Earnings Comparison
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Thursday, April 24, 2008 | 04:30 PM | Permalink
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Earnings ex-financial have been OK. Financials are having less problems finding liquidity.
Financial markets are looking good, and the credit markets are starting to function.
Bear market rally or bottom in place?
Posted by: kk | Apr 24, 2008 5:29:08 PM
Well, there are those Alt-A loans that will be resetting soon, bigger pool than subprime,more stated income (higher FICO) more investor property, and neg am option arms to boot. So, when you hear about the subprime "write-ups" balance that against new "write downs."
We are still nowhere near the estimates for credit losses, yet the market is pricing in the end of the credit crisis? Incongruous to say the least.
Watching CNBC today and one bull on the financials was asked, how about the idea that consumers will start defaulting on basic consumer credit. His answer-"well, during the last recession that happened but the financials made money."
I will tell you this, after 8 months of negativity, these "long only" guys NEED this thing to be over in order to make their bonuses this year and they NEED to be able to tell their clients it is over in order to get in new money and they NEED new money most of all. Can you imagine a fund manger ever saying: "We see no opportunities or sectors we want to buy right now?" If it is not commodities anymore, then it has to be something..so why not "BUY FINANCIALS WITH BOTH FISTS." It is like the old line: I don't know if he is Mr. Right, but he is "Mr. Right Now" so for now, everything is fine, until it isn't.
It doesn't make sense, but it doesn't really have to-that is the new pardigm in the new milleneum.
Posted by: Rich Shinnick | Apr 24, 2008 6:18:23 PM
P.S.
Paradigm in the new millennium...(I sure can't spell when I get fired up)..but I had a question for the regulars that I forgot to add....
Can someone point me to a blog where the commentary and the comments are biased toward the bull case? I am looking for some material with reasoned analysis that supports the bulls. Seriously, I am very worried that I am hanging out too much with the wrong crowd (metaphorically speaking) in the blogosphere and "self-reinforcing" my world view. Remember, "reasoned analysis" on the bull case...anyone?
Posted by: Rich Shinnick | Apr 24, 2008 7:21:24 PM
I would suggest that earnings charts be published in a basket of currencies in order to gage inflation effects but it seems that the dollar isn't the only currency turning into a basket case.
Commodities have the "futures" problem (speculation with leverage and no plans to take delivery), so it's paralyzing prudent investors who want real ROI after inflation and speculation costs.
This looks like a "go away in May" scenario for a huge diversity of markets.
1932 on Steroids.
Posted by: AGG | Apr 24, 2008 7:31:14 PM
Can someone point me to a blog where the commentary and the comments are biased toward the bull case?
Posted by: Rich Shinnick | Apr 24, 2008 7:21:24 PM
_______
I found this for you on the Google:
http://www.thebulltrader.com
Very chart heavy and bullish. Let us know if it's any help.
Posted by: Marcus Aurelius | Apr 24, 2008 8:11:03 PM
Marcus Aurelius,
No help. No reasoned analysis. Here is the bull case for EMC poer that site: “Yes, they are subject to a slowing economy, but that isn’t going to last forever. The company is a leader in its field….The chart looks like EMC will move higher.”
Err....slowing economy will not last forever." Conclusory. "The chart looks like the stock will move higher.." Chartology is not reasoned analysis in my book. "The company is a leader in its field." Yeah, New Century Financial was a leader in it's field, as was Bear Stearns. So, thank you, but not what I am looking for. No offense to the blogger in question and no offense to Marcus....
Posted by: Rich Shinnick | Apr 24, 2008 8:24:20 PM
Rich,
A well reasoned bullish blog I might suggest is marketthoughts.com. It is published by Henry To.
I use his site to help balance my cynical bias.
Posted by: Ross | Apr 24, 2008 8:35:16 PM
The stock market appears to be bullet proof. Good news or bad it just doesn't seem to matter, right now. But that won't last.
Posted by: Pat G. | Apr 24, 2008 9:47:35 PM
Ross, thanks. That blog does have some good perspectives i.e. focuses on individual stocks that you can make a reasonable case for owning regardless of the macro issues.
I think I am guilty of getting bogged down in the negatives of the BIG PICTURE (pun intended) and forget that within that there are a thousand smaller pictures that might be worth looking at too.
So, Barry, with respect to your MACRO theme, can you throw optimism a bone here and get up a post on something that is RIGHT? Is there anything RIGHT with the BIG PICTURE?
You don't have to go Kudlow on us but something? Anything?
Posted by: Rich Shinnick | Apr 24, 2008 10:17:27 PM
My "day job" is to be neither optimistic nor pessimistic, but rather, to sift thru the economic and market data to determine the reality beneath.
If the reality is not lovely, well, that's irrelevant to me.
As noted back on Jan 23, and again on April 1, I do not think this is an environment to be short in. We are mostly neutral, running decent amounts of cash. (Is that positive enough?)
But happy talk for its own sake? You've come to wrong place . . .
Posted by: Barry Ritholtz | Apr 24, 2008 10:49:33 PM
Barry,
You are right: "hold cash, don't short" is probably as good as it gets right now.
Anyway, my 3-year old read me a book since my last comment, so I feel much better ..... she thinks cash is a good idea right now too.
Appreciate the blog.
Thanks.
Posted by: Rich Shinnick | Apr 25, 2008 2:14:12 AM
Barry I'm wondering if your shop does any fundamental valuation research, or do you rely on sentiment/market/macro driven?
Posted by: kk | Apr 25, 2008 2:18:32 AM
Love the cartoon. Brevity is the soul of wit and this one is outstanding.
Posted by: Egg | Apr 25, 2008 5:26:38 AM
