mexican standoff. Many depositors are too risk averse to jump back into equities, so they sit in crappy time deposits. If they get their risk appetite back...

OT,

Interesting development in Pakistan - Google news aggregation on collapse of Swat Valley peace talks:

http://news.google.com/news?pz=1&ned=us&hl=en&topic=w&ncl=1327341942&cf=...

Jay D.
Saw the link you posted for me. Funny, I didn't find it bullish at all.

You read the paragraph that alluded to NPLs? Because a funny thing has been happening. Right now there is a global overcapacity of shipping, firms are cancelling orders all over. Yet Chinese shipping companies seem to have an order for Chinese shipbuilders whenever there is a cancellation... I guess there is the Reserve to pay for any unforeseen costs

You'll have to rely on more than government statistics to stay current, because China is not going to have a self-sustaining economic recovery any time soon. Too much weight behind manufacturing oriented exports, and the heavy bureaucracy imposed on small businesses means there isn't a chance of that changing quickly.

Werner,
Article for you: [Germany's] exports were equivalent to more than 47 per cent of GDP last year – compared with less than 20 per cent in Japan and about 13 per cent in the US. Its industrial base is skewed towards producing machinery and equipment – "investment goods" account for more than 40 per cent of its exports – and towards emerging European and Asian economies.

Make no mistake, 'it' will arrive. I don't encounter a recession at all in my day to day life, but I'm smart enough to know the absence of evidence is not the evidence of absence. These things take time to appear

Dr Strangebank?

Wells Fargo couldn't have shown an honest profit. They had the smallest loan loss reserves as a portion of assets by an order of magnitude going into the quarter. They were not head and shoulders above the most prudent mortgage lender, they loved giving junior mortgages. I can't remember if there was some notable movement into L3 last quarter, but definitely apply your own double digit % losses to that if you want to translate their books into current reality

What this does tell you is that on the losses did have, they held off on selling/closing defaults/REOs. We're coming up on the optimal time of the year to sell, or rather sell lots of, housing. They can hold off for a few months, hoping for the Treasury to buy them out at par. It makes no sense to wait for another full year, so there's a timeframe of reckoning that requires only modest patience

So, people are losing their jobs, their 401(k) matches, the cash they have tied up in their homes, return on their investments, etc, etc., but WFC manages to post record profits. What does this say to me?

1. End all bank bail outs now! They no longer need the money if the can cash flow themselves back to solvency
2. Claw back bail outs given to "profitable" banks
3. Consider a windfall tax on future banking profits to repay the USG losses incurred to date that can't be clawed back from the balance sheet, much like the windfall taxes proposed on "Big Oil" by the idiocracy

Such bullshit.

couple three things,

why is it that the vix only rises when stocks go down? are we not experiencing volatility this week?

do these etfs only soak up investor demand to keep selling pressure off stocks? can we assume all these mega ultra etfs are run by saintly bankers who pull no tricks?

dollar rallies when stocks drop, reported as cause and effect by financial mass media. dollar rallies when stocks rise today, will it be presented as cause and effect?

albrt (member) wrote on Thu, 04/09/2009 - 8:38am.
"Borrow at 0.21% and lend twelve times at 5.83%"
OK, but where are they finding borrowers to take out all those loans?
I mean borrowers who can actually make payments.

It doesn't matter. They'll take the points up front and then the cash flow and won't even care if there is 100% impairment after 6 months.
Lather, rinse, repeat.

Who is Mein Fargo?

It is a place in a magical world called Dakota where everyone gets what they deserve.

Hoised, not hoisted.

Their earnings are once again total fraud. What's the NPA threshold now.... 150 still or did they bump it to 180 days. What's Industry std, 90 days? Considering their HELOC exposure, serious analysts have to ask themselves do they really have enough reserved... no, they don't. Would also love to know how they accounted for Wachovia. Let me guess, it was NOT conservative. Same ole accounting scams and all the while they suck off the public taxpayer's teet. Anybody buying into this is a fool that deserves to be parted with their money. For legitimate short sellers, not those thieving naked shortsellers deserving of an orange jump suit and a small jail cell, they just got a gift from heaven with this deliberate cram job. One of these days a mainstream media host or analyst worth their paycheck will start delving into these questions on air when the CFO is in front of them and in a position to state their lies on the public record. CNBC must pay peanuts it seems.

This isn't an annoucement. This is a pre-annoucement. They don't announce until April 22nd!!!! Let that soak in for a minute. What is today? Maundy Thursday. The day before Good Friday which is a holiday for Wall St. The day after the Jewish passover has already started. All this means a large swath of Wall St. will be gone and volume will be negligible. Not only that, the pre-announcement doesn't really have anything useful in it. There will be no call, no 10Q filed, no discussion because of the "quiet period", no additional information for two weeks!!! So if your short you have two weeks to wait to see to determine what you should do. This is highway robbery on the other side.
Where are the congressional hearings, investigations, the screams about manipulation? Why are there none? Because this type of manipulation is approved. Is looked upon favorably.

