Friday, August 29, 2008

Repo Man......

He will be busy for years to come..... No matter how "strong" the GDP numbers are ... :-)

Immerhin einige haben auf Jahre hinaus einen mehr als sicheren Job...... Und das unabhängig davon wie "stark" die Daten aus den USA hereinkommen.... Siehe auch Sie wollen es immer noch glauben FT Deutschland

Have a nice weekend

Allen ein schönes Wochenende

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Wednesday, August 27, 2008

At Least This Intervention Is Obvious..... :-)

Unlike many others hidden & covert interventions / bailouts ( see end of the post ) that are going on right now...... But as long as they can avoid or postpone Stoning & Riots .... :-)

Immerhin kennzeichnen die Pakistanis Ihren Markteingriff überdeutlich...... Was man bei den ganzen offenen und versteckten Bailouts ( siehe Ende des Postings ) an den westlichen Märkten momentan ja nicht gerade behaupten kann..... Immerhin werden so wohl vorerst weitere Steinigungen in Karachi verhindert bzw aufgeschoben.. :-)

Pakistan Stocks Snap 6-Day Slump as Exchange Sets Floor Prices Bloomberg
Aug. 28 (Bloomberg) -- Pakistan's benchmark index rose for the first time in seven days after the exchange set a floor for stock prices to halt a plunge that has wiped out $36.9 billion of market value since April.

The Karachi Stock Exchange 100 index rose 55.85, or 0.6 percent, to 9,200.78 at 10:18 a.m. local time, snapping a six- day, 16 percent slump.

Securities can trade within the 5 percent daily limits ``but not below the floor-price level'' of yesterday's close, the exchange said on its Web site,without giving details.

The exchange is working to restore confidence after President Pervez Musharraf quit on Aug. 18 to avoid impeachment, and ruling alliance members nominated rivals for the presidency. Investors stoned the exchange last month after it removed a 1 percent daily limit on price declines. Today's decision follows a collapse in the index to the lowest in 26 months.

``This could cause liquidity to dry up because who wants to buy if they can only pay a higher price?'' said Daphne Roth, Singapore-based head of equity research in Asia at ABN Amro Private Bank, with about $30 billion of Asian assets. ``Risk appetite is low and investors are avoiding markets where there is political instability.''

Pakistani Riots over Stock Exchange from the beginning of August

Dank an Zeitenwende

Slashed Spending
Foreign investors slashed their spending on Pakistani stocks to $62.2 million in the 11 months ended May 31, from $1.76 billion a year earlier, according to data compiled by the central bank.

``With these draconian measures to support the market, there's a real question whether you can get out,'' said Mark Tan, director at UOB Asset Management Ltd., which oversees about $3 billion in Asian equities but not Pakistan stocks. ``It adds to the uncertainty.''

Sharif quit the coalition on Aug. 25, accusing Zardari of reneging on a pledge to reinstate judges fired by Musharraf. Stocks have plunged on concern the political instability will blunt government efforts to tackle a rising Taliban insurgency, grapple with inflation at its highest in 30 years and revive the faltering economy.

``The market is definitely in a condition where it will need some extraordinary measures,'' said Nasim Beg, who manages the equivalent of $370 million in stocks and bonds as chief executive officer of Arif Habib Investments Ltd. in Karachi.

Value Plunged
Pakistan's stock market value plunged to $38.8 billion on Aug. 26 from the peak of $75.7 billion on April 4.

Police and paramilitary forces ringed the exchange on July 17, a day after hundreds of investors stoned the building and shouted anti-government slogans. The Securities and Exchange Commission of Pakistan, which had imposed a 1 percent daily limit on price declines, was forced to remove the measure as trading volume plummeted. The commission sought to halt a slide that wiped out $30 billion of market value in three months, threatening to undo a 14-fold rally since 2001.

``Freezing the index would not be a good idea,'' said Habib-ur-Rehman, who manages the equivalent of $91.5 million of stocks and bonds at Karachi-based Atlas Asset Management Ltd. ``Direct intervention in market movements would lead to further complications as we have seen in the recent past.''


Speaking of hidden & covert interventions / bailouts ....

Zum Thema der verdeckten Markteingriffe.....

Bloomberg Holders of asset-backed securities can get money 39 percent cheaper at central-bank auctions than through investors. A Spanish mortgage-backed bond rated at the highest credit rating trades with a spread of about 2.8 percentage points to the euro interbank offered rate, or Euribor. The resulting rate of 7.76 percent compares with an average rate of 4.74 percent at yesterday's ECB auction for three-month money.

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Tuesday, August 26, 2008

Not Only Homeowners Are Having Refinancing Problems.......

It is really no wonder that investors are demanding a much higher risk premium for bank debt.... It will be interesting to see how the central bank balance sheets will look like in 2009/2010....

Wenig verwunderlich das die Investoren zukünftig eine ansprechende Risikoverzinsung verlangen..... Bin gespannt wie die Bilanzen der Zentralbanken im Jahre 2009/2010 aussehen werden.....

New Credit Hurdle Looms for Banks WSJ
U.S. and European banks, already burdened by losses and concerns about their financial health, face a new challenge: paying off hundreds of billions of dollars of debt coming due.

At issue are so-called floating-rate notes -- securities used heavily by banks in 2006 to borrow money. A big chunk of those notes, which typically mature in two years, will come due over the next year or so, at a time when banks are struggling to raise fresh funds. That's forcing banks to sell assets, compete heavily for deposits and issue expensive new debt.

The crunch will begin next month, when some $95 billion in floating-rate notes mature. J.P. Morgan Chase & Co. analyst Alex Roever estimates that financial institutions will have to pay off at least $787 billion in floating-rate notes and other medium-term obligations before the end of 2009. That's about 43% more than they had to redeem in the previous 16 months.
The problem highlights how the pain of the credit crunch, now entering its second year, won't end soon for banks or the broader economy. The Federal Deposit Insurance Corp. said on Tuesday that its list of "problem" banks at risk of failure had grown to 117 at the end of June, up from 90 at the end of March. FDIC Chairman Sheila Bair said her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures. She said the borrowing could be needed to handle short-term cash-flow pressure brought on by reimbursements to depositors after bank failures.

