JLarkin

More Economic Markers Pointing to Recovery

This is most likely a sucker's rally. According to Roubinin, IMF, etc. there are 4 Trillion in toxic losses to be written down before it's over. Banks have acknowledged less than 1 T. Foreclosures are rising, commercial real estate is the next shoe to drop on the head of the banks (especially regional), consumers are not spending, fearing layoffs, and our GDP is 70% consumption. Credit card charge offs are rising into double digits now. Maybe after BAC and C are taken over and restructured we will have cause for optimism.

Caterpillar's Loss Not a Good Harbinger of Economic Things to Come

That's spelled "rosy", Tom.

Let's Not Get Carried Away: It's Still a Bear Market

capital pains, you got it right.


On Mar 26 01:30 AM capital pains wrote:

> These past 2 weeks have been the personification of "don't fight
> the tape"..The cheerleaders at CNBC have been just breathless with
> enthusiasm, practically orgasmic. The "Fast Money" monkeys are extremely
> pleased with themselves. Contrary to their past track records, these
> unseemly traders just can't pick a loser lately.
> As we continue to borrow our way out of debt, (what's counter-intuitive
> about that !), the next debacle is coming down the pike: The collapse
> of the commercial real estate market. True, the TALF program will
> be forced to include bad securitized commercial loans.
> However, the astronomical bill for this will be jaw-dropping. 700
> or so banks will fail due to their inflated Tier 1 assets marks.
> Absurdly inflated valuations for relatively worthless commercial
> backed securitizations.
> The stock market can stay irrational longer than you can stay solvent.
> The global economy is horrendous. Social unrest is spreading across
> Europe. Asia's exports have fallen through the floor. Our country
> is on a respirator. etc etc etc .
> Cash is King ..Sell into this overblown bear market rally .

Wells Fargo and US Bancorp - Hitch a Ride with These Two

"These regional banks are generally more attractive currently - provided that their bad assets are under control and that they operate in an economically attractive part of the country"

Martin, you don't mention the fact that commercial real estate (CRE) is now starting to fall off a cliff. It has typically lagged residential real estate by several months. Many cities have 20% vacancy downtown with *more* high rises coming on line in 2009. CRE is going to get very ugly. Regional banks are large holders of CRE loans, and they are about to see record rates of default in 2009-2010. See the calculatedrisk.com blog for the data.

Secondly, what about credit card defaults? Those are now rising and will likely get to very high levels in 2010. I would be very cautious about holding bank stocks for the long term. Day trading is a different story.

Danger: Stock Market Crash - Recession - Depression Ahead

Great comment Larry. To do otherwise is just gambling.
John


On Mar 18 10:18 AM Larry House wrote:

> Well, you are absolutely right that we will only really know in hindsight.
> We diversify our investments to hopefully reduce risk, and also because
> we can't be sure which asset is going to do well. I think the same
> thing makes sense with what may happen in the larger economy. We
> can't be sure what we are in, so one should invest (which includes
> hold cash) to try to cover all bases. There is no perfect way to
> do this, but that is the challenge we face.
>
> I know we all want to take hold of any glimmer of hope, but so many
> of the weaknesses in the economy--consumers, banks--are just at the
> beginning of the cycle. More weakness is almost surely ahead in these
> areas. To think at this point that we are past the danger point and
> can jump back into risky assets with abandon is a fool's game.<br/>
>
> My plan, and I am not suggesting it for anyone else, is to keep some
> exposure to a wide variety of assets that include stocks, bonds,
> precious metals, commodities, and cash. I reject the idea that one
> should be all out of stocks, etc. because of the uncertainty. By
> the time it is certain, it will be too late invest.

Cramer Grilled on Jon Stewart

Jon Stewart hit the nail on the head. Anyone who watches CNBC, e.g. Squawk Box, knows that the network is very pro-Wall St., very bullish, and has no interest whatsoever in getting at the underlying facts. When Nouriel Roubini, the NYU economist, started predicting the collapse of the housing bubble and the credit crunch over two years ago, the CNBC crew would roll their eyes, and counterpoint with six other guests who predicted everything was rosy.

