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Bullish on Ms. Bair!!

Posted by Larry Doyle on March 28th, 2009 3:30 PM |

The Bull and the "Bair"

The Bull and the "Bair"

Is there anything worse than engaging a dishonest broker? Regrettably, our financial landscape (banking, investing, real estate, insurance, et al) is littered with shady brokers. How and why these people remain in business is another topic for another day. This piece is to highlight the integrity of an honest broker, Sheila Bair, and her involvement in the PPIP (Public-Private Investment Program) designed to handle toxic assets, both securities and loans.

For those unaware of the specifics of the PPIP, the toxic securitized assets will be sold via a facility known as the TALF (Term Asset Backed Lending Facility) and via partnerships with 5 large private money managers.

Toxic loans (unsecuritized) are the much more difficult part of the program. The bulk of these loans are likely still held on banks’ books at origination cost (not yet marked down) and pose a much greater disparity in perceived value and challenge in reaching agreeable prices. Read the rest »


Gambling for Our Future

Posted by Larry Doyle on March 28th, 2009 12:21 PM |

slot-machine-cartoon

Cartoon by Mike Smith, Las Vegas Sun


Sense on Cents Central Station

Posted by Larry Doyle on March 28th, 2009 6:30 AM |

***UPDATE: The live event has ended, but you can watch the replay at the end of this post.***

central-station-promo-3-boldJoin me at No Quarter USA blog on Saturday morning beginning at 10:30 a.m. ET for Sense on Cents Central Station. This endeavor is a few hours of written Q/A and LiveChat with your resident host, Larry Doyle. I like to utilize the theme of a ride on the rails, so please allow me to expound.

With so many cross currents at play in the markets, economy, and world of global finance, where can one go to develop a framework of understanding, enjoy the company of friends, and make sense of the madness? Welcome to Sense on Cents Central Station. Our ride departs at 10:30 a.m. (I’ll open the chat room at around 10:15 a.m.) with an expected return at 12:30 p.m. While we traverse the curves along our track, we can address a wide range of issues, including: Obama’s economic plans, Secretary Geithner’s outlook, the market performance this week, month, and year to date, developments overseas, the outlook for our financial regulatory structure, issues of personal finance, or anything else on your mind. Read the rest »


Laszlo Birinyi: “Not a Time to Buy”

Posted by Larry Doyle on March 28th, 2009 12:10 AM |

Our Economic All-Star, Laszlo Birinyi, believes . . . Market Extremes Not a Time to Buy.

Based on Birinyi Associates’ proprietary market and sector indicators, we are at short-term extremes. Traders with aggressive accounts should look to take profits, and investors with more long-term accounts should be cautious on taking new positions. Consumer discretionary, technology, and materials stocks are the most extreme, while health care and utilities companies have lagged.  

birinyi-sector-indicators1
According to Birinyi:

The Overbought/Oversold indicators are short-term measures, while the Momentum indicators are for the longer term. The momentum indicates the market can certainly go higher, but we have had an abrupt move and some consolidation should be expected.

LD


Creative Accounting!!

Posted by Larry Doyle on March 27th, 2009 5:23 PM |

I will readily admit that my preferred source for market news is Bloomberg.  Having seen enough media outlets covering market activity, in my opinion, there really is no alternative to Bloomberg. Why? Literally every day I am learning and being introduced to new and useful information. The information emanates not only from those they interview, but often from their own in-house research and analysts.

To wit, I just caught a segment with Jonathan Weil, a Bloomberg reporter focused on corporate accounting. With 1st quarter earnings a few weeks away, Weil’s insights are the stuff that stops you in your tracks. 

In short, Weil highlights how companies effectively massage their earnings and income statements. Massage? Where’s Sarbanes-Oxley when you really need it to check the numbers?   Read the rest »


The Modern Day Fall of the Roman Empire?

Posted by Larry Doyle on March 27th, 2009 1:36 PM |

I have focused on the problems in western and eastern Europe over the last few months. Those problems are not abating. Who would have thought that the host of next week’s G-20 may need the greatest amount of aid of all. 

Should Prime Minister Gordon Brown look to increase the room rates for world leaders in attendance next week? Perhaps a slightly higher fee for the mini-bar? Every little bit helps. 