The rates they'll have to pay if they want to issue new debt will be much higher than they were back in 2006. In July 2007, the interest rates on banks' floating-rate notes were only about 0.02 percentage point above the London interbank offered rate, or Libor, a benchmark meant to reflect the rates at which banks lend to one another. Today, that "spread" is at least two full percentage points for some banks.

via Bloomberg U.S. Says Banks on `Problem List' Rose 30% in Quarter

The U.S. Federal Deposit Insurance Corp. said its ``problem list'' of banks increased [to] 117 ``problem'' banks as of June 30, up from 90 in the first quarter and the highest since mid 2003 ... FDIC-insured lenders reported net income of $4.96 billion, down from $36.8 billion in the ame quarter a year ago.

> It seems to me that even the spread of 200 basispoints for lots of banks is not quite "rich"...... Especially when you add the lousy quality of their balance sheets..... Just take a look the another main sector besides residential is showing some kind of "stress"...... Hat Tip EconompicData

> Wenn man sich diese Meldung ansieht können einige Banken noch froh sein das die Spreads nur 200 Basispunkte betragen.... Ganz zu schweigen von der ansonsten oft sehr dürftigen Bilanzqualität...... Man muß sich nur einen zweiten Eckpfeiler neben dem privaten Immobiliensektor ansehen um zu erahnen das die Luft "dünner" wird..... Dank an EconompicData

As many banks compete for funds to pay off their borrowings, or sell assets to raise cash, their actions could exacerbate strains in financial markets. Banks that turn to shorter-term loans will have to renew their borrowings more frequently, increasing the risk that they won't be able to get money when they need it.

via Bloomberg Merrill, Wachovia Hit With Record Refinancing Bill

The increase in yields may cost them as much as $23 billion more in annual interest versus a year ago based on Merrill Lynch index data.

Standard & Poor's said last week that it had a ``negative'' outlook on almost half of the 50 highest-rated financial institutions in the U.S. as of June 30, the highest proportion in 15 years.

The difficulties with the floating-rate loans can be traced to the onset of the credit crunch last year. At the time, bank-affiliated funds known as structured investment vehicles, or SIVs, were among the first to suffer. Those funds had been buyers of the banks' floating-rate notes. But when SIVs were unable to find investors for their own short-term debt, the SIV market largely collapsed, taking a big chunk out of demand for new bank floating-rate notes.

The crunch comes as problems in the markets on which banks rely to borrow money are showing no sign of abating. In one gauge of jitters about banks' financial health, the three-month dollar Libor remains well above expected central-bank target rates for the same period.

Even at the higher interest rates, banks are having a hard time getting cash. The securitization markets that had allowed banks to repackage loans and sell them to investors remain all but shut. Banks today rarely make loans to one another for periods of more than a week, and even some so-called "repo" loans -- in which the borrower puts up securities as collateral -- are becoming more expensive.

At the same time, the pressures on limited resources of banks and investment banks are growing. Companies have been actively tapping bank credit lines set up before the credit crisis began, forcing banks to increase their lending at a time when they're trying to reduce risk. A number of big financial firms, including Citigroup Inc., Merrill Lynch, UBS AG, Morgan Stanley, J.P. Morgan, and Wachovia, have agreed to buy back some $42 billion of so-called auction-rate securities amid allegations that they misinformed retail investors about the securities' risks.

Central Banks' Role
All the strains have made financial institutions increasingly dependent on central banks in the U.S., the U.K. and Europe for loans to make ends meet. Many banks have been packaging mortgages into securities to use as collateral for financing from the European Central Bank and the U.S. Federal Reserve. Questions are cropping up about how long central bankers should prop up financial markets, and whether banks in Europe are taking undue advantage of the central bank's lending facilities.

On this topic..... Buy Freddie Paper With Fed Leverage via Dealbraker Hat Tip FT Alphaville

We don't know who bought the Freddie notes today. But buyers of Freddie notes who have access to borrowing from the Federal Reserve would have found the ecision to bid relatively easy. That's because the ability to exchange the Freddie debt for Fed cash means banks can buy Freddie debt with a huge amount of leverage, dramatically increasing the return on their capital.

Here's how it works. A bank that bought the six month notes from Freddie this morning could also bid to borrow from the Fed's Term Facility, which held an $75 billion auction today. As collateral for the borrowing, the bank could offer the newly purchased Freddie notes, for which the Fed would give them credit for 97% of their market value. Recently, the TAF pricing topped out at 2.35 percent for 28-day borrowing. So a bank buying $100 million of Freddie paper yielding 2.858% could flip it to the Fed, borrowing $97 million at around 2.4% (assuming the pricing will be slightly higher this time around).

At the end of the day, a credit desk could buy $100 million of Freddie debt for just $3 million down. On that $3 million, the desk would receive a 17.7% annualized return, or 8.8% over six months, for paper that is thisclose to being explicitly backed by the Treasury Department. Not a bad deal at all.

via Real Time Economics

But there is growing concern banks have become over-reliant on ECB funding, or may be abusing the situation. The ECB says it is monitoring developments and will, if necessary, adjust funding rules. Some financial institutions may have started to treat the ECB’s financing window as a substitute for a well-functioning structured finance market that has been largely shut since last August.

The share of asset-backed securities — or notes backed by repayments on debt such as mortgages or credit card loans — in the total collateral held with the national central banks in the 15-nation euro zone has risen to around 20%, from around 4% in 2004. At the same time, the share of government bonds has fallen sharply.

> Here the Fed´s balance sheet..... Hardly AAA.....

> Hier das grausige Bild der Fed Bilanzkomposition..........Sieht mir nicht mehr nach AAA aus.....

Mish has also something to say and is offering this must see chart Factors Adding to Reserves and Off Balance Sheet Securities Lending Program via Cumberland Advisors. Scary.....

Mish trifft mit seiner Aussage den Nagel mal wieder auf den Kopf und liefert gleichzeitig einen Blick auf die detaillierte Ansicht der Fed Bilanz. Nicht verpassen! Factors Adding to Reserves and Off Balance Sheet Securities Lending Program via Cumberland Advisors. Fuchteinflösend.....

