Do not let the Fed’s cut diversion fool you.

[Sapiens]

Do not let the Fed’s cut diversion fool you.

There are massive amounts of derivatives that CANNOT be safely priced right now. There are massive losses currently hidden from the public. DO NOT PANIC.

Keep you liquid assets handy, you will come to a buyers market soon enough.

[Jim Nickerson]

Re: Do not let the Fed’s cut diversion fool you.

Do not let the Fed’s cut diversion fool you.

There are massive amounts of derivatives that CANNOT be safely priced right now. There are massive losses currently hidden from the public. DO NOT PANIC.

Keep you liquid assets handy, you will come to a buyers market soon enough.

You sort disappeared here for a while, Sapiens, I thought someone had succeeded in getting to you in the way of being offensive toward your tendancies for being cryptic. Nothing cryptic about your post here, except one might ask, as one could of many things that get posted on iTulip, is how do you really know you are correct in your assertion of the massive losses currently hidden from the public?

[c1ue]

Re: Do not let the Fed’s cut diversion fool you.

Jim,

An example of losses which haven't come to light yet, but might:

JPM is Tier 1 capitalized at 1/3 of the industry average (8ish vs. 24).

There is not a breakdown of capital vs. specific losses, but you can see this is a non-positive item.

[Jim Nickerson]

Re: Do not let the Fed’s cut diversion fool you.

http://news.yahoo.com/s/nm/20070919/...5n1GJ6balkM3wV

Morgan Stanley execs say worst of crisis is over 9/19/07

NEW YORK (Reuters) - The worst of the credit crunch that forced Morgan Stanley to mark down loans and assets by $940 million during the third quarters is over, said Morgan Stanley's incoming chief financial officer Colm Kelleher.

"I do believe the worst is over," Kelleher, who is currently Morgan's global head of capital markets, told Reuters in an interview.

Morgan Stanley earlier on Wednesday reported a 17 percent decline in third-quarter profit, reflecting a decline in fixed income trading as well as the lower value of corporate loans and other assets.

"We're seeing some clear signs of recovery," said Kelleher, who succeeds CFO David Sidwell when he retires at the end of this year. "This will take some time to work through the credit markets. I would suspect you're talking about one to two quarters."

What are the odds this guy is lying? I have no idea myself.

Lehman reported yesterday and was up along with everything.

BSC and GS report tomorrow.

[Jim Nickerson]

Re: Do not let the Fed’s cut diversion fool you.

http://www.marketwatch.com/news/stor...siteid=yahoomy

9/19/07

Morgan Stanley takes its medicine
Commentary: A painful report may lead to a quicker recovery
NEW YORK (MarketWatch) -

By the traditional measures, Morgan Stanley had a terrible quarter.


Revenue on a sequential basis fell 24%. Debt trading revenue fell 53%. Equity trading was off 21%. Investment management fell 10%. Investment banking fell 16%. Profits fell 17%. And finally, overall results, $1.38 a share, fell 16 cents short of the consensus. See full story.

"Net-net: this is not a great quarter for Morgan Stanley," Mike Mayo, Deutsche Bank analyst, wrote in a note to clients.

But taken in the context of this early earnings season, there was some optimism from analysts that Morgan Stanley, in defiance of Lehman Bros.

Holdings Inc.'s report Tuesday, may be anticipating a quick turn around for the firm.

Shares fell about 1% near midday.

Morgan Stanley wrote down nearly $940 million in asset values, compared to $700 million for Lehman. This was a surprise because the general sentiment on Wall Street was the Lehman had far more exposure to the fixed-income and credit markets. See full story.

How firms write down their assets or, mark them to market, is the one place where firms can fudge if they desire. On the surface, Lehman appears to have fudged a little, its stock rallied on its report which beat estimates. Morgan Stanley missed and is flat.

One explanation may be that Lehman's Richard Fuld is hoping the markets will rally and the firm won't have a big bite as the year comes to a close. And maybe John Mack at Morgan Stanley, is betting on it.
mailto:dweidner@marketwatch.com

[c1ue]

Re: Do not let the Fed’s cut diversion fool you.

What are the odds this guy is lying?

To steal a generalization from trial lawyers - are the lips moving? :confused:

My general rule is to look at the motivations:

Anything I hear from a company officer - doubly so in a financial call - I would take with a double helping of salt.

There is a tremendous self interest to minimize the negative and accentuate the positive - what Galbraith called incantation.

When times are good this is not especially harmful, but when times are bad it is a killer.

[c1ue]

Re: Do not let the Fed’s cut diversion fool you.

Jim,

I'll even go out on a limb and say that this week will be the peak for the financial services companies for the short term foreseeable future.

