Monday, August 31, 2009
Our gold is going away
Voltron says: There are a lot of shady things that go on in the gold markets. This article asserts that more than half of the US gold reserve was exported in the last two years. Make sure you don your tinfoil hat while reading this.
Fed indirectly buying Treasuries to prop up dollar
Voltron says: The FED is buying Fannie Mae and Freddie Mac ("agency") paper from foreign central banks with the quid pro quo that they will buy U.S. Treasuries in order to prop up the dollar.
Thursday, August 27, 2009
Wednesday, August 26, 2009
Tuesday, August 25, 2009
Pre-paid college tuition
Voltron says: States are losing money on this . . . If you're enrolled, their loss is your gain.
http://marketplace.publicradio.org//display/web/2009/08/25/pm-college-futures
http://marketplace.publicradio.org//display/web/2009/08/25/pm-college-futures
Hot Waitress Index
Voltron says: Keep a weather eye for vanishing winsome hostesses. Hopefully
not too soon.
not too soon.
Sunday, August 23, 2009
Thursday, August 20, 2009
Lessons from Crazy Eddie
Voltron says: Anyone who lived in the New York City area in the 1980's remembers "Crazy Eddie". It was an electronics store chain with an ad campaign featuring a frenetic radio show host . . . Their prices were "Insaaaaaaaane!". The company was also a massive fraud from the beginning. NPR's "Planet Money" interviewed their CFO Sam Antar
http://www.npr.org/blogs/money/2009/08/into_the_mind_of_a_financial_c.html
http://www.npr.org/blogs/money/2009/08/into_the_mind_of_a_financial_c.html
Crazy Eddie was underreporting their sales and skimming the New York City sales tax (a whopping 8.5%). Their CFO said, the joke at the time was that if New York City eliminated their sales tax, half the mom and pop shops in the city would go out of business, implying that skimming sales tax was how most small businesses stay solvent! This flies in the face of academic economic wisdom, which is that eliminating the sales tax would be good for businesses. It reminds me of the scene from "Back to School" where Rodney Dangerfield is explaining why his business professor's example construction budget is bunk: "Well, first of all, you're gonna have to grease the local politicians for the sudden zoning problems that always come up. Then there's the long-term costs, such as waste disposal. I don't know if you're familiar with who runs that business, but I assure you it's not the Boy Scouts." After Crazy Eddy became publicly traded, they slowly moved their off-the-books business back on the books to give the illusion that their business was growing in order to inflate the stock price.
I'm always fascinated by frauds. I've become convinced that the economy is completely dominated by fraud and criminal activity. The biggest cash crop in the United States is Marijuana. Credit Card fraud is larger than the entire illegal drug trade. During the S&L crisis of the 90's almost every bank committed fraud. When Fitch recently looked at individual mortgage files, they found "the appearance of fraud or misrepresentation in almost every file." I'm certain that all the major banks are insolvent and have committed massive frauds. After all, how can you compete with frauds when the government is complicit? To paraphrase Balzac: "behind every great fortune lies a great crime."
Former S&L regulator William Black has done a lot of great work on this. One of the first things he did was limit the growth of S&Ls. This seems counter-intuitive, but makes sense because all ponzi schemes must grow otherwise they implode, so it's a very easy way to ferret them out and limit the damage. With the current banking crises, the FDIC is doing the exact opposite by giving banks a pass to allow them to "earn their way out" of the red (i.e. grow). By the time the FDIC finally takes action, the losses are huge.