"A the current pace, the Fed runs out of treasuries about a year from now. Things are about to get very interesting."

via Telepgraph Bank borrowing from ECB is out of control

One ECB source told The Daily Telegraph that over-reliance on the ECB funds has become an increasingly bitter issue at the bank because the policy amounts to a covert bail-out of lenders in southern Europe.

"Nobody dares pinpoint the country involved because as soon as we do it will cause a market reaction and lead to a meltdown for the banks," said the source.

This "soft bail-out" is largely underwritten by German and North European taxpayers, though it is occurring in a surreptitious way. It has become a neuralgic issue for the increasingly tense politics of EMU.

The latest data from the Bank of Spain shows that the country's banks have increased their ECB borrowing to a record €49.6bn (£39bn). A number have been issuing mortgage securities for the sole purpose of drawing funds from Frankfurt.

Got gold......?

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Monday, August 25, 2008

The Daily Lehman Takeover Rumor....... :-)

Brilliant! The only way to withstand the daily nonsense...... This is at least as credible as all the other stuff that is making waves on a daily basis on bubblevision via Wall Street Finest.... Enjoy!UPDATE: speaking of rumors/nonsense...Lehman Said to Weigh Forming New Company to Buy Mortgage Assets ..Makes you wonder who will finance this vehicle....... Wouldn´t be the first time that they are getting lets call it very "creative"to unload toxic assets ( see Lehman Needs to Come Clean About R3) ......
Genial! Anders ist der tägliche Wahnsinn auch kaum noch zu ertragen..... Leider unterscheiden sich einige Passagen in der Qualität kaum von dem ganzen Schrott der noch immer tagtäglich von Experten und den Medien verbreitet wird...... Hier wird immerhin ausdrücklich auf den Humorgehalt hingewiesen.... Habe aber bei manchen Statement von Bernanke, Paulson, Analysten und Volkswirten noch mehr gelacht..... :-) UPDATE: passend zu dem Hinweis auf den tagtäglichen Wahnsinn Lehman Said to Weigh Forming New Company to Buy Mortgage Assets . Ich glaube zu wissen wer diese Transaktion finanzieren wird.......Wäre ja nicht das erste Mal das Lehman zu mehr als fragwürdigen Methoden greift um ( auf den ersten Blick ....) die Bilanz zu bereinigen ( siehe Lehman Needs to Come Clean About R3 )
Lehman, the Tooth Fairy and the Revenge of the Short-Sellers WSJ Deal Journal
To review: KDB is out. Barclays is looking for an asset-manager, not a whole investment bank. J.P. Morgan Chase is digesting Bear Stearns. It seems the potential terrestrial bidders are bowing out. Is it time to go extraterrestrial? How about the Tooth Fairy?

Well, a satiric email among fund managers suggests just that. The email (reproduced below) actually takes a swipe at many of the prominent names and storylines from the credit crunch

Below, the Tooth Fairy email in its entirety.

Breaking News: Lehman To Be Acquired by Tooth Fairy

The market responded with enthusiasm to reports that the Tooth Fairy has agreed to acquire Lehman. The purchase price has not yet been determined and will be set by Dick Fuld wishing upon a star, clicking his heels three times, and being ransported back to that magical place where Lehman still sells for over $70 per share.

In related news, Lehman has agreed to sell all of its level III capital, including CDOs, ABSs, pet rocks, baseball cards, slightly used condoms, and credit default swaps written by MBIA and Ambac. Lehman’s level III capital will be acquired for 150% of its face value by Tinkerbell, who will carry it off to Neverland to be fed to a crocodile.
Lehman is financing 90% of the acquisition at an interest rate that has not been announced; Tinkerbell’s up-front payment consists of a handful of pixie dust, three crickets, and a bullfrog. Analyst Dick Bove estimates that the bullfrog could eventually be transformed into three princes and a pumpkin coach. The deal gives Lehman no recourse to any of Tinkerbell’s assets other than the Level III capital. If Tinkerbell defaults, Lehman’s successor entity will stick its hand down the crocodile’s throat and attempt to get it to regurgitate. The firm’s historical value-at-risk analysis shows that sticking your hand down a crocodile’s throat is completely safe.

Treasury Secretary Hank Paulson issued a statement: “I am delighted that SWFs (Sovereign Wealth Fairies) continue to express confidence in the terrific values represented by American financial institutions. As I have been saying since August of 2007, this shows that the crisis is now over.”

Meanwhile, the SEC has announced an investigation of mean, evil, bad short-seller David Einhorn. While out for a beer with a friend, Einhorn reportedly suggested that the Tooth Fairy does not exist and that wishing upon a star is not a wholly reliable price discovery mechanism. Christopher Cox, chairman of the SEC, said
, “Vicious rumors attacking the Tooth Fairy will not be tolerated. Our entire financial system and indeed the American way of life depend on the Tooth Fairy and wishing upon a star. How else could one value level III capital appropriately?” The SEC is reportedly planning to set up re-education camps for short-sellers.

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Thursday, August 21, 2008

Science Fiction On Wall Street.....

"Wall Street Finest" are doing it again..... Click here to see the S&P calculation which would make even the BLS jealous...... Nice to see that the difference between "operating eranings" and "reported earnings" (GAAP) is spiking. In the fourth quater of 2006 operating earnings were $ 21,99 and reported $ 20,24.... The forecast for the fourth quarter of 2009 is $ 29,24 and $ 14,7......So don´t be fooled when they are coming up with an estimated PE close to 12.... Easy to calculate what this would be if they would use the real earnings number...... Blodget would be proud.......

