11 replies to this topic

[denleo]

What if Financials bottom today? What arguments will bears have? This is the only thing they have right now. NAV is right. All those sub prime problems are priced in. What else can bring the market down? Nothing. Denleo

[Spectacular Bid]

What if Financials bottom today? What arguments will bears have? This is the only thing they have right now. NAV is right. All those sub prime problems are priced in. What else can bring the market down? Nothing.

Denleo

If that happens and the bears have no arguments we'll probably have a top within a month or two, albeit at higher prices.

[ogm]

What if Financials bottom today? What arguments will bears have? This is the only thing they have right now. NAV is right. All those sub prime problems are priced in. What else can bring the market down? Nothing.

Denleo

Its not just about subrime. From a pure technical poiint of view...They are breaking some trendlines, and monthly chart on XBD is setting up for a plunge.

From fundamental point of view.. they just lost huge business.. CDO's They packaged and sold 100s of billions of them over the past couple years. 500 bil last year alone. That business is now gone.

Now look at the corporate spreads, they are skyrocketing. Means there is soime anticipation of rising defaults in that area too .

Another huge chunk of their business were LBO's, now that premiums on junk corporates are rocketing too, and LBO companies are struggling to raise credit for buyouts, that business is evaporating too. Borrowing at higher prices makes LBO's less atrtractive. And that was another huge revenue stream for Brokers. They raked in billions in fees.


Overall credit standards are tightening, liquidity available for risky deals is shrinking. They are losing a lot of revenue. They aren't going to bottom today or tomorrow.

Charts say things are changing. Weekly/monthly charts. Of course they can bounce on 15 min chart here and there.

Edited by ogm, 20 July 2007 - 01:29 PM.

[gorydog]

What if Financials bottom today? What arguments will bears have? This is the only thing they have right now. NAV is right. All those sub prime problems are priced in. What else can bring the market down? Nothing.

Denleo

Considering we are setting records, earnings have kinda sucked. Some have been good, but more misses, and less raising guidance the last Q.

GD

[eminimee]

Speaking of "what if?"

http://stockcharts.com/c-sc/sc?s=$BKX&p=D&yr=3&mn=0&dy=29&i=p72532755935&a=89765629&r=7640.png

[ogm]

Banks have problems too. They are all trying to get out of subprime business. So that revenue stream is gone. And now they are starting to get stuck in LBO bridge loans and are trying to tighten their lending standards. Look at C, they posted decent results on growth in loans. Now that was last quarter, what about the next one ? Will they give out more loans or less, if they are trying to tighten their lending standards ? This is a general liquidity shrink. And if corporate bonds will start faultering, that will just add fuel to the fire. And the corporate credit markets already starting to price that in. I'm much more negative on brokers then banks, though. Brokers are losing tremendous business now that the LBO and CDO frenzy is over. They'll be warning one after another, as soon as they will decide who will open the can of worms first. If the market will start sagging due to lower liquidity, IPO's will start shutting down too. More pain for brokers. Look at BX IPO... not only it says bad things about the LBO's but about the IPO market too. Once again its sitting at a new low today at 26.

Edited by ogm, 20 July 2007 - 01:47 PM.

[Insider]

What if Financials bottom today? What arguments will bears have? This is the only thing they have right now. NAV is right. All those sub prime problems are priced in. What else can bring the market down? Nothing.

Denleo

Priced in ?

[skyymaster]

Banks have problems too. They are all trying to get out of subprime business. So that revenue stream is gone. And now they are starting to get stuck in LBO bridge loans and are trying to tighten their lending standards. Look at C, they posted decent results on growth in loans. Now that was last quarter, what about the next one ?
Will they give out more loans or less, if they are trying to tighten their lending standards ?

This is a general liquidity shrink. And if corporate bonds will start faultering, that will just add fuel to the fire. And the corporate credit markets already starting to price that in.

I'm much more negative on brokers then banks, though. Brokers are losing tremendous business now that the LBO and CDO frenzy is over. They'll be warning one after another, as soon as they will decide who will open the can of worms first.

If the market will start sagging due to lower liquidity, IPO's will start shutting down too. More pain for brokers. Look at BX IPO... not only it says bad things about the LBO's but about the IPO market too. Once again its sitting at a new low today at 26.

Also, their little sibling OWW that IPO today want down.

[ogm]

Banks have problems too. They are all trying to get out of subprime business. So that revenue stream is gone. And now they are starting to get stuck in LBO bridge loans and are trying to tighten their lending standards. Look at C, they posted decent results on growth in loans. Now that was last quarter, what about the next one ?
Will they give out more loans or less, if they are trying to tighten their lending standards ?

This is a general liquidity shrink. And if corporate bonds will start faultering, that will just add fuel to the fire. And the corporate credit markets already starting to price that in.

I'm much more negative on brokers then banks, though. Brokers are losing tremendous business now that the LBO and CDO frenzy is over. They'll be warning one after another, as soon as they will decide who will open the can of worms first.

If the market will start sagging due to lower liquidity, IPO's will start shutting down too. More pain for brokers. Look at BX IPO... not only it says bad things about the LBO's but about the IPO market too. Once again its sitting at a new low today at 26.

Also, their little sibling OWW that IPO today want down.

Thhats even worse news for them. Not only they Leveraged themselves up on all kinds of junk, they can't even get rid of it, since the IPO market appears to be weakening.


The way the LBO cycle is supposed to work, you buy out companies when they are down, and then sell them when the market is good.

Here is a thought.... what if a lot of the latest deals where done at the top and not at the bottom ? What if that is why the corporate debt market is worried. That they bought deals that they won't be able to unload easily for a loong time. And that some of them may go bad.

The credit market has just about shut itself down for LBO's now.

There were so many of these ridiculous deals done with toggle bonds. As in with provisions that when they can't pay interest that they will issue more bonds.
Thats analag to negative amortization mortgages. And we all know what a great deal those were.

Edited by ogm, 20 July 2007 - 04:07 PM.

[arbman]

Teaparty, just flip that fractal upside down and you will be all done...