The Credit Crisis Financial Stocks Short Journal

The market might be waking up to the fact that slightly less awful economic numbers dont mean much. I'm buying SEP puts on SPY, also buying puts on MET(life insurance, insolvent in a mark-to-market basis and still with a long portfolio in risk assets)
The bearish positions have grown to became significant, I'm betting a lot of companies will fail or plunge big through puts. This is not too ideal because my portfolio is becaming too one sided, I might buy calls on certain commodities to protect myself in case the global economy makes a comeback in 2010
 
Quote from Daal:

Looks like meredith whitney fears are playing out. Credit card debt is plunging
http://www.marketwatch.com/news/sto...97170-84DD-4CC0-B23B-DEE0730E1BC9}&dist=msr_7

This must be the result of outstanding balances being paid and lines being shut preventing further increases in total debt. This might act as a depressant on consumer spending for years
More...

I'm not getting bearish again until the fed/Geithner are out of bullets. It's a full court press to get these financials higher. And they know if they fail the game is over.

I think we will see a solution for the insurance co's soon as they are holding 1/2 of all corporate bonds. I'm thinking capital requirement changes, rating agency ratings thrown out the window and so on.


Even Whitney and Faber are bullish on banks short term.
 
Quote from Cdntrader:

I'm not getting bearish again until the fed/Geithner are out of bullets. It's a full court press to get these financials higher. And they know if they fail the game is over.

I think we will see a solution for the insurance co's soon as they are holding 1/2 of all corporate bonds. I'm thinking capital requirement changes, rating agency ratings thrown out the window and so on.


Even Whitney and Faber are bullish on banks short term.
More...

I agree with that, but I rather not try to time the market and be patient here

But the thing is, there are losses out there and the accounting tricks cant make them go away, anywhere from $300b to $1000b directly to the TCE of banks.

They can get the bank's books to hide the bad stuff but the market seems to know better, it was the market who realized preferred stock was not capital since it had to be paid back with interest so the long-run probability of the bank going under didnt changed with TARP 1. The market then ignored preferred equity and only looked at TCE.
I believe the same will happen with the lastest accouting tricks, people will look at the Other Comprehensive Income eventually and see whos lying, then the CDS might start to reflect the liars, the stock would then follow. Lets remember that FNM and FRE had big 'capital' in their phony books but the market realized the games that were going on and crushed their multiples(although not by enough)

Same thing with accouting tricks for the insurers
 
Quote from Daal:

I agree with that, but I rather not try to time the market and be patient here

But the thing is, there are losses out there and the accounting tricks cant make them go away, anywhere from $300b to $1000b directly to the TCE of banks.

They can get the bank's books to hide the bad stuff but the market seems to know better, it was the market who realized preferred stock was not capital since it had to be paid back with interest so the long-run probability of the bank going under didnt changed with TARP 1. The market then ignored preferred equity and only looked at TCE.
I believe the same will happen with the lastest accouting tricks, people will look at the Other Comprehensive Income eventually and see whos lying, then the CDS might start to reflect the liars, the stock would then follow. Lets remember that FNM and FRE had big 'capital' in their phony books but the market realized the games that were going on and crushed their multiples(although not by enough)

Same thing with accouting tricks for the insurers
More...


I agree completely but the issue is "timing". As always it's a matter of opinion and its fleshed out in pnl:)
 
I keep thinking whether I'm wrong on goldman sachs because that position is underwater.
They are expected to earn something like $1.2 this Q, this is about $5 in annual earnings. with the stock at $113, this is about 22x earnings, I understand earnings are likely to comeback at some point when good times return but I think the market is hoping that will happen too soon(2nd half), in the meantime you are taking nationalization risk, dillution risk, balance sheet risk, regulatory crackdowns, etc.

This stock looks massively overvalued, I cant believe for a minute that people who levered bubble assets at the top of the market somehow dodged all the problems that other people did, so far they claimed they all they lost was $2.2b, I dont believe these numbers
 
Quote from Daal:

I keep thinking whether I'm wrong on goldman sachs because that position is underwater.
They are expected to earn something like $1.2 this Q, this is about $5 in annual earnings. with the stock at $113, this is about 22x earnings, I understand earnings are likely to comeback at some point when good times return but I think the market is hoping that will happen too soon(2nd half), in the meantime you are taking nationalization risk, dillution risk, balance sheet risk, regulatory crackdowns, etc.

This stock looks massively overvalued, I cant believe for a minute that people who levered bubble assets at the top of the market somehow dodged all the problems that other people did, so far they claimed they all they lost was $2.2b, I dont believe these numbers
More...


looks like you caught a break. GS gonna do share offering. This will be the catch 22 for market. The higher it goes, the more share offerings will hit the market.
 
Quote from Cdntrader:

looks like you caught a break. GS gonna do share offering. This will be the catch 22 for market. The higher it goes, the more share offerings will hit the market.
More...

I actually think GS will gap up monday, $5b offering doesnt seem much dillution and it seems implicit that if they are going after this then the stress test told them they dont need capital, plus the tarp payback should get everyone happy
 
You must log in or register to reply here.
Back
Top