Displaying items by tag: fundamentals

So, the stock market, bond market and real estate markets are all at all-time highs. Everything is Awesome! You know better than that. You see, when the bond market wakes up (that has happened already, btw), the resultant higher rates will drag the rest of Wonderland back into reality. Where do you think those steadily increasing EPS counts have been coming from? The cheapest credit every simply tempts management to do some of the dumbest things every....

thumb Bonds fuel stock buybacks4

Published in BoomBustBlog

Since 42 pages is a lot to digest, let me post an excerpt from the pdf  CRE 2010 Overview 2009-12-15 02:39:04 2.72 Mb to illustrate a point.

REITs have ascended too far from their fundamentals -DJ US Real Estate Index has outpaced S&P 500 index by more than 50% during a time when their macro and fundamental outlook pale compared to that of the broad market. There is no "deal" to be had here! What you are witnessing is momentum trading, not fundamental value.

 S&P 500 increased 62.0% between March 9, 2009 and December 9, 2009, while the DJ US Real estate index increased by 96.2% over the same period. With many tribulations still plaguing the US REIT sector, the valuations appear quite stretched.

image029.gif

The ascending REIT index is again creating the potential for another upheaval similar to that witnessed after the Lehman debacle. The DJ US Real estate index which was at 228.91 on September 15, 2008 has reached at 171.6 as of December 9, 2009.

image030.gif

 

Since 42 pages is a lot to digest, let me post an excerpt from the pdf  CRE 2010 Overview 2009-12-15 02:39:04 2.72 Mb to illustrate a point.

REITs have ascended too far from their fundamentals -DJ US Real Estate Index has outpaced S&P 500 index by more than 50% during a time when their macro and fundamental outlook pale compared to that of the broad market. There is no "deal" to be had here! What you are witnessing is momentum trading, not fundamental value.

 S&P 500 increased 62.0% between March 9, 2009 and December 9, 2009, while the DJ US Real estate index increased by 96.2% over the same period. With many tribulations still plaguing the US REIT sector, the valuations appear quite stretched.

image029.gif

The ascending REIT index is again creating the potential for another upheaval similar to that witnessed after the Lehman debacle. The DJ US Real estate index which was at 228.91 on September 15, 2008 has reached at 171.6 as of December 9, 2009.

image030.gif

 

Friday, 05 June 2009 00:00

Pursuing the Bullish Argument

A reader posted a video of strategist who laid out his argument for why he is bullish on the market (click here to see the video), and apparently made a good call on the market turning in March. I also saw the market turning in March, but was not prepared for the extent of the turn, which seems t have been unprecedented. My issues with the points in the video center around the fact that the strategist ran through all of the symptoms of the cause of the problem, but has not addressed the problems directly. The continued existence of the core problem of asset devaluation is my problem with believing this is a bull market. I can't say stocks won't go up in price, but actual value is not increasing. As a matter of fact, I still see it on the decline. Therein lies the problem and the danger which puts us at risk of a crash. The real estate situation (the impetus of the market drop) is arguably worse now than it was in March when the market allegedly bottomed.

The strategist puts emphasis on accounting rules measuring the bottom. As BoomBustBlogger Shaunsnoll said, "saying a dog has 5 legs doesn't make him a five legged dog!" Accounting rules aren't the same as actual profits and money!

Spreads and other metrics are improving because those improvements have been directly purchased by governments around the globe. At this point, if those purchases cease, spreads will blow out again because the economic drivers behind the spreads are still weak and the real assets and property drawn upon by so many derivative assets and levered products are still falling back to

Friday, 05 June 2009 00:00

Pursuing the Bullish Argument

A reader posted a video of strategist who laid out his argument for why he is bullish on the market (click here to see the video), and apparently made a good call on the market turning in March. I also saw the market turning in March, but was not prepared for the extent of the turn, which seems t have been unprecedented. My issues with the points in the video center around the fact that the strategist ran through all of the symptoms of the cause of the problem, but has not addressed the problems directly. The continued existence of the core problem of asset devaluation is my problem with believing this is a bull market. I can't say stocks won't go up in price, but actual value is not increasing. As a matter of fact, I still see it on the decline. Therein lies the problem and the danger which puts us at risk of a crash. The real estate situation (the impetus of the market drop) is arguably worse now than it was in March when the market allegedly bottomed.

The strategist puts emphasis on accounting rules measuring the bottom. As BoomBustBlogger Shaunsnoll said, "saying a dog has 5 legs doesn't make him a five legged dog!" Accounting rules aren't the same as actual profits and money!

Spreads and other metrics are improving because those improvements have been directly purchased by governments around the globe. At this point, if those purchases cease, spreads will blow out again because the economic drivers behind the spreads are still weak and the real assets and property drawn upon by so many derivative assets and levered products are still falling back to

The reinsurer analysis recently reported results in line with that forecasted in my analysis. The shares have been, nonetheless, driven by this recent bear market rally, as has the shares of HIG. I have released a rash of HIG research warning subscribers of the trouble they are in, and it seems the industry in general and particularly those that have sold variable annuities will have problems for the foreseeable future.

From Bloomberg: Hartford Financial Reports Third Straight Loss Amid Equity-Market Slump 

April 30 (Bloomberg) -- Hartford Financial Services Group Inc., the Connecticut-based insurer, had its third straight quarterly loss as the stock-market slump raised the cost of protecting customers from declines in retirement accounts.

The first-quarter net loss was $1.21 billion, or $3.77 a share, compared with profit of $145 million, or 46 cents, in the year-earlier period, the company said today in a statement distributed by Business Wire.

Hartford’s earnings shrank, then disappeared amid the six- quarter drop in the Standard & Poor’s 500 Index as the company shouldered declines for savers with equity-linked variable annuities. That depleted capital at the life insurance division, and Chief Executive Officer Ramani Ayer, who also oversees a profitable property-casualty unit, is under pressure to stanch the losses or break up the 199-year-old insurer.

The reinsurer analysis recently reported results in line with that forecasted in my analysis. The shares have been, nonetheless, driven by this recent bear market rally, as has the shares of HIG. I have released a rash of HIG research warning subscribers of the trouble they are in, and it seems the industry in general and particularly those that have sold variable annuities will have problems for the foreseeable future.

From Bloomberg: Hartford Financial Reports Third Straight Loss Amid Equity-Market Slump 

April 30 (Bloomberg) -- Hartford Financial Services Group Inc., the Connecticut-based insurer, had its third straight quarterly loss as the stock-market slump raised the cost of protecting customers from declines in retirement accounts.

The first-quarter net loss was $1.21 billion, or $3.77 a share, compared with profit of $145 million, or 46 cents, in the year-earlier period, the company said today in a statement distributed by Business Wire.

Hartford’s earnings shrank, then disappeared amid the six- quarter drop in the Standard & Poor’s 500 Index as the company shouldered declines for savers with equity-linked variable annuities. That depleted capital at the life insurance division, and Chief Executive Officer Ramani Ayer, who also oversees a profitable property-casualty unit, is under pressure to stanch the losses or break up the 199-year-old insurer.

Page 1 of 2