Thursday, 12 November 2009 00:00

News Recap for 11/12/09

Are we in consecutive back to back bubbles or what?

From Bloomberg:

KKR Puts Higher Valuation on Dollar General Than Walmart in IPO Offering: Wasn't the private equity/LBO biz dead just a year ago?

Wall Street Faces `Live Ammo' as Congress Tries to Dismantle Biggest Banks: So all of that posting about busting up the big banks didn't go to waste! See Any objective review shows that the big banks are simply too big for the safety of this country, Big Bank (and the Treasury) vs. Little Bank: Whose risking your tax dollars?, The Next Step in the Bank Implosion Cycle??? and the very important JPM Public Excerpt of Forensic Analysis Subscription (1878)

Japan Credit Default Swaps Seen Unraveling as Aiful Defers Payment on Debt: The Japanese version! See The Next Shoe to Drop: Credit Default Swaps (CDS) and Counterparty Risk - Beware what lies beneath!, Reggie Middleton says the CDS market represents a "Clear and Present Danger"!, CDS stands for Credit Default Suckers... and Will this be the first domino in the CDS collapse? .

Spanish Economy Contracts for a Sixth Quarter, Slowing European Rebound: BBVA may be seen as more viable than it actually is. See Banco Bilbao Vizcaya Argentaria SA (BBVA) Professional Forensic Analysis Banco Bilbao Vizcaya Argentaria SA (BBVA) Professional Forensic Analysis 2009-02-23 09:05:09 439.80 Kb

And from my friends over at Calculated Risk: Fannie, Freddie, Counterparty Risk and More - excerpt from Freddie Mac's 10-Q:

We believe that several of our mortgage insurance counterparties are at risk of falling out of compliance with regulatory capital requirements, which may result in regulatory actions that could threaten our ability to receive future claims payments, and negatively impact our access to mortgage insurance for high LTV loans.

Those that follow me know how bearish I have been on the mortgage insurers for two years running now. I pretty much promised my readers that Ambac and MBIA were insolvent back in 2007:

Last modified on Thursday, 12 November 2009 00:00


  • Comment Link Reggie Middleton Thursday, 12 November 2009 09:13 posted by Reggie Middleton

    You are right that is quite difficult to position one's self, which is why I published the market neutral strategy analysis for subscribers. It allows one to trade the volatility of the underlying versus the actual downside directional movement. To date, from the beginning of the markets, fundamentals have always won out. I fear that the correction that many feel will come will be devastatingly quick and near impossible to time or trade, thus positions will have to be in before the correction in order to full participate. Since that has proven to be highly unprofitable during the most recent bear rally, the next best order of the day would be market neutral or volatility trading.

    Nearly every single fundamental metric that I can bring myself to use says it would be foolish to go long in this market, yet they said the same things 4 months ago as well. For the time being, momentum and exuberance are winning the day.

  • Comment Link angus Thursday, 12 November 2009 09:00 posted by angus

    Hard to position oneself correctly. Being bearish for the last 8 months has been a terrible strategy. I wonder if it will continue to be with the Fed (and every other central bank) so determined to inflate. Gold is the only bearish bet working at the moment. I wonder what catalysts could force a reality check on stocks?

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