It just isn't going to get any better than this: a hoped for and larger than expected 0.5% cut, but without (yet) the ugly news out in the open.

Even with another cut in late October - unless it is again 0.5% - the ongoing train wreck of ugly real estate news is going to drain the punch bowl despite B-Nank's best efforts.

That's why I dumped my long time C and JPM holdings yesterday and early today.

If I had followed BSC and GS more closely and were comfortable with the stock dynamics, I'd be considering medium range puts after announcements - assuming of course the kimono doesn't fall open on one or both. But that isn't too likely.

[Sapiens]

Re: Do not let the Fed’s cut diversion fool you.

Nothing cryptic about your post here, except one might ask, as one could of many things that get posted on iTulip, is how do you really know you are correct in your assertion of the massive losses currently hidden from the public?

Jim, the reason I know, it's because I am right in the middle of it. I am wading in a unterminable sea of dubious paper.

-Sapiens

[Jim Nickerson]

Re: Do not let the Fed’s cut diversion fool you.

Jim, the reason I know, it's because I am right in the middle of it. I am wading in a unterminable sea of dubious paper.

-Sapiens

Sapiens,

What is "unterminable," undeterminable? To me this is the first thing you have posted that suggests something about what you do. Do you wish to reveal a bit more about what you know about this stuff?

[Guest]

Re: Do not let the Fed’s cut diversion fool you.

This news clip from the JSMINESET website seems to fit in neatly with the topic on this thread.


The Credit Crisis Could Be Just Beginning
By Jon D. Markman
Special to TheStreet.com
9/21/2007 6:40 AM EDT

Satyajit Das is laughing. It appears I have said something very funny, but I have no idea what it was. My only clue is that the laugh sounds somewhat pitying.
One of the world’s leading experts on credit derivatives (financial instruments that transfer credit risk from one party to another), Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. As a developer and marketer of the exotic instruments himself over the past 30 years, he seemed like the ideal industry insider to help us get to the bottom of the recent debt crunch -- and I expected him to defend and explain the practice.

I started by asking the Calcutta-born Australian whether the credit crisis was in what Americans would call the "third inning." This was pretty amusing, it seemed, judging from the laughter. So I tried again. "Second inning?" More laughter. "First?" Still too optimistic.
Das, who knows as much about global money flows as anyone in the world, stopped chuckling long enough to suggest that we're actually still in the middle of the national anthem before a game destined to go into extra innings. And it won't end well for the global economy.

[Rajiv]

Re: Do not let the Fed’s cut diversion fool you.

The link to the article "The Credit Crisis Could Be Just Beginning"

[Jim Nickerson]

Re: Do not let the Fed’s cut diversion fool you.

The link to the article "The Credit Crisis Could Be Just Beginning"

Thanks for doing the work to link the article, Rajiv. Lukester seems to have a genetic deficit when it comes to putting up links. Perhaps he isn't savvy enough to know how to do it, yet he is so savvy about most things.

It is an interesting article, Lukester. Thanks for posting enough info on it so that Rajiv could find it.

This thread seems to remind me of another, or even two maybe, where Sapiens was the subject, and everyone seemed to respond but Sapiens (though he did give a possibly pertinent response in this thread).

[Jim Nickerson]

Re: Do not let the Fed’s cut diversion fool you.

One other thought. Das probably is a very informed dude, but who really knows? He strikes me as someone on the outside thinking about what is going on inside.

If Sapiens were to be an individual who works in a "place" where people are actually trying to figure out what in the hell to do about all the derivatives that, according to Sapiens, cannot be safely priced right now, then such an individual's opinion about all this shit might just be the most valid opinion that is going to come about.

Certainly Das's article supports there is going to be a long-unwinding.

[Guest]

Re: Do not let the Fed’s cut diversion fool you.

Jim -

<< Thanks for doing the work to link the article, Rajiv. Lukester seems to have a genetic deficit when it comes to putting up links. Perhaps he isn't savvy enough to know how to do it, yet he is so savvy about most things. >>

I get attention deficit whatchamacallit (translation: lazy-sloppy disorder) about posting source links because I know Rajiv is always obsessively hunting around on this website looking for loose ends to staple down to the concrete.

He seems incapable of reading past ANY flapping loose end without pouncing upon the source reference material and then presenting it in silent indignation to the sloppy poster and the community, all while presumably muttering something under his breath about "abysmal work ethics".


Now, where's Sapiens, and why hasn't he told us what the bottom line is yet?


[ Sorry C1ue - too late. I edited that out. You've got to be faster on the draw. ]

[c1ue]

Re: Do not let the Fed’s cut diversion fool you.

Wierd and wacky is cool.

I thought referring to yourself as cool meant exactly the opposite? :confused: :p ;)