Thursday, July 31, 2008

Can't wait to try the Chinese new technology

designed to control bear running rampant. Truly a "leap forward" that Mao can only dream of. USA needs to get a few dose of this medicine too, tasty.


China Tightens Share Sale Approvals to Revive Market (Update1)

By Zhao Yidi
Enlarge Image/Details

Aug. 1 (Bloomberg) -- China is restricting approvals for share sales to keep new supply of equities from putting additional pressure on the world's worst-performing major stock market, two people familiar with the matter said.

The China Securities Regulatory Commission is delaying the issuance of written approval documents, the final regulatory stage, to companies preparing initial public offerings, said the people. They declined to be identified because they aren't authorized to speak publicly on the matter.

Shang Fulin, chairman of the securities watchdog, is trying to cushion a market that plunged 47 percent this year, making the CSI 300 Index the worst performer among the 20 biggest benchmarks. About a third of IPO applications were rejected last month, compared with 8.3 percent when stocks peaked in October, based on data from the regulator's Web site.

``Controlling share sales is an important tool for CSRC, and it's effective in the short term,'' said Leo Gao, who helps manage the equivalent of $2.3 billion at APS Asset Management Ltd. in Shanghai. ``More stock sales in a bear market is bad news'' for investors.

So, I will leave risk management to you guys.

imho bad job report is the signal to go in fast. Good job report is where I ask u use your own discretion, stops, and risk management strategy. There is no option in this one and that is a minus. If you feel this is not explosive enough, FED is still around.

I tried to find more FED and DSL-type of supernova.

It is kinda scary with possibly more suckers coming in (remember FED going to $12 for like, 5 minutes?) and upset the best laid plans.

The key is catching the animal while NPA is small, but with what I know of the situation and numbers, make a forecast about whether such can go parabolic in losses.

I was speculating about PCBC, but the price seems to reflect an already parabolic loan loss reserve or somewhat close to it. I have some puts there and was checking the price, when I mistyped "CBC" instead of PCBC and I think this could be SHORT at FIRST SIGHT.

Location must be bubble state heavy, delinquency/NPA ratio should not cross 5% yet (undetected by masses), and asset GROWTH had to be pretty good clip (10%) in 2007 to maximize FUTURE damage to equity and earnings. Furthermore, a "dilution strategy", taking more asset to deflate %delinquent to appear low, is a bonus if you can get one.

As you can see, the typo could really be similar to a guy digging for coal in the backyard and struck uranium deposit instead.

Read on:

Net interest margin


Total nonperforming assets / total assets (quarterly from last year to now)


$5,340,400 (Q2 this year)
$4,901,763 (Q2 last year)

Total stockholders' equity

$389,145 (Q2 this year)
$385,965 (Q2 last year)

See that?


Capitol Bancorp’s National Network of Community Banks

Arizona Region:

Arrowhead Community Bank
Glendale, Arizona
Asian Bank of Arizona
Phoenix, Arizona
Bank of Tucson
Tucson, Arizona
Camelback Community Bank
Phoenix, Arizona
Colonia Bank
Phoenix, Arizona
Mesa Bank
Mesa, Arizona
Southern Arizona Community Bank
Tucson, Arizona
Sunrise Bank of Albuquerque
Albuquerque, New Mexico
Sunrise Bank of Arizona
Phoenix, Arizona
Valley First Community Bank
Scottsdale, Arizona
Yuma Community Bank
Yuma, Arizona

California Region:

Bank of Escondido
Escondido, California
Bank of Feather River
Yuba City, California
Bank of San Francisco
San Francisco, California
Bank of Santa Barbara
Santa Barbara, California
Napa Community Bank
Napa, California
Point Loma Community Bank
San Diego, California
Sunrise Bank of San Diego
San Diego, California
Sunrise Community Bank
Palm Desert, California

Colorado Region:

Fort Collins Commerce Bank
Fort Collins, Colorado
Larimer Bank of Commerce
Fort Collins, Colorado
Loveland Bank of Commerce
Loveland, Colorado
Mountain View Bank of Commerce
Westminster, Colorado

Great Lakes Region:

Ann Arbor Commerce Bank
Ann Arbor, Michigan
Bank of Auburn Hills
Auburn Hills, Michigan
Bank of Maumee
Maumee, Ohio
Bank of Michigan
Farmington Hills, Michigan
Brighton Commerce Bank
Brighton, Michigan
Capitol National Bank
Lansing, Michigan
Detroit Commerce Bank
Detroit, Michigan
Elkhart Community Bank
Elkhart, Indiana
Evansville Commerce Bank
Evansville, Indiana
Goshen Community Bank
Goshen, Indiana
Grand Haven Bank
Grand Haven, Michigan
Kent Commerce Bank
Grand Rapids, Michigan
Macomb Community Bank
Clinton Township, Michigan
Muskegon Commerce Bank
Muskegon, Michigan
Oakland Commerce Bank
Farmington Hills, Michigan
Ohio Commerce Bank
Beachwood, Ohio
Paragon Bank & Trust
Holland, Michigan
Portage Commerce Bank
Portage, Michigan

Midwest Region:

Adams Dairy Bank
Blue Springs, Missouri
Bank of Belleville
Belleville, Illinois
Community Bank of Lincoln
Lincoln, Nebraska
Summit Bank of Kansas City
Lee’s Summit, Missouri

Nevada Region:

1st Commerce Bank
North Las Vegas, Nevada
Bank of Las Vegas
Las Vegas, Nevada
Black Mountain Community Bank
Henderson, Nevada
Desert Community Bank
Las Vegas, Nevada
Red Rock Community Bank
Las Vegas, Nevada

Northeast Region:

Geneva, New York

Northwest Region:

Bank of Bellevue
Bellevue, Washington
Bank of Everett
Everett, Washington
Bank of Tacoma
Tacoma, Washington
High Desert Bank
Bend, Oregon
Issaquah Community Bank
Issaquah, Washington

Southeast Region:

Bank of Valdosta
Valdosta, Georgia
Community Bank of Rowan
Salisbury, North Carolina
First Carolina State Bank
Rocky Mount, North Carolina
Peoples State Bank
Jeffersonville, Georgia
Pisgah Community Bank
Asheville, North Carolina
Sunrise Bank of Atlanta
Atlanta, Georgia

Texas Region:

Bank of Fort Bend
Sugar Land, Texas
Bank of Las Colinas
Irving, Texas

Wednesday, July 30, 2008

Interrupting the current TV show for updates from Zimbabwe.

Low volume pump to 1320?

Could be consistent with break on 1280. Then low volume pump and sector catch-up especially CRE to grind the short further and reduce sky high IV and bid-ask. I was wondering if this part of the bear market was gonna be missing from this leg of BM rally.

Anyway just talking to myself, u should pay attention more on actual readings like tomorrows job #s and actual Q2 GDP. If they turn bad and the market rally then the 1320 is the play and u even want to get in short early. If they turn out decent, ... well what could be the stuffs where 1320 be passed for a few points of headfake, with strong initial rally on thursday and friday.

Tuesday, July 29, 2008

I have found a spectacular short.

It's a bank, with

* attempts to dilute NPA% with growing asset TREMENDOUSLY in 2007 -2008
* dividend is 400% of earnings.
* operating in CA, FL, NV, AZ AND MI, yes the holy grail of blight Michigan!!!!.
* analyst can NOT provide positive commentary at best
* is rallying hard but nobody is watching.
* NPA is climbing rapidly in $ basis and adjusting for the less season (age) this is significantly worse than comparable books.

The stock is still rallying hard and I will post what I have as soon as stabilization hits. Maybe tomorrow after some #s from ADP, they usually like to taser the short, even more so than USA who actually loves the short.

Monday, July 28, 2008

What form of singularity, Sir?

I was sure of this now. Looking at what Paulson said today and the housing bill text in more details, the sense I have is that it's just a matter of time before mortgage loans are going to "survive a bankruptcy".

You see, in a typical blackhole, they said when you fell into one, just before you get shredded into your tiny little atoms they said light waves got bent so hard you can see your own ass looking forward.

This is what would happen since they have decided that zimbabwe is probably not a good economic model to follow.

So they will entrap every "recent" borrower, enact that covered bond, use a combination of deep subordinate support and FDIC, but the scheme can only work when the backstop can garnish money from the borrower should the event of default happens.

I guess if you NEED to default, it's probably best to do so now. If things are really retroactive, then it's useless but you can say you have tried your best anyway.

Common wisdom suggest ....

That you should PILE ON the momo of the day, which could be rotating from basic/commodity related into pharma-care/biotech. AMGN and JNJs of the world.