Wednesday, August 19, 2009
Tuesday, August 18, 2009
Saturday, August 15, 2009
Wells Fargo: Whatever Happened to Bank Bears? -- Seeking Alpha
Voltron says: "free thinking maverick" Reggie Middleton's latest, well
researched article on wells fargo
researched article on wells fargo
http://seekingalpha.com/article/155945-wells-fargo-whatever-happened-to-bank-bears
Thursday, August 13, 2009
Wednesday, August 12, 2009
ProShares UltraShort S&P 500, ProShares UltraShort 7-10 Year Treasury: Money Flow Leaders (SDS, PST) - WSJ.com
Voltron says: money is flowing into SDS (ultra short s&p500) and out
of PST (treasuries).
of PST (treasuries).
http://online.wsj.com/article/SB125009554881426385.html?ru=yahoo
Monday, August 10, 2009
Off Topic: USAA lets you deposit checks with iPhone
Voltron says: You can use the iphone camera to photograph the front and
back of a check and USAA will deposit it electronically. I think the fact
that the camera on the iPhone 3GS can focus in close opens up many
possibilities: business card scanner, document scanner, barcode scanning.
back of a check and USAA will deposit it electronically. I think the fact
that the camera on the iPhone 3GS can focus in close opens up many
possibilities: business card scanner, document scanner, barcode scanning.
http://www.nytimes.com/2009/08/10/technology/10check.html
[This is completely off topic and is not a statement about Apple stock.]
Friday, August 7, 2009
Is it Time To Short Wells Again?
August 7, 2009 – 3:07 pm
by Teri Buhl for BankImplode.com
The smart money has turned bearish on Wells Fargo again.
Yesterday, rapid put volume and big block buys on the September 26 strike price had hedgies buzzing. On Thursday WFC traded 87,500 calls against 194,000 puts for 2.20:1 put/call ratio. That type of unusually volume set off optionmonster.com alarm bells, as clients received email alerts to big institutional money turning negative on the stock.
Two well-known bank analysts said they got a rush of calls mid-day from their top hedge fund clients sniffing around for the name of the block buyer. According to traders on the CBOE and sources inside the firm’s trading operation it was none other then the recently-hailed trading profit leader Goldman Sachs. CBOE trading records show the put buyer traded around 30,000 contracts at the September 26 strike price paying $1.05 and $.1.10 between two big blocks.
Meaning: Goldmanites and other smart money are betting Wells’ stock gallop is over and the sharp reversal in bearish activity is a ‘tell’ sign that a downside move is in the near future.
Andrew Wilkinson, market analyst at Interactive Brokers Group said, “This was a very well-researched, well-timed turn on Wells Fargo yesterday.”
Pete Najarian, of OptionMonster.com, warns to be cautious on Well Fargo, while his Fast Money buddy Guy Adami said on yesterday’s show he’d ride a full-blown short now. FBR Capital Markets analyst Paul Miller has a current price target of $15 on the stock and recommends to short the heck out of it while it’s so overvalued. Famed short-sellers like Jim Chanos and David Einhorn, who successfully shorted Wells in the past, have likely been ramping up their short positions while the stock is flying at a high.
WFC hit a high for the year today at $29.34. Data Explorers says there has been a rapid increase in the short base this week, rising from 1.5% to 2% of shares outstanding on loan.
Why all the recent souring on the mortgage banking giant, considering they blew analyst EPS estimates out of the water again (by over 40%) for the second quarter? Because once again, it’s believed that Wells Fargo is playing accounting tricks to show paper profits like they did in Q1, this time off of goodwill from their Wachovia purchase.
Wells Fargo — which has a strange practice of never answering analyst calls when they announce earnings — will publish their 10-Q next week, sending data combers to scour through the details to try to find where the core pre-provision earnings really are.
According to Paul Miller’s team there are a few key data points that just don’t add up. One red flag they present is that mortgage rate movements in the quarter were not enough to justify a billion-dollar write-up in their mortgage servicing rights. Another is the fact the non-performing assets accelerated 45%, with an increase of $5.7bn over last quarter, yet the bank reserved only about half what it did the quarter before, at $700m for future loan losses. And this isn’t the first time in recent months analysts have complained bitterly that the bank was playing around with loan loss reserves for the purpose of boosting profits.
Miller — who doesn’t think the bank’s net charge-off or non-performing assets are going to decrease anytime this year, given the lagging job market — continues to warn that they are simply not managing their credit cost. He writes in a note to clients on July 22, “WFC will have to materially increase its provision expense, which will put pressure on earnings and valuations.”