The company is distorting economic reality and will probably try to jam some sort of equity raise. Is that not fraud? For example. The NCO rate was likely ~1.55% vs. 2.72% in 4Q08, 1.98% in 3Q08, and 1.55% in 2Q08. To me that just seems highly unlikely compared to economic reality. I have never been short WFC so not talking my book. This just seems criminal to me.

Wells Fargo non-fed spread (mortgage lending rate minus depositor interest) declined from 470bp to 410bp compared to same quarter last year.

Everything hinges on the CFO saying that Wells Fargo's writedowns are over, and the severely undersized loan loss reserve that results from an assumption (or did the chicken come before the egg)

The homeowners assistance program is a joke. I already checked into it and I don't qualify for a refi option because my loan isn't via F and F. The loan modification option is simply this, you can call your mortgage company and ask them to help you out....Uhm yeah, that should work. My husband is finally back to work now after we've burned through all of our savings so now our income level is too high for a modification anyway. We've been paying our mortgage on time but that doesn't mean the next reset won't be the end of us if LIbor goes on a tear. THe last reset was a wash. If they really wanted to stimulate the economy they would adjust these mortgages down to a reasonable rate for people like us that have been paying and are working and hey, with the money we'd save we might be able to buy things so other people won't lose their jobs...Too much like common sense though I suppose. Well that and we are not too big to fail despite the pizza and donuts...

On the Rasmussen poll:

Adults under 30 are essentially evenly divided: 37% prefer capitalism, 33% socialism, and 30% are undecided. Thirty-somethings are a bit more supportive of the free-enterprise approach with 49% for capitalism and 26% for socialism. Adults over 40 strongly favor capitalism, and just 13% of those older Americans believe socialism is better.

Investors by a 5-to-1 margin choose capitalism. As for those who do not invest, 40% say capitalism is better while 25% prefer socialism.

There is a partisan gap as well. Republicans - by an 11-to-1 margin - favor capitalism. Democrats are much more closely divided: Just 39% say capitalism is better while 30% prefer socialism. As for those not affiliated with either major political party, 48% say capitalism is best, and 21% opt for socialism.

Anybody else see the Republican party's problem?

Some excerpts
• Solid operating margins with consolidated net interest margin of approximately 4.1 percent and efficiency ratio of approximately 56 percent;
As I already said, that 4.1% net interest margin is down from the same period last year by 50bp. solid

• Combined net charge-offs of $3.3 billion, compared with fourth quarter net charge-offs totaling $2.8 billion at legacy Wells Fargo and $3.3 billion at legacy Wachovia;
• Provision expense of approximately $4.6 billion, including $1.3 billion credit reserve build, bringing the allowance for credit losses to $23 billion; and
• Pre-tax pre-provision profit of approximately $9.2 billion.
• Approximately $175 billion in loan commitments, mortgage originations and mortgage securities purchases in the first quarter;
• $190 billion in mortgage applications for over 800,000 homeowners in the first quarter, up 64 percent from prior quarter, including record $83 billion applications in March;
• Funded over $100 billion in mortgage loans, helping over 450,000 homeowners either purchase a home or lower their payments through refinancing;
• Over 150,000 mortgage solutions in the first quarter to help homeowners remain in their homes; and
Can we get some clarity on that? Given the success rate of some 'mods', can we reclassify that to 150k unforeclosed negative equity mortgages?

• Strong revenue contribution from legacy Wachovia, about 40 percent of combined revenue;

Quite a Jam job today. I'm still adding to my put positions. This rally is officially OVER.

On the brighter side:
Looks like this cycle is just a few years from being over;)
Or not.....

This link doesn't seem to work? Hmm....

Goat Herder Boy was happy today. He found three silver dollars in a rotting cotton bag when he was searching through debris. He ran off to tell Grandpa Old Goat herder the news. He was rich! He found Grandpa Old Goat Herder sitting on a log watching the goats graze. "Grandpa! Look what I found!"
He showed him the coins pleased at how they chinked as they moved against each other. "Nice Goat Boy. What are you going to do with them?"
That stopped Goat Boy in his tracks. "I could buy something?"
"Sure, what do you need?"
This puzzled Goat Boy. "A sword?"
"Nope, not enough."
He stood their silent. "I could save it and maybe I could find more."
Grandpa Old Goat smiled and Goat Boy winced. He knew he was about to hear about the "Old Days." He was right.
"Why in the old days we would have put it in a bank and made interest."
"What was interest Grandpa?"
This stumped Grandpa. He scratched his head. "I'm not sure I remember but it was good." He brightened for a moment "Plus banks kept it safe."
"Then why don't we have banks anymore Grandpa?"
"You ask to many questions boy. Go away"

"Anybody else see the Republican party's problem? "

I presume you mean a demographics problem. I'd say that supporting capitalism is a good thing, but I guess I've transitioned into that group or "older" Americans, or as we prefer to call it, "Real Americans"

"his rally is officially OVER. "

I still hold that the rally ends between tax day and Memorial Day, but probably closer to tax day.

Does anyone actually think that WFC's putting anything of significance out there? Clearly a long-weekend jam job, but i'm operating and speculating under the greater fool hypothesis.

