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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (10646)	11/20/2008 11:19:36 AM
From: ajtj99	Read Replies (2) \| Respond to of 33421

John, remember you thought financials were a screaming buy in July as well <G> I think we may still need 7197 Dow and 4407 NYA. We'll see how this bounce develops. Lots of stuff still looks like it needs some more bottoming action. However, oil hit my pivot area of $51, and I thought the whole market might turn when that happened.

To: John Pitera who wrote (10646)	11/20/2008 11:49:05 AM
From: ajtj99	Respond to of 33421

Here, this should sober you up <G> To: ajtj99 who wrote (9696) 7/29/2008 2:11:56 PM From: John Pitera 2 Recommendations Read Replies (5) of 10649 XBD-- BKX-- A CHANGE --JP starting to see light at the end of the long nightmare for financial stocks???? is it possible.... The 24th was a time turning point, market timing tools, cycles, Gann time turning points, Fibonacci time turning points can indicate turns and sometimes they turn out to be tops or bottoms. Looking at the long term charts of MER, MS, UBS, etc is telling me that there are some values being created here and there are some excellent longer term buying opportunities that are arising in a number of premier companies. The problem is that another one or two of them may need to go under to complete the process. I've beated up and berated financial and bank stocks here for the past couple of years it seems. I'm not saying that today is the bottom and this is not the ninth inning of this bear market; but more than half way through the process..... 7th inning or so? BUT we'll undeniably look back at this period 12 and 18 months from now and say, yup premier companies like MER, MS, UBS etc where buys in the summerfall of 2008. Remember that these stocks have fallen so hard and for so long, and have such a huge overhang that they are not going to turn around and engage in any type of multiyear bull market without a nice long number of months where the darn things stabilize; get off of the life support machines and then have a sideways convolescence period. The fact that there are still folks who are trying to catch the bottom in these financial stocks shows the psychology of a bottom is not yet fully in place. MER is really agressive in raising capital and writing down and selling off CDO's the past couple of days. The thing is the pattern that MER has set will now need to be followed by all the other investment banks and bigger financial firms, mark down these CDO's, This is easily the most charitable, positive thing I have had to say on these Investment banks the past 2 years.... so this is a change of pace and the initial indication that my posture and outlook on the credit crisis is changing and I'm evolving away from my very bearish prognostications of the past 18 to 24 months. I'll become more positive as we move forward, and we'll have to see how the market handles the mark downs. We all shall continue to monitor the situation and never underestimate the markets profound ability to amaze and astonish us.... both in bull market-bear market..... whether equities, bonds, other debt, currencies, commodities, real estate, collectibles. etc. John

To: John Pitera who wrote (10646)	11/20/2008 11:55:06 AM
From: ajtj99	Respond to of 33421

Financials need at least $1 trillion: analyst (courtesy of Les on SI) (Reuters) - The U.S. financial system still needs at least $1 trillion to $1.2 trillion of tangible common equity to restore confidence and improve liquidity in the credit markets, Friedman Billings Ramsey analyst Paul Miller said. Eight financial companies -- Citigroup Inc, Morgan Stanley, Goldman Sachs Group Inc, Wells Fargo & Co, JPMorgan Chase & Co, American International Group Inc, Bank of America Corp and GE Financial -- are in greatest need of capital, he said. "Debt or TARP capital is not true capital. Long-term debt financing is not the solution. Only injections of true tangible common equity will solve the current crisis," he said in a note dated November 19. Currently, the U.S. financial system has $37 trillion of debt outstanding, he noted. Combined, these eight companies have roughly $12.2 trillion of assets and only $406 billion of tangible common capital, or just 3.4 percent, the analyst said in his note to clients. Miller said these institutions need somewhere between $1 trillion and $1.2trillion of capital to put their balance sheets back on solid ground and begin to extend credit again, given their dependence on short-term funding and the illiquid nature of their asset bases. Since the summer of 2007, Wall Street has been hammered by a sharp pullback in debt markets, which began with mortgage woes and escalated into a credit crisis, slowing economic activity around the world. RECAPITALIZATION NEEDS The bulk of the capital will have to come from the U.S. government, Miller said. The government needs to take the initial steps to begin the process, and private capital and earnings can finish the job. "The quicker the government acts, the sooner the financial system can work through its current problems and begin to supply credit again to the economy," he said. The U.S. government must declare a bank-dividend holiday and convert the TARP funding into pure tangible common equity to get the credit markets functioning. Also, the government should support a centralized CDS clearinghouse that backstops all transactions and eliminates the cross-default problem, the analyst said. Top U.S. financial regulators said on Friday they were working on developing a centralized clearinghouse for credit default swaps, the exotic instruments that have exacerbated the financial crisis of recent months. The weakened economy and global credit crisis had pushed the U.S. government into bailing out companies including insurer AIG, investment bank Bear Stearns, and mortgage companies Fannie Mae and Freddie Mac. Regulators have also shown a willingness this year to intervene when banks appeared to struggle. They pushed Wachovia Corp into finding a buyer and arranged for JPMorgan to buy Washington Mutual Inc's banking assets after worried customers began to yank deposits. Miller, however, said it could take three to five years for the financial system to fix itself completely, with adequate capital and appropriately priced interest rate and credit risk. (Reporting by Neha Singh in Bangalore; Editing by Vinu Pilakkott) reuters.com