Posts filed under “Think Tank”

My friend and colleague Janet Tavakoli sent me this scathing comment.  She is one of the most respected analysts in the world of structured finance and risk.  When I see Janet rant, I read.  Also, 7/30/09 reply from Jim Rogers at bottom. Enjoy –  Chris

Where Were Drama Pundits [Whitney, Taleb and Gasparino] When It Mattered?

TSF (Opinion) Roundup Commentary – July 29, 2009

By Janet Tavakoli

Hundreds of people from clergymen to lawyers have claimed decorations for bravery that they never earned.  Why should finance be any different?

Meredith Whitney’s Unreported Death Threats (See also: “Reporting v. PR”)

In the early part of 2007, Meredith Whitney appeared on Cavuto on Business with Jim Rogers and opposed his viewpoint.  She rated Citigroup “sector perform.” Rogers was short.  By the end of October 2007, three other prominent analysts already had a sell on Citi; Whitney followed by rating it sector underperform and said Citigroup could trade in the low ‘30’s and would have to cut its dividend.  The dividend cut was a good call.  Rogers made it months earlier when he shorted the stock.  It was too late to give an early warning about Citigroup’s toxic assets.  Securitization had already ground to a halt, and everyone was taking losses.  Citi hit $5 in January 2009, just as Rogers said it would.

According to Reuters, Whitney said she got “several death threats” as a result of her Citi call.  The rumored death threats were widely reported.  But who told the press about death threats? Security consultants advise the target of death threats not to discuss it, particularly not with the press.  The threats were downgraded faster than Whitney downgraded Citigroup—a Fortune interview said she received “one death threat.”  Whitney rated Bear Stearns perform and downgraded it to underperform on March 14, 2008 as it tumbled 53% in one day.  Clues to Bear Stearns’ problems were publicly reported in May 2007 when the Everquest IPO became news, and CDOs from BSAM’s hedge funds landed on Bear Stearns’s balance sheet.  Reportedly, Whitney hesitated Bear’s fateful week of March 2008 due to her perceived pressure over her Citi dividend call, but pressure or not, she was already too late.

Jim Rogers also warned about Lehman when Bear Stearns imploded in mid-March 2008, but Whitney continued to rate Lehman outperform.  Whitney downgraded Lehman to “perform” at the end of March 2008—so much for taking a hint or issuing an early warning.  Lehman went under September 2008.

I first took an interest when Whitney was billed as the woman who gave early warning about AIG, because she did not as far as I know.  In August 2007, I challenged AIG’s earnings—specifically its failure to take losses on credit derivatives protecting “super senior” structures, the type of products on which we eventually paid out TARP money.

When asked by an economist to comment on my analysis of her calls that missed some death threats, Whitney retorted: “She is just jealous.”  Not true.  My feeling is akin to that which I have for Rosie Ruiz, who appeared to run a marathon in record time, but had merely jumped in at the end of the race—it’s a different feeling entirely.

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Category: Think Tank

Is Big Really Beautiful?

Bill Dunkelberg is currently a professor of economics at Temple University where he served as dean of the School of Business from 1987-95. Prior appointments were at Purdue, Stanford and the University of Michigan. He has served as the Chief Economist for the National Federation of Independent Business for 35 years, is the Chairman of…Read More

Category: Credit, Markets, Think Tank

Chicago manufacturing PMI

The July Chicago PMI was 43.4, about in line with expectations of 43 and up from 39.9 in June and it’s the highest level since the Sept ’08 reading of 55.9. New Orders remained below 50 but jumped 6.4 points to 48. Backlogs however fell 5.5 points to 32.1. Inventories remained extremely lean, falling to…Read More

Category: MacroNotes

King Report: Reasons to Rally?

> Initial Jobless Claims were 9k more than expected. But Continuing Claims were 103k less than expected. As we have regularly noted, Street spinmeisters ignore Continuing Claims when they are worse than expected but herald the rebound in the job market when they are better than expected. We noted almost two months ago that Continuing…Read More

Category: Think Tank

Q2 GDP, thanks for the deflator

Q2 GDP fell 1%, .5% better than expected but the breakdown was very mixed as NOMINAL GDP fell more than expected as the deflator rose just .2% vs expectations of a gain of 1%. If the deflator was in line, REAL GDP would have fallen 1.8%. Personal consumption dropped 1.2%, .7% more than the consensus…Read More

Category: MacroNotes

morning note/Q2 GDP

Today we’ll quantify to what extent the US economy is one step closer to ending the recession when Q2 GDP is expected out with a decline of 1.5%, the 4th Q in a row of contraction. Trade and inventories are the two components that will lead the slowing rate of decline as personal consumption, 70%…Read More

Category: MacroNotes

New Classifications for Personal Consumption Expenditures (Wonky)

Today, we get the Bureau of Economic Analysis (BEA)  comprehen­sive, or benchmark, revision of the national income and product accounts (NIPAs). The last such revision was released in December 2003. ture components of gross domestic product (GDP) and some of the income components. For those of you who want more info, consider the following sources:…Read More

Category: Economy, Think Tank

Backbone Not Likely in Fed’s Exit Strategy Toolkit

Good Evening: Just when market participants had grown used to the stock market’s recent pattern of falling in the morning and rising in the afternoon, U.S. share prices pulled a George Costanza and did the opposite today (if you are unsure what this “Seinfeld” reference means, click here). Higher markets overseas, some decent earnings reports,…Read More

Category: Markets, Think Tank

7 year note auction

The 7 year note auction was good as the yield was about 3 bps less than expected. The bid to cover of 2.63 was above the average seen in the previous 5 of 2.4 but below the June auction of 2.82. The level of indirect bidders totaled 62.5%, below the 67.2% seen in June which…Read More

Category: MacroNotes

RSI in the NDX, highest since Jan 2000

With another run today higher, the 14 day RSI (relative strength index) in the NDX is now at the highest level since Jan 2000. Momentum such as this that brings us overbought can keep us overbought for a continued period of time so it’s never a one stop timing measurement but it at least brings…Read More

Category: MacroNotes