So when do some of the big retailers file, names like JCP, SKS, JWN, or SHLD. My guess is in Feb or March we should see some big names go down. Dirk van Dijk | 01.14.09 - 2:05 pm | #
I agree. Any of you familiar with 'Altman Z Scores'? If so any comments you'd like to share?
The bankruptcies this quarter should be off the charts. Every retailer was just waiting for the 4th quarter sales to contribute to the bottom line before they closed up shop. Too bad they were far below expectations....
There was a pretty decent blog post / opinion piece floating around on the pros/cons of mark-to-market recently? I'm trying to dig up. Thought it was at nakedcapitalism, but couldn't find it there ... any ideas?
"The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy."
TPC: I was saying to my parents at Xmas that we could expect alot of bankruptcies after the holiday season because of this factor. So, no surprise here.
Off-topic, but did you guys all get your Bernie Madoff watches in the mail yet? I've been checking every day, but mine hasn't shown up yet.
wally | 01.14.09 - 2:08 pm | #
I know some SEC folks who had Madoff tatoos before they were popular. You'll never guess where they put them?
Remember seeing them in Grad school, but have not looked at them in real time. Dirk van Dijk | 01.14.09 - 2:09 pm | #
I have run into customers who are now requiring it before they do business with anyone - run Z Scores from their counterparties 'finanacials'... my first thought was GIGO but then my second thought overwhelmed the first... customers are always right and even when they aren't, if you correct them, they cease to be customers...
Gottschalks doesn't matter much nationwide. But it does in Central California and the Central Valley. Going to leave a lot of anchor-store holes in a lot of big malls, including our local one.
Apparently they bought a couple of regional retailers to expand their reach back in the late '90s -- in SoCal and the Pacific Northwest. In retrospect, maybe not such a good idea.
manja_cake writes:
Here's one for my deflationist friends:
"The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy."
manja_cake | 01.14.09 - 2:19 pm | #
"The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy." \t manja_cake | \t \t \t \t01.14.09 - 2:19 pm | # So that whoever gets it will hoard it? Pushing on a string in secret doesn't make it more effective.
It's just the beginning too. Now is a great time to start bringing jobs back to the US because soon, the scarcity of products will create true supply and demand again, healthy prices, living wages, and a prosperous economy for all people.
real estate, banks, now retail, soon usa and the whole world it seems like.
all because of over-indebtedness.
last week i hired a baby-sitter - she owns two investment properties.
this week a handyman came in to fix something - turns out he "only" owns one investment property.
all 3 properties have negative cash flow of course.
but on a brighter note my cousin works for MER, mergers and acquisitions. she got a huge bonus this year, well over a mil.
That's correct, CR Companion is for dopes. This place is interesting, but you're not going to learn anything. It amounts to people yelling fire in the theater because someone burned the popcorn. Wait until the real shit hits the fan. You wonks will be cleaned out and the field will be cleared and leveled.
I essentially thought the TIP plan was a warning to the market earlier in the month. It was eerily reminiscent of when Paulson told us in early Oct that they were prepared to deal with a large bank failure. There are some large BK's in the pipeline. Bank on it.
They're not giving it to me though, they're giving it to zombie banks that have a ton of assets whose worth they're not sure about, but know its much less than they currently value them at. Yeah, they'll be hoarding it.
Due to the unprecedented demand for ATF Form 4473 (Firearm Transaction Record), the Bureau of Alcohol, Tobacco and Firearms is allowing gun dealers to photocopy the form in its entirety until stocks are replenished.
In December 2008, there was a 24% year-over-year increase in firearms purchaser background checks. This is after a 42% year-over-year increase in November 2008, the largest volume in the FBI's NICS (National Instant Criminal Background Check System) history. These background checks are a strong indicator of actual gun sales.
Conjure says, "Some folks say the increase in sales is due to expectations that the Obama administration will make gun purchases more difficult."
Morocco Bama writes:
That's correct, CR Companion is for dopes. This place is interesting, but you're not going to learn anything. It amounts to people yelling fire in the theater because someone burned the popcorn. Wait until the real shit hits the fan. You wonks will be cleaned out and the field will be cleared and leveled.
Interesting that you assume I will be on the field. I always take the high ground. Always.
"Did you know that most European financial institutions were insuring assets through AIG because non-treasury like instruments that are AAA rated can be counted against their tier-1 capital ratio.
AIG going under would have brought down most of the European banks within 72 hours."
That bears repeating multiple times. Euro financial institutions are in at least as bad shape as US major banks. Their book leverages were higher than US banks, and they were using AIG CDS's as replacements for real equity capital. The only thing holding up Euro financials is the Fed's swap lines, IMO.
Conjure, some of it could be attributed to that but I agree, that's not it. I know it wasn't in my case anyway, but then again; I know what time it is.
manja_cake writes: If I gave you a $1,000,000,000 for free, you tell me you could resist the temptation to spend it? manja_cake | 01.14.09 - 2:28 pm | # ----- It depends on the amounts on the other side of the balance sheet, no?
If I knew I had to fork up 1,500,000,000 later in the quarter, why would I want to spend what "little" liquidity I have now?
Don't forget that the European banks are the ones with all that emerging market debt on their books. $3.5 TRILLION in outstanding emerging market debt and oil in the 30's....
Morocco Bama writes:
That's correct, CR Companion is for dopes. This place is interesting, but you're not going to learn anything. It amounts to people yelling fire in the theater because someone burned the popcorn. Wait until the real shit hits the fan. You wonks will be cleaned out and the field will be cleared and leveled.
"What Does Altman Z-Score Mean?
A predictive model created by Edward Altman in the 1960s. This model combines five different financial ratios to determine the likelihood of bankruptcy amongst companies.
Investopedia Says Icon
Investopedia explains Altman Z-Score...
Generally speaking, the lower the score, the higher the odds of bankruptcy. Companies with Z-Scores above 3 are considered to be healthy and, therefore, unlikely to enter bankruptcy. Scores in between 1.8 and 3 lie in a grey area.
This is a relatively accurate model -- real world application of the Z-Score successfully predicted 72% of corporate bankruptcies two years prior to these companies filing for Chapter 7."
citizen Kung Fu Panda writes: \tPOIC said in previous thread: "Did you know that most European financial institutions were insuring assets through AIG because non-treasury like instruments that are AAA rated can be counted against their tier-1 capital ratio.
AIG going under would have brought down most of the European banks within 72 hours." citizen Kung Fu Panda | 01.14.09 - 2:34 pm | # ------ I definitely missed that memo. Did he cite a source or provide a link?
If this situation is the case, why were the public statements coming out of Eurozone so high & mighty regarding the U.S.'s financial situation?
yagij - that AIG/Euro-bank story has been out for a good long while. At lest November but I can't find a link back to it. I remember seeing Yves Smith mention it.
Perhaps the Euro guys just sound high and mighty to us because of those accents?
OCDan said: "...Who here thinks this year will be the bottom?"
I'm reasonably sure it will be. Yes, there's lots of bad news and there's no end in sight, but that's what recessions look like.
As we now know the recession is already a year old, which is pretty old as recessions go, actuarially speaking. The various risk spreads have come down sharply from their respective peaks, indicating that the financial stress is easing. Real income less transfer payments is actually up and monthly job-loss is slowing.
Things certainly aren't going to be good for awhile, but a bottom in the stock market and real GDP in calendar year 2009 seem like good bets.
Jim A.(Unrated) writes: \tTPC: I was saying to my parents at Xmas that we could expect alot of bankruptcies after the holiday season because of this factor. So, no surprise here. Jim A. | 01.14.09 - 2:20 pm | #
Sebastian writes: \t...and monthly job-loss is slowing. Sebastian | 01.14.09 - 2:45 pm | # ----- "Is slowing"? As in currently slowing (Present) or will be slowing (near future)?
What statistics are you referring, and how many press releases about job growth have you been reading coming out of Corporations over the past 2-3 months?
wally(Excellent) writes: Off-topic, but did you guys all get your Bernie Madoff watches in the mail yet? I've been checking every day, but mine hasn't shown up yet.
My feeling is that it was a cover transaction. He transferred stuff to his kids which they gave him up on on. They're holding something better than a watch. Dad gave himself and some jewelry up to drag a leg and pull eyes off the transfer.
NEWARK, Del. The president of the Federal Reserve Bank of Philadelphia expects the economy to slowly start recovering in the second half of 2009 and inflation to remain below 2 percent over the next year.
In a speech Wednesday at the University of Delaware, Charles Plosser also said that the unemployment rate probably won't drop anytime soon, but that he doesn't expect it to rise to double digits, as it did during the recession of the early 1980s.
"I expect the housing sector will finally hit bottom in 2009 and the financial markets will gradually return to some semblance of normalcy," said Plosser, adding that the current recession could be one of the longest in the post-World War II era.
In other words, Morocco would like to know, "Anybody know where I can find some BMX armor in a hurry?"
Comrade Byzantine_Ruins | Homepage | 01.14.09 - 2:31 pm | #
He picked some up cheap on Craigslist when CSC went vagabond...
