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Wednesday, May 6, 2009

No Way Out - Wells, Citi , BofA Need Capital, JPMorgan OK ?

That was quite a good movie with Kostner but the same appears to be true for all banks except Goldman and JPM who have a special situation due to their heritage and successful lobbying to say the least.
This stress test worst case scenario is a kindergarten parameter scenario and does not match at all what could and will be challenging going forward without the 180 bil through AIG taxpayer presents all banks would be bust by now as even JPM could not have collected various receivables and be bankrupt include the Bear Stearns looses of 6 Bil which taxpayers have on the FED book).
Those losses will gather again going forward as even the conservative IMF forcast expects US banks to take another 500 billion hit this year. Where should they gather that money as exact the same amount brought them into this trouble.
Subprime and Alt A make 4 tril in potential losses plus a part of the other 10 tril makes alone 6 trillion in losses til 2012. The easy bond trading presents are also gone sponsored again by the pathetic bond buying program of the FED.
Most lucrative sectors of banking income are dead and will remain so the yield curve or gross margin banks have right now is steep but will not remain so after Q3 of this year and vanish actually produce losses on the books. The CRB hence inflation will pick up sharply going forward and whatever people try to say now the credibility of governments will deteriorate and yields will rise in 2010 as all the stimulus programs will hit the money flow while printing machines keep printing money only in 2010 when the market looses its nerve as it understands that the trillions spend did not do the trick we can expect panic selling to kick in.


Wells, Citi , BofA Need Capital, JPMorgan OK: Tests
Shares of bank stocks soared even as the government told some of the industry's leaders that they'll need to raise billions to pass stress tests.

Bank of America needs to close a nearly $35 billion capital gap. Wells Fargo needs $15 billion while Citigroup probably will require about $5 billion.

JPMorgan Chase, Goldman Sachs, American Express, Regions Financial and Bank of New York Mellon will need none, wire service reports indicated.

Market experts attributed the surge in bank stocks to relief among investors that they could finally attach a number to the supposedly worst-case scenarios for the nation's largest financial institutions.

"This is sell-on-the-rumor and buy-on-the-news," said Michael Cohn, chief investment strategist at Atlantis Asset Management in New York. Of the BofA news, he said, "It's a bad number, it sounds awful and you would think they would sell it off on that news. The news is out, and against all conventional wisdom it rallied."

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