Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:305 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:693 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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It's the Real Estate Crash That I Warned…

20-03-2017 Hits:1168 BoomBustBlog Reggie Middleton

It's the Real Estate Crash That I Warned You About (again)

I've issued several warnings late last year warning of the real estate bubble peaking and popping. I feel I'm especially qualified to do such since I quite accurately called the...

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When It Comes Time To Show and Prove, Eq…

20-03-2017 Hits:1021 BoomBustBlog Reggie Middleton

When It Comes Time To Show and Prove, Equity Markets May Drop Hard

The markets have gotten euphoric since the Trump election, apparently because someone believed what he was selling. Take a look at the broad market jump (powered greatly by the bank...

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So, Brexit Is Now Almost Official. Is Th…

20-03-2017 Hits:435 BoomBustBlog Reggie Middleton

Note: All downloadable legacy content is for subscribers only. We currently have a sale for $11 per month for basic access. Professional subscribers are now evevated to have direct access...

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In Less Than Two Weeks, Another Bitcoin …

17-03-2017 Hits:1809 BoomBustBlog Reggie Middleton

In Less Than Two Weeks, Another Bitcoin ETF Faces SEC Deadline - It's Denial Is NOT A Bearish Event

LedgerX's "SOLIDX BITCOIN TRUST" has an approval deadline this March 30th, 2017.If it is approved, Bitcoin is due for one hell of a bump, but...  

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The Fed Raises Rates While Still Baby Fe…

17-03-2017 Hits:1660 BoomBustBlog Reggie Middleton

The Fed Raises Rates While Still Baby Feeding the MBS Market With Billions in Monthly Purchases

The Fed has raised rates, officially making real what was mere signaling of the end of its expansionary era... Or is it? You see, from a practical perspective, QE is...

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A Bitcoin ETF or Similar Regulated Insti…

16-03-2017 Hits:2192 BoomBustBlog Reggie Middleton

A Bitcoin ETF or Similar Regulated Institutional Vehicle is a Forgone Conclusion - What Happens Next?

Someone with over 53 years on Wall Street sent me this article from Lex of the Financial Times...

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Why the Winelvoss Bitcoin ETF Was Reject…

13-03-2017 Hits:3007 BoomBustBlog Reggie Middleton

Why the Winelvoss Bitcoin ETF Was Rejected and How to Create a Regulated Vehicle That Passes Muster

 The Winkelvoss ETF application was rejected by the SEC, and bitcoin dropped about 20% in price. I repetitively warned those that followed me that a very low risk buying opportunity...

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Trump Calls Obama's Policies On Russia W…

10-03-2017 Hits:2699 BoomBustBlog Reggie Middleton

 Donald Trump's recent Tweet discusses how Russia has gotten stronger at the behest of President Obama.   For eight years Russia "ran over" President Obama, got stronger and stronger, picked-off Crimea and...

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SNAP's Greed Derived Self-Inflicted Woun…

08-03-2017 Hits:3756 BoomBustBlog Reggie Middleton

SNAP's Greed Derived Self-Inflicted Wounds Continue to Manifest

The day before the SNAP IPO, I penned "Goldman Sachs & Morgan Stanley Pull Off the Heist of the Decade, Bends Over Those Who Don't Read BoomBustBlog". Despite being rather...

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Bitcoin Is Reaching the Point of No Retu…

08-03-2017 Hits:3479 BoomBustBlog Reggie Middleton

Bitcoin Is Reaching the Point of No Return - Buy Side Should Take Note

Many bitcoin aficionados are waiting with baited breath as the SEC is to announce by this Friday whether they will approve the first registered bitcoin ETF. This is not the...

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As stated in my earlier posts, I have embarked upon stress tests for certain members of the Doo Doo 32 (As I see it, these 32 banks and thrifts are in deep doo-doo!) as well as other financial services and insurers/reinsurers that I have released analysis on. These stress tests use the published methodology issued by the government, and uses the government's assumptions for the optimistic case. I feel (actually, I know) the government's assumptions are much too rosy to be considered a prudent base case or pessimistic case scenario. See "More on Reggie Middleton's Bank Stress Testing" for the justification behind this line of thinking. Nouriel Roubini has been consistently more accurate in the call of the current downfall than the government's models, thus I feel it is most prudent to rely on his input for the base case scenario.

Below is the link for the stress test results of PNC Bank including the acquisition results of National City, an interesting taxpayer funded combination of two of the Doo Doo 32 (As I see it, these 32 banks and thrifts are in deep doo-doo!).

We have created 3 economic stress test scenarios with RGE Monitor's estimates as the base case, the Fed's base line assumption as optimistic case and a slightly direr (though still plausible) distressed scenario.  The Fed's baseline assumptions are on an average higher than RGE's estimates by a factor of 1.33x while under the adverse case the macroeconomic assumptions are lower by a factor of 0.80x.  We have used these factors to build optimist and adverse case scenarios. 

Base Case - RGE Monitor

 

2009

2010

GDP

-3.4%

 

Unemployment

10.0%

11.0%

Price Index

-16.3%

 

     

Our Optimistic case - Fed's baseline case

 

2009

2010

GDP

-2.0%

 

Unemployment

8.4%

8.8%

Price Index

-14.0%

 

     

Adverse Scenario - L shaped recession

 

2009

2010

GDP

-4.9%

 

Unemployment

11.5%

12.5%

Price Index

-21.3%

 

     

Factor sensitivity - Base case

1.00

 

Factor sensitivity - Optimistic Case

1.33

 

Factor sensitivity - Adverse case

0.80

 

 

As per RGE Monitor HPI is expected to fall 44% over 2006 levels. S&P Case Shiller has declined 27% since then.

 

Jan-06

202.44

 

Current Index

146.40

 
 

-27.7%

 

 Previous PNC research:

PNC Report 050508 revised PNC Report 050508 revised 2008-08-30 06:38:42 711.95 Kb

PNC Report_update final - Retail PNC Report_update final - Retail 2008-10-15 13:21:38 337.21 Kb

PNC Report_update final - Pro PNC Report_update final - Pro 2008-10-15 13:21:22 590.98 Kb

The PNC Stress Test Results

PNC Stress Test Retail PNC Stress Test Retail 2009-04-13 02:11:08 323.51 Kb

PNC Stress Test Pro PNC Stress Test Pro 2009-04-13 02:10:17 3.11 Mb

 

The Professional Version is 56 pages long and has roughly 60% of the output of my proprietary PNC model (there are some formatting issues with the pro addition due to the heft of the tables included). Below is a pasting to illustrate the contents and the amount of intellectual capacity that went into it. I will be releasing a similar stress test for every company that I have a financial interest in. 

Pro Contents

Summary. 2

The Scenario Analysis. 4

Base Case - RGE Monitor. 4

Our Optimistc case - Fed's baseline case. 5

Adverse Scenario - L shaped recession. 6

Relative Value: Sum of the Parts. 7

Net Interest Income. 9

Interest Bearing Liabilities. 11

Non-interest Income. 12

Off Balance Sheet Items. 18

Business Segments. 18

Retail Banking. 19

Corporate and Institutional 24

PFPC. 25

The BlackRock Investment. 27

Relative Value: Consolidated. 35

Loan Portfolio. 37

Regulatory Ratios. 46

Charge-offs and Delinquencies. 47

FDIC Supporting Data, Tables, Charts and Graphs. 54