What is truth?

Archive for the ‘Bank of America’ Category

Recent Market “Events”

If like me you have become puzzled by the recent Market “events” you should find this excellent article sent to me to-day helpful

Recent Market “Events”


Following quite a number of requests from students and clients this brief will deal with my understanding of what transpired last Thursday the 6th. May when just after 2.30 PM the Dow Industrials collapsed by nearly 10% and then suddenly recovered in 11 minutes.

The implications of what occurred are far reaching and unless the regulatory issues are resolved we can expect similar “events” of like nature.

In the main to comprehend the situation in the “Market” one must realise that there are now many markets. In the good old days, in America, all we had was the New York Stock Exchange where real people dealt with real market makers in real time. But computers in general and the internet in particular have changed all that. In addition as well as the “public market” we now have the (OTC) Over the Counter Market. The OTC is basically a private market between banks and large institutions which has little or no active supervision. I find this development strange because the trading activity on the OTC is 60 trillion dollars annually, while turnover on the public market is 5 trillion. Now in addition to public markets and private markets let us now bring in “Dark Pools” to our explanation.

“Dark Pools” What are they? ” Dark pools of liquidity” are crossing networks that provide liquidity that is not displayed on order books. This situation is highly advantageous for institutions that wish to trade very large numbers of shares without showing their hand. Dark liquidity pools thus offer institutions many of the efficiencies associated with trading on the exchanges’ public limit order books but without showing their actions to other parties. This is achieved because neither the price nor the identity of the trading entity needs to be displayed. Many of the OTC “exchanges ” used by the dark pools use high frequency trading programmes to minimise order size and maximise order execution. Now you may think that this manner of doing business on the “stock market” is carried out by minor unknown entities but this is not the case. Below I list the Independent dark pools, the broker-dealer dark pools and exchange-owned dark pools.

Independent dark pools: Instinet, Smartpool, Posit, Liquidnet, Nyfix,Pulse Trading, RiverCross

and Pipeline Trading.

Broker-dealer dark pools: BNP Paribas, Bank of New York Mellon, Citi, Credit Suisse, Fidelity, Goldman Sachs, Knight Capital, Deutsch Bank, Merrill Lynch, Morgan Stanley, USB, Ballista ATS, BlocSec and Bloomberg.

Exchange-owned dark pools: International Securities Exchange, NYSE Euronext, BATS Trading and Direct Edge.

When you understand that all the big players in banking and finance are using the OTC system and have a turnover 12 times that of the “public” markets you get to wonder why there is a New York Stock Exchange at all. Well you see there is a big difference between the OTC “private” market and the NYSE “public” market. The NYSE is comprised of market makers. These market makers are specialists who are obliged to buy and sell on their own and the publics’ account to create a liquid active market. The OTC market faces no such obligation. Over the past number of years attempts have been made to abolish the specialist role and remove the “human” engagement.

What happened on Thursday was the high frequency OTC trading programmes

created “trades” which did not make sense to the NYSE specialists. Accordingly the NYSE stopped handling orders so that the situation could be analysed. The OTC computerized networks then began rerouting orders to other “markets” and with no “public” markets participating prices collapsed through sell stops and the rest is history.

There are many lessons to be learned from this event. But for me the main question is whether a “market” that is only 8% “transparent” is actually a market (5 trillion as a ratio of 60 trillion). Going forward it is obvious that additional “circuit breakers” must be brought in to modify the exchange activity of high frequency dark pools. Whatever the eventual fallout from last Thursday’s events are it is clear that the issues I have touched upon are only the tip of the iceberg and any trader or investor worth his salt must reflect upon what happened and adjust his or her strategies appropriately.

Wealthbuilder.ie


Reggie Middletons take on Goldman Sacks

Can You Believe There Are Still Analysts Arguing How Undervalued Goldman Sachs Is? Those July 150 Puts Say Otherwise, Let’s Take a Look

To begin with , Goldman Sachs produces more accounting revenue and accounting profits than its peers. This is because Goldman benefits from virtual monopoly pricing and advantages in several markets. Despite this advantage, when one factors in economic RISK and the cost of capital, Goldman doesn’t fare nearly as well as the sell side makes it seem. Of course, the sell side rarely attempts to quantify risk, which is cool until reality rears its (sometimes ugly) head. Before we get to risk adjust returns, let’s look at the simple accounting numbers and attempt to throw some logic on them…


