The Credit Crisis Financial Stocks Short Journal

Quote from Daal:

Decided that I will have to sit this gross preferred stock idea out. Non-US citizens need to pay 30% in withholding tax on dividends, so a third of the yield is out hurting R/R. I also think gross is understimating the odds the big troubled banks will be nationalized and I dont think the preferred will get much(FNM FRE and WM preferred all got wacked)

At this point it seems safer to stick with the senior debt. C got $2T of liabilites, hard to see the US government seizing all that property and wiping it out and if they do my shorts should profit a lot

Also PGF(financial preferred etf) is in a strong downtrend, so the market is trying to say something
More...

The market is trying to say sell Goldman Sachs. :)
 
m22au,
Summers said in an interview friday that part of the stock market disapointment had to do with too much optimism by financial stocks investors, Timothy G was also trash talking banks. So it seems they will be a little harsher on their terms
 
Quote from Daal:

.
http://www.princeton.edu/svensson/und/522/Readings/Bernanke.pdf
Some bernankes points
-BOJ japan print its way to prosperity
says Bernanke's plan is to have all govt's print money and equalize super debt globe wide,makes most paper next to worthless,i think when the ruble was worthless ,russia tanked and stayed their for many years,does the same thing happen if all govt's print money to magically make debt disappear,bernanks thinking outside the box here,any economists on this board want to explain
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Daal,

Thanks for bringing that interview to my attention.

Although I believe that Obama / Timmy G and Summers will be less friendly to financial services companies than Bush / Paulson, I still think they will be generous, particularly when dealing with the bigger banks (C, BAC, WFC, USB, GS, MS, JPM).

For example, suppose C and BAC fail the "stress test" that Timmy G has proposed. I find it hard to believe that (1) C and BAC would be 'allowed' to fail the stress test and (2) be shut down as a result of failing the stress test.

For smaller banks, in particular RF, FITB, MI, HBAN, I think it is possible that these banks are shut down / nationalised, however I don't think this will happen to C and BAC.


Quote from Daal:

m22au,
Summers said in an interview friday that part of the stock market disapointment had to do with too much optimism by financial stocks investors, Timothy G was also trash talking banks. So it seems they will be a little harsher on their terms
More...
 
Quote from ammo:

Quote from Daal:

.
http://www.princeton.edu/svensson/und/522/Readings/Bernanke.pdf
Some bernankes points
-BOJ japan print its way to prosperity
says Bernanke's plan is to have all govt's print money and equalize super debt globe wide,makes most paper next to worthless,i think when the ruble was worthless ,russia tanked and stayed their for many years,does the same thing happen if all govt's print money to magically make debt disappear,bernanks thinking outside the box here,any economists on this board want to explain
More...

Bernanke is printing all that money to offset a fall in velocity of money. This should lead to a great deal of inflation in late 2010 or 2011
http://macrospeculations.blogspot.com/2009/01/ben-bernanke-is-lunatic-paranoid-money.html
More...
 
wow, greenspan is backing bank nationalization, xlf might go to to a new 50% decline
http://www.ft.com/home/us

He is also saying more tarp money is needed and the senior debt of banks needs to be protected, he must be my portfolio manager as I'm long senior debt and short the stocks. Its interesting that he works for pimco who is heavly long preferred and with nationalization they get wiped out, I bet Gross is not too happy with this opinion

Basically most economists and policymarkets not in government are calling for nationalization, should be a matter of time now
 
Nationalisation is increasingly likely for COF, AXP, DFS, HIG, LNC, MET, STi, FITB, RF, KEY, HBAN, MI, ZION, SNV and CMA ..... but I would be surprised if C and BAC were formally nationalised.

Having said that, given the amount of preferred stock the government has pumped into those two companies, the stocks could gradually trade towards zero, in a similar vain to FRE and FNM.

Quote from Daal:

wow, greenspan is backing bank nationalization, xlf might go to to a new 50% decline
http://www.ft.com/home/us

He is also saying more tarp money is needed and the senior debt of banks needs to be protected, he must be my portfolio manager as I'm long senior debt and short the stocks. Its interesting that he works for pimco who is heavly long preferred and with nationalization they get wiped out, I bet Gross is not too happy with this opinion

Basically most economists and policymarkets not in government are calling for nationalization, should be a matter of time now
More...
 
Quote from Daal:

Bernanke is printing all that money to offset a fall in velocity of money. This should lead to a great deal of inflation in late 2010 or 2011
http://macrospeculations.blogspot.com/2009/01/ben-bernanke-is-lunatic-paranoid-money.html
More...

Velocity of money is defined simply as the rate at which money changes hands. If velocity is high, money is changing hands quickly, and a relatively small money supply can fund a relatively large amount of purchases. On the other hand, if velocity is low, then money is changing hands slowly, and it takes a much larger money supply to fund the same number of purchases.

As you might expect, the velocity of money is not constant. Instead, velocity changes as consumers' preferences change. It also changes as the value of money and the price level change. If the value of money is low, then the price level is high, and a larger number of bills must be used to fund purchases. Given a constant money supply, the velocity of money must increase to fund all of these purchases. Similarly, when the money supply shifts due to Fed policy, velocity can change. This change makes the value of money and the price level remain constant.
 
m22au,
The reason that I think they will nationalize(specially the big banks) is because consensus is a very persuasive thing for most people. Alan Greenspan is a chicago school type economist, Bernanke is as well and probably agrees with with him 80%+ of the time, so if greenspan is saying that, bernake is in all likelyhood already there. Yesterday he gave BS reasons and mostly said the administration wants banks in private hands.

Remember when fnm and fre had rumors of inadequate capital, bernanke and paulson denied and denied and sometime after they took them over, the consensus of people and the stock market was very strong for them to ignore. At this point all it takes if for the consensus to get to Obama as he seems to control Geithner a good deal, as opposed to Paulson who was running the show and Bush just accepted his decisions. More and more Obama will hear natz from everywhere, that should persuade him

We as traders tend ignore consensus due our contrarian nature but I believe for most people it works

Its hard to see an end to this uptrend on natz consensus and financial stocks massacre
 
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