The Credit Crisis Financial Stocks Short Journal

I'm going to use this whitney rally to stablish some put positions in financials. I'm relutanct to disclose more specific trades because I find the idea of having ingrate sobs like cutten making money from me trully sickening
Put losses YTD for me have been significant, my fed futures has put me in the black for the year though, going to have to try this again
 
I dont pay for Whitney research so I'm not sure what she is thinking. The stress tests show Goldman will make $0.7b net over the next 18 months, they will have $17.4b in losses in 'trading & counterparty', those are 'earnings estimates' from the goldman management themselves

Yes, its possible that after that they will make a mint as things return to normal, its also possible they will be regulated like hell, its also possible XYZ, the market wont hold the stock at a premium forever in hope XYZ will be good, peoples mood will change, as the SPX fall people will think the worse will come.

Goldman will probably blow estimates tomorrow, yet they need to generate $18.5B in pre-tax net revenue for the next 18 months or they wont even make the $0.7B from the stress test. Whitney thinks a company that is almost losing money will be held at a premium by the market(almost infinite PE ratio) in the 'hope' good stuff will come. I find that hard to believe
 
Meredith Whitney says banks are going to post huge numbers on the back of non-agency mortgage gains. The mother of all mortgage quarters on refis, MSRs writeups(whatever that means) and mods
http://www.cnbc.com/id/15840232?video=1180792150&play=1
http://www.cnbc.com/id/15840232?video=1180810791&play=1

I just bought a decent position on XLF shares as a hedge, will hold through earnings just to protect myself

I might be wrong on GS as she makes a case that rising debt issuance benefits GS to the expense of other IB players but the management already disclosed they expect $17B in counterparty losses, they NEED to blow away earnings in order to make up for those coming losses, we just going to have to see this one. I already took my loss on that one, will stay out of this stock for now
 
I'm not sure what whitney is expecting from Goldman. Total debt underwriting revenues for the quarter were $584M, thats $1 a share pre-tax pre-expenses. Goldman really made their money from Trading and Principal Investments, due gains in FICC(fixed income, currency and commodities) $13.3b in revenue against $895m in their investment bank division. In fact equity underwriting was bigger than debt. The company is a hedge fund speculating in markets, the idea that they will underwrite every debt offering that will come out and the competition wont fight for the market seems dubious at best. In any event, the amounts that they need to do are massive, revenues there are tiny so far
 
So GS is now a hedge fund in the right side of the market raking in lots of gains from FICC but GS themselves arent exactly the oracles of the market
http://www.businessinsider.com/goldman-as-a-stock-broker

As it currently stands with its current valuation all it takes for GS to plunge is for the FICC to have a bad quarter(like 08 Q4) and then people will realize no one has a clue how they make money there and how thats likely to continue. If they start to underwrite every debt offering known to man plus some then they might reach the $15 a share EPS a year that seem to be currently embedded in the share price but so far there is no evidence of that by looking at the current levels of debt underwriting revenues
 
Wow, Mcculey from Pimco just made an article that is all the stuff I have been arguing on why the US is not Japan for the long-run. He even used the same sources
http://www.pimco.com/LeftNav/Featur...y+2009+Global+Central+Bank+Focus+McCulley.htm

This is a big reason on why I like gold in a deflationary enviroment, as the central bank tips off its intentions this should create a floor for gold prices as people buy in antecipation of worries of monetization and devaluation. As the core CPI declines Bernanke will support gold prices as I argued a few months back, although its not a high confidence trade I do hold a resonable exposure to gold and silver
 
Empire State Manufacturing
Prices Paid Index +10.42
Prices Received Index -8.33

Some green shoot, this is the stuff that manufacturing bankruptcies are made of. The amount of firms reporter 'higher' Business conditions actually fell, but the ones that went from 'lower' conditions to 'same' rose significantly, a japanese economy is considered a green shoot. Good thing I bought that XLF
 
I just noticed a good point made by a blogger, those who are betting on a V shapped recovery(like the Fed with their 2010/2011 GDP projections) are essentially making a call on the savings rate. Essentially they think its going back to 0%, that looks highly unlikely

Sure there were strong recoveries lead by investment in the past but they also had a stable and rising consumer spending, this time is the opposite, so investment would have to do a double effort if the savings rate doesnt go back to 0%
 
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