Friday, April 3, 2009

Did anyone pick up the financials in yesterday's after hour swoon?

It was advertised here.

The banks are being hit a bit in afterhours because of the whisperings that the new mark-to-market moves won't affect the banks. Please. Those games are so last month....
You can take some right now in the afterhour selloff and add to them tomorrow on the dips.

Why the swoon?

Besides the article in the WSJ we had Goldman Sachs saying that that mark to market wasn't the bottom for the bank stocks.

Oh please.

Sorry, but Goldman Sachs is wrong because the stock prices are the judge on Wall Street. But here's Goldman's dubious note, that is presented in all it's intellectual rigor:

Mark to market is not the bottom

Our views on banks do not change following the FASB mark to market rule changes. Our core view is that banks will not bottom until nonperforming asset growth decelerates. All of the data points we track in 1Q point to acceleration.

Mark to market accounting changes provide banks with a little bit of Tier 1 capital relief, less earnings volatility from securities impairments (OTTI) as banks now estimate the credit loss rather than take the mark to market charge, and maybe more flexibility in putting assets into Level 3 and marking to model.

Against that, however, we note: (1) investors are not focused on Tier 1, (2) for securities, ultimately the losses are what the losses are and if the bank is wrong it will come at a later date, and (3) we believe investors will look through increases in tangible common at the expense of a big increase in Level 3 assets. Also, to the extent that banks do mark up risky securities it will make PPIP even harder to execute as banks will be marked further from the bid.

That's the sales job Wall Street spouts.

Even though that viewpoint, will prove to be completely wrong.

Maybe Goldman will get a backache like Soros and re-asses.

But only after their prop desk has covered their shorts!

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