Sucker's rally in the stock market tomorrow

[Jerk]

Be there!

It's going up up up!

edit - oh wait, nevermind, I think tomorrow is when GM and Chrysler announcer their earnings.

Bloodbath.

[JohnnyMack]

We know, we know, the world is gonna end. Oh noes. Whoa is us.

[Jerk]

btw - do you guys have any good home gardening tips?

[Jerk]

We know, we know, the world is gonna end. Oh noes. Whoa is us.


How's that 401k been doing, Johnny?

[olevetonahill]

http://www.youtube.com/watch?v=zh-0UYCUDeE&feature=PlayList&p=24037F09F724000A&index=0&playnext=1

[JohnnyMack]

How's that 401k been doing, Johnny?

I actually finally opened my statement the other day. :D

Off 33%

But since I'm only 33, I imagine it'll see plenty more highs and plenty more lows over the next few decades, so I'll just relax, keep going to work, keep hanging out with my kids and keep drinking good beers. Tonight it's, Ten Commandments by Lost Abbey.

[Jerk]

I actually finally opened my statement the other day. :D

Off 33%

But since I'm only 33, I imagine it'll see plenty more highs and plenty more lows over the next few decades, so I'll just relax, keep going to work, keep hanging out with my kids and keep drinking good beers. Tonight it's, Ten Commandments by Lost Abbey.


Well then, it's a good thing you'll retire long after Obama has left office. You might have a shot.

Have you thanked your kid yet for paying for our stimulus?

[JohnnyMack]

Have you thanked your kid yet for paying for our stimulus?

I can just thank him for not ****ting in the tub during his bath tonight.

[jkjsooner]

Well then, it's a good thing you'll retire long after Obama has left office. You might have a shot.

Have you thanked your kid yet for paying for our stimulus?

You know they've been talking about our kids paying for our excesses for like 20 years (if not a lot longer).

I think we may wake up and find out we ARE the kids who are going to pay...

[olevetonahill]

I can just thank him for not ****ting in the tub during his bath tonight.

Speakin of Kids , when we gonna see a new Pic ???????

[JohnnyMack]

Speakin of Kids , when we gonna see a new Pic ???????



This is a month or so old, but you get the idea:

http://4.bp.blogspot.com/_9W4I3B0QDa4/SSbWUSb-nOI/AAAAAAAAAgg/GWwWHE_2sUI/s1600/DSC_1573.jpg

[olevetonahill]

This is a month or so old, but you get the idea:

http://4.bp.blogspot.com/_9W4I3B0QDa4/SSbWUSb-nOI/AAAAAAAAAgg/GWwWHE_2sUI/s1600/DSC_1573.jpg

Cute Kid

[Frozen Sooner]

Looks like your initial call was right. Good jorb.

[Jerk]

Looks like your initial call was right. Good jorb.

Yeah I should have left it alone.

But it was a guess on my part, anyway.

[Frozen Sooner]

Heh.

I think we're probably going to see a steady decline punctuated by minor rallies for a few months.

Expect financials to take another hit when 1q earnings are announced. I explained a change in accounting rules the FDIC mandated that's sucking up a bunch of earnings. Expect things to look rosier in 2q as reserves are stabilized for the new accounting rules and banks work some "impaired" loans off their books. We may be looking at significant windfalls in 4q.

[OUHOMER]

Heh.

I think we're probably going to see a steady decline punctuated by minor rallies for a few months.

Expect financials to take another hit when 1q earnings are announced. I explained a change in accounting rules the FDIC mandated that's sucking up a bunch of earnings. Expect things to look rosier in 2q as reserves are stabilized for the new accounting rules and banks work some "impaired" loans off their books. We may be looking at significant windfalls in 4q.

I hope your right, I have taken such a hit in my 401k, i am going to the very aggressive side. I think soon it can only go up

[Frozen Sooner]

I think anyone who buys WFC is likely to be sitting pretty once this all shakes out. I haven't looked at their10-k filing, but I'm willing to bet that the biggest hit they took was reserving for bad debt.

[Chuck Bao]

I am pretty much amazed that China's still strong economic growth is mentioned as a factor on Wall Street. They are having their national party conference and their idea of public perception is pretty important to them now. Count on some doubters later. I can't figure out how they can turn on and turn off the spigot for global trade so easily. I can't figure out if there is a new and important risk factor for new foreign investment in China. I can't figure out what they are importing from the rest of the world besides raw materials and commodities. I can't figure out how their strong economy would boost the rest of Asia or the rest of the world.

Regarding US financial institutions, Froze, I ain't so sure it is useful talking about 4Q09 when some of the banks may have been already nationalized. But, it would be good news for taxpayers.

