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If the truth is inconvenient ... just lie !!


kahuna1

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In reply to: kahuna1 on Wednesday 16/07/08 12:35pm

"however the financial side and side created from lending to any fool in a cardboard box who wanted to buy a home has yet to really enter the equation"

 

Mr Kahuna1

 

I read your posts when I can and find them informative.

 

Your posts dont need crap like the above I highlighted in them.

 

fools in cardboard boxes who want to buy a home

 

Your kidding aren't you?

 

Trublu

 

 

 

 

 

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I don't think theres any point lying about the state of the economy; it is doom and gloom in most parts. If the price deflation, global banking crisis (their balance sheets!) and commodity price inflation continues theres going to be no change to the state of the US in '09, it will continue to weaken. I think corporate leverage has taken a major hit, so many are taking a defensive approach and cost pressures continue to build, debt is getting harder and harder to get. This is making everyone look to focus on cost-out initiatives. I doubt think we have seen much of this yet but it will properly pop up over the next say, 6 months. I think this applies to us, Australia as much as it does to the rest of the world.

 

Now I think I could go on and on about the gloom and doom but I wouldn't be saying anything new, we've heard it all and this bad news has been amplified greatly, exactly what the press does in every bear market. The good news is ignored, theres not much but I think there are still some positives out there.

 

I don't think the US is yet to capitulate. Theres been I think around a 50% fall in housing starts and an 18% fall in house prices. Sub-prime loans accounts for around 15% of the US mortgage pool, it hasn't fallen into a recession as yet because of the assistance of rebates from the Fed, exports is still go well and the GPD looks to have expanded in the June quarter. This might sound strange but the mess the US has faced has been huge but we still formally haven't tipped into a recession.

 

The financial sector over there has been a huge reason for the fall and itÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s driving a huge derating of financials around the world. I have no doubt that our banking stocks are been harshly treated and our balance sheets and operational risks are no-where near as extreme. All that is needed for us to go down is that damn old perception of risk, i.e.: the U.S IR's are falling apart. I think the sector will remain exposed to the global performance trends; itÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s going to stay like that for a while to. I think the best we can expect is that local banks will maintain, hopefully, a small valuation premium against its global peers; itÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s around 16% at the moment on a forward PE basis. I said hopefully, I don't think this is guaranteed if our trading conditions continue to deteriorate, i.e. industrials fall apart. Something else which is good is that the credit demand will go down to around 7%?, a pretty manageable upswing in bad debts and for '09 a reversal in wholesale funding cost pressures.

 

But then there is the downside and I think that the demand for credit could contract further next year, the upswing in bad debts - particularly from sme sector surpass expectations and pressure on wholesale funding costs persist into '09 on the back of the vulnerability of the global banking industry. Putting it simple the business conditions are going to remain challenging.

 

Another positive is that job markets are yet to capitulate. payrolls have contracted in each of the past 6 months and the aggregate job loss is 0.3% is still pretty light. Lab our markets across the OECD are yet show any sign of material deterioration. Unemployment has started to trend up, but as you can see not at a very alarming rate. http://www.sharescene.com/html/emoticons/tongue.gif

 

The third thing thatÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s yet to capitulate. Emerging economyÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s -there holding up well, facing a few issues like material inflationary pressures and weakening export demand they look all right. In May the OECD - contains 6 major emerging economies was showing signs of forming a base. When viewed in aggregate the merging markets have been the only regions within the global equity market to see earnings upgrades over the past six months. It will e a major plus for the global economy if the emerging ones can draw on domestic demand to avoid a major downturn.

 

I think Aus has its problems but I think if they were to intensify we have put in place policy that would envy the world. Given the high starting point of our interest rates they could easily be halved. We a have a negible level of public sector debt, fiscal initiatives in excess of 5% of GPD could easily be rolled out and still leaves Aus with a pretty sound public sector balance sheet in OECD. Under a scenario where Aus economic prospects are slipping relative to those of the world, the AU would pullback sharply. With this stimulus in reserve and the fact that residential construction is lagging underlying demand, it is highly unlikely that the Aus economy would suffer a prolonged recession or see the type of financial crises that is currently unfolding in the US and UK. We can buy our way out of trouble. http://www.sharescene.com/html/emoticons/tongue.gif

 

The bull market never ends, it just changes assets. Over the past year an investor with an exposure to global bonds would have a generated a 17% return or a 96% return in comm's. Yes it is not always easy to identify and commit to those opps they will always be there. At the very least, it highlights the benefits of global diversification in our portfolios.

