Fundie Analysts

Merrill Lynch cut its rating on the brokerage stocks to “neutral” from “buy” — including financial-services giants Citigroup, Lehman Brothers Holdings, and Bear Stearns.

Yet another example of the old Wall Street saw about Fundamental  Analysts:

Don’t need ’em in a Bull market, don’t want ’em in a Bear market.

>

(with my apologies to my fundie friends)

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. dryfly commented on Aug 28

    Does ML rate themselves?

  2. michael schumacher commented on Aug 28

    no rate cut coming IMO

    Placing inflation as a concern over the credit problem.

    And then 10 days later cutting rates….

    No rate cut in Sept.

    Ciao
    MS

  3. Glenn commented on Aug 28

    I just got into my office this morning (Tuesday) and noticed that the market has been “hit with the ugly stick”. It’ll be interesting to see if the SPX closes below it’s 200-day EMA. It’s currently trading below it as I write this e-mail. I also notice that the SPX once again found resistance at it’s 50-day EMA. That also occurred during the last “snap-back” rally.

    If we are in a bear market (which is a big “IF”), then this should be the start of the 2nd, and most vicious leg down. Things are getting interesting…to say the least. A close below the 200-day EMA would probably be a BIG negative today.

    I’m tempted to short…but I’m also aware that Bernake still has another arrow or two in his quiver. If he see’s the market tanking, he’s likely to pull the trigger on the Fed funds rate. That makes shorting VERY precarious, since I think he’ll do whatever he can to “prop up” the market heading into the holiday shopping season.

    Best regards,

    Glenn

  4. techy2468 commented on Aug 28

    Glenn…you are right on target.

    its a pity we cannot go short because the government does not want the equitities to be priced right.

    if we go into recession…most of the companies trading at 16-20 P/E….they wont be making much money. so if market was really rational, it would have been priced for a higher probability of a recession.

    but i am assuming that more 50% of the money manager by funds manager is not their money, they dont care where things end up finally….they want to bet on going up so that they can get their bonus if their bet is right…..i am sure there is no such thing as negative bonus

  5. michael schumacher commented on Aug 28

    fees and bonus’ is what this market is ALL about. Take out the ability to collect them and techy has it right…..fair value of equities. Would’nt want that though as the NYC property/art market would collapse without those big checks coming..

    “what you mean we have to earn them??”-
    most people under 30 on Wall Street

    Ciao
    MS

  6. Last Line of Defense commented on Aug 28

    I posted this last week. My apologies to those that already saw it.

    A suggested draft for a Fed communique from their upcoming retreat at Jackson Hole:

    The Federal Reserve Governors and Presidents want to make public their full awareness of the following facts:

    * By August 15 hedge funds have received redemption notices from their clients, to be fulfilled by September 30, for an unprecedented total amount.

    * In order to fulfill those requests, hedge funds will have to collectively liquidate a significant part of their huge positions in the debt, foreign exchange, equity and commodity markets between now and September 30.

    * The liquidation of those positions will inevitably cause significant movements in all these markets.

    * These movements, being inherently transient in nature, have a very low probability to affect economic growth, which latest data – particularly the recent July Durable Goods Orders report – shows to be proceeding at a satisfactorily robust pace.

    In view of the aforementioned facts, the Federal Reserve Governors and Presidents state their unanimous resolve to not introduce any change whatsoever in monetary policy, in particular to the federal funds rate, in response to any movement, however large or steep, that might occur between now and September 30 in the mentioned markets. They view any such change as completely unnecesary for the purpose of ensuring a sustainable pace in economic growth. They are also aware that any such measure would not stand up to any examination on moral grounds, since it could justifiably be interpreted as having the purpose of bailing out hedge funds – which are definitely neither banks nor an essential or even important part of the financial system – and their clients – who are not exactly widows and orphans.

  7. MarkTX commented on Aug 28

    Looking at US tresauries,

    the 5 yr (yield) is being crushed… (-.136)

    The only way I can explain it is that

    The Fed has lost control of the train wreck.

    And congratulations to everyone….

    Everyone has hit the nail on the head today….and I am shaking/knodding my head as I look at stock market …..

    -Fees and Bonus’ “OPM” are the driving force in the market and the economy, ie…real estate, mortgage, debt, credit, whatever…

    -shorting this market with mad men (who have unlimited “money”) at the control is very dangerous

    -recession?, some places are already in recession…the numbers, however, have been twisted, turned, and tortured (CPI,Unemployment,GDP, etc…)

    The famous line from Jack Nicholson
    is all thats left for some people….

    “You can’t handle the Truth”

  8. techy2468 commented on Aug 28

    can funds managers play short in the market?

    i mean are they allowed to do whatever they deem right? or they can only be long since it amounts to actual purchase.

  9. ari5000 commented on Aug 28

    mutual funds have rules and must follow them. They are paid to do what their prospectuses outline. They are not allowed to go all cash… they’re not paid to avoid risk. It all depends what the prospectus says. Hedge funds have more leeway.

    Most mutual fund managers are not terribly concerned about losing other people’s money. Their only real worry is beating their benchmark. So if a large cap fund only loses 15% this year and the markets drop 20% — they are very pleased to have 500 basis points of alpha and get a huge bonus — even though your grandma just lost a big chunk of dough.

    If you look at sector flow recently — you can see money flowing into utilities and consumer staples (good old PG). They must be invested so the fund managers are in the sad game of trying to figure out where to lose the least amount.

  10. mhm commented on Aug 28

    Merril Lynch -> merry lynching

    They started with BSC (bruised, but escaped), then CFC (mauled, rescued by BAC), and now attacked C, LEH and again BSC.

    What is going on with this company?

  11. Winston Munn commented on Aug 28

    MarkTX wrote: “The Fed has lost control of the train wreck.”

    The truth is the Fed has never been in control. The Fed could cut 200 basis points off the target rate tomorrow, but unless someone wanted to borrow at that rate, they would have accomplished mothing.

    Markets set rates. Demand drives supply.

    The music has stopped, and now everyone is scrambling to find a chair.

  12. Aaron commented on Aug 29

    Ironic since Merrill effectively killed their own stock today, but yeah they have certainly been behind the curve here. Unless these stocks go far lower, this call won’t be very impressive at all.

Posted Under