Morocco Bama has issues, he's made poor life choices and blames the man for it. I think he thinks a revolution will bring him back to par.
® | 01.14.09 - 2:34 pm | #
No poor choices here. I didn't vote for Bush, and I ended up playing it right on my home loan. We have friends who poured their earnings into home equity and now their home values have plummeted and eaten that equity. Also, we haven't invested in the market because we've always seen it as a sucker's bet...and that's turning out to be true. Those were wise choices. We don't trust the system and have managed to tread water despite that. You small time investors and gamblers have it coming. You're not the Plutocracy. That's the message that's being sent loud and clear. You don't belong...you never did, and you're being cleaned out.
Disagree from an actuary point of view. The longer a recession lasts the worse conditions get and it's that much harder to bounce out of it which is why the depression could be noted to have begun sometime in 1927 and ended with several severe recessions in the early 1950s. Only to come out into the golden age of 91% tax brackets.
NEWARK, Del. The president of the Federal Reserve Bank of Philadelphia expects the economy to slowly start recovering in the second half of 2009 and inflation to remain below 2 percent over the next year.
stretch002 writes:
So what can we do to protect ourselves? If the USD (and other currencies)is heading for a collapse along with other currencies what do we do?
Hard assets are losing value, commodities are losing value. Is there a magical inflection point where we should hop out of currency and into some asset class? If so, how do we spot that point?
Or is it more likely that this is a race to the bottom? All currencies are going to weaken and thus price points will seesaw back and forth but ultimately there will not be a winner nor a loser...
Let's assume that's the case. What's most likely to fair poorly?
Yagij - The story was from early October. Here's some other discussion: Devil in the Derivative In that post, this bit apparently from AIG's 2007 annual report is found- per AIG's annual report:
... Approximately $379 billion (consisting of the corporate loans and prime residential mortgages) of the $527 billion in notional exposure of AIGFP's super senior credit default swap portfolio as of December 31, 2007 represents derivatives written for financial institutions, principally in Europe, for the purpose of providing them with regulatory capital relief rather than risk mitigation. ...
How can/will they intervene in the markets? Can they print and sell a tremendous amount of yen? What would they buy? USD? Would it work?
Mr. Beach | 01.14.09 - 2:51 pm | #
It's the yen carry-trade still unwinding... that is all.
Mr. Beach(Unrated) writes: How can/will they intervene in the markets?
They sent some retiree "Mr. Yen" out to tell everyone they were defending 80. It was in Bloomberg. I dunno what everyone is staring at, it's gonna go to 80 now. Japanese public policy 101 stuff.
Mr. Beach(Unrated) writes: \tAnyone have ideas about the Japanese?
What can they do? They've tried all of the things you mention, and they've been in a recession off and on for the last twenty years. I thought "normalizing" interest rates when they hit a good patch was the thing to do, but the BoJ backed off of that due to political pressure. Now there's no way interest rates can be normalized ever again, it seems like, and they're stuck where they've been but with much less exports.
crispy&cole writes:
"but a bottom in the stock market"
LOL!!!
Bottom call #5,286,275 from you
crispy&cole | Homepage | 01.14.09 - 2:46 pm | #
One day he'll be correct. On that day forward, rich people will want to hang out with him. Beautiful women will want to be with him. Oprah will have him on her book club for his, 'Saving Democracy with the Ultimate Booty Call'.
We'll tell everyone, 'But he called the bottom 5,286,275 times before! Even a blind squirrel gets a nut once in a while!' We'll be laughed at by those very people on CNBC we've been ridiculing.
Many of us will be put on terrorist watch lists. Some of us will end up spending our nights mumbling in some doorway flipping our charts.
Mr. Sparkle writes: \tYagij - The story was from early October. Here's some other discussion: Devil in the Derivative In that post, this bit apparently from AIG's 2007 annual report is found- per AIG's annual report: Mr. Sparkle | Homepage | 01.14.09 - 2:52 pm | # ----- Extreme danke! I don't know how I missed out on that bit of econ historical trivia.
Seriously, I heard more than 1 Eurocrat on NPR and other talks shows explain about how they were more stable & secure than their hick cousin on "that" side of the pond. Whocoudanode?
Kneale and Kudlow are equally as bad. Pisani I especially dislike after he spent the entire fall of 2007 dismissing anyone who was less than 100% bullish as a recessionista. If I was 100% wrong for so long I'd be 100% unemployed. It's a crime any of those morons are still on the air.
But what can they do to competitively devalue? Interest rates and quantitative easing have already been tried?
How can/will they intervene in the markets? Can they print and sell a tremendous amount of yen? What would they buy? USD? Would it work? Mr. Beach | 01.14.09 - 2:51 pm | #
If they printed [massively increased money supply & not just 'eased' more] then the yen would fall against all currencies including the dollar and would make their exports more 'competitive' in the other currencies. In that respect it would work.
But remember they import everything they consume or use in mfg to export - it would make them considerably poorer if they print their way out. The stuff they consume would cost a lot more in parity terms.
Also it depends on if their debt is denominated in yen or not... if in yen then flooding the market with yen ruins the lenders but doesn't crush Japan itself. If a lot of the debt is non-yen denominated then flooding the market in yen ruins Japan and not the lender [unless it precipitates a Japanese default].
The surprising thing about the yen strength is that the BOJ hasn't blown up the yen yet. That speaks volumes about a potential 'paradigm shift'.
Enjoy this little gem from his bog history. Turbo | 01.14.09 - 2:52 pm | #
He was right.... "Keep an eye on the big picture. If this continues, we are in an historic time. There will be books written about this period in the next decade."
yagij wrote: "If I knew I had to fork up 1,500,000,000 later in the quarter, why would I want to spend what "little" liquidity I have now?"
manja_cake replied: "Point taken. However, if you're on the verge of bankruptcy, why leave anything for the creditors?"
The subtle, but critical, difference here is that the institution on the verge of bankruptcy is not the same as the person deciding how to spend the money. The economically-rational thing to do in that case is clearly to take the billion dollars, pay yourself and your other friends on the board a billion dollars in bonuses, and let the bank collapse a few months from now.
Eric(Excellent) writes: He was right.... "Keep an eye on the big picture. If this continues, we are in an historic time. There will be books written about this period in the next decade."
Peak Grifter.
Hustlers of the world, there is one mark you cannot beat -- the mark inside.
"Keep an eye on the big picture. If this continues, we are in an historic time. There will be books written about this period in the next decade."
This rules out the worst-case scenario, in which books are no longer published, and the few remaining stocks are used primarily for toilet paper and kindling by the barbarian tribes...
ille_vir writes: \tMr. Beach writes: \tAnyone have ideas about the Japanese?
What can they do? ille_vir | 01.14.09 - 2:57 pm | # ----- To reiterate this point: What can they do?
They have a shrinking population that is graying at a relatively rapid clip so they aren't going to be able to "naturally" grow out of their problem domestically. They have a shrinking export sector that seems to be speeding up so they aren't going to be able to "import" grow out of their foreign customers. They have bad debts that still haven't been corrected over the past 20 years that are weighing down on their financial sector.
In all honesty, maybe their recession is just a natural "life cycle" that has to play out until the 2nd largest economy in the world gets more in line with their future earnings.
Well, truly inquiring minds would look it up for themselves.
In the past several recessions there's been a point where net job-loss has accelerated month over month to an extreme, then backed-off, similar to a climax "crash" in the stock market after a long downtrend. With monthly non-farm payrolls that pattern occurs at or near the end of a recession.
It happened at the end of 2008, with monthly net job-loss accelerating four months in a row to a one-month extreme of -584,000 in November, but then it backed-off to -524,000 in December.
The cumulative job-loss will continue, but the point of maximum weakness is past. That's what the drop in the interest rate risk spreads is telling us. It's also showing up in (as I mentioned) real income less transfers, which is no longer falling.
[Turbo writes:
Kneale and Kudlow are equally as bad. Pisani ]
All total imbecile script readers. But my skin crawls when Erin blathers in her arrogant smug GS dismissive tone. Disgusting. At least Maria has orgasms and those monthly lip-pump jobs.
"LONDON (Reuters) - HSBC Holdings is likely to halve its dividend and may need to raise up to $30 billion (21 billion pounds) in a rights issue, according to leading analysts, sending shares in Europe's biggest bank to a seven-year low."
"but a bottom in the stock market and real GDP in calendar year 2009 seem like good bets."
"but the point of maximum weakness is past."
I really don't see how someone could be confident of that in light of the demographic/entitlement issues and our earnest attempt to mimic every page of the late 90s japanese playbook. did japanese real estate and equities bottom out 2 or 3 years into their process just because 2 or 3 years is a long time for a recession? or did their demographics and policies extend it and deepen it to the present day, 17 years later?
Lisa - I just wrote a big long post about dividends on SPX. It's astonishing how far EPS has fallen and low little dividends have. The charts are amazing.