 

Global equities are still cheap. Adding to kahuna and alberton's comments PE multiples remains at 25 year lows. Looking at the three key drivers for valuation, interest rates are very low, the pricing of risk is still relatively high and profit estimates for '08 and '09 remain optimistic. Over the past few monthsÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ analyst profit downgrades have accelerated, suggesting that a more realistic profit outlook may be in place by year-end. In the interim, global interest rates will remain low and equity risk premia should slowly contract as financial economic clarity improves. The latter I think will struggle to materialize if oil prices continue to escalate. If anything I think moving in 2009 further expansion is likely.

 

Another positive that will come out of this is "purification". When we come out of this "cleansing" exercise we will emerge in pristine shape with high quality and undervalued invest. opportunities, improved corporate disclosures, an uncompromised market regulator & financial advice industry (i hope), a neutered IR industry, sustainable investment practices an appreciation of the value that should be placed in liquidity. All though the learning part is very very tough in the long run we will come out better for it.

 

There you go, it's been tough but I can find some positives out of this. But if we continue to unfold along the lines that I mentioned in the first paragraph, everything else that I have written means nothing! http://www.sharescene.com/html/emoticons/tongue.gif

post-37-1216201631.jpg

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QUOTE (kahuna1 @ Wednesday 16/07/08 12:35pm)

NEW YORK, July 16 (Reuters) - U.S. gold futures turned higher Wednesday

after a government report showed that U.S. consumer prices in June rose by

the biggest amount since 1982, boosting bullion's inflation hedge appeal.

At 8:41 a.m. EDT (1241 GMT), the gold contract for August delivery

on the COMEX division of the New York Mercantile Exchange was up

$1.30 at $980.00 an ounce. Prior to the release of the CPI report, it was

down $4.20 at $974.50 an ounce.

___________________________________________________________________________

 

Could it possibly be that--for once--tonights figures are nearer the truth than usual?

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In reply to: trublu on Wednesday 16/07/08 07:41pm

Trublu, ....

 

My comment is regarding what is now apparent ... the level of lending in the sub prime market in terms of credit risk and ability to repay was at best described as shocking. loans to people with no income was not that unusual and the motivations of the people writing the loans was .... nothing to do with what it should have been with. The ability of the borrower to repay the loan ... even service the loan.

 

Maybe I took it to extremes by usung an anology so harsh that they lent money to those who are down on their luck and were homeless and living on the street, however with 3 million home loans in TOTAL default .... not paying any interest ... and 10 million likely with negative equity in their homes in the USA right now ..... I am not sure any description no matter how harsh can encompass what actually went on.

 

 

Nothing is out of bounds. They preyed on the less fortunate and those less educated and those less able to protect themselves from loan sharks and that means the poor blacks and hispanics represented ... or should I say over represented in this sad bunch who have had their financial futures ruined. It was nto a comment about the actual homeless or the sad people causght up in the mess ... it was the total opposite ...

 

I would send all of the people who arranged this misery served out to 10 million US households around 30 million people and if you read the post in question ... I would sent the lot of them to Jail.

 

SO no ....

 

QUOTE
Your kidding aren't you?

 

No I am not ....

 

Send all the mortgage brokers who sold this stuff to the people who could never afford it ... to jail ... all the investment bankers and the onss that do credit ratings on the paper.

 

How the hell does a credit ratings agency have 200 issues fail ... fail in 18 months when it has them rated at investment grade.

 

If your not happy ... such is life.

 

 

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Trublu, the truth is really not that far off K1ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s analogy, IÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢m afraid.

