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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To highlight more of the damage to be done to TARP recipient banks such as Wells Fargo and PNC, I know turn my attention to the commercial mortgage sector (see the previous post BoomBustBloggers appear to be pressuring PNC for background info). We have already hashed out risk in the residential mortgage sector with valuable research that I released for free: see The Re-Release of the Open Source Mortgage Default Model and Green Shoots are Being Fertilized by Brown Turds in the Mortgage Markets for our in depth take on loan losses to come for all banks who participated in residential real estate lending. I have visited commercial lending risk many times before, starting with my work on GGP, which is now bankrupt, but not before I gave my readers a warning nearly a year in advance   See my posts from 2007 and early 2008:

•·         Will the commercial real estate market fall? Of course it will.

•·         Do you remember when I said Commercial Real Estate was sure to fall?

•·         The Commercial Real Estate Crash Cometh, and I know who is leading the way!

Now that the nation's second largest mall property owner and REIT has just filed chapter 11, after I warned readers over a year and a half ago of this very distinct possibility, others are finally starting to jump on the bandwagon (See General Growth Files for Protection in Biggest U.S. Real Estate Bankruptcy then go on to read the 80 or so pages of research that I have generated to support riding the share price down from $60 to near zero: GGP and the type of investigative analysis you will not get from your brokerage house.)

You may read more about what is happening in CRE lending in A Micro View of the Macro Damage to be Caused by Imploding Commercial Real Estate, but for now, I want to drill down to what these banks are holding.

 

 Notice the exceptional timing of PNC management.

pnc_cre.png

    Commercial real estate values in the U.S. remained on an upward trend long after the 2nd half of 2006, when the housing prices began falling in most MSAs. Commercial real estate values peaked and began falling towards the end of 2007 and continued to decline through 2008.

These are our very conservative expected losses for PNC's CRE holdings, as compared to the government's stress test green shoots...

pnc_cre_loss_expectations.png

Trust me, it can get much worse. Take a look at Real Point Consulting's CMBS loss data, keeping in mind that the losses shown in CMBS are also cracking in the whole loans held at regional banks. CMBS delinquency rates are up 585%, year over year. REPEAT, 585%! For those who want to know why, I suggest you peruse "Who are ya gonna believe, the pundits or your lying eyes?"and Who are you going to believe, the pundits or your lying eyes, part 2 . Here, a picture is worth a thousand words...

shiller_condo_index__change_-_april_09.png

There ain't nuthin like building thousands of extra condo units next to empty condo to be lots, as condo prices plunge amid a glut of condo supply - all funded by banks like PNC!

dsc00456.jpg

Oh yeah, and back to the Real Point analytics:

In June 2009, the delinquent unpaid balance for CMBS increased by a substantial $9.87 billion, up to a trailing 12-month high of $28.65 billion. Overall, the delinquent unpaid balance grew for the 10th straight month, up an astounding 585% from one-year ago (when only $4.18 billion of delinquent balance was reported for June 2008), and is now almost 13 times the low point of $2.21 billion in March 2007. An increase in four of the five delinquent loan categories was noted in June, including a significant $6.82 billion increase in the 30-day delinquency bucket. Nearly one-half of this increase was driven by the reporting of $3.38 billion of GGP-sponsored but specially-serviced loans as 30-days delinquent (the ultimate resolution of such loans to be determined). In addition, the distressed 90+-day, Foreclosure and REO categories grew in aggregate for the 19th straight month – up 32% from the previous month and over 411% in the past year. This increase far overshadows the $104.6 million in loan workouts and liquidations reported for June 2009 across 26 loans. Ten of these loans at $58.06 million, however, experienced a loss severity near or below 1%, most likely related to workout fees, while the other 16 loans at $46.66 million experienced an average loss severity near 64%. As additional pressures are placed on special servicers to maximize returns in today’s credit market, true loss severities are expected to be high while liquidation activity is expected to slow as fewer transactions occur. This would be the result of reduced or distressed asset pricing, lower availability of take-out financing, and increased extensions of balloon defaults through 2009 and 2010.

The total unpaid balance for all CMBS pools under review by Realpoint was $817.4 billion in June 2009, down from $825.4 billion in May (affected by some servicer and trustee reporting delays). Both the delinquent unpaid balance and delinquency percentage over the trailing twelve months are shown in Charts 1 and 2 below, clearly trending upward. (PS, that giant red stalk is a green shoot!)

cmbs_delinquency.jpg

 


The "lite" version of the "real" PNC stress test conducted in May by my staff and I is now available for public download. Notice how prescient it is now, and then, in light of PNC's recent earnings announcement - PNC profit down 87 pct, misses view on bad loans   23 Jul 2009. 

 PNC stress test write up - public lite 2009-07-27 02:37:11 193.21 Kb

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Relevant links:

·  America, You have been outright lied to! Bamboozled! Swindled! Hoodwinked! The Worst Case Scenario

·  Regarding Housing Price Decline, You Ain't Seen Nothing Yet

·  America, You have been outright lied to! Bamboozled! Swindled! Hoodwinked! The Worst Case Scenario,

·  The Real Stress Test Results;

·  and Reggie Middleton Releases More Goldman Sachs Secrets that Tim Geithner Might not Share with You!

·  as well as The Truth About the Banks Has Been Released: the open source spreadhseet edition;

·  Welcome to the Big Bank Bamboozle! and

·  The Re-Release of the Open Source Mortgage Default Model]

·  Tricky Dick Bank Reporting Schemes - What record earnings are you referring to?]

·  § WFC Investment No...

·  § WFC Investment No...

·  § PNC SCAP Results ...

·  § PNC SCAP Results ...

·  § BoomBustBlog.com'...

·  § Small retail bank 1Q09

·  § PNC Simulated Gov...

·  § Sun Trust Banks S...

·  § MS Simulated Gove...