Posts filed under “Analysts”

Time to Defang Moody’s and S&P

Fundamental Analysts: You don’t need them in a Bull market, and you don’t want them in a Bear market.”

>

I started out in this business on a trading desk. The head of trading who trained me was a crusty no bullshit former Marine Jungle Combat Instructor. He was not keen on Fundamental Analysts, and I vividly recall that quote above as one of his favorite expressions about them.

I was reminded of that no-nonsense attitude when reading about the recent threats of a US credit rating downgrade by S&P and Moody’s.

There are three problems with the NRSROs:

1. The Ratings Agencies completely missed the biggest credit risk and collapse in a century. Why should anything they ever say be trusted by investors again?

2. They subverted their own business models from objective analysts to paid shills in pursuit of greater profits. Hence, they have failed in even their most basic obligations to investors, as well as their fundamental business structure.

3. Their status as Nationally Recognized Statistical Rating Organizations (“NRSROs”) reduces competition in analysis and ratings, and gives them unnecessary credibility.

After the colossal clusterf$#% they helped creat, why on eart are they afforded any special privileges or competitive advantages?

It is time to eliminate the special NRSRO status, radically open up the ratings space to real competition, and force bond buyers to do their own homework.

It is the 21st century. Perhaps out regulatory structures should reflect that . . .

Category: Analysts, Bailouts, Regulation

It appears that the web editors at the AEI have been busy. Peter Wallison, currently a member of the Financial Crisis Inquiry Commission, was also the co-director of AEI’s Financial Deregulation Project, along with his co-director, Columbia professor Charles Calomoris. Over at Calomoris’s bio, his status as co-director of AEI’s Financial Deregulation Project is the…Read More

Category: Analysts, Bailouts, Credit, Politics, Real Estate

Yahoo Finance + StockTwits = Message Boards 2.0

Two firms I have more than a passing relationship — Yahoo Finance and StockTwits — have formally announced a deal to place the curated StockTwit content directly onto Yahoo Finance. (I am a regular on Yahoo Finance, and FusionIQ offers several products in the stock twits marketplace). Lets use Google as an example of what…Read More

Category: Analysts, Trading, Web/Tech

Top Economic Forcasters

Here are Bloomberg’s run of Wall Street’s top economic prognosticators. Click to open PDFs • Top Personal Spending Forecasters • Top Unemployment Forecasters • Top GDP Forecasters • Top CPI Forecasters • Top Overall Forecasters Yes, I know that calling someone a top Wall Street’s top economist is like saying they are the skinniest guy…Read More

Category: Analysts

WSJ: Expert Networks = Insider Trading

The WSJ occasionally buries huge stories in its much less read weekend edition; recall the option backdating investigation in 2006. This past weekend was a classic example of this: “Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation, according…Read More

Category: Analysts, Legal, M&A

Tight Employers: Frugal or Counter-Productive?

Have a quick look at yesterday’s post: Wedbush: Cheap as a Fox. There was a robust discussion in comments — and the general take that resonated with me was summed up thusly: Being judicious about expenses is one thing, but being ultra cheap can be counter-productive and myopic when you figure in the opportunity costs….Read More

Category: Analysts, Corporate Management, Wages & Income

Home Equity as a Percentage of Household Net Worth

> I frequently find myself disagreeing with Tobias Levkovich of Citigroup. That’s not surprising, given his firm and their investment posture. Where I really part ways is on anything housing related. Levkovich was part of the mainstream herd of strategists who, as the markets topped in October 2007, made the erroneous forecast that Housing would…Read More

Category: Analysts, Real Estate, Really, really bad calls

Regulation AB: Downgrading the Ratings Agencies

We know the major ratings agencies suck. We know their business model was payola. We know they sold ratings for cash, committed fraud on structured product investors. We know they hid significant modeling errors, and then hid these problems from the public and regulators. Might their free ride be coming to an end? The SEC…Read More

Category: Analysts, Bailouts, Credit, Legal, Really, really bad calls

Are Wall Street Analysts Contrary Indicators?

‘Boy these companies look pretty good, earnings are OK, they have plenty of cash. What if there’s a double dip?’ ‘I’m no macroeconomist, but . . .’ > Here is an intriguing possibility, one that should make any investor holding 80% cash a tad nervous: The Buy/Sell/Hold crowd of analysts are excessively cautious: “For the…Read More

Category: Analysts, Contrary Indicators, Corporate Management, Earnings

MISH vs ECRI

I hate it when two people I know and like do battle. This week, it is Mike Shedlock of MISH’s global economic analysis squaring up against my friend and work neighbor, Lakshman Achuthan of the Economic Cycle Research Institute (ECRI). Mish ripped ECRI in an unsparing critique this morning: ECRI Weekly Leading Indicators at Negative…Read More

Category: Analysts, Cycles, Economy