 

Last year I told traders on another thread about my friend in Sacramento California.

 

She works at Safeway (a grocery shop) as a night filler and makes about $40,000 per year. Her credit is poor. When her husband left her after 20 years, a broker told her that he would ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“help herÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ keep the house.

 

So he arranged for a $250,000 CASH OUT refinance for her. She paid her ex-husband his share of the equity, and in her despair, never looked at the figures very deeply.

 

So letÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s seeÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¦ she was charged 7 points ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ that is a 7% loan fee upfront. Her interest rate is 12% which makes her interest only payments $2500 per month. Taxes and insurance would be about another $300 per month.

 

You do the mathÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¦her mortgage expense is about $100% of her net income. She never had a prayer of paying this mortgage and keeping this home.

 

How did they qualify her? They gave her credit for having several roommates which of course she didnÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t have.

 

Now, her property has declined 25% in value, and with the prepayment penalty on the loan, the best she can hope for is to just walk away with nothing.

 

I used to be a mortgage broker in the US, and I specialized in sub-prime loans. There is nothing more satisfying than helping someone keep their home, when everyone else has turned them down.

 

BUT it does no favours to anyone if a broker knowingly places a person in a loan which they have no hope of ever maintaining for the long term.

 

The behavior that has gone on the past few years is not helping anyone, and IMHO is down right criminal.

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Danville, small world I was a mortgage loan officer in Citrus Heights I know exactly where you are coming from the adjusted rate mortgages are the ones that are the worst, specially now with stagflation.

Problem was to little regulation of the mortgage companies anyone could become a broker and if you had good phone skills sell a lot of paper

I am reducing all my shareholdings at the moment due to the Fanny may Freddie mac crisis

 

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In reply to: kahuna1 on Wednesday 16/07/08 12:35pm

Kl you will get no flack from me on Freddy and Fannie, my suggestion is that they sell them to the Saudia's or Chinese for $1.00 and let them take over the debt, . Many of my friends think I am absolutely mad suggestion that property prices in Australia could actually fall, not possible they say prices will always go. I now have a full time job going around real estate agents asking them for their famous picture of "The young man waiting for the prices of real estate to fall" I replace the very old man with a baby. Australians are not alone in the property price bubble,Spain Ireland,UK ect all think the same the same way on property values.Just look at some of the recent gems from General Property Trust ,solid results,strong investment portfolio,total assets$12billion,vibrant funds management,overscribed funding facility,gearing only 35.9%,NTA per share $3.86 and positioned for future earnings growth. Well all those true believers in the total assets of $12billion have their answer with a shareprice of $1.35. Who knows what their NTA is maybe only a quarter of what they say at best. Yesterday did mention that if anyone was considering US shares, companies with overseas earnings was the sector to look at. Some of these companies could be looking at very big profit increases in US$ terms. Using Pfizer again as an example an Australian investor can now buy the shares for under A$18.00 going back a couple of years one share would have cost about A$70 (using PFE at US$35 and the exchange rate at the time). Seems a reasonable bet to me with current yield at over 7%. Could be a possible "double whammy" with the share price and US$ up in the future.

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"Maybe I took it to extremes by usung an anology so harsh that they lent money to those who are down on their luck and were homeless and living on the street".....

 

Kahuna1

 

"from lending to any fool in a cardboard box who wanted to buy a home"

 

Yes that is all I took exception to your description of people, in some cases, less intelligent and less fortunate than you or I.

 

 

End of story!

 

 

Trublu

 

 

Danville

 

 

I agree with your closing remarks in your post.

 

 

 

 

 

 

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Wow ....

 

7% fee straight up ... sounds fair to me.

 

 

Got to love these bear market rallies.

 

It's all over that was the bottom .... NOT .... end of the world is over because one bank managed not to get scorched in the USA and despite the third largest EVER fail of a US bank .... the market is up for the week ?

 

Oh please .....

 

Stand back slam your hand in the car door and maybe they might wake up.

Every time it seems things are actually getting worse, Freddie Mac Fannie Mae and so on instead of things going the right way they do the opposite. I stood out last time when we hit 5,050 and it went to 5,950 and this time I want to see them try and repeat that feat.

