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| User Info | Why Dick Bove And Market Callers Like Him Are Wrong in forum [Ticker] | |||
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Genesis Posts: 66463 Incept: 2007-06-26 
Royal Flush! 
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http://market-ticker.denninger.net/2008/.... Once more, into the breach..... ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2008-03-22 00:05:09
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Matt Posts: 3819 Incept: 2007-06-26 
Bothell, WA
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Quote:Sea change? Only if you consider the tide going out before a tsunami strikes as a "sea change." Intelligent people run when that happens, not stop to pick up the seashells and fish!  Awesome...
---------- "Market players should be buying things even though they are overvalued, Cramer advised. Although this may seem irresponsible, traditional market thinking is not going to get people anywhere right now." 2008-03-22 00:12:35
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Sierraboy Posts: 1314 Incept: 2007-06-26
San Diego, CA
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Great one Karl, but did you mean Joe Lewis and not Joe Frazier?
2008-03-22 00:27:46
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Genesis Posts: 66463 Incept: 2007-06-26
Royal Flush!
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Yep - fixed it.
---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2008-03-22 00:30:33
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Etz3l Posts: 8658 Incept: 2007-06-26 
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 Great work Karl. ---------- I could slit my wrists and people would cheer - L. Blankfein.  http://www.youtube.com/watch?v=p8jm61vk2.... 2008-03-22 00:31:56
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Interested Posts: 2515 Incept: 2007-10-07
SC Online
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Great ticker. Karl, also see my notes about how Bove had you short financials at the bottom in 1991.
2008-03-22 00:40:09
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Ksfq Posts: 1007 Incept: 2007-07-11
California
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If this is bottom then I have no idea how young families are going to buy a house. It seems that houses will be only for very rich. There is data which really cannot be disputed. All these "market callers" need to explain the following: Lets take San Francisco. Median house price in San Francisco is $675,000 (http://www.housingtracker.net/old_housin.... The median household income is $57,833 (http://www.census.gov/acs/www/Products/R.... Hmm... Ok then let's move to Central Valley, since San Francisco is just for rich bankers. Sacramento has median house price of $309,000. Median household income is about $42,142 (http://www.census.gov/acs/www/Products/R.... If you assume that house should not be more than 4 times than income, then we need ~50% cut in house prices or 100% increase in income. Last modified:
2008-03-22 00:52:11 by ksfq
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Blackswan Posts: 3361 Incept: 2007-11-06
Execution Pit Online
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---------- The market can crash further then you can remain short. Trade the moon cycle not the tape you want. 2008-03-22 00:53:22
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Tz Posts: 465 Incept: 2007-09-18
Southfield, MI but in Owatonna, MN for a while
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I only disagree (with both) on one subtle but fundamental point. Our host is absolutely right on one point. Right now, evaluating these institutions is like asking a doctor to do a check-up without any tests, probing, touching, or looking at anything more than a distance while the patient is fully clothed. Or having a mechanic certify a car while it sits in the parking lot with the doors and hoods closed. Knowing is part of the problem, but it really doesn't help. Assuming we opened FNM or FRE's books completely to have every mortgage detailed in an online database. Would there be any surprises? Does anyone who has a pen and an old envelope think they aren't already zombies? Insolvent by any definition? Dead bodies sometimes can be accurately diagnosed as dead without using anything invasive. So detailing their condition might not change things. "The implicit guarantee" is a myth, but one that can become real, and is believed by too many. And FNM and FRE had to restate their financials - many consider this to be a clean bill of health. BSC? Ben & his fellow helicopteers flew in and saved the day! Confidence is restored. Is/was it worth $80, $60, $45, $5, or $2. The value depends on confidence, not the other way around. (I believe this is an accurate statement of the Mises - Austrian school view). The value of a CDS is based on AMBAC/MBIA (transparency would not increase knowledge here either), based on S&P/Moody's (who apparently have seen what we all would), based on SEC permission and Ben's superpowers. Go for an insurance physical and bribe the doctor to declare you in perfect health? Or the mechanic to say the lemon is a cream-puff? Some might be more honest and accurate than the ratings agencies, but will they be believed? Most people are short truth and long emotion. I'd call it fraud except it has been certified legal and can be relied on in contracts and for regulatory purposes (AAA ratings). Lets just call it a judgment call. So you have all this subjectivity and appraisal value in a lot of things, and liquidity (do we count the 100 share bid, or the aggregate to get to 100,000) but it is worse. JPM owns things from BSC, which probably owns things from C, which owns things from GS, etc. So the value of JPM is dependent on the value of GS and vice versa just because of the interlocking. And the hedge funds are suppliers and customers of all of them (LTCM had several brokers). And if GS is healthy, they can buy more and pay more and the market is larger. If not, the market is smaller. So the interlock makes a problem in any node system-wide. That helped when they could spread the risk below the noise floor of the system. But the reverse is now true, any risk is a systemic risk. If