Jorge Piedrahita's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/38766/comments http://seekingalpha.com/article/177291-bernanke-s-50-billion-hidden-stimulus?source=feed#comment-798490 798490
You know what he paid and you can estimate the market price of the securities without his intervention. The difference is the subsidy paid.

There is another subsidy which is the one between low artificial short term rates as set by the Fed and the theoretical market rates without the Fed printing money.

There is more. Think about the funding programs established since the crisis started, the FHA programs, the SBA lending, etc...

And the economy is not yet picking up which tells you that we are getting closer to a Japan-type of situation than we think...]]> Wed, 09 Dec 2009 15:04:52 -0500
You know what he paid and you can estimate the market price of the securities without his intervention. The difference is the subsidy paid.

There is another subsidy which is the one between low artificial short term rates as set by the Fed and the theoretical market rates without the Fed printing money.

There is more. Think about the funding programs established since the crisis started, the FHA programs, the SBA lending, etc...

And the economy is not yet picking up which tells you that we are getting closer to a Japan-type of situation than we think...]]> http://seekingalpha.com/article/176326-bank-of-america-repayment-plan-doesn-t-signal-an-improved-economy?source=feed#comment-788923 788923
Credit card deliquencies, severity, etc. generally follow a set of rules that are mean-reverting type, so the accounting system is always behind market action for these. The story is different when we look at ABS that are marked-to-market.

Most banks prefer not to use mark-to-market except for trading books. Lately regulators seem to agree with them, so we ended up creating balance sheets that are not consistent between institutions and that are almost impossible to understand.

The intention of the article was not to make a discussion about reserves, accounting, etc. but to signal the motivation for the deal which it seems at 3:20 PM the market seems to agree with (to my surprise) given the sell off in financials.]]> Thu, 03 Dec 2009 15:21:44 -0500
Credit card deliquencies, severity, etc. generally follow a set of rules that are mean-reverting type, so the accounting system is always behind market action for these. The story is different when we look at ABS that are marked-to-market.

Most banks prefer not to use mark-to-market except for trading books. Lately regulators seem to agree with them, so we ended up creating balance sheets that are not consistent between institutions and that are almost impossible to understand.

The intention of the article was not to make a discussion about reserves, accounting, etc. but to signal the motivation for the deal which it seems at 3:20 PM the market seems to agree with (to my surprise) given the sell off in financials.]]> http://seekingalpha.com/article/176211-d-r-horton-did-anyone-actually-listen-to-the-call?source=feed#comment-788626 788626
1) The only souce of cash are tax refunds which end next years (a similar position could be found in automotive companies back in 2002...)
2) Inventory is high and will need to be marked down.
3) Even more important they are in a market segment that is facing a tectonic shift in terms of buyers preferences.
4) House price deflation is not over. After all the subsidies, the breathing space the sector got is just temporary.
5) The sector is very sensitive to credit availability which as we now is still going down.

Suggest that you stay out of the sector and this particular stock]]> Thu, 03 Dec 2009 12:08:56 -0500
1) The only souce of cash are tax refunds which end next years (a similar position could be found in automotive companies back in 2002...)
2) Inventory is high and will need to be marked down.
3) Even more important they are in a market segment that is facing a tectonic shift in terms of buyers preferences.
4) House price deflation is not over. After all the subsidies, the breathing space the sector got is just temporary.
5) The sector is very sensitive to credit availability which as we now is still going down.

Suggest that you stay out of the sector and this particular stock]]> http://seekingalpha.com/news/market_currents/post/37559?source=feed#comment-787569 787569
Banks should have been nationalized instead of using the head-in-the-sand approach.]]> Wed, 02 Dec 2009 21:34:11 -0500
Banks should have been nationalized instead of using the head-in-the-sand approach.]]> http://seekingalpha.com/article/175847-is-a-deficit-neutral-stimulus-possible?source=feed#comment-784900 784900 Tue, 01 Dec 2009 15:19:29 -0500 http://seekingalpha.com/article/173853-at-ford-bulls-are-taking-the-wheel?source=feed#comment-767274 767274
Present valuation implies that the company should make $4 to $5 billion per year on a normalized basis. This is highly unlikely in an industry with overcapacity of about 15 million cars on a worldwide basis.

They will need government help if there is a double dip.]]> Thu, 19 Nov 2009 10:30:04 -0500
Present valuation implies that the company should make $4 to $5 billion per year on a normalized basis. This is highly unlikely in an industry with overcapacity of about 15 million cars on a worldwide basis.

