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The Imminent Equity Implosion

I agree almost 100% with what Nauful said here. Just one question...

"however, the upcoming quant fund deleveraging will cause an explosion in volatility as market liquidity becomes hard to come by and selling causes more selling and wider bid/ask spreads."

What will cause the deleveraging?

And one bit of advice...
The trend is your friend.

Bonus Scandals Begin to Emerge

Everyone complains about shorts running these stocks into the ground, but if there was any accountability or regulatory oversight, the shorts would have to find other targets. As long as this charade continues unabated, the shorts will continue to pound on the banking stocks.

The bottom line is that the executives know the party is over so they're sending out one last batch of thank-yous before the boat goes down. Better their lieutenants get it than the taxpayers since the taxpayers have no duty of fealty.

Contemplating the Demise of Bank of America, Citi and JPMorgan

"so much of their personal money"?!?!?!

Are you insane? COLLECTIVELY, Ken Lewis and his board bought $1.2M dollars worth of BAC stock. They probably borrowed the money from the government too, errr sorry, the taxpayers. It's a pittance to these guys. Their club memberships cost more than that.

Dimon bought roughly $11M worth of JPM. That's at least a little more noteworthy since he's not the completely egomaniacal dunce that Lewis is. Good luck finding his net worth. All I know is he made around 50M in '08 and 30M in '07. He's been running JPM since '04 and before that he ran BankOne. Before that he was at Citi as Weill's protege.

These guys collective STOLE several Billion in compensation by cashing out before the investments came due and turned out to be complete stinkers. Now the taxpayers are being asked to fill the gap.

We all need to tell the government to GO GET IT BACK FROM THE CROOKS!

On Jan 22 01:10 AM nutflush wrote:

> .... ignoring the one world theme for a moment....
>
> What do you make of Lewis & Co at BAC buying millions of their
> stock today in the open market? One person suggested that they dropped
> the Merrillbomb in the fashion they did to provide them an opportunity
> to profit (buying on the subsequent crash in share price).
>
> There are many reasons executives sell, but only one reason they
> buy (in the open market). Given all the dramatics re: the banks this
> week - why in the world would they put so much of their personal
> money on the line? Especially if BAC (JPM, C, etc) are all going
> to be diluted and nationalized....

What to Buy and Why: Barron's 2009 Roundtable, Part II

I generally think the round-table is pretty savvy, but

1. including Cohen is laughable, and

2. they decided not to revisit last years picks and assess performance.

Not the standard I've come to expect from Barron's.

10 Banks 'Guaranteed' to Survive and Prosper

This article is intensely flawed. Most of these banks will continue to write down the "asset" portfolios this year and there's a big question about survival. Look at retail and the coming implosion in commercial real estate. Who do you think securitized and financed all that garbage? No doubt there will be a banking system in a year or two, but what it looks like and who the players will be is anyone's guess.

Citi is the perfect example. Selling the brokerage arm for $3.5B doesn't suggest they're selling out of desire because the price is so good. They're selling it out of need. In fact, the word on the street is that the Treasury told them to cut a deal. Know what that means? Even the Treasury is wary at this point of pushing more money at the original recipients (or C at least).

The new suggested restrictions for the second half of the TARP will effectively neuter any financial co that takes a handout. Minimal dividends will send any yield-seeking investor running for the exits. In fact that may be what drove the weakness today.

Look at the massive spike in put volume today on HBC which, thus far, has had fewer problems. Look at JPM today. Weaker than the overall market by a mile. At the very least you should look at something like the financial preferreds since 85% are financials anyway. At least you're higher in the capital structure and are more likely to get paid to wait.

I hate to say it, but I think this article borders on dangerous.

The Dogs of the Dow Can Keep You Out of the Doghouse

Yield seekers have gotten crushed this year... especially in the last half. Witness the flood of capital into Treasuries even at virtually zero nominal yields and even possibly negative real yields which continues even now.

Eventually the spreads we see to the risk-free curve will shrink. It's a question of when not if. However, the time frame is anyone's guess. In the meantime, dividend cuts are a real risk and the outcome would be not only a loss of income, but potentially and likely a reduction of principal as well as yield-seekers flee the issue.

I would think if you're looking for a short-term place to hide the preferreds are a better bet than the DotD.

What Are Some of the Best Hedge Fund Managers Doing?

Keith,

Thanks for the yeoman's work. Can you point to more information about the correlation between EEM and GLD? Seems counter-intuitive to me. Unless you're suggesting that Short EEM (or long EEV) and GLD are correlated?

Thanks.