 

Like normal bottom pickers just looking for a reason to buy and at times like this lets add 4/5/6% to anything .... in fact American express yes it deserved the 7% rally they put on it last night :}

 

Its all very amusing.

 

Anyhow back to the title of the thread ....

 

LITMUS test number three and they passed.

 

In fact my long awaited and suffering view the US has a real and very large inflation problem is quite clear.

 

Last night CPI expected at 0.7% comes out at 1.1% ...... Year on year inflation is now 5%.

 

In short they ran out of seasonal adjustments and they had to show the full rise in CPI at least for fuel.

 

YEAR ON YEAR inflation is now 5% ....

 

US fed funds rate is 2%

 

PPI out the previous day showed 9.2% INFLATION.

 

Certainly a reason to rally banks when the CPI hits a 25 year high.

 

What a load of total rubbish. Still they want to buy one cant argue with a 7% rally in a company with no news .....

 

Make no mistake .... NONE ... well not really but read on !!!

 

My often annoying view on inflation ... the US has run out of time. Year on year inflation is 5% as reported right now. I believe oil at US$135- its actually 6.5% and they have to reverse some of those very strange seasonal adjustments the next 3 months .......

 

So if oil just sits here and does not a thing .... the CPI rate goes up as they actually adjust the price being paid for petrol by the consumers .... up from the current US$3.30 according to the CPI to the actual rate being paid of $4.10. Also these strange adjustments to apparel and food and transportation when the actual prices being paid went up but were turned into negatives via a seasonal adjustment .... all come back.

 

The Numbers for CPI year on year .... from July - Sept the three months last year in total had a mere 0.3% for the three months added so inflation was not even there ... this year well since they fudged the numbers so hard for Feb/Mar/Apr/May ... there is nearly 2.5% if they were honest of seasonal adjustments to repay.

 

Since they ain't .... minimum .... 1.5% added vs the 0.3% reported last year ... so we have my magic 6.2% CPI ....

 

See not totally mad.

 

In light of this .... SHOCKING awful numbers .... these are numbers the US market was not operating with the belief that it was somehow immune to inflation ....

 

Lets rally bank stocks ? lets rally bank stocks in one of the largest ever rallies ever seen ?

Has the sub prime issue gone away ? No lets change the rules and cheat !!!

 

Hmmm

 

I doubt the fed acts by itself but not sure what the rest of the world does. I am less than amused with the fact that the US fed funds rate is 2% and now the reported CPI is 5% in other words let me pay you minus 3% for your funds. I am fairly sure the reported CPI will be 6.5% by years end if oil sits at US$135- and in fact over 6% in the next 3 months if they reverse the massive seasonal adjustments which they cheated with earlier this year.

PPI side the adjustments were larger and headline PPI hit 9.2% and I expect its at least 14% PPI. same thing.

 

So I scratch my head about the rally this morning and smile. Commentaries mostly miss the point ... totally !!!

 

Certainly a reason for things to go up , banks that is , PPI much much higher than expected by anyone except someone as strange as myself and so too CPI much higher than expected ..... 1.1% vs 0.7% ... headline hits 5% highest in 25 plus years and they rally banks the very same day ... the hardest in 20 years.

 

Oh really ?

 

thing about oil ... and the adjustments made to both PPI and CPI. The seasonal adjustments for iol made to PPI and un repaid as yet have oil at US$100- at best ... they messed with the numbers that hard .... and CPI .... they made a 50% rise in the retail price disappear totally .... so the CPI is reflecting a US$3.30 a gallon oil about 23% below where its is right now.

 

thats just oil ... they messed with the whole series so far this year ... apparel prices were a classic rise of 6.5% turned into a 1.4% fall ? Oh please.

 

Obviously they want to buy the US market and on the strength of that rally I suspect they keep it going.

 

On the other hand a nutter maybe I am, but when inflation hits 5% and your central banks rate is 2% ..... is it a time to rally the prices of banks ? Of course CPI had nothing to do with the rally .