They will need government help if there is a double dip.]]> http://seekingalpha.com/article/100804-hedge-fund-unwinding-is-still-driving-this-train?source=feed#comment-287044 287044 a) Given the size of the hedge fund industry losses are significantly smaller than long-only mutual funds,.
b) In addition, hedge funds have been reducing leverage for at least a year
c) Most of them have planned on withdrawals to the point that they are rumored to about $500 billion in cash.

Everybody is expecting a meltdown from hedge funds, it may fail to materialize. If you did not sell already, then you are late to the party and it is stupid to recommend people to sell here. ]]> Tue, 21 Oct 2008 10:53:03 -0400 a) Given the size of the hedge fund industry losses are significantly smaller than long-only mutual funds,.
b) In addition, hedge funds have been reducing leverage for at least a year
c) Most of them have planned on withdrawals to the point that they are rumored to about $500 billion in cash.

Everybody is expecting a meltdown from hedge funds, it may fail to materialize. If you did not sell already, then you are late to the party and it is stupid to recommend people to sell here. ]]> http://seekingalpha.com/article/99138-dow-jones-in-perspective?source=feed#comment-277787 277787 Thu, 09 Oct 2008 11:55:11 -0400 http://seekingalpha.com/article/98909-cpff-taf-tarp-bailouts-and-all-that-jazz?source=feed#comment-276113 276113
There is ineptitude in both sides of the Atlantic.

It is interesting to notice how the super-bullish Levkovich is not bmost bearish according to an article in Bloomberg. I guess ineptitude is not a public servant-only attribute.]]> Tue, 07 Oct 2008 16:11:20 -0400
There is ineptitude in both sides of the Atlantic.

It is interesting to notice how the super-bullish Levkovich is not bmost bearish according to an article in Bloomberg. I guess ineptitude is not a public servant-only attribute.]]> http://seekingalpha.com/article/98634-monday-outlook-ascendant-fear?source=feed#comment-274674 274674
The problems seem to be going over their head here. ]]> Mon, 06 Oct 2008 10:47:55 -0400
The problems seem to be going over their head here. ]]> http://seekingalpha.com/article/96449-hank-paulson-buy-sider?source=feed#comment-260328 260328 Sat, 20 Sep 2008 21:12:05 -0400 http://seekingalpha.com/article/50936-the-economist-on-the-limitations-of-central-bankers?source=feed#comment-99463 99463
The value of money is the inverse of the prices of everything that can be bought with that money -- under this definition, we have had a huge inflation over the last decade. That is a fact. My money buys now, fewer shares, less of an appartment, etc.

Central bankers are at the end of the day political animals and they want to be praised for growth regardless of the fact that it may be growth that leads to a crises that sets you back. The tipical behaviour of an Emerging Markets banker would fit that description easily -- but now, the description of the Fed fits it as well.

Government and corporations want the average Joe to feel good and believe there is no inflation, so we have the six-headed monster of "core" inflation as we do not need to eat or drive our cars. One conclusion is that starvation leads to lower inflation! It has the added benefit that it lowers social security liabilities, so the government would be happy as well...

The Fed is happy to encourage another bubble in order to keep the unsustinalbe situation of an overextended consumer going. Whether now or in the enxt event, the music will stop. I believe the sooner we correct the imbalances, the better. I find the Fed utterly irresponsible.

Regards]]> Tue, 23 Oct 2007 12:35:31 -0400
The value of money is the inverse of the prices of everything that can be bought with that money -- under this definition, we have had a huge inflation over the last decade. That is a fact. My money buys now, fewer shares, less of an appartment, etc.

Central bankers are at the end of the day political animals and they want to be praised for growth regardless of the fact that it may be growth that leads to a crises that sets you back. The tipical behaviour of an Emerging Markets banker would fit that description easily -- but now, the description of the Fed fits it as well.

Government and corporations want the average Joe to feel good and believe there is no inflation, so we have the six-headed monster of "core" inflation as we do not need to eat or drive our cars. One conclusion is that starvation leads to lower inflation! It has the added benefit that it lowers social security liabilities, so the government would be happy as well...

The Fed is happy to encourage another bubble in order to keep the unsustinalbe situation of an overextended consumer going. Whether now or in the enxt event, the music will stop. I believe the sooner we correct the imbalances, the better. I find the Fed utterly irresponsible.

Regards]]> http://seekingalpha.com/article/41394-the-next-bear-market-is-anybody-s-guess?source=feed#comment-91551 91551
Talk to people in banks and you will hear stories of risk managers taking over positions and people starting to panick. The easy credit window is shutting down. That is why the Chrysler deal put additional covenants and increased spreads very quickly... ...smart guys, so that it would happen before the lights go off.