you made everything transparent, ignoring how much value is based on confidence (including "good will") or is otherwise subjective or unmeasurable, you would not get a series of integers, but a complex differential equation that the NSA computers that do crypto could not solve. That won't create any more certainty to the value than we have now. And if confidence is based on certainty, it won't matter if the uncertainty is from opaqueness or because the equation is very precise but unsolvable. Is the problem transparency or leverage or (de)coupling? At best it is a strange attractor - TA works BECAUSE the valuations are subjective and ever changing, but act like natural forces. Fibonacci retraces, support and resistance, flags, the whole thing. The patterns you point out on the technical each evening are caused by the changes in value, which are changes in attitude which follow patterns. There are fundamental forces too, but they are swamped by the madness - whether manic or depressive - of the crowds. Gold and silver probably are the most transparent trades (GATA aside). If Gold that has not changed since before Man, can move huge percentages both ways in one week, how can you have any hope of putting a number on a portfolio of complex interrelated securities? Or are the markets for Gold and Silver so opaque? Perhaps hedge funds are deleveraging but won't they also deleverage financial equities and thus affect their values? Stocks seldom trade for 1.000 book value. And this stuff we now call toxic was trading for their original hyperinflated valuations two years ago. People bought them at that price, and I don't think they would have had any problem with transparency then as it would have revealed a recent trade for 200% of the value. It would have only made the bubble worse under those circumstances. The impending bankruptcies of the dot-coms (burn rate) were well known, but they still traded in the stratosphere at IPO. My fear (but what I believe) is that EVERY FINANCIAL INSTITUTION on wall street, and probably most other large ones internationally are insolvent under the rules of the financial petition. Because they are all dependent on market values from N trading partners, if actual, immediate insolvencies are greater than N, all are. No one has enough cash or liquid securities to pay every note. ---------- "I am become debt, destroyer of worlds" 2008-03-22 10:45:52
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Richard112360 Posts: 127 Incept: 2008-02-06 Hooterville
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Awesome ticker KD!!!!!
2008-03-22 11:05:11
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Bubblesee Posts: 3620 Incept: 2007-06-27
nyc
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KD, I beleive Bove is also wrong by not identifying 1989 as a downturn in Real Estate. It was quite bad and not just in CA but many other places including MA where i experienced it first hand. Many people were forclosed on and went bankrupt on both coasts. Even NYC was affected for a few years. It was the knowledge i gained from this period that led me to short my first stock (homebuilder) over 2 years ago. Based on the 1989 downturn i would agree that now would be the perfect time to get out of most short positions and perhaps even go long HB's and others.......however the Ticker and other knowledge gained clearly shows that this situation and 1989 are two very different animals. But 1989 WAS a serious downturn nontheless. ---------- Ticker Forum Special: "Bennie and the Feds" Melody:Elton John Lyrics:Bubblesee http://www.youtube.com/watch?v=etfVMtCq9Oc (Larry Kudblow eat your heart out) Last modified:
2008-03-22 11:24:32 by bubblesee
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Genesis Posts: 66463 Incept: 2007-06-26
Royal Flush!
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Well exactly. He didn't identify 89 in my conversations with him, but I sure as hell knew about 89, and what it did to people. '89 was one of the (many) reasons that in the early 90s, when I was offered a job from Telebit, I refused - I told them what my salary demand was and they had a coronary. Why was my demand so high? Because I was well-aware of the bubble nature of real estate in California, and since I had to live somewhere... ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2008-03-22 11:28:36
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Colonelkurtz Posts: 145 Incept: 2008-01-28 Seattle
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Savagely comprehensive. Showed Bove his brain, before the body hit the ground.
---------- Democrats; the velvet glove over the iron fist of Republican rule 2008-03-22 11:32:52
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Theone Posts: 6865 Incept: 2007-08-07 They crucified the only PERFECT one Banned
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-------> Karl  Quote:My fear (but what I believe) is that EVERY FINANCIAL INSTITUTION on wall street, and probably most other large ones internationally are insolvent under the rules of the financial petition. BOOM -----> http://research.stlouisfed.org/fred2/ser.... 
---------- Let me know when the DENIAL of who runs everything is over. Until then enjoy the circle jerk. I'm going fishing. State of the Union ---> http://www.mindspring.com/~lcruiser/Stat.... Last modified:
2008-03-22 12:23:15 by lcruiser
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Shortqqq Posts: 314 Incept: 2007-07-20
las vegas
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Any one who believes housing is close to a bottom needs thier head examined. Housing is directly dependant on the avialability of financing it and that is drying up by the day.
2008-03-22 12:52:32
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Bubblesee Posts: 3620 Incept: 2007-06-27
nyc
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Lcruiser: Thats a wild chart! ---------- Ticker Forum Special: "Bennie and the Feds" Melody:Elton John Lyrics:Bubblesee http://www.youtube.com/watch?v=etfVMtCq9Oc (Larry Kudblow eat your heart out) 2008-03-22 13:18:29
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Ponzi_unit Posts: 4155 Incept: 2007-09-05
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You've done it now Genesis, no Fed window for you!