Above, you see that GS has enjoyed a significant premium over its peers in terms of book valuation. This premium has actually increased over the past year. Let me be the one to remind you that no US company has every survived a criminal judgment, none. Arther Anderson was driven into bankruptcy from charges stemming from the Enron collapse, and that is despite the fact that the Supreme Court overturned the guilty verdict! Assuming, for the benefit of the doubt, GS can somehow set precedence, or more realistically, criminal charges are not filed, we still have to contend with:

  1. the SEC lawsuit
  2. the increased regulation, in particular the Volcker rule and derivatives oversight
  3. follow on litigation, which is virtually guaranteed, and virtually guaranteed to be extremely expensive, time consuming, and distracting from the core businesses.
  4. a general decline in business since we are coming off of a credit and risky asset boom and going into a sovereign debt crisis that will make FICC much less predictable (seeThe Next Step in the Bank Implosion Cycle???
    for a more on how this could end with the Pan-European Sovereign Debt Crisis drama unfolding).

  5. Taking all of this into consideration, you tell me… Does Goldman really deserve to be trading at such a premium considering the myriad risks it is currently exposed to PLUS the murky business and regulatory environment? They are also losing talent on the sales side, and at the MD level to boot. Today’s market is starting to see things the Reggie Middleton way.


    Now, let’s factor in some more reality. No matter what your broker says about accounting earnings and revenues, they don’t come free. They all have a cost of capital attached to them. Let’s reference an excerpt from When the Patina Fades… The Rise and Fall of Goldman Sachs???

    GS return on equity has declined substantially due to deleverage and is only marginally higher than its current cost of capital. With ROE down to c12% from c20% during pre-crisis levels, there is no way a stock with high beta as GS could justify adequate returns to cover the inherent risk. For GS to trade back at 200 it has to increase its leverage back to pre-crisis levels to assume ROE of 20%. And for that GS has to either increase its leverage back to 25x. With curbs on banks leverage this seems highly unlikely. Without any increase in leverage and ROE, the stock would only marginally cover returns to shareholders given that ROE is c12%. Even based on consensus estimates the stock should trade at about where it is trading right now, leaving no upside potential. Using BoomBustBlog estimates, the valuation drops considerably since we take into consideration a decrease in trading revenue or an increase in the cost of funding in combination with a limitation of leverage due to the impending global regulation coming down the pike.


    Remember, practically everybody poo-poohed my research and opinion in 2008 when I said Goldman was drastically overvalued – Reggie Middleton on Risk, Reward and Reputations on the Street: the Goldman Sachs Forensic Analysis. Those 600% to 1000% gains on the put options proved otherwise. Speaking of which, those July 150 puts… Can you smell what the forensic analysis is cookin’???


    For those who haven’t read my review of Goldman’s latest quarter performance, please do: A Realistic View of Goldman Sachs and Their Latest Quarterly Results

    source
    http://boombustblog.com/reggie-middleton/2010/04/30/can-you-believe-there-are-still-analysts-arguing-how-undervalued-goldman-sachs-is-those-july-150-puts-say-otherwise-lets-take-a-look/

“This is a blatant attempt to rob existing shareholders of the merger holding of the carcass that is Bank of Ireland”


The bank will launch a rights issue of up to €1.89 billion as well as a €1.54 billion private placing to institutional investors and the state. In addition, certain holders of Tier 1 and upper Tier 2 securities will be able to exchange their instruments for either common stock or cash. The exact size of the rights issue will depend on how much is raised from the debt-to-equity swap.

Bank of Ireland said its Tier 1 capital ratio is expected to increase to 8% from 5.3%, meeting the Irish government’s stress test.

“This transaction is good news for our economy, good news for the taxpayer and good news for Bank of Ireland’s shareholders and investors,” Irish Finance Minister Brian Lenihan said Monday. “The level of private-sector investment is tangible evidence of the growing international and domestic confidence in both Bank of Ireland and our economy.”

How is this good news for the “for Bank of Ireland’s shareholders and investors”?

“This is tangible evidence of the growing international and domestic confidence in both Bank of Ireland and our economy.”

“Are you sure you’re taking your proper medicine”?

Under Bank of Ireland’s institutional placing, 326.8 million shares will be sold at €1.53 each, a 15% discount from Friday’s closing price of €1.80.

The government has agreed to subscribe to an additional 575.6 million shares at €1.80 each.

“So why is the taxpayers asked to 1.80″ a shair ?

“This is a blatant attempt to rob existing shareholders of the merger holding of the carcass that is Bank of Ireland”

The bank and its peers have been hard hit by mounting bad-debt charges resulting from the property-market crash. Last month, the Irish government set up requirements that banks must meet to improve their capital position, in exchange for absorbing some of the so-called “toxic” assets under a “bad-bank” program.

