gabe borenstein

Market Overview: Indices Fall with More Earnings Misses

This is a mole nonsense.
For the record ,a desk that trades a 100 million Euros a day in bonds is a Micky Mouse operations.
I trade for my clients in the increments of a 100 million dollars and have traded as much as billion dollars at a clip (treasuries).
For the record ,I dont think any investor expects rebound in the earnings in the near future.It is quite clear that based on the current levels ,two consecutive contractions have been discounted without any allowance for the major economic impact of the TARP-I preferr to call it a stability plan.
Given the magnitude of easing (U.S) and the liquidity injection into the system ,U.S economy and the markets are heading for major rebound-period.
That is not the case for Europe and Asia and Emerging Markets as ECB and other Central Banks were late in acknowledging problems and are behind the curve on the implementation of radically easier monetary policy.
The dollar strength is a reflection of the global recognition of the major U.S economic upward momentum in the period ahead.
In the meantime we have to listen to a Mole nonsense and other economic fairly tales.
We are getting ready for a record /unprecedented stock market rally.
This outcome can not be affected by the new President elect as the catalysts in place will shortly produce the results.
I suppose what is missing on this opinion platform is an article about the end of the universe as the anti Christ is influencing the market.
Enough of this garabage.

Fannie Mae Conference Call Stresses the Good and the Bad

Fannie Mae's problems are reflective of the broader economic issues.The most important objective must be stabilization of the economy .That may require more aggressive easing from the FED and some additional ehnamcement of the fiscal stimulus.In 2006 some 20% of the homes were financed by the subrime funding.This is the sector responsible for the problems on the "Street" and the problems for the various financial institutions including the FNMA and the bond insurers.Let's not focus on the past but objectively evaluate the future.Finally ,most of the key issues are out in the open and are being addressed.The financial sector has been decimated in the market place(stock prices),without allowing for the various measures directed at the rectifications of the issues.The FED had provided a record liquidity and continues to lower the rates.Fiscal stimulus is in place,but we must allow for the lag.Clearly some of the unrealized losses recorded to date ,will become realized profits in the period ahead as the economy rebounds and the markets stabilize.Perceived risks of today are not reality in the period ahead.

Ambac's Earnings: You Can't Make This Stuff Up

This would have been an appropriate article in the mid of 2007,when the share of the financial companies including the bond insurers were trading at the high.One more time ,as early as as June of 2005 ,I have discussed cyclical/market risks with Mark Gilbert (Bloomberg -London). I have specifically addressed the severity of contraction ahead and its impact on the markets-the warning was ignored I have specifically addressed the CDO and the" structured products"risks on September 18 ,2007 with Brian Sullivan(Bloomberg TV).That warning was ignored -but six weeks later the market upheaval had started.To discuss at this point the risk exposure that the bond insurers face is meaningless.The FED has implicitly minimized the "subprime "risks when it had "term swapped" the peceived lower quality paper for the treasuries. Clearly by "devaluing" partial risk exposure by up to 70% ,Ambac and other bond insurers have opened a possibility for a mega revaluation in the period ahead.As the economy rebounds in the second half of 2008 ,driven by the fiscal and monetary policies ,the value of the subprime derivatives will be restated .We already know from the FED actions that no financial entity will be allowed to default because of the sequential global risks. In my opinion (correct untill now),the financial sector has made a bottom and is poised for a record rally ,bearish articles not withstanding-I certainly was bearish on Ambac in 2007 at 95 dollars.At four dollars per share let the others sell and face a thirty dollar risk.

Falling Timbers - Cramer's Stop Trading! (4/24/08)

I have seen Mr Cramer recommending Taser at a $ 90 as a buy and then I have observed the stock imploding .This has happened to quite a few of his recommendations .Now we know that he is human.Let's revert to AMBAC and other insurers as well.The "insured" paper is continously "devalued" forcing various parties to reflect the unrealized losses in their qurterly financial reports,the good news is that the unrealized losses are reflection of the worst case scenario.The economy is on the verge of a record rebound .The housing market will recover by the third quarter of this year.The CDOs and all derivatives of the subprime structured paper will stabilize and stage a major rally( recovery).All the unrealized losses will turn into mega realized profits. All of the financials including bond insurers will be gapping up. Most likely the financials will outperform any other sector.

Ambac, MBIA Finally Get the Rating They Deserve

There are no lies involved by the rating agencies,by the way only Fitch had downgraded MBIA to AA .Not a bad rating considering that the Government of Italy has only AA/A rating.Basically the rating issues today have to do with inability of the rating agencies to quantify and define past and the current risks.I have discussed the economic and the subprime risks as early as June of 2005 with Mark Gilbert ,Bloomberg reporter(London).I have reiterated the issue of the "Subprime "risks on September 18 ,2007 during the interview with Brian Sullivan (Bloomberg TV).Back then very few had understood the monumental and sequential risks.Since then the FED'S actions ,especially the "rescue" of Bear Sterns ,potentially a global and sequential financial disaster,had convinced me that the worse is over.By accepting "subprime" collateral in order to provide the necessary liquidity,the FED had clarified the rating issues and had eliminated the potential of financial failure in any segment of the market.Clearly the MBIA and AMBAC have the necessary resources to insure any perceived risks .As the economy recovers and gains momentum in the period ahead the perceived and the real risks will diminish substantially.The financial sector is the process of consolidating for unprecedented rally.Wuthout the real stability in that sector ,global markets will be vulnearble to an unprecedented turmoil.The FED understands it (that is why it intervened to assure J.P Morgans and Bears'"Merger") and will not allow for a financial failure.One more time ,the FED has no P&L but the mandate to maintain economic and financial stability.The FED will prevail in its'objective and the shorts will mega cover innthe period ahead.Do not bet against the FED's aim of stabilizing the financial sector.WE should all understand that the debacle in that sector will cause unprecedented global turmoil-that is why the FED will prevail,it must.

Assured Guaranty: Vulnerable to Continued Bond Market Troubles

With FED's recent intervention,implicitl... recognizing aaa rating of the subprime "paper".....accepting the 'questionable"instrume... to be swapped for the treasuries,all of the bond insurers can finally sit back and relax.The FED is not allowing any financial institution to go under and is guaranteeing every institutional component of our system.Only shorts with the position in the financial sector will have a financially painfull experience.The FED had acknowledged the issues and is addressing them .The FED has no P&L but a mandate to stabilize economy and the markets-The FED will prevail and financial sector of the stock market will have uprecedented rally in the period ahead be it MBIA or Ambak .Current psychology is not synonymous with the economic reality.