Posts filed under “Analysts”

There’s Only One Way to Avoid a Downgrade to U.S. Credit

According to Reuters, a majority of economists now think that U.S. credit will be downgraded.

The debt ceiling plans being proposed likely will not avoid a debt downgrade.

Indeed, as Zero Hedge notes, the cuts being proposed in the debt ceiling proposals would be offset by the costs of the downgrade:

The US downgrade alone, now virtually taken for granted by everyone, will offset any beneficial impact from any deficit reduction that will have to happen for the debt ceiling to be increased.

Indeed, many are starting to say that a downgrade is inevitable.

In truth and in fact, we could still avoid a downgrade … but only if we immediately:

(1) End the imperial wars, which reduce – rather than strengthen – national security (and see this and this);

(2) End the never-ending bailouts for Wall Street;

(3) Prosecute fraud and claw back ill-gotten gains;

(4) End the Bush tax cuts, which Ronald Reagan’s budget director David Stockman said were the worst fiscal mistake in history; and

(5) Slash pensions for public employees, at least when they are pegged to an artificially “spiked” final year’s salary.

The talking heads will say that these actions are not politically feasible.

However, as I’ve previously noted, that phrase is just code for:

The powers-that-be don’t want it, even if the people overwhelmingly and passionately support it.

Category: Analysts, Credit, Think Tank

When Will Apple Be Bigger than ExxonMobil?

Apple’s blowout numbers this week got tongues wagging about the tech juggernaut. David Wilson at Bloomberg charts the answer to the question as to when Apple Inc. will overtake Exxon Mobil as the world’s most valuable public company. Apple is currently at ~$358.7 billion, a mere 13%behind Exxon Mobil at $410.3 billion. Short answer: At…Read More

Category: Analysts, Trading, Valuation

S&P Threatens To Downgrade Everything

Media coverage of S&P downgrade threat; • Reuters – S&P threatens downgrade of U.S. financial companies Standard & Poor’s on Friday raised the pressure on debt negotiators in Washington, saying it could downgrade insurers, securities clearinghouses, mortgage agencies and a laundry list of other firms without a deal soon to lift the debt ceiling and…Read More

Category: Analysts, Credit, Think Tank

Reporting Season Farce

Albert Edwards is the uber-Bear who sits on the Global Strategy Team at Société Générale. Edwards notes:  “It’s that surreal time of the quarter, just ahead of the reporting season, when US companies cajole compliant analysts into reducing their profit forecasts so that on the day the company can record a positive earnings surprise.” Here’s…Read More

Category: Analysts, Corporate Management, Earnings, Trading

Stock Buybacks vs Insider Buying: 70:1 Ratio

“While insiders are willing to use corporate cash to try to support the value of their stock-based compensation, they don’t seem to think their stocks are attractively priced.“ -Charles Biderman, Trimtabs > Over the years, I have been critical of Trimtab’s Charles Biderman (See this, this, this and this). I suspect much of the visibility…Read More

Category: Analysts, Corporate Management, Investing

Analysts Exist to Make Economists Look Respectable

“The only function of economic forecasting is to make astrology look respectable.” -John Kenneth Galbraith > Regular readers know that I do not hold the economics profession in particularly high regard. These sociologists too often have an unfortunate unfamiliarity with how Human Beings behave in the wild. Forget forecasting — economic theories fail to adequately…Read More

Category: Analysts, Really, really bad calls

Are Economists Now Too Pessimistic?

Société Générale has a very interesting piece out this morning looking at the notion of economic surprises and a double-dip scenario: “The economic surprise indicator has returned to very low levels, indicating that a lot of negative surprises are now discounted. We don’t believe that the indicator will remain low for long as the drop…Read More

Category: Analysts, Psychology, Really, really bad calls

Blackberry vs Apple vs Droid

About 6 months ago on CNBC Fast Money, I discussed why Blackberry was toast (cant find the video, but it may been this). I was astonished anyone would even defend RIMM against the Apple onslaught. To be blunt, i am surprised RIMM is a still a double digit stock. This was one of the cases…Read More

Category: Analysts, Really, really bad calls, Technology

Time Running Out?

A mention by David Rosenberg in a recent note sent me scurrying to find this report from the San Francisco Fed in August of last year.  The report — remember, it was almost one year ago — used the Leading Economic Indicators to assess the probability of another recession within the next 24 months (from that date,…Read More

Category: Analysts, Cycles, Data Analysis, Economy, Research

While Baghdad Bob Ben Bernanke says that everything is fine, China’s Dagong credit rating agency says the U.S has already defaulted. As AFP reports: “‘In our opinion, the United States has already been defaulting….Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies – eroding the wealth of creditors…Read More

Category: Analysts, Credit, Think Tank