Sunday, July 31, 2011
Thursday, July 28, 2011
Sunday, July 24, 2011
Thursday, July 21, 2011
Instead of $8.5 billion, Bank of America is actually on the hook for an amount that is at least 3 times greater if one uses proper impaired security valuation protocols...
Should the true extent of deterioration of Bank of America's books be revealed, then its market cap would be not $100 billion but some modest fraction thereof. In fact, even John Paulson, formerly the biggest believer in BAC has now washed his hands. And he doesn't give up (read: look foolish to the investment community) easily. Our advice is to have a chat with Jon Weil: after all he is the man who said to "Curse the geniuses who brought us this madness."
Tuesday, July 19, 2011
The slide to which we should pay particular attention is this one:
According to Bloomberg, Oppenheimer & Co. analyst Chris Kotowski believes that Bank of America will be hoarding cash until at least 2016 to reach the 9.5 percent goal. That means no dividend increases for shareholders. In fact Kotowski does not rule out a share offering, which typically depresses the share price. “Bank of America’s capital position relative to peers creates dilution risk,” wrote Kotowski in a June 30 research note. “While we aren’t certain that an equity raise will actually happen, the risk is certainly there.”
The company's stock, which trades under the ticker symbol BAC, has been getting crushed. The stock price slid from $13.33 per share at the beginning of April to $10.96 at the end of June, a drop of 17.8 percent during the quarter. Managers of the MainePERS investment portfolio fell for the value trap and bought 63,358 more shares during that same period. As the quarter drew to a close, MainePERS held over 2.6 million shares. That's when Bank of America announced a $20.4-billion hit to its balance sheet. Talk about buyer's remorse.
Goodbye Teenage Wasteland: Bank Of America Pulls A Benjamin Button, Reenters Single Digits
Even the Vampire Squid, Goldman Sachs, is struggling. The investment bank's quarterly earnings report, also today, was not much better than Bank of America's. The Lex column at Financial Times sums up the industry's challenges this way:
If an interminable period of declining asset prices is the first Japan-like problem for US banks, the second is the effect of deleveraging on economic activity. Goldman Sachs, like any business, needs enthusiastic clients to make money. That underwriting revenues fell by a 10th versus last quarter, equities trading by a third, and fixed income, currency and commodity trading by twice that, suggests an increasingly nervous client base. Likewise, reversing the downward trend in net interest income at BofA (almost a $1bn less this quarter) and other banks will only be possible if an improving economy causes interest rates to start rising again.
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Sunday, July 17, 2011
Saturday, July 16, 2011
Sunday, July 10, 2011
Friday, July 8, 2011
Is there a better word to describe today's job numbers from the Bureau of Labor Statistics? Only 43,000 nonfarm payrolls (according to the Establishment Survey) have been added in the U.S. economy in the last two months, a number insufficient to accommodate all the new entrants to the workforce, never mind the 8 million-plus who lost jobs since December 2007.