When Something Goes Wrong: The Case Of JPMorgan Chase [View article]
Good points Alan.
The broad outlines of the trade have been known for some time, frequently discussed in the FT. Nobody knew the outcome and few were privy to the exact trades. But the trades can be fiendishly complex and in the context of hedging a portfolio, permitted under current legislation, as opposed to hedging a specific asset, its impossible to understand either (1) the trade and the intent or (2) whether it was hedging or prop trading.
I think this was prop trading and allowing banks to hedge portfolios is a loophole so big a Mack truck can pass through it.
Why Do Corporations Hold So Much Cash? [View article]
For his part, Desai argues that there are three main explanations for the excess cash holdings issue:
1. Weak product market demand
2. Regulatory and macroeconomic uncertainty
3. A coordination problem leading managers to be frozen into not spending
______________________...
The Conference Board measure of CEO confidence, which had declined in the second quarter, fell further in the third quarter. The Measure now stands at 42, down from 55 last quarter (a reading of more than 50 points reflects more positive than negative responses).
Executives are most concerned about prospects for growth; finding and hiring the right talent; optimizing costs; innovating; and regulatory burdens. Changes to the tax code will not eliminate the exogenous uncertainties of a burdensome and constantly changing regulatory environment, geo-political risk and slowing global growth.
Money Supply Explosion: It Doesn't Matter [View article]
Without doing the math, we know that GDP is stagnating and it must follow that the spending multiplier must be contracting while the money supply expands which is not uncommon during a balance sheet recession.
Wall Street Breakfast: Must-Know News [View article]
Obama vetoes foreclosure bill. In the first effective veto of his presidency, Obama blocked a bill that would have required state and federal courts to accept the validity of out-of-state document notarizations; the bill would have made it harder to challenge the authenticity of foreclosures and other legal documents. ______________________...
I have mixed feelings about this whole mess but the Community Organizer in Chief's veto of this foreclosure bill was entirely too predictable. Whatever the shortcomings in title transfers, we know money is owed and the people living in the house owe it.
Wall Street Breakfast: Must-Know News [View article]
Whitney warns on state budget crisis. Look for states to suffer a collapse similar to the banking industry implosion of 2008 as crippling deficits come back to haunt them, outspoken analyst Meredith Whitney said Tuesday (video). "The similarities between the states and the banks are extreme to the extent that states have been spending dramatically and are leveraged dramatically," she said. Whitney, famous for calling the financial sector crisis, warned banks aren't out of the woods yet, predicting a sharp drop in housing prices and shrinking trading revenues will decimate Q4 earnings. ______________________...
Rather than correct the structural issues of fiscal imbalances and insolvency, we will proceed in some fashion to "fix" the problem with additional liquidity in the form of new debt which will only "paper over" the underlying problem and kick the can down the road.
Along with reducing the power of unions, we need reductions in services, compensation and retirement benefits. Additionally, the private sector can reduce its footprint by outsourcing routine activities to the private sector who can perform them at a lower cost.
We must recognize we, at every level, are living beyond our means and must embrace difficult decisions and pain as part of the solution.
While not disagreeing with anything said, what I have observed is broad, alternating themes of (1) reflation which is accompanied by strength in commodities and equities and (2) deflation which is accompanied by strength in the dollar and US Treasuries.
Preview from Europe: Fear Trumps Hope as Dow Falls Below 8,000 [View article]
In my mind, it is clearly the global financial crisis that strikes fear and terror into this market. While banking and the real economy are intertwined, yesterdays action was driven by the former.
The comment by Roubini, State Street earnings, a report the BAC would need an additional $80 billion of capital and the international stories all contributed to the massive sell-off.
Credit will not thaw until the global credit crisis is resoved and it is my belief the host of measures already taken will prove insufficient. Sorry for being such a pessimist.
I make a habit of being as respectful as possible on this board and others but this article taxes my restraint.
And while there may be an Obama bounce, though that is not certain as many earnings will be released next week, the structural aspects of this decline are worsening as they surface.
Declining estimates of economic growth, rising foreclosures, collapsing industrial production, growing estimates of what is needed in the stimulus package, rising estimates of banking sector losses and growing unemployment are simply the first things that come to mind.
If we face deflation and the corrective actions are not equal to the task, we are some ways off from the streets of Barcelona where the bulls run.
When Something Goes Wrong: The Case Of JPMorgan Chase [View article]
The broad outlines of the trade have been known for some time, frequently discussed in the FT. Nobody knew the outcome and few were privy to the exact trades. But the trades can be fiendishly complex and in the context of hedging a portfolio, permitted under current legislation, as opposed to hedging a specific asset, its impossible to understand either (1) the trade and the intent or (2) whether it was hedging or prop trading.
I think this was prop trading and allowing banks to hedge portfolios is a loophole so big a Mack truck can pass through it.
Why Do Corporations Hold So Much Cash? [View article]
For his part, Desai argues that there are three main explanations for the excess cash holdings issue:
1. Weak product market demand
2. Regulatory and macroeconomic uncertainty
3. A coordination problem leading managers to be frozen into not spending
______________________...
The Conference Board measure of CEO confidence, which had declined in the second quarter, fell further in the third quarter. The Measure now stands at 42, down from 55 last quarter (a reading of more than 50 points reflects more positive than negative responses).
Executives are most concerned about prospects for growth; finding and hiring the right talent; optimizing costs; innovating; and regulatory burdens. Changes to the tax code will not eliminate the exogenous uncertainties of a burdensome and constantly changing regulatory environment, geo-political risk and slowing global growth.
Money Supply Explosion: It Doesn't Matter [View article]
Wall Street Breakfast: Must-Know News [View article]
______________________...
I have mixed feelings about this whole mess but the Community Organizer in Chief's veto of this foreclosure bill was entirely too predictable. Whatever the shortcomings in title transfers, we know money is owed and the people living in the house owe it.
Wall Street Breakfast: Must-Know News [View article]
______________________...
Rather than correct the structural issues of fiscal imbalances and insolvency, we will proceed in some fashion to "fix" the problem with additional liquidity in the form of new debt which will only "paper over" the underlying problem and kick the can down the road.
Along with reducing the power of unions, we need reductions in services, compensation and retirement benefits. Additionally, the private sector can reduce its footprint by outsourcing routine activities to the private sector who can perform them at a lower cost.
We must recognize we, at every level, are living beyond our means and must embrace difficult decisions and pain as part of the solution.
Key Factors Driving the Market [View article]
These relationships can be see here:
stockcharts.com/charts...
Preview from Europe: Fear Trumps Hope as Dow Falls Below 8,000 [View article]
The comment by Roubini, State Street earnings, a report the BAC would need an additional $80 billion of capital and the international stories all contributed to the massive sell-off.
Credit will not thaw until the global credit crisis is resoved and it is my belief the host of measures already taken will prove insufficient. Sorry for being such a pessimist.
The Bull Run Begins This Week [View article]
And while there may be an Obama bounce, though that is not certain as many earnings will be released next week, the structural aspects of this decline are worsening as they surface.
Declining estimates of economic growth, rising foreclosures, collapsing industrial production, growing estimates of what is needed in the stimulus package, rising estimates of banking sector losses and growing unemployment are simply the first things that come to mind.
If we face deflation and the corrective actions are not equal to the task, we are some ways off from the streets of Barcelona where the bulls run.