Was uns hier von den sogenannten Experten aufgetischt wird verschlägt sogar mir fast die Sprache..... Schon dumm wenn man anscheinend keine anderen Kaufargumente mehr für den US Markt zusammenschustern kann. Wer herzhaft Lachen möchte dem rate ich here die Kalkulation von S&P anzusehen ( Warnung: bitte vorher den Kaffe aus der Hand nehmen.... ). Besondere Erwähnung muß die sich dramatisch ausweitende Spanne zwischen den sog "operativen" und den "ausgewiesenen" (GAAP) Ergebnissen finden. So war zum Beispiel im 4. Quartal 2006 die Spanne noch zu vernachlässigen ( 21,99$ zu 20,24$). Für die Q4 2009 Prognose ergibt sich ein Wert von 29,24$ zu 14,17$........Laßt Euch also nicht veräppeln wenn demnächst wieder die Schlagzeile dien Runde macht das der US Markt für 2009 ein KGV von 12 ausweist.... Unschwer zu erkennen wie hoch es nach "realen" Berechnungsmethoden sein müßte...... Kein Wunder das die Spinmaster aus der Finanzwelt (rund um den Globus) immer neue Bezeichnungen für die Gewinngröße "erfinden" müssen um dem Rest der Wert vorzugaukeln das die Märkte doch billig sind

Earnings Look Great, to Analysts Anyway Floyd Norris / NYT
Did you know that corporate America is going to post record profits in the final quarter of this year?

Neither did I. But that is the collective wisdom of the people who follow those companies for brokerage firms.

Howard Silverblatt, the market maven at Standard & Poor’s, has that amazing news on his blog today. It seems that the companies in the Standard & Poor’s 500 will post operating earnings of $24.61 per S.&P. unit in the fourth quarter. That would break the quarterly earnings record of $24.06 set in the second quarter of last year.

Since then earnings have been plunging, but the analysts have lots more good news. The financial stocks will return to profitability in the third quarter of this year, the one now nearing an end. And in 2009 the record annual earnings rate of 2006 will be smashed by 23 percent.

Those numbers are based on taking the consensus profit forecasts for each of the 500 companies and putting them together. Analysts are usually optimistic, but as Mr. Silverblatt says, “Let’s get real.”

It should be noted that these are operating earnings, which in practice still means companies can massage the numbers. (That’s not operating, it’s just a write-off of all those profits we never should have taken in years past.) Even so, it is one more indication that optimism runs deep in that crowd, no matter how pessimistic others may be.

> Here is one example of what will happen if you follow Wall Stett Finest without using common sense.....

> Hier kommt eines von vielen Beispielen was zwangsläufig passiert wenn man blindlings den sog. "Experten" folgt und nicht den gesunden Menschenstand benutzt.....

Brokers Trade Lower on Citi Call; Really?? Bespoke

Update via Barry Ritholtz Analysts' Profit Forecasts: Worse Than Ever!

finally the omnipresent Richard Bove ( "the citigroup dividend is safe"......) via FT Alphaville

This is Mr Bove’s forecasting record on Lehman this year: enthusiastic “buy” recommendations between February and April, capitulation in May, before moving to a neutral stance in June.

If the analyst believed it was a buy above $50 six months ago, it must be a screaming buy now the price has fallen 70 per cent.

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Wednesday, August 20, 2008

Quote Of The Day On Inflation, Deflation, Stagflation

The follwing quote from Kevin Depew ( taken from Five Things You Need to Know: Not Your Father's Stagflation ) sums it up. Mish has another good take on this topic M3 Contraction - The Future Is Now

Die nachfolgende Aussage von Kevin Depew aus Five Things You Need to Know: Not Your Father's Stagflation trifft den Nagel auf den Kopf. Wie üblich hat auch Mish etwas zu diesem Thema beizutragen M3 Contraction - The Future Is Now . Wie bereits mehrmals betont stimme ich mit Mish überein das bei richtiger Definitionsauslegung ( siehe Inflation: What the heck is it? ) zukünftig zumindest in einigen westlichen Ländern wohl eher eine Deflationsdebatte zu führen ist.

"Stagflation is simply the transition from credit expansion to credit contraction, leading inevitably to deflation."

Needless to say that the Fed & Co have always the agenda to reverse this trend William Poole : "The Fed Wants To Create Inflation" . All the latest efforts ( lending facilities, low interest rates in the face of sky high consumer prices, rebate checks, etc ) & baliouts we have seen recently are clearly a sign of desperation and fear that they will lose the battle this time ...... Next step probably over the weekend the nationalisation of Phony Mae & Fraudie Mac

Überfllüssig zu erwähnen das die Fed & Co grundsätzlich die Agenda haben ( schließe da ausdrücklich die EZB mit ein ) Inflation extrem zu begünstigen William Poole : "The Fed Wants To Create Inflation" . Die letzten Aktionen ( diverse neue Programme zur Kreditversorgung von Banken und Investmentbanken, niedrige Leitzinsen im Angesicht explodierender Konsumentenpreise, usw. ) sowie diverse Baliouts zeigen immer verzweifelter werdende Versuche den deflationären Trend umzukehren..... Nächste Aktion dürfte die Verstaatlichung von Phony Mae & Fraudie Mac. Würde mich nicht wundern wenn es hier bereits am Montag Neuigkeiten gibt......

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Monday, August 18, 2008

Deutsche Bank Is Doubling Down In Vegas.....

I´m pretty sure that the statement "Problem loans stable" at page 27 from their latest results won´t be repeated in the comming quarters...... Throwing good money after bad money has not often worked. This is especially true when you see the clip further down and watch the latest Las Vegas Statistics..... You really have to work at Wall Street or the financial complex to see light at the end of the tunnel..... I assume that the light is coming from a fast moving train ....

Bin mir ziemlich sicher das die Aussage "Problem loans stable" siehe Seite 27 letztes Quartalsergebnis in den nächten Quartalen sicher nicht mehr wiederholt werden kann..... Schlechtem Geld noch gutes hinterherzuschmeissen ist in den seltensten Fällen die richtige Entscheidung gewesen. Seht Euch den Clip zu dem im Feuer stehenden Projekt an und werft einen Blick auf die letzten Las Vegas Besucherstatistiken und man muß ziemlich "kühn" kalkulieren um hier auch nur ein kleines Licht am Ende des Tunnels zu sehen.... Ich tippe darauf das das Licht eher das eines heranrauschenden Zuges sein wird...... Hier noch ein passender Artikel der FAZ Ausgespielt in Las Vegas. Lesenwert!

DEUTSCHE BANK dug itself into a $10 billion commercial-real-estate hole. So far, the German bank is doing a decent job clambering out. But the tale raises questions about Deutsche's judgment.

