Saturday, May 2, 2009

What If They Don't Print It?

In 3 Days of the Condor, Robert Redford discovers a secret plot to invade the Middle East, which he relays to the NYT. Cliff Robertson, his branch director, asks him, "What if they don't print it? You can run, but how far if they don't print it?"


Well, the government is trying to see how long they can go without printing it, the stress-test results that is. The release has been delayed until Thursday after market close. They don't want too volatile a reaction to the news, but odd that they are releasing it during the week, especially prior to the April jobs numbers, which I suspect will be artificially low.


It's also interesting to note how much market sentiment has changed as GDP numbers were downright horrible at -6.1%. Markets still climbed on that news and fought through the Chrysler bankruptcy as well. Compare this to the initial Q4 GDP release of -3.8%, which was so blatantly false, the markets pummeled it. Optimism reigns over the big decrease in inventories, as the assumption is that reloading will spur GDP. Right, companies that are barely making at are going to load up on unsold inventories in our now booming economy....


Banks will spend the next five days trying to convince the government not to release bad results. Estimates on Citi range from a need to raise $10 billion, to a $500 million cushion. Estimates on BAC are all over the map, with the most dire predictions necessitating the need for $70 billion more. Fifth Third is on one analyst's upgrades, another analyst's list for possible nationalization.

At least some semblance of reality has returned, with BBW losing 30% this week. Turns out when malls keep closing and nobody goes to the ones that are open, it's tough to sell stuffies. Sales YOY down 20%.


This week promises to be incredibly volatile between the banks begging for mercy, the results that are released, the "real" results which we might never know, and the jobs report. Should be fun.

4 comments:

Tiger Coach said...

Ax...
Now that CRE is receiving their own bailout of sorts...mall owners to the construction companies that build them... I believe we can mark a more dramatic paradigm shift which echoes the call of "who is next" for a bailout?

Funny how opaque the transparency of those stress tests already sound, with no one except the insiders seeing the results. Too, I find it more than interesting that some banks are actually arguing with regulator findings which may at least hint at the "real" truth...and to think these results are not FASB approved nor will the measures be done on a mark to market basis...truly strange. Never fear. Buffet still recommends WFC...

Strange too how Mexico is putting an early end to the Swine Flu...as one headline read "Swine Flu beginning to ebb in Mexico." The puppet...or President...or whatever they are calling him these days is fretting at the collapse of his peso... and the tourism lifeline that keeps his country floating...

AX said...

Funny how Buffett thinks all of his banks are in excellent shape. Funny too how Marketwatch headlines read, "Buffett optimistic about housing," while other MSM say, "Buffett talks of gloomy economy." The charade goes on, this week will expose how truly criminally our govt. has been behaving.

You're right, if CRE bailout, we might have to look to IYR as a hedge.

Tiger Coach said...

P.S. Three more banks failed this weekend...

Tiger Coach said...

Let's keep zion on that list