How many companies really have the stomach to squeeze their balance sheets more just to maintain share price? Particularly in the face of a bear market with lower expectations.
"It happened at the end of 2008, with monthly net job-loss accelerating four months in a row to a one-month extreme of -584,000 in November, but then it backed-off to -524,000 in December.
The cumulative job-loss will continue, but the point of maximum weakness is past. That's what the drop in the interest rate risk spreads is telling us. It's also showing up in (as I mentioned) real income less transfers, which is no longer falling."
Phone-systems in 4 separate states crashed due to overload in December. NYC had 80k per day versus their standard 8k per day.
I think you are sadly mistaken if you think that peak unemployment was in November but only time will tell. I think we see a 9 figure monthly unemployment print before all is said and done.
The cumulative job-loss will continue, but the point of maximum weakness is past.
You are beyond help. Your opinions are worthless. you spent the batter part of 9 months defending the indefensible. just stfu and watch. that's the positioned you've earned.
Sebastian writes: "In the past several recessions there's been a point where...
How has your modeling this time period based upon past eras worked out so far? Sebastian, understand. There is no past model for 2006-2012. What you are doing isn't even guessing or randomness.
In all honesty, maybe their recession is just a natural "life cycle" that has to play out until the 2nd largest economy in the world gets more in line with their future earnings. \t yagij | \t \t \t \t01.14.09 - 3:07 pm | # Yes, I'm beginning to think that the fate of mature economies follows a trajectory much like theirs. Population growth isn't sustainable forever. As productivity rises within a shrinking population, job growth slows. Exports can make up for that, but only to a certain point. At some point, economies stop growing. Efforts to reverse this trajectory by the BoJ have all been failures, and have partly led to the global credit bubble. Are other mature economies fated to follow the same trajectory? It's beginning to look that way.
Sebastian [It happened at the end of 2008, with monthly net job-loss accelerating four months in a row to a one-month extreme of -584,000 in November, but then it backed-off to -524,000 in December]
LMAO! 1 month, December which has year-end holiday distortions, and you pick it for marking a trend towards lower job losses, even as BK's & announced firings escalate where WARN act has a 2 month latency before the firings actually show up in the claims. You numbskull.
Rob Dawg- excellent point. When I would read things from various financial newsy stuff, if I detect someone running last recessions's playbook I almost immediately stop reading. The initial conditions of this recession are so vastly different from the last one they are hardly worth comparing. Home-equity, participation rate, U3/U6... very little is equivalent. It's so much worse.
"What about when they pay those dividends out from money they received from the gov't"
sure, it is less than ethical, perhaps.
but jas has made a good point on this - compare the earnings of companies (especially tech ones like aapl, csco, qcom, etc) and the haul brought by the board in due to options. that's looting.
speaking of nortel - how much options cash went out the door on that one in '98-'00?
OCDan said: "...Who here thinks this year will be the bottom?"
All depends on what level the SPX falls to. If the SPX fell from 900 to 800 i'd say its likely not the bottom, but what if the SPX fell to 100 sometime this year? Would you think that it is too low a level based on the future earnings of the SPX and therefore a reasonable, prudent person would be pretty logical to say it's very likely "THE" bottom? I would. so it all depends where it falls to. just my 2 cents
It is telling the BOJ hasn't jumped in and started buying USD. Why not? What specifically is holding them back? Are the natural buyers of Yen unable to do so?
If we are replaying the 1965 - 1982 economic / bear market scenario, which I'm starting to believe is the case, then s&p 800 could prove to be a reasonable place to buy, provided you stick to unleveraged targets - the broad market, not so much for now. That being said, those who were long in Q3/2008 will be waiting until oh 2017 to be back to even.
Parting comment - Even if the divys of some of my shares get cut by 50%, its more than I'm going to get in a CD or savings acct. So long as I dont need the cash in lue of the shares, I'm fine w/ this decision. I have actually been adding to some longer term positions w/ this in mind and maybe the prospect of some cap. gains. In Oct/Nov I bought some prd stuff so cheap that the effective yieled was 17% - I have since seen a nice lift of about 22% gain on these tidbits.
While I might be a tad bearish (just a tad) and I do believe the sky is almost falling, there is no way in hech all things are going to zero because governments would not like the prospect of civil unrest.
If and when Mad Max's shadow is seen on the horizen, I will alter my approach.
"monthly net job-loss accelerating four months in a row to a one-month extreme of -584,000 in November, but then it backed-off to -524,000 in December."
Sebastian | 01.14.09 - 3:09 pm
You're my hero.
1) your post brought DAWG back to us.
2) your irrepressible optimism, especially in your new bear role, still shines through and puts a grin on my face and sunshine in my day.
However, please wait for the revision to December 2008's job loss number. It could be increased, like October & November's were.
Pissed Off in California said: "...I think you are sadly mistaken if you think that peak unemployment was in November but only time will tell. I think we see a 9 figure monthly unemployment print before all is said and done."
Well, now things are getting back to normal. Nobody actually reads what I post, they simply attack it without thought or consideration.
I would be sadly mistaken...if that's what I had said.
In fact, I clearly said that cumulative job-loss would continue. I was only describing the equivalent of a high-volume climax pattern in the non-farm payrolls numbers.
¡ay Dios mío!
By Diana Washington Valdez / El Paso Times
Posted: 01/13/2009 03:49:34 PM MST
EL PASO - Mexico is one of two countries that "bear consideration for a rapid and sudden collapse," according to a report by the U.S. Joint Forces Command on worldwide security threats.
The command's "Joint Operating Environment (JOE 2008)" report, which contains projections of global threats and potential next wars, puts Pakistan on the same level as Mexico. "In terms of worse-case scenarios for the Joint Force and indeed the world, two large and important states bear consideration for a rapid and sudden collapse: Pakistan and Mexico.
"http://www.mytradersparadise.com
If you are new to trading, before you go out and buy into to someone that claims to have the holy grail take a day and read thru this blog. If it sounds to good to be true, well it just might be....BE SAFE and email me at dbolzes@chartertn.net ..."
Good to see that irony is not only alive but remains absolute ruler of the universe.
That and never invest money with someone lacking basic grammar. It's a sputtering hot, glowing red flag of doom.
Rob Dawg said: "How has your modeling this time period based upon past eras worked out so far? Sebastian, understand. There is no past model for 2006-2012...."
True, but there's also falling risk spreads and rising real income. If risk spreads are falling that means risk is falling. If real income is rising that means real income is rising.
If my prior mistake was ignoring the evidence, but I'm looking at it now, what's your point? If your outlook is so much darker than mine, shouldn't the risk spreads have remained at elevated levels? Shouldn't real income less transfers be continuing downward?
Mexico is one of two countries that "bear consideration for a rapid and sudden collapse," according to a report by the U.S. Joint Forces Command on worldwide security threats.
I really don't see how someone could be confident of that in light of the demographic/entitlement issues and our earnest attempt to mimic every page of the late 90s japanese playbook. did japanese real estate and equities bottom out 2 or 3 years into their process just because 2 or 3 years is a long time for a recession? or did their demographics and policies extend it and deepen it to the present day, 17 years later? Anonymous | 01.14.09 - 3:12 pm | #
This is a multiyear story, potentially a multidecade story. There could be a bottom this year followed by sustained rebound followed by an even lower bottom a year or two later (not saying I have data to support this). We are witnessing world-changing upheaval. This stuff can take a lot of time to unfold.
Just my 2 cents.
There could be a bottom this year followed by sustained rebound followed by an even lower bottom a year or two later (not saying I have data to support this).
I think there is some pretty good data in Japan to support that
Wow...here is Yahoo Finance's Top Stories blurb from a minute ago...
Top Stories
Stocks Hammered on Dismal Retail Sales, Banking Woes- AP
Wall Street extended its 2009 retreat Wednesday, falling sharply after the government issued a dismal reading on retail sales and investors grew increasingly anxious about the banking industry.
* For big US banks, trouble is just getting started- CNBC.com
* Judge rules Madoff can remain free on bail- AP
* Fed: Economy starts '09 on weaker footing; outlook dim- AP
* Oil prices tumble below $37 with US inventories bulging- AP
* Retailers Gottschalks and Goody's file for bankruptcy- Reuters
* Citi breakup in sight after Morgan deal; stock drops below critical $5 level- CNBC.com
* London 2012 monitoring Nortel after bankruptcy- AP
* Retail sales plummet more than expected in December- AP
* Tax Errors and Bailout Gaffes: Is Tim Geithner the Right Man to Run Treasury?- Tech Ticker
I've been a long time lurker, and quite often I've thought Sebastian is not serious in his outlooks. He may even be one of bearish regulars just pullin our legs.
If Seb really means what he types, yikes.
While Goody's was founded in 1953, Bob Goodfriend (the son of the founder) sold his interest in the company several years ago in a big LBO. Prior to that, Goody owned the vast majority of their assets - those assets were leveraged up to the hilt as part of the LBO. This leveraging is ultimately what did them in.