The bank's exit from its Manhattan hole is off to a fast start. Just last summer, Deutsche helped real-estate mogul Harry Macklowe buy seven office towers for $7.5 billion. Mr. Macklowe soon ran into trouble. But Deutsche persuaded him to surrender the buildings, avoiding painstaking foreclosure proceedings.

Three of the towers have already been sold, two are under contract and the last two are expected to go soon. True, they're selling for about 25% less than Mr. Macklowe paid, and Deutsche will lose money. But a swift exit at a modest loss is probably the best outcome that could have been achieved.

Las Vegas, though, is another story. Deutsche is foreclosing on the $3.5 billion Cosmopolitan Resort & Casino after developer Ian Bruce Eichner defaulted. Rather than sell the half-finished project into a depressed market, Deutsche will take possession.

> I especially like the somment " The concept that will stand the test of time"..... Impossible to suppress Schadenfreude while watching the clip..... :-)
> Besonders beeindruckend ist in diesem Zusammenhang der Schlußsatz "The concept that will stand the test of time"......... Zwecklos bei Ansicht des Clips nicht in Schadenfreude zu verfallen.... :-)
Deutsche will have to raise its bet with another $1 billion investment in the development, at the same time local operator Boyd Gaming has shelved a $5 billion project on the Strip. That looks like a risky double-down for a bank already exposed to MGM Mirage's cash-strapped $11 billion CityCenter project nearby.
> I´m not sure if they are already on the hook but when even Dubai World is late in raising as much as $3.5 billion for their $11.2 billion CityCenter project in Las Vegas it is not a very good sign.....MGM, Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan . Watch the folling clip and it is no wonder why they are falling behind.....
> Ich bin mir nicht sicher ob die Deutsche Bank hier schon im "Feuer" steht. Wenn aber selbst Dubai als Hauptinvestor momentan Probleme hat Kredite zu bekommen ist dies sicher kein gutes Zeichen..... MGM, Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan . Schaut Euch den Clip an und es ist wenig verwunderlich warum es Finanzierungsprobleme gibt.......
Project CityCenter - Las Vegas Luxury Condos

Even so, Deutsche's biggest hole may not be in Vegas, but in its reputation. It made the sucker's mistake of overlooking history, backing two racy developers with well-chronicled failures. It also was apparently blinded by the market's former momentum. In New York, it expected skyscraper rents to soar by 75%. In Las Vegas, it seems to have overestimated growth prospects and Sin City's resilience to a slowing U.S. economy.

Deutsche might be forgiven for failing to anticipate the full extent of the credit crunch. It has nevertheless revealed two weak cards in its hand: its ability to assess both borrowers and risk.

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Thursday, August 14, 2008

Bank Or REIT..... :-)

I know that the headline is a little bit overstreched but i couldn´t resist.....When you now add Quelle Surprise! Banks Taking Big Losses on Real Estate Disposals via Naked Capitalism ( watch the chart! ) you know that the bottom for banking stocks and housing is nowhere near. .... Unless you are "Easy Al" Greenspan Calls a Housing Bottom (Again) Thanks Mark :-)!

Bin mir sehr wohl bewußt das die Überschrift natürlich übetrieben its. Da der Trend aber aif Sicht anhalten wird würde es mich nicht weiter wundern wenn die größten US Banken demnächst unter den größten Immobilienbesitzern auftauchen werden ( wenn auch ungewollt....) Wenn man jetzt noch dieses Posting von Naked Capitalism Quelle Surprise! Banks Taking Big Losses on Real Estate Disposals in die Betrachtung miteinbezieht ( bitte den Chart beachten ) ist es offensichtlich das der Boden der ja jetzt zum gefühlten zwanzigsten Male von sog. "Experten" ( hier ein extrem tarurigens und schauriges Beispiel Greenspan Calls a Housing Bottom (Again) ) ausgerufen worden ist für US Finanzwerte und den Immobilienmarkt noch lange nicht erreicht ist.

U.S. Foreclosures Increase 55%, Bank Seizures Rise to Record Bloomberg
Bank repossessions almost tripled in July and U.S. foreclosure filings increased 55 percent from a year earlier as falling prices cut homeowner equity, accelerating the housing decline, RealtyTrac Inc. said. ....

Bank seizures rose 184 percent, the most since reporting began in January 2005, the Irvine, California-based seller of foreclosure data said today in a statement

Bank seizures, known as real estate-owned or REO properties, are the ``fastest growing segment of foreclosure activity,'' James Saccacio, chief executive officer of RealtyTrac, said in the statement. The REO properties in the company's database represent about 17 percent of the inventory of existing homes reported in June by the National Association of Realtors, he said.

via FT Alphaville

RealtyTrac now has more than three quarters of a million properties in its active REO database, a number that represents approximately 17 percent of the inventory of existing homes for sale reported in June by the National Association of Realtors.

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Tuesday, August 12, 2008

Chris Martenson´s Crash Course Must See Clip!

Unmasking "creative accounting" on such unimportant subjects like CPI, unemployment, GDP etc via Chris Martenson's Crash Course. Click here to start the video. You will love it. Almost every other episode is as good as the "Fuzzy Numbers" clip. Got gold...... ?

Seit ich mit dem Bloggen im Jahr 2006 angefangen habe hat mich am meisten fasziniert wie es die USA schaffen mit zum Teil wahnwitzigen Kalkulations und Berechnungsmethoden Ihre Statistiken massiv "aufzuhübschen" und damit Ausländern die $ Anlagen schmackhaft zu machen. Betrachtet man wie die Mittelzuflüsse aus dem Ausland entwickelt haben muß man Ihnen ein riesengroßes Kompliment machen. Die PR und Spinversuche stellen die des Irakfeldzuges locker in den Schatten. Auf der anderen Seite muß man schon fragen wie man diese zum Teil halsbrecherischen Methoden die Enron & Co blaß aussehen lassen als Investor nicht durchschauen kann.... Das dabei die eigenen Bürger auf der Strecke bleiben und diese "kreative Buchführungen" furchtbare Auswirkungen haben interessiert die politische Klasse ( parteiübergreifend wohlgemerkt ) die ja bekanntermaßen nur bis zur nächsten Wahl denkt wie üblich nicht sonderlich.