[Chuck Bao]

Yeah, I would still steer clear of investing in financial institutions. I could be wrong. Time will tell.

I could be like that dude who predicted really terrible doom and gloom stuff. His conclusion was that Americans should only spend money on bare essentials and pay off debt. The funny thing is that if everyone followed his advice, then we would really be in a terrible doom and gloom situation.

[Frozen Sooner]

I will be greatly surprised if banks are nationalized in a way similar to previous nationalizations. We may see conservatorships, but true ownership of banks by the federal government...hmmm. The FDIC is really really good at finding market-based solutions.

Just looked up WFC's 10-k and they don't include their financials on edgar. Chuck, any way you can take a peek real quick and tell me what their Net Income was vs. their reserve for bad debt or impaired loans?

[Jerk]

That's very positive, Froz. But I have heard we are going to get some more big waves either this year or next year (I don't know if this is true or not) but there were a lot of ARM loans made in 2005 and that little "teaser" interest rate is about to go bye-bye on millions of them. And commercial real estate may have bubbled, too, and from what I understand it could make the sub-prime collapse look like a picnic if it bursts.

I don't analyze these things; I just drive a truck and listen to the stereo all day and try not to run over sh*t. It's interesting to me.

Also, the .gov sold mostly 7 year T bonds for all of their spending and the only way to pay it back is for the economy to grow significantly between now and when they're due. Can you imagine how much life will change if we can't pay it back?

[Chuck Bao]

I will be greatly surprised if banks are nationalized in a way similar to previous nationalizations. We may see conservatorships, but true ownership of banks by the federal government...hmmm. The FDIC is really really good at finding market-based solutions.

Just looked up WFC's 10-k and they don't include their financials on edgar. Chuck, any way you can take a peek real quick and tell me what their Net Income was vs. their reserve for bad debt or impaired loans?

We will have to agree to disagree on nationalization. You know that I have been arguing this point for some time now based solely on the fact that the private sector wants government guarantees and assets sold at very steep discounts. I just don't think it is prudent for the government to subsidize profits for private groups or bail out shareholders. I sincerely hope you are right and I am wrong. If large private investors do see a light at the end and are willing to invest in very sizeable equity stakes, it would be a major turning point for the market, obviously. Until then, I remain skeptical.

There probably are a few financial institutions that will emerge relatively unscathed. I will look at WFC. I used to be a stock market banking analyst and I have to say that audited financial statements sometimes lack the qualifications we would like to expect. I mean look at what happened at Enron.

[Chuck Bao]

Froze, oh man! I have to take back everything in my previous post.

I did read through some of that massive 10-k filing for Wells Fargo (WFC). I used to be a stock market banking analyst and now I have to admit that I have no clue. I’ll look at it again this weekend.

Anyway, this article from Market Watch is not helping your case. Or, maybe it is. The right buying opportunity will eventually present itself.

http://www.marketwatch.com/news/story/banks-fall-out-bed-citi/story.aspx?guid=%7B0A1A3831%2DA98B%2D40E4%2DAFD0%2 D2F47AE08F3A8%7D&dist=TQP_Mod_mktwN


Wells Fargo and J.P. Morgan fell 16% and 14%, respectively. Long viewed as two of the best-positioned firms in the global financial collapse, the banks saw their stocks fall after Moody's expressed renewed concern about their near-term future.
Moody's on Wednesday said it is reviewing Wells Fargo & Co.'s long-term ratings and may downgrade them, depending on its analysis of the impact that future credit costs could have on Wells' capital ratios.

"The review was prompted by a concern that Wells Fargo's capital ratios could deteriorate in 2009 from their current levels, which are comparatively low, because of the potential need to take high loan loss provisions in 2009," Moody's said in a statement.

[Frozen Sooner]

"The review was prompted by a concern that Wells Fargo's capital ratios could deteriorate in 2009 from their current levels, which are comparatively low, because of the potential need to take high loan loss provisions in 2009," Moody's said in a statement.

This is exactly what I'm talking about. These loan loss provisions aren't reasonable and that'll be reflected as windfall profit in the long term.

[Chuck Bao]

This is exactly what I'm talking about. These loan loss provisions aren't reasonable and that'll be reflected as windfall profit in the long term.

I have to beg to differ again.

I was saying several years ago that Basel II was insane. I now have to eat my words.

I remember more than several years ago that the required capital risk asset ratio gave a substantially reduced risk weighting for mortgages because it was widely seen as very secure. The unintended side consequence was that many commercial banks went very aggressive in pricing mortgages because it was asset and earnings growth generative without requiring a corresponding increase in capital.

But, I get your point. I assume that you are referring to "mark to market" and the resulting over provisioning. Honestly, I do agree that markets always over-react, but we should never discount the market based on a "things will eventually get better" scenario. What if they don't?

