As illustrated in my last post, Goldman Sachs has upgraded the US REIT sector, an action that was obvious to those who know that Wall Street analyst departments are basically marketing arms for their broking, trading and underwriting arms. Tyler at ZeroHedge saw it coming months in advance (see Is Goldman Preparing To Upgrade The REIT Sector?) and the writing on the wall had already cured as they hawked their first CMBS offering in quite some time (see Reggie Middleton Personally Contragulates Goldman, but Questions How Much More Can Be Pulled Off).

We all know what's next. The products that they are hawking to finance these ailing companies must have their paths paved by glorious upgrades and buy recommendations - damn be the facts and the obvious observations (which you will definitely get from me). Many of these actions can easily be seen as a REIT pump and dump scheme by Wall Street - "Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!." I have already released independent and unbiased subscription research on Taubman (TCO Report - Professional, TCO Report - Retail), whom Goldman Sachs has issued a buy recommendation on. I am also researching the CMBS that contain the properties from the REITs that I am analyzing (part and parcel of the analysis is an independent review of the property portfolio) and will be creating reports on the actual performance of assets behind the CMBS. You know, the type of work that the rating agencies should have done before they stamped these things with that AAA market, yet you know they never bothered to perform.

As illustrated in my last post, Goldman Sachs has upgraded the US REIT sector, an action that was obvious to those who know that Wall Street analyst departments are basically marketing arms for their broking, trading and underwriting arms. Tyler at ZeroHedge saw it coming months in advance (see Is Goldman Preparing To Upgrade The REIT Sector?) and the writing on the wall had already cured as they hawked their first CMBS offering in quite some time (see Reggie Middleton Personally Contragulates Goldman, but Questions How Much More Can Be Pulled Off).

We all know what's next. The products that they are hawking to finance these ailing companies must have their paths paved by glorious upgrades and buy recommendations - damn be the facts and the obvious observations (which you will definitely get from me). Many of these actions can easily be seen as a REIT pump and dump scheme by Wall Street - "Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!." I have already released independent and unbiased subscription research on Taubman (TCO Report - Professional, TCO Report - Retail), whom Goldman Sachs has issued a buy recommendation on. I am also researching the CMBS that contain the properties from the REITs that I am analyzing (part and parcel of the analysis is an independent review of the property portfolio) and will be creating reports on the actual performance of assets behind the CMBS. You know, the type of work that the rating agencies should have done before they stamped these things with that AAA market, yet you know they never bothered to perform.

In Straight Talk From the Homebuilder CFO: The tricks builders use to disguise the true losses on their, the impairment game was discussed as a method of hiding losses on builders' balance sheets by taking impairments on what could be considered exaggerated book values. The exaggeration may not be that hard considering how far, how fast, and potentially how long property and land values can continue to fall.

Again, I refer to the comparative chart that shows the appreciation rate of Japan's major city real property values as their GDP started to ramp up and out of a major recession:

In Straight Talk From the Homebuilder CFO: The tricks builders use to disguise the true losses on their, the impairment game was discussed as a method of hiding losses on builders' balance sheets by taking impairments on what could be considered exaggerated book values. The exaggeration may not be that hard considering how far, how fast, and potentially how long property and land values can continue to fall.

Again, I refer to the comparative chart that shows the appreciation rate of Japan's major city real property values as their GDP started to ramp up and out of a major recession:

Sunday, 01 November 2009 19:00

Reggie Middleton on BOKF's 3Q09 Results

Here is my review of the BOKF 3rd quarter results. BOKF has performed relatively well in comparison to other regionals, but the caveats and basis of the orignal thesis that we warned about in the forensic preview are still valid. See:

BOK 1Q09 BOK 1Q09 2009-05-07 06:34:52 460.74 Kb

BOK 2Q09 review BOK 2Q09 review 2009-08-01 05:04:06 1.05 Mb

March Actionable Note - Banking Sector BK March Actionable Note - Banking Sector BK 2009-03-03 11:58:22 184.25 Kb

March 2nd Actionable Note Preview - banking March 2nd Actionable Note Preview - banking 2009-03-02 09:44:20 61.88 Kb

and an off topic piece that BOKF just happened to be involved in... Deposit Insurance Arbitrage