Ich empfehle jedem dringend sich diesen informativen Clip zum Thema kreative Statistik der USA in Sachen Inflation, GDP, Arbeitslosigkeit usw. von Chris Martenson's anzusehen. Bin mir sicher das Ihr danach alle anderen Folgen mit Haut und Haaren verschlingen werdet. In stark abgeschwächter Form findet ähnliches sicher auch bei uns statt. Die Ausmaße die in den USA notwendig sind um dem Rest der Welt vorzugaukeln das der Boden noch nocht rausgefallen ist belegen eindrucksvoll wie desaströs die tatsächliche Lage schon seit Jahren ist. Behaltet die Aussagen vom Clip im Hinterkopf wenn trotz übler Lage demnächst wieder "überraschend" starke US Zahlen kommen. Beispiele wie diese beweisen einmal mehr warum trotz aktueller Schwäche Gold in mein Depot gehört...... :-)

Hat tip to Barry Ritholtz

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Monday, August 11, 2008

Showing Stress.....& The Impotent Fed.

I think it is safe to say that the spreads in the auto & credit card segment will spike much higher in the coming quarters.... And this trend will spread around the globe.....

Ich bin mir ziemlich sicher das die Risikoaufschläge besonders im PKW und Kreditkartenbereich in den nächsten Quartalen noch erheblich steigen werden. Und das betrifft dann nicht nur die USA betreffen...... Passend hierzu aus der FAZ Unternehmensanleihen : Dunkle Wolken über spekulativen Werten

Worry About Stretched Firms,Consumers Hits Debt Markets WSJ
A range of corporate bonds and securities backed by consumer loans and mortgages have sagged in recent weeks to levels last seen in March, when worries about a financial crisis hit a high.

This time there is much less panic, but concern is building about the health of businesses and consumers.

The weakness is most visible in the debt of auto makers, retailers and companies in sectors reliant on consumer spending. Bonds issued by some financial institutions are also strained.

While a large-scale credit meltdown looks unlikely now, rising bond yields will make it harder and more expensive for corporations and individuals to finance their businesses, homes, education and day-to-day expenses.

Investors are demanding higher interest rates on most corporate and asset-backed debt. The average junk bond now yields around 8.1 percentage points more than Treasury securities, or 11.5%. That compares with a yield of 11.1% and spread of 8.6 percentage points on March 17, according to data from Merrill Lynch & Co.

Average spreads on bonds backed by auto loans and credit cards are three percentage points and 2.1 percentage points, respectively, close to their highs this spring. .....

Moody's Investors Service recently surveyed 31 companies that distribute gas to households. Of the group, 18 companies said an increasing number of customers were falling behind on their gas bills this year compared to last year

> No surprise to see that banks are once more procyclical in their lending habbits ( Same is happening in Europe WSJ: Euro Banks Tighten Lending Standards via Calculated Risk) ....... Too bad that there is so far no bill/law that allow Bernanke & Paulson to order banks to lend...... But with all the attempts we have seen you can´t even rule this out for the future ........ :-)

> Schon bemerkenswert wie es Banken immer wieder schaffen Ihre Kreditvergabekriterien immer prozyklisch dem Markt anzupassen anstelle in Zeiten des offensichtlichen Exzesses gegenzusteuern ( gleiches passiert auch in Europa Banken geizen mit Krediten FTD ).... Zu dumm das es bisher noch keine gesetzliche Handhabe für Bernanke und Paulson gibt die Banken zu verpflichten mehr zu vereleihen.... Nach allem was bisher aus den USA gekommen ist kann man aber selbst das zukünftig nicht mehr ganz auschließen..... :-)

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Sunday, August 10, 2008

Hussman On Phony Mae "This makes Long Term Capital Management Look Like A Conservative Strategy"

If you can stand it i suggest to click through the Fannie Mae Q2 Confernce Call Presentation. Sobering stuff with a management that is still highlighting useless stuff like this one.....

Wenn Ihr die Nerven habt empfehle ich einen Blick durch die Slides der Fannie Mae Q2 Telefonkonferenz Präsentation zu werfen. Ein paar ganz üble Charts sowie ein Management das immer noch auf zu vollkommen nutzlosen Aussagen wie den folgenden beharrt.....

Core capital of $47.0 billion at end of 2008 Q2 is above both our statutory minimum capital requirement, a surplus of $14.3 billion, and the OFHEO-directed minimum capital requirement, a surplus of $9.4 billion.

Compare this one with the reality aka Hussman or Kevin Depew

Vergleicht diese Aussage mit der von Hussman oder Kevin Depew

This is another misleading statement. Technically, based on the Office of Federal Housing Enterprise Oversight (OFHEO) requirements, both companies have dequate capital cushions. But that's like jumping out of an airplane without a parachute and arguing on the way down over whether your shoes have the right government mandated soles. Yes, according to OFHEO guidelines, Fannie and Freddie have the right soles. But put in context, those shoes aren't going to be of much use when their feet hit the ground without a parachute

Hussman With regard to Fannie Mae's report, the most interesting figure wasn't the reported $2.3 billion loss, but rather the much larger deterioration in the reported fair value of Fannie's balance sheet. We can observe what's going on by comparing Table 32 of Fannie Mae's Q2 2008 10Q filing with the same table in Fannie Mae's Q1 2008 10Q filing.

As of June 30, 2008, the fair value of Fannie Mae's common equity (that is, the book value available to common shareholders) was -$5.39 billion, compared with a March 31 fair value of -$2.07 billion. What's notable here is that this deterioration (-$3.32 billion) was even larger than the -$2.30 billion loss that Fannie reported to investors, which was itself about four times higher than the loss analysts had estimated.
Note that balance sheet losses are excluded from earnings. Financial stocks tend to be reasonably valued when they trade at tangible book value, but simply put, Fannie Mae has no tangible book value. The common stock is now a call option.

Even if we include the fair value of preferred equity, we find that on a fair value basis, Fannie Mae is operating at a gross leverage multiple of 72.7 (total assets comprised primarily of mortgage loans, divided by shareholder equity). In other words, a slight 1.4% deterioration in the value of Fannie's book of assets will wipe out all of the remaining shareholder equity. This makes Long Term Capital Management look like a conservative strategy.

