Using Veritas to Construct the "Per…

29-04-2017 Hits:82209 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:77819 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:77393 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:82132 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:78726 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:81015 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:47896 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:79726 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:79243 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:79797 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:84797 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:81730 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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Like JP Morgan (Anecdotal observations from the JP Morgan Q2-09 conference call), I have never performed a full forensic analysis of Bank if (pun intended) America, but I have made anecdotal observations in the past. See the list of articles at the end of the post for my ruminations on BAC. For now, let's look at the media reports of thier most recent quarter...

From Reuters:

Chief Executive Kenneth Lewis said tough economic conditions will hurt results into 2010. Soaring credit losses may add to pressure on Lewis as the U.S. Congress and regulators increase their scrutiny of the bank, including its ability to manage risk and its controversial January 1 acquisition of Merrill Lynch & Co.

"Growth in charge-offs and non-performing assets still scares the daylights out of me," said Paul Miller, an analyst at FBR Capital Markets. Ya Damn Skippy!

Bank of America set aside $13.38 billion for bad loans for a second straight quarter, and net charge-offs totaled $8.7 billion, up 25 percent from the prior three-month period.

ONE-TIME GAIN HELPS RESULTS

Second-quarter net income applicable to common shareholders fell 25 percent to $2.42 billion, or 33 cents per share, from $3.22 billion, or 72 cents, a year earlier.

Before preferred stock dividends in both periods, profit fell 5 percent to $3.22 billion. Net revenue on a taxable equivalent basis rose 60 percent to $33.09 billion.

reResults included a $5.3 billion pre-tax gain from the sale of one-third of the bank's stake in China Construction Bank Corp. They also included $713 million of dividend payments tied to a federal bailout of the bank, and a charge to bolster a federal deposit insurance fund...

Nonperforming assets surged 21 percent to $30.98 billion. The Charlotte, North Carolina-based bank added $4.63 billion to reserves for bad loans, ending with $35.78 billion, and the rate of credit card losses soared to nearly 12 percent.

"Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010," Lewis said. Ya think???!!!

From Bloomberg:

Bank of America's report follows better-than-expected results from JPMorgan Chase & Co. and Goldman Sachs Group Inc. earlier this week. While competitors have repaid U.S. rescue funds and freed themselves of extra U.S. scrutiny, Lewis must repair relations with regulators after clashes over the bank's pursuit of Merrill Lynch & Co. and demands that he raise $33.9 billion in capital.

...

Profit in global banking increased 74 percent to $2.49 billion at Bank of America, aided by a gain from selling the merchant processing business. In my opinion, these are all one time occurances. You can't blow  the trading doors off every quarter, particularly as more competitos come in to shrink margins, and how many merchant processing businesses and Chinese Bank minority interests does BAC have to sell for next quarter?  The home loan and insurance unit lost $725 million, even as revenue tripled, on credit costs and expenses to help homeowners modify their loans.  So this is not lost on anybody, with a 300% increase in revenues, BAC managed to pull out a 3/4 billion dollar loss. That goes to show you exactly how bad the credi t deterioration actually is in its markets. Countrywide and Merrill didn't implode due to overperformance. 

Earnings in global markets, the unit that includes trading of bonds, equities and currencies, more than quadrupled to $1.38 billion on improved credit markets. Again, hard to get a multiple repeat performance here. Wealth and investment management declined 24 percent to $441 million as net interest income slid. Revenue in the wealth unit nearly doubled after the Jan. 1 purchase of Merrill Lynch. Again, a doubling of revenue from acquisitions brings a 24% decrease in income. The Merrill purchase can be justified this quarter due to the trading profits, but that will be a rabbit that can come out of the hat at that velocity but so many times. As talent drains out of Merrill, it looks like decreasing profits mean the merger was actually value destroying, particularly the price paid (as if we didn't already know that overpaying for a collapsing company is a bad idea!).

Card services swung to a $1.62 billion loss from a $582 million profit last year as more borrowers fell behind on payments. Earnings at the deposits business declined 59 percent to $505 million and the net interest margin, the difference between what it pays on deposits and the rates earned on loans and securities, narrowed to 2.64 percent from 2.7 percent in the first quarter and 2.92 percent in the year-earlier period. This is the same story as over at JPM. Subscribers, look hard at the Doo Doo 32 forensic reports and the Tricky Dick bank. They do not have large trading arms to hide credit losses. It may get interesting. There is plenty of fodder in the downloads section to keep you both entertained and informed.