Squawk Box truly is just a Wall St. infomercial. In spite of a great guest list, even their guests admit that they don't want to say anything "negative". The point of a news network, the "fourth estate", is to use freedom of the press to challenge the spin and lies coming out of government or... Wall St. But CNBC has a different take; they pump up the market and suck up to corporations (sponsors?).

At least they give air time to Roubini, Schiff, and others who have been pointing out the house of cards for months and months. That is to their credit. But journalism? Please, they never do any digging or investigation of the lies told on their shows. It's sickening how badly they've sold out to self promotion and corporate interests.

The other week, CNBC anchors were talking about how unemployment may be due to Obama's policies. Please... unemployment has been rising and earnings falling for fourteen months, and these bimbos are suggesting that it's due to Obama?

Pump up the market, Republicans, etc. No journalism, no facts, just trash talk.

Capitally Challenged Stocks That Could Be Diluted or Extinguished

Alan,

Shouldn't these criteria be ">"? I'm thinking that increasing liabilities and decreasing assets identifies potential liquidity issues.

Liabilities / Current Assets: <3 (identify potential liquidity issues)
Liablities / Adjusted Current Assets: < 5 (haircut AR and Inventory to further define liquidity issues)
Liabilities / EBITDA: < 6 (identify long-term solvency concerns)

How CNBC Squandered Roubini and Taleb

CNBC, and Squawk Box in particular, is just an infomercial for Wall St. interests. They have a good guest list, but the questions are almost always from the bullish perspective. Anything else and the reporters roll their eyes or change the subject.

This Is Just the Beginning

Dream on


On Feb 08 09:32 AM yellowhoard wrote:

> What would happen to the dollar if China, India, or Japan bought
> up some of the worlds larger gold and silver producers and backed
> their currencies with precious metal?

Lesson from Sweden: Aggregator Bank Will Fail

This article is spot on! The media have it backwards, referring to nationalizing the banks as if it were a bad thing. Allowing insolvent banks to fail will allocate resources to better managed entities. Let capitalism work!

Two World Views: Buffett vs. Lahde

Roubini on the causes (it's not just the ivy league):

The crisis was caused by the largest leveraged asset bubble and credit bubble in history. Leveraging and bubbles were not limited to the US housing market, but also characterized housing markets in other countries. Moreover, beyond the housing market, excessive borrowing by financial institutions and some segments of the corporate and public sectors occurred in many economies. As a result, a housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble and a hedge funds bubble are all now bursting simultaneously.

California: Canary in the Economic Coal Mine

In Orange County, CA roughly half of all home sales are foreclosures (REO).

Check calculatedrisk.blogspo... There are occasional posts on this topic.

Six Paths to Possible Bailout Success

Russ: the bailout plan will be administered with no real effective oversight by the Treasury which is full of Goldman Sachs executives who want to rescue their heritage industry. What will they pay for the toxic crappy securities? My guess is they'll pay 80-90 cents on the dollar for securities to recapitalize the banks, and that in the *long* run these securities will probably be worth around 20-30 cents. The housing bubble popped, it's not "coming back". Supposing that the taxpayers may someday see a profit is a fantasy. Taxpayers directly purchasing the toxic stuff is not the best way to resolve this crisis, as 200 economists have just pointed out in a petition against the bill. Even though I'm sure the bill appeals to all those who are "in" the financial business, including many in the media.

Does Paulson's Lie Matter?

Lies don't matter, if they're from politicians. What a sad point of view.

Real Estate Bubble Is Only in 4 States: CA, FL, NV, AZ

Dr. Perry,
What are your leading indicators in the NO states? Here in GA, foreclosures are up, builders are desperate, regional banks are full of non-performing assets (residential and commercial development loans), there is a 4 year supply of homes > $1 million north of Atlanta. Are you familiar with the law of supply and demand? You should be ashamed of yourself.