You should do it quick, both the entry (AND the EXIT sign out of commodity) might be shut permanently.

Saturday, July 26, 2008

The "bailout"

The name says it all.

Friday, July 25, 2008

The absolute TRUTH about the condition of GSE today:

The truth is this: that FRE/FNM 800B or so money is just pulled out of paulson ass. Why not 500B or 1T, nice round number? What does 800B correspond to? Nothing to the best of my knowledge. Just a LARGE number being thrown out there to soothe the nerve of bond holders.

What it signifies is just USA politely asking Asian people to continue rolling their debt to FRE and FNM. FRE and FNM isn't in my opinion out of cash or negative equity.
The issue is the DEBT. Imagine your bank coming to you asking you to repay your 30-yr mortgage and tell you to find another lender. You'd be immediately dead regardless to the fact that you a) have a job and b) have been paying your bills on time every month since you have the mortgage.

That is precisely the condition of the GSE today. This isn't a Wamu case where money was lost, or ABK/MBI/MTG where money wasn't even there in the first place. It is a ST debt story.
Now, Paulson wouldn't mind at all moving the request to 100B or 500B or 1 Trillion, cuz he knows he isn't gonna pay a dime of it. He doesn't need to. At the worst case of losses, it is the share holder, and perhaps preferred who will get wiped out and not anybody else. And I mean SHITKICKING BAD situation resembling the Civil War era.

It is again, politely begging the GSE investors not to cancel their debts and leave in droves.

I know this is HARD to believe, after BSC, after LEH, after WM, after ABK/MBI, after MTG/RDN/PMI. But it is what it is.

Should you buy FRE/FNM? I don't at all suggest that. The damage is now very real. Now that the government is running the lending business, you MUST NEVER expect credit expansion within the next decade. FRE and FNM makes money from expanding credit and earning spreads from that credit. How much contraction of credit should you expect? A LOT.

Think this way: Credit will be dried out like the levee in New Orleans. Then the regulations are like the sharks being thrown in the smaller, drying pond. The pond, is now crowded with monetarily misled people (inflationists) as well as people who would like to sell their Potash to you.

I wish it was just caught swimming naked when the pond is drying. You can still use your hands to cover what it is you want to cover. But, those shark teeth will leave their marks pretty good on your members too if you think PRINTING is the key to tomorrow.

I like TF for the entertainment values; I am absolutely surprised they spent that much energy in opposing the housing bill and FRE/FNM-related bill; something that absolutely confirms their lifelong belief of deflation, won't really spend any tax $ and more about jawboning, and would actually help a lot making money in the short side by sucking in yahoo message board investors into some of the bank trash out there. They even fly some dude to make a video to Florida having President Karl giving his 2c on GSE "bailout" that really isn't a bailout but more of a way to neuter the GSEs permanently. What I am saying is just focus on the credit dry-up and find opportunities in taking out over priced stocks be it in banking, commercial, commodity, or retail one by one in a focused fashion and leave the marching band to run the parade.

So long as it's free, you and I can watch.

Thursday, July 24, 2008

A little dusty since the last excitement/orgy ...

I really am running out of material to spew out maybe I will start putting links for porn on the sidebar.

In TF, 7 months ago I was really speculating that FRE and FNM will have to be taken over by the government and their shareholder value would be wiped out. The owner of that forum was really mad and this is some of his retort, I wont force you to read the entire confusing debacle:

Well, .... I guess now we just sit and wait for that Treasury moonshot then?

This whole simple thing is just a reflection of the lack of war since like 1940s. I really don't mind risking my life in WW3 right now. If I survive, then I would hug everybody, apologized, and sing kumbayah, with the remaining 40% of the world who survive. Then we can do business again. This place gets too crowded, man. Besides, I am tired with the stock footage they use in video games these days. Need new material man. By the way, are you still long basic material my friend? You won't be able to farm that much crop when the fields are thoroughly mined.

Heheheh, I really don't like posting this in TF because I'd rather shit on my own carpet. But then again, I have a good record shitting live giant black mambas on the floor, as the links posted above would testify.

Still laughing?

Monday, July 14, 2008

The south will rise again?

I don't think so. I am talking about Synovus (SNV), the Goldman Sach of the South? If you say so, heheheh.

Haven't fallen that much when you account for the huge dividend payment early this year. Just for diversification if GGP, ZION, RF, and $2.50 puts on NCC and FED isn't exactly your cup of tea.

After cashing out what they can through that dividend, you should treat what's not cash-able VERY similarly to you would on LEVEL 3 ASSETS. Construction, real estate, and commercial loans for subprime heavy GA and busted FL. Recently, I heard (FDIC?) said something about GA banks being really heavy on their list. Gettysburg?

Revisiting FRE/FNM Jun 23 comments/insight:

The biggest concern about the US economy right now is that no net long investor in these bonds, and mostly arbitrageurs of some kind.

Saturday, July 12, 2008

Last advice to FRE and FNM.

If you got money, don't spend it. Hunker down. Don't listen to those miscreants in Capitol Hill. This is a deflationary environment that happened because there WAS a lack of collateral when you printed the money the first time.

Oh, you forgot what an investment bank is, did you? It simply is an institution whom the Government delegates money printing to. The government decides to print money for the public. You print money for the private sector, and you can do that provided the enterprise needing the money is worthwhile, or in other words, well collateralized.

Initially, you did the right thing. But in recent years, you PRINTED money with INSUFFICIENT collateral, did you not? $100 house whom you end up loaning $150?

Listen to me, I learned from you two once. Now it's time I pay the favor.

Two suggestions:

1. When you get the money from Paulson, curtail your lending and curtail hard. How hard? Create a supply and demand curve for mortgages, keep tweaking the credit requirement until you get approximately credit expansion of 3-4% a year. Otherwise you'd be diluting the value of the house with worthless paper, like what you just did. If that point is 35% down-payment, then so be it - that is the natural growth of credit that the public can SUPPORT for the long run.

2. Increase mortgage rate. A lot. Realize that housing is a twenty year cycle with 19 years of zero losses and 1 year of 100% loss. Charging the average, of 5% loss for example, is not the right thing to do, because when the 100% comes you would immediately be insolvent. And the 100% loss is NOT known up front where it would happen be it in year 1 or year 20. Charge a lot and combine with the credit restriction so that you don't expand credit greater than the public expand theirs, which is observable through the inflation rate.

For the congress people I have also a reminder. That the GSE was created so USA doesn't have to appear to borrow too much, was it not? So you ask private money to provide some equity, and it can survive because USA is like the illegitimate parent of these lovechilds. What happens if the children are broke because of you asking them to send money to you? They'd be looking for you and they ain't happy. Hands off - the deflationary process happens because the people you trusted, including the GSEs, were printing money indiscriminately to invest in projects that turns to be less worthwhile than the amount of money invested. It is USELESS trying to add more money into these "projects" because the value just isn't there to begin with. You cannot stop house prices to revert to what long term supply and demand dictates. Hunker down, spend less, and let prices go where they may.

Friday, July 11, 2008

Details are emerging on FRE/FNM...

From unnamed sources:

In the event of nationalization:

* The GSE will have to book pretax loss of $70-100B.

* Charge the losses through the capital structure.

* Then the government will guarantee the obligation.

* The government will run the portfolio in a runoff mode.

* Mortgage rate will be very high and lending term will be very restricted going forward.

I believe

* this will take the final leg of denial in house prices around the USA. Drop of 40-60% from HERE.
* lead to no money printing at all.
* final admission that in the next few years the best USA can do, is to "manage" the deflationary process so that it can be as orderly as possible. (Which should have been the case upfront since 2 years ago, I regret to say).

Wednesday, July 9, 2008

Decoupling implies NEGATIVE correlation, ....

which can be created from 100% positively correlated asset classes, when LAG in time is involved.

Enjoy this simple but often confusing mathematical concept most economists/anal-ysts don't understand or purposely omit from their discussions.

Tuesday, July 8, 2008

what to do ...

is to add more short into ZION and probably use the money from WB to do it.
GSE will provide the rocket fuel in financials, hopefully. Until somebody asks where MTG is gonna fetch the money from, that is.

Also a very clear sign is emerging that the US hasn't been printing more than the self-imposed rule of CPI for the past 18 months, despite claims otherwise from basic material/agri/oil people. Not very nice ending for those, I suspect. AA reported in-line despite 10% less shares, which are all bought above current prices. Very nice management reminiscent of FRE, CFC, and DSL. Will inquire the name of ultra long basic material later this evening. I saw that MON was indeed $60 before the beginning of "anti-US$" trade from July last year when Libor started blowing up in earnest.