July 29th, 2010 by Reggie Middleton
About two weeks ago I warned my readers and subscribers not to count Microsoft out of the smart phone fray (Don’t Count Microsoft Out of the Ultra-Mobile Computing Wars Just Yet). They succumbed to big company-itis like many other monopolies, but you don’t survive two technology paradigm shifts by being a slouch. Now upon the eve of the third major paradigm shift in as many decades (an unprecedented pace of popularly accepted technological advance than many do not fully appreciated), we finally have Microsoft taking things seriously as Google and Apple commence to eating MSFT’s lunch.
The ability to fully and functionally integrate with Office 2010 and legacy versions, X-Box Live, and Zune Marketplace are levers that Microsoft should have used to take over the smart phone space years ago. They didn’t, they fumbled the ball like a butter-laden fair maiden with extra greasy finger tips. They also, apparently, have learned their lesson…
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Tags: Strategy, technology
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July 28th, 2010 by Reggie Middleton
From CNBC: BofA, Citi, Wells Fargo Outlook Negative: Moody’s
Moody’s on Tuesday changed its outlook on Bank of America, Citigroup and Wells Fargo to negative, from stable, citing lessened government support for the institutions under new U.S. regulations.
A negative outlook indicates the banks are more likely to be downgraded over the next 12 to 18 months. The credit ratings agency also said it may cut its ratings on ten regional banks on reduced government support.
Moody’s has boosted its debt and bank deposit ratings on large financial institutions by between 3 and 5 notches since early 2009 on the assumption that they would receive government support in a time of trouble because of the risks they pose to other financial firms and the economy as a whole.
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Tags: Asset Securitization Crisis, Commercial Banks, Current Affairs, Research
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July 27th, 2010 by Reggie Middleton
I’ve been harping on banks a lot lately, so why give up a good thing. Next up, we have a “how to” manual for JP Morgan private bank salespersons to assist wealthy executives in insider trading and the liquidation and/or monetization of restricted stock. You see, this gets sticky because it very well may be against the law to put a hedging position on your restricted stock portfolio based upon non-public information. As a matter of fact, I’m pretty sure it is against the law. This is how JP Morgan presents it…
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Tags: Capital Markets, Financial Shenanigans, Investment Banks, Legislation
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July 27th, 2010 by Reggie Middleton
Last week, I made clear to my readers and subscribers that the bank malaise is not over, despite what may appear to be encouraging moves by the executive staff. Housing prices are still on their way down, save temporary blips from government bubble blowing and the outright concealment of non-performing assets by banks, see Anecdotal Evidence That Banks Are Hiding Depressed High End Real Estate. Now, many may see this as consipiracty theory, which is why I always included hard analysis behind my posts. After a Careful Review of JP Morgan’s Earnings Release, I Must Ask – “What the Hell Are Those Boys Over at JP Morgan Thinking????”
The boys over there at the “Morgan’ appear to be partying like it was 1999, releasing all types of reserves and provisions (which coincidentally padded a very weak earnings quarter) as if I didn’t make it “Very Clear In March, US Housing Has a Way to Fall”:
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Tags: Asset Securitization Crisis, Banking, Commercial Banks, Financial Shenanigans, Heard on the Street, Mortgage Banking, Research
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July 27th, 2010 by Reggie Middleton
Much of the mainstream media has carried articles that were at least somewhat skeptical of the European bank stress tests. I think being “somewhat skeptical” is about 5 leagues below where they should be, but its a start. After all, the EU actually passed a bank that is literally insolvent. I don’t want to pound on the actual insolvency of this German bank, since I already went into detail on this topic earlier, but it is imperative that my readers understand the depth and extent of the travesty (or lies) that are being promulgated in the name of “transparency”. I ridiculed the basis of these stress tests last week (European Bank Investors, Don’t Look Now – You’ve Been Hoodwinked, BamBoozled…), but now it is time to show you that these tests which assume the biggest threat to the European banking system (sovereign default or restructuring) will not occur and capriciously passes banks that not only will be hampered in the future, but are actually quite insolvent (by nearly any realistic means measurable) now, have actually proven that the risks of restructuring and/or haircuts are virtually guaranteed. This leaves the results of the stress tests a farce, at best and an insult to capitalism and common sense.
The tests assumed that there would not be a sovereign default. The tests also refused to mark “hold to maturity” inventory to market, despite the fact that said inventory may be permanently impaired. The logic? Europe will not allow a default. But how about a restructuring? And how will Europe handle more than one sovereign coming to the restructuring trough? I’ve already demonstrated the damage that can be done in A Comparison of Our Greek Bond Restructuring Analysis to that of Argentina.
Price of the bond that went under restructuring and was exchanged for the Par bond in 2005
Price of the bond that went under restructuring and was exchanged for the Discount bond
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Tags: Asset Securitization Crisis, Capital Markets, Central and Eastern Europe, Commercial Banks, Current Affairs, Financial Shenanigans, Global Macro, Heard on the Street, Law & the Government, Legislation, Questions from Reggie to Ask YOUR Advisor, Research, UK and Eurozone
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July 26th, 2010 by Reggie Middleton
To continue on the topic of deflation, inflation, depression and stagflation (what joyous times we live in:-)) I bring you..
Deflation of the Great Depression vs. Stagnation of Now: Casey Mulligan
- Current price levels have not dropped significantly, and most consumer items are still more expensive in nominal terms than they were ten years ago
- In 1929, consumer prices fell every month for four years, compared to a few deflationary months in 2008 followed by light increases in consumer costs throughout 2009
- While the author is a PhD (and therefore according to a Federal Reserve researcher, BoomBustBlog is not mighty enough to question him), his statement that deflation has not been as bad is based on 20/20 hindsight logic, and he should be more concerned with, “Whether or not deflation is about to take root and stay for a while.”
Where is the consumer demand to keep prices from falling? As credit continues to contract and consumer discretionary spending is still weak, growth in consumer prices looks unlikely at best. It would be wise not to confuse deleveraging with deflation, as consumers continue to surrender their credit cards and approach living within their means.
Tags: Asset Securitization Crisis, Global Macro, Heard on the Street
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July 26th, 2010 by Reggie Middleton
Let’s make this quick and clean. Enter the first leg of the formula…
Wages Fail to Keep Pace with Inflation: WSJ
- Median weekly earnings rose 0.8% in the 2nd Quarter this year, against 1.8% CPI growth in the same period
- Excess supply in the labor market has kept wage inflation low
- On a year over year basis, wage growth based on occupation has been barely positive, or in some cases wages are showing deflationary pressures
Which leads to a hint of the Stagflationary conclusion…
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Tags: Asset Securitization Crisis, Current Affairs, Global Macro, Socio-economics, Strategy
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July 25th, 2010 by Reggie Middleton
Why are Banks Hiding High End Residential Real Estate? Courtesy of the Real Estate Channel:
- Without the FTB tax credit, the housing market is receiving artificial demand and price support from the FHA loan guarantees and banks sitting on mortgages of homes once valued at $300,000
- Banks in areas that were severely damaged by the downturn in domestic real estate (Cook County, Illinois, Miami-Dade County, Florida, Orange County, California) have significant inventories of homes worth more than $300,000 that they will not put on the market, even after foreclosures lasting more than 2 years
According to Bruce Krasting over at Zero Hedge, the FHA is “Officially Broke” anyway: FHA – “We are Officially Broke” After perusing the data above, one would wonder why… (Link to FHA/FR)
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Tags: Asset Securitization Crisis, Commercial Banks, Current Affairs, Heard on the Street, Residential Real Estate
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