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Corporate Titans Master the Obvious

Posted by Larry Doyle on October 30, 2009 3:25 PM |

Why is the market breaking down today?

A number of analysts are pointing to comments by corporate titans, Wilbur Ross, George Soros, and bank analyst Mike Mayo.

What did Ross, Soros, and Mayo have to say? With all due respect, these corporate titans do not offer any new news. That said, let’s navigate.

1. Wilbur Ross sees a pending crash in commercial real estate.

Really? Is this news? This story has been touted for the last 6 months. The banking system has well over a hundred billion in impending losses on commercial real estate.

In a Bloomberg interview as I write, Carl Icahn concurs with Ross’ assessment. Icahn can’t understand why REITS are currently as highly valued as they are.

2. George Soros also harps on the pending doom on the commercial real estate market. Additionally, he highlighted the fact that the American consumer can not and will not be the engine for global growth. Soros offered that the economy may slip back into recession.

Really? Is this news? George, please tell us something we don’t know.

3. Mike Mayo, highly regarded banking analyst, highlights that Citigroup may very well have $10 billion in unrealized losses yet to take.

That’s all? Really? I think Mayo is likely low by a significant margin.

Recall that the IMF projects global banking losses to total $3.4 trillion and that approximately just slightly more than half of those have been taken to date. Another $1.7 trillion in losses and Citigroup has only got $10 billion to recognize?

The fact is the overall economy remains mired somewhere between intensive care and critical condition despite what the wizards in Washington would have us believe.

Today’s pullback in the market is not an indication of any real change in the economy. The economy is still quite ill. Today’s pullback is an indication that the speculative money in a highly speculative market is sending a signal for “everybody out of the pool.”


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