Sunday, 01 November 2009 19:00

Reggie Middleton on BOKF's 3Q09 Results

Here is my review of the BOKF 3rd quarter results. BOKF has performed relatively well in comparison to other regionals, but the caveats and basis of the orignal thesis that we warned about in the forensic preview are still valid. See:

BOK 1Q09 BOK 1Q09 2009-05-07 06:34:52 460.74 Kb

BOK 2Q09 review BOK 2Q09 review 2009-08-01 05:04:06 1.05 Mb

March Actionable Note - Banking Sector BK March Actionable Note - Banking Sector BK 2009-03-03 11:58:22 184.25 Kb

March 2nd Actionable Note Preview - banking March 2nd Actionable Note Preview - banking 2009-03-02 09:44:20 61.88 Kb

and an off topic piece that BOKF just happened to be involved in... Deposit Insurance Arbitrage

I'll admit it to everyone, I am absolutely disgusted with my investment performance over the past two quarters. I came into the second quarter up nearly 500% for the two years running thanks to top notch research across myriad sectors (see zipResearch_Samples 11/17/2008 for examples) and loss about half of that profit fighting the bull rally that I easily saw coming but severely underestimated the length, depth and breadth of. Having switched over to market neutral in the third quarter (see Recent strategy analysis sample available to the public) caused me to simply hover with a few percentage point gains here and there, since by then most of the drastic moves were over, but I was biding my time in mostly cash waiting for the fundamentals to kick back in. You see I am a fundamental investor, and I kill it when 2+2=4, and I do even better when it equals something else. The caveat is when it does equal something else, I have to wait until it starts moving back towards that number 4 for me to realize my meal. This severe boom/bust market is basically custom tailored to my investment style (see "The Great Global Macro Experiment, Revisited", and realize why I call it BoomBustBlog!) just to an aggravated extreme! 

Hey, y'all! It appears as if we may be approaching that time where 2+2 may again equal 4.

By now I'm sure we have soaked in the head-fake that was the "better than expected" GDP number. Well, the gross number was only marginally better than expected, and if one bothers to taken even the most cursory glance beneath the surface.... Whoa! Stimulus was quoted as the reason the economy expanded, but this is just not true. Stimulus is something that stimulates. That just didn't happen in this case. The main drivers reported for the GDP pop came from automobiles (the cash for clunkers so-called stimulus plan) and residential investment (the government tax break, more so-called stimulus). This is how I see it. Automobile sales are already down since the clunker plan ended, so there is no speculation as to whether or not this government effort stimulated anything, It didn't. All the government did was to literally "purchase" a few GDP basis points.  There was no multiplier effect. There wasn't even a material economic impact that lasted a month after teh plan ended. Basically, the government put $XX billion into car sales to get a $XX billion less slippage and administrative costs purchase of a few GDP points for the months in question. Basically, a waste of money that should have went into guaranteeing ABS for small business loans to take over the hole that CIT is making in entrepreneurial lending - with more realistic underwriting, of course.

How about the housing boost? Well, home sales and home prices have trended downward from what I can see, as soon as the deadline for the first time homebuyer credit approached. Damn near in real time. Again, now real multiplier and no lasting effect. I mean it didn't even last a month into expiration. Again, a waste of money in an attempt to reflate a bursting bubble.

So, what is it that I do see for the economy. Well, from my perch in NYC...

I'll admit it to everyone, I am absolutely disgusted with my investment performance over the past two quarters. I came into the second quarter up nearly 500% for the two years running thanks to top notch research across myriad sectors (see zipResearch_Samples 11/17/2008 for examples) and loss about half of that profit fighting the bull rally that I easily saw coming but severely underestimated the length, depth and breadth of. Having switched over to market neutral in the third quarter (see Recent strategy analysis sample available to the public) caused me to simply hover with a few percentage point gains here and there, since by then most of the drastic moves were over, but I was biding my time in mostly cash waiting for the fundamentals to kick back in. You see I am a fundamental investor, and I kill it when 2+2=4, and I do even better when it equals something else. The caveat is when it does equal something else, I have to wait until it starts moving back towards that number 4 for me to realize my meal. This severe boom/bust market is basically custom tailored to my investment style (see "The Great Global Macro Experiment, Revisited", and realize why I call it BoomBustBlog!) just to an aggravated extreme! 

Hey, y'all! It appears as if we may be approaching that time where 2+2 may again equal 4.