[Frozen Sooner]

That's a decent point. I don't have a problem with mark-to-market, by the way. That's just good accounting. What I have a problem with is the change in what is considered an impaired loan and the loss provisioning for impaired loans.

Used to be an impaired loan was one delinquent by 60 days. Now it's a loan delinquent by 1 day-that's CONTRACT due date, by the way, not including grace period. You're required to reserve at 140% on impaired loans. That means banks have to build MASSIVE loan loss reserves. All I'm saying is that once those reserve requirements are met, bank income statements should start looking a lot better.

[Chuck Bao]

That's a decent point. I don't have a problem with mark-to-market, by the way. That's just good accounting. What I have a problem with is the change in what is considered an impaired loan and the loss provisioning for impaired loans.

Used to be an impaired loan was one delinquent by 60 days. Now it's a loan delinquent by 1 day-that's CONTRACT due date, by the way, not including grace period. You're required to reserve at 140% on impaired loans. That means banks have to build MASSIVE loan loss reserves. All I'm saying is that once those reserve requirements are met, bank income statements should start looking a lot better.

Okay, I'm seeing more of your point. Historic aging of receiveables is or should be very clear to stock market investors. If the provisioning requirement is forcing commercial banks to not lend to new loan applicants, then I agree that the provisioning requirement should be changed.

On the other hand, I would not base my valuation on a bank based on a relaxed provisioning requirement. I have always valued banks on a basis of capital plus provisions and then try to assess the quality of assets, not that current provisioning is already a wash with the bad assets. But, Moody's is in a much better position than I am to assess these things and they don't seem to be getting the over-provisioning senario.

So, I'm back to zero, nothing, nada in regard to recommendations, except for "be careful.".

[Jerk]

lJmBPCYt5LY

[Frozen Sooner]

WFC just leaked that their 1Q profits are going to be significantly higher than expected. Triggered a rally led by financials today.

Just sayin'. :D

[Jerk]

Yeah, things are so great that the Treasury delayed the stress test

http://money.cnn.com/2009/04/07/news/economy/bank_stress.reut/index.htm?postversion=2009040712

Speaking of Wells Fargo

http://market-ticker.denninger.net/archives/948-JamJob-Wells-Fargo-And-More.html



So Wells comes out this morning and says they're going to make a "record" profit, claiming an expected 55 cents (.vs. mid 30s expectation)
It must be nice to be able to keep loans on the books at whatever price you feel like, receive billions of taxpayer money including "assistance" in rolling up Wachovia, and then turn out to not need it, right?
That is, if these numbers are accurate.
Wells premarket is ramping from $14.89 at the close yesterday and now trading premarket at $18.10, up over $3 or some 30%.
This leads one inescapably to the following:
Either Wells is lying (obfuscating losses through unrealistic marks, etc) OR
These "bailouts" were no such thing - they were a simple and transparent looting operation by the banks that is now showing up directly in "earnings" (and will shortly show up in the bonuses of executives too!)So which is it folks?
Are the banks really that healthy? Because if they are, you've been robbed to the tune of tens of thousands of dollars per person in this country, and it is long past the time that you act to stop it.
If they aren't, then how is it that these banking executives are not residing in the graybar motel for cooking their books? Again, it is long past the time that you, the citizens of this country, act to stop it.
And while we're at it, perhaps you'd like to tally up the income you're NOT making on savings (CDs, etc) through the much lower rates of interest you're being PAID so that these guys can post "record earnings"? Naw, we don't want to hold The Fed accountable for their monetary policy - a backdoor way of looting the public even further - do we?
PS: AIG's former CEO Greenberg is on CNBC this morning and he actually used the word "LOOTING" and insisted that the government must claw back the payments that were made as a "passthrough" - exactly as I and others have called for.
While I object to the characterization that Hank Greenberg was "blameless" in AIG's morass, it is nonetheless refreshing to hear people like him talking about what we should and indeed must do - that is, claw back the inappropriate and arguably illegal "pass through" payments that in my opinion are nothing more than pure robbery of the taxpayers of this country.


http://market-ticker.denninger.net/plugins/serendipity_event_findmore/img/facebook.png (http://www.facebook.com/share.php?u=http%3A%2F%2Fmarket-ticker.denninger.net%2Farchives%2F948-JamJob-Wells-Fargo-And-More.html&t=JamJob:%20Wells%20Fargo%20And%20More)

[texas bandman]

Well then, it's a good thing you'll retire long after Obama has left office. You might have a shot.

Have you thanked your kid yet for paying for our stimulus?

Actually, the market has historically done better under Democratic administrations.

Damn libs. ;)