Friday, May 15, 2009

Green Shoots

After a huge runup over the last 10 weeks, the market ran out of steam this week despite "glowing" economic data such at flat CPI (only so because of YOY energy comparisons), a decrease in retail sales (can anyone be surprised by this?), and a sudden spike in weekly jobless claims (only the result of the Chrysler bankruptcy). Well, when one of the largest employers in the country goes bankrupt, that counts. Ditto 2 weeks from now when GM goes under and the combined 1900 dealerships are closed. That's a lot of jobs directly, and even more indirectly when you factor in suppliers. GM also didn't win any points when they announced that they'd consider importing cars from China. Thanks guys.

Meanwhile, we've discovered that Citi was able to negotiate their capital needs from $35 billion down to $5.5 billion. Interesting that Ken Lewis was unable to do the same for his dying company. And a mere week after the stress tests were released, banks are scrambling to raise capital as Fitch today downgraded the credit of those very banks we were just told had solid capital ratios. Right.

Oil did hit $60 this week and gold is above $930 again. Doesn't sound like a deflationary environment to me. More money was doled out today to insurers, who now need a bailout. Trucking company YRC want a billion dollars in TARP funds. Why not?

The SEC will soon be investigating, the SEC. Nice to know that our financial "watchdog" is looking into insider trading by two of its lawyers on info about the very companies they were watching over. Fills me with confidence that our government will set a strict new set of guidelines for Wall Street. At least they've finally gotten around to investigating the orange man, Angelo Mozilo, former CEO of countrywide. When he wasn't giving free loans to Senator Dodd, he was selling his bankrupt company to BAC without letting his shareholders know.

Sheila Bair, head of the FDIC, hinted today that some of the CEOs from distressed banks may be replaced in the next few months. The FDIC immediately refuted this report as the CEOS let the FDIC know that Sheila Bair may need to be replaced if she doesn't play nice with Timmy and Benjy.

Oh, and S&P said the banking crisis may persist until 2013, but only if you counts stuff like losses and bad loans. In about 5 minutes we'll find out that several Florida banks have failed. Green shoots.

http://www.marketwatch.com/story/report-some-bank-ceos-may-be-replaced-bair-says

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20090515&id=9880399

http://www.marketwatch.com/story/sec-lawyers-face-fbi-insider-trading-probe

3 comments:

Tiger Coach said...

Ax... A restaurant guru on Bloomberg discussed the rather dire predicament of high end restaurants... and then alluded to the occupancy rates in Vegas... Those with low cash margins could be DOA. A Stress test for the casinos? The WYNN, LVS, and MCRI will shrivel on the vine...

Aside from a take of Hydrogen, I don't know what is holding up CRE unless Bazooka Ben and Tiny Tim can hook them up with whatever is left from TARP.

Funny too how the banks "thought" they were off the hood with dumping their "collateral" on the Fed... More dire now that there are still capital concerns.

Ken Lewis is done... amd I am not sure if his removal can save BAC at this point. Our good man Pandit seems to be more proactive dealing with foreclosures...and may end up in the good graces of the Barack camp before the crisis is over. Pragmatism is what they are looking for...

AX said...

TC, my brother called me from Vegas yesterday. $5 tables at MGM on a Saturday night with BJ paying 1 1/2 : 1 again. Casinos are in rough shape.

Anonymous said...

Ax...
Pretty incredible about the casinos... and I am sure that things will get much worse for those yo yos... The questions is whether foreign investments can be winners? I doubt it... Let's take a closer look and have ideas by Wednesday...