terryt

Top Ten Reasons to Dismiss Last Friday’s Unemployment Report

1) disbelief could be very dangerous if you were wrong.
2) quote from Warren Buffet: "It’s a terrible mistake to look at what’s going on in the economy today and decide whether to buy or sell stocks."

Jon Friedman wonders whether Jim Cramer is defiant, or just clueless. "When Cramer writes about the stock market for New York magazine, there is no better or more knowledgeable Wall Street pundit around. He is that good. But when he turns into his Mr. Hyde persona on television, his brilliance gets lost in the noise."

If you follow ANYONE's stock recommendations blindly and you will lose money too. You don't count on a TV personality to make money, do you?

Senate passes credit-card crackdown bill which promises to curb sudden rate hikes and hidden fees. Largely anticipated, but credit-card issuers are still looking weak: C +4.1%. BAC -0.5%. JPM -1.9%. AXP -3.2%. DFS -3.5%. COF -4.1%. MA -2.4%. V -2.4%.

Citi's number seems wrong. C is up 4.6% for now.

Rumors of a low-cost iPhone (AAPL) data plan from AT&T (T) are flying fast and furious, but Felix Salmon thinks the idea is stunningly bad: "The iPhone was the first phone to be fully integrated into the internet; unintegrating it by introducing a limited-data plan would be a horribly retrograde step."

Could be bad for T but positive for AAPL.

Boston University professor Laurence Kotlikoff and John C. Goodman propose a novel solution to the financial-sector crisis: Limit banks to banking. "They would never, themselves, own financial assets. Thus, they would never be in a position to fail because of ill-advised financial bets. No-risk banking? Exactly."

This is interesting. "Never own financial assets"? So who will/should own your mortgage at the bank, professor?

Risk managers, who perhaps more than others bear the burden of blame for AIG's (AIG) ugly collapse, were among those who received performance awards and/or retention awards. Prompting Rep. Gary Peters to remark, "People who failed very miserably should not be receiving bonuses."

Who actually failed miserably?

Ford's Stock Issue Makes More Sense than Microsoft's Bond

There's nothing wrong to leverage balance sheet as MSFT did. No one is paying millions in fee and interest expense to just "signaling".

It's Too Late to Shut the Barn Door

The key here is liquidity. Do you have enough liquidity to absorb the MTM losses? Or, it could be worse if you level up say by 2. You are gone after 50% losses. In short, manage your risk carefully under whatever strategy you would use.

Who's the Newest, Riskiest Bank on the Street?

Be careful when you short GS. credit market doesn't think it's the "riskiest" at all. In fact, it's one of the two least risky counterparties. Another one? JPM.

Bank stress tests are harsher on loans than on other troubled assets (like, say, MBS), according to a document obtained by AP. Under one scenario, tests (astonishingly) assume banks will see no further losses on the complex securities at the heart of the credit crisis. The approach favors the big Wall Street firms, while potentially threatening regional banks.

Sorry, I don't have publications for these market data.
But you can look at markit.com and they have pretty good market data. Check ABX for rmbs pricing and CMBX for cmbs information.


On Apr 21 11:57 PM Illusional Delusion wrote:

> terryt,
> i tried to read up on the writedowns and stuff. do you know where
> or have articles on the current state of their writedowns?

Bank stress tests are harsher on loans than on other troubled assets (like, say, MBS), according to a document obtained by AP. Under one scenario, tests (astonishingly) assume banks will see no further losses on the complex securities at the heart of the credit crisis. The approach favors the big Wall Street firms, while potentially threatening regional banks.

we will see if this is a sucker's rally or a rally suckers missed

Bank stress tests are harsher on loans than on other troubled assets (like, say, MBS), according to a document obtained by AP. Under one scenario, tests (astonishingly) assume banks will see no further losses on the complex securities at the heart of the credit crisis. The approach favors the big Wall Street firms, while potentially threatening regional banks.

Further losses will be limited. AJ class CMBS tranches are being traded around 30 cents on a dollar, BBB rated RMBS is next to nothing now. Also most of the trades have been written down or hedged.

Bank loans, on the other hand, are still up in the air.

Changyou.com IPO: Reminiscent of the Tech Bubble Era

Multiplayer online gaming is NOT a "very fickle entertainment/gaming sector" in China.

China's call for some magical solution to the problem of its huge dollar reserve suggests a bigger problem, Paul Krugman writes: Its leaders have yet to come to grips with the fact that the rules of the game have changed in a fundamental way.

"We will soon all be mandated to speak the horrible Mandarin dialect, rather than the clean Cantonese dialect." - What does this have to do with Krugman's point. Are u suggesting all Chinese speak Mandarin and force everyone else speak mandarin? factually false and totally irrelevant to the topic.

Exclusive: Big Banks' Recent Profitability Due to AIG Scam?

Before getting in politics, a few questions need to be raised:

1) Was AIDFP long or short credit overall before its blowup? Based on Lou's recount, it sounds like they long credit portfolio risk was mostly hedged by short single names(which may cause issues when they unwound the trades). However, that is just impossible to me: if they managed their risk so carefully, why AIG went bust at first place in Sep? Logically, one would guess they sold tons of naked credit protection and not hedge them properly, which brought down the whole house. If their correlation desk "back risk out" properly, they should not in big trouble at first place.

2) This is the quote in the article: "This caused single name credit to massively underperform equities - run a chart from say last September to current of say S&P 500 and Itraxx" Ok, I don't quite get it either: why was he comparing S&P with Itraxx at all? Itraxx indices are for Euro names rather than US name. CDX index i more relevant here. Ok, now you pull SPX and CDX IG on the run index, from Jan 1 09 to Feb 09, SPX is down 20.7%, CDX IG 11 index was down 10.2%. Where was the "massive underperformance"?

3) Based on Lou's talk, AIGFP sold protection on both corp and asset-backed notes. I don't know how they managed their risk since there was very limited liquidity to even unwound all the trades, not to mention manage risk properly with their models.