Rabbitisrich

http://www.psyfitec.com/2011/07/perpetual-novelty-santa-fe-style.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ThePsy-fiBlog+%28The+Psy-Fi+Blog%29 When Arthur and colleagues modelled a simple stock market by allowing investors to modify their expectations in response to market changes - which were themselves formed by expectations in an endless recursive fashion - they found that if people didn’t change their future expectations very often the simulation once again settled down to an equilibrium in line with the classical models, under the rational expectations approach. However, if their expectations changed more frequently the market never reached equilibrium and weaved about randomly, oscillating between periods of stability and periods of great volatility. As the researchers state, this helps to explain: "One of the more striking puzzles in finance: that market traders often believe in such concepts as technical trading, "market psychology", and bandwagon effects, while academic theorists believe in market efficiency and a lack of speculative opportunities. Both views, we show, are correct, but within different regimes."

WFC and, to a lesser extent, PNC are my major financial industry plays, along with a basket of community banks. You can benefit from the non-interest expense drawdown, loan performance improvement, and asset management and advisory fees. There are also plays like BK where the businesses warrant a higher multiple. Lots of places to make money in this sector.

That's a rather generous assessment of the investment banking model (which is still basically a catch all term). Everytime there is a financial shocker, from Credit Suisse FP in the 90s to Morgan Stanley in the 00s, we learn that executives don't really know the details of their own machine, and that it is very difficult to restrain risk taking behavior due to the incentive warping competition for talent. A well-hedged financial product offering today tends to become out and out speculation tomorrow, using the SAME instruments. But BAC longs are likely correct that this is a time where risk management is actually meaningful.

You are definiely right that the public likes their entitlements. They also like others to pay for them. Isn't that the whole problem? Washington is following what the voters tell them. Sadly the voters are grossly ignorant. Way too many think foreign aid is a large part of the budget and that trimming it would make a meaningful difference. If entitlements are sticky and they continue to comprise a large percentage of liabilities, then isn't a GDP spending target asking for trouble? Whole industries arise from government spending, which means that lobbyists and special interest parties emerge to resist irrelevance. I see such a plan heading down the path of the "debt limit", except with the same chart as the social security cost of living adjustment.

If this were true, then wouldn't we see a higher rate on excess reserves? The M1 multiplier is at .73, and excess reserves are up 54% YOY. This looks more like a liquidity trap than a pure monetary exercise.

That method still faces the problem of all technical analysis, which is that there are multiple pathways to every price action and no method to determine the relevant pathway. The price action is an indicator of a catalyst(s) but is not in itself a catalyst. In this age of Carson Blocks and Whitney Tilsons (referring to their promotion, not integrity or quality of research), wouldn't it be better to simply purchase the cheapest stock and then broadcast your thesis?

The ~20% of GDP mark would have a procyclical effect more than anything else. Increasing expenditures during the good times and then cutting back during the bad seems disruptive.

Paulson conceded that his research analysts were hearing rumblings about problems at Sino Forest for months and that his trading desk received requests to borrow the stock to short it. Indeed Paulson was trimming the position when the Muddy Waters research report alleging account problems hit. Hmm, that sounds like coincidence and nothing to do with shopping the research before shorting. To reposition the portfolio, Paulson said he diversified into financial companies with less exposure to mortgage loans, noting that he liked Capital One (NYSE:COF - News) and Wells Fargo (NYSE:WFC - News), two names he owned at the end of the first quarter. Wells Fargo and low mortgage exposure does not compute. Until the mortgage crisis, Paulson was known for making consistent and intelligent investments with an emphasis on event specific bets. Perhaps the type of money that flowed into his funds after '08 were hoping for more Sosa and less Ichiro?

Well, maybe something is lost in translation when the philosophy is executed. The reporter did note the asymmetric flow of chiding. Orson Welles said it already: "All animals are equal but some animals are more equal than others."