 

Not suggesting the US fed raises rates willingly to the rest of the world but the fact that they are ripping them off and paying MINUS 3% now instead of the MINUS 2% they were reporting last month and my suspicion that reported CPI will go to 6.5% and they are paying MINUS 4.5% ....

 

Yes thats a reason to buy banks.

 

Obviously not really ..... in fact I wonder that at some stage buyers of US bonds and all forms of securities from overseas and with an IQ over 40 actually just say I would rather put the money under the bed than get a real rate of return of MINUS 3% or MINUS 4.5%.

 

time will tell ....

 

market as per normal ... total nut job from the depths of depression to the total euphoria of its all over. This time however the hoof prints of Paulson messing with things ... yet again all over this move.

 

Madness .... If I had to pick the least likely scenario for financials if I knew the PPI would be reported 0.5% higher than expected a shocking number and CPI 0.4% higher than expected again a shocking numbers .... both were already expecting bad numbers and it was only the very fringe nutters actually going there are bad things going on CPI and PPI and its going to be worse and worse in coming months .....

 

But least likely scenario this week ... US financials to do what they did overnight.

US stock market to be up not down this week.

 

All makes perfect sense to me .... BA is up 22% in a day ? Bank of America ? Suppose it did get crushed but ... really. AMBAC the mono-line bond insurer ... gee its 100% higher than its low a week ago ... then again its a mere $2- and change .

 

Do you really want to know why financials went so hard up yesterday ?

 

The actual news was shocking on PPI and CPI ... not good but nothing like a distracting move to take peoples focus away from a really really bad number ....

 

Paulson is really very good ....

 

QUOTE
An emergency order issued yesterday by the SEC aims to curb the short selling of stocks in the financial services sector, including Fannie Mae and Freddie Mac, as well as 17 other firms. The plan takes effect on Monday July 21 and remains in place for 30 days. However, the SEC is considering whether to extend it to all U.S. traded stocks.

 

http://www.onwallstreet.com/asset/article/...adline.html?pg=

 

I read the headline news and its all a rally inspired by some better than expected number out of some bank in the USA.

 

Not a mention of the worse than expected CPI number.

 

No words about the 5% CPI level .....

 

And NOT A WORD .... behind the real reason why US financials went nuts ... all shorts were told they have one week to get square. No reason to dilly dally ....

 

Yes its all the big bad short sellers causing the problems ... Fannie Mae didn't lend to anyone Freddie Mac the same.

 

Amazing when a stock worth nothing ... doubles in a week ... when the stock has negative equity behind it ... and it doubles.

 

make what you will of this US lead.

 

they want to buy our market and theirs so hard it hurts.

 

I agree yes we have fallen a long way .... however .... the move is zero basically last week or two and have things got better or far worse. the reported outlook and actual outlook ?

 

Sure I have been rabbiting on about CPI being 6/7/8% by year end but I am the fringe to get at least some of it confirmed when not expected .... it snot a reason to buy the markets its the opposite to be more cautious.

 

the fail of the bank over the weekend and now US stocks are higher ? Stuff me ....

 

making it illegal to short sell financial stocks ... oh really ... next it will be a mandate you have to buy 10% of financial stocks for every purchase.

 

In the end it makes no difference. Short term however the news being impartial last two weeks that the largest bond insurers on the US side are in fact broke and seeing this morning US financials are much higher .... when we have the third largest Us bank fail ever thrown in ... larger CPI and PPI rises than expected.

 

All makes Perfecto sense to me !!! Not.

 

Make it illegal to be short and thats what happens .... hahahahha

 

 

People argue its all the fault of the shorters that its gone down . Me I am of the view if you make one side of the market illegal it ends always in tears. If one looks at the fate of some of our financials and collapses here and if not involved did they deserve to go down ? of course they did. short sellers all they did was highlight the problem and did not cause the idiots in some cases to borrow far too much.

