basehitz

The Financial Crisis: Nowhere Near Over

“This indicates that Goldie is bearish on both the euro and gold. which hints that Wall Street’s finest are likely betting on a US Dollar rally”

The trade has been dollar up, stocks and commodities down, and vice versa. The inverse correlation was shown clearly by Karl Denninger in a chart here:
“The dollar and S&P 500 correlation . . . in July it became nearly-perfect”
market-ticker.org/arch...

And if Goldie is right on financials bearish bet, the market won’t fight that. Since Goldie’s results last 2 Qs shows they almost never have a losing day trading, you gonna bet against them?

I need to rephrase the author’s following statement:
“Given Goldman’s incredible access to and close relationship with the regulators and federal government”

That should read:
“Given Goldie’s directives to it’s wholly owned subsidiaries, the Federal Reserve and the US Treasury. . . “

The Secret to the Banking Sector's Success

I subscribe to Rosenberg and recommend it. Were it not for the endless handouts, bailouts and backstops financed in a major way by money printing, we'd face very different economic data. But it has come at the risk of the currency. Too high a price to pay IMO for a temporary boost.

As for the banksters, Dylan Ratigan weighed in on what he calls “corporate communism”. After the 2 minute mark he gets pretty intense over GS trying to justify their egregious pay.

www.msnbc.msn.com/id/3...

A Tale of Two Banking Worlds

Thanks John for another informative post. What you say is intuitive, and corroborates what we see going on around us. But the market seemingly refuses to recognize any danger. The bulls have the tape and everything is spun to their liking. But in the real world, this is a sampling of some troubling remarks in earnings reports:

WFC
Many analysts, though, have expressed worry that Wells Fargo will need to raise more capital to cover potential losses from real estate loans, including the option adjustable-rate mortgages it inherited when it bought Wachovia.
CFO said the bank expects credit losses and nonperforming assets to increase, despite "some moderation" in the rate of growth in some consumer portfolios.

BAC
Like JPMorgan, it did report continuing losses from failed loans. Bank of America said it recorded a $13.4 billion provision for loan losses during the second quarter as consumers struggled with debt amid rising unemployment.

JPM
These results were negatively affected by the continued high levels of credit costs in Consumer Lending and Card Services, which we expect will remain elevated for the foreseeable future.

C (excerpt from John’s 5/6 article)
One of the ways Citigroup achieved this gain was booking a profit of $2.7 billion on the decline in Citi's own debt. Say what? Under accounting rules, Citi was allowed to book a one-time gain equivalent to the decline in its bonds because, in theory, it could buy back its debt cheaply and save $2.7 billion over time. Of course, Citi didn't actually do that. Even though more consumer loans went bad in the first quarter, Citi reduced its loan loss reserve from $3.4 billion in the fourth quarter to $2.1 billion in the first quarter, thereby picking up another $1.3 billion of 'earnings'. And the recent change in mark to market accounting enabled Citi to book an additional $413 million in 'profit' on impaired assets. Without these one-time adjustments, Citi's $1.6 billion in first quarter profit becomes a $2.8 billion loss.

I purposely ignored the casino banks. I don’t care how much Goldman Sucks can make by the many shenanigans cited by bloggers.

Bank Earnings: Revenues Falling, Losses Rising

"Could it be that market sheep are starting to wake up? "

If so, they've got a lot to contend with. Seems to me the bulls are making an all out effort to break out to the upside.

Here in the blogosphere, spin gets confronted. But Tout TV (WS’s marketing arm), churns out propaganda constantly. And people I talk to are mixed in their outlook. For example, some folks believe we can afford the expanded social programs being considered because "we're a rich nation". And some think cap & trade is a good thing, seemingly ignoring that China, India and Mexico not cooperating will put the US at a competitive disadvantage. They're getting these ideas from somewhere.

Consider the persistence of Tout TV. Yesterday, Zero Hedge posted links to video clips, including one from Kudlow, who was in full pom pom mode. Tyler emphasized Karl Denninger’s outlook, which is credible and who is bearish. Kudlow did what he always does AFTER a market has rallied. But the most misleading comments came from Jerry Boyer who actually said “we have a stable work force”. WTF? This guy has been so wrong for so long, I don't see how he even gets air time. I nominate him in next year's runoff against Dennis Kneale (aka that annoying idiot) for Head Buffoon.

Here’s the link to TD’s post w/linked videos:
www.zerohedge.com/arti...

Do You Believe Banks Are Recovering? (Part 2)

Thank you. That was a lot of work. I take it then you don't see a green shoots and mustard seeds everywhere. I assume you won't be appearing soon on CNBC. Amused by your "morons" remark. Actually, I don't think they're morons. I think they do it on purpose. I have read that CNBC ratings skyrocketed during the dot-com bubble, as well as the Oct 2008 cliff diving event. Volatility = ratings. So pricing extremes, in either direction, help ratings. That explains why the non-stop cheerleading at market tops continuing even as it rolls over, and the fear mongering when it crashes. Early 2000 we were getting "price/page hits" to fraudulently promote businesses that had no "E" and some had no "S". No problem for these pump monkeys. But in late summer '02 near the end of that brutal selloff they bring on Bill Fleckenstein to do what he does best. Then at market top in '07, cheerleading was in vogue and continued into '08 even after technical broke down. Dissenting opinions were smacked around. And just before the March '09 bottom, we had analysts predicting SPX to 600, or possibly 400. You can further break that down into swing trades, like what's happening now. CNBC just can't be that stupid!

No, this is calculated. In addition to the many excellent points this author makes, there is one thing that the pump monkeys and bought politicians absolutely don't want you to realize about this point of time in history, and the ONLY other time in our history we were in that predicament, and that it couldn't get fixed until "Mount Everent" was resolved. FDR tried it, the Chosen One is repeating the experiment. Doesn't mattter in either case.

ftalphaville.ft.com/bl.../

It will take time and resposible financial management to dig our way out. Shoveling the debt from one balance sheet to another doesn't fix it. I sold almost all my stocks this week. Doesn't mean Government Sachs won't find some bullsh*t recommendation to issue every 2 days to fool the last gullible investor. I'll wait for the next bus.

Be Wary of Risk Assets and Citi's 'Profit'

Chris, the analysis from historical context is helpful. dshort.com has posted extensive graphs during last 100 years, which I broke down to look for patterns common to market bottoms. Though all are different, what has happened recently, if it were THE bottom, would be an outlier by that analysis. So I keep studying. If I'm wrong, I'll admit it and buy. But not so far. and your analysis further corroborates that conclusion. Worthwhile read. BTW, oil is my #1 target as well. This week we get a bunch of driller reports. I hope they're dreadful, so I can add. But OIH is a slave to crude, which is a slave to SPX. I'm obviously partial to this outcome.

An added concern that could trump any of this analysis is our collective debt. We've never been in debt this much in our history.

ftalphaville.ft.com/bl.../

And our ability to work our way out of this is weak. Globally, we don't compare well in producing goods and services (besides financial engineering). Either way, I'm not sure US-focused companies will perform well. But oil and international drillers seem an obvious winner.