Mostly excess reserves: http://65.89.18.138/fred2/graph/fredgraph.png?&id=WSBASE,EXCRESNS&scale=Left,Left&range=5yrs,1yr&cosd=2006-07-13,2010-06-01&coed=2011-07-13,2011-06-01&line_color=%230000ff,%23ff0000&link_values=false,false&line_style=Solid,Solid&mark_type=NONE,NONE&mw=4,4&lw=1,1&ost=-99999,-99999&oet=99999,99999&mma=0,0&fml=a,a&fq=Weekly%2C+Ending+Wednesday,Monthly&fam=avg,avg&fgst=lin,lin&transformation=lin,lin&vintage_data-ipsquote-timestamp=2011-07-20,2011-07-20&revision_data-ipsquote-timestamp=2011-07-20,2011-07-20

Cwericb, what is your source regarding Sino-forest's cancellation of the analyst tour? I didn't even know that the company claimed that the analysts requested the postponement until your message, and then I couldn't find any supporting stories until I googled "Sino-forest tour postponement analyst request". That search yielded a Globe and Mail article that cited an anonymous analyst and Stephen Atkinson of BMO Nesbitt Burns, both of whom said that the trip would have yielded no new information without the PWC audit. And yet, on the June 14 call, Richard Kelertas of Dundee Capital Markets requested an introduction to one of the AIs, presumably for verification scuttlebutt. The tour would have been more significant than a stroll through some woods. Six days later, he stopped coverage. If you are correct, and the analysts requested the postponement, then it changes the character of the delay. Why wouldn't the analysts, especially those with a bullish price target, have come forward? Why did one of two analysts interviewed speak to the Globe and Mail under condition of anonymity? I admit to not fully understanding the company's response to the Globe and Mail expose. Apparently, Gengma Forestry's Chairman neglected to count sales of timberland in which his company acted as the selling agent. That seems like a huge communication mistake, if true. Also, I am not savvy with Chinese regulations concerning ownership verification. TRE claims that tree purchase agreements fall under local, rather than provincial, forestry bureaus and that the ownership transfer certificates are not communicated between local and provincial branches. What confuses me is that the master agreement provides for "pre-emptive" rights to lease the land, SUBJECT to governmental approval, which in this case includes the provincial forestry bureau. If, under such terms, the company can purchase trees without registering at the provincial level, then what does "pre-emptive" mean exactly? I have no position in TRE, but the Block supporters vs. rationalist argument is little more than a straw man. Can you quote anyone who is arguing the short position using Block's authority standing?

Yeah, also his allegations are not reliant upon his personal standing. Block questioned the authorized intermediary model, the TRE responded, and investors were able to consider the arguments. He also pointed to signs of asset exaggeration, which can be disputed through legal evidence of ownership or purchase. However, Globe and Mail uncovered supporting evidence of misrepresentation and TRE cancelled an investor meeting. This is not at all the same as an investment banking analyst, John Gwynn, claiming that FRFHF was hugely under-reserved and that the reinsurance didn't exist. In that case, there was no evidence, and the company could only prove its integrity over YEARS. One is an argument, and the other is a claim by someone who leveraged his soapbox to claim authority.

Compared to the Jackson Hole speech, Bernanke's recent comments were more restrained. The condition of increasing likelihood of deflation suggests that new voting members require higher hurdles for QE.

Bair was a critic of the Basel II proposals as far back as '06 or '07, and she took a fair bit of flack for being a "bureaucrat". I'm not a fan of the current capital adequacy focus since you need to move the needle a lot to counter regulatory arbitrage and other big bank responses to disintermediation, but Bair was doing her job, no doubt.