By now I'm sure we have soaked in the head-fake that was the "better than expected" GDP number. Well, the gross number was only marginally better than expected, and if one bothers to taken even the most cursory glance beneath the surface.... Whoa! Stimulus was quoted as the reason the economy expanded, but this is just not true. Stimulus is something that stimulates. That just didn't happen in this case. The main drivers reported for the GDP pop came from automobiles (the cash for clunkers so-called stimulus plan) and residential investment (the government tax break, more so-called stimulus). This is how I see it. Automobile sales are already down since the clunker plan ended, so there is no speculation as to whether or not this government effort stimulated anything, It didn't. All the government did was to literally "purchase" a few GDP basis points.  There was no multiplier effect. There wasn't even a material economic impact that lasted a month after teh plan ended. Basically, the government put $XX billion into car sales to get a $XX billion less slippage and administrative costs purchase of a few GDP points for the months in question. Basically, a waste of money that should have went into guaranteeing ABS for small business loans to take over the hole that CIT is making in entrepreneurial lending - with more realistic underwriting, of course.

How about the housing boost? Well, home sales and home prices have trended downward from what I can see, as soon as the deadline for the first time homebuyer credit approached. Damn near in real time. Again, now real multiplier and no lasting effect. I mean it didn't even last a month into expiration. Again, a waste of money in an attempt to reflate a bursting bubble.

So, what is it that I do see for the economy. Well, from my perch in NYC...

Thursday, 22 October 2009 20:00

More Bank Bullsh1t???

Among the green shoots sprouting today, we have several lenders reporting things are potentially looking better. Let's glance at two:

Loan Delinquencies Increase For Freddie Mac: Freddie Mac said on Friday its mortgage investment portfolio grew by an annualized 7.3 percent rate in September, while delinquencies on loans it guarantees accelerated.

The portfolio increased to $784.2 billion, for an annualized 3.4 percent decrease year to date...

The portfolio size increased on a year-over-year basis. In September 2008, the portfolio was $736.9 billion.

Delinquencies, which increase stress on the company's capital, jumped to 3.33 percent of its book of business in September from 3.13 percent in August and 1.22 percent in September 2008.

 Hmmm. All big lenders are shrinking their portfolio except for the one's outright nationalized. Oh well, there is one thing they nearly all have in common, and that is they are taking credit losses up the wazoo! Most paper over the losses with cute terminology and accounting gimmicks, but we at BoomBustBlog.com know better. After all, if you apply The open source mortgage default model loss rates to these companies' portfolio, the truth is evident.

SunTrust posts 3Q loss but sees some signs improve   22 Oct 2009  -  The Associated Press: ATLANTA - SunTrust Banks Inc. on Thursday posted a big third-quarter loss as it set aside more money to cover bad loans, but said the rate at which mortgages were slipping into delinquency slowed for the first time in a year.

I'm going to review this one in another post since I have so much to say about it.

Thursday, 22 October 2009 20:00

More Bank Bullsh1t???

Among the green shoots sprouting today, we have several lenders reporting things are potentially looking better. Let's glance at two:

Loan Delinquencies Increase For Freddie Mac: Freddie Mac said on Friday its mortgage investment portfolio grew by an annualized 7.3 percent rate in September, while delinquencies on loans it guarantees accelerated.

The portfolio increased to $784.2 billion, for an annualized 3.4 percent decrease year to date...

The portfolio size increased on a year-over-year basis. In September 2008, the portfolio was $736.9 billion.

Delinquencies, which increase stress on the company's capital, jumped to 3.33 percent of its book of business in September from 3.13 percent in August and 1.22 percent in September 2008.

 Hmmm. All big lenders are shrinking their portfolio except for the one's outright nationalized. Oh well, there is one thing they nearly all have in common, and that is they are taking credit losses up the wazoo! Most paper over the losses with cute terminology and accounting gimmicks, but we at BoomBustBlog.com know better. After all, if you apply The open source mortgage default model loss rates to these companies' portfolio, the truth is evident.

SunTrust posts 3Q loss but sees some signs improve   22 Oct 2009  -  The Associated Press: ATLANTA - SunTrust Banks Inc. on Thursday posted a big third-quarter loss as it set aside more money to cover bad loans, but said the rate at which mortgages were slipping into delinquency slowed for the first time in a year.

I'm going to review this one in another post since I have so much to say about it.

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