Main street and most of the financial press still seem to be enamored with the talked-up-by-Buffett Wells; but the institutional money is starting to place its bets — based on extreme skepticism with a firm which has allowed serious questions to fester about how they’re really making their profits.
by Teri Buhl for BankImplode.com
The smart money has turned bearish on Wells Fargo again.
Yesterday, rapid put volume and big block buys on the September 26 strike price had hedgies buzzing. On Thursday WFC traded 87,500 calls against 194,000 puts for 2.20:1 put/call ratio. That type of unusually volume set off optionmonster.com alarm bells, as clients received email alerts to big institutional money turning negative on the stock.
Two well-known bank analysts said they got a rush of calls mid-day from their top hedge fund clients sniffing around for the name of the block buyer. According to traders on the CBOE and sources inside the firm’s trading operation it was none other then the recently-hailed trading profit leader Goldman Sachs. CBOE trading records show the put buyer traded around 30,000 contracts at the September 26 strike price paying $1.05 and $.1.10 between two big blocks.
Meaning: Goldmanites and other smart money are betting Wells’ stock gallop is over and the sharp reversal in bearish activity is a ‘tell’ sign that a downside move is in the near future.
Andrew Wilkinson, market analyst at Interactive Brokers Group said, “This was a very well-researched, well-timed turn on Wells Fargo yesterday.”
Pete Najarian, of OptionMonster.com, warns to be cautious on Well Fargo, while his Fast Money buddy Guy Adami said on yesterday’s show he’d ride a full-blown short now. FBR Capital Markets analyst Paul Miller has a current price target of $15 on the stock and recommends to short the heck out of it while it’s so overvalued. Famed short-sellers like Jim Chanos and David Einhorn, who successfully shorted Wells in the past, have likely been ramping up their short positions while the stock is flying at a high.
WFC hit a high for the year today at $29.34. Data Explorers says there has been a rapid increase in the short base this week, rising from 1.5% to 2% of shares outstanding on loan.
Why all the recent souring on the mortgage banking giant, considering they blew analyst EPS estimates out of the water again (by over 40%) for the second quarter? Because once again, it’s believed that Wells Fargo is playing accounting tricks to show paper profits like they did in Q1, this time off of goodwill from their Wachovia purchase.
Wells Fargo — which has a strange practice of never answering analyst calls when they announce earnings — will publish their 10-Q next week, sending data combers to scour through the details to try to find where the core pre-provision earnings really are.
According to Paul Miller’s team there are a few key data points that just don’t add up. One red flag they present is that mortgage rate movements in the quarter were not enough to justify a billion-dollar write-up in their mortgage servicing rights. Another is the fact the non-performing assets accelerated 45%, with an increase of $5.7bn over last quarter, yet the bank reserved only about half what it did the quarter before, at $700m for future loan losses. And this isn’t the first time in recent months analysts have complained bitterly that the bank was playing around with loan loss reserves for the purpose of boosting profits.
Miller — who doesn’t think the bank’s net charge-off or non-performing assets are going to decrease anytime this year, given the lagging job market — continues to warn that they are simply not managing their credit cost. He writes in a note to clients on July 22, “WFC will have to materially increase its provision expense, which will put pressure on earnings and valuations.”
Main street and most of the financial press still seem to be enamored with the talked-up-by-Buffett Wells; but the institutional money is starting to place its bets — based on extreme skepticism with a firm which has allowed serious questions to fester about how they’re really making their profits.
Wednesday, August 5, 2009
About half of U.S. mortgages seen underwater by 2011
Excerpt:
NEW YORK (Reuters) - The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.
Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.
http://www.reuters.com/article/businessNews/idUSTRE5745JP20090805?feedType=RSS&feedName=businessNews
Monday, August 3, 2009
FDIC: More losses to come from home equity loans
Voltron says: Wells Fargo is a big player.
http://www.reuters.com/article/marketsNews/idINN0352824120090803?rpc=44
http://www.reuters.com/article/marketsNews/idINN0352824120090803?rpc=44
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