She provided an "exit interview" to the NY Times: http://www.nytimes.com/2011/07/10/magazine/sheila-bairs-exit-interview.html?_r=2&pagewanted=all Some juicy quotes: Geithner wanted the F.D.I.C. to guarantee literally all debt issued by the big bank-holding companies — an eye-popping request. No bank needed more federal assistance than Citi — it required three separate bailouts. And yet, in Bair’s view, no bank was treated as solicitously, especially by the New York Fed. She felt pressured by the Fed to allow Citi to buy a failing Wachovia — which she suspected was a kind of backdoor way to strengthen Citi by giving it access to Wachovia’s stable deposit base. To make the deal work, the New York Fed even agreed to absorb some of Wachovia’s losses. When the F.D.I.C. accepted the Citi offer, Geithner felt that a deal had been made. But before Citi could close the deal, Wells Fargo, a much stronger bank, made a better offer — one that didn’t require government assistance. Bair leapt at it. Geithner was furious, complaining that Bair’s action was sending the wrong signal at the wrong time: that the federal government couldn’t be trusted to stick to its word. During the crisis, however, Treasury and the Fed were adamant about protecting debt holders, fearing that if they had to absorb losses, the markets would be destabilized and a bad situation would get even worse. “What was it James Carville used to say?” Bair said. “ ‘When I die I want to come back as the bond market.’ Looks like Mrs. Bair indulged in a few well-deserved snipes at the people who took shots at her, off record of course, during the crisis.

I'm a bit skeptical of the time monopoly theory simply because the costs of sneaking food are so low. Your maximum financial loss is capped at the ticket price. I couldn't find any estimates on the likelihood of getting caught, but it's not as if you have to hide Twix in your butt. I have eaten a panini in the theater and my lifetime hit rate is 100%. Another thing is that high traffic areas frequently have multiple theaters offering similar movies. If consumers are sensitive to the price of consumables, then wouldn't these theaters compete on that basis? Or do seats fill up so quickly that theaters can charge whatever they want during attendance peaks? In which case, wouldn't we expect more variable pricing throughout the year and time of day?

Sounds like a wonderful use of brokered deposits and FHLB advances. So great to see FDIC insurance properly applied! 35% equity to assets? Man, if only more banks ran like Beal's we wouldn't have had a recession.

This thread should be renamed "Who bought RIMM and who bought SD?"

So are the retail stores meant to attract to tourists to the restaurant, and the restaurant to attract diners to the kitsch? If retail brings more people to restaurant, then wouldn't they show above average gross margins, or higher restaurant sales per square foot? Has management discussed the metrics they use to evaluate the hybrid model vs. standalone? I've never been to a Cracker Barrel so I don't have a feel for the customer experience.

Cracker Barrel has always been rather mysterious with its refusal to break out restaurant/retail margins. There is a lot of square footage devoted to the retail space.

Just days after management reported he was "supportive." I mostly agree that most market gurus are charlatans, or at least not as great as everyone thinks. When the fame and fortune was attained through one or two events (like betting against subprime) as opposed to a lifetime of good investing decisions, the "guru" status is even more questionable, no matter how well thought out the one mega trade was. This doesn't mean Paulson is not a very good investor, we all have our mistakes, but this cements the fact that comparisons of him to greats like Buffett are patently ridiculous. Buffett would of never gotten caught up in this. What about Gen Re?

BINGO!!!!!!!!!!!! ;D ;) :D This is getting serious. Google core U.S. search share only rose by 0.1% to 65.5% in May. Can they hold off the Bing onslaught?!!

Woltac, I didn't mean to be so cryptic. I was referring primarily to the "obligations under leases" and the discounted operating leases. At the current price, and without a significant source of low cost leverage, you need an optimistic view of future ROA. Regarding cost of equity, while difficult to calculate, it is a cost that comes to bear when you issue more shares. The discussions about valuation may be theoretical but it is real cost.

Property360 also interviewed Stephen Way, CEO of HIIG and former CEO of HCC, who commented on pricing: . You can quote me. There’s no hope. Rates aren’t going up. In many cases, they are still going down. They are woefully low at this point, and if the industry didn’t have the reserve releases we’ve been seeing over the last 18 months, we would already be seeing red ink.]As to the market-turn inference, we are not at the end of the soft market. We might see some increase in property rates, but there is no hope of casualty business [hardening]. You can quote me. There’s no hope. Rates aren’t going up. In many cases, they are still going down. They are woefully low at this point, and if the industry didn’t have the reserve releases we’ve been seeing over the last 18 months, we would already be seeing red ink. http://www.propertycasualty360.com/2011/06/17/picky-hiig-seeks-unadvertised-specials

It's important to take matters into your own hands because, sometimes, parents just don't understand.