Posts filed under “Think Tank”

ADP

ADP reports that 491k jobs were lost in the private sector, much less than expectations of a fall of 645k and a big improvement from a revised -708k reading in March (down from 742k). It’s the smallest job loss since the -352k figure in Oct ’08.

Small and medium sized businesses continue to see the biggest declines. Construction shed 95k jobs and a total of 1.261mm jobs have been lost in this sector since the high in Jan ’07 but the loss of 95k is the smallest since Nov ’08. Friday’s Govt Payroll # is expected to fall by 610k and some may revise that based on today’s data but the month to month correlation between the two survey’s has been sketchy.

We’ve seen a plateau in initial jobless claims that is reflecting a static level of firing and today’s # could follow that but continuing claims moving higher reflects the difficulty in finding new jobs and will result in the unemployment rate moving still higher.

Either way, we’ll take less bad as it’s the new good.

Category: MacroNotes

How Do You Raise Capital Without Having to Raise Capital?

According to the leak du jour, BAC needs $34b in equity capital in order to absorb the losses estimated in the ‘stress test.’ Considering that they’ve already received $45b in preferred stock from the US taxpayer, an accounting maneuver of converting that to common can, Voila, cure their capital needs without raising a penny of…Read More

Category: MacroNotes

A True Outsider’s Perspective Revisited

Good Evening: After yesterday’s launch into space, U.S. stock prices spent Tuesday settling into a comfortable, if slightly lower, orbit. The economic data out today continued to portray a slowing rate of economic decay in the U.S., enough so that some bulls are proclaiming the recession might be over and some bears are rethinking their…Read More

Category: Markets, Think Tank

Stress Tests & Tim Geithner’s Bar Mitzvah

May 5. 2009

Thursday is stress test day. Not on a treadmill, but it may just as well be so.

We are now going to add some Geithner-Bernanke-Summers-esque formula of bank strength or weakness assessment to an already long list that includes Tier 1, Tier 2, TCE, and CAMELS and BOPEC. Tier 1 and 2 capital measures are released by banks in their public disclosures. TCE (tangible common equity) can be calculated from public documents.

Two other ratings are kept confidential. They are critical to regulators; and, in an affront to democracy and transparency, we are not permitted to learn them. Banks are not permitted to reveal them and the penalties for doing so may be harsh. Welcome to modern banking in America.

The BOPEC acronym stands for the five key areas of supervisory concern: the condition of the Bank Holding Company’s (BHC) bank subsidiaries, other nonbank subsidiaries, Parent company, Earnings, and Capital adequacy. BOPEC ratings are assigned according to an absolute scale, from the highest rating of one (indicating strong performance) to the lowest rating of five (very poor performance).

CAMELS ratings are assigned to banks within a bank holding company. Since the condition of a BHC is closely related to the condition of its subsidiary banks, the off-site BHC surveillance process includes monitoring recently assigned CAMELS ratings. The CAMELS system is used by the three federal banking supervisors (the Federal Reserve, the FDIC, and the OCC) and other financial supervisory agencies to provide a convenient summary of bank conditions at the time of an exam. The acronym CAMELS refers to the six components of a bank’s condition that are assessed: Capital adequacy, Asset quality, Management, Earnings, Liquidity, and a bank’s Sensitivity to market risk.

For a critical discussion of the coming stress test environment see Dick Bove’s guest commentary on Cumberland’s website: http://www.cumber.com/special/bove.pdf . We thank Dick for giving our readers access to his essay. We agree with him.

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Category: Think Tank

How best to deal with debt?

Ben Bernanke and the FOMC have the fed funds rate currently at zero and with a straight face in the Q&A today, he says he’s committed to price stability. He has one unspoken goal in his policies and that is to inflate our way out of this current economic malaise. The Fed and Treasury are…Read More

Category: MacroNotes

FusionIQ Market Statistics

Market internals continued to be stellar with the NYSE registering an up to down volume ratio of 19.2 to 1, while advancers beat decliners by a ratio of 5.7 to 1. On the NASDAQ up volume bested down volume by a rate of 5.19 to 1, while advancers bested decliners by a 3.47 to 1…Read More

Category: Technical Analysis, Think Tank

LIBOR continues its drop

Another day closer to the release of the bank ‘stress test’ brings us another leak in the morning papers and today reveals that 10 of the 19 banks MAY need to raise capital and/or convert preferred to common in order to improve the TCE ratio. The relevance of the outcome is only important for those…Read More

Category: MacroNotes

Chrysler Battle has Important Implications

Good Evening: Last Thursday evening, U.S. stock market bulls were fretting an aborted attempt to launch the S&P 500 into the green for the year. I speculated then that some undaunted bulls might trot out another rocket and try again on Friday. So they did, achieving a decent launch profile at Friday’s closing bell. The…Read More

Category: Markets, Think Tank

Fed’s Loan Survey

The Fed’s quarterly senior loan officer survey revealed that 39.7% of banks tightened credit standards for businesses, 5.7% considerably and 34% somewhat with the balance unchanged. This is down from a total of 64.1% of banks that tightened standards in the previous quarter and 83.6% in the one before. No bank eased standards and none…Read More

Category: MacroNotes

SPX, Oil, Copper: Bull or Bear Markets?

> Here is the S&P 500 Index on a weekly basis since May 1992. The slope of the yearly (52 week) and 70 week (favored by some researchers but more appropriate for commodities, which are more volatile than stocks) clearly defines bull and bear markets. Stocks can rally further and still not be in a…Read More

Category: Think Tank