2008-03-22 13:35:48
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Nirvan45 Posts: 1527 Incept: 2007-10-31
florida
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Holly crack note to dick bove Just wave the white flag and get it over with your misery. There is noway of winning with this guy on these subject because he has prepared a bear tool that will dig a hole deep enough to insert that tool. Housing bubble in 80's don't count heh? I bought a house in ma fall of 84, sold it in summer of 86 more than double what I paid, but in mid 90's the house that was priced late 80's for 150 sold mid 30's after owner spent close to 20k to fix it up, we are no where near historical yet. K.d regarding bear market, you have mentioned multiple times a 25 to %30 drop from peak, considering the market was over priced by 15 to %20 at peak from its norm, shouldn't bear market down turn consider all those factor and we may be looking to around %50 drop from peak by the time bear is over? 2008-03-22 13:42:36
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Genesis Posts: 66463 Incept: 2007-06-26
Royal Flush!
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Quite possibly, yes. Remember that the last bubble (tech) didn't hit consumers materially at all and yet resulted in a 50% haircut. I wrote a Ticker on this having to do with dynamic instability and how all the "engineering" by The Fed and others actually CAUSES the instability in pricing of financial assets which everyone's screaming about now, but it appears that Bove didn't read that - or didn't understand it. ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2008-03-22 13:44:56
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Weedthegarden Posts: 379 Incept: 2007-09-11
Houston, Tx
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Karl,wasnt that a pleasant bitch slapping.....LOL I have always traded and invested as a broker will make you broker ---------- WeedtheGarden "They who lack talent expect things to happen without effort. They ascribe failure to a lack of inspiration or ability, or to misfortune, rather than to insufficient application. At the core of every true talent there is an awareness of the difficulties inherent in any achievement, and the confidence t 2008-03-22 14:54:47
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Akula Posts: 1796 Incept: 2007-10-01
Moscow
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If the cornerstone of Bove's call is an expectation that housing prices are about to bottom he needs his head examined or his butt buddy's last name is Yun. One of my favorite housing market indicators is the number of Trustee Deeds filed in San Diego on a monthly basis which I have copied below. In the drop down box select "1982" as the start date for the chart and you will get a chart of Deeds filed on a monthly basis from 1982 to the March of this year. As a point of reference keep in mind that California had a housing crisis in the early 90's with monster declines in home values. I'm sure many Californians remember that crash. See if you can spot the shuttle launch! http://www.sddt.com/Finance/EconomicIndi.... 2008-03-22 15:56:52
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Isaac Posts: 535 Incept: 2007-07-27
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Great Ticker! It's awesome that you were able to get phone time with Bove. Instead of "No Way Jose!".. It's now, "No Way Bove!" P.S. Tell me... Which exchange I can buy put options on Mr. Bove? Last modified:
2008-03-22 19:28:43 by isaac
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Geckogm Posts: 1410 Incept: 2007-06-26
Canyon Lake
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Front page of marketwatch.com Bank of America may write down $6.5 billion: analyst By MarketWatch Last update: 3:34 p.m. EDT March 22, 2008 Print E-mail RSS Disable Live Quotes NEW YORK (MarketWatch) -- Bank of America Corp. could tally a $6.5 billion provision in the first quarter to cover potential losses in its home equity and mortgage portfolios, Punk Ziegel and Co. analyst Richard Bove was quoted as saying by the Bloomberg news agency. All the same, the bank will still report a profit when it releases its next quarterly results April 21, Bove was reported to say Saturday. Bove has a buy rating on Bank of America (BAC: 41.86, 0.00, 0.0%) shares, the report said. The analyst also wrote that he doesn't foresee an economic slide that would create the need for Bank of America's record reserve buildup, citing the change in the value of the dollar and steps by the Federal Reserve as likely to ease the credit crisis, the report said. 2008-03-22 21:00:15
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Synthetik Posts: 4359 Incept: 2007-06-26
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Quote:in Florida the state bird is the construction crane LMFAO ---------- g-d made us #1 cuz he loves us the best! Last modified:
2008-03-22 21:46:01 by synthetik
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Mango Posts: 218 Incept: 2008-02-08
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Great ticker Genesis! Your general theme of trust on all your tickers (and petition) is a point well taken. Isn't it true that bigs banks via Wall Strret have been taking down thier own risk by selling MBS to mom and pop's pension funds for decades? And with international trade opened up, is there a significant percentage of this (potentially bad) mortgage debt being held by foreigners now too? If so, how much??? This further begs the question: what percentage of the "hot potato" did U.S. banks actually end up getting stuck with(or do you suspect if we can't know for cetain)? Maybe the sly dogs got BSC to take it all and to be the fall guy. Mom and pop will get stuck with the rest along with the higer credit card fees, higher minimums and a host of other gimmics which will supposedly help the (parasitic) banks. Yeah--help them to kill their host(and thus themselves-but not the C team)! ---------- "Wall Street should be asking us for Bail, not Bailouts" T. M. O'Sullivan 2008-03-22 22:29:56
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