I understand that equities are so far ignoring the credit markets, but they can do it for so long only. Unless credit markets turn arround soon, equities are set to at least stay flat.

One site with a lot of info that I like is markit.com -- Just look at the ABX indexes or the high yield index. The BBB ABX 2007-02 has a 500 bps coupon or slightly more than double the coupon of a year ago. And the AA has a 192 bps coupon. Good luck with a long position here.]]> Thu, 19 Jul 2007 09:29:35 -0400
Talk to people in banks and you will hear stories of risk managers taking over positions and people starting to panick. The easy credit window is shutting down. That is why the Chrysler deal put additional covenants and increased spreads very quickly... ...smart guys, so that it would happen before the lights go off.

I understand that equities are so far ignoring the credit markets, but they can do it for so long only. Unless credit markets turn arround soon, equities are set to at least stay flat.

One site with a lot of info that I like is markit.com -- Just look at the ABX indexes or the high yield index. The BBB ABX 2007-02 has a 500 bps coupon or slightly more than double the coupon of a year ago. And the AA has a 192 bps coupon. Good luck with a long position here.]]> http://seekingalpha.com/article/38681-john-hussman-unfinished-cycle-or-new-economy?source=feed#comment-91544 91544
John does not twist the facts, actually I think he just lays them there and you can take your own conclusion. Which in my mind are very clear.

It seems to me that like in the late 90s many want to believe in Santa and a new era... ...do it at your own peril. The fact that some stupid continues to be stupid, does not make it smart. Gravity force does not dissapear when you see a rocket going up...]]> Thu, 19 Jul 2007 09:09:41 -0400
John does not twist the facts, actually I think he just lays them there and you can take your own conclusion. Which in my mind are very clear.

It seems to me that like in the late 90s many want to believe in Santa and a new era... ...do it at your own peril. The fact that some stupid continues to be stupid, does not make it smart. Gravity force does not dissapear when you see a rocket going up...]]> http://seekingalpha.com/article/41285-how-much-lower-can-the-abx-go?source=feed#comment-91390 91390 -- Rating agencies are always slow to recognize the deterioration of any credit (I bet this is one of those cases)
-- Market levels are an unbiased predictor of a paper's rating. In this case, it is basically saying that the AAA paper is in reality a single A.
-- Mark-to-market losses are just starting to hit, when they do then risk managers and others take control of the situation with a liquidation at any level following. We are far from that yet.]]> Tue, 17 Jul 2007 13:11:18 -0400 -- Rating agencies are always slow to recognize the deterioration of any credit (I bet this is one of those cases)
-- Market levels are an unbiased predictor of a paper's rating. In this case, it is basically saying that the AAA paper is in reality a single A.
-- Mark-to-market losses are just starting to hit, when they do then risk managers and others take control of the situation with a liquidation at any level following. We are far from that yet.]]> http://seekingalpha.com/article/41285-how-much-lower-can-the-abx-go?source=feed#comment-91381 91381
The ABX HE refers to Home Equity. If you assume that home prices will continue to go down, then the negative equity that many borrowers are facing might continue to deteriorate which translates into larger loses for HE loans. The amazing thing is that even mild price declines in houses bring loses in the ABX to staggering leves.

This is just the beginning of a credit crunch process that got started in housing, it is now continuing in High Yield and Leveraged Loans and will move into investment grade paper, etc. Bottom Line: This is a re-pricing process that has just started.

Even AAA ABX paper may face loses -- Remember a rating is just an estimate of the probability of defatult and in order to calculate actual losses should a default occur, then the number to look is a the "Loss Given Default" (which is going to be significantly higher than a 5 or 10% for a Home Equity related paper).

Yes today it may be just one guys liquidation, but in reality this is just a bear market for ABX.]]> Tue, 17 Jul 2007 12:25:31 -0400
The ABX HE refers to Home Equity. If you assume that home prices will continue to go down, then the negative equity that many borrowers are facing might continue to deteriorate which translates into larger loses for HE loans. The amazing thing is that even mild price declines in houses bring loses in the ABX to staggering leves.

This is just the beginning of a credit crunch process that got started in housing, it is now continuing in High Yield and Leveraged Loans and will move into investment grade paper, etc. Bottom Line: This is a re-pricing process that has just started.

Even AAA ABX paper may face loses -- Remember a rating is just an estimate of the probability of defatult and in order to calculate actual losses should a default occur, then the number to look is a the "Loss Given Default" (which is going to be significantly higher than a 5 or 10% for a Home Equity related paper).

