Is everybody making popcorn for when BAC’s Brian Moynihan testifies on the Hill in the ongoing witch hunt?
Moynihan is expected to explain to people who don’t get it that MER’s sale averted a further collapse. I don’t expect for Moynihan to explain that avoiding financial collapse was why Hank Paulson blackmailed Lewis with the threat of sacking him and the BoD if BAC exercised the MAC clause to bail on the purchase of MER.
Still have plenty of the kid’s halloween candy so no need for popcorn. On other news I heard “reports” that the gov has info pointing towards Lewis strong arming the government and playing his own game of hardball. Apparently BAC legal was not advising an out via an MAC clause.
Interesting drama indeed! I’ll be watching tomorrow.
Anyway, I stepped and came back to discover the market tanked. What I miss?
Edit: never mind Whitney opened her trap and spewed Dr. Doom stuff. Dr. Doom is also wrong. And while I’m at it, Wu is also mostly wrong. And those other guys—them too. Wrong!
Good thing Bernanke came out on my thesis at today’s Economics Club: higher trailing unemployment because recovery doesn’t recovers lost jobs but doesn’t provide new jobs underscoring my two Americas thesis.
Is everybody making popcorn for when BAC’s Brian Moynihan testifies on the Hill in the ongoing witch hunt?
Moynihan is expected to explain to people who don’t get it that MER’s sale averted a further collapse. I don’t expect for Moynihan to explain that avoiding financial collapse was why Hank Paulson blackmailed Lewis with the threat of sacking him and the BoD if BAC exercised the MAC clause to bail on the purchase of MER.
Still have plenty of the kid’s halloween candy so no need for popcorn. On other news I heard “reports” that the gov has info pointing towards Lewis strong arming the government and playing his own game of hardball. Apparently BAC legal was not advising an out via an MAC clause.
Interesting drama indeed! I’ll be watching tomorrow.
Anyway, I stepped and came back to discover the market tanked. What I miss?
Edit: never mind Whitney opened her trap and spewed Dr. Doom stuff. Dr. Doom is also wrong. And while I’m at it, Wu is also mostly wrong. And those other guys—them too. Wrong!
Good thing Bernanke came out on my thesis at today’s Economics Club: higher trailing unemployment because recovery doesn’t recovers lost jobs but doesn’t provide new jobs underscoring my two Americas thesis.
Meredith Whitney - “I’ve never been more bearish the past year” - translated you expect me to believe that you were more bullish in January of this year with all the uncertainty of the end of the world versus today with concerns of a few banks needing to raise capital and a chance (I say a chance) of a Q of negative GDP once we switch from government fuel to consumer fuel. I can’t stand that chick….
Who would you trust here? Did I mention MW drives me insane!
Funny. And I agree, Whitney sounds very foolish here.
I sold some shares at HOD, thinking I’ll be able to buy some back near $200, if we see it. But I won’t be terribly disappointed if we don’t see $200 again…
Meredith Whitney told CNBC that she “hasn’t been this bearish in a year.”
She’s also calling for a “double dip” recession.
StreetInsider bullet-points her comments:
the banking sector is “not adequately capitalized today”
sees another leg down in the residential real estate market when mortgage rates/prices begin moving lower. To this point, Meredith said she feels that there is still a much bigger risk related to residential mortgage exposure, rather than commercial.
says that this market makes “no sense” to her and that there is no fundamentals behind the recent rally in stocks
within the banking sector the major difference between the market today and last year is that there is no mark-to-market now.
“banks will go back to tangible book value”
sell the banks
would sit on cash until another leg down in valuation, estimates
“everything’s expensive right now”
expecting a double dip recession, although the second part of “W” will not be as severe
I’m on the W myself but from my perspective this represents a scaling in period.
I’m also on board that the later half of 2010 will come under more pressure from residential loans; however, I think there is a damping effect on the downdraft because:
1) The Swiss Family Landstroms (SFL) of the world view dips as opportunities and are aligning themselves to take advantage of expected dippage. Multiply SFL by 1,000,000 and you’ve a hungry market segment ready and willing to snap up on value. Value buyers should then act as a pillow between the rock and the hard place.
2) The market sees this next slug of defaults coming with clarity which is why the financials have been grinding sideways. Banks have rallied without any apparent reason because guys like myself have moved from viewing the second slug as severe as the first slug of subprime to something less severe. With every re-evaluation, we were able to scale in on expected book values. Nevertheless, we have to manage our risk to the downside which makes it look as though we’re building huge short positions with options when in fact we’ve simply been managing the risk of long positions.
3) There is a theory that those who need to re-fi their 80/20 ARM largely have done so already. I think some that is true if one looks at the re-fis that came out of BAC (who owns 25% of that business), however, there is a segment of people who are mortgaged to the hilt with jumbos and these people will either do strategic walk-aways or be forced into foreclosure. Notwithstanding, if these people do not lose their jobs, they may simply sit on their properties. As such, my kinder, gentler dip theory hinges on the jobless recovery thesis which states that we will have high trailing unemployment because the recovery doesn’t provide enough jobs to keep up with population expansion but that productivity of workers will increase off-setting the lack of job growth. What the jobless recovery thesis means to me is that so long as the professional isn’t axed his or her job, he or she is likely to keep paying his or her mortgage rather than walk away from his or her mortgage.