OT: Just curious...........I haven't seen a SINGLE report on the effects of income tax returns on the economy. Does that NOT matter anymore? This last report from Wal-Mart showed a decrease over expectations of 2/3rds. If they have previously been consistently above the curve, and NOW are feeling the pinch after tax checks have been run thru their stores, shouldn't this be REALLY BAD NEWS that hasn't even risen to the surface of the worthless MSM news? Could ppl be saving the checks unlike previous history? Cashing them and piling them into the cookie mattress? This past month should have been better retail wise if people were spending?................

Gavshire,
Just in case you missed it, Hillary Kramer on PBS Nightly Business Report, Street Critique - - - agrees with you.

http://www.pbs.org/nbr/site/onair/street_critique/sc_home/

wmt's problem, relative to the other retailers, is that it doesn't have margins to cut to make up for the revenue drop.

i expect the rally in financials to continue through earnings season. GS on deck for tuesday.

"I don't believe: a) China's economy can get by without exports"
Define "get by". The cultural revolution didn't end "that" long ago, and the poor in China have been dealing with tyrants for Millennia

"b) There is any where that will boost their demand for Chinese imports"

You are most likely correct, sir...

Jay D.
Did you watch the video you sent me? Summary:
- US unemployment bad, will get worse
- USD will fall
- friend went to China, said things looked busy

First of all, which country would be most injured by a fall in the USD? How about China, one of its biggest low margin exporters and biggest single investor

Second of all, it was 15sec out of a ~3min clip where he mentioned China. Here is a 5 min clip of a hedgie from 1 week ago as he is in China, http://www.youtube.com/watch?v=ektMQGbW3wk

This thread is on fire! To chip in my two cents...

RE the Republican party: since it tossed away it's position on fiscal conservatism through the Gramm deregulation-Cheney deficits don't matter switchover, it has only a core of Southern fundamentalists/defense spending preservationists. The party has no coherent platform to run on.

On Germany, we should pay more attention to that country and the rest of Europe. Germany has a sizeable population that grew to adulthood under a Soviet system(a large proportion of whom are dependent on the welfare system), and it's not surprising to me that their dependence on exports is so great. The German government is resisting the idea of fiscal stimulus, and the rest of the Eurozone is hoping that Germany will bail them out; which tells you that countries like Spain and Italy are in much worse shape.

to all, there is a new thread

to Jay D.,
I didn't notice the other videos, maybe I will look at them when I have time later. As for the US, it is/was 1/4 of the global economy. Same for Europe. It will be years before recent boom-times return, even in Asia (according to my expectations)

New old thread: http://www.hoocoodanode.org/node/6556

I haven't looked closely at this but I seem to recall a huge reason for their acquisition of Wachovia was the tax benefit that accrued to them. Throw in their free money from various programs, and voila.

Ultimately, I believe the banks are going to come through this. I said when the stress tests were announced that they were a show trial except that instead of a firing squad at the end, the goal is to burnish the image of financial stability. It doesn't matter what reality is. Rob Dawg is right - given enough time, the carry trade and fees will pull these guys through. What this episode really illustrates is how little the average American understands - or cares - about the financial system. The banks are receiving tax dollars, lending them out to the taxpayers, charging them fees to do it, and then using massive tax subsidies to avoid paying any taxes after that. That's quite a business model. And yet, there seems to be no real outcry. I'll be amazed if the mid-term elections result in a larger than normal failure to re-elect incumbents.

On an unrelated note, I'm so bummed I didn't finish my post to Gavshire last night, in which I was going to refer to War Bonds. Then I read this morning the very same term. Day late, dollar short.

@ EHP,

"O/T: WFC has an interesting product, http://www.sec.gov/Archives/edgar/data/72971/000119312509074442/dex41.htm
Due April 2011. Linked to S&P500, initial level of 797.80. Pays 2x upward movement, capped at 35% profit. Protected to principal value from a 15% decline, with a 1x index loss for anything below that."

Notes Linked to the S&P 500® Index

due April 7, 2011.

after S&P 1077 or below 678 the mark gets nothing else until he hopefully gets back his money in Q2 2011.

it appears WFC is willing to bet that inflation takes off and doesn't stop before 2011, but they are stop limit 678.

they get to keep all the proceeds if things blow up over 17.5% but if market falls below march lows you eat all the losses. nice risk reward for them, since they get the stake for free..

plus

"if a Market Disruption Event has occurred or is continuing on that day, the next Trading Day on which there is not a Market Disruption Event will be deemed to be the Valuation Date."

so if theres a crash you get liquidated the day after! who thinks the market will remain in a 32.5% band for two years? what if the market moves down and up through their limits? hope they thought of that one because someone will surely call bullshit on the Market Disruption Event if volatility shoots balls on their 32.5% band. the range the last two days was 7.6% (russell 2000).

who would loan them betting money with no interest for two years to keep the cream and none of the loss? who wants to let WFC hold that bet for two years on their behalf? was it really that easy to make money in finance? do you just ask for money? was that all?