Fannie Bid to Preserve Capital Is Temporary WSJ
Postponing a problem is very different from solving one. Yet Fannie Mae is going to extraordinary lengths to preserve capital -- even trying to forestall big losses by giving essentially free money to delinquent borrowers.

This is a temporary fix that could leave investors with a bad surprise down the road.

In Friday's second-quarter results, Fannie said it made $127 million in loans that allow delinquent borrowers to get current on their mortgages. That prevents Fannie having to repurchase the loans from mortgage trusts at face value and take an immediate charge based on market prices.

In the second quarter, the average markdown for such repurchased loans was 47% and resulted in an overall charge of $380 million. Without the special loans to delinquent borrowers, Fannie might have been forced to buy back 17,901 loans. That could have meant an additional charge of as much as $1.5 billion, based on the losses Fannie took on the mortgages it did repurchase.

Superficially, that isn't a bad trade. Fannie avoids a big extra charge by issuing just $127 million of new loans. The trouble? The special loans have their own cost. Fannie is already carrying the $127 million on its books at just $4 million, meaning it wrote the loans down to about three cents on the dollar.

In its second-quarter filing, Fannie said it expects such special loans "to continue to reduce the number of delinquent loans that we otherwise would have purchased" throughout 2008.

That may preserve capital. But it is really just postponing a problem festering out of investors' sight.

> More comedy from Hank.....Paulson Interview: No Plans to Insert Money in Fannie and Freddie . I´ll bet that during the coming 6-8 weeks the Taxpayerwill be the only one buying the new equity....

> Hier gibt es weitere Aussagen die in 6-8 Wochen vollkommen von der Wirklichkeit eingeholt werden sein dürften......Paulson Interview: No Plans to Insert Money in Fannie and Freddie .

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Friday, August 08, 2008

Happy Olympics......

With the Olympics beginning in just a few hours it is time to revisit one of the greates spin attempts a year ago. Near the top the mantra was that the the communist party will prop up the markt until the games will begin.... Every time you hear so much desperation to keep the party going it is time to exit or to to short....... Here comes my collection of posting on this topic Nasdaq vs China... Nobody can say that there wasn´t enough evidence that something was a little bit "frothy"......

Da die Spiele in ein paar Stunden offiziell eröffnet werden ist es höchste Zeit einen der verzweifeltens Spinversuche der im letzten Jahr die Runde gemacht erneut der Lächerlichkeit preis zu geben..... Nahe dem Hoch im letzten Jahr macht plötzlich die These die Runde das die chinesiche Regierung den Aktienmarkt bis zum Beginn der Spiele stützen wird.... Immer wenn solch abstruse "Argumente" hervorgeholt werden müssen um die Party am laufen zu halten ist es höchste Zeit auszusteigen bzw. short zu gehen....... Wer Lust hat kann sich meine Kollektion an Nasdaq vs China Postings aus dem Jahr 2007 ansehen.... Wer beim Betrachten dieser Datenlage nicht erkennen wollte bzw konnte das hier etwas nicht ganz "stimmig" ist muß zwangläufig bei einer Bank bzw Broker arbeiten......

Thanks to Bob Gorrell

Shanghai drops to 52-week low before Olympics
HONG KONG (MarketWatch) -- Chinese stocks in Shanghai and Shenzhen slumped Friday, finding little support ahead of the Beijing Olympics opening ceremony later in the day, as concerns about a slowing economy weighed down property developers and steelmakers.

The benchmark Shanghai Composite index, which tracks both the yuan-denominated A shares as well as B shares priced in foreign currency, slumped 4.5% to 2,605.72, its lowest close in the past year. The All Share index in Shenzhen tumbled even more, finishing 5.6% down at 747.34.

At Friday's closing level, the Shanghai Composite, which nearly doubled in 2007, has lost a little more than half its value at the end of last year and is down more than 57% from its 52-week high of 6,092.06.

"You would have expected Shanghai to be getting a treatment, but markets are being left to their own [fate]," said Howard Gorges, vice chairman at South China Brokerages. "There's speculation that Beijing may try and engineer a [Olympics] rally, but next week we may see markets falling quite low, in Shanghai as well."

> And the spin is still alive and kicking...... :-)

> Und wie man sehen kann hat selbst eine Halbierung einige nicht davon abhalten können sich weiter an dem anscheinend letzten Stohhalm zu klammern..... :-)

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Thursday, August 07, 2008

I´ll Bet The BLS Will Miss This One....

I just want to remind you that i´m with Mish on Inflation ( see Inflation: What the heck is it? ). I also want to highlight a world class rant from Aaron Krowne on this topic. The Truth About Inflation .

But when you go with the "official" definition of inflation ( rising prices ) and take the history of BLS calculations or how Tim from The Mess That Greenspan Made has described it "Guantanamo-style torture of the inflation statistics by government economists" into account i doubt that they will adjust for such "complex" things like smaller box sizes .... :-).

Bekanntermaßen sehe ich die Definition von Inflation wie Mish ( siehe Inflation: What the heck is it? ). Darüberhinaus möchte ich Euch diesen wirklich gelungenen Rundumschlag von Aaron Krowne zum Thema ans Herz legen The Truth About Inflation .

Wenn man aber der offiziellen Sprachregelung ( steigende Preise ) folgt und dann die äußerst "kreative" oder wie The Mess That Greenspan Made es ausdrückt "Guantanamo-style torture of the inflation statistics by government economists" in die Betrachtung miteinbezieht habe ich starke Zweifel ob diese Preiserhöhungen "enttarnt" werden...... :-)

Thanks to Wall Street Follies

Smaller Box, Similar Price
WSJ: Many food manufacturers are retooling assembly lines to produce smaller versions of everything from cereal boxes and ice-cream cartons to mayonnaise jars, margarine tubs and cheese packages. By giving consumers less for roughly the same price, food executives hope to keep consumers from moving to cheaper brands.

Consider General Mills Inc.'s Cheerios cereal. When the American Farm Bureau Federation sent members into supermarkets to conduct its second-quarter food-price survey, the 10-ounce box of Cheerios had vanished. So the volunteer shoppers turned to the box nearest in size, 8.9 ounces.

