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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (197384)	4/21/2009 4:31:11 PM
From: patron_anejo_por_favor	Respond to of 306849

>>Is Goldman Sachs Running the Plunge Protection Team?<< Do pigs on Wall Street wear lipstick?

To: Les H who wrote (197384)	4/21/2009 4:40:15 PM
From: Smiling Bob	Read Replies (1) \| Respond to of 306849

I tried twittering this, but twisted my teat in the process. Probably doing something wrong. Nuebert dismisses the notion, but he's be gone since 2002, so he wasn't there during the past three years or so, when market seemed most manipulated --- Is the current stock market rebound based on fundamentals, or are more sinister forces at work? Tyler Durden, one of the best financial bloggers around, have found some circumstantial evidence that suggests the mysterious Plunge Protection Team (PPT) has recently been boosting the stock market. And some might say Goldman Sachs is running the show... The Working Group on Financial Markets, known colloquially as the Plunge Protection Team (PPT), was created in 1988 by Ronald Reagan, in response to the Black Monday stock market crash in 1987. Their operations have always been shrouded in secrecy, with a Washington Post article from 1997 writing that the group aims to prevent the "smoothly running global financial machine" from locking up. Conspiracy theorists have long claimed that the PPT manipulates U.S. stock markets by using government funds to buy stocks in the event of market dislocation, but skeptics argue that such an operation would be unworkable. Durden, author of the ZeroHedge blog, thinks he found some evidence of the PPT's interference with the market. He cites an unusual piece of data on program trading, a part of the stock market that is controlled by mysterious computer programs that use mathematical formulas to buy and sell stocks. According to the New York Stock Exchange, last week's volume of program trading was 8% higher than the 52 week average. It's strange that program trading volume would be increasing so sharply when overall market volume is declining, says Durden. It's even stranger to note that principal trading, which occurs when a brokerage buys or sells stocks for its own account, is running 21% above 52 week average. New York Stock Exchange weekly volume, on the other hand, is running about 9% below 52 week average. "A very interesting data point, also provided by the NYSE, implicates none other than administration darling Goldman Sachs in yet another potentially troubling development," writes Durden. "Key to note here is that Goldman's program trading principal to agency+customer facilitation ratio is a staggering 5x, which is multiples higher than both the second most active program trader and the average ratio of the NYSE, both at or below 1x." The implication is that Goldman Sachs trades much more often for its own (principal) benefit. "In this light, the program trading spike over the past week could be perceived as much more sinister," he says. "For conspiracy lovers, long searching for any circumstantial evidence to catch the mysterious "plunge protection team" in action, you should look no further than this." My colleague at Kapitall, David Neubert, disagrees with the conspiracy theory. David was the head of program trading at Morgan Stanley from 1996 to 2002 (both Global and U.S.), which, at the time, was the NYSE volume leader. "Program trading volume on a proprietary basis can come from many things, all of which make pushing the entire market higher difficult to nearly impossible," he writes. "The only thing that can drive a market higher is buyers willing to pay more than current market prices," writes Neubert. "Among the many financial market abuses that have occurred in the past few years, portfolio (program) trading is not among them." Is the PPT a Wall Street fairy tale? I don't know the answer. But it's interesting that Goldman Sachs recently announced a $5 billion stock issue plan. Come on, conspiracy lovers, tell us what you think. Did the PPT push stock market prices higher so that Goldman could get a better price for their stock offerin

To: Les H who wrote (197384)	4/21/2009 7:24:06 PM
From: Les H	Read Replies (1) \| Respond to of 306849

Whitney Says Stress Tests Will Be Harder for Regional Banks By Margaret Popper and Jamie McGee April 21 (Bloomberg) -- U.S. regional banks will have greater difficulties in passing the government’s stress tests, said Meredith Whitney, the former Oppenheimer & Co. analyst who gained fame by predicting a decline in the industry’s shares. “For a lot of the regional banks that have so much commercial real estate exposure as a percentage of their core capital levels, it’s going to be more difficult,” she said in a interview on Bloomberg Television yesterday. She said “big” banks will pass the tests. The window to raise equity capital has closed and banks will begin selling non-core assets, Whitney said. “You will see what I describe as a yard sale,” she said. Whitney, 39, the founder of Meredith Whitney Advisory Group, predicted in late October 2007 that Citigroup Inc. would have to cut its dividend, which the bank did in January 2008, by 41 percent. At the time, her call triggered the steepest tumble in Citigroup shares since September 2002. “If you have a key to Dean Wormer's office, you can pass the stress test,” she said. “If you don’t have a copy of the keys, then you will have a harder time passing the stress test.” bloomberg.com Whitney's suspicion of regional banks is in line with a call made on Intelligent Investing by John Jacquemin, manager of the Mooring Capital hedge fund and a member of the Forbes Investor Team. Jacquemin believes regional bank balance sheets aren't as strong as they appear because they have exposure to commercial real estate securities that have yet to be written down to conform with economy reality. Whitney also discussed credit card lines and how the country's biggest lenders are sucking liquidity out of consumer wallets. "This is the most interesting topic for me out there, which is credit card lines," Whitney says. "So, there are about US$4.2-trillion in unused credit card lines. And there are about US$840-billion of used credit lines. In the fourth quarter alone, half a trillion dollars of lines were cut from the consumer -- half a trillion." As Americans face layoffs and pay cuts, they're turning to their credit cards to make up the difference, says Whitney. These cuts in unused credit lines amount to cuts in compensation. Her gloomiest forecast is for a 50% cut in unused credit lines. Finally, she argues that state and local budgets, under severe strain from losses in income and property taxes as well as their own inability to access credit markets, could dampen any prospects for a recovery. State and municipal spending accounts for 12% of gross domestic product. "A misplaced assumption could be that something can change and you'll have a V-shaped recovery inside of 2009. I don't see that happening. I don't see an L-shaped recovery, either," Whitney said. Whitney ultimately believes that the entire U.S. economy needs to be rebuilt from the ground up. Financial services were our greatest export, she said, and now we need to create something new for the world to buy. That process, she believes, will take several years. financialpost.com