In all seriousness, the U.K has spent proportionately almost three times as much in bailing out their financial institutions as the United States. 

For those unaware, the U.K. was unable to fully place 40 year debt this week. That experience, known as a “failed auction,” is financially and politically embarrassing, aside from being fiscally frightening. If a country is not able to finance itself . . . Read the rest »


Is the Party REALLY Over?

Posted by Larry Doyle on March 27th, 2009 11:58 AM |

party-hats1There is NO doubt that our financial markets and financial firms will experience significant changes in regulation on a going forward basis. Turbo-Tim Geithner laid out those plans this week. President Obama is hosting the heads of the major banks at noon today to lay the groundwork for the universal acceptance of the new rules, amongst other topics.

Over the next few weeks and months, new regulations will be defined and a new division of responsibilities will be outlined  amongst the various bodies (Fed, Treasury, SEC, FDIC, FINRA, CME). Rest assured, there will be some power grabs by the heads of these agencies and regulatory bodies in the process.  

We have clearly just come through an ENORMOUS party on Wall Street, leaving our entire economy with a MASSIVE hangover. Do not forget, though, as with any good party, we need to review who was working the door, who got let in, who got the discount cover, who brought some attractive friends, and who was taking a little something on the side.  I won’t dare venture as to who left together.  Read the rest »


Does the Market Rally Have Legs?

Posted by Larry Doyle on March 27th, 2009 9:24 AM |

Barring a major selloff in the stock market in the next three days, March 2009 will go into the books as the largest positive month in the stock market since 1974. It all started 3 weeks ago today when the market, if not the world itself, felt like it was ready to end. The question before the court is “does this rally have legs?”

Having seen some stability and pleasant surprises in economic data over the last few weeks, will those trends continue? What prompted some of the stability in the first place?

In the face of consumer and corporate cutbacks in spending and expenditures, the government has been forced to provide relief to consumers. This relief came largely in the form of cost of living adjustments in Social Security and increased unemployment benefits. Were these the only props supporting a 20+% rally in the stock market? Doubtful. Don’t forget, no market ever goes anywhere in a straight line. The market was oversold and many investors as well as short term traders became exceedingly bearish. That excessive level of bearishness was the catalyst for this rally. Read the rest »


Let’s Get Real About Real Estate

Posted by Larry Doyle on March 27th, 2009 5:25 AM |

After the meltdown in technology stocks in 2000-2001, many people decided they would never go near that sector again. I certainly hope we do not see people reluctant to buy real estate again after this correction. Real estate has so many great qualities. As with anything you put money into, you need to understand the risks beforehand and while you own it. Regrettably, not nearly enough people understood the risks of real estate or the risks in the mortgage finance process before they purchased real estate over the last 5 years. 

While Sense on Cents has been focused on many of the major market moving news on Wall Street and Washington, ultimately to most effectively navigate the economic landscape we all need to relate the major news to our own financial lives.

To that point, there are already some great deals in certain real estate markets and there will be more coming along. Where does one go to become more familiar with real estate? Let’s check out our Investing Primer which just so happens to have a piece on Exploring Real Estate Investments: Introduction. Read the rest »


How Many Investment Bankers and Campaign Aides Does It Take to Turn a Lug Wrench?

Posted by Larry Doyle on March 26th, 2009 5:16 PM |

In light of the hundreds of billions of dollars allocated to the financial sector, I never thought for a second that Washington would not bail out Detroit. While details are being finalized, rest assured there will be tens of billions of dollars injected into the automotive industry.

The question regarding the automotive industry’s viability has always revolved around the level of annual sales. These sales had run at an annual rate of 16 million during the “good” years. Sales in 2009 are now projected in the 8-9 million range. How much does the industry need to downsize and what rate of sales are necessary in order to breakeven? Will the capital injected be the proverbial “good money after bad?”

There are so many variables in the automotive equation (rate of sales, merger possibilities, debt covenants, union and pension obligations, dealerships, autoparts suppliers) as to make the entire equation untenable. Read the rest »


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Larry Doyle

Larry Doyle A Wall Street veteran's views and instincts on the markets, economy, and all things financial.







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