Loss Reserves

The provision for credit losses, money set aside to cushion against bad debts, was $13.38 billion, unchanged from the previous quarter. Assets no longer collecting interest rose to $30.98 billion from $25.6 billion on March 31 and debts the bank doesn't expect to be repaid jumped 25 percent to $8.7 billion. At this rate of deterioration, it appears as if BAC is being a bit stingy in not increasing provisions for losses. It's not as if losses aren't ramping up. Expect these provisions to increase in the near future, and to hit accounting earnings accordingly.

Bank of America said it can't collect payments on 11.73 percent of its $170 billion credit-card portfolio as of June 30, up from 8.62 percent on March 31. CREDIT CARD LOSSES ALONE ARE 16% OF TANGIBLE (UNADJUSTED) EQUITY, AND ARE RAMPING UP AT 12% PER QUARTER. uH ohhh!!!

Predictions from analysts varied from a loss of 11 cents a share to a 50-cent profit because of differences in accounting for unusual items, including a gain of $5.3 billion from the sale of a stake in China Construction Bank Corp. and dividend payments to the U.S. bank rescue fund, which holds $45 billion of preferred stock.

Bank of America posted its second straight quarterly profit after a $1.7 billion loss in the last period of 2008, its first losing quarter in 17 years.

Capital Markets

The bank, largest in the U.S. by deposits and assets, is benefiting from a surge in demand from corporate clients selling equities and bonds, and rebounding values of securities backed by residential and commercial mortgages. Again, at least for the near term, this is a one time event, and can't be relied on for next quarters profit surge!

"Their capital issues are mostly behind them," said Bill Andrews, a senior vice president at C.S. McKee LP, a Pittsburgh firm that holds about 6.9 million Bank of America shares. "The big thing is whether they are progressing in the right direction in generating growth." Yeah, right! Rule number 1 -  never fall in love with your position!

Federal Reserve stress tests in May found the bank may face as much as $136 billion in losses through 2010, and regulators told the bank to raise more capital. Lewis, 62, said U.S. officials were underestimating the bank's earnings power, and then raised more money than they demanded, ending the campaign with about $38 billion.

Acquisitions

Regulators and lawmakers have pressured Lewis to prove that his agreements last year to buy Countrywide Financial Corp., the biggest U.S. home lender at the time, and Merrill Lynch, the largest brokerage, can pay off with unemployment reaching the highest level since 1983. Countrywide was acquired a year ago after the home lender almost collapsed under the weight of defaulting subprime home mortgages.

Merrill's acquisition "is going to work out," said Bill Fitzpatrick, an equity analyst at Optique Capital Management, which manages $900 million, including Bank of America shares, in Racine, Washington. "That's why they are profitable here in the second quarter. They would not be, outside of the Merrill Lynch revenue."

Lewis had considered backing out of the Merrill Lynch purchase in December as losses spiraled toward more than $15 billion in the fourth quarter. The bank completed the deal in January after then-Treasury Secretary Henry Paulson threatened to have Lewis ousted if the deal was scuttled because regulators feared Merrill would collapse and threaten the financial system.

Let's set a few facts straight here. BAC currently has non-performing assets equal to ALL of the capital that it just raised, the same capital that it said it didn't need just a few short weeks ago. These non-performing assets are a full 1/4 of its tangible equity (unadjusted, of course - if I took the time to scrub it for BS the numbers would look much worse) with an upwards trend of 12%. Let's just assume this trend is valid, quarterly, and we lop 12% off for the next 3 or 4 quarters. This spells insolvency, plain and simple, and that is with trillions of dollars of government aid, much of which aimed directly at the nations largest bank.

Good readin' on the topic:

  • Green Shoots are Being Fertilized by Brown Turds in the Mortgage Markets
  • Beware of Bank Earnings Propaganda - They are still in BIG trouble!
  • The two tailed banking crisis
  • America, You have been outright lied to! Bamboozled! Swindled! Hoodwinked! The Worst Case Scenario
  • The Re-Release of the Open Source Mortgage Default Model
  • The Truth About the Banks Has Been Released: the open source spreadhseet edition
  • Who are ya gonna believe, the pundits or your lying eyes?"
  • Who are you going to believe, the pundits or your lying eyes, part 2

    shiller_condo_index__change_-_april_09.png

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