End of day WTF?! Post
Things that make you go Hmmmmmmmmm:
• Except for all the losses, U.S. Banks were wildly profitable last year (Bloomberg)
• Who's to blame for the market rout? Da Bears! (Infectious Greed)
• Today was the Biggest Rate Cut in Quarter Century (Portfolio)
• Goldman Sachs’ Abby Joseph Cohen chief U.S. portfolio strategist continues to forecast a Dow return of 11% by year-end. She sees the Dow at 14,750 by year-end (Briefing.com)
• Our Fed post this morning was titled Whiff of panic. The phrase pinged around a bit, from the Economist to the blogosphere.
• This morning’s gap down led to a surge in the VIX to 37.57 (VIX & More)
• Speaking of Contrary Indicators: Blog Traffic the past two days has been through the roof -- and since then, we see the market has been trying to recover. Buying signal or not? You decide:
(1.18.08 as of 3:45pm EST)
Tuesday, January 22, 2008 | 04:00 PM | Permalink
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I have only been trading for 3 years now, and dont really pay any attention to analysts, economists... but this Abbey Joseph Cohen dude, always seems to be wrong. So he says 14750 for dow end of year... so that means 9800 dow? anyone know more about this fool than I?
Posted by: BB | Jan 22, 2008 4:10:56 PM
Seems like a good place to ask a question. Barringo, I don't remember you posting any topics directly related to ethics, but I have one.
I hope to get many responses.
Here's the question:
Is it conceivably possible for an analyst to discern the capacity of a firm he follows to effect a mere 1/2% change in earnings for all of 2008?
In other words, were the earnings to have been expected to be $1.00, he might now determine them to be just 99.5 cents, or in the case of $2.00, merely a 1 penny change, or for $4.00, just 2 cents.
Are any of these changes to estimates worthy of an announcement of the change?
Can an analyst perceive or maintain a capacity to discern so little a change?
Would an announcement of such a change be ethical, moral... and would it skirt the fringes of legality? (at least the spirit of laws governing security analysts?)
Any opinions?
It is my contention that no such accuracy could exist, and then announcements of changes in such insignificant amounts is for the purpose of self-dealing.
Does anyone agree?
Posted by: Eclectic | Jan 22, 2008 4:11:56 PM
I want to see a 45+ on the VIX...
Posted by: Justin | Jan 22, 2008 4:12:35 PM
"ECB WATCH: ECB Reps Stick Firmly To Anti-Inflation Bias"
A serious hmmmm: the Dollar will have to ride it alone...
Posted by: mhm | Jan 22, 2008 4:12:43 PM
Abbey Joseph Cohen is not a dude, dude.
Posted by: Shnaps Parlor | Jan 22, 2008 4:15:01 PM
Despite the relatively large cut, the market closed down 125 pts. Now we celebrate? Get ready for the one-shot hangover.
Posted by: Marcus Aurelius | Jan 22, 2008 4:15:06 PM
of course GS sees it all ending well.....after they have profited by selling long ABX products to you and then shorting the hell out of it.
WTF is more appropriate for today. Now the question is , having shot it's wad today, WTF do they do in, say, three months when all that inventory from the peak of the reset cycle is added to an already bloated inventory?
Panic is the word of the day....by the Fed
Ciao
MS
Posted by: michael schumacher | Jan 22, 2008 4:15:42 PM
whole-heartedly Eclectic.....especially when they couldn't see any of the current "issues" until January 2nd of this year.
Where are you taking this???
Ciao
MS
Posted by: michael schumacher | Jan 22, 2008 4:18:45 PM
Ciao,
I'm not speaking of grand swaths of earnings estimates that go bad for any number of reasons. I'm talking about a specific analyst (or his firm) who might decide to give a news release to a financial reporter or blogger and in that release alone change his estimate on a company's earnings for all of 2008... of just 1/2 of 1 percent.
Is it possible to be so accurate, Ciao?
Where I'm taking it is to illustrate my original contention. It is beyond my rational, logical ability to believe that so little a change is worthy of a notice, release, news item, etc.
And I further repeat my contention that such firm's analyst or the firm itself is merely doing it for the purpose of moving markets for its own self-interest.
Do you agree?.... Is there anyone else out there that also agrees with me?
Posted by: Eclectic | Jan 22, 2008 4:25:35 PM
Uh-oh
Fanny/Freddie may write down $16 billion 4th quarter loss.
http://www.reuters.com/article/ousiv/idUSN2249496320080122
Posted by: Stuart | Jan 22, 2008 4:26:13 PM
there's a worm in my AAPL
Posted by: scorpio | Jan 22, 2008 4:33:54 PM
Another way of asking this is:
Is manipulation the objective for changing a company's earnings forecasts by just 1/2 of one tiny percent?
Personally, I could not face myself in the mirror were I an analyst and I changed a forecast of, say, $4.00 to $3.98, or to change $1.00 to so little a difference as to effect a meaningless rounding error of 1/2 penny.
Does anyone agree with me?
I wonder, does the SEC agree with me?
Posted by: Eclectic | Jan 22, 2008 4:34:12 PM
Hopeful Uncle Ben can give us another 75 BPS because Apple just warned after hours and the stock is getting taken to the woodshed.