The smaller box cost $2.98 on average, up from $2.86 charged by the stores for the bigger box a year earlier. On a per-ounce basis, the retail price of Cheerios jumped 17% to 33.5 cents in the second quarter from 28.6 cents a year earlier.

General Mills spokesman Tom Forsythe said moves by the Minneapolis company can't alone explain the big retail-price jump. It's possible that supermarkets, which set the retail price, are taking advantage of an opportunity to add some margin of their own.

David Mackay, Kellogg's chief executive officer, said in an interview last week that his company has shrunk about 10% of its U.S. breakfast-cereal boxes by an average of 2.4 ounces. With the company's input costs climbing 9% this year, Mr. Mackay said he doubts grain prices will ever drop back to where they were just a few years ago.

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Tuesday, August 05, 2008

Havn´t Heard The Word Decoupling For A Long Time......

I think it is safe to say that the downturn isn´t solely the result from the government efforts ( raising price for gasoline, hiking reserve requirements & rates, lending restrictions, yuan appreciation etc ) to slow down the economy.... Just one look at the CIMC Chart ( claimes to make 50 percent of all shipping containers ) is enough to see that the slowdown in the US has spread already to Europe and is now hitting Asia/China. It will be interesting to see if the communist party in China will still be able to keep the people "quiet" & "under control" during a longer lasting downturn......

Denke es ist nicht vermessen zu sagen das sich die nachfolgende Übersicht nicht alleine aus den Versuchen der chinesischen Regierung ( höhere Benzinpreise, Erhöhung der Mindestreservesätze und Zinsen, Verschörfung der Kreditbedingungen, Aufwertung des Yuan´s usw ) geschuldet ist.... Ein weiter Blick auf den CIMC Chart ( stellen nach eigenen Angaben 50% aller Schiffahrtscontainer her ) weist ebenfalls darauf hin das die viel zu oft gehörte These der "Abkopplung" einzelner Regionen nichts weiter als Wunschdenken gewesen ist. Der US Abschwung hat Europa bereits voll erfasst und ist gerade dabei Asien und den Rest der Welt mit voller Wucht zu treffen.

Bin wirklich gespannt ob der Kommunitischen Partei gelingt auch während einer länger anhaltenden wirtschaftlichen Schwächephase die Kontrolle im Land zu behalten. Habe nachdem was ich in letzter Zeit in Sachen Umwelt, Korruption, Unabhängigkeit der Justiz, Presse-und Meinungsfreiheit usw gehört habe ensthafte Zweifel....

Booming China Suddenly Worries That a Slowdown Is Taking Hold NYT

A Slowdown in China

Brad Setser has a different view

Brad Setser hat eine andere Sicht der Dinge

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Monday, August 04, 2008

“Subprime Was The Tip Of The Iceberg”.... “Prime Will Be Far Bigger In Its Impact.”

Nothing really new but sometimes it is always good to get an update on the ongoing residential housing bust..... Scary that there are still some bottom callers out there..... I really hope that they have always put their money where their mouth was during their perma-bottom-calls.....

Das nachfolgende Posting liefert nicht wirklich bahnbrechend Neues und soll in erster Linie ein Update in Sachen US Wohnimmobilienmarkt geben. Denke hier werden all diejenigen die schon fast penetrant den Boden ausrufen als Phantasten entlarvt. Wenn man jetzt bedenkt das der Verfall im gewerblichen Sektor gerade erst Fahrt aufnimmt erscheinen einige bullische Kommentare in einem noch fragwürdigerem Licht...... Kein noch so großer Bailout kann die dringend notwendige Bereinigung verhindern.... Bin sogar der Meinung das je länger die Korrektur durch die "Eingriffe" verlängert wird desto größer wird der volkswirtschaftliche Gesamtschaden letztendlich sein. Da aber in der Realität immer irgendwelche Wahlen anstehen muß man wie die aktuellen Beispiele zeigen mit dem Schlimmsten rechnen.....

Housing Lenders Fear Bigger Wave of Loan Defaults NYT
The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building

The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.

Delinquencies on mortgages tend to peak three to five years after loans are made....

Prime and alt-A borrowers typically had a five- or seven-year grace period before payments toward principal were required. By contrast, subprime loans had a two-to-three-year introductory period. That difference partly explains the lag in delinquencies between the two types of loans, said David Watts, an analyst with CreditSights

> You don´t need to be a genius to figure out will happen during the next few years..... The following quotes from Calculated Risk sums it up

> Denke hier braucht man nun wirklich kein Genie zu sein um zuerkennen das die nächsten Jahre brutal werden. Der nachfolgende Kommentar von Calculated Risk dürfte zutreffen.....

I think the second wave of foreclosures will be smaller in numbers, as compared to the largely subprime first wave, but the price of each home will be much higher. And the second wave will impact prices in the mid-to-high end areas, as opposed to the subprime foreclosures impacting prices in the low end areas.

Barry Ritholtz on "perma-bottom-callers"

Wishful thinking is never a substitute for reviewing the actual data;
thoughtful analysis is better than cheerleading

UPDATE: Click trough pages 61 & 62 from the HSBC Earnings Release to get an up to date picture of their US mortgages, consumer lending, credit card and vehicles credit book.... I also want to highlight page 12 & 13. They are showing the credit trends worldwide ( personal & commercial ) ...... Watch Latin America ( mainly related to Mexico ) ......

UPDATE: Passendweise hat gerade HSBC berichtet. In diesem Report findest man auf den Seiten 61 & 62 Daten nette Charts zu der US Kreditqualität quer durch alle Sektoren ( Kreditkarten , PKW Finanzierungen usw ). Darüberhinaus sollte man einen Blick auf die Seiten 12 & 13 werfen. Hier werden die weltweiten Rsikovorsorgen für den privaten und den gewerblichen Sektor aufgeschlüsselt. Hier sticht besonders und für mich etwas überracshend der starke Anstieg in Süd Amerika hervor ( Lt. Telefonkonferenz überwiegend Mexico )...... Die 200% Aufstockung der Risikovorsorge im gewerblichen US Bereich dürfte erst der Anfang sein.....

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