"For big US banks, trouble is just getting started- CNBC.com"
No. CNBC is just starting to report on it. They are what, 2+ years late on this topic?
I worked at major financial institutions and have been out of their stock completely since mid 2007 (except the options which will vest over the next two years).
For a number of banks, the trouble isn't just starting, it's about to end. Do we have a pool on number of banks taken over by the FDIC this year? Dollar volume? A dead pool perhaps?
OT: but I must say that neither party (Rep/Dem) wanted to win this election, however, Dems put up a candidate that did win. Well, someone had to win!!!
The Dems saw an opportunity to kill Regonamics...Was it a good idea...
Think about it, they can re scramble the board, if they succeed, they will rule for the next 30+ years,
,if they fail, there will be a new party system with new parties will re-align...
More bottoming process.
Another one bites the dust!
BAD
BADDY!!!
At least the annoying Alltel commercials are going bye bye with Verizon buying them out.
As long as you tried your hardest.
Not so Goody
"These are long term retailers."
Too bad they took on too much short term debt.
Nostrovia,
Gottshalkdammerung?
Market explodes after beige book
It'll be nice to see businesses hold large amount of cash on their balance sheets again.
So when do some of the big retailers file, names like JCP, SKS, JWN, or SHLD. My guess is in Feb or March we should see some big names go down.
So when do some of the big retailers file, names like JCP, SKS, JWN, or SHLD. My guess is in Feb or March we should see some big names go down.
Dirk van Dijk | 01.14.09 - 2:05 pm | #
I agree. Any of you familiar with 'Altman Z Scores'? If so any comments you'd like to share?
Off-topic, but did you guys all get your Bernie Madoff watches in the mail yet? I've been checking every day, but mine hasn't shown up yet.
geez it it were not for skyrocketing salaries for these retail workers, some of these retailers might make it.
I agree. Any of you familiar with 'Altman Z Scores'? If so any comments you'd like to share?
dryfly | 01.14.09 - 2:08 pm | #
Remember seeing them in Grad school, but have not looked at them in real time.
By the end of the month, these bankruptcies won't seem so shocking. But today - dang!
keeps getting better -
The bankruptcies this quarter should be off the charts. Every retailer was just waiting for the 4th quarter sales to contribute to the bottom line before they closed up shop. Too bad they were far below expectations....
Gottschalks?
Gottsmilks?
They were doomed anyway. Who the heck can spell that to find it on the Internet?
There was a pretty decent blog post / opinion piece floating around on the pros/cons of mark-to-market recently? I'm trying to dig up. Thought it was at nakedcapitalism, but couldn't find it there ... any ideas?
I wish the TARP money would buy up all the bad bank debt today, so people will go back shopping.
There has never been a better time to buy or sell novelty items manufactured from the stock certificates of bankrupt companies.
OT: I put up a new version of CR Companion
last night, that fixes a few bugs people have reported.
I see Hovnanian and Beazer are on the dollar menu again.
Thanks Ken. The CR Companion really makes the comments more manageable.
Poor Nortel. To have survived the TMT crash just to go down now.
My portfolio of Guns to Caviar is doing great. There's money to be made in the disaster complex.
Thanks Ken. The CR Companion really makes the comments more manageable.
JS | 01.14.09 - 2:14 pm | #
What he said... btw when are you gonna publish the 'CR Companion For Dummies'? Got be big money in that.
I imagine Chambers is hosting a nice lunch right 'bout now!
Better dryfly:
CR Companion For Dopes!
(punctuation included in title)
CR Companion For Dopes!
Gary | 01.14.09 - 2:18 pm | #
Beat me to it.
I know these are small-fry BKs, but the speed at which these are a comin' is gettin' scary!
It seems CR has a few of these everyday.
Anyone who thinks this year is going to see the bottom, might as well stick his/her head up their bottom.
I know we have belabored the point, but this year is ugly and with all the resets coming in '10 and '11, I think the economy as we know it is done.
Obama and the gubmint can TARP everything they want, but this house of debt is too big.
Forget the derivatives game or the entitlements, even the national debt, for a moment. We can't even balance an annual budget for cryin' out loud.
Who here thinks this year will be the bottom?
Crickets! Crickets!
Bueller? Bueller?
I thought so.
Plan and invest accordingly as the toilet seems to be swirlin' faster and faster.
Lastly, I know president-elects usually start before the oath, but Obama has had to set some records for getting the new admin moving.
I wonder why?
Economic collapse, anyone?
Here's one for my deflationist friends:
"The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy."
How can somebody fail to pay their self-employment tax? Maybe the guy had a "it's for the little people" mentality.
Bottom Line: Auto-disqualification.
Oops.
TPC: I was saying to my parents at Xmas that we could expect alot of bankruptcies after the holiday season because of this factor. So, no surprise here.
Off-topic, but did you guys all get your Bernie Madoff watches in the mail yet? I've been checking every day, but mine hasn't shown up yet.
wally | 01.14.09 - 2:08 pm | #
I know some SEC folks who had Madoff tatoos before they were popular. You'll never guess where they put them?
Madoff tattoos « For What It’s Worth
Remember seeing them in Grad school, but have not looked at them in real time.
Dirk van Dijk | 01.14.09 - 2:09 pm | #
I have run into customers who are now requiring it before they do business with anyone - run Z Scores from their counterparties 'finanacials'... my first thought was GIGO but then my second thought overwhelmed the first... customers are always right and even when they aren't, if you correct them, they cease to be customers...
Gottschalks doesn't matter much nationwide. But it does in Central California and the Central Valley. Going to leave a lot of anchor-store holes in a lot of big malls, including our local one.
Apparently they bought a couple of regional retailers to expand their reach back in the late '90s -- in SoCal and the Pacific Northwest. In retrospect, maybe not such a good idea.
manja_cake writes:
Here's one for my deflationist friends:
"The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy."
manja_cake | 01.14.09 - 2:19 pm | #
What good will this do?
Banksters will just use to keep themselves going.
Ain't any of that money trickling down!
a new version of CR Companion
Ken Cooper | Homepage | 01.14.09 - 2:13 pm | #
Thanks, Ken!
CR Companion For Dopes!
Gary | 01.14.09 - 2:18 pm | #
Amen! LMAO!
HEY CR, can you throw recessions on your retail sales graph?
"The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy."
\t manja_cake | \t \t \t \t01.14.09 - 2:19 pm | #
So that whoever gets it will hoard it? Pushing on a string in secret doesn't make it more effective.
So when do some of the big retailers file, names like JCP, SKS, JWN, or SHLD. My guess is in Feb or March we should see some big names go down.
Clearly, we need a bailout for retailers. Bernanke says they all look like banks to him.
Why doesn't Helicopter Ben just come out and tell the market that he's going to print like there is no tomorrow?
Bank of England will be able to print extra money
Google "velocity of money".
It's just the beginning too. Now is a great time to start bringing jobs back to the US because soon, the scarcity of products will create true supply and demand again, healthy prices, living wages, and a prosperous economy for all people.
real estate, banks, now retail, soon usa and the whole world it seems like.
all because of over-indebtedness.
last week i hired a baby-sitter - she owns two investment properties.
this week a handyman came in to fix something - turns out he "only" owns one investment property.
all 3 properties have negative cash flow of course.
but on a brighter note my cousin works for MER, mergers and acquisitions. she got a huge bonus this year, well over a mil.
ongoing transfer of wealth i guess.
"So that whoever gets it will hoard it? Pushing on a string in secret doesn't make it more effective."
If I gave you a $1,000,000,000 for free, you tell me you could resist the temptation to spend it?
ille_vir,
"Pushing on a string in secret doesn't make it more effective."
No, but it will grow hair on your hands and make you go blind........Or so I'm told.
Nostrovia,
That's correct, CR Companion is for dopes. This place is interesting, but you're not going to learn anything. It amounts to people yelling fire in the theater because someone burned the popcorn. Wait until the real shit hits the fan. You wonks will be cleaned out and the field will be cleared and leveled.
I essentially thought the TIP plan was a warning to the market earlier in the month. It was eerily reminiscent of when Paulson told us in early Oct that they were prepared to deal with a large bank failure. There are some large BK's in the pipeline. Bank on it.
THE PRAGMATIC CAPITALIST » Page not found
Morocco Bama(Excellent) writes:
You wonks will be cleaned out and the field will be cleared and leveled.
In other words, Morocco would like to know, "Anybody know where I can find some BMX armor in a hurry?"
They're not giving it to me though, they're giving it to zombie banks that have a ton of assets whose worth they're not sure about, but know its much less than they currently value them at. Yeah, they'll be hoarding it.
You wonks will be cleaned out and the field will be cleared and leveled.
\t Morocco Bama
Morocco Bama | 01.14.09 - 2:29 pm | #
Why such hostility? And why spend so much time reading and posting if you feel this way?
Due to the unprecedented demand for ATF Form 4473 (Firearm Transaction Record), the Bureau of Alcohol, Tobacco and Firearms is allowing gun dealers to photocopy the form in its entirety until stocks are replenished.