 

Solution in America ... lets make it illegal to now be short Fannie Mae or Freddie Mac or 15 other firms because they are under pressure. IN the case of Freddie Mac and Fannie Mae and some of the others ..... THEY ARE BROKE. That is not even up for debate. Their assets are dwarfed by their liabilities and making it illegal to sell a stock for US$10- when its worth zero and its likely real worth is MINUS $100- per share as is the case with some of these now barred to short selling stocks are ....

 

Its all quite funny.

 

So many things are now illegal ...

 

Annoy the Pope and you go to jail .....

 

Short sell a stock thats worth MINUS US$100- ... no its illegal ...

 

Little Johny made it illegal to say anything negative against the government and made the crime of sedition one you got sent to jail for :}

 

Nothing like pain aversion ... shocking PPI and CPI ... lets make it it illegal to be short.

 

My good friend Robert ... in Zimbabwe has made many many things illegal. Sadly eating is one of them, opposition parties another.

 

What the market does with this information and development ? its a big thing to be punished for being short. Removes one side of the equation to some extent. Sadly like when Robert stopped reporting inflation because the index starting at 100 a few years before hit 1,000,000 .... it did not change facts.

 

Who the hell they actually think they are doing this is beyond me. Someone correctly reads the balance sheet of a company as people shooting Freddie did and saying gee its broke and then to not only be slapped in the face but kicked in the crown jewels . No you have to buy your stock back.

 

The STOCK IS BROKE. US govt is mulling over ways to keep it alive.

 

Insulting in the extreme as a professional player on my level to see the govt resort to these tactics.

 

The mono line insurers which insured the SUB prime went broke in every sense of the word 9 months ago yet they are still being traded on the market. How can this be ? well US govt buggering and tinkering has kept something with negative equity floated.

 

Not I believe one of the 17 firms its now illegal to be short .... are these some of them ?

 

QUOTE
In a dramatic emergency order, the SEC said it would immediately move to curb improper short selling in the stocks of struggling mortgage giants Fannie Mae and Freddie Mac, as well as those of 17 financial firms, including Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Morgan Stanley and Merrill Lynch & Co.

 

http://online.wsj.com/article/SB1216142480...p_us_whats_news

 

Hahahhaha ....

 

Well they have given up on the mono-line guys but the threat is out there anyhow ... watch out or we will punish you naughty shorts. Amazing the Sub prime issue is dead and Fannie Mae and Freddie Mac are mainline PRIME loan insurers but they are both broke ... no ifs whats or buts about it .....

 

Found the list ..... 17 stocks late release on them .....

 

WHY DID THE US STOCK MARKET TAKE BA ... Bank of America up 22% ?

 

Its on the list along with 16 others ... its illegal to short sell it.

 

No bloody wonder BA went up 22% .

 

USA's largest retail bank ... bank Of America it was now made illegal to sell it !!

 

Here is the list ...

 

QUOTE
BNP Paribas Securities Corp.  BNPQF or BNPQY 
Bank of America Corporation  BAC 
Barclays PLC  BCS 
Citigroup Inc.  C 
Credit Suisse Group  CS 

Daiwa Securities Group Inc.  DSECY 
Deutsche Bank Group AG  DB 
Allianz SE  AZ 
Goldman, Sachs Group Inc  GS 
Royal Bank ADS  RBS 
HSBC Holdings PLC ADS  HBC and HSI 
J. P. Morgan Chase & Co.  JPM 
Lehman Brothers Holdings Inc.  LEH 
Merrill Lynch & Co., Inc.  MER 
Mizuho Financial Group, Inc.  MFG 
Morgan Stanley  MS 
UBS AG  UBS 
Freddie Mac  FRE 
Fannie Mae  FNM 

 

http://www.sec.gov/news/press/2008/2008-143.htm

 

You have to be shitting me some of the names on the LIST ....

 

JP morgan

 

BA

 

UBS

 

what a load.

 

Short term clearly this was going to happen and explains the explosive rally ... you have 7 days to close out all shorts ... all shorts in all the largest banks ... largest investment banks ... no bloody wonder there was a rally.

 

Still doesn't change the underlying fact

 

Freddie is broke

 

Fannie is broke

 

CPI even the lax reporting via the US govt hit another record high .... 5%

 

PPI at a mere 9.2% .... again worse than expected.