Yes today it may be just one guys liquidation, but in reality this is just a bear market for ABX.]]> http://seekingalpha.com/article/40212-16-reasons-to-be-bullish-on-this-market?source=feed#comment-90467 90467
Well that should always be the case as a fixed income instrument is significantly less risky than equity -- whether it is UST or AA paper. I am actually amazed how people are fixated with this.

Also, earnings are high on historical basis which basically says that it is unlikely that future growth will continue at the pace that the bulls are projecting -- otherwise people will end up working for free at some point.

In addition, UST yields are low due to a list of price insentitive buyers (i.e. central banks) most of which told us that tell will look for other assets and other currencies. The low end of the 10 year yield is now a solid 5%, with the potential to get close to 6% in an inflation uptick. And corporate spreads continue to widen -- just check swap spreads, ITraxx, or anything else including Emerging Markets.

The argument reads more like the new era we have heard many times in the past -- whether in 1929, 2000 or 2007...]]> Thu, 05 Jul 2007 15:29:43 -0400
Well that should always be the case as a fixed income instrument is significantly less risky than equity -- whether it is UST or AA paper. I am actually amazed how people are fixated with this.

Also, earnings are high on historical basis which basically says that it is unlikely that future growth will continue at the pace that the bulls are projecting -- otherwise people will end up working for free at some point.

In addition, UST yields are low due to a list of price insentitive buyers (i.e. central banks) most of which told us that tell will look for other assets and other currencies. The low end of the 10 year yield is now a solid 5%, with the potential to get close to 6% in an inflation uptick. And corporate spreads continue to widen -- just check swap spreads, ITraxx, or anything else including Emerging Markets.

The argument reads more like the new era we have heard many times in the past -- whether in 1929, 2000 or 2007...]]> http://seekingalpha.com/article/40142-bulls-likely-to-keep-rally-going-for-another-quarter?source=feed#comment-90465 90465
And even a company like Ford is issuing shares in therii tender offer for the convertible preferred they issued in 2002 -- More equity because they sense that June automotive sales at 15.6 million units (annualized) is providing a signal of harder times ahead?]]> Thu, 05 Jul 2007 15:20:30 -0400
And even a company like Ford is issuing shares in therii tender offer for the convertible preferred they issued in 2002 -- More equity because they sense that June automotive sales at 15.6 million units (annualized) is providing a signal of harder times ahead?]]> http://seekingalpha.com/article/40142-bulls-likely-to-keep-rally-going-for-another-quarter?source=feed#comment-90463 90463 -- Higher oil prices
-- Lower house prices
-- Tighter credit

In addition we have inflation to continue to feed through the headline number -- it seems the Fed is now looking it as well. I guess Ben also drives and eat.

And finally, the M&A boom will slow down significantly. Yes the private equiyt guys have cash to put to work, but the debt part of it will either be more expensive or less available. Remember, banks hold $250 billion of bridgge loans in their books and praying for a high yield issuance to take them out. The PE guys also have deals that need the HY maket to close -- you saw KKR today quickly realizing that the landscape changed and agreeing to debt limitation covenants in Europe.

The market may continue to go up, but if you buy based on last quarter earnings it is like driving looking at the rear mirror... ...do it at your own risk.]]> Thu, 05 Jul 2007 15:16:32 -0400 -- Higher oil prices
-- Lower house prices
-- Tighter credit

In addition we have inflation to continue to feed through the headline number -- it seems the Fed is now looking it as well. I guess Ben also drives and eat.

And finally, the M&A boom will slow down significantly. Yes the private equiyt guys have cash to put to work, but the debt part of it will either be more expensive or less available. Remember, banks hold $250 billion of bridgge loans in their books and praying for a high yield issuance to take them out. The PE guys also have deals that need the HY maket to close -- you saw KKR today quickly realizing that the landscape changed and agreeing to debt limitation covenants in Europe.

The market may continue to go up, but if you buy based on last quarter earnings it is like driving looking at the rear mirror... ...do it at your own risk.]]> http://seekingalpha.com/article/39118-short-interest-hits-new-record-high-on-nyse?source=feed#comment-89358 89358
In addition, convertibles, market neutral funds, etc. creat a short position while creating a long one at the same time with no price implication when it gets unwound.

There are enough equities arround for everybody that wants one -- i.e. no short squeeze or melt-up.]]> Fri, 22 Jun 2007 05:47:55 -0400
In addition, convertibles, market neutral funds, etc. creat a short position while creating a long one at the same time with no price implication when it gets unwound.

There are enough equities arround for everybody that wants one -- i.e. no short squeeze or melt-up.]]>