In December 2008, there was a 24% year-over-year increase in firearms purchaser background checks. This is after a 42% year-over-year increase in November 2008, the largest volume in the FBI's NICS (National Instant Criminal Background Check System) history. These background checks are a strong indicator of actual gun sales.
Conjure says, "Some folks say the increase in sales is due to expectations that the Obama administration will make gun purchases more difficult."
"Sorry, that's not it."
"Have a nice day."
ATF Online - Page Not Found
Morocco Bama writes:
That's correct, CR Companion is for dopes. This place is interesting, but you're not going to learn anything. It amounts to people yelling fire in the theater because someone burned the popcorn. Wait until the real shit hits the fan. You wonks will be cleaned out and the field will be cleared and leveled.
Interesting that you assume I will be on the field. I always take the high ground. Always.
Good luck.
--bh
Will a trade war with China and Mexico mean we have to pay more at Wall Mart and mow our own lawns?
"You wonks will be cleaned out and the field will be cleared and leveled."
I'm no wonk, but I play one on TV...
Nostrovia,
Morocco Bama has issues, he's made poor life choices and blames the man for it. I think he thinks a revolution will bring him back to par.
POIC said in previous thread:
"Did you know that most European financial institutions were insuring assets through AIG because non-treasury like instruments that are AAA rated can be counted against their tier-1 capital ratio.
AIG going under would have brought down most of the European banks within 72 hours."
That bears repeating multiple times. Euro financial institutions are in at least as bad shape as US major banks. Their book leverages were higher than US banks, and they were using AIG CDS's as replacements for real equity capital. The only thing holding up Euro financials is the Fed's swap lines, IMO.
Conjure, some of it could be attributed to that but I agree, that's not it. I know it wasn't in my case anyway, but then again; I know what time it is.
"print extra money without having legally to declare it "
Why not just stop prosecuting counterfeiting for a year? Cheaper, and definitely will be spent.
manja_cake writes:
If I gave you a $1,000,000,000 for free, you tell me you could resist the temptation to spend it?
manja_cake | 01.14.09 - 2:28 pm | #
-----
It depends on the amounts on the other side of the balance sheet, no?
If I knew I had to fork up 1,500,000,000 later in the quarter, why would I want to spend what "little" liquidity I have now?
Don't forget that the European banks are the ones with all that emerging market debt on their books. $3.5 TRILLION in outstanding emerging market debt and oil in the 30's....
European Banks to be Hit by Collapsing Emerging Markets :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website
"Will a trade war with China and Mexico mean we have to pay more at Wall Mart and mow our own lawns?"
EVERYONE I have ever seen on a riding mower is in dire need of the exercise.
Peak oil == peak diabetes.
Getting a gun in next to impossible in Canada.
Hasn't stopped my shopping though.
Morocco Bama writes:
That's correct, CR Companion is for dopes. This place is interesting, but you're not going to learn anything. It amounts to people yelling fire in the theater because someone burned the popcorn. Wait until the real shit hits the fan. You wonks will be cleaned out and the field will be cleared and leveled.
And what value are you adding to this blog?
Jwn will make it thru, they will have more than 2 sales a yr.
they may close a underperforming store but they are ready...discussed with insider on Sunday....
Conjure says, "Some folks say the increase in sales is due to expectations that the Obama administration will make gun purchases more difficult."
"Sorry, that's not it."
"Have a nice day."
When the shit goes down,
you better be ready.
YouTube - when the shit goes down
mp,
To put it another way: we have democratized predation in the same way we democratized home-ownership and debt.
--bh
I'm not a wonk, but I did stay in a Holiday Inn Express last night.
Anyone remember the post/comment where Morocco Bama "accidentally" signed his post with "Jas". Strongly suggesting the two may be one?
From Investopedia:
"What Does Altman Z-Score Mean?
A predictive model created by Edward Altman in the 1960s. This model combines five different financial ratios to determine the likelihood of bankruptcy amongst companies.
Investopedia Says Icon
Investopedia explains Altman Z-Score...
Generally speaking, the lower the score, the higher the odds of bankruptcy. Companies with Z-Scores above 3 are considered to be healthy and, therefore, unlikely to enter bankruptcy. Scores in between 1.8 and 3 lie in a grey area.
This is a relatively accurate model -- real world application of the Z-Score successfully predicted 72% of corporate bankruptcies two years prior to these companies filing for Chapter 7."
Citicorp is only down 21% today (to $4.61)? Shouldn't it be less than $1.00?
Morocco Bama:
Wonk or wanker?
discuss...
IT, where the heck are you shopping?
Ontario Hunting Network: Gun_and_Archery_Stores
"We ship Canada Wide!" say some of these.
Citicorp is only down 21% today (to $4.61)? Shouldn't it be less than $1.00?
JimPortlandOR | 01.14.09 - 2:41 pm | #
What an optimist !
C should be F-
JimPortlandOR writes:
Citicorp is only down 21% today (to $4.61)? Shouldn't it be less than $1.00?
JimPortlandOR | 01.14.09 - 2:41 pm | #
Sure, in a free market system, yes.
citizen Kung Fu Panda writes:
\tPOIC said in previous thread:
"Did you know that most European financial institutions were insuring assets through AIG because non-treasury like instruments that are AAA rated can be counted against their tier-1 capital ratio.
AIG going under would have brought down most of the European banks within 72 hours."
citizen Kung Fu Panda | 01.14.09 - 2:34 pm | #
------
I definitely missed that memo. Did he cite a source or provide a link?
If this situation is the case, why were the public statements coming out of Eurozone so high & mighty regarding the U.S.'s financial situation?
Darkness - Thanks ! bookmarked.
"If I knew I had to fork up 1,500,000,000 later in the quarter, why would I want to spend what "little" liquidity I have now?"
Point taken. However, if you're on the verge of bankruptcy, why leave anything for the creditors?
I guess the beige book didn't start off with "OMG we're all gonna die" so the market will now try to rally away the blues...
And what value are you adding to this blog?
asl hearts lenin | 01.14.09 - 2:39 pm | #
He's letting you know what a dope you are. Since Jas isn't around, someone has to do it.
yagij - that AIG/Euro-bank story has been out for a good long while. At lest November but I can't find a link back to it. I remember seeing Yves Smith mention it.
Perhaps the Euro guys just sound high and mighty to us because of those accents?
OCDan said: "...Who here thinks this year will be the bottom?"
I'm reasonably sure it will be. Yes, there's lots of bad news and there's no end in sight, but that's what recessions look like.
As we now know the recession is already a year old, which is pretty old as recessions go, actuarially speaking.
The various risk spreads have come down sharply from their respective peaks, indicating that the financial stress is easing. Real income less transfer payments is actually up and monthly job-loss is slowing.
Things certainly aren't going to be good for awhile, but a bottom in the stock market and real GDP in calendar year 2009 seem like good bets.
JMO.
Sebastia
why were the public statements coming out of Eurozone so high & mighty regarding the U.S.'s financial situation?
yagij | 01.14.09 - 2:42 pm | #
That's the nature of the beast.
"but a bottom in the stock market"
LOL!!!
Bottom call #5,286,275 from you
BERNARD MADOFF TO REMAIN FREE ON BAIL - NYPOST.com
bernie with a Nice blue vest
Jim A.(Unrated) writes:
\tTPC: I was saying to my parents at Xmas that we could expect alot of bankruptcies after the holiday season because of this factor. So, no surprise here.
Jim A. | 01.14.09 - 2:20 pm | #
Do you think they'll increase your allowance now
Sebastian writes:
\t...and monthly job-loss is slowing.
Sebastian | 01.14.09 - 2:45 pm | #
-----
"Is slowing"? As in currently slowing (Present) or will be slowing (near future)?
What statistics are you referring, and how many press releases about job growth have you been reading coming out of Corporations over the past 2-3 months?
Inquiring minds want to know.
wally(Excellent) writes:
Off-topic, but did you guys all get your Bernie Madoff watches in the mail yet? I've been checking every day, but mine hasn't shown up yet.
My feeling is that it was a cover transaction. He transferred stuff to his kids which they gave him up on on. They're holding something better than a watch. Dad gave himself and some jewelry up to drag a leg and pull eyes off the transfer.
At least, that's what my suspicious side says.
seb-this isn't a recession...
seems to me theirs been quite a few data points that are different...
I think I will stick with Roubini's call. No positive GDP growth till 2010 at the earliest. And weak growth for several years afterwards.
Check out this stock chart of Friedman, Billngs & Ramsey.
FBR: Summary for FIBRIA CELULOSE SA- Yahoo! Finance
Their employees are frequent guests on the financial entertainment networks.
Another "smart" guy firm.
Unbelievable...
NEWARK, Del. The president of the Federal Reserve Bank of Philadelphia expects the economy to slowly start recovering in the second half of 2009 and inflation to remain below 2 percent over the next year.
In a speech Wednesday at the University of Delaware, Charles Plosser also said that the unemployment rate probably won't drop anytime soon, but that he doesn't expect it to rise to double digits, as it did during the recession of the early 1980s.
