Posts filed under “Analysts”
A quick reminder of the extent of corruption at the ratings agencies: They were well aware of the fraud that was going on, they just elected to ignore it.
Recall this 2010 NYT article:
“In 2004, well before the risks embedded in Wall Street’s bets on subprime mortgages became widely known, employees at Standard & Poor’s, the credit rating agency, were feeling pressure to expand the business.
One employee warned in internal e-mail that the company would lose business if it failed to give high enough ratings to collateralized debt obligations, the investments that later emerged at the heart of the financial crisis.
“We are meeting with your group this week to discuss adjusting criteria for rating C.D.O.s of real estate assets this week because of the ongoing threat of losing deals,” the e-mail said. “Lose the C.D.O. and lose the base business — a self reinforcing loop.”
In June 2005, an S.& P. employee warned that tampering “with criteria to ‘get the deal’ is putting the entire S.& P. franchise at risk — it’s a bad idea.” A Senate panel will release 550 pages of exhibits on Friday — including these and other internal messages — at a hearing scrutinizing the role S.& P. and the ratings agency Moody’s Investors Service played in the 2008 financial crisis. The panel, the Permanent Subcommittee on Investigations, released excerpts of the messages Thursday.
Understand the litigation against Standard & Poors — and eventually Moody’s and Fitcvh Ratings — is not about “Opinion” — its about knowing, willful fraud.
Documents Show Internal Qualms at Rating Agencies
NYT, April 22, 2010
I have shown this graphic repeatedly in the past, but given today’s rally, we might as well trot it out one more time: The Sell Side Indicator — Merrill’s measure of Wall Street’s bullishness on stocks — rose by 2.8pt in January to 49.8. This is now an eight month high and the fifth…Read More
Okay, kids, gather round: I have in my hands your weekend reading assignment, and its a doozey: Dylan Grice, former Société Générale strategist (and Big Picture conference speaker) collection of Popular Delusions essays. The work covers the period from 2009 to 2012 and runs 244 pages long. It is chock full of terrific stuff. Topics range…Read More
While Hooey-Peddling Agencies Are Rewarded The big 3 government backed ratings agencies (technically known as Nationally Recognized Statistical Rating Organization) – S&P, Moody’s and Fitch – all committed massive fraud, which was a prime cause of the 2008 economic crash. They took bribes for higher ratings, “sold their soul“, engaged in a “culture of covering…Read More
Throw back the little ones And pan fry the big ones Use tact, poise and reason And gently squeeze them -Steely Dan, Throw back the Little Ones The WSJ is reporting that the Securities and Exchange Commission has suspended small ratings firm Egan-Jones from issuing any “official ratings” on bonds issued by countries, U.S. states,…Read More
Dr. David P. Kelly of JP Morgan Asset Management quarterly deck is out. Its a regular favorite of mine, laden as it is with great charts that look at the very long term. You can download the entire 69 page deck here. click for ginormous chart Source: JP Morgan Funds
Source: Adam Parker, Morgan Stanley Today’s absurd datapoint comes from Slate’s Moneybox: 88% of the S&P500 earnings growth for 2012 came from just 10 firms. Just four companies—Apple, AIG, Goldman Sachs, and Bank of America—together provided a majority of overall earnings growth among large-cap companies. Source: Four Companies That Together Provided Most of…Read More
I moderated a few panels at the PEW conference in DC this summer with Sheila Bair — and the stand out to me was Laurie Goodman. I think this quote today sums up the Housing recovery meme perfectly: “While we have seen many dramatic headlines touting the housing recovery over the past 3.5 years,…Read More
Wall Street pays QE3 no mind Source: Merrill Lynch Merrill Lynch’s Equity & Quant Strategist, Savita Subramanian, notes that Wall Street is still excessively bearish, and that this remains a reliable contrarian indicator: The Sell Side Indicator is based on the average recommended equity allocation of Wall Street strategists as of the last business…Read More
In light of the California bankruptcies and the usual belated downgrades comes this nice overview on Municipalities from UBS analysts Thomas McLoughlin and Kristin Stephens, titled Municipal Bonds: City credit quality reconsidered. They did a screen of credit quality via the Merritt Research database of 284 cities, and note come to the oft overlooked conclusion…Read More