4) There is a theory that everybody who could lose their home has likely already lost their home. I don’t buy that but the people who are next in line to lose home are likely of higher incomes than subprime and I expect that they are better at managing money. As such this class of people is likely to see the bad news coming and do something about resolving their debts rather than simply defaulting.
I’m on the W myself but from my perspective this represents a scaling in period.
Thanks for the video. She said the right is higher than the left. In EW-speak is: Currently in wave 1, wave 2 would retrace at least 76.8% of wave one. She has missed the wave 1 rally and has no choice but to wait for wave 2 to go long. I’m also waiting for wave 2. Wave 1 seems to take ages to complete. Btw, S&P since Mar has formed a zigzag. If S&P is in wave 1 (not abc), it could take up to mid 2010 before wave 1 completes.
I’m on the W myself but from my perspective this represents a scaling in period.
She’s getting a lot of press for growling like a bear. I agree bank credit is still tight and banks still want to hoard cash, but I’m not seeing the kind of consumer contraction she sees. The extension of the homebuyer credit (including existing homebuyers now) should keep the real estate recovery percolating, even if it’s not bubbling over. If it’s a “W” then I think she needs remedial penmanship because it looks more like a “U” to me.
Sounds like she missed a party and wants to be invited to the next one…
I’m on the W myself but from my perspective this represents a scaling in period.
Thanks for the video. She said the right is higher than the left. In EW-speak is: Currently in wave 1, wave 2 would retrace at least 76.8% of wave one. She has missed the wave 1 rally and has no choice but to wait for wave 2 to go long. I’m also waiting for wave 2. Wave 1 seems to take ages to complete. Btw, S&P since Mar has formed a zigzag. If S&P is in wave 1 (not abc), it could take up to mid 2010 before wave 1 completes.
I’m with your mid 2010 thesis (I added more to the post you responded to and touched on mid 2010).
I’m on the W myself but from my perspective this represents a scaling in period.
She’s getting a lot of press for growling like a bear. I agree bank credit is still tight and banks still want to hoard cash, but I’m not seeing the kind of consumer contraction she sees. The extension of the homebuyer credit (including existing homebuyers now) should keep the real estate recovery percolating, even if it’s not bubbling over. If it’s a “W” then I think she needs remedial penmanship because it looks more like a “U” to me.
Sounds like she missed a party and wants to be invited to the next one…
OR…..
.... she is that rare animal in a land filled with streetwalkers, a TRUTH TELLER who actually can see past the fog, smoke, and mirrors?
One MUST give credit to the RARE pundit that had both the courage, AND insight to see the former trainwreck of the Leper Colony { big banks } and MORE IMPORTANTLY, went public risking her entire career as a Watchman on the Wall.
Rise to fame
Whitney wrote a particularly pessimistic, but accurate, report on Citigroup, on Oct. 31, 2007, which got her attention from many Wall Street analysts[3] and the news media.[4] She has since followed this report with similar reports and predictions, which have tended to leave the companies involved with lower stock prices as the market has taken her opinion seriously.[3] One of her claims is that goodwill is built-in to a lot of companies’ share prices, and that as the market moves into dark times, this goodwill will dissipate.[3]
[edit] Recognition
In 2007, Whitney was listed as the second best stock picker in the capital markets industry on Forbes.com’s list of “The Best Analysts: Stock Pickers”,[5] as well as being named “one of NY Post’s 50 Most Powerful Women in NYC.[6]
Whitney’s extremely bearish view on banks landed her on the cover of the August 18, 2008 issue of Fortune Magazine. Even before the problems in September that befell Merrill Lynch and Lehman Brothers, she is quoted as saying, “It feels like I’m at the epicenter of the biggest financial crisis in history, however even a broken clock is right twice a day”[7] In October 2008 Whitney, was ranked as one of Fortune 500’s “50 Most Powerful Women in Business.” In 2008 she won CNBC’s “Power Player of the Year” over Jamie Dimon, Ben Bernanke, and Hank Paulson.
Compared to the REST of the captive press mid-last-summer?
Isaiah 56:10 (KJV)
His watchmen are blind: they are all ignorant, they are all dumb dogs, they cannot bark; sleeping, lying down, loving to slumber.
11 Yea, they are greedy dogs which can never have enough, and they are shepherds that cannot understand: they all look to their own way, every one for his gain, from his quarter.
Tan, I understand your point. But since its so hard to carry gold bullion around most of us trade dollars (whether paper or plastic) for eggs, milk, and even houses.
In the late 1930’s, an American could buy a very nice mid-size car for about twenty ounces of gold or about $700.00. By 1995 at $400 price, an American could hardly purchase the least expensive car available on the market for the same weight in gold. Even with todays dollar deflationary cycle that has boosted the price of gold, one is still looking at a deflationary draw down on the value of gold over the span of decades. Moreover, the value of gold will decline when interest rates move higher and the value of the dollar increases which will highlight the deflationary value of gold.
In the last 24 hours Bernanke, Kohn and Yellen all said that the Fed policy is to move investors into riskier assets (equities) and there is no sign of an asset bubble right now. The Fed has said they will side with the equity investor for the coming months if not longer. Greenspan (out lovely friend) also put emphasis on the need for a strong equity market to help “build wealth” and get the economy back on track. Believe in the economy or not, the Fed is on the long’s side…
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