"I expect the housing sector will finally hit bottom in 2009 and the financial markets will gradually return to some semblance of normalcy," said Plosser, adding that the current recession could be one of the longest in the post-World War II era.
Yahoo! 404 - Page Not Found
If I gave you a $1,000,000,000 for free, you tell me you could resist the temptation to spend it?
manja_cake | 01.14.09 - 2:28 pm | #
Perhaps not if I were already in the hole for $2,000,000,000.00.
In other words, Morocco would like to know, "Anybody know where I can find some BMX armor in a hurry?"
Comrade Byzantine_Ruins | Homepage | 01.14.09 - 2:31 pm | #
He picked some up cheap on Craigslist when CSC went vagabond...
Things certainly aren't going to be good for awhile, but a bottom in the stock market and real GDP in calendar year 2009 seem like good bets.
JMO.
Sebastian
Sebastian
less tha
Morocco Bama has issues, he's made poor life choices and blames the man for it. I think he thinks a revolution will bring him back to par.
® | 01.14.09 - 2:34 pm | #
No poor choices here. I didn't vote for Bush, and I ended up playing it right on my home loan. We have friends who poured their earnings into home equity and now their home values have plummeted and eaten that equity. Also, we haven't invested in the market because we've always seen it as a sucker's bet...and that's turning out to be true. Those were wise choices. We don't trust the system and have managed to tread water despite that. You small time investors and gamblers have it coming. You're not the Plutocracy. That's the message that's being sent loud and clear. You don't belong...you never did, and you're being cleaned out.
Sebastion,
Disagree from an actuary point of view. The longer a recession lasts the worse conditions get and it's that much harder to bounce out of it which is why the depression could be noted to have begun sometime in 1927 and ended with several severe recessions in the early 1950s. Only to come out into the golden age of 91% tax brackets.
U.S. Home Prices Will Continue to Tumble Until 2010, PMI Says
U.S. Home Prices Will Continue to Tumble Until 2010, PMI Says - Bloomberg.com
2 chains closing dont make a crisis.
We got ten of thousands of chains in the US.
Feckless Ness(Excellent) writes:
Unbelievable...
NEWARK, Del. The president of the Federal Reserve Bank of Philadelphia expects the economy to slowly start recovering in the second half of 2009 and inflation to remain below 2 percent over the next year.
Fact is political.
Anyone have ideas about the Japanese?
Their currency continues to strengthen against the dollar.
Their exporters are getting crushed.
But what can they do to competitively devalue? Interest rates and quantitative easing have already been tried?
How can/will they intervene in the markets? Can they print and sell a tremendous amount of yen? What would they buy? USD? Would it work?
From the previous thread...
stretch002 writes:
So what can we do to protect ourselves? If the USD (and other currencies)is heading for a collapse along with other currencies what do we do?
Hard assets are losing value, commodities are losing value. Is there a magical inflection point where we should hop out of currency and into some asset class? If so, how do we spot that point?
Or is it more likely that this is a race to the bottom? All currencies are going to weaken and thus price points will seesaw back and forth but ultimately there will not be a winner nor a loser...
Let's assume that's the case. What's most likely to fair poorly?
Of all the talking heads on cnbc, Bob Pisani is the one I outright despise the most. Enjoy this little gem from his bog history. I certainly did.
CNBC's Pisani: The Bears Are Wrong. Here's Why. - CNBC
Yagij - The story was from early October. Here's some other discussion: Devil in the Derivative
In that post, this bit apparently from AIG's 2007 annual report is found- per AIG's annual report:
... Approximately $379 billion (consisting of the corporate loans and prime residential mortgages) of the $527 billion in notional exposure of AIGFP's super senior credit default swap portfolio as of December 31, 2007 represents derivatives written for financial institutions, principally in Europe, for the purpose of providing them with regulatory capital relief rather than risk mitigation. ...
Wonk or wanker?
discuss...
blackhat | 01.14.09 - 2:41 pm | #
Both, I guess, or fill in the blank. I had Indian food for lunch.
The day will soon approach, I fear, when ISPs begin to fail as well. Tech collapse on stilts---
Then I will miss all of you, and we'll go our separate ways into "meatspace" to survive any way we can.
Other than that, I'm optimistic!
How can/will they intervene in the markets? Can they print and sell a tremendous amount of yen? What would they buy? USD? Would it work?
Mr. Beach | 01.14.09 - 2:51 pm | #
It's the yen carry-trade still unwinding... that is all.
Seb,
Now, now...Not this year.
The dark side is still calling...
Nostrovia,
Of all the talking heads on cnbc, Bob Pisani is the one I outright despise the most
Pisani is bad, but Dennis Kneale is worst imo. His cavalier, polyanna, dismissive attitude bugs me to no end.
ultimately there will not be a winner nor a loser
This is incorrect.
Mr. Beach(Unrated) writes:
How can/will they intervene in the markets?
They sent some retiree "Mr. Yen" out to tell everyone they were defending 80. It was in Bloomberg. I dunno what everyone is staring at, it's gonna go to 80 now. Japanese public policy 101 stuff.
It's the yen carry-trade still unwinding... that is all.
How much longer can this continue? Or alternatively what do you see as the top for the Yen?
Is the Yen a safe store of value?
Dennis Kneale would be far more entertaining if he was being waterboarded throughout the broadcast.
Market bottom in 2009, believable.
Economic bottom in 2009, possible.
Economy leaves recession March 2010 likely
Fugly recovery until 2012 probable.
The day will soon approach, I fear, when ISPs begin to fail as well. Tech collapse on stilts---
Then I will miss all of you, and we'll go our separate ways into "meatspace" to survive any way we can.
Other than that, I'm optimistic!
kurtyboy | 01.14.09 - 2:53 pm | #
We'll always have Ken's CR Companion, though. You can use it to open a can of pork and beans without having to look at the label.
Is the Yen a safe store of value?
Mr. Beach | 01.14.09 - 2:55 pm | #
LOL... um no.
It will continue until it stops. If I could answer that, I would be a lot richer right now.
Mr. Beach(Unrated) writes:
\tAnyone have ideas about the Japanese?
What can they do? They've tried all of the things you mention, and they've been in a recession off and on for the last twenty years. I thought "normalizing" interest rates when they hit a good patch was the thing to do, but the BoJ backed off of that due to political pressure. Now there's no way interest rates can be normalized ever again, it seems like, and they're stuck where they've been but with much less exports.
http://search.japantimes.co.jp/cgi-bin/nn20090106a3.html
crispy&cole writes:
"but a bottom in the stock market"
LOL!!!
Bottom call #5,286,275 from you
crispy&cole | Homepage | 01.14.09 - 2:46 pm | #
One day he'll be correct. On that day forward, rich people will want to hang out with him. Beautiful women will want to be with him. Oprah will have him on her book club for his, 'Saving Democracy with the Ultimate Booty Call'.
We'll tell everyone, 'But he called the bottom 5,286,275 times before! Even a blind squirrel gets a nut once in a while!' We'll be laughed at by those very people on CNBC we've been ridiculing.
Many of us will be put on terrorist watch lists. Some of us will end up spending our nights mumbling in some doorway flipping our charts.
Let's add 100+ restaurants to the BK heap..
Bankruptcy on the menu | gantes, restaurants, million - News - The Orange County Register
This guy's biz configuration makes the Gordian Knot appear small potatoes
Pisani must give a real good BJ. no way he stayed in that position on talent alone.
I'm willing to bet that this scumbag has been, or possibly even is, a poster here:
January Is International Fugitive Month - Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
It Gets Better - Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
A Giving Life. A Magical Chalet. The Stuff of Fairytales. - Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
irregahdless, an entertaining series of stories on yet another financial scoundrel.
If this situation is the case, why were the public statements coming out of Eurozone so high & mighty regarding the U.S.'s financial situation?
Basel II Accord
US Banks are supposed to be compliant by October(?) 2009. The deadline has been pushed back so many times for the US, I can't remember.
And what value are you adding to this blog?
asl hearts lenin | 01.14.09 - 2:39 pm | #
Mr. Sparkle writes:
\tYagij - The story was from early October. Here's some other discussion: Devil in the Derivative In that post, this bit apparently from AIG's 2007 annual report is found- per AIG's annual report:
Mr. Sparkle | Homepage | 01.14.09 - 2:52 pm | #
-----
Extreme danke! I don't know how I missed out on that bit of econ historical trivia.
Seriously, I heard more than 1 Eurocrat on NPR and other talks shows explain about how they were more stable & secure than their hick cousin on "that" side of the pond. Whocoudanode?
Kneale and Kudlow are equally as bad. Pisani I especially dislike after he spent the entire fall of 2007 dismissing anyone who was less than 100% bullish as a recessionista. If I was 100% wrong for so long I'd be 100% unemployed. It's a crime any of those morons are still on the air.
Gottshalkdammerung?
Nemo | Homepage | 01.14.09 - 2:04 pm | #
Twilight of the Gottshalks?!