Under Bank of Ireland’s institutional placing, 326.8 million shares will be sold at €1.53 each, a 15% discount from Friday’s closing price of €1.80. The government has agreed to subscribe to an additional 575.6 million shares at €1.80 each.

Again this is the Government handing over taxpayer’s money to “investors” in England

Who will no doubt end up owing the bank!

As I write this post I here Gerry Ryan talking about this very topic and he is glowing with approval and telling the nation what a wonderful coup this is for the Bank of Ireland

He is also telling the Nation that Mr.Richie Boucher was the chief architect of this deal and goes on to insinuate that the man was unjustly criticised by the media last week because of the pension saga

I do not agree with Mr. Ryan and I believe Mr. Ryan is severely mistaken on his views .

The state will also take up its entitlement of up to €685 million under the rights issue, while the remaining will be fully underwritten,

This means that this wrights issue would not get off the ground without the Irish Government guaranteeing to take up all the issued shares if no one else will.

Bank of Ireland said. The capital raising will result in a maximum state ownership of 36%, up from 34% currently, the bank added.

This is just accounting gimmickier, the government is underwriting the entire transaction

So without this guarantee there is no Bank of Ireland period!

The rights issue price will be 10 European cents plus the result of a 38%-42% discount to the theoretical ex-rights price, or the calculated price for shares after issue of new stock.

What does this crap mean???

The capital raising is subject to shareholders’ approval during a meeting May 19.

No correction, this will be done well before this EGM and the ordinary shareholders will be told what that is, and then “asked to vote” and it won’t make a blind bit of difference what they decide on the day this meeting is only an exercise in esthetics!

 

The big boys have already sold you out! the ordinary shareholders have no say !

 

 

 

Get out of Bank of Ireland.

Close your accounts and put your money in one of the big American banks like Bank of America

The dollar is getting stronger and the Euro is heading down the toilet,

You have been warned! As long as Lenihan and his band of economic terrorists remain in power

this country is in the crap heap!

Pirates Of The ‘Carry-On-Regardless’

Posted by jayfromeire on Mar 25th, 2010 and filed under Economic Crisis, International. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry from your site


William K. Black wrote a book in 2005 titled “The Best Way to Rob a Bank is to Own One” where he outlined the fraud and corruption at the highest levels of international banking.                   

What we are seeing now in the light of massive bonuses, involving billions of Euro, Dollars and Pounds, being handed out to executives and lower level employees, is simply the same culture of fraud and corruption which has seeped down to the lower levels of an industry which has utterly disregarded any pretence of moral conscience.       

           
 

This industry has deliberately plunged the world and the majority of ordinary people into a period of extreme doubts and anxieties over the future of themselves, their children and future generations.        

The climate of greed in this industry has undeniably never changed. Whilst the international bankers have absconded with the wealth of nations, their cronies in subsidiary banks, where ordinary people’s financial security is crucial, are now doing the same. These lower level parasites continue to coerce governments into passing legislation, in Ireland’s case, NAMA – (Never Any Money Again).                   

This is happening across the developed world and allows governments, without the consent of its citizens, to literally tax working people to pay for the illegal and corrupt practices of a criminal cabal responsible for the state of the world today.                    

This is piracy of the highest order, and the ordinary people paying for this, for generations to come, will be born into a financial bondage to the coming world state which amounts to nothing less than SLAVERY.               

We are being financially raped by the banking elite who simply demand that our government pass the very legislation which will condemn the citizens to a future of indentured servitude. We, the taxpayers, will have to cough up our last cent to the parasites of finance to furnish their lavish lifestyles of champagne parties and fancy yachts, whilst we are left struggling to make ends meet.                 

The government tells us we need to get through this current financial crisis together, by pulling together don’t you know, whilst they maintain their positions of power over us and live the highlife with their banker and building developer buddies. They don’t take responsibility for, or account to the public for, the catastrophe they’ve inflicted on families and businesses in this country. At the same time they try to justify their uselessness and inflated salaries, presumably in line with their inflated egos and ludicrous self belief in their value to society, whilst at the same time maintaining their massive expense accounts and lavish pension arrangements which nobody else in the country is entitled to.

machholz responce 

Careful what you ask for!

With the cries of change the government getting louder, I caution and ask the question will we be any better off?

Make no mistake I want to have a change of government and I want to jail All the corrupt Basta***

Responsible for the mess we are now in.

