NONCASH temporary expenses, and do not affect the banks ability to generate Free Cash FLow from keeping the securities in their books, they earn very good interest on them, and that's the reason they are not selling them. Just ask them if they would rather have Treasuries in their books yielding below their cost of funds and they will tell you that they would rather own what they have.

Financial Stocks to Buy When the Market Reverses

UYG is the Double Long ETF

Financial Stocks Trading Near Book Value

Never compare a Bank's Book Value with a Broker's book value. Its a totally different animal. Broker's are leveraged up to the WAAAZZZZOOOO almost as twice as Commercial Banks. Therefore look for higher fluctuations in the. In the other hand, the Book Value of the banks, is less volatile, along with the assets it holds. Banks are less subject to leverages than brokers, therefore less risky, and more stable. The business model of banks is more stable too, you can't predict what dislocations in credit securities will do to Brokers, because they are more leveraged, and because they don't have a stable depositor base like the banks, who will always have an insight on the cost of funds, and don't have to worry about MARGIN CALLS.

Time for Greater Oversight of Mortgage Lenders? Duh!

Why would BAC, WB, and C cut the dividends? It seems totally ridiculous. Best time to buy ever, Banks are fully capitalized, and can absorb huge loses that will not materialize. WB has 73 Billion of Capital a wooping 10% of Total Assets with consumer loans totalling just 223 Billion. Banks will make 2.25% on Deposits, because CD rates have gone down, and with 75 points dropping on Tuesday it will be more. No need for any of these banks to cut the dividend, specially when at year end the payout ratio will be less than 50%, and there won't be a need to keep capital, because the growth in assets will be slowing down. Banks on average keep 5-6% Capital/Total Assets depending on their risk weighted assets, and right now they have much more than that. You will never have an opportunity to buy these banks so cheap in your lifetime. If you're not confident in U.S. Banks buy ING, BCS, RBS, or LYG all of them yielding close to 7.5% without the SUBPRIME debacle, trading at 6 times earning and being hit harder than the U.S. for stupid Reasons.
Can you imagine a 7.5% dividend or a 9% dividend for life with WB. Plus once the charges are finished and earnings are restored, the dividends will be increased year over year. Buy now put it on SafeBox, enjoy the rest of your life without having to worry about social Security.