But what can they do to competitively devalue? Interest rates and quantitative easing have already been tried?
How can/will they intervene in the markets? Can they print and sell a tremendous amount of yen? What would they buy? USD? Would it work?
Mr. Beach | 01.14.09 - 2:51 pm | #
If they printed [massively increased money supply & not just 'eased' more] then the yen would fall against all currencies including the dollar and would make their exports more 'competitive' in the other currencies. In that respect it would work.
But remember they import everything they consume or use in mfg to export - it would make them considerably poorer if they print their way out. The stuff they consume would cost a lot more in parity terms.
Also it depends on if their debt is denominated in yen or not... if in yen then flooding the market with yen ruins the lenders but doesn't crush Japan itself. If a lot of the debt is non-yen denominated then flooding the market in yen ruins Japan and not the lender [unless it precipitates a Japanese default].
The surprising thing about the yen strength is that the BOJ hasn't blown up the yen yet. That speaks volumes about a potential 'paradigm shift'.
Enjoy this little gem from his bog history.
Turbo | 01.14.09 - 2:52 pm | #
He was right.... "Keep an eye on the big picture. If this continues, we are in an historic time. There will be books written about this period in the next decade."
Is the Yen a safe store of value?
Mr. Beach | 01.14.09 - 2:55 pm | #
Only the BOJ knows for sure.
yagij wrote: "If I knew I had to fork up 1,500,000,000 later in the quarter, why would I want to spend what "little" liquidity I have now?"
manja_cake replied: "Point taken. However, if you're on the verge of bankruptcy, why leave anything for the creditors?"
The subtle, but critical, difference here is that the institution on the verge of bankruptcy is not the same as the person deciding how to spend the money. The economically-rational thing to do in that case is clearly to take the billion dollars, pay yourself and your other friends on the board a billion dollars in bonuses, and let the bank collapse a few months from now.
Eric(Excellent) writes:
He was right.... "Keep an eye on the big picture. If this continues, we are in an historic time. There will be books written about this period in the next decade."
Peak Grifter.
Hustlers of the world, there is one mark you cannot beat -- the mark inside.
ding ding ding - Opening Bell!
That was my favorite part Eric. Historic times indeed.
"Keep an eye on the big picture. If this continues, we are in an historic time. There will be books written about this period in the next decade."
This rules out the worst-case scenario, in which books are no longer published, and the few remaining stocks are used primarily for toilet paper and kindling by the barbarian tribes...
ille_vir writes:
\tMr. Beach writes:
\tAnyone have ideas about the Japanese?
What can they do?
ille_vir | 01.14.09 - 2:57 pm | #
-----
To reiterate this point: What can they do?
They have a shrinking population that is graying at a relatively rapid clip so they aren't going to be able to "naturally" grow out of their problem domestically.
They have a shrinking export sector that seems to be speeding up so they aren't going to be able to "import" grow out of their foreign customers.
They have bad debts that still haven't been corrected over the past 20 years that are weighing down on their financial sector.
In all honesty, maybe their recession is just a natural "life cycle" that has to play out until the 2nd largest economy in the world gets more in line with their future earnings.
One day he'll be correct.
asl hearts lenin | 01.14.09 - 2:58 pm | #
ROFLMAO!
bearly(Excellent) writes:
ding ding ding - Opening Bell!
Big 'evaporation' style crash at the end! Come of baby!
This roach has a big head, big headed roaches run fastest. Now I'm a master of TA too.
@yagij - You're welcome.
There's been so much to keep track of, it's easy to miss something like that.
CBR, you are obviously not from Florida or you would know that's not a roach...
yagij said: "...Inquiring minds want to know."
Well, truly inquiring minds would look it up for themselves.
In the past several recessions there's been a point where net job-loss has accelerated month over month to an extreme, then backed-off, similar to a climax "crash" in the stock market after a long downtrend. With monthly non-farm payrolls that pattern occurs at or near the end of a recession.
It happened at the end of 2008, with monthly net job-loss accelerating four months in a row to a one-month extreme of -584,000 in November, but then it backed-off to -524,000 in December.
The cumulative job-loss will continue, but the point of maximum weakness is past. That's what the drop in the interest rate risk spreads is telling us. It's also showing up in (as I mentioned) real income less transfers, which is no longer falling.
Sebastia
[Turbo writes:
Kneale and Kudlow are equally as bad. Pisani ]
All total imbecile script readers. But my skin crawls when Erin blathers in her arrogant smug GS dismissive tone. Disgusting. At least Maria has orgasms and those monthly lip-pump jobs.
"LONDON (Reuters) - HSBC Holdings is likely to halve its dividend and may need to raise up to $30 billion (21 billion pounds) in a rights issue, according to leading analysts, sending shares in Europe's biggest bank to a seven-year low."
HSBC hits 7-year low on $30 billion cashcall
| Reuters
Can someone explain why/how companies still pay dividends even when there are no earnings to distribute?
"but a bottom in the stock market and real GDP in calendar year 2009 seem like good bets."
"but the point of maximum weakness is past."
I really don't see how someone could be confident of that in light of the demographic/entitlement issues and our earnest attempt to mimic every page of the late 90s japanese playbook. did japanese real estate and equities bottom out 2 or 3 years into their process just because 2 or 3 years is a long time for a recession? or did their demographics and policies extend it and deepen it to the present day, 17 years later?
yagij | 01.14.09 - 2:42 pm
Check the Financial Times article archive...they had some pieces a while back about the leverage of Euro banks.
Also, Google for Haloscan/CR and "regulatory arbitrage"; there were a couple of threads where this subject was discussed.
Also, search on AIG and "regulatory capital"...that should bring up some relevant pieces.
Don't have specific links right now...busy at work.
Lisa - I just wrote a big long post about dividends on SPX. It's astonishing how far EPS has fallen and low little dividends have. The charts are amazing.
How many companies really have the stomach to squeeze their balance sheets more just to maintain share price? Particularly in the face of a bear market with lower expectations.
"It happened at the end of 2008, with monthly net job-loss accelerating four months in a row to a one-month extreme of -584,000 in November, but then it backed-off to -524,000 in December.
The cumulative job-loss will continue, but the point of maximum weakness is past. That's what the drop in the interest rate risk spreads is telling us. It's also showing up in (as I mentioned) real income less transfers, which is no longer falling."
Phone-systems in 4 separate states crashed due to overload in December. NYC had 80k per day versus their standard 8k per day.
I think you are sadly mistaken if you think that peak unemployment was in November but only time will tell. I think we see a 9 figure monthly unemployment print before all is said and done.
Can someone explain why/how companies still pay dividends even when there are no earnings to distribute?
its called looting
Lisa(Unrated) writes:
Can someone explain why/how companies still pay dividends even when there are no earnings to distribute?
They're distributing your children's future income in the form of loans backed by government indebtedness, which you will later pay as taxes.
What about when they pay those dividends out from money they received from the gov't, ie, taxpayers????
The cumulative job-loss will continue, but the point of maximum weakness is past.
You are beyond help. Your opinions are worthless. you spent the batter part of 9 months defending the indefensible. just stfu and watch. that's the positioned you've earned.
Sebastian writes:
"In the past several recessions there's been a point where...
How has your modeling this time period based upon past eras worked out so far? Sebastian, understand. There is no past model for 2006-2012. What you are doing isn't even guessing or randomness.
"its called looting"
hardly, that money actually goes into suckers' IRAs and 401Ks.
real public company looting almost involves options and/or buyouts/mergers
What about when they pay those dividends out from money they received from the gov't, ie, taxpayers????
then they are being wise guys
Dawg!
Ya been missed...though some folks were anging for the resident curmudgeon gig...
In all honesty, maybe their recession is just a natural "life cycle" that has to play out until the 2nd largest economy in the world gets more in line with their future earnings.
\t yagij | \t \t \t \t01.14.09 - 3:07 pm | #
Yes, I'm beginning to think that the fate of mature economies follows a trajectory much like theirs. Population growth isn't sustainable forever. As productivity rises within a shrinking population, job growth slows. Exports can make up for that, but only to a certain point. At some point, economies stop growing. Efforts to reverse this trajectory by the BoJ have all been failures, and have partly led to the global credit bubble. Are other mature economies fated to follow the same trajectory? It's beginning to look that way.
Sebastian [It happened at the end of 2008, with monthly net job-loss accelerating four months in a row to a one-month extreme of -584,000 in November, but then it backed-off to -524,000 in December]
LMAO! 1 month, December which has year-end holiday distortions, and you pick it for marking a trend towards lower job losses, even as BK's & announced firings escalate where WARN act has a 2 month latency before the firings actually show up in the claims. You numbskull.
Rob Dawg- excellent point. When I would read things from various financial newsy stuff, if I detect someone running last recessions's playbook I almost immediately stop reading. The initial conditions of this recession are so vastly different from the last one they are hardly worth comparing. Home-equity, participation rate, U3/U6... very little is equivalent. It's so much worse.