What exactly will the new government do about the political gangsters responsible for the mess we are now in?

see posting

we need reform now!

The current Irish Government are responsible for the financial disaster the country is in,
With the establishment of NAMA the Government is trying to socialize the enormous losses that the Banks and their Developer buddies have encored.
Corruption is rife and now a new monster burocratic system is being created, where X politicians will have jobs for life and the same corrupt developers will be able to manipulate the housing market all over again
While the people are being robbed of their homes, savings, pensions, and education for their children, that same gangsters are running the country
This has to stop!
Join the CAB to-day and get things moving
Come on! Get active in your own area now!
We as a country need new faces and not the same old tired faces that have being around using the system to suite themselves.

Fianna Fail ship on the rocks

Fianna Fáil TD for Carlow-Kilkenny John McGuinness today accused Brian Cowen of weak leadership and called on him to consider his position as leader of Fianna Fáil and as Taoiseach.

In an interview broadcast on KCLR96FM this morning, Mr McGuinness said this week’s Cabinet reshuffle showed “a lack of vision, strategy and imagination.”

He also claimed he Taoiseach had “put the party and tribalism first and the country second, with his reshuffle.

“There wasn’t enough emphasis on the economics of the situation, the need for a powerhouse within Government to formulate policy and move things forward with a direct focus on those who are unemployed,” said Mr McGuinness.

“There isn’t an obvious plan for people…we haven’t reached out to those people that need the leadership in terms of their unemployment status or their business strategy to say, and by the way, this is what we are going to do next to support you and to get you out of your difficulties,” he added.

Here we see the Fianna Fail machine is now beginning to fall apart

The obvious self preservation of the party leadership being the main emphases in the latest Cabinet reshuffle.

Things are bad, when their own party members start attacking their own leadership.

With the establishment of NAMA with the support of the above Mr. John Mc Guinness

This government lost all claim to be of the people and for the people.

They sold us out the international bond holder’s .In America the large banks have realized the reality of the situation on the ground and have started a new incentive to keep people in their homes even to the extent that they write down 35%-50% of the lone on these people’s homes

To-day we here that Anglo Irish Bank is now looking for another 10,000,000,000:00 that’s 10 Billion Euros

So far we have given them 5 billion and the other banks have gotten approx 7,500,000,000 and will be expecting to get another 9,000,000,000:00

With all this money it would be cheaper for the government to pay off every house mortgage in the country and let the banks and international bond holders go and developers and commercial investors go and whistle and negotiate their own way out instead of making the taxpayers of this country pay for them.

It may be the right direction

 

Markets nosedived on Thursday when Barack Obama set out broad new measures on financial regulation. The most significant of them is banning deposit-taking banks from proprietary trading that is “unrelated to serving customers”. This activity has generated politically incendiary profits for banks and bonuses for bankers.

The timing was political: the president spoke on the day that Goldman Sachs announced fourth-quarter earnings of $4.95bn. Those of a more populist nature than Mr Obama – both on the left and on the right – will say that he comes late to the game.

The Recession is not over.  

Economists may see the recession as being over, but the man on the street does not. Roughly 60% of the public believes the recession still has a way to go, a NBC/Wall Street Journal poll reported last October. Even those who have not suffered know someone—a friend, a neighbor, a family member—who is being hurt. Two in three say the rally in the stock market has not changed their views.

The uptrend is broken.
— The uptrend in the S&P 500 Index was broken this week.  There is a lot of backpedaling in Washington, which was all too ready to claim success as the market was rising, but asked us to ignore the last two day decline.

The uptrend, which was technically “on the edge” since early December, has finally lost what is called trend support.  Look for much lower prices ahead.


Obama’s proposals strengthened Treasuries.

Treasuries headed for a third weekly gain as speculation that President Barack Obama’s bank- regulation plans will crimp economic growth weakened equities and added to demand for fixed-income securities.  The yield on the 10-year note reached its lowest in a month after the Obama administration yesterday proposed to limit the size and trading activities of financial institutions as a way to prevent another systemic meltdown. The Treasury is scheduled to sell $118 billion in notes next week.

Gold’s decline ready to resume?

Gold may decline as a rebounding dollar curbs demand for the metal as an alternative investment, a survey showed.

Twelve of 17 traders, investors and analysts surveyed by Bloomberg, or 71 percent, said bullion would fall next week. Four forecast higher prices and one was neutral. Gold for delivery in February was down 2.9 percent for this week at $1,097.70 an ounce at noon in New York yesterday.