 

If you cant get the market to go up by usual means ... make it illegal to sell ... and only sell orders accepted between 9.51 and 9.52 allowed on any day.

 

I thought it was unusual the CPI and PPI and buggering of the statistics but this one is up there with it. Making it illegal to short sell ? USA unlike Australia lets the short selling of stocks go on .... people have the same risk of a stock going up as it going down and only fools blame the demise of a stock on short sellers.

 

Always when something bad happens they blame the most likely person around. ABC recently blamed short sellers for its problems. Could it be the fact they had too much borrowings and the credit market implosion and widening of credit spreads and cost of funding that had just a little to do with it ?

 

This move via the US is somewhat childish and yes its caused a one day rally maybe a 2 day rally. Shorts now not able easily to go short and stunning the names on the list ... go and read it ... never head of half of them ... JP Morgan ... who are they Citi group ....

 

Its actually that bad ... when the govt needs to try and make it illegal to short sell them.

 

What is next ? Every time you fill up your SUV at a US filling station you have to buy a bank share ?

 

Stuff me.

 

Every time things dont work out they change the playing field. OH inflation has now gone from 2% to 5% ..... so what has the USA done its lowered interest rates from 5.25% to 2%.

 

All makes perfect sense to me.

 

Not sure where they take thing short term with this latest nifty move by Paulson the snake oil salesman ..... Bet that Goldman's was not short any of those stocks on the special list of 17 .... and what a stunning list it is .... Fannie and Freddie are in trouble .... but lets make it illegal to sell our largest financial institutions .... stuff the small ones ... cant touch these investment banks either ....

 

Long term.

 

Fannie and Fred RIP.

 

CPI goes to 6% then I suspect near 7% by year end.

PPI has further ... current official 9.2% ... me i am 14% minimum ...

 

Neither good.

 

This classic move on financials distracting from the real game.

 

If your paying me 2% via fed funds and CPI is 5% ... eventually its not good. If CPI then hits 6% or 7% even better.

 

the lie on the statistical side got less last night and last two nights ... sadly changing the rules how the market has operated for 100 years .... more than a little stunning.

 

Is BA worth 22% more than it was yesterday ? Well only for one reason. yes they sold it heavily and maybe too far for now, however as the largest retail bank in the USA the demise of the PRIME bond insurers Freddie and Fannie is a very big thing for BA and the only reason the stunning rally ...

 

It is now illegal to short them.

 

Never works .... you want to stuff with the market Mr Paulson ... when you first embarked with your Chum Berananke in 2007 I commented on the stupidity and terror I felt when they lowered rates despite the CPI going form 2% to 4% they lowered rates .....

 

Want to change the rules again ... fine ....

 

No short selling. Does this somehow change the fact I believe the Prime bond insurers are worth MINUS US$100- ? No ... that the Sub prime ones are still being allowed to trade is a joke. Even our own ASIC would have suspended them long ago and APRA ... even with its shocking record on HIH can see if you have 300 billion of bonds in default at the two do and a mere 15 billion in assets .... it likely the net number even being nice is negative and hence they are broke.

 

Sadly US has a problem with the truth and reality at times like this. Like a bully its got a tendency to lash out and blame others and sometimes quite prone to violence.

 

On the fiscal side ... government spending its all out of bullets.

 

Monetary side ... even that fool Berananke cannot lower rates now the US inflation rate s has gone from 2% to 3/4/5 % and I am sure it hits 6% within 3 months.

 

So whats left ?

 

Didn't think of this one ... lets make it illegal to short sell !!!

 

How about another dummies rally like last time. Freddie is not worth minus US$100- it worth lots .....

 

 

Got to run .... I now dictate any and all views not positive to the US economy and in US interests be allowed to be published and anyone in breach of these rules will be sent for a nice visit to Cuba.

 

Its so amusing standing back and watching the school bully try and fight his way out of quicksand and the harder he struggles the more he is doomed.

 

take care

 

 

 

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