"What about when they pay those dividends out from money they received from the gov't"
sure, it is less than ethical, perhaps.
but jas has made a good point on this - compare the earnings of companies (especially tech ones like aapl, csco, qcom, etc) and the haul brought by the board in due to options. that's looting.
speaking of nortel - how much options cash went out the door on that one in '98-'00?
OCDan said: "...Who here thinks this year will be the bottom?"
All depends on what level the SPX falls to. If the SPX fell from 900 to 800 i'd say its likely not the bottom, but what if the SPX fell to 100 sometime this year? Would you think that it is too low a level based on the future earnings of the SPX and therefore a reasonable, prudent person would be pretty logical to say it's very likely "THE" bottom? I would. so it all depends where it falls to. just my 2 cents
citizen energyecon writes:
Dawg!
Ya been missed...though some folks were angling for the resident curmudgeon gig...
Sh¡t. I was responding for my own benefit. Didn't mean to actually post. Fat fingers hit post v preview. I blame it because of how hot it is here.
No, I'm not back.
market opens in 16 minutes
Rob Dawg, yes you are
Thanks Mr. S. I'll check it out.
It is telling the BOJ hasn't jumped in and started buying USD. Why not? What specifically is holding them back? Are the natural buyers of Yen unable to do so?
dow maneuvering back towards 8150?
I see Hovnanian and Beazer are on the dollar menu again.
Angry Saver | 01.14.09 - 2:14 pm | #
Any word from anyone on David Weekly?
If we are replaying the 1965 - 1982 economic / bear market scenario, which I'm starting to believe is the case, then s&p 800 could prove to be a reasonable place to buy, provided you stick to unleveraged targets - the broad market, not so much for now. That being said, those who were long in Q3/2008 will be waiting until oh 2017 to be back to even.
Mr. Sparkle - Nice chart porn.
Parting comment - Even if the divys of some of my shares get cut by 50%, its more than I'm going to get in a CD or savings acct. So long as I dont need the cash in lue of the shares, I'm fine w/ this decision. I have actually been adding to some longer term positions w/ this in mind and maybe the prospect of some cap. gains. In Oct/Nov I bought some prd stuff so cheap that the effective yieled was 17% - I have since seen a nice lift of about 22% gain on these tidbits.
While I might be a tad bearish (just a tad) and I do believe the sky is almost falling, there is no way in hech all things are going to zero because governments would not like the prospect of civil unrest.
If and when Mad Max's shadow is seen on the horizen, I will alter my approach.
da bounce @ 8161?
Barley - I have a small problem with excel. It's kind of a compulsion that I suspect I share with more than a few on here. Thanks for the comments.
PageNotFound
Heh heh...Sparkle, if you need a different rush try OpenOffice...
"monthly net job-loss accelerating four months in a row to a one-month extreme of -584,000 in November, but then it backed-off to -524,000 in December."
Sebastian | 01.14.09 - 3:09 pm
You're my hero.
1) your post brought DAWG back to us.
2) your irrepressible optimism, especially in your new bear role, still shines through and puts a grin on my face and sunshine in my day.
However, please wait for the revision to December 2008's job loss number. It could be increased, like October & November's were.
Pissed Off in California said: "...I think you are sadly mistaken if you think that peak unemployment was in November but only time will tell. I think we see a 9 figure monthly unemployment print before all is said and done."
Well, now things are getting back to normal. Nobody actually reads what I post, they simply attack it without thought or consideration.
I would be sadly mistaken...if that's what I had said.
In fact, I clearly said that cumulative job-loss would continue. I was only describing the equivalent of a high-volume climax pattern in the non-farm payrolls numbers.
Sebastia
OT
¡ay Dios mío!
By Diana Washington Valdez / El Paso Times
Posted: 01/13/2009 03:49:34 PM MST
EL PASO - Mexico is one of two countries that "bear consideration for a rapid and sudden collapse," according to a report by the U.S. Joint Forces Command on worldwide security threats.
The command's "Joint Operating Environment (JOE 2008)" report, which contains projections of global threats and potential next wars, puts Pakistan on the same level as Mexico. "In terms of worse-case scenarios for the Joint Force and indeed the world, two large and important states bear consideration for a rapid and sudden collapse: Pakistan and Mexico.
gary,
"http://www.mytradersparadise.com
If you are new to trading, before you go out and buy into to someone that claims to have the holy grail take a day and read thru this blog. If it sounds to good to be true, well it just might be....BE SAFE and email me at dbolzes@chartertn.net ..."
Good to see that irony is not only alive but remains absolute ruler of the universe.
That and never invest money with someone lacking basic grammar. It's a sputtering hot, glowing red flag of doom.
Rob Dawg said: "How has your modeling this time period based upon past eras worked out so far? Sebastian, understand. There is no past model for 2006-2012...."
True, but there's also falling risk spreads and rising real income. If risk spreads are falling that means risk is falling. If real income is rising that means real income is rising.
If my prior mistake was ignoring the evidence, but I'm looking at it now, what's your point? If your outlook is so much darker than mine, shouldn't the risk spreads have remained at elevated levels? Shouldn't real income less transfers be continuing downward?
Sebastian
Mexico is one of two countries that "bear consideration for a rapid and sudden collapse," according to a report by the U.S. Joint Forces Command on worldwide security threats.
Oh, please. He who smelt it, dealt it.
but the point of maximum weakness is past.
again, just silence your desire to try and help.
I really don't see how someone could be confident of that in light of the demographic/entitlement issues and our earnest attempt to mimic every page of the late 90s japanese playbook. did japanese real estate and equities bottom out 2 or 3 years into their process just because 2 or 3 years is a long time for a recession? or did their demographics and policies extend it and deepen it to the present day, 17 years later?
Anonymous | 01.14.09 - 3:12 pm | #
This is a multiyear story, potentially a multidecade story. There could be a bottom this year followed by sustained rebound followed by an even lower bottom a year or two later (not saying I have data to support this). We are witnessing world-changing upheaval. This stuff can take a lot of time to unfold.
Just my 2 cents.
"but there's also falling risk spreads"
CB string pushing. The underlying problem is still one of insolvency -- and that is clearly getting worse.
Re: market bottom prognosticators: a stopped watch is right two times a day
Just my 2 cents.
There could be a bottom this year followed by sustained rebound followed by an even lower bottom a year or two later (not saying I have data to support this).
I think there is some pretty good data in Japan to support that
"but there's also falling risk spreads"
A product of negative velocity
Wow...here is Yahoo Finance's Top Stories blurb from a minute ago...
Top Stories
Stocks Hammered on Dismal Retail Sales, Banking Woes- AP
Wall Street extended its 2009 retreat Wednesday, falling sharply after the government issued a dismal reading on retail sales and investors grew increasingly anxious about the banking industry.
* For big US banks, trouble is just getting started- CNBC.com
* Judge rules Madoff can remain free on bail- AP
* Fed: Economy starts '09 on weaker footing; outlook dim- AP
* Oil prices tumble below $37 with US inventories bulging- AP
* Retailers Gottschalks and Goody's file for bankruptcy- Reuters
* Citi breakup in sight after Morgan deal; stock drops below critical $5 level- CNBC.com
* London 2012 monitoring Nortel after bankruptcy- AP
* Retail sales plummet more than expected in December- AP
* Tax Errors and Bailout Gaffes: Is Tim Geithner the Right Man to Run Treasury?- Tech Ticker
That could put a dent in someone's day.
I've been a long time lurker, and quite often I've thought Sebastian is not serious in his outlooks. He may even be one of bearish regulars just pullin our legs.
If Seb really means what he types, yikes.
1) Don't Pay Taxes.
2) Say it's common.
3) Get appointed Treas. Sec.
4) Profit !!!
Bottom call? OK. Dow between 6600 and 7000 this year. When? 2-4 different times. The first one in February. The last one, maybe October.
CR, point of clarification:
While Goody's was founded in 1953, Bob Goodfriend (the son of the founder) sold his interest in the company several years ago in a big LBO. Prior to that, Goody owned the vast majority of their assets - those assets were leveraged up to the hilt as part of the LBO. This leveraging is ultimately what did them in.
Just wanted to let you know.
"For big US banks, trouble is just getting started- CNBC.com"
No. CNBC is just starting to report on it. They are what, 2+ years late on this topic?
I worked at major financial institutions and have been out of their stock completely since mid 2007 (except the options which will vest over the next two years).
For a number of banks, the trouble isn't just starting, it's about to end. Do we have a pool on number of banks taken over by the FDIC this year? Dollar volume? A dead pool perhaps?
Goodys has been in trouble for over 15 years. It was already in bankruptcy before the subprime crisis hit.
OT: but I must say that neither party (Rep/Dem) wanted to win this election, however, Dems put up a candidate that did win. Well, someone had to win!!!
The Dems saw an opportunity to kill Regonamics...Was it a good idea...
Think about it, they can re scramble the board, if they succeed, they will rule for the next 30+ years,
,if they fail, there will be a new party system with new parties will re-align...