The Nikkei turns south.

— Japanese stocks slumped the most since November after the U.S. proposed to reduce risk-taking at banks and concern mounted that China will raise interest rates to curb inflation. The Nikkei 225 fell 2.6 percent to close at 10,590.55 in Tokyo, almost erasing this year’s gain. The broader Topix index slid 1.6 percent to 940.94, with six times as many stocks declining as advancing. Both gauges lost the most since Nov. 27.

Shanghai isn’t immune to troubles, either.

Investors pulled $348 million from China equity funds last week, the biggest outflow in 18 weeks, on concern China’s moves to cool its economy will slow growth, according to EPFR Global.     Chinese stocks fell since the government this month started tightening monetary policy to curb record loan growth and prevent bubbles in the nation’s property and stock markets.  Technically, the Shanghai Index violated a potential Head and Shoulders formation, which calls for a large decline.  The bubble may be popped.

The dollar is showing bullish tendencies.

The dollar is poised for an upside breakout.  The “line in the sand” in red is a technical pattern called a neckline of an inverted Head and Shoulders pattern.  Tuesday’s election in Massachusetts is considered a change in the outlook of Washington to “dollar friendly.”    In the past, Washington talked a good talk, but their actions were quite destructive to the dollar.  The outlook may have reversed.

A safety net hides the risk of bank failure.

 — There is a fascinating phenomenon that occurs in the banking system when capital is running short.  At least, this was the case before the government decided to be the ultimate financial backup for the entire banking structure of our country.  Places like Washington Mutual or Countrywide were offering stellar rates on various savings vehicles only days before their demise.  How can this be?  Well for one, banks are allowed to chase public capital and realize that the public will put money into a bank so long as the FDIC backs up the bank.  Unfortunately, if the bank fails the FDIC only covers your principal, not interest.

The chart shows Gasoline prices dropping faster than at the pump.

 The Energy Information Agency weekly report suggests, “The U.S. average price for regular gasoline dropped a penny to $2.74 per gallon, $0.89 higher than the average a year ago. On a regional basis, price changes were mixed. The East Coast price of $2.75 per gallon moved up less than a penny, while the price in the Rocky Mountains jumped up four cents to $2.62 per gallon. The price on the Gulf Coast was essentially unchanged at $2.62 per gallon. Prices in the Midwest and on the West Coast dropped, moving down over a penny on the West Coast to $2.95 per gallon and dropping nearly five cents to $2.68 per gallon in the Midwest.”

Frigid weather keeps NatGas prices high.

The Energy Information Agency’s Natural Gas Weekly Update reports, “As the extreme cold left much of the lower 48 States this week, natural gas demand for space heating and as a fuel for electric power plants fell precipitously. Compared with the prior report week, U.S. natural gas average daily demand decreased about 25 percent from 106 Bcf to 79 Bcf, according to Bentek Energy LLC. Lower demand led to widespread declines in prices that were generally less than 5 percent.”

Joseph Stiglitz: ‘We’re More Strict With Our Poor Than With Our Banks’

During the economic turmoil of the last few years, Nobel Prize-winning economist and Columbia University professor “ersatz capitalism” in America. He has also repeatedly called for a second round of fiscal stimulus to support struggling Americans.  Read full article here.
Joseph Stiglitz has been one of the most strident and incisive critics of the historic bailout of the banking sector.

Never one to mince words, Stiglitz, who served as the Chief Economist at the World Bank and on President Clinton’s Council of Economic Advisers, has said the meltdown has resulted in a kind of

Is The U.S. Economy Being Tanked By Mistake or By Intent?

Should American bankers be let off the hook because they self-declare, before an investigational panel, that the failure of their newly invented risk swaps and other highly leveraged investment schemes was simply due to “mistakes”? Not malfeasance – just every-day mistakes? Bankers just fell asleep at the helm at a critical juncture in American history. Is that what we are being led to believe?

Oh well, it’s just 18 million American homes that now lay empty in the wake of unprecedented foreclosures, and the bankers have collected obscene bonuses for reckless lending of their depositors'(and taxpayers’) money. It’s like the captain and crew of a ship saying, not to worry, twenty-percent of the passengers were lost overboard, but this was due to unavoidable mistakes, and then being rewarded with bonuses when they reach port.

for more information follow link http://www.financialsense.com/fsu/editorials/cherniawski/2010/0122.html
source :by Anthony Cherniawski, The Practical Investor, LLC | Janury 22, 2010

Tag Cloud