Posted by: John Borchers | Jan 22, 2008 4:35:23 PM
If you don't go out and buy an iphone or an ipod touch from BBY on your way home, then you are not a patriot and you hate America.
Posted by: George Bush | Jan 22, 2008 4:39:58 PM
One of the 4 horse puckies just took a lance through its breast. One down, three to go.
Posted by: Ross | Jan 22, 2008 4:41:08 PM
A big Cramer booyah for my Apple puts. Missed out on selling them at the open as I was busy unloading my SPY puts and FXP's, guess that turned out to be fortuitous.
Now let's see if Big Ben has another slug left in his six-shooter to fire before the markets open tomorrow...
Posted by: Short Man | Jan 22, 2008 4:44:09 PM
what say you commenter's. we have much lower fed rates and probably even lower in 10 days.
Do the lower rates materially and positively impact consumers and companies, leading to better econ conditions in 6-12 months and the market begins to price in that positive info starting now???
or are the rate cuts too little too late and even with low rates banks still won't loan, consumers won't rebound spending, house prices still decrease, company margins compress and earnings fall, companies lower cap-ex, less hiring, more firings, etc. mkt rebound from lows today mainly short covering and short term optimism that winds up just plain wrong???
can the white house fiscal and monetary policy action revive the economy, company earnings, growth, etc. to the point that we avoid major market declines from here? or is the intervention all for naught.
i'd love to hear comments on that. i'm only about 20% net-long right now and while i lean towards thinking markets are 5-15% lower in 6-12 months, i'd prefer not to go net-short in the face of some serious govt intervention that could work (i'm not an economist and don't have huge conviction the plan works or not)
tahnks for any comments.
Posted by: craig | Jan 22, 2008 4:45:17 PM
Craig according to what I heard on Bloomberg this afternoon an emergency cut hasn't been done since 2001.
Posted by: John Borchers | Jan 22, 2008 4:48:50 PM
"Except for all the losses, U.S. Banks were wildly profitable last year."
Except for all the items that goes up in price, there is no inflation.
Except for all the (recurrent) one-time charges on our balance sheet, we are oh! so profitable.
Except for all the mistakes I've made in the past, my life is perfect and everyone should strive to emulate such a great guy.
Had enough?
Posted by: Francois | Jan 22, 2008 4:54:00 PM
That Bloomberg article was ... amazing. Basically, yeah we burned up all our kitchen cabinets, but look how nicely this roast turned out! (Or "other than that, Mrs. Lincoln, how did you enjoy the show?")
He spent a lot of time giving answers to a question nobody cares about. Who really cares if the banks' other lines of business didn't crater? I never saw any expectation that they would. Of course if those lines also cratered, that would be news.
"It's the bad loan write-offs, stupid!"
Posted by: LFC | Jan 22, 2008 4:55:30 PM
craig..
it all depends now on jan 30 FOMC meeting..
if they give another 25-50 pt rate cut, great for longs particularly financials.
but if we dont get anything.....i would tilt towards short on that day...
tomorrow we will get some retails sales...what if it is bad news??
Posted by: techy2468 | Jan 22, 2008 5:04:03 PM
Rumor on the street is that Bernanke will be buying AAPL shares at the open tomorrow and will also cut rates by 25bps to make it an even 100bps in 2 days. You heard it here first folks!!
Suge
Posted by: Suge Knight | Jan 22, 2008 5:09:52 PM
Craig- IMHO certainly the cuts will have some effect compared to doing nothing or regular 25bp cuts every meeting. However, I personally think the weight of the credit contraction, falling real wages, falling home prices and cloudy employment outlook will all weigh more heavily on the consumer than a 2% drop in prime. Fundamentally, it will not slow the decline in house prices. And that's those are just the problems the consumer is facing - the ultimate unwinding/failure of credit derivative structures is still in the early stages with unknown effects for the key financial players.
Add to this the fact that the recent moves will worsen the inflation picture 6-12 months out with a weaker dollar and continued high commodity prices and I have a hard time landing on the bullish side of the argument. Stagflation looks more and more to be the default scenario at this pace.
Posted by: Short Man | Jan 22, 2008 5:11:21 PM
"Don't Fight The Fed"
Common this is rediculous! Listen to CNBC and you will surely lose your ass.
Last time the Fed has emergency meeting 2001
Look at XLF over 2001? Did that go up?
Last time the Fed had lowered the rate this far this fast 2000.
Look at XLF over 2000? Did that go up?
Look banks and everyone else make more money in higher interest rate environments. Sure in lower interest rate environments you make more loans but it doesn't make up the difference.
Otherwise why did banks do these teaser rates in the first place if all they needed was just more loans?
Posted by: John Borchers | Jan 22, 2008 5:12:30 PM
I don't know what you guys are freaking out about...the US economy is strong. Did you see the rest of the world crashing the past two days? We held up strong, based primarily on the strength of our banks, and especially our monoline insurers. Oh, did I mention that we've had 52 months of consecutive job growth? And barely any inflation at all!
Oh, by the way....don't forget to pick up your APPL ipod on the way home. I would recommend BBY. I mean, you love America, right?
Posted by: